1 LOJAS AMERICANAS S.A. Corporate Taxpayer ID (CNPJ/MF) no. 33.014.556/0001-96 Business Registry ID Number (NIRE) 3330002817-0 MANAGEMENT PROPOSAL ORDINARY AND EXTRAORDINARY GENERAL MEETINGS APRIL 30, 2018
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LOJAS AMERICANAS S.A. Corporate Taxpayer ID (CNPJ/MF) no. 33.014.556/0001-96
Business Registry ID Number (NIRE) 3330002817-0
MANAGEMENT PROPOSAL
ORDINARY AND EXTRAORDINARY
GENERAL MEETINGS
APRIL 30, 2018
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CONTENTS
ORDINARY GENERAL MEETING ....................................................................................................... 3
EXTRAORDINARY GENERAL MEETING ......................................................................................... 6
ANNEX I - OFFICER COMMENTS ....................................................................................................... 8
ANNEX II – CAPITAL BUDGETING .................................................................................................. 46
ANNEX III – NET PROFIT ALLOCATION ........................................................................................ 47
ANNEX IV – CANDIDATES TO THE BOARD OF DIRECTORS AND AUDIT COMMITTEE .. 53
ANNEX V – MANAGER REMUNERATION ...................................................................................... 64
ANNEX VI – PROPOSED ALTERATIONS TO THE ARTICLES OF INCORPORATION ......... 95
ANNEX VII – CONSOLIDATED ARTICLES OF ORGANIZATION .............................................. 96
ANNEX IV – RESTRICTED SHARE PLAN ...................................................................................... 103
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LOJAS AMERICANAS S.A.
Corporate Taxpayer ID (CNPJ/MF) no. 33.014.556/0001-96
Business Registry ID Number (NIRE) 3330002817-0
Publicly Traded Company
Dear Shareholders,
We now present the management proposal ("Proposal") regarding the subjects present in the
agenda of the Ordinary and Extraordinary General Meetings of Lojas Americanas S.A.
("Company"), to be held on April 30, 2018 ("Meetings").
Copies of the instruments to be discussed at the Meetings, including those required by CVM
Instruction no. 481/09 ("ICVM 481") are available for shareholders at the headquarters of the
Company during business hours, at the Company's Investor Relations website
(https://ri.lasa.com.br/), as well as at the websites of the Brazilian Securities Exchange
Comission ("CVM") AND OF b3 s.a. – Brasil, Bolsa, Balcão ("B3").
Ordinary General Meeting
1. Discussion of manager accounts, examination, discussion and voting on the financial
statements relative to the fiscal year ending on 12.31.2017.
We propose the approval, without objection, of the manager accounts and financial statements
relative to the fiscal year ending on 12.31.2017, as disclosed on 03.07.2018 on the CVM and B3
websites, through the Empresas.Net System and at the Company website, and as published on
the "Official Gazette of the State of Rio de Janeiro" and on the "Valor Econômico" journal on
03.14.2018 (the "Financial Statements").
Pursuant to article 9, item III of the ICVM 481, the information provided in Annex I to this
Proposal reflects our commentary on the Company's financial situation.
The Company's Audit Committee was favorable to the approval, by the Company's
shareholders, of the management accounts and the Financial Statements, as per the opinion
disclosed through the Empresas.Net System on 03.15.2018.
Additionally, the management report and independent auditors' opinion were duly disclosed and
published, along with the Financial Statements, pursuant to ICVM 481.
2. Capital Budgeting.
Pursuant to article 25, §1, item IV, of CVM Instruction 480/09 ("ICVM 480"), and for the
purposes of article 196 of Law no. 6.404/76, we propose the adoption of Capital Budgeting for
the fiscal year of 2018, in accordance with Annex II to this Proposal.
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3. Examination, discussion and vote on the allocation of net income of the fiscal year ending
on 12.31.2017.
We propose the approval of the allocation of Company net income relative to the year ended on
12.31.2017, as indicated in the Financial Statements and detailed on Annex III to this Proposal,
prepared in compliance with article 9, §1, item II of the ICVM 481.
The Company's Audit Committee was favorable to the approval, by the Company's
shareholders, of said net income allocation proposal, as per the opinion disclosed through the
Empresas.Net System on 03.15.2018.
4. Definition of the number of members to make up the Board of Directors.
Company management proposes that the Board of Directors should be made up by eight (8)
effective members and one (1) alternate member, regardless of the voting system adopted,
whereas said number may be have an additional two (2) effective members and two (2) alternate
members due to separate elections.
5. Election of the members of the Board of Directors.
Company management proposes the following composition for the Board of Directors:
Name Effective/Alternate
Carlos Alberto da Veiga Sicupira Effective member
Paulo Alberto Lemann Effective member
Roberto Moses Thompson Motta Effective member
Cecília Sicupira Effective member
Claudio Moniz Barreto Garcia Effective member
Paulo Veiga Ferraz Pereira Effective member
Sidney Victor da Costa Breyer Effective member
Miguel Gomes Pereira Sarmiento Gutierrez Effective member
André Street de Aguiar Alternate member
Company management clarifies that these candidates (i) are not prevented from taking the office
for which they have been elected, pursuant to article 37, item II, of Law no. 8.934/94, as well as
not having been condemned due to bankruptcy fraud, malfeasance, bribery, corruption,
embezzlement, crimes against popular economy, public faith or property, or due to a criminal
sentence that prohibts, even in a temporary capacity, access to public office; (ii) are not
sentenced to a suspension or temporary inability, applied by the CVM, rendering them ineligible
for the function of publicly traded company managers; (iii) meet the requirements of undisputed
reputation established by article 147, §3 of Law no. 6.404/76; and (iv) do not hold office in a
company that could be considered a competitor of the Company and do not have, nor do they
represent, conflicting interests with those of the Company.
Shareholders or a group of shareholders that wish to propose another slate to run for office at
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the Board of Directors may do so pursuant to current regulations.
The minimum shareholding percentage required to adopt the multiple voting process for the
election of Board of Director members is 5% of the Company's share capital. This option may
only be enjoyed by shareholders when observing the minimum advance period of forty eight
(48) hours prior to the Meetings.
The information relative to the candidates appointed by company management, as established in
article 10, item I, of ICVM 481 (items 12.5 to 12.10 of Annex 24 of ICVM 480) was provided
in Annex IV to this Proposal.
6. Opening of the Audit Committee.
We propose the opening of the Audit Committee, with a mandate of one (1) year, until the
Ordinary General Meeting of 2019, with a number of members to be defined at the General
Meeting.
7. Election of the Audit Committee.
Company management proposes that the Audit Committee should be made up by eight (3)
effective members and up to three (3) alternate members.
We also propose the reelection of the following members of said entity:
Name Effective/Alternate
Vicente Antonio de Castro Ferreira Effective member
Carlos Alberto de Souza Alternate member
The information relative to the candidates appointed by company management, as established in
article 10, item I, of ICVM 481 (items 12.5 to 12.10 of Annex 24 of ICVM 480) was provided
in Annex IV to this Proposal.
The Audit Committee shall be made up by at least three (3) members, and as such the
shareholders of the Company shall be responsible for appointing one or more candidates for the
election of Audit Committee members, regardless of the voting system adopted. Said
appointment shall be accompanied by information relative to the candidates provided in article
10, item I, of ICVM 481 (items 12.5 to 12.10 of Annex 24 of ICVM 480).
8. Determination of the limit of global manager remuneration.
We propose that the global manager remuneration to be paid from the date of approval by the
shareholders at the Meetings until the Ordinary General Meeting of 2019 should be determined
at the annual amount of up to BRL 44,401,533.00, corrected on a monthly basis by the IGP-DI,
which, added by the amount of up to BRL 21,690,554.00 referring to expenses associated with
the acknowledgment of the fair value of purchase operations relative to stock issued by the
Company, adds up to BRL 66,092,087.00.
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The information required for the proper analysis of the manager remuneration proposal, as
established by article 12 of ICVM 481 (including information given in item 13 of Annex 24 of
ICVM 480) is provided in Annex V to this Proposal.
We also inform that, on the Ordinary General Meeting of 2017, a global limit was approved for
manager remuneration to the annual amount of fifty eight million, nine hundred and sixty two
thousand, five hundred and fifty six reais (BRL 58,962,556.00), with the total annual amount of
fifty seven million, two hundred and twenty three thousand, six hundred and eighteen reais
(BRL 57,223,618.00) being effectively paid. The difference between the approved amount and
the value that was effectively paid results mainly from the amounts paid as variable
remuneration and from the quantity of managers.
9. Determination of the limit of Audit Committee member remuneration.
We propose that the remuneration of audit committee members should correspond to the legal
minimum, so that the remuneration of each current member of the Audit Committee shall
correspond to ten per cent of the average remuneration attributed to each Officer, without
including benefits, representation fees and shared profits.
Extraordinary General Meeting
1. Amendment to the Articles of Incorporation
We propose the alteration of the caput of Article 5 of the Company's Articles of Incorporation to
reflect the capital increases approved by the Board of Directors, within the authorized capital
limit, on September 8, 15 and 29, November 8 and December 27, 2017, as a result of the
exercise of options granted under the Company's Stock Purchase Option Program approved in
the General Meeting held on April 30, 2012, as well as the conversion of debentures issued
under the 5th Private Issuance of Senior Bonds Convertible into Company-Issued Stock,
approved on the General Meeting held on September 28, 2011, as detailed in Annex VI to this
Proposal.
2. Consolidation of the Articles of Incorporation
We propose, in view of the amendments proposed in item 1 above, the approval of the
consolidation of the Company's Articles of Incorporation, in accordance with Annex VII to this
proposal.
3. Incentive Plan with Restricted Company Stock
Company management proposes the approval of the Incentive Plan with Restricted Company
Stock ("Restricted Stock Plan"), with the purpose of (a) stimulating the expansion, success and
corporate goals of the Company and the interests of its shareholders, granting executives and
top-level employees with the gratuitous right to receive stock issued by the Company, according
to the terms, conditions and mode provided in this Restricted Stock Plan, thus promoting the
integration of these executives and employees with the Company; and (b) enabling the
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Company to obtain and maintain the services of high-level executives and employees, offering
said executives and employees the additional advantage of becoming Company shareholders,
according to the terms, conditions and the mode provided in this Restricted Stock Plan.
The information relative to the Restricted Stock Plan, as required by article 13 of ICVM 481, is
provided in Annex VIII to this Proposal.
Rio de Janeiro, March 28, 2018.
Management
Lojas Americanas S.A.
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ANNEX I - OFFICER COMMENTS
10.1 – General Financial/Equity Conditions
The financial information contained in items 10.1 to 10.9 of this annex derives from the
Company's consolidated accounting statements relative to the fiscal years ending on December
31 of 2017, 2016 and 2015, prepared in compliance with the accounting practices adopted in
Brazil, including the accounting announcements issued by the Accounting Announcement
Committee (CPC) and the international financial report rules (IFRS) issued by the IASB.
The analysis of the Officers clarifying the results obtained and the reasons for the variations in
the Company's equity constitutes an opinion on the impacts or effects of the data presented in
the accounting statements regarding the Company's financial situation and operational results.
The Company's Board of Directors cannot assure that the financial situation and the operational
results obtained in the past may repeat themselves in the future.
The terms "AH" and "AV" present in the columns of specific tables in item 10 in general mean
"Horizontal Analysis" and "Vertical Analysis", respectively.
The information presented in item 10 should be read and analyzed jointly with our consolidated
financial statements, presented on our website (ri.lasa.com.br) and on the Brazilian Securities
and Exchange Commission website (www.cvm.gov.br).
a) general financial and equity conditions:
The Company is one of the leading retailers in Brazil operating through a varied and
complementary sales platform and present in all Brazilian states and in the Federal District,
owning 1,306 stores on December 31, 2017. Furthermore, through its controlled company B2W
Digital, the Company leads the e-commerce market in Latin America in terms of sales turnover,
according to Internet Retailer in 2017.
The Company presents sufficient financial and equity conditions to implement its business plan
and to meet its short, medium and long-term obligations, as well as to cover its necessities in
terms of cash, working capital and short, medium and long-term investments, as well as to
maintain its financial and equity conditions at appropriate levels for the performance of its
activities. These necessities are supported by the capacity of working capital generation and by
third-party resources.
Over the last three fiscal years, the variation of indebtedness and liquidity indicators
accompanied the growth of the Company's operation. The current liquidity index at the end of
the years of 2017, 2016 and 2015 was of, respectively, 1.8x, 1.6x and 1.6x, demonstrably
remaining stable over this time period. The immediate adjusted liquidity index at the end of the
years of 2017, 2016 and 2015 was of, respectively, 1.2x, 0.9x and 1.0x, also demonstrating
relative stability.
As detailed below, our consolidated short and long-term loans and bonds increased 34.6%, or
BRL 4,016.3 million, from BRL 11,608.5 million on December 31, 2016 to BRL 15,624.8
million on December 31, 2017, especially due to (i) our expansion strategy, allocating most of
the funds acquired during this period to those investments and (ii) technological investments
and the acquisition of technology and service companies in order to reach the level of
excellence in terms of services of the controlled company B2W Digital. During this time period,
the amount acquired with financial institutions added up to BRL 3,549.2 million, representing
31.6% of our indebtedness before financial institutions, and the amount acquired in the stock
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market by the issuance of bonds amounted to BRL 1,500.0 million, which represents 34.1% of
our indebtedness resulting from the issuance of bonds.
The Consolidated Net Equity of the Company at the end of the years of 2017, 2016 and 2015
amounted to, respectively, BRL 6,106.3 million, BR 3,155.2 million and BRL 2,943.6 million.
The increase of BRL 2,951.1 million of December 31, 2017, compared to the year ending on
December 31, 2016 is explained, especially, by the restricted publif stock offer, to the amount of
BRL 2.4 billion, and by the issuance of preferred stock due to the exercise of the right of
conversion of bonds issued during the 5th Private Bond Issuance, to the amount of BRL 126.2
million. The increase of BRL 211.5 million of December 31, 2016, compared to the year ending
on December 31, 2015 is explained, especially, by the issuance of preferred stock due to the
exercise of the right of conversion of bonds issued during the 5th Private Senior Bond Issuance,
to the amount of BRL 161.6 million, convertible into Company-issued stock.
The Company presented consistent growth over the years, combining newly opened stores and
acquisitions. As part of the "85 anos em 5 – Somos Mais Brasil" pgrogram, from the start of
2015 to the end of 2017, the Company opened 380 stores, reaching the number of 1,306 stores
on December 31, 2017.
The gross consolidated income went from BRL 20,714.5 million on December 31, 2015 to BRL
20,002.3 million in 2017, a variation that reflects the migration of direct sale/1P lines/products
to the marketplace/3P made by B2W Digital.
Said process may be observed in the following table:
B2W Digital Consolidated
Financial Statements
(BRL million)
Fiscal year ended on December 31,
2017 2016 2015
GMV (Gross Merchandise Volume) 12,838.5 12,457.7 11,266.4
Gross Revenue 8,763.6 10,520.4 10,509.6
The B2W Marketplace is undergoing swift growth, with transactions amounting to over BRL
4.5 billion in 2017 after little more than three years of activity. We expect this operation to
become increasingly relevant and to contribute to the growth and profitability of the e-
commerce segment. The GMV consolidates own merchandise sales, sales made in the
Marketplace and other revenues (excluding Marketplace sales commissions), after returns and
including taxes.
b) capital structure:
The Company's capital structure, as a relation between stockholder equity and payabilities, in
the Management's opinion, is adequate considering the activities developed and the sector of
activity.
On December 31, 2017, the Company's consolidated short and long-term loans and bonds
totaled BRL 15,624.8 million. Upon subtracting the total position of availabilities, cards, FIDC
and electronic depoists and checks to the amount of BRL 11,978.7 million from the loan total,
we found a net debt of BRL 3,646.1 million. In 2017, net indebtedness presented a reduction of
29.9% in relation to the status presented on December 31, 2016. The net debt reduction
occurred due to the Company's public stock offering and the capital contribution of non-
controllers at the controlled company B2W Digital. The consolidated net debt of the Company
was 1.3x the Adjusted EBITDA for 2017.
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On December 31, 2016, the Company's consolidated short and long-term loans and bonds
totaled BRL 11,608.5 million. Upon subtracting the total position of availabilities, cards, FIDC
and electronic depoists and checks to the amount of BRL 6,410.1 million from the loan total, we
found a net debt of BRL 5,198.4 million. In 2016, net indebtedness presented a growth of 83.3%
in relation to 2015. The consolidated net debt of the Company was 1.9x the Adjusted EBITDA
for 2016.
On December 31, 2015, Lojas Americanas' consolidated short and long-term loans and bonds
totaled BRL 10,731.2 million. Upon subtracting the total position of availabilities, cards, FIDC
and electronic depoists and checks to the amount of BRL 7,894.8 million from the loan total, we
found a net debt of BRL 2,836.5 million. The consolidated net debt of the Company was 1.1x
the Adjusted EBITDA for 2015. The table below shows the Company's capital structure on the
given dates:
Fiscal year ending on December 31, 2017
(in BRL million) 2017 2016 2015
Total third-party capital(1) 15,624,759 11,608,518 10,731,320
Total stockholder's equity 6,106,261 3,155,132 2,943,605
Total financing 21,731,020 14,763,650 13,674,925
Ratio of third-party capital to
total financing 71.9% 78.6% 78.5%
Ratio of stockholder equity to
total financing 28.1% 21.4% 21.5%
(1) Corresponds to the sum of loans and financing and current and non-current bonds
c) payment capacity in relation to assumed financial commitments:
On December 31, 2017 and December 31, 2016, the total position of availabilities, cards, FIDC
and electronic deposits and checks of the Company amounted to BRL 11,978.7 million and
BRL 6,410.1 million, respectively, while the net debt totaled, on December 31, 2017 and on
December 31, 2016, respectively, BRL 3,646.1 million and BRL 5,198.4 million. The net debt
reduction occurred due to the controller company's public stock offering and the capital
contribution of non-controllers at the controlled company B2W.
On December 31, 2016 and December 31, 2015, the total position of availabilities, cards, FIDC
and electronic deposits and checks of the Company amounted to BRL 6,410.1 million and BRL
7,871.7 million, respectively, while the net debt totaled, on December 31, 2016 and on
December 31, 2015, respectively, BRL 5,198.4 million and BRL 2,893.4 million. The variation
of net debt, when compared to the year ending on December 31, 2015, occurred due to the
growth of service of debt, resulting by the increased leverage, higher bank spread and increased
CDI. The Company believes that its future generation of cash, added to its capacity of hiring
new loans, is sufficient to cover its cash needs relative to its contractual obligations resulting
from loans, financing and bonds, and for the financing of operations, though it may not assure
that said situation shall continue as such.
To face the uncertainties and volatility of the financial market, the Company strives to preserve
cash and to lengthen the debt profile. Over the last few years, multiple measures were taken
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with this goal in mind, such as the creation of the credit right investment fund (FIDC) to secure
advanced credit card expenses and the issuance of long-term bonds, which allowed the
Company to consolidate its growth plan in the long term.
d) sources of financing for working capital and for investment in non-current assets used:
The main financing sources of the Company over the last three fiscal years were: (i) cash
generation through its operation, (ii) loan facilities with main local and foreign banks, and
besides, the Company is a partner of banks and investment agencies to finance its expansion and
innovation projects, (iii) issuance of bonds, promisory notes and other securities in the stock
market (iv) public offering of primary share distribution and (v) discount of credit card
receivables, i.e. advanced flow of receipt of sales made through credit cards, in which the
Company suffers a discount at an agreed fee. This type of operation may be performed both
through card administrators, banks or the FIDC, with this decision being made by the Company.
For more information on the loans and funding, as well as on the FIDC, see item 10.1(f) and (g)
below.
The Company also understands that these sources are sufficient to cover its necessities in terms
of cash, working capital and short, medium and long-term investments, as well as to maintain its
available cash at appropriate levels for the performance of its activities.
For more information on financial contracts entered by the Company, see item 10.1(f) below.
d) sources of financing for working capital and for investment in non-current assets that the
Company intends to use to cover liquidity deficits:
The Company intends to continue using its current fund sources to meet any future cash
necessities. The Company has approved and unused credit facilities with the main financial
institutions of the country and understands that the local stock market would support new bond
issuances. An as-of-yet unexplored source is the foreign stock market, which could enable the
Company to obtain longer financing terms than those currently practiced in the domestic
market.
f. levels of indebtedness and debt characteristics
The objective of the Company in managing its capital is to ensure the continuity of its
operations to offer shareholder returns and benefits to other stakeholders, as well as maintaining
an ideal capital structure to minimize the associated costs. The Company monitors the levels of
indebtedness through the Adjusted Net Debt / Adjusted EBITDA ratio, which in its opinion
represents, more appropriately, its debt metrics, since it reflects the consolidated financial
obligations net of immediate cash and cash equivalents, considering its generation operating
cash flow. The Company’s solid financial position and its long-standing relationship with major
financial institutions and the capital market guarantee it a very comfortable access to
fundraising.
(i) Relevant loan and financing contracts
Loan and financing contracts entered with financial institutions:
What follows is the composition of loans and financing in the consolidated perspective:
2017 2016 2015
In national currency
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BNDES (a) 468,056 602,690 747.229
BNDES (a) 54,418 97,441 76,020
BNDES (a) 761,166 853,053 740,466
FINEP 271,725 278,778 269.165
Working capital 6,866,131 3,711,994 3,054,262
FIDC (d) 1,222,364 1,236,082 1,236,478
In foreign currency (b)
Working capital (c) 1,632,204 1,417,196 1,518,552
Swap operations 53,816 118,980 (287,720)
Cost of funding (IOF and others) (109,079) (63,787) (57.947)
11,220,801 8,252,427 7,296,505
Noncurrent portion (8,124,317) (7,155,318) (6,440,398)
Current portion 3,096,484 1,097,109 856.107
a) Financing of BNDES related to the FINEM program (investments in the opening and remodeling of stores,
logistics and technology), FINAME (acquisition of machinery and equipment) and PEC (Working Capital).
b) Transactions in foreign currency are hedged against foreign exchange fluctuations through derivative financial
instruments;
c) Funding pursuant to Resolution 2,770, published by the Brazilian Central Bank;
d) the balance of senior and subordinated mezzanine quotas issued by the FIDC.
BNDES
The last contract with BNDES was entered on 2014 and provided financing related to the
FINEM program (investments in the opening and remodeling of stores, logistics and
technology), FINAME (acquisition of machinery and equipment) and PEC (Working Capital),
during the years of 2013, 2014 and 2015.
The total debtor balance of the financing contracts with BNDES was of BRL 1,283.6 million on
December 31, 2017.
FINEP
The contract with FINEP was entered in 2015 and provided financing related to technologic
innovation, focusing on product development and/or process creation or enhancement, in the
period of 2014, 2015 and 2016. Credits granted are secured by bank-issued guarantees.
The debtor balance of the financing with FINEP was of BRL 271.7 million on December 31,
2017.
Working capital
The Company obtains working capital loans from the country’s main financial institutions,
substantially indexed to the CDI variation (from 109% to 140% of the CDI).
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On December 31, 2017, the Company's working capital loan balance amounted to BRL 6,866.1
million.
FIDC
The Retail Credit Right Investment Fund ("Fênix FIDC do Varejo") has the purpose of
acquiring credit rights owned by the Company and its controlled company B2W ("Assignors")
originating from sales, through credit cards, made by the Assignors to their clients. Fênix FIDC
do Varejo has an undetermined duration, whereas each issuance/series of bonds shall have a
determined expiration term. On June 21, 2013, the operations of Fênix FIDC do Varejo were
expanded, and the final amortization is scheduled for the sixtieth (60th) month.
On December 31, 2017, the Fênix FIDC do Varejo bonds amounted to BRL 1,222.3 million,
whereas BRL 1,171.4 million in Senior bonds and BRL 51 million in Mezzanine bonds.
Swap operations
The Company uses traditional swaps for the purpose of eliminating exchange losses arising
from devaluations of the Brazilian Real currency (BRL) against these funds in foreign currency.
The counterpart of these traditional swaps is the financial institution that provides loans in
foreign currency (US dollars). These CDI-denominated swap operations aim to offset exchange
rate risk by transforming the cost of debt to local currency and local interest rates, varying from
115.7% to 141.0% of the CDI.
The swap contracts amounted, in a consolidated capacity, to BRL 54 million on December 31,
2017. These transactions are matched in terms of value, terms and interest rates. The Company
intends to settle such contracts simultaneously with the respective loans. In this type of
operation there are no contractual terms of margin call.
Promissory Notes
On December 13, 2016, the 2nd issuance of Company promissory notes was approved, in a
single series, for public distribution with restricted placement afforts, pursuant to CVM
Instruction no. 476, of January 16, 2009, as amended, to the total global amount of BRL 190
million. 190 promissory notes were issued, with the unit nominal value of BRL 1 million,
expiring 1,095 days after the issuance date. On the unit nominal value of the promissory notes,
remuneration interest shall be levied corresponding to 112% of the accumulated variation of the
average daily CDI rates of one day, over extra-group, as disclosed by CETIP.
On June 29, 2017, the Company performed the public distribution of the 3rd issuance of
commercial promissory notes, in a single series, to a total global amount of BRL 900 million,
with remuneration interest corresponding to 115.3% of the CDI per year and due on June, 2022.
The resources acquired through promissory notes were used to extend the indebtedness profile
of the Company, in the ordinary management of its business.
Long-term loans and financing by maturity year
The long-term loans and financing by maturity year are summarized according to the following
table:
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Consolidated
2017
2016 2015
2017
-
- 788,995
2018 (*) - 3,141,572 3,183,412
2019 2,542,136 2,507,482 1,340,143
2020 3,121,713 1,161,783 857.231
2021 1,086,062 215,531 170.021
2022 1,352,645 119,043 90,735
2023
12,515 4,151 3,287
as of 2024
9,246 5,756 6,574
8,124,317
7,155,318 6,440,398
(*) Represented especially by the Fênix do Varejo - FIDC Fund
Issuance of bonds by the controlling company Lojas Americanas S.A.
The Company has performed eight bond issuances, of which seven were current at the end of
2017. The current issuances are: 4th, 6th, 7th, 8th, 9th, 10th and 11th.
In 2011, the 4th simple senior bond issuance was approved, non-convertible into stock, in a
single series, for public distribution, with restricted placement efforts. The total amount of the
operation was BRL 500 million, destined to the redefinition of the profile of existing debts and
cash reinforcement. Currently, its expiration term is in 2020.
In 2012, the 6th simple unsecured bond issuance was approved, non-convertible into stock, in
two series, for public distribution, with restricted placement efforts. The total acquired amount
was of BRL 500 million, destined to reinforce the Company's cash and to extend its
indebtedness profile. Currently, its expiration term is in 2018.
At the end of 2012, the Company performed the 7th issuance of simple unsecured bonds, non-
convertible into stock, in two series, for public distribution, with restricted placement efforts.
The operation amounted to BRL 650 million, so as to extend the indebtedness profile of the
Company. The 1st series is due in 2017 and the 2nd is due in 2018.
In 2013, the 8th simple unsecured bond issuance was approved, non-convertible into stock, in
up to three series, for public distribution, with restricted placement efforts. The total amount of
the operation was BRL 400 million, destined to the redefinition of the Company's debt. The
series are due in 2018 (1st series), 2019 (2nd series) and 2021 (3rd series).
In 2014, the 9th simple unsecured bond issuance was approved, non-convertible into stock, in
two series, for public distribution, with restricted placement efforts. The total acquired amount
was of BRL 950 million, destined, mainly, to extend the Company's indebtedness profile. Its
expiration term is in 2021.
In 2016, the 10th simple unsecured bond issuance was approved, non-convertible into stock, in
a single series, for public distribution, with restricted efforts. The total acquired amount was of
15
BRL 300 million, destined to extend the Company's indebtedness profile in the ordinary
management of its business. Its expiration term is in 2019.
In 2017, the 11th simple unsecured bond issuance was approved, non-convertible into stock, in
two series, for public distribution, with restricted efforts. The amount of the operation was of
BRL 1.500 million, destined to extend the Company's indebtedness profile in the ordinary
management of its business. The 1st series is due in 2022 and the 2nd is due in 2024.
Date of
Issuance
Due Date
Type of
issuance
Securities in
circulation
Value on the
date of
issuance
Annual
financial
charges
2017
2016
2015
4th issue 09/05/2011 09/05/2020 Public 50,000 500,000 113.5% CDI 461,812 497,822 524,084
6th Issue -
Lame 16 01/26/2012 01/26/2018 Public 30,000 300,000 112% CDI 311,271 319,618 341,933
6th Issue -
Lame 26 01/26/2012 01/26/2018 Public 20,000 200,000 112% CDI 207,514 213,079 227,956
7th Issue -
Lame 17 12/21/2012 12/21/2017 Public - 300,000 CDI + 1.03% - 150,576 301,190
7th Issue -
Lame 27 12/21/2012 12/21/2022 Public 35,000 350.000 114.50% CDI 350,530 351,407 351,456
8th Issue -
Lame 18
07/15/2013
07/15/2018
Public
15,460
154,600
112% CDI
80,445
165,388
165,567
8th Issue -
Lame 28 07/15/2013 07/15/2019 Public - 45,400 112.55% CDI - 48,581 48,634
8th Issue -
Lame 38 07/15/2013 07/15/2021 Public 20,000 200,000 IPCA + 6.9% 209,005 214,993 214,995
9th Issue -
Lame 19 06/25/2014 06/25/2021 Public 70,000 700,000 113% CDI 700,628 701,606 701,246
9th Issue -
Lame 29 06/25/2014 06/25/2021 Public 25,000 250,000 113% CDI 261,962 269,835 270,057
10th Issue
- Lame
10
11/21/2016 11/21/2019 Public 30,000 300,000 112% CDI 302,484 305,005 -
11th Issue
- Lame
A1
04/15/2017 04/15/2022 Public 126,335 1,263,350 115% CDI 1,284,404 - -
11th Issue
- Lame
B1
04/15/2017 04/15/2024 Public 23,665 236,650 IPCA +
7.0972% 253,975 - -
4,424,030
3,373,610
3,450,490
Funding costs
(20,072)
(17,519)
(14,213)
4,403,958
3,356,091
3,434,815
16
(c)Issuance of debentures by the controlled company B2W Digital
In 2010, the 1st simple subordinate bond issuance, non-convertible into stock, in a single series,
by B2W Digital was approved. The total acquired amount was of BRL 200 million, destined to
reinforce the Company's working capital. Currently, its expiration term is in 2022.
Date of
Issuance
Due Date
Type of
issuance
Securities in
circulation
Value on
the date
of
issuance
Annual
financial
charges
2017
2016
1st
private
issue
12.22.2010 12.22.2022 Private 200,000 1,000 125.0%
CDI 200,265 200,762
(ii) Other long-term relations with financial institutions
On the fiscal years ended on December 31 of 2017, 2016 and 2015, the Company had no other
long-term relations with financial institutions beyond those mentioned in this proposal and in
the financial statements and respective explanatory notes.
(iii) Debt hierarchy
The 4th issuance of bonds related to senior bonds, while other Company debts are not secured.
(iv) Any restrictions imposed to the issuer, especially in regards to indebtedness limits and
limits to the hiring of new debts, to the distribution of dividends, to the alienation of assets, to
the issuance of new securities and to the alienation of corporate control, as well as whether the
issuer has met these restrictions
The Company is subject to certain debt restriction clauses (debt covenants) included in the loan
and financing agreements and in the bond issuance deeds. These clauses include, among others,
the maintenance of certain financial ratios, calculated based on the financial statements
disclosed by Management. On December 31 of 2017, 2016 and 2015, the Company met the
obligations assumed in these agreements and met the debt covenants determined therein.
The loan and financing contracts and the bond issuance instruments of which the Company is a
party also include restrictions related to the distribution of dividends above the legal minimum
if the Company does not meet its obligations, asset alienation and corporate control alterations.
Even if not entirely applicable to all current contracts on this date, including the stipulation of
different limits for each contract, the Company informs that it has cross default provisions in its
current financial instruments.
Calculation of covenants applicable to the BNDES
The financing contract with BNDES provides the maintenance, during its effective term, of the
following covenants relative to the Company's consolidated financial statements, assessed, on
an annual basis, in a balance sheet audited by external auditors registered with the CVM:
a) Capitalization Level (Total Net Equity) greater than or equal to 9% (minimum level), with
default flexibility until 7%;
b) Total Net Debt/Adjusted EBITDA lower than or equal to 3.5.
17
For the purposes of financial index calculation, the following definitions apply:
Total net debt: Bank Loans/Financing + Bonds + Loans Payable + Fiscal Debt at cost + Social
Security Debt at cost – Available – Accounts Receivable (Credit Card and Credit Right
Investment Fund - FIDC), with discount of 5%.
Adjusted EBITDA: Operational profit before interest, taxes, depreciation and amortization,
other operational revenues/expenses, equity equivalence, minority shareholders, shareholders
and discontinued operations.
The Company has met the obligations assumed in this contract, including the obligation of
maintaining the covenants.
Calculation of covenants applicable to the issuance of bonds and promissory notes
In its financial bond contracts, of the 4th, 6th, 7th, 8th, 9th, 10th and 11th bond issuance and the
2nd and 3rd issuance of promissory notes, the Company is subject to the Consolidated Net
Debt/Adjusted EBITDA financial index being lower than or equal to 3.5x, to be verified on a
quarterly basis by the Trustee based on the consolidated Quarterly Information regularly
disclosed by the Company.
For the purposes of financial index calculation, the following definitions apply:
"Consolidated Net Debt" means the sum of all consolidated financial debts of the Company with
individuals and/or legal entities, including loans and financing with third parties, issuance of
fixed income securities, whether convertible into stock or not, in the domestic and/or
international stock market, values referring to redeemable Company stock, as well as the
difference to be paid for operations with derivatives, minus the sum of availabilities (cash and
financial investments), of the credit card Accounts Receivable and the Credit Right Investment
Fund - FIDC Accounts Receivable (when consolidated), with the latter two with five per cent
(5%) discount and the difference receivable for operations with derivatives. We ratify that, to
calculate the Consolidated Net Debt, one shall consider the consolidated FIDC effects on the
Company's Financial Statements, while the non-consolidated FIDC shall not be considered.
"Adjusted EBITDA" means the sum of (a) the consolidated operational profit of the Company
before deducting taxes, rates, contributions and shares; (b) the consolidated depreciation and
amortizations of the Company occurred in the same period; (c) the other consolidated
operational revenues (expenses) occurred in the same period; (d) the consolidated financial
expenses deducted from consolidated financial revenues of the Company in the same period;
and (e) equity equivalence. The result of the sum of sub-items (a), (b), (c), (d) and (e) of this
paragraph shall be assessed for the last twelve (12) months and calculated on the date of the
most recent quarterly balance sheet of the Company. For the purposes of this definition and the
consequent assessment of the Financial Index, any effects of the calculation of the adjustment at
present value shall be ignored – AVP (article 184 of the Joint-Stock Company Law). The
Adjusted EBITDA considered shall be the accumulated Adjusted EBITDA of the last twelve
(12) months.
"Consolidated Net Financial Income" means the consolidated financial revenues of the
Company, minus the consolidated financial expenses of the Company; the result of the
subtraction provided in this paragraph shall be assessed for the last twelve (12) months and
calculated on the date of the most recent quarterly balance sheet of the Company. For the
purposes of this definition and the consequent assessment of the Financial Indexes, any effects
of the calculation of the adjustment at present value shall be ignored – AVP (article 184 of the
Joint-Stock Company Law).
18
Pursuant to the bond issuance deed of the 5th issue, the Company is subject to the covenants (i)
Consolidated Net Debt / EBITDA lower than or equal to 3.5x and (ii) EBITDA/Consolidated
Net Financial Income equal to or greater than 1.0x, both to be verified on a quarterly basis by
the Trustee based on the consolidated Quarterly Information regularly disclosed by the
Company.
For the purposes of financial index calculation, the following definitions apply:
"Consolidated Net Debt" means the sum of all consolidated financial debts of the Company with
individuals and/or legal entities, including loans and financing with third parties, issuance of
fixed income securities, whether convertible into stock or not, in the domestic and/or
international stock market, values referring to redeemable Company stock, as well as the
difference to be paid for operations with derivatives, minus the sum of availabilities (cash and
financial investments), of the credit card Accounts Receivable and the Credit Right Investment
Fund - FIDC Accounts Receivable, with the latter two with five per cent (5%) discount and the
difference receivable for operations with derivatives.
"EBITDA" means the sum of (a) the consolidated operational profit of the Company before
deducting taxes, rates, contributions and shares; (b) the consolidated depreciation and
amortizations of the Company occurred in the same period; (c) the other consolidated
operational revenues (expenses) occurred in the same period; (d) the consolidated financial
expenses deducted from consolidated financial revenues of the Company in the same period;
and (e) equity equivalence. The result of the sum of sub-items (a), (b), (c), (d) and (e) above
shall be assessed for the last twelve (12) months and calculated on the date of the most recent
quarterly balance sheet of the Company. For the purposes of this definition and the consequent
assessment of the Financial Index, any effects of the calculation of the adjustment at present
value shall be ignored – AVP (article 184 of the Joint-Stock Company Law). The Adjusted
EBITDA considered shall be the larger between (i) the accumulated EBITDA of the last twelve
(12) months and (ii) the EBITDA of the last quarter multiplied by 4.0.
"Consolidated Net Financial Income" means the consolidated financial revenues of the
Company, minus the consolidated financial expenses of the Company; the result of this
subtraction shall be assessed for the last twelve (12) months and calculated on the date of the
most recent quarterly balance sheet of the Company. For the purposes of this definition and the
consequent assessment of the Financial Indexes, any effects of the calculation of the adjustment
at present value shall be ignored – AVP (article 184 of the Joint-Stock Company Law).
Calculation of covenants applicable to the working capital contracts
Pursuant to certain working capital contracts, the Company is subject to the Consolidated Net
Debt/Adjusted EBITDA financial index being lower than or equal to 3.5x, to be verified on a
quarterly or semestral basis by the financial institutions based on the consolidated Financial
Information regularly disclosed by the Company.
The Company has met the financial index obligations assumed in this contract.
Other Restrictions and Limitations imposed by Financial Contracts
The Company has advanced due date clauses in line with usual market practice.
19
g) limits of hired financing and percentages already used
Contract
Banco do
Nordeste
12/05/2013
BNDES
FINAME
12/16/2013
BNDES
FINEM
03/12/2014
FINEP
04/07/2015
Available hired value (BRL MM) 166.0 29.1 734.9 42.9
Status on
12/31/2015
Accumulated cleared value (BRL MM) 23.2 19.8 643.4 14.3
Use percentage (%) 14.0% 68.0% 87.5% 33.3%
Status on
12/31/2016
Accumulated cleared value (BRL MM) 23.2 19.8 733.6 28.6
Use percentage (%) 14.0% 68.0% 99.8% 66.7%
Status on
12/31/2017
Accumulated cleared value (BRL MM) 23.2 19.8 734.9 42.9
Use percentage (%) 14.0% 68.0% 100.0% 100.0%
Banco do Nordeste (12/05/2013): Opening/reformation of stores and inauguration and
expansion of distribution centers during the year of 2013.
BNDES FINAME (12/16/2013): Acquisition of executive aicraft.
BNDES FINEM (03/12/2014): Opening/reformation of stores and inauguration and expansion
of distribution centers in the period from 2013 to 2015.
FINEP (04/07/2015): Development of 7 technology and innovation projects between 2014 and
2016.
h) significant alterations to each item of the financial statements
YEAR INCOME STATEMENT
Description of the main lines of our income
Net Revenue
The Company's net revenue comprises especially the resale of goods.
Goods resale revenues are generated by all of our brick and mortar stores and e-commerce sites.
The accounting of goods resale revenue is made when there is transfer of control of the
commercialized asset. The Company offers a digital platform for sales from third parties to final
consumers, known as the Marketplace, where the Company is a liaison and receives a comission
on sales made by third parties. Only the Marketplace service comission is registered as
Company revenue.
20
Taxes and Returns on Sales
o ICMS
The State Value-added Tax (ICMS) is a state tax levied on the gross revenue in each stage of the
production and commercialization chain.
We work in all Brazilian states and, until 2015, the ICMS tax substituion regime was levied on
most product categories of our sales mix. In this regime, the tax is collected in advance, upon
the purchase of the asset, based on the purchase cost and the mark-up determined by tax
authorities in each state. The advanced taxes in the substitution were registered according to the
competency regime in the cost group of the sold goods, of retail operations. From 2016 onward,
a portion of products that used to be framed in the tax substitution regime began to be taxed by
the normal regime, i.e. the colelction started to occur after the sale, and therefore the cost of
goods sold stopped being considered, with the taxes on sales replacing.
The internal ICMS rates vary between 7% and 25% according to the legislation of each state
and Brazilian region (North, South, Southeast, Northeast and Midwest).
o PIS and COFINS
The rates of 1.65% for PIS and 7.6% for COFINS are levied on the sales revenue of goods and
services. We adopt the non-cumulative regime, discounting credits earned in purchases and
other expenses.
Returns on Sales
Amounts relative to returns of sales made are registered as deductions to gross operating
revenue.
Cost of goods sold and services provided
The cost of goods sold is assessed based on the average acquisition cost and registered on the
date of transfer of control over the commercialized asset. Besides, we also account as part of the
cost of goods the expenses with freight necessary to enable the goods to be commercialized as
intended by Management.
Expenses with Sales
Our sales expenses result from operations directly related to the commerce of goods. Our main
expenses are: personnel and occupation, consisting especially of the rental of physical stores and
distribution centers.
General and administrative expenses
General and administrative expenses are incurred in the management and support of operational
activities. Our main general and administrative expenses are the expenses with personnel and
the depreciation and amortization of investments made.
Other Operating Revenues (Expenses)
Other operating revenues consist of contingency provisions, expenses with action plans,
employee shares, investment alienation, cost write-offs with alienations and the respective taxes
over these alienations, besides compensations to clients.
21
Financial Income
Financial income is the difference between financial revenues and expenses. The main groups
that integrate financial income are Interests and monetary adjustment on loans and financing
and expenses with advanced receivables.
Current and deferred income tax and social contribution
For commercial activities, the provision for income tax and social contribution is levied on the
taxable income of the years at rates of 25% for Legal Entity Income Tax, profits exceeding BRL
240 thousand annually, and 9% for CSLL. The effective Company rate comprises the current
and deferred Income Tax and Social Contribution according to the best accounting practices.
YEARS ENDING ON DECEMBER 31, 2017 AND 2016
In thousands of Brazilian Reais
2017 A.V.% 2016 A.V.%
Var. %
2017 x 2016
NET SALES AND SERVICE
REVENUE
17,044,716 100.0
18,103,512 100.0
(5.8)
Cost of goods and services
(11,603,751) (68.1)
(12,703,942) (70.2)
(8.7)
GROSS PROFIT
5,440,965 31.9
5,399,570 29.8
0.8
Expenses with Sales
(2,426,098) (14.2)
(2,421,179) (13.4)
0.2
General and administrative expenses
(964,311) (5.7)
(798,084) (4.4)
20.8
Other expenses
(137,951) (0.8)
(142,089) (0.8)
(2.9)
Financial Income
(1,876,522) (11.0)
(2,153,690) (11.9)
(12.9)
Income tax and social contribution
45,151 0.3
143,300 0.8
(68.5)
Net profit in the year
81,234 0.5
27,828 0.2
(191.9)
Net Sales and Service Revenue
2017 A.V.%
2016 A.V.%
A.H.%
Net revenue from sales and services – Physical
commerce
11,000,183 64.5%
10,372,345 57.3%
6.1%
Net revenue from sales and services – E-commerce
7,120,777 41.8%
8,601,311 47.5%
-17.2%
Others/Eliminations*
(1,076,244) -6.3%
(870,144) -4.8%
23.7%
Total
17,044,716 100.0%
18,103,512 100.0%
-5.8%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately / Eliminations: Sales between segments
The net revenue of the years ending on December 31 of 2017 and 2016 amounted to BRL
17,044.7 million and BRL 18,103.5 million, respectively, representing a reduction of 5.8% in
2017 compared to the previous year. This variation refers to the migration of direct sale/1P
lines/products to the marketplace/3P made by B2W Digital within said period. In the physical
retail segment, the growth of net revenue was of 6.1% represented by the increas in the number
of stores from 1,127 on December 31, 2016 to 1,306 on December 31, 2017. Some departments,
such as Domestic Utilities, Entertainment and Candy Products slowed down, taking a heavier
22
toll in the economic crisis. However, through the diversified goods sale strategy, physical retail
reached growth with lower-value goods, such as hygiene, beauty and food products. In 2017, we
experienced a reduction of net revenue in the e-commerce segment of 17.2%, represented by the
reduction of direct sales due to a different equilibrium in relation to the business model, with
rapid growth of Marketplace sales, in which B2W is a liaison and receives a commission on
sales made by third-parties. The commissioning model generates lower revenue than direct
sales, but with higher margins. Thus, the Company analyzes the evolution of its sales by the
GMV, which considers the sales of its own goods and those of third parties. In 2017, the GMV
presented growth of 3.2% (BRL 739.3 million) when compared to the previous year.
Cost of goods and services
2017 A.V.%
2016 A.V.%
A.H.%
Cost of goods and services sold - Physical
commerce
(7,110,019) 61.2%
(6,676,398) 52.6%
6.5%
Cost of goods and services sold - E-commerce
(5,554,882) 47.9%
(6,889,181) 54.2%
-19.4%
Others/Eliminations*
1,061,150 (9.1)%
861,637 -6.8%
23.2%
Total
(11,603,751) 100.0%
(12,703,942) 100.0%
-8.7%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately / Eliminations: Costs of sales between segments
The costs of goods and services of the years ending on December 31 of 2017 and 2016
amounted to BRL 11,603.8 million and BRL 12,703.9 million, respectively, representing a
reduction of BRL 1,100.1 million, or 8.7%, compared to the previous year. In physical retail,
the variation of the cost of goods sold, compared to the growth of net sales income, was slightly
affected by the growth of relevance of the Red Friday event (Lojas Americanas' Black Friday).
In e-commerce, a negative variation occurred ue to a different equilibrium in relation to the
business model, with rapid growth of Marketplace sales, in which B2W is a liaison and receives
a commission on sales made by third-parties.
Gross Profit
2017 A.V.%
2016 A.V.%
A.H.%
Gross profit - Physical commerce
3,890,164 71.5%
3,695,947 68.5%
5.3%
Gross profit - E-commerce
1,565,895 28.8%
1,712,130 31.7%
-8.5%
Others/Eliminations*
(15,094) -0.3%
(8,507) -0.2%
77.4%
Total
5,440,965 100.0%
5,399,570 100.0%
7.7%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately / Eliminations:
gross profit between segments
As a result of the aforementioned factors, the gross profit reached BRL 5,441.0 million on
December 31, 2017, with 7.7% (BRL 41.4 million) exceeding the one assessed until December
31, 2016, i.e. BRL 5,399.6 million. The gross margin on December 31, 2017 was of 31.9% of
the net revenue and 29.8% on December 31, 2016, registering an improvement of 2.1% in
relation to the gross margin verified in the previous year. The gross margin improvement was
favored by the improvement in operational efficiency of the stores and by the evolution of
multiple projects implemented by the Company, such as: logistics, supplies, pricing, own brands
and promotion of products and financial services.
Expenses with Sales
2017 A.V.%
2016 A.V.%
A.H.%
Expenses with Sales - Physical Commerce
(1,599,579) 65.9%
(1,486,372) 61.4%
7.6%
Expenses with Sales - E-commerce
(841,311) 34.7%
(942,976) 38.9%
-10.8%
Others/Eliminations*
14,792 -0.6%
8,169 -0.3%
81.1%
Total
(2,426,098) 100.0%
(2,421,179) 100.0%
0.2%
23
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately/ Eliminations:
Expenses of sales between segments
On December 31, 2017, the value of expenses with Company sales was BRL 2,426.1 million,
compared to BRL 2,421.2 million on December 31, 2016, representing an increase of BRL 4.9
million or 0.2%. The increase in expenses with sales of the physical retail segment amounted to
7.6%, i.e. BRL 113.2 million, represented especially by the increase of expenses related to a
greater number of stores opened in relation to the previous year, by inflation indexes, such as
salaries and occupation costs (rent, electric power, etc.). In the e-commerce segment, sales
expenses were reduced in 10.8%, i.e. in BRL 101.7 million. This reduction was caused by the
revision of the personnel structure, which was adjusted to the company's new commercial
policies, as well as by expenses referring to occupation. There is no relevant vertical variation.
General and administrative expenses
2017 A.V.%
2016 A.V.%
A.H.%
General and administrative expenses –
Physical commerce
(527,291) 54.7%
(425,286) 53.3%
24.0%
General and administrative expenses – E-
commerce (436,995) 45.3%
(372,750) 46.7%
17.2%
Others/Eliminations*
(25) 0.0%
(48) 0.0%
47.9%
Total
(964,311) 100.0%
(798,084) 100.0%
20.8%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately /
Eliminations: General and administrative expenses between segments
On December 31, 2017, the value of the Company's general and administrative expenses was
BRL 964.3 million, compared to BRL 798.1 million on December 31, 2016, representing an
increase of BRL 166.2 million or 20.8%. The increase of general and administrative expenses of
the physical retail segment amounted to 24.0%, i.e. BRL 102.0 million, represented by the
increase of depreciation and amortization expenses in 29.2%, i.e. BRL 98.1 million, resulting
from the increase in the Company's fixed assets by opening stores of the Company's expansion
program. In e-commerce, the growth in general and administrative expenses amounted to
17.2%, i.e. BRL 64.2. This growth is based on the increase of depreciation and amortization
expenses in BRL 40.7, represented, basically, by the amortization of the development of
websites and systems, and also by the increase with judicial compensation and lawyer fees, on
December 31, 2017, compared to the same period in the previous year.
Other expenses
2017 A.V.%
2016 A.V.%
A.H.%
Other expenses - Physical Commerce
(97,072) 70.4%
(93,177) 65.6%
4.2%
Other expenses - E-commerce
(39,739) 28.8%
(35,325) 24.9%
12.5%
Others/Eliminations*
(1,140) 0.8%
(13,587) 9.5%
-91.6%
Total
(137,951) 100.0%
(142,089) 100.0%
-2.9%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately /
Eliminations: Other transactions between segments
On December 31, 2017, the value of the Company's other expenses was BRL 138.0 million,
compared to BRL 142.1 million on December 31, 2016, representing a reduction of BRL 4.1
million or 2.9%. The values result basically from the establishment of contingency provisions
and from expenses with the Company's action plans. This year lacks significant variations
compared to the previous year.
24
Financial Income
2017 A.V.%
2016 A.V.%
A.H.%
Financial Income - Physical Commerce
(1,034,733) 55.1%
(1,119,388) 52.0%
-7.6%
Financial Income - E-commerce
(868,540) 46.3%
(1,084,278) 50.3%
-19.9%
Others/Eliminations*
26,751 -1.4%
49,976 -2.3%
-46.5%
Total
(1,876,522) 100.0%
(2,153,690) 100.0%
-12.9%
* Others: FIDC and Other activities that did not meet the minimum quantitative and qualitative parameters for presentation
separately / Eliminations: Financial income between segments
On December 31, 2017, the balance of the financial income was negative at BRL 1,876.5
million, compared to negative BRL 2,153.7 million on December 31, 2016, representing an
improvement of BRL 277.2 million or -12.9%, with positive impact resulting from the
reductions of the CDI, which reduce the Company's debt charges. This positive effect was
partially offset by the increase in gross debt, seeking to enjoy a window of opportunity in the
market to extend the debt profile and to secure future scenario fluctuations.
Income tax and social contribution
2017 A.V.%
2016 A.V.%
A.H.%
Income tax and social contribution - Physical
commerce
(155,377) 344.1%
(83,496) -58.3%
86.1%
Income tax and social contribution - E-commerce
208,940 462.7%
237,298 165.6%
-11.9%
Others/Eliminations*
(8,412) -18.6%
(10,502) -7.3%
-19.9%
Total
45,151 100.0%
143,300 100.0%
-68.5%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately /
Eliminations: Income tax/Social contribution on transactions between segments
On December 31, 2017, the value of the Company's Income Tax and Social Contribution was
positive at BRL 45.2 million, compared to positive BRL 143.3 million on December 31, 2016,
representing a reduction of BRL 98.1 million or negative 68.5%. In physical retail, in the fiscal
year of 2017, the expense with income tax and social contribution amounted to BRL 155.4
million, presenting a growth of BRL 71.9 million or an increase of 58.3%. It is worth noting that
the expense with income tax and social contribution of the fiscal year of 2016 is affected by the
recognition of extemporaneous tax credits corresponding to losses of controlled companies
abroad to the amount of BRL 75.7 million. In electronic retail, in the fiscal year of 2017, there
was a reduction in the positive income tax and social contribution to the amount of BRL 28.4
million due to the reduction of the taxable calculation basis.
Net profit
As a result of the abovementioned factors, the net profit of the year ending on December 31,
2017 was of BRL 81.2 million, compared to the net profit of BRL 27.8 million registered in the
year ending on December 31, 2016, which corresponds to an increase of 192.1%. In general, the
most relevant factor for the increased profits in 2017 was the improvement of the financial
income, which in 2017 was negative at BRL 1,876.5 million, compared to negative BRL
2,153.7 million on December 31, 2016, representing an improvement of BRL 277.2 million or
12.9%.
25
YEARS ENDING ON DECEMBER 31, 2016 AND 2015
In thousands of Brazilian Reais
2016 A.V.%
2015 A.V.%
2016
x 2015
NET SALES AND SERVICE
REVENUE
18,103,512
100.0
17,926,155 100.0
1.0
Cost of goods and services
(12,703,942) (70.2)
(12,799,670) (71.4)
(0,7)
GROSS PROFIT
5,399,570 29.8
5,126,485 28.6
5.3
With sales
(2,421,179) (13.4)
(2,401,626) (13.4)
0.8
General and administrative
(798,084) (4.4)
(751,248) (4.2)
6.2
Other expenses
(142,089) (0.8)
(38,869) (0.1)
265.6
Financial Income
(2,153,690) (11.9)
(1,659,999) (9.3)
29.7
Income tax and social contribution
143,300 0.8
(210,269) 1.2
(168.2)
Net profit in the year
27,828 0.2
64,474 0.4
(56.8)
Net Sales and Service Revenue
2016 A.V.%
2015 A.V.%
A.H.%
Net revenue from sales and services – Physical
commerce
10,372,345 57.3%
9,746,712 54.4%
6.4%
Net revenue from sales and services – E-
commerce 8,601,311 47.5%
9,013,779 50.3%
-4.6%
Others/Eliminations*
(870,144) -4.8%
(834,336) -4.7%
4.3%
Total
18,103,512 100.0%
17,926,155 100.0%
1.0%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately / Eliminations: Sales between segments
The net revenue of the years ending on December 31 of 2016 and 2015 amounted to BRL
18,103.5 million and BRL 17,926.2 million, respectively, representing an increase of 1.0% in
2016 compared to the previous year, with there being growth in the net revenue of the physical
retail segment at 6.4% represented by the increase of the number of stores, from 1,041 on
December 31, 2015, to 1,127 on December 31, 2016. Some departments, such as Domestic
Utilities, Entertainment and Candy Products slowed down, taking a heavier toll in the economic
crisis. However, through the diversified goods sale strategy, the Company achieved growth with
lower-value goods, such as hygiene, beauty and food products.
In 2016, we experienced a reduction of net revenue in the e-commerce segment of 4.6%,
represented by the reduction of direct sales due to a different equilibrium in relation to the
business model, with rapid growth of Marketplace sales, in which B2W is a liaison and receives
a commission on sales made by third-parties. The commissioning model generates lower
revenue than direct sales, but with higher margins.
Thus, the Company analyzes the evolution of its sales by the GMV, which considers the sales of
its own goods and those of third parties. In 2016, the GMV presented growth of 10.6% (BRL
1,191.0 million) when compared to the previous year. Besides, the alteration of the tax
substitution regime (ICMS-ST) to the normal regime on an ample variety of goods negotiated
by the Company influenced the increase in the tax line on sales, which amounted to BRL
2,779.9 million on December 31, 2015, compared to BRL 3,287.8 million on December 31,
2016, which affected net revenue.
26
Cost of goods and services
The costs of goods and services of the years ending on December 31 of 2016 and 2015
amounted to BRL 12,703.9 million and BRL 12,799.7 million, respectively, representing a
reduction of BRL 95.8 million, or 0.7%, compared to the previous year. This alteration was due
to the alteration of the tax substitution regime (ICMS-ST) to the normal assessment regime, in
which a significant portion of the ICMS stopped composing the cost of goods sold and began to
be treated as tax on sales, thus influencing the increase in the tax on sales, line, which amounted
to BRL 2,779.9 million on December 31, 2015, compared to BRL 3,287.8 million on December
31, 2016, and an equivalent reduction in the cost line of goods and services sold. The 4.7%
reduction in e-commerce is in line with the reduction of direct sales due to the migration of sales
to the Marketplace, in which B2W is a liaison and receives a commission on sales made by
third-parties, instead of sales of its own goods. We estimate that the effect of the tax substitution
regime change is of approximately BRL 400.0 million in 2016. Thus, comparatively, the net
revenue of 2016 would grow 3.2% in relation to the previous year (instead of 1.0%) and the cost
of 2016 would grow 2.4% in relation to the previous year (instead of being reduced in 0.7%).
Gross Profit
As a result of the aforementioned factors, the gross profit reached BRL 5,399.6 million on
December 31, 2016, with 5.3% (BRL 273.1 million) exceeding the one assessed until December
31, 2015, i.e. BRL 5,126.5 million. The gross margin on December 31, 2016 was of 29.8% of
the net revenue and 28.6% on December 31, 2015, registering an improvement of 1.2% in
relation to the gross margin verified in the previous period. The increase in the gross margin
occurred partially due to the alteration of the tax substitution regime (ICMS-ST) to the norma
regime, which reduced net revenue and the cost of goods sold. In 2016, the gross margin was
also favored by the improvement in operational efficiency of the stores and by the evolution of
multiple projects implemented by the Company, such as: logistics, supplies, pricing, own brands
and promotion of products and financial services.
2016 A.V.%
2015 A.V.%
A.H.%
Cost of goods and services sold - Physical
commerce
(6,676,398) 52.6%
(6,399,619) 50.0%
4.3%
Cost of goods and services sold - E-commerce (6,889,181) 54.2%
(7,226,275) 56.5%
-4.7%
Others/Eliminations* 861,637 -6.8%
826,224 -6.5%
4.3%
Total (12,703,942) 100.0%
(12,799,670) 100.0%
-0.7%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately /
Eliminations: Sales between segments
2016 A.V.%
2015 A.V.%
A.H.%
Gross profit - Physical commerce
3,695,947 68.4%
3,347,093 65.3%
10.4%
Gross profit - E-commerce
1,712,130 31.7%
1,787,504 34.9%
-4.2%
Others/Eliminations*
(8,507) -0.2%
(8,112) -0.2%
4.9%
Total
5,399,570 100.0%
5,126,485 100.0%
5.3%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately / Eliminations: Sales between segments
27
Expenses with Sales
2016 A.V.%
2015 A.V.%
A.H.%
Expenses with Sales - Physical Commerce
(1,486,372) 61.4%
(1,372,176) 57.1%
8.3%
Expenses with Sales - E-commerce
(942,976) 38.9%
(1,037,489) 43.2%
-9.1%
Others/Eliminations*
8,169 -0.3%
8,039 -0.3%
1.6%
Total
(2,421,179) 100.0%
(2,401,626) 100.0%
0.8%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately /
Eliminations: Sales between segments
On December 31, 2016, the value of expenses with Company sales was BRL 2,421.2 million,
compared to BRL 2,401.6 million on December 31, 2015, representing an increase of BRL 19.6
million or 0.8%. The increase in expenses with sales of the physical retail segment amounted to
8.3%, i.e. BRL 114.2 million, represented especially by the increase of expenses related to
inflation indexes, such as salaries and occupation costs (rent, electric power, etc.). In the e-
commerce segment, sales expenses were reduced in 9.1%, i.e. in BRL 94.5 million, caused by
the reduction of BRL 140.8 million in distribution expenses on december 31, 2016 compared to
the previous year. This reduction occurred due to the substitution of the hiring of third-party
transportation services by the Company with services performed by its own transportation
companies. There is no relevant vertical variation.
General and administrative expenses
On December 31, 2016, the value of the Company's general and administrative expenses was
BRL 798.1 million, compared to BRL 751.2 million on December 31, 2015, representing an
increase of BRL 46.9 million or 6.2%. The increase of general and administrative expenses of
the physical retail segment amounted to 14.5%, i.e. BRL 53.9 million, as a result of the increase
of depreciation and amortization expenses in 16.1%, i.e. BRL 46.7 million, resulting from the
increase in the Company's fixed assets by opening stores of the Company's expansion program.
The vertical variation related to the net revenue of depreciation and amortization expenses was
of 3.0%, i.e. BRL 529.4 million, in 2015, and 3.5%, i.e. BRL 628.0 million, in 2016, due to the
aforementioned factors. The increase in general and administrative expenses was partially
compensated by the reduction in 1.9%, i.e. BRL 7.0 million, in e-commerce, as a result of the
reduction of other general and administrative expenses of 75.2%, i.e. BRL 46.0 million, related
especially to judicial compensation and lawyer fees on December 31, 2016 compared to the
previous year. This reduction occurred as an effect of the client approximation program, in
which the Company, through multiple channels, meets the needs of its public, thus reducing
lawsuits filed against the Company by clients that were not satisfied with the service provided.
2016 A.V.%
2015 A.V.%
A.H.%
General and administrative expenses –
Physical commerce
(425,286) 53.3%
(371,421) 49.4%
14.5%
General and administrative expenses – E-
commerce (372,750) 46.7%
(379,781) 50.6%
-1.9%
Others/Eliminations*
(48) 0.0%
(46) 0.0%
4.3%
Total
(798,084) 100.0%
(751,248) 100.0%
6.2%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately /
Eliminations: Sales between segments
28
Other expenses
On December 31, 2016, the value of the Company's other expenses was BRL 142.1 million,
compared to BRL 38.9 million on December 31, 2015, representing an increase of BRL 103.2
million or 265.6%. The main effect registered in other expenses is related to the liquid gain of
BRL 99.1 million in the alienation of the companies Ingresso.com and B2W Viagens in 2015.
In 2016, there are no relevant non-recurring gains, and other expenses registered in this line did
not present relevant variations. The main vertical variation in relation to the net revenue
occurred with the sale of companies, which represented 0.5%.
Financial Income
On December 31, 2016, the balance of the financial income was negative at BRL 2,153.7
million, compared to negative BRL 1,160.0 million on December 31, 2015, representing an
increase of BRL 493.7 million or 29.7%. This increase was a result of the improvement of the
Company's net debt balance, which went from BRL 2,836.5 million on December 31, 2015, to
BRL 5,198.4 million on December 31, 2016, with a consequent increase in the interest charges
provisioned by the Company. The accumulated CDI between the years of 2015 and 2016
increased in approximately 5.7%. Beyond this reason, the increase in financial income is linked
mainly to the total debt.
The variation of net debt, when compared to the year ending on December 31, 2015, occurred
due to the growth of service of debt, resulting by the increased leverage, higher bank spread and
increased CDI.
Besides, the increased need for working capital in the year was affected, especially, by the
larger volume of net payments made to suppliers, of BRL 1,444.4 million, and investments of
BRL 1,044.3 million, focusing on expansion, technology and operations in physical stores, as
well as the focus on fixed assets and the development of websites and systems at B2W Digital,
affecting the variation of net debt in the year. The main vertical variation related to the net
revenue occurred with interest, monetary variation of loans and financing and swap operations
net of interest and monetary variation on securities and bonds, which went from 4.9%, i.e. BRL
885.4 million, in 2015 to 6.4%, i.e. BRL 1,154.9 million in 2016. This variation occurred
according to the factors described above.
2016 A.V.%
2015 A.V.%
A.H.%
Other expenses - Physical Commerce
(93,177) 65.6%
(84,039) 216.2%
10.9%
Other expenses - E-commerce
(35,325) 24.9%
41,897 -107.8%
-184.3%
Others/Eliminations*
(13,587) 9.6%
3,273 -8.4%
-515.1%
Total
(142,089) 100.0%
(38,869) 100.0%
265.6%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately / Eliminations: Other transactions between segments
2016 A.V.%
2015 A.V.%
A.H.%
Financial Income - Physical Commerce
(1,119,388) 52.0%
(904,740) 54.5%
23.7%
Financial Income - E-commerce
(1,084,278) 50.3%
(818,323) 49.3%
32.5%
Others/Eliminations*
49,976 -2.3%
63,064 -3.8%
-20.8%
Total
(2,153,690) 100.0%
(1,659,999) 100.0%
29.7%
* Others: FIDC and Other activities that did not meet the minimum quantitative and qualitative parameters for presentation
separately / Eliminations: Sales between segments
29
Income tax and social contribution
2016 A.V.%
2015 A.V.%
A.H.%
Income tax and social contribution - Physical
commerce
(83,496) -58.3%
(176,462) -83.9%
-52.7%
Income tax and social contribution - E-commerce
237,298 165.6%
(12,246) -5.8%
-2037.8%
Others/Eliminations*
(10,502) -7.3%
(21,562) -10.3%
-51.3%
Total
143,300 100.0%
(210,270) 100.0%
-168.2%
* Others: Other activities that did not meet the minimum quantitative and qualitative parameters for presentation separately /
Eliminations: Sales between segments
On December 31, 2016, the value of the Company's Income Tax and Social Contribution was
positive at BRL 143.3 million, compared to negative BRL 210.3 million on December 31, 2015,
representing an increase of BRL 353.6 million or negative 168.2%. The positive balance of
income tax and social contribution in 2016 is mainly due to the loss of the year prior to income
tax and social contribution of BRL 115.5 million and due to the recognition of extemporaneous
tax credits corresponding to losses of controlled companies abroad to the amount of BRL 75.7
million. In 2015, the negative balance is due especially to the profit before income tax and
social contribution of BRL 274.7 million and the reversion of the deferred tax asset at B2W to
the amount of BRL 143.8 million.
Net profit
As a result of the abovementioned factors, the net profit of the year ending on December 31,
2016 was of BRL 27.8 million, compared to the net profit of BRL 64.5 million registered in the
year ending on December 31, 2015, which corresponds to a reduction of 56.8%. In general, the
most relevant factor for the reduced profits in 2016 was the worsening of the financial income,
which in 2016 was negative at BRL 2,153.7 million, compared to negative BRL 1,660.0 million
on December 31, 2015, representing a worsening of BRL 493.7 million or 29.7%.
LOJAS AMERICANAS S.A.
BALANCE SHEETS ON DECEMBER 31, 2017, 2016 AND 2015.
In thousands of Brazilian Reais
Consolidated
2017
AV%
2016
AV%
A.H.
2017 x
2016 %
2015
AV%
A.H.
2016 x
2015 %
ASSET
CURRENT
Cash and cash equivalents
3,567,545
13.0
523,436
2.5
581.6
1,326,147
6.5
(60.5)
Marketable securities
6,517,532
23.7
3,838,947
18.5
69.8
4,526,222
22.1
(15.2)
Accounts Receivable from
Clients
1,977,862
7.2
2,135,944
10.3
(7.4)
2,139,820
10.4
(0.2)
Inventories
3,608,451
13.1
3,688,057
17.7
(2.2)
3,445,605
16.8
7.0
Other Current Assets
1,933,358
7.0
1,494,332
7.2
29.4
809,549
4.0
84.6
NON-CURRENT
17,604,748
64.0
11,680,716
56.2
50.7
12,247,343
59.8
(4.6)
Non-current receivables:
Other non-current assets
2,899,246
10.5
2,572,290
12.4
12.7
2,111,511
10.3
21.8
2,899,246
10.5
2,572,290
12.4
12.7
2,111,511
10.3
21.8
Fixed assets
3,283,046
11.9
2,888,341
13.9
13.7
2,716,759
13.2
6.3
30
Intangible
3,749,345
13.6
3,634,644
17.5
3.2
3,418,844
16.7
6.3
Total non-current assets
9,931,637
36.0
9,095,275
43.8
9.2
8,247,114
40.2
10.3
Total assets
27,536,385
100.0
20,775,991
100.0
32.5
20,494,457
100.0
1.4
Balance sheets on December 31, 2017 and 2016 – Comparison
LOJAS AMERICANAS S.A.
BALANCE SHEETS ON DECEMBER 31, 2017, 2016
AND 2015.
In thousands of Brazilian Reais
Consolidated
2017
AV%
2016
AV%
A.H. 2017
x 2016 % 2015
AV%
A.H.
2016 x
2015 %
LIABILITY
CURRENT
Suppliers
4,466,623
16.2
4,546,482
21.9
(1,8)
5,316,533
25.9
(14.5)
Loans and financing
3,096,484
11.2
1,097,109
5.3
182.2
856,107
4.2
28.2
Debentures
1,048,905
3.8
662,677
3.2
63.2
360.990
1.8
83.6
Other current liabilities
1,043,075
3.8
1,166,543
5.6
(10.6)
1,077,983
5.3
8.2
9,655,087
35.0
7,472,811
36.0
29.2
7,611,613
37.1
(1.8)
NON-CURRENT
LIABILITIES
Long-term liabilities:
Loans and financing
8,124,317
29.5
7,155,318
34.4
13.5
6,440,398
31.4
11.1
Debentures
3,355,053
12.2
2,693,414
13.0
24.6
3,073,825
15.0
(12.4)
Other non-current liabilities
295,667
1.1
299,316
1.4
(1.2)
425,016
2.1
(29.6)
11,775,037
42.8
10,148,048
48.8
16.0
9,939,239
48.5
2.1
NET EQUITY
Capital
3,926,518
14.3
1,441,673
6.9
172.4
898,655
4.4
60.4
Retained earnings
605,177
2.2
487,549
2.3
24.1
1,005,699
4.9
(51.5)
Others
89,989
0.3
61,234
0.3
47.0
(162,010)
(0.8)
(137.8)
4,621,684
16.8
1,990,456
9.6
132.2
1,742,344
8.5
14.2
Interest of Non-Controlling
Shareholders
1,484,577
5.4
1,164,676
5.6
27.5
1,201,261
5.9
(3.0)
Total net equity
6,106,261
22.2
3,155,132
15.2
93.5
2,943,605
14.4
7.2
Total of Liabilities and
Shareholders’ Equity
27,536,385
100.0
20,775,991
100.0
32.5
20,494,457
100.0
1.4
31
Current Assets
Cash and cash equivalents and Marketable securities: On December 31, 2017, the cash and cash
equivalents plus marketable securities balance reached BRL 10,085.1 million, compared to BRL
4,362.4 million on December 31, 2016, representing an increase of BRL 5722.7 million or
131.2%. The variation of Company available funds occurred, basically, due to the acquisition of
BRL 2,312.2 million from the public offering of shares, BRL 1,500.0 million by the placement
of the 11th bond issuance, BRL 900.0 million by the placement of promissory notes and
acquisitions of working capital loans.
Accounts Receivable from Clients: The balance of this item reached, on December 31, 2017, the
total amount of BRL 1,977.9 million, compared to BRL 2,135.9 million on December 31, 2016,
representing a reduction of BRL 158.0 million or 7.4%. The balance reduction is basically
related to the reduction of advances with FIDC in BRL 442.0 million and to the increase of
sales paid with credit cards to the amount of BRL 254.8 million.
Inventories: The balance of this item reached, on December 31, 2017, the total amount of BRL
3,608.5 million, compared to BRL 3,668.1 million on December 31, 2016, representing a
reduction of BRL 59.6 million or 2.2%. Physical retail demonstrated an increase of BRL 254.4
million. The increase is mainly related to the expansion of the Company's physical trade
operations. The number of stores on December 31, 2017 was 1,306, an evolution of 13.7%,
when compared to the 1,127 stores existing on December 31, 2016. E-commerce demonstrated
a reduction of BRL 314.0 million, which was based on the increase of Marketplace operations.
Non-current assets
Fixed: The balance of this item reached, on December 31, 2017, the total amount of BRL
3,283.0 million, compared to BRL 2,888.3 million on December 31, 2016, representing a
variation of BRL 394.7 million or 13.7%. The variation refers basically to the investment of
BRL 827.9 million made in 2017, focusing especially on newly opened stores, and to the
depreciation of the year of BRL 393.3 million.
Intangible: The balance of this item reached, on December 31, 2017, the total amount of BRL
3,749.3 million, compared to BRL 3,634.6 million on December 31, 2016, representing a
variation of BRL 114.7 million or 3.2%. The investments amounted to BRL 491.9 million and
were mostly made in the development of websites and systems for the controlled company B2W
Digital. The amortization of the period amounted to BRL 376.3 million.
Current liabilities
Suppliers: The balance of this item reached, on December 31, 2017, the total amount of BRL
4,546.5 million, compared to BRL 4,466.6 million on December 31, 2016, representing a
reduction of BRL 79.9 million or 1.8%. The reduction is related to the variation of stock in said
period.
Non-current liabilities
Loans and financing (Short and long-term): The balance of this item reached, on December 31,
2017, the total amount of BRL 11,220.8 million, compared to BRL 8,252.4 million on
December 31, 2016, representing a positive variation of BRL 2,968.4 million or 36.0%. The
increase was especially propelled by the acquisition of new loans of BRL 3,549.2 million and
increased interests of BRL 1,107.2 million. On the other hand, the principal was liquidated at
BRL 827.8 million and interests were paid in up to BRL 862.8 million.
32
Debentures (Short and long-term): The balance of this item reached, on December 31, 2017, the
total amount of BRL 4,404.0 million, compared to BRL 3,356.1 million on December 31, 2016,
representing a positive variation of BRL 1,047.9 million or 31.2%. The increase was especially
propelled by the placement of the 11th issuance to the amount of BRL 1,500.0 million and
increased interests of BRL 462.2 million. On the other hand, the principal was liquidated at
BRL 311.6 million, convertible bonds were capitalized to the amount of BRL 129.2 million and
interests were paid in up to BRL 471.0 million.
Net equity
Capital: The balance of this item reached, on December 31, 2017, the total amount of BRL
3,926.5 million, compared to BRL 1,441.7 million on December 31, 2016, representing an
increase of BRL 2,484.8 million or 172.4%. The main variations in the period occurred due to
the public share offering to the amount of BRL 2,312.2 million and bond conversion of BRL
129.2 million.
Retained earnings: The balance of this item reached, on December 31, 2016, the total amount of
BRL 605.2 million, compared to BRL 487.5 million on December 31, 2016, representing an
increase of BRL 117.7 million or 24.1%. The variation in the item refers to the portion of profits
destined to be retained and to the reserve for new enterprises.
Interest of Non-Controlling Shareholders: The balance of this item reached, on December 31,
2016, the total amount of BRL 1,484.6 million, compared to BRL 1,164.7 million on December
31, 2016, representing an increase of BRL 319.9 million or 27.5%. The variation results from
the interest of non-controlling shareholders in the capital increase at the controlled company
B2W, to the amount of BRL 437.9 million, and to the loss of the year, of the same controlled
company, to the amount of BRL 156.4 million.
Balance sheets on December 31, 2016 and 2015 – Comparison
Current Assets
Cash and cash equivalents and Marketable securities: On December 31, 2016, the cash and cash
equivalents plus marketable securities balance reached BRL 4,362.4 million, compared to BRL
5,852.4 million on December 31, 2015, representing a reduction of BRL 1,490.0 million or
25.5%. The variation of Company availabilities occurred, basically, due to the investment of the
Company in its expansion plan, especially through the larger volume of net payments made to
suppliers, of BRL 1,444.4 million, and investments of BRL 1,044.3 million, focusing on
expansion, technology and operations in physical stores, as well as the focus on fixed assets and
the development of websites and systems.
Accounts Receivable from Clients: The balance of this item reached, on December 31, 2016, the
total amount of BRL 2,135.9 million, compared to BRL 2,139.8 million on December 31, 2015,
representing a reduction of BRL 3.9 million or 0.2%. The reduction of the balance is related to
the increased provision for doubtful debtors of BRL 5.0 million.
Inventories: The balance of this item reached, on December 31, 2016, the total amount of BRL
3,688.1 million, compared to BRL 3,445.6 million on December 31, 2015, representing an
increase of BRL 242.5 million or 7.0%. The increase is mainly related to the expansion of the
Company's physical trade operations. The number of stores on December 31, 2016 was 1,127,
an evolution of 8.3%, when compared to the 1,041 stores existing on December 31, 2015.
33
Non-current assets
Fixed: The balance of this item reached, on December 31, 2016, the total amount of BRL
2,888.3 million, compared to BRL 2,716.8 million on December 31, 2015, representing a
variation of BRL 171.5 million or 6.3%. The variation refers basically to the investment of BRL
493.6 million made in 2016, focusing especially on newly opened stores, and to the depreciation
of the year of BRL 306.8 million.
Intangible: The balance of this item reached, on December 31, 2016, the total amount of BRL
3,634.6 million, compared to BRL 3,418.8 million on December 31, 2015, representing a
variation of BRL 215.8 million or 6.3%. The investments amounted to BRL 550.7 million and
were mostly made in the development of websites and systems for the controlled company B2W
Digital. The amortization of the year amounted to BRL 330.0 million.
Current liabilities
Suppliers: The balance of this item reached, on December 31, 2016, the total amount of BRL
4,546.5 million, compared to BRL 5,316.5 million on December 31, 2015, representing a
reduction of BRL 770.1 million or 14.5%. The variation occurred due to the larger volume of
advanced payments made to suppliers.
Non-current liabilities
Loans and financing (Short and long-term): The balance of this item reached, on December 31,
2016, the total amount of BRL 8,252.4 million, compared to BRL 7,296.5 million on December
31, 2015, representing a positive variation of BRL 955.9 million or 13.10%. The increase was
especially propelled by the acquisition of new loans of BRL 1,423.7 million and increased
interests of BRL 1,139.6 million. On the other hand, the principal was liquidated at BRL 802.9
million and interests were paid in up to BRL 798.3 million.
Debentures (Short and long-term): The balance of this item reached, on December 31, 2016, the
total amount of BRL 3,356.1 million, compared to BRL 3,434.8 million on December 31, 2015,
representing a reduction of BRL 78.7 million or 2.3%. The reduction was propelled by the
payment of the principal of BRL 194.7 million, by the payment of interests of BRL 526.8
million and by the conversion of bonds into stock of BRL 161.6 million. On the other hand, new
bonds were issued at BRL 300.0 million and the interests increased at BRL 506.3 million.
Net equity
Capital: The balance of this item reached, on December 31, 2016, the total amount of BRL
1,441.7 million, compared to BRL 898.7 million on December 31, 2015, representing an
increase of BRL 543.0 million or 60.4%. The main variations in the period occurred due to the
public share offering to the amount of BRL 346.4 million and bond conversion of BRL 161.6
million.
Retained earnings: The balance of this item reached, on December 31, 2016, the total amount of
BRL 487.5 million, compared to BRL 1,005.7 million on December 31, 2015, representing a
reduction of BRL 518.1 million or 51.5%. The variation of this item occurred especially due to
the allocation of reserves in the period of BRL 346.4 million and due to the cancellation of
treasury stock at BRL 263.4 million.
34
Interest of Non-Controlling Shareholders: The balance of this item reached, on December 31,
2016, the total amount of BRL 1,164.7 million, compared to BRL 1,201.3 million on December
31, 2015, representing a reduction of BRL 36.6 million or 3.0%. There were no relevant
variations in this period.
CASH FLOW
The table below summarizes the Company's Consolidated Cash Flow for the years indicated
therein:
LOJAS AMERICANAS S.A.
CASH FLOW STATEMENTS – INDIRECT METHOD
YEARS ENDING ON DECEMBER 31, 2017, 2016 AND 2015
In thousands of Brazilian Reais
Generated net cash (invested) 2017 2016 2015
A.H.
2017 x
2016%
A.H.
2016 x
2015
%
In operational activities
437,047 (1,198,963) 710,027 -136.5 -268.9
In investment activities (3,998,372) (356,998) (2,342,588) 1,020.0 -84.8
In investment activities 6,605,434 753,250 2,006,889 776.9 -62.5
Increase (reduction) of cash and
cash equivalents
3,044,109 (802,711) 374,328 -479.2 -314.4
Operational activities
When comparing December 31, 2017 with December 31, 2016, the invested cash of BRL
1,199.0 million went to a generated cash of BRL 437.0 million, representing an increase in cash
generation of BRL 1,636.0 million, or 136.5%. The increase in cash generation of Company
operational activities was propelled by variations resulting from the reduction of financing of
company inventory on BRL 415.6 million, extending financing with suppliers in BRL 627.7
million, and by the reduction of the level of taxes recoverable at BRL 529.4 million.
When comparing December 31, 2016 with December 31, 2015, the generated cash of BRL
710.0 million went to an invested cash of BRL 1199.0 million, representing a cash variation of
BRL 1,909.0 million, or 268.9%. The variation is explained by the Company's strategy of
reducing the financing level with suppliers (by reducing the average payment term) which, due
to the effects of the financial crisis, require cash to maintain the supply of goods to stores, thus
affecting the operational cash in a negative capacity at BRL 1,444.4 million.
Investment activities
When comparing December 31, 2017 with December 31, 2016, the invested cash of BRL 357.0
million went to BRL 3998.4 million, representing a cash investment increase of BRL 3,641.4
million, or 1,020.0%. The variation is basically explained by the increase of BRL 2,678.6
million from net investments in marketable securities resulting from loan acquisition funds and
the public offering of shares, which were not invested during the year, as well as the investment
in fixed and intangible assets, to the amounts of BRL 827.9 million and BRL 491.9 million,
respectively.
When comparing December 31, 2016 with December 31, 2015, the invested cash of BRL
2342.6 million went to BRL 357.0 million, representing a cash investment reduction of BRL
1,985.6 million, or 84.8%. The variation is explained by the increase of net redemptions of
35
financial investments in the period to the amount of BRL 1,589.1 million used for the advanced
payment to suppliers, who required cash to maintain the supply of goods due to the effects of
the crisis in the operations of Company suppliers. There was also a reduction in fixed asset
investments of BRL 212.3 million and in intangible assets of BRL 276.3 million, propelled by
the reduction of investments in the B2W digital platform.
Financing activities
When comparing December 31, 2017 with December 31, 2016, the generated cash of BRL
753.3 million went to BRL 6,605.4 million, representing a cash generation increase of BRL
5,852.1 million, or 776.9%. The variation occurred due to the increase in the net acquisition of
loans and financing of BRL 2,721.4 million, through the placement of bonds, net of settlements,
to the amount of BRL 1,188.4 million, public stock offering to the amount of BRL 2,312.2
million, capital contribution of non-controllers at the controlled company of B2W to the amount
of BRL 473.9 million and payment of dividends to the amount of BRL 115.0 million.
When comparing December 31, 2016 with December 31, 2015, the generated cash of BRL
2,006.9 million went to BRL 753.3 million, representing a cash generation reduction of BRL
1253.6 million, or 62.5%. The variation was propelled by the reduction of Company investment
acquisitions in BRL 2,102.2 million and mitigated by the reduction of the payment of loan
principal in BRL 463.1 million and by the issuance of bonds of BRL 300.0 million. The
Company's cash recovery in the period was performed by redeeming marketable securities, as
mentioned in the investment activities. However, our net debt increased due to non-cash effects,
i.e. interest on recognized and unpaid loans, resulting from term renegotiations with financial
institutions, considering the macroeconomic scenario and the difficulty in 2016 of entering new
debts, and the reduction of cash and cash equivalents and marketable securities as previously
described.
10.2 – Operational and financial income
a) Company operation income, especially:
(i) description of any important revenue components;
Net Revenue
2017 A.V.
2016 A.V.
A.H.
Physical Commerce
11,000,183 60.7%
10,372,345 54.7%
6.1%
E-commerce
7,120,777 39.3%
8,601,311 45.3%
-17.2%
2015 A.V.
2014 A.V.
A.H.
Physical Commerce
9,746,712 52.0%
8,737,797 52.3%
11.5%
E-commerce
9,013,779 48.0%
7,963,835 47.7%
13.2%
In physical retail, the Company is dedicated to trading consumer products through 1,306 stores
in the fiscal year ending on 2017, and 1,127, 1,041 physical stores in the years ending on 2016
and 2015, respectively.
36
In 2017, the growth of the Marketplace allowed B2W Digital to accelerate the change of its
business model, from e-commerce (Direct Sales/1P) to the hybrid digital platform model
(combination of Direct Sales/1P, Marketplace/3P and Services). The year of 2017 was notable
due to the transition of the Strategic Plan of business model transformation (2017-2019) with
the migration of items/product lines from 1P to 3P. In 2017, an important transition year for the
Company, B2W Digital presented growth of 3.1% in the Total GMV (indicator that considers
all sales transactions in the platform, including direct sales of own and third-party inventory at
the Marketplace platform). This growth was especially propelled by the Marketplace, which
grew 108.0% in the period.
(ii) factors that substantially affected operational results.
In 2017, the main macroeconomic variables presented results in line with the principle of
Brazilian economy growth recovery. The country's GDP (Gross Domestic Product), according
to data disclosed by the IBGE (Brazilian Institute of Geography and Statistics) presented
progress of 1.0%, with the Brazilian company growing again after two years of recession. With
this scenario, retail presented progress in the sales volume of 2.0% in 2017, the best result of the
historical series disclosed by the IBGE since December 2014. Also, the inflation measured by
the IPCA (National Broad Consumer Price Index) registered an accumulated rate of 2.95%, the
lowest annual variation since 1998, presenting the first result below the threshold established by
the target regime of the National Monetary Council – current since 1999.
In spite of the challenging recovery scenario and the low inflation levels, the Company believes
that the combination of the broad product mix, low concentration of sales in the multiple
categories offered within the stores, expansion potential and multiple and complementary model
generate market gain opportunities. During 2017, the Lojas Americanas controlling company
presented growth of 6.1% in net revenue, 4.5% in net revenue in the "same stores" concept and
3.6% in Adjusted EBITDA, reaching 20% of the Adjusted EBITDA margin in the year. The
results achieved demonstrate the resilience of this business model.
The year of 2016 was particularly complex and the balance of sales and profitability was a great
challenge. With the reduction of the economic pace (GDP reduction forecast at 4.55%), higher
added-value goods did not have the same emphasis as in previous years. However, through the
diversified goods sale strategy, the Company achieved growth with lower-value goods, such as
hygiene, beauty and food products. The "Family Consumption Intention – ICF" published by
the National Goods, Service and Tourism Trade Confederation (CNC) was lower in all months
of 2016 compared to the same period in 2015, with the index remaining over the year below the
indifference zone, which indicates a perception of dissatisfaction with the current situation. The
Brazilian tax scenario was sensibly altered at the start of the year, especially in relation to the
ICMS through measures such as Covenant 92/2015, which altered the tax substitution of
multiple goods negotiated by the Company, along with the elevation of the tax rate in 19 states
and the Constitutional Amendment 87/2015, which established the progressive payment
transition, being no longer fully collected at the state of origin of the goods and now being paid
in part both at the origin and at the destination. In the last months of 2016, signs of
improvement began to appear in the national economic scenario, such as the reduction of the
interest rate (SELIC) and the approval of measures that seek to control public spending, but
their effects may only be perceived over the following year. In spite of the challenging situation,
the Company presented growth of 3.3% in gross revenue and opened 93 physical retail stores in
2016, presenting a growth of 7.6% in gross revenue. In e-commerce, there was an acceleration
of the migration of direct sales to the Marketplace model, which is a sales service commissioned
to third parties through the Company's business platform.
The year of 2015 was marked by the natural unfolding of the political, social and economic
crises, which had a negative effect on the "Family Consumption Intention – ICF", which was
37
reduced in 36.1% between January and December of 2015. In this context, the competition
became much stronger, with all players seeking the same few clients. In other words, the year
ended a bit more difficult than it started, exceeding the less optimistic forecasts for the year. We
opened 92 stores and presented a growth of 11.9% in gross revenue.
The GDP is formed by multiplo macroeconomic factors that define the level of activity of the
economy. In general, the Company presents a low correlation with the GDP variation over the
years. In periods in which the economy is booming, the Company benefits from the increased
consumption level, but less than specialized commerce, due to the generalistic characteristics of
the Company, but in periods in which the economy is slower, the Company, even when affected
in a negative manner, is less affected than specialized commerce.
The table below indicates the evolution of the most relevant macroeconomic indexes for
Company activities in the fiscal years of 2017, 2016 and 2015:
Fiscal years ending on 12/31
2017 2016 2015
GDP Growth (%) (1) 1.0 (4.6) (3.8)
Inflation (IGP-M) (%) (2) (0.52) 7.2 10.5
Inflation (IPCA) (%) (3) 2.95 6.3 10.7
CDI (%) (4) 9.93 14.0 13.2
TJLP (%)(5) 7.1 7.5 6.3
SELIC Rate (%)(6) 7.0 14.1 13.4
Valuation (devaluation of the Real
before the Dollar)
1.5 (16.5) 47.0
Exchange rate (closing) BRL for
US$1,00(7)
3.3 3.3 3.9
Average exchange rate BRL for
US$1,00(8)
3.2 3.5 3.3
(1) Source: IBGE.
(2) General Market Price Index, as disclosed by FGV.
(3) Broad Consumer Price Index, as disclosed by the IBGE.
(4) Average rate of the interbank deposit certificates in Brazil.
(5) Long-term Interest Rate ("TJLP") required by the National Economic and Social Development Bank ("BNDES") in its financing in this modality.
(6) Basic interest rate, as established and disclosed by the Brazilian Central Bank.
(7) Exchange rate (sale) on the last day of each year, as disclosed by the Brazilian Central Bank.
(8) Average of the exchange rate (sale) on the last day of each month, as disclosed by the Brazilian Central Bank.
b) variations of revenues attributable to modifications of prices, exchange rates, inflation,
volume alterations and introduction of new products and services
The Company's revenue is directly affected by alterations to the sales volume, modifications of
prices and the introduction of new products in its portfolio. As a retailer, the Company transmits
cost variations (positive or negative) to its clients, with this transmission affecting its sales
volume. Besides, tax and legislation changes may affect the revenue and cost metrics of the
Company. Exchange variations directly affect the prices of the imported products.
c) impact of inflation, price variations of the main inputs and products, exchange and interest
rate on the operational and financial incomes of the Company, when relevant.
38
A significant inflation increase may affect the operational costs and expenses of the Company.
Substantially, all cash and operational expenses of the Company are made in Reais and tend to
increase according to the inflation, because suppliers of goods and service providers tend to
elevate prices to reflect losses due to inflation.
In regards to exchange variation, the Company continues to restate its commitment with the
conservative cash investment policy, manifested by the use of hedge instruments in foreign
currency to face any exchange fluctuations, be it in relation to financial liabilities, be it for the
total cash position. These instruments offset exchange rate risk by transforming the cost of debt
to local currency and local interest rates (in CDI percentage).
In regards to the interest rates, the elevation of interest rates may affect the cost of acquisition of
loans by the Company, as well as the cost of indebtedness, so as to cause an increase of
financial expenses. This increase, in turn, may negatively affect the payment capacity of
obligations assumed by the Company, to the extent that it shall reduce its cash availability.
Mismatches between indexes hired in assets versus liabilities and/or high volatilities in interest
rates cause financial losses for the Company.
10.3 – Relevant Effects in DFs
a) introduction or alienation of the operational segment
There was no introduction or alienation of operational segments.
b) establishment, acquisition or alienation of company interest
i) On May 26, 2015, B2W had 91.26% interest in B2W Viagens e Turismo Ltda. ("B2W
Viagens") and its controlled company, 8M Participações, had the other 8.74%. On that date, the
controlled companies B2W and 8M Participações entered a sales contract of 100% of their
interest in B2W Viagens to CVC Brasil Operadora e Agência de Viagens S.A. ("CVC"). Said
contract also provides the license for the buyer to use the brand "Submarino Viagens". The price
of acquisition shall be determined based on the number of visits originated from B2W websites
within the term of 10 years onward, with added positive working capital deducted from the
debts of B2W Viagens on the date, limited to BRL 80 million corrected by the SELIC rate. If
the limit value is reached in less than 10 years, CVC has the option of maintaining the right to
use the brand Submarino Viagens through a payment per number of visits to the website.
Likewise, in case the limit value is not reached within 10 years, B2W has the option of
extending the contract until this limit is fully reached.
ii) On July 1, 2015, the indirect controlled company 8M Participações acquired all the shares of
the technology company Sieve Group Brasil Tecnologia S.A. ("Sieve Tecnologia"). A down
payment was made upon the closing of the deal and a portion was paid in installments of,
approximately, BRL 131.000, plus an additional contingent price, the payment of which is
conditioned to the achievement of goals, up to the limit of BRL 7.000, to be paid, when owed,
on the fifth anniversary of the date on which the deal was closed.
iii) On September 24, 2015, B2W entered, with its controlled company 8M Participações, a
Membership Interest Purchase Agreement with Fandango Media, LLC ("Fandango") for the
alienation of 100% of the share capital of its controlled company Ingresso.com Ltda.
("Ingresso.com"). The total price paid by Fandango for the acquisition of 100% of the
Ingresso.com membership interests was BRL 280 million. The transaction was approved by the
39
CADE (Administrative Board for Economic Protection) on October 26, 2015 and concluded on
November 16, 2015.
The alienation of Ingresso.com has the purpose of focusing B2W on the e-commerce operations,
on the Marketplace, on digital services and consumer financing, in line with its strategic plan.
iv) On the the Extraordinary Shareholders’ Meeting held by B2W, on 31 May 2016, a capital
increase of BRL 823.000 was approved, through the private issuance of 82,300,000 registered
common shares at the price of BRL 10.00 per share. The capital increase was approved at a
meeting of the Board of Directors of the subsidiary, held on 1 August 2016.
The Company subscribed the total of 69,789,183 shares, with 45,766,785 that corresponded to
the Company’s proportional interest in the controlled company’s share capital, on the date of
notice to the shareholders of the capital increase, with added shares of non-controlling
shareholders that did not exercise their right of first refusal within the legal term to the amount
of 24,022,398 shares. With the subscription, the Company’s interest in the subsidiary's capital
stock, on the date of homologation, became 62.7%.
c) unusual events or operations
B2W Controlled Company
On October 31, 2016, 8M Participações had a portion of its share capital separated, with interest
in the following companies being transferred to BFF Logística e Distribuição Ltda.:
• 100% - Click Rodo Entregas Ltda.
• 100% - Direct Express Logística Integrada S/A
On October 21, 2016, the alteration of the Company name "Ideais Tecnologia Ltda." to "BIT
Services Tecnologia e Inovação Ltda." was approved.
On December 31, 2016, the merger of BIT Services Tecnologia e Inovação Ltda. with the
companies Tarkena Consultoria, Licenciamento e Desenvolvimento de Sistemas de Informática
Ltda., 8M Participações Ltda. and Minimália Comércio Eletrônico de Roupas e Estampas Ltda.
was approved.
During a member's meeting on December 31, 2016, the merger of the companies Tarkena
Consultoria, Licenciamento e Desenvolvimento de Sistemas de Informática Ltda. with the
companies Vectis Participações Ltda. and Smart E-Commerce do Brasil Tecnologia Ltda. was
approved. On the same date, the merger of 8M Participações Ltda. with Sieve Group Brasil
Tecnologia S.A., B2W Services Ltda., Myboo Soluções em Tecnologia da Computação Ltda.,
Myboo Prestação de Serviços de Tecnologia e Informática Ltda., R2L Serviços de Internet
Ltda., Site Blindado S.A., Skyhub Sistemas de Integração Ltda., Sieve Serviços de Tecnologia
da Informação S.A., PC Blindado S.A. and Trustsign Certificadora Digital & Soluções de
Segurança de Informação Ltda. was approved.
The Restructuring had the following purposes: (i) concentrating operations related to the
information technology segment, which were made by multiple controlled companies, in a
single company, individualizing the entire customer service structure and existing business
models related to each company and their brands, thus continuing to develop all activities that
were previously conducted without dissolving the continuity, (ii) segregating logistics activities
from information technology activities, thus (iii) simplifying the corporate structure, with
operational and structural optimization and synergy. In this sense, BIT Services Inovação e
40
Tecnologia Ltda. (formerly Ideais Tecnologia Ltda.) began to concentrate activities related to
the information technology segment, with the logistics activities being developed independently
by BFF Logística e Distribuição Ltda.
Controlled companies abroad
In the year ending on December 31, 2016, a result of the expectation of future generation of
operating income, the Company approved the capital contribution to the direct subsidiaries
abroad, Klanil and Louise, in the amounts of BRL 21,951.8 million and BRL 42,215.0 million,
respectively. As a consequence of the approval of the contribution, the tax credits on income
and social contribution on net income were recognized in that fiscal year, arising from tax losses
and negative basis of social contribution generated by these subsidiaries abroad, in the amount
of BRL 75,714.8 million.
10.4 – Practical Changes Cont./Caveats and Emphases
a) significant changes to accounting practices
There are no significant changes to accounting practices that affect the Company's consolidated
financial statements.
Starting on December 31, 2015, the Company began to maintain said receivable in its current
assets, with the counterpart being the Loans and Financing account in the non-current liabilities,
for FIDC quotas are redeemable within over one year. This reclassification did not affect the
consolidated financial statements or generate any effect to the income of the year or the
determination of financial covenants used for the compliance with restrictive clauses in loans
and financing.
b) significant effects of alterations on accounting practices
There are no significant changes to accounting practices that affect the Company's consolidated
financial statements.
c) caveats and emphases present in the auditor's report
The reports and opinions of the Company's independent auditors regarding the years ending on
2017, 2016 and 2015 presented no caveats or emphases.
10.5 – Critical Accounting Policies
The company's critical accounting policies:
Accounting estimates and judgments are continuously evaluated and are based on historical
experience and other factors, including expectations of future events, which are considered
reasonable for the circumstances.
Impairment of premium
The Group annually tests any impairment losses in premium in accordance with its accounting
policy.
41
For the B2W (publicly-held company), the premium calculated on the acquisition of the
investment was assessed for impairment, based on market price information, and did not
identify a need to record a provision for losses.
For the other direct and indirect subsidiaries, premium impairment was assessed based on future
profitability projections and expectations for a period of 10 years, using a nominal IPCA rate
plus 2% pa. and a 1% growth rate for perpetuity. The discount rate on future cash flows was
estimated at 10.3% p.a.
No impairment losses were recognized in the financial statements for the years ended 31
December 2017 and 2016.
Recovery of deferred income tax and social contribution
Significant management judgment is required to determine the amount of deferred tax assets
that can be recognized based on the expected maturity and level of future taxable income,
together with future tax planning strategies and profit-generating market assumptions.
Fair value of derivative and other financial instruments
The fair value of the financial instruments is based on market prices quoted at the balance sheet
date or, if they do not exist, in other instruments that allow them to be measured.
Provision for doubtful liquidation credits
This provision has a mitigated risk due to the accounts receivable being backed by operations
carried out with the main credit card operators. Management monitors losses based on historical
analysis. The provision is recorded in an amount considered sufficient to cover probable losses
on the realization of accounts receivable.
Provision for losses in inventories
The Company conducts cyclical inventories in the distribution centers and stores and provides
for the differences established during the year. At the end of each fiscal year, the provision is
offset against the losses recorded in the inventories. The remaining balance of the provision at
the end of the fiscal year is estimated based on the history of losses of goods in stores not
inventoried in the last months of the year. This provision is considered sufficient by
Management to cover probable losses in the realization of its inventories.
Useful lives of property, plant and equipment and intangible assets
The depreciation or amortization of property and equipment and intangible assets, based on an
appraisal report issued by independent experts, considers the best estimate of the use of these
assets throughout their operations. Management periodically assesses whether changes in the
economic scenario and/or in the consumer market may require revision of these estimates of
useful life.
Impairmant of non-financial assets
Impairment tests are carried out considering the projections of future results, calculated based
on internal and market assumptions, discounted to present value. These projections are
calculated considering Management’s best estimates that are reviewed when there is a change in
the economic scenario or in the consumer market.
42
Contingent assets and liabilities
The Company recorded provisions, which involve a considerable judgment by Management, for
tax, labor and civil risks that, as a result of a past event, it is probable that an outflow of
resources involving economic benefits will be required to settle the obligation and an estimate
amount of that obligation. The Company is subject to legal, civil and labor claims covering
matters arising from the normal course of its business activities.
The assessment of the probability of loss includes the valuation of available evidence, the
hierarchy of laws, available case law, the most recent court decisions and its relevance to the
legal system, as well as the valuation from independent lawyers. Provisions are reviewed and
adjusted taking into account changes in circumstances, such as the applicable limitation period,
conclusions of tax inspections or additional exposures identified on the basis of new matters or
court decisions. Actual results may differ from estimates.
Contingent assets are events that give rise to the possibility of entry of economic benefits to the
Company. When practically certain, based on legal opinions that support its realization, are
recognized in the year's income.
10.6 – Relevant Items that were not shown in the Financial Statements
a) the assets and liabilities held by the Company, directly or indirectly, that did not show
in the balance sheet (off-balance sheet items), such as:
(i) operational commercial leases, assets and liabilities;
Physical commerce has lease contracts for its commercial, logistics and administrative units.
Management analyzed these contracts in all periods and concluded that these are included in the
operating lease classification.
The lease agreements of commercial units (stores), for the most part, provide for a variable rent
expense, incident on sales, or a minimum amount, with the monthly obligation of paying the
higher of both, with a semiannual or annual calculation. The minimum values of the contracts
are adjusted annually, according to the variation of the main inflation indexes. The lease
contracts of the logistics and administrative areas have values fixed in contract, with annual
adjustments, according to variation of the main inflation indexes. Future commitments, in
thousands of reais, based on the stores existing on 31 December 2017, with a 4.01% increase
(IPCA projected for 2018) resulting from these lease agreements, are distributed as follows:
2018 2019 2020 2021 as of 2022
Rents 599,146 623,172 648,161 674,153 701,186
E-commerce maintains a Private Instrument of Rental Agreement for Commercial Property and
Other Covenants for all of its Distribution Centers.
B2W analyzed these contracts and concluded that these are included in the operating lease
classification. The future commitments arising from these leases of the CDs in use, in thousands
of reais, on 31 December 2017, are distributed as follows:
43
2018 2019 2020 2021 as of 2022
Rents 79,826 76,537 65,806 60,509 147,495
(ii) written-off receivable portfolios of which the entity held risks and responsibilities,
indicating the respective liabilities;
The Company clarifies that there are no written-off receivable portfolios of which the entity
held risks and responsibilities that were not shown in the Company's balance sheets of the years
ending on December 31, 2017, 2016 and 2015.
(iii) future purchase and sale contracts of products or services;
The Company clarifies that there are no future purchase and sale contracts of products and
services that were not shown in the Company's balance sheets of the years ending on December
31, 2017, 2016 and 2015.
(iv) unfinished construction contracts;
The Company clarifies that there is no unfinished construction that was not shown in the
Company's balance sheets of the years ending on December 31, 2017, 2016 and 2015.
(v) future financing earning contracts
The Company clarifies that there are no future financing earning contracts that were not shown
in the Company's balance sheets of the years ending on December 31, 2017, 2016 and 2015.
b) other items that were not shown in the financial statements
There are no other items that were not shown in the financial statements.
10.7 – Comments on Items that were not shown in the Financial Statements
a) how said items alter or may alter the revenues, expenses, operational income, financial
expenses or other items of the Company's financial statements
According to current accounting standards, the Company discloses in its financial statements all
relevant transactions of which it is a party, or on which it holds any risk due to corporate interest
or contract. There are no transactions or operations that were not shown in the financial
statements and that could significantly affect the Company.
b) nature and purpose of the operation
Not applicable
c) nature and amount of the obligations assumed and the rights generated in favor of the
Company as a result of the operation
Not applicable
44
10.8 – Business Plan
a) investments, including:
(i) quantitative and qualitative description of current and forecast investments;
On the fiscal years ending on December 31 of 2017, 2016 and 2015, the Company invested
BRL 1,319.8, BRL 1,044.3 million and BRL 1,532.9 million, respectively, with emphasis on the
expansion of its store chain and updating its technologic platform.
Investments (in millions of reais) 2017 A.V.%
2016 A.V.% A.H.% 2015 A.V.%
A.H.%
Facilities, furniture and utensils 159,368 12.1%
56,271 5.4%
183.2%
123,755 8.1%
-54.5%
Machines and computer equipment 260,569 19.7%
102,527 9.8%
154.1%
264,118 17.2%
-61.2%
Improvements to third-party property 404,769 30.7%
282,791 27.1%
43.1%
293,370 19.1%
-3.6%
Buildings - 0.0%
- 0.0%
0.0%
6,745 0.4%
0.0%
Premium in investment aquisitions - 0.0%
6,625 0.6%
100.0%
119,689 7.8%
-94.5%
Right to use software 177,614 13.5%
130,124 12.5%
36.5%
171,874 11.2%
-24.3%
Website and system development 311,061 23.6%
407,848 39.1%
-23.7%
531,400 34.7%
-23.3%
Others 6,406 0.5%
58,087 5.6%
-89.0%
21,931 1.4%
165.0%
Total 1,319,787 100.0% 1,044,273 100.0%
26.4%
1,532,882 100.0%
-31.9%
Store Chain Expansion
In the fiscal year ending on December 31, 2017, Lojas Americanas opened 195 new stores,
reaching 1,306 stores in 522 municipalities of all Brazilian states and the Federal District.
The table below details the profile of the stores opened in 2017:
Region FormatNumber of
Stores
1,127,
Traditional 14
Express 68
Convenience 6
Traditional 27
Express 10
Traditional 17
Express 10
Traditional 22
Express -
Traditional 11
Express 10
Traditional 91
Express 98
Convenience 6
Refurbishment/Deactivation (16)
1,306
As of 12/31/2016
As of 12/31/2017
Midwest
Southeast
Northeast
South
North
Total
45
The opening of stores during the period between December 31, 2016 and December 31, 2017 is
related to the Company's implementation of its expansion program "85 anos em 5 – Somos Mais
Brasil". The plan forecasts the opening of 800 new stores in Brazil, between 2015 and 2019,
always baed on economic feasibility studies containing multiple macroeconomic data,
including: population growth, income per capita and local economy evolution.
(ii) investment financing sources; and
To protect the investments forecast within its expansion program, the Company uses its own
funds and those of third parties.
(iii) relevant ongoing disinvestments and forecast disinvestments.
The Company informs that there is no forecast for ongoing relevant disinvestments in the fiscal
year of 2018.
b) already disclosed acquisitions of plants, equipment, patents or other assets that should
substantially influence the Company's productive capacity, provided that they have
already been disclosed
The acquisitions of membership interests with relevant effect for the Company are informed in
item 15.7 of this Reference Form.
c) new products and services, indicating:
Lojas Americanas has its Own Brands and recently intensified its strategy, creating an exclusive
area for the development and control of these brands in 2013. Currently, the Company has 15 of
its own brands in various areas, such as clothing, food, toys, domestic utilities and decoration.
(i) description of disclosed ongoing research;
There is no ongoing research that has already been disclosed by the Company.
(ii) total amounts spent by the Company in researches for the development of new
products or services;
No relevant amounts were spent by the Company in researches for the development of new
products or services.
(iii) already disclosed development projects; and
There are no projects under development that have already been disclosed by the Company.
(ii) total amounts spent by the Company in the development of new products or services.
No relevant amounts were spent by the Company in the development of new products or
services.
10.9 – Other Factors of Relevant Influence
All relevant information pertaining to this topic has been disclosed in the items above.
46
ANNEX II – CAPITAL BUDGETING
Base Date: 12.31.2017 (as per art. 25, paragraph 1, of CVM Instruction no. 480, of December 7, 2009)
The Company presents the capital budgeting for the year of 2018, as provided in art. 25,
paragraph 1, of CVM Instruction no. 480, of December 7, 2009.
Since these are business perspectives of Lojas Americanas that involve risks,
uncertainties and assumptions, the amounts expressed in the capital budgeting may
diverge from the initially forecast amounts.
Thus, we shall submit to the Meeting the following proposal for capital budgeting in the
year of 2018.
INVESTMENTS* (in millions of reais)
EXPANSION (New Stores, Reformations and Adjustments)......................................R$ 823.2 (80.3%)
TECHNOLOGICAL UPDATES ...................................................................................R$ 140.6 (13.7%)
OPERATIONS AND OTHERS .........................................................................................R$ 61.0 (6.0%)
TOTAL ........................................................................................................................R$ 1,024.8 (100.0%)
In order to face the investments provided in the capital budgeting, Management
proposes the retaining of 44.5% of the net profits of the year of 2017, to the amount of
BRL 105.7 million, totaling BRL 570.2 million in the retained earnings item for new
ventures, to which the operational cash generation of the year of 2018 and third-party
funds shall be added.
SOURCES* (in millions of reais)
CASH GENERATION AND/OR THIRD-PARTY FUNDS ......................................R$ 454.6 (44.4%)
STOCKHOLDER'S EQUITY*.......................................................................................R$ 570.2 (55.6%)
TOTAL ........................................................................................................................R$ 1,024.8 (100.0%)
* The value of BRL 105.7 million, corresponding to the retained earnings of 2017, is included in this
distribution.
47
ANNEX III – NET PROFIT ALLOCATION
Base Date: 12.31.2017 (as per Annex 9-1-II, of CVM Instruction no. 481, of December 17, 2009)
1. Inform the net profit in the year:
In 2017, the net profit amounted to BRL 237,627,556.63.
2. Inform the global amount and value per share of the dividends, including advanced
dividends and interest on stockholder equity that were already declared:
Global amount dividends and JCP (interest on
stockholder's equity)
BRL
120,000,000.00
Global amount dividends -
Global amount JCP BRL
120,000,000.00
Global amount JCP (net of withheld income tax) BRL
101,732,744.57
Total (dividends + JCP)
Integral parts
Value per share
Common BRL 0.075228929
Preferred BRL 0.075228929
Dividends
Integral parts
Value per share
Common -
Preferred -
(*) JCP
Integral parts
Value per share
Common BRL 0.075228929
Preferred BRL 0.075228929
(*) Value subject to withheld income tax on the
account as per current legislation.
The amounts above were declared in the following manner:
(i) BRL 120.000.000,00 declared as interest on stockholder's equity in the Board of
Directors' Meeting of December 29, 2017.All payments shall occur on April 2, 2018.
3. Inform the percentage of distributed net profit in the year:
50.5%
4. Inform the global amount and value per share of dividends distributed based on the
profit of previous years:
48
Not applicable.
5. Inform, deducting advanced dividends and interest on stockholder equity that were
already declared (*)
a) The gross value of dividends and interest on stockholder's equity in a segregated
manner, by share of each type and class.
Not applicable, considering that the meeting merely ratifies the anticipated and declared
value.
b) The form and term of payment of the dividends and interest on stockholder's equity.
Not applicable, considering that the meeting merely ratifies the anticipated and declared
value.
c) Any updates and interest on dividends and interest on stockholder's equity.
Not applicable, considering that the meeting merely ratifies the anticipated and declared
value.
d) Date of declaration of the payment of dividends and interest on stockholder's equity
considered for the identification of shareholders entitled to receive.
Not applicable, considering that the meeting merely ratifies the anticipated and declared
value.
(*) The meeting merely ratifies the anticipated and declared value.
6. If there is a declaration of dividends or interest on stockholder's equity based on
profits assessed on semestral balance sheets or in shorter periods:
a) Inform the amount of the dividends or interest on stockholder equity that were already
declared.
Not applicable.
b) Inform the date of respective payment.
Payment shall occur on April 2, 2018.
7. Provide a comparative table indicating the following values per share of each type and
class (assessed based on current legislation):
a) Net profit in the year and of the three (3) previous years.
Profit per share Common (BRL) Preferred (BRL)
2017# 0.15299 0.15299
2016 0.15001 0.15001
2015 0.17699 0.17699
Profit per share (excluding treasury shares)
2017 0.15183 0.15183
49
2016 0.14821 0.14821
2015 0.17505 0.17505
b) Dividends and interest on stockholder's equity distributed in the three (3) previous
years.
By corporate legislation
2017 - Integral parts
Dividends per share Common (BRL) Preferred (BRL)
Dividends -
-
JCP 0.075228929 0.075228929
2016 - Integral parts
Dividends per share Common (BRL) Preferred (BRL)
Dividends -
-
JCP 0.084785781 0.084785781
2015 - Integral parts
Dividends per share Common (BRL) Preferred (BRL)
Dividends 0.018292395 0.018292395
JCP 0.079925086 0.079925086
c) Destination of profits to the Legal Reserve item:
a) Identify the amount destined to the legal reserve.
In relation to the year of 2017, the amount destined to the legal reserve shall be BRL
11,881,377.81.
b) Detail the form of calculation of the legal reserve.
Article 27 of the Company's Articles of Incorporation provides that the legal reserve shall be
established with 5% of the net profit of the year, until it reaches 20% of the share capital,
with it being certain that, pursuant to §1 art. 192 of Law no. 6.404/76, the Company may
cease to establish a legal reserve in years in which the balance of this reserve, added by the
amount of capital reserves discussed in §1 of art. 182 of Law no. 6.404/76, exceeds thirty per
cent (30%) of the Company's share capital.
d) If the Company has preferred shares entitled to fixed or minimum dividends:
a) Describe the form of calculation of the fixed or minimum dividends.
Not applicable, for the preferred shares are not entitled to fixed or minimum dividends.
b) Inform whether the profit of the year is sufficient for the full payment of fixed or
50
minimum dividends.
Not applicable, for the preferred shares are not entitled to fixed or minimum dividends.
c) Identify whether any unpaid installment is cumulative.
Not applicable, for the preferred shares are not entitled to fixed or minimum dividends.
d) Identify the global value of fixed or minimum dividends to be paid to each class of
preferred shares.
Not applicable, for the preferred shares are not entitled to fixed or minimum dividends.
e) Identify the fixed or minimum dividends to be paid to each class of preferred shares.
Not applicable, for the preferred shares are not entitled to fixed or minimum dividends.
e) Regarding the mandatory dividend:
a) Describe the form of calculation provided in the Articles of Incorporation.
Article 28 of the Company's Articles of Incorporation provides that the Company shall
distribute, as a mandatory dividend, at least the amount corresponding to 25% of the net
profit of the year, adjusted according to the Law.
b) Inform whether it is being paid fully.
The mandatory dividend shall be fully paid, with the Company having BRL 101,732,744.57
to distribute as dividends and interest on stockholder's equity, with said amount being net of
withheld income tax regarding the declared interest on stockholder's equity.
c) Inform any withheld amount.
The mandatory dividend was not withheld.
f) If the mandatory dividend is withheld:
a) Inform the withheld amount.
Not applicable, because the Company does not withhold mandatory dividends.
b) Describe, in detail, the financial situation of the Company, including aspects related
to the analysis of liquidity, working capital and positive cash flows.
Not applicable, because the Company does not withhold mandatory dividends.
c) Justify the withholding of the dividend.
Not applicable, because the Company does not withhold mandatory dividends.
g) If the income is destined to a contingency reserve:
51
a) Identify the amount destined to the reserve.
No income shall be destined to the contingency reserve.
b) Identify the loss considered to be likely and its cause.
No income shall be destined to the contingency reserve.
c) Explain why the loss was considered likely.
No income shall be destined to the contingency reserve.
d) Justify the establishment of the reserve.
No income shall be destined to the contingency reserve.
h) If the income is destined to an unearned income reserve:
a) Identify the amount destined to the unearned income reserve.
No income shall be destined to the unearned reserve.
b) Inform the nature of the unearned income that gave origin to the reserve.
No income shall be destined to the unearned reserve.
i) If the income is destined to a reserve created by the articles of incorporation:
a) Describe the clauses that establish the reserve.
The Company's Articles of Incorporation does not discuss reserves.
b) Identify the amount destined to the reserve.
Not applicable, according to the previous item.
c) Describe how the amount was calculated.
Not applicable, according to the previous item.
j) If profits are withheld as provided in the capital budgeting:
a) Identify the withheld amount.
BRL 105,746,178.42
b) Provide a copy of the capital budgeting
INVESTMENTS* (in millions of reais)
52
EXPANSION (New Stores, Reformations and Adjustments).................................R$ 823.2 (80.3%)
TECHNOLOGICAL UPDATES*.............................................................................R$ 140.6 (13.7%)
OPERATIONS AND OTHERS ....................................................................................R$ 61.0 (6.0%)
TOTAL ...................................................................................................................R$ 1,024.8 (100.0%)
SOURCES* (in millions of reais)
CASH GENERATION AND/OR THIRD-PARTY FUNDS .................................R$ 454.6 (44.4%)
TECHNOLOGICAL UPDATES*.............................................................................R$ 570.2 (55.6%)
TOTAL .......................................................................................................... BRL 1,024.8 (100.0%)*
The value of BRL 105.7 million, corresponding to the retained earnings of 2017, is included in
this distribution.
k) If a portion of the income is destined to the tax incentive reserve:
a) Inform the amount destined to the reserve.
No portion of the income shall be destined to the tax incentive reserve.
b) Explain the nature of this allocation.
No portion of the income shall be destined to the tax incentive reserve.
53
ANNEX IV – CANDIDATES TO THE BOARD OF DIRECTORS AND AUDIT COMMITTEE
Information on the candidates to the Board of Directors and Audit Committee appointed by the Company on the Ordinary General Meeting to be held on April
30, 2018.
BOARD OF DIRECTORS
12.5 Candidate information:
Name Carlos Alberto
da Veiga Sicupira
Paulo Alberto
Lemann
Roberto Moses
Thompson
Motta
Cecília Sicupira Miguel Gomes
Pereira
Sarmiento
Gutierrez
Sidney Victor da
Costa Breyer
Claudio Moniz
Barreto Garcia
Paulo Veiga
Ferraz Pereira
André Street de
Aguiar
Birth Dates 05/01/1948 03/15/1968 11/06/1957 05/24/1981 03/09/1961 11/18/1969 11/30/1968 04/23/1954 05/04/1984
Profession Businessman Economist Businessman Business
Administrator
Engineer Engineer Economist Engineer Businessman
Individual
Taxpayer ID
(CPF) /
Passport
041.895.317-15 957.194.237-53 706.988.307-25 055.532.167-37 843.872.207-59 991.213.877-53 945.115.007-20 596.364.247-72 055.844.287-01
Title Director
(Effective)
Director
(Effective)
Director
(Effective)
Director (Effective) Director
(Effective)
Director
(Effective)
Director
(Effective)
Director
(Effective)
Director
(Alternate)
Date of
Election
04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018
Investiture
Date
04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018 04/30/2018
Term of Office AUG 2020 AUG 2020 AUG 2020 AUG 2020 AUG 2020 AUG 2020 AUG 2020 AUG 2020 AUG 2020
Other Titles Financial
Committee,
People and
Remuneration
Committee
Digital Committee
People and
Remuneration
Committee
Digital Committee
Financial
Committee and
Digital
Committee
People and
Remuneration
Committee
Digital Committee
Chief Executive
Officer,
Financial
Committee,
People and
Remuneration
Committee
Digital
Committee
N/A N/A N/A Financial
Committee,
People and
Remuneration
Committee
Elected by the
Controller
Yes Yes Yes Yes Yes Yes Yes Yes Yes
Independent
Member
No No No No No No No No No
54
Number of
consecutive
terms
13 5 5 3 21 N/A N/A N/A 9
55
Curriculum of the Candidates to the Board of Directors
(a) Curriculum
(b) Judicial and administrative convictions (including criminal penalties) involving managers
Carlos Alberto da Veiga Sicupira Professional experience:
In the last 5 years, he has worked as a: (i) Member of the Board of Directors of Burger King
Worldwide, food company; (ii) Member of the Board of Directors of S-BR Global Investments Ltd.,
investment holding company; (iii) Officer of Companhia Preferencial de Varejo SaRL, investment
holding company; (iv) Officer of Companhia Global de Varejo SaRL, investment holding company;
(v) Officer of Mercosul Internet SaRL, investment holding company; (vi) Officer of Companhia
Global de Imóveis SaRL, investment holding company; (vii) Officer of S-BR Global Investments Ltd.,
investment holding company and (viii) Member of the Board of Directors of Anheuser Busch Inbev
SA/NV, beverage company.
He currently works as the: (i) Member of the Board of Directors of Lojas Americanas S.A.; (ii)
Member of the Board of Directors of Anheuser-Busch Inbev S.A.; (iii) Member of the Board of
Directors of BRC SaRL, investment holding company; (iv) Member of the Board of Directors of
Restaurant Brands International Inc., food company; (vi) Member of the Board of Directors of S-
Velame Administração de Recursos e Participações, investment holding company; (vii) Member of the
Board of Directors of 3G Capital, investment company; (viii) Officer of Cathos Holding SaRL,
investment holding company; (ix) Officer of BVC Services Ltd., investment holding company; and (x)
Officer of BR Global Investments Ltd., investment holding company.
Work in third-sector organizations: (i) Fundação Brava, from 2000 until now, as member of the Board
of Directors; (ii) Fundação Estudar, from 1991 until now, as member of the Board of Directors; (iii)
Instituto Empreendedor Endeavor, from 2000 until now, as member of the Board of Directors.
Statement of Convictions: Mr. Carlos Alberto da Veiga Sicupira stated, for all intents and purposes,
that in the last 5 years he was not subject to the effects of any criminal conviction, any conviction or
penalty of an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial
or administrative contexts, with the effect of a suspension or disqualification to practice any
professional or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
Paulo Alberto Lemann Professional experience:
In the last 5 years, he has worked as a: (i) Manager Superintendent/Member of the Board of Directors
of Fundação Lemann; (ii) Member of the Board of Directors of S-BR Global Investments Ltd.,
investment holding company; (iii) Officer of Companhia Preferencial de Varejo SaRL, investment
holding company; (iv) Member of the Board of Directors of Companhia Global de Varejo SaRL,
investment holding company; (v) Member of the Board of Directors of Mercosul Internet SaRL; (vi)
Member of the Board of Directors of Companhia Global de Imóveis SaRL; (vii) Member of the Board
of Directors of BRC-Global SaRL, (viii) Member of the Board of Directors of BR Global Investmetns
Ltd.; (ix) Member of the Board of Directors of S-BR Global Investments Ltd; (x) Founding member of
Pollux Capital Administração de Recursos Ltda.
He currently works as the: (i) Effective Member of the Board of Directors of Lojas Americanas S.A.;
(ii) Member of the Board of Directors of Anheuser-Busch Inbev SA/NV, beverage company; (iii)
Member of the Board of Directors and Officer of S-Velame Administração de Recursos e
Participações S.A., investment holding company; (iv) Officer of BRC SaRL; (v) officer of the private
corporation Companhia Global de Imóveis S.A.; (vi) Member of the Board of Directors of Companhia
Global de Imóveis S.A.; (vii) Officer of L2 Empreendimentos e Participações S.A.; (viii) Chairman of
Pollux Capital Administração de Recursos Ltda.; (ix) Member of the Board of Directors and of the
Investment Committee of ALPS Capital; (x) Founding Member of Vectis Partners Holding Ltda.
Work in third-sector organizations: (i) Member of the Board of Directors of Fundação Lemann since
56
2003; (ii) Member of the Board of Directors of Nova Escola since 2016.
Statement of Convictions: Mr. Paulo Alberto Lemann stated, for all intents and purposes, that in the
last 5 years he was not subject to the effects of any criminal conviction, any conviction or penalty of
an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial or
administrative contexts, with the effect of a suspension or disqualification to practice any professional
or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
Roberto Moses Thompson Motta Professional experience:
In the last 5 years, he has worked as a: (i) Member of the Board of Directors of Burger King
Worldwide, food company; (ii) Member of the Board of Directors of S-BR Global Investments Ltd.,
investment holding company; (iii) Officer of Companhia Preferencial de Varejo SaRL, investment
holding company; (iv) Officer of Companhia Global de Varejo SaRL, investment holding company;
(v) Officer of Mercosul Internet SaRL, investment holding company; (vi) Officer of Companhia
Global de Imóveis SaRL, investment holding company; (vii) Officer of S-BR Global Investments Ltd.,
investment holding company and (viii) Member of the Board of Directors of Anheuser Busch Inbev
SA/NV, beverage company.
He currently works as the: (i) Member of the Board of Directors of Lojas Americanas S.A.; (ii)
Member of the Board of Directors of São Carlos Empreendimentos e Participações S.A., real estate
investment company; (iii) Member of the Board of Directors of BRC SaRL, investment holding
company; (iv) Member of the Board of Directors of Ambev S.A., beverage company; (v) Member of
the Board of Directors of Restaurant Brands International Inc., food company; (vi) Member of the
Board of Directors of S-Velame Administração de Recursos e Participações, investment holding
company; (vii) Member of the Board of Directors of 3G Capital, investment company; (viii) Officer of
Cathos Holding SaRL, investment holding company; (ix) Officer of BVC Services Ltd., investment
holding company; (x) Member of the Board of Directors of Companhia Global de Imóveis S.A.,
investment holding company and (xi) Officer of BR Global Investments Ltd., investment holding
company.
Work in third-sector organizations: Patron of the São Paulo Museum of Modern Art - MASP and
member of the Metropolitan Art Museum New York International Council.
Statement of Convictions: Mr. Roberto Moses Thompson Motta stated, for all intents and purposes,
that in the last 5 years he was not subject to the effects of any criminal conviction, any conviction or
penalty of an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial
or administrative contexts, with the effect of a suspension or disqualification to practice any
professional or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
Cecília Sicupira
Professional experience:
In the last 5 years, she worked as: (i) Officer of Silkim Participações S.A., Family Office of the
Controlling Families of AB Inbev, Lojas Americanas and São Carlos Empreendimentos; and (ii)
Member of the Board of Directors of the private corporations S- BR Global Investments Ltd.
She currently works as the: (i) Member of the Board of Directors of Lojas Americanas S.A.; (ii)
Member of the Board of Directors of Restaurant Brands International Inc., food company (iii) Member
of the Board of Directors of Companhia Global de Imóveis S.A. (iv) Officer of Companhia Global de
Imóveis S.A.; (v) Alternate Member of the Board of Directors of São Carlos Empreendimentos e
Participações S.A., real estate investment company; (vi) Member of the Board of Directors of the
private corporation S- Velame Administração de Recursos e Participações S.A. (described in items
15.1 and 15.2 of the Company's Reference Form); (vii) officer of the private corporation S- Velame
Administração de Recursos e Participações S.A. (described in items 15.1 and 15.2 of the Company's
Reference Forem); (viii) officer of the private company Cathos Holding SaRL (described in items 15.1
and 15.2 of the Company's Reference Form); (ix) officer of the private corporation BRC SaRL; (x)
57
officer of the private corporation Braco S.A.; and (xi) officer of CHL Empreendimentos e
Participações S.A.
Work in third-sector organizations: N/A
Statement of Convictions: Mrs. Cecília Sucupira stated, for all intents and purposes, that in the last 5
years she was not subject to the effects of any criminal conviction, any conviction or penalty of an
administrative lawsuit before the CVM or to any unappealable conviction, in the judicial or
administrative contexts, with the effect of a suspension or disqualification to practice any professional
or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
58
Miguel Gomes Pereira Sarmiento Gutierrez
Professional experience:
In the last 5 years he worked as the: (i) Officer Superintendent of the Company; (ii) Effective member
of the Board of Directors of Lojas Americanas; (iii) Chairman of the Board of Directors of B2W
Digital, a company controlled by the Company; (iv) Officer Superintendent of BWU Comércio e
Entretenimento S.A.; (v) Officer of Freijó Administração e Participação Ltda. and (vi) Officer of Posto
Vicom Ltda.
He currently works as the: (i) Officer Superintendent of the Company and Director of Lojas
Americanas; (ii) member of the Board of Directors of the Company; (iii) Chairman of the Board of
Directors of B2W – Companhia Digital; (iv) Officer Superintendent of BWU Comércio e
Entretenimento S.A.; (v) Officer of Freijó Administração e Participação Ltda. and (vi) Officer of Posto
Vicom Ltda.
Work in third-sector organizations: N/A
Statement of Convictions: Mr. Miguel Gomes Pereira Sarmiento Gutierrez stated, for all intents and
purposes, that in the last 5 years she was not subject to the effects of any criminal conviction, any
conviction or penalty of an administrative lawsuit before the CVM or to any unappealable conviction,
in the judicial or administrative contexts, with the effect of a suspension or disqualification to practice
any professional or commercial activity. Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
Sidney Victor da Costa Breyer
Professional experience:
In the last 5 years, he worked as the: (i) Chief Executive Officer of Alog Data Centers do Brasil S.A.,
technology sector; (ii) Chief Executive Officer of Aggir Capital e Gestão, investment holding; (iii)
Chairman of the Board for Yenzah Cosméticos, cosmetics sector; (iv) Member of the Board of
Directors of (i) Cultura Inglesa S.A., education sector, controlled indirectly by the same control group
that controls the issuer; (ii) Brazil Brokers Participações S.A., real estate sector; (iii) Mandic Cloud
Solutions, technology sector; (iv) Eleva Educação, education sector, controlled indirectly by the same
control group that controls the issuer; and (v) Gera Venture Capital, investment holding, controlled
indirectly by the same control group that controls the issuer.
He currently works as the: (i) Chief Executive Officer of Aggir Capital e Gestão, investment holding;
(ii) Chairman of the Board for Yenzah Cosméticos, cosmetics sector; (iii) Member of the Board of
Directors of (i) Cultura Inglesa S.A., education sector, controlled indirectly by the same control group
that controls the issuer; (ii) Brazil Brokers Participações S.A., real estate sector; (iii) Mandic Cloud
Solutions, technology sector; (iv) Eleva Educação, education sector, controlled indirectly by the same
control group that controls the issuer; and (v) Gera Venture Capital, investment holding, controlled
indirectly by the same control group that controls the issuer.
Work in third-sector organizations: Founder and sponsor of Associação Instituto Potencial, supporting
public school students from their entrance to their graduation in top universities.
Statement of Convictions: Mr. Sidney Victor da Costa Breyer stated, for all intents and purposes, that
in the last 5 years he was not subject to the effects of any criminal conviction, any conviction or
penalty of an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial
or administrative contexts, with the effect of a suspension or disqualification to practice any
professional or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
Claudio Moniz Barreto Garcia
Professional experience:
In the last 5 years he worked as the: (i) People and Technology Officer of Anheuser Busch InBev SA,
beverage sector, controlled indirectly by the same control group that controls the issuer.
Currently works as the: (i) Co-founder of the Garcia Family Foundation, education sector.
Work in third-sector organizations: (i) Co-founder of the Garcia Family Foundation; (ii) Member of
the Board of Directors of the Telles Foundation UK; (iii) trustee of The Chapin School.
Statement of Convictions: Mr. Claudio Garcia stated, for all intents and purposes, that in the last 5
59
years he was not subject to the effects of any criminal conviction, any conviction or penalty of an
administrative lawsuit before the CVM or to any unappealable conviction, in the judicial or
administrative contexts, with the effect of a suspension or disqualification to practice any professional
or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
Paulo Veiga Ferraz Pereira
Professional experience:
In the last 5 years he worked as the: (i) Director in multiple municipal and state offices and institutions
in the Town Hall and State Government of Rio de Janeiro; (ii) Member of the Board of Directors and
the Advisory Council of Rio Negócios, public sector.
Currently works as the: (i) Member of the Board of Tamboro Educacional S.A., education and
technology sector.
Work in third-sector organizations: Director of organizations such as Fundação Brava, Cruzada do
Menor and Associação Vencer.
Statement of Convictions: Mr. Paulo Veiga Ferraz Pereira stated, for all intents and purposes, that in
the last 5 years he was not subject to the effects of any criminal conviction, any conviction or penalty
of an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial or
administrative contexts, with the effect of a suspension or disqualification to practice any professional
or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
André Street de Aguiar Professional experience:
In the last 5 years he worked as the: (i) Officer of the following companies: (a) VCK Investment Fund
Limited, investment holding company; (b) DLP Payments Holdings Ltd., investment holding
company; (c) Usina Internet Group LLC, investment holding company; (d) Usina Investments LLC,
investment holding company; (e) ACP Investments Ltd., investment holding company;
Currently works as the: (i) Effective member of the Board of Directors of B2W - Companhia Digital;
(ii) alternate member of the Board of Directors of Lojas Americanas S.A., (iii) Officer of the following
companies: (a) VCK Investment Fund Limited; (b) DLP Payments Holdings Ltd.; (c) Usina Internet
Group LLC; (d) Usina Investments LLC; (e) ACP Investments Ltd.
Work in third-sector organizations: N/A
Statement of Convictions: Mr. André Street de Aguiar stated, for all intents and purposes, that in the
last 5 years he was not subject to the effects of any criminal conviction, any conviction or penalty of
an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial or
administrative contexts, with the effect of a suspension or disqualification to practice any professional
or commercial activity.
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
60
12.6 Percentage of participation in meetings held by the respective entity in the same period,
occurring after they have taken office:
Member
Total meetings held
after investiture and
until December 2017
% of participation in the
meetings held
Carlos Alberto da Veiga Sicupira 36 100%
Paulo Alberto Lemann 36 100%
Roberto Moses Thompson Motta 36 100%
Cecília Sicupira 36 100%
Miguel Gomes Pereira Sarmiento Gutierrez 36 100%
André Street de Aguiar 36 100%
12.7 Advisory Councils to the Board of Directors – information from item 12.5:
The information is provided in item 12.5, above.
12.8 Advisory Councils to the Board of Directors – Percentage of participation in meetings held
by the respective entity in the same period, occurring after they have taken office:
Members of the Financial Committee
Total meetings held
after investiture and
until December 2017
% of participation in the
meetings held
Carlos Alberto da Veiga Sicupira 8 100%
Roberto Moses Thompson Motta 8 100%
Miguel Gomes Pereira Sarmiento Gutierrez 8 100%
André Street de Aguiar 8 100%
People and Remuneration Committee
Members
Total meetings held
after investiture and
until December 2017
% of participation in the
meetings held
Carlos Alberto da Veiga Sicupira 8 100%
Paulo Alberto Lemann 8 100%
Cecília Sicupira 8 100%
Miguel Gomes Pereira Sarmiento Gutierrez 8 100%
André Street de Aguiar 8 100%
Members of the Digital Committee
Total meetings held
after investiture and
until December 2017
% of participation in the
meetings held
Carlos Alberto da Veiga Sicupira 8 100%
Paulo Alberto Lemann 8 100%
Roberto Moses Thompson Motta 8 100%
Cecília Sicupira 8 100%
Miguel Gomes Pereira Sarmiento Gutierrez 8 100%
61
12.9 Marriage, stable union or relatives up to the second degree between:
(a) Company managers
Mr. Carlos Alberto da Veiga Sicupira and Mrs. Cecilia Sicupira are first-degree relatives.
(b) (i) Company managers and (ii) managers of companies directly or indirectly controlled by the
Company
Mr. Paulo Alberto Lemann is a first degree relative of Jorge Felipe Lemann, member of the
Management of B2W – Companhia Digital, controlled by the Company.
(c) (i) managers of the Company or managers of companies directly or indirectly controlled by the
Company and (ii) direct or indirect controllers of the Company
Mr. Paulo Alberto Lemann is a first degree relative of the controller of the Company, Jorge Paulo
Lemann, and Mrs. Cecília Sicupira is a first degree relative of the controller of the Company, Mr.
Carlos Alberto da Veiga Sicupira.
(d) (i) Company managers and (ii) managers of direct or indirect controllers of the Company
Mr. Paulo Alberto Lemann is a first degree relative of the controller of the Company, Jorge Paulo
Lemann, who owns shares in the following controllers of the Company: Santa Mônica, Santa
Perpétua, Maniro and Companhia Global do Varejo; and Mrs. Cecília Sicupira is a first degree relative
of the controller of the Company, Mr. Carlos Alberto da Veiga Sicupira, who owns shares in the
following controllers of the Company: Santa Luzia, Santa Marcelina and Companhia Global do
Varejo.
12.10 Subordination, service provision or control relations maintained, in the last three fiscal
years, between Company managers and:
(a) a company controlled directly or indirectly by the Company, with the exception of those in which
the Company holds, directly or indirectly, all of the share capital
Mr. Miguel Gomes Pereira Sarmiento Gutierrez is the Chairman of the Board of Directors of a
company directly controlled by the Company, B2W – Companhia Digital.
(b) direct or indirect controller of the issuer
Mr. Carlos Alberto da Veiga Sicupira, owns shares as a controlling shareholder of the Company in the
following controlling companies: Santa Luzia, Santa Marcelina and Companhia Global do Varejo.
Mr. Roberto Moses Thompson Motta is the manager of a company that is part of the controller group.
(c) if relevant, supplier, client, debtor or creditor of the Company, its controlled or controlled
companies or companies controlled by any of these people
Not applicable.
62
AUDIT COMMITTEE
12.5 Candidate information:
Name Vicente Antonio
de Castro
Ferreira
Carlos Alberto de
Souza
Birth Date 05/06/1966 07/28/1957
Profession Business
Administrator
Accountant
Individual
Taxpayer ID
(CPF) / Passport
859.355.067-34 433.157.047-91
Title Audit Director
(Effective)
Audit Director
(Alternate)
Date of Election 04/30/2018 04/30/2018
Investiture Date 04/30/2018 04/30/2018
Term of Office AUG 2019 AUG 2019
Other Titles -- --
Elected by the
Controller
Yes Yes
Independent
Member
No No
Number of
consecutive
terms
7 1
Curriculum of the Candidates to the Board of Directors
(c) Curriculum
(d) Judicial and administrative convictions (including criminal penalties) involving managers
Vicente Antonio de Castro Ferreira Professional experience:
In the last 5 years, he worked as the: (i) Alternate Director of Executive Education and Professor of
the UFRJ Coppead.
Currently works as the: Audit Director of Lojas Americanas.
Statement of Convictions: Mr. Vicente Antonio de Castro Ferreira stated, for all intents and purposes,
that in the last 5 years he was not subject to the effects of any criminal conviction, any conviction or
penalty of an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial
or administrative contexts, with the effect of a suspension or disqualification to practice any
professional or commercial activity. Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
Carlos Alberto de Souza Professional experience:
In the last 5 years he worked as the: (i) Alternate Member of the Company's Audit Committee; and (ii)
Controllership Superintendent of the Company.
Currently works as the: Audit Director (Alternate) of the Company.
Statement of Convictions: Mr. Carlos Alberto de Souza stated, for all intents and purposes, that in the
last 5 years he was not subject to the effects of any criminal conviction, any conviction or penalty of
an administrative lawsuit before the CVM or to any unappealable conviction, in the judicial or
administrative contexts, with the effect of a suspension or disqualification to practice any professional
or commercial activity.
63
Independence Criteria: Not applicable
Statement of whether the person is politically exposed: No
12.6 Percentage of participation in meetings held by the respective entity in the same period,
occurring after they have taken office:
Member
Total meetings held after
investiture and until
December 2017
% of participation in the
meetings held
Vicente Antonio de Castro Ferreira 5 100%
Carlos Alberto de Souza 0 N/A
12.7 Advisory Councils to the Board of Directors – information from item 12.5:
Not applicable.
12.8 Advisory Councils to the Board of Directors – Percentage of participation in meetings held
by the respective entity in the same period, occurring after they have taken office:
Not applicable.
12.9 Marriage, stable union or relatives up to the second degree between:
(a) Company managers
None.
(b) (i) Company managers and (ii) managers of companies directly or indirectly controlled by the
Company
None.
(c) (i) managers of the Company or managers of companies directly or indirectly controlled by the
Company and (ii) direct or indirect controllers of the Company
None.
(d) (i) Company managers and (ii) managers of direct or indirect controllers of the Company
None.
12.10 Subordination, service provision or control relations maintained, in the last three fiscal
years, between Company managers and:
(a) a company controlled directly or indirectly by the Company, with the exception of those in which
the Company holds, directly or indirectly, all of the share capital
None.
(b) direct or indirect controller of the issuer
None.
(c) if relevant, supplier, client, debtor or creditor of the Company, its controlled or controlled
companies or companies controlled by any of these people
None.
64
ANNEX V – MANAGER REMUNERATION
13.1 Describe the remuneration policy or practice of the baord of directors, officers
whether appointed by the articles of incorporation or not, of the audit committee, of
committees established by the articles of organization and of the audit, risk, financial and
remuneration committees, approaching the following aspects:
a. goals of the remuneration policy or practice, informing whether the remuneration
policy was formally approved, the entity responsible for the approval, approval date and,
if the issuer discloses the polcy, locations in the world wide web where the document may
be read
The goal of the Company's remuneration policy is the application of a remuneration system for
the management that promotes a goal-achievement culture by hiring and keeping the best
people, in line with the interests of the shareholders. The remuneration policy is within the
responsibilities of the People and Remuneration Committee, being under analysis, revision and
approval by said committee on an annual basis. This policy is not currently disclosed.
b. remuneration elements, indicating:
(i) description of the remuneration elements and the goals of each one
Board of Directors
The members of the Board of Directors are entitled to fixed remuneration grounded in market
practices.
Board
The members of the Board are entitled to fixed remuneration and variable incentives, whereas
the fixed component is aligned with the market average, while the main focus is the variable
incentive and the long-term incentive, composed by the stock option purchase plan described in
item 13.4 below.
Audit Committee
The members of the Audit Committee receive a fixed remuneration, which is at least equivalent
to the legal minimum. It cannot be inferior, for each current member, than ten per cent of the
average attributed to each officer, without computing the variable incentive. Additionally,
members of the Audit Committee are mandatorily reimbursed for their expenses with
transportation and accommodations necessary for the performance of their function.
Committees
The members of the People and Remuneration, Digital and Finance Committees do not receive
specific remuneration for said function.
(ii) in relation to the last three fiscal years, what was the proportion of each element in
total remuneration
For the members of the Board of Directors and of the Audit Committee, in the last three fiscal
years, fixed remuneration corresponded to 100% of the total remuneration, as previously
mentioned.
65
In the case of the Board, in 2017, fixed remuneration corresponded to 40% and variable
incentives corresponded to 60% of the total remuneration, including the incentive value based
on stock. These percentages may vary due to changes in results obtained by the Company and
by the manager at the time, given the component of risk sharing existing in variable incentives.
In 2016, fixed remuneration corresponded to 44% and variable incentives corresponded to 56%
of the total remuneration, including the incentive value based on stock.
In 2015, fixed remuneration corresponded to 45% and variable incentives corresponded to 55%
of the total remuneration, including the incentive value based on stock.
(iii) calculation and readjustment methodology for each element of the remuneration
The value of fixed remuneration paid to the Board of Directors, Board and Audit Committee is
periodically compared with the market standard through research made by specialized external
consulting firms, so that the competitiveness may be assessed, as well as the need to perform
readjustments in remuneration. Variable remuneration is not subject to readjustments, but rather
to compliance with established goals, as better described below.
(iv) reasons that justify the breakdown of remuneration
For the Board of Directors and for the Audit Committee, an attempt is made to secure
remuneration compatible with the limits defined in applicable legislation, assuring proper
retribution for the members' performance.
The model of the remuneration of Officers is based on the meritocracy policy and on
withholding the best professionals in the market, being broken down in the following manner:
Fixed Remuneration:
Fixed remuneration is in line with market practice, being frequently assessed based on research
made by specialized external consulting companies.
Variable Incentive:
Variable remuneration is established with a goal management system with the following
criteria: (i) the achievement of Company goals as a whole; (ii) the achievement of goals related
to the Managers as individuals; and (iii) minimum compliance: in case the Company or the
Manager do not reach the minimum established goals, there will be no payment of variable
remuneration.
Variable Long-Term Incentive
By granting stock options, we promote the alignment of shareholder and manager interests in
the long term, considering the investment in Company stock by managers and the fact that said
stock shall have restricted sales for a specific period of time and, with the approval of the new
wording of the Company's Option Plan, their delivery will be conditioned to permanence in the
Company for a period of time. Besides, the new granting model provides the concession of
additional options depending on the level of commitment of variable incentive with the stock
options and, in some cases, the exercise of stock options may be conditioned to the achievement
of performance goals (see item 13.4 below).
66
(v) the existence of members that are not paid by the issuer and the reason for this fact
There are no members without remuneration in the Company.
c. main performance indicators taken into consideration when determining each element
of remuneration;
The indicators considered in the determination of remuneration are part of a goal management
system that considers not only the Company's strategic indicators, such as EBITDA, Customer
Satisfaction, Sales Volume and Expenses, but also specific indicators for the managers as
individuals.
With the new wording proposed for the Company's option plan (as described in item 13.4
below), a part of the options to be granted shall have their exercise conditioned to quantitative
goals to be established, considering a long-term timeframe.
d. how remuneration is structured to reflect the evolution of performance indicators:
The Company's and the Administrator's main performance indicators are assessed through the
goal management system. This assessment system is the basis for the determination of variable
remuneration (bonus). In case the Company or the Manager do not reach the minimum
established goals, there will be no payment of variable remuneration.
Besides, based on the new wording of the Company's option plan (as described in item 13.4
below), the programs to be launched may establish that some options may only be exercised if
specific Company goals are met.
e. how is the remuneration policy or practice in line with the Company's short, medium
and long-term interests:
The Company's remuneration policy incorporates elements of alignment with the Company's
short, medium and long-term interests.
In the short term, the annual results of the Company and the Managers shall define the amount
to be distributed as variable remuneration (bonus).
Medium and long-term alignment is obtained through the Company's option plan. The options
granted in the plan, and those that shall be granted in view of the plan's new wording, represent,
due to their characteristics, a form of risk sharing, requiring medium and long-term commitment
and alignment with the Company.
f. existence of remuneration paid by subsidiaries, controlled companies or direct or
indirect controllers:
There are members of the Company's executive board that earn due to a similar function
exercised in another group company, due to the fact that they exercise management functions in
Company subsidiaries.
g. existence of any remuneration or benefit bound to the occurrence of a specific company
event, such as the alienation of the Company's corporate control:
The Company has no remuneration or benefit bound to the occurrence of a specific company
event.
67
h. practices and procedures adopted by the baord of directors to define the individual
remuneration of the board of directors, indicating:
(i) the entities and committees of the issuer that take part in the decision-making process,
identifying how they participate
Remuneration policies and practices are established and managed by the People and
Remuneration Committee, which is part of the Board of Directors. The proposals defined by the
committee are then approved at the Ordinary General Meeting.
(ii) criteria and methodology used to determine individual remuneration, indicating
whether studies are used to verify market practices and, if so, the comparison criteria and
scope of these studies
The People and Remuneration Committee uses services of specialzied consulting companies
with experience in market remuneration for their studies.
(iii) how frequently and in what way does the board of directors assess the issuer's
remuneration policy
Technical studies relative to remuneration are at least annual or made to order.
13.2 Total remuneration of the board of directors, officers and audit committee
Forecast for the Year 2018
Board of Directors Officers Audit Committee Total
Total number of
members 8 12 5 25
Number of paid
members 8 12 5 25
Fixed annual
remuneration 3,334,032 25,067,501 1,044,479 29,446,012
Salary or wages 3,310,318 24,995,750 1,011,450 29,317,517
Direct and indirect
benefits
Participation in
committees
Others 23,714 71,751 33,029 128,495
Description of other
fixed remuneration INSS INSS INSS INSS
Variable
remuneration 16,000,000 16,000,000
Bonus 16,000,000 16,000,000
Profit sharing
Participation in
meetings
Commissions
Others
Post-employment
benefits
68
Benefits caused by
the interruption of
the exercise of the
function
Remuneration
based on stock,
including options
21,690,554 21,690,554
Observation
The number of
members of each
entity corresponds
to the annual
average of the
number of members
of each entity,
assessed on a
monthly basis.
The number of
members of each
entity corresponds to
the annual average
of the number of
members of each
entity, assessed on a
monthly basis.
The number of
members of each
entity corresponds
to the annual
average of the
number of
members of each
entity, assessed on
a monthly basis.
The number of
members of
each entity
corresponds to
the annual
average of the
number of
members of
each entity,
assessed on a
monthly basis.
Total remuneration 3,334,032 62,758,055 1,044,479 67,136,566
YEAR OF 2017
Board of Directors Officers Audit Committee Total
Total number of
members 7 11 3.58 21.58
Number of paid
members 7 8 3.58 18.58
Fixed annual
remuneration 3,079,527 21,276,429 692,667 25,048,623
Salary or wages 3,057,623 21,215,529 670,763 24,943,915
Direct and indirect
benefits
Participation in
committees
Others 21,904 60,900 21,904 104,708
Description of other
fixed remuneration INSS INSS INSS INSS
Variable
remuneration 14,100,000 14,100,000
Bonus 14,100,000 14,100,000
Profit sharing
Participation in
meetings
Commissions
Others
Post-employment
benefits
Benefits caused by
the interruption of
the exercise of the
function
Remuneration
based on stock, 18,074,995 18,074,995
69
including options
Observation
The number of
members of each
entity corresponds
to the annual
average of the
number of members
of each entity,
assessed on a
monthly basis.
The number of
members of each
entity corresponds to
the annual average
of the number of
members of each
entity, assessed on a
monthly basis.
The number of
members of each
entity corresponds
to the annual
average of the
number of
members of each
entity, assessed on
a monthly basis.
The number of
members of
each entity
corresponds to
the annual
average of the
number of
members of
each entity,
assessed on a
monthly basis.
Total remuneration 3,079,527 53,451,424 692,667 57,223,618
YEAR OF 2016
Board of Directors Officers Audit Committee Total
Total number of
members 7 11 3 21
Number of paid
members 7 8 3 18
Fixed annual
remuneration 2,572,556 20,865,723 570,716 24,008,995
Salary or wages 2,550,415 20,812,631 550,164 23,913,210
Direct and indirect
benefits
Participation in
committees
Others 22,141 53,092 20,552 95,785
Description of other
fixed remuneration INSS INSS INSS INSS
Variable
remuneration 14,098,447 14,098,447
Bonus 14,098,447 14,098,447
Profit sharing
Participation in
meetings
Commissions
Others
Description of other
variable remuneration
Post-employment
benefits
Benefits caused by
the interruption of
the exercise of the
function
Remuneration based
on stock, including
options
12,487,604 12,487,604
70
Observation
The number of
members of each
entity corresponds
to the annual
average of the
number of
members of each
entity, assessed on
a monthly basis.
The number of
members of each
entity corresponds to
the annual average of
the number of
members of each
entity, assessed on a
monthly basis.
The number of
members of each
entity corresponds
to the annual
average of the
number of
members of each
entity, assessed on
a monthly basis.
The number of
members of
each entity
corresponds to
the annual
average of the
number of
members of
each entity,
assessed on a
monthly basis.
Total remuneration 2,572,556 47,451,774 570,716 50,595,046
YEAR OF 2015
Board of Directors Officers Audit Committee Total
Total number of
members 6.58 11 3 20.58
Number of paid
members 6.58 8 3 17.58
Fixed annual
remuneration 1,719,999 18,858,615 514,350 21,092,964
Salary or wages 1,700,505 18,810,392 495,882 21,006,779
Direct and indirect
benefits
Participation in
committees
Others 19,494 48,223 18,468 86,185
Description of other
fixed remuneration INSS INSS INSS INSS
Variable
remuneration 0 13,950,000 0 13,950,000
Bonus 0 13,950,000 0 13,950,000
Profit sharing 0 0 0 0
Participation in
meetings 0 0 0 0
Commissions 0 0 0 0
Others 0 0 0 0
Description of other
variable remuneration
Post-employment
benefits 0 0 0 0
Benefits caused by
the interruption of
the exercise of the
function
0 0 0 0
Remuneration based
on stock, including
options
0 9,297,381 0 9,297,381
71
Observation
The number of
members of each
entity corresponds to
the annual average of
the number of
members of each
entity, assessed on a
monthly basis.
The number of
members of each
entity corresponds to
the annual average of
the number of
members of each
entity, assessed on a
monthly basis.
The number of
members of each
entity corresponds
to the annual
average of the
number of members
of each entity,
assessed on a
monthly basis.
The number of
members of each
entity
corresponds to
the annual
average of the
number of
members of each
entity, assessed
on a monthly
basis.
Total remuneration 1,719,999 42,105,996 514,350 44,340,345
13.3 In relation to the variable remuneration of the last three fiscal years and the one
forecast for the current fiscal year for the board of directors, the officers and the audit
committee:
Members of the Board of Directors and of the Audit Committee of the Company do not receive
variable remuneration for their work. The table below presents the variable remunerations of
Company Officers forecast for payment in 2018 and paid in 2017, 2016 and 2015.
Year 2018 2017 2016 2015
Number of Members(1) 12 11 10 11
Number of paid members 12 8 8 8
Minimum variable remuneration
forecast (BRL) 0 0 0 0
Maximum variable remuneration
forecast (BRL) 16,000,000 16,000,000 16,000,000 15,000,000
Variable remuneration forecast if the
goals established are met (BRL) 16,000,000 16,000,000 16,000,000 15,000,000
Value effectively acknowledged in the
income of the last fiscal year (BRL) N/A 14,100,000 14,098,447 13,950,000
(1) The number of members was assessed through the annual average of the number of members
of each entity, assessed on a monthly basis and with two decimal places.
72
13.4 In relation to the remuneration plan based on actions of the board of directors and of
the officers, current in the last fiscal year and forecast for the current fiscal year, describe:
a. general terms and conditions
Within the Company's Stock Purchase Option Plan ("Option Plan"); and the (ii) Restricted
Share Incentive Plan ("Restricted Share Plan", and jointly with the Option Plan, the "Plans"),
managers, employees and service providers of the Company and its controlled companies
(included in the concept of Company for the purposes of the Plans), as selected for each
Program by the Board of Directors or by the Committee (as defined below), according to each
case ("Beneficiaries"), are eligible to receive stock purchase options and/or restricted shares
issued by the Company.
The Option Plan was approved by the Extraordinary General Meeting held on April 30, 2012.
The Restricted Share Plan is pending approval at the Extraordinary General Meeting to be held
in 2018.
The Plans shall be managed by the Board of Directors or, if the latter so chooses, by a
committee comprising three members, with at least one being a member (effective or alternate)
of the Board of Directords, excluding officers that have executive functions in the Company,
unless otherwise decided by the Board of Directors. Currently, the plan is managed by the
People and Remuneration Committee (the "Committee").
The Board of Directors or the Committee, according to each case, has broad powers, respecting
the terms of the Plans and, in the case of the Committee, the directives of the Company's Board
of DIrectors, to organize and manage the Plans and the granting of options and/or restricted
shares. Members of the Committee, but not of the Board of Directors, when installed as a
Committee, cannot take part in the Plans as Beneficiaries.
The granting of options and/or restricted shares is performed by the Board of Directors or by the
Committee, establishing the applicable terms and conditions pursuant to the corresponding
stock option purchase and/or restricted share programs ("Programs"), in which the Beneficiaries
and the total number of options or restricted shares granted shall be defined, according to each
case.
Option Plan
The Board of Directors or the Committee, according to each case, may establish a specific
discipline and condition so that the Beneficiary should allocate a portion of the annual bonus
paid by the Company to the Beneficiary, as bonus or share of profits, net of income taxes and
other charges ("Bonus"), to the acquisition of Shares resulting from the exercise of the options
granted. In that case, the Board of Directors may also determine specific incentive conditions
for the allocation of the Bonus, referring to the options that are granted, their quantity, term,
price and form of exercise.
The Beneficiaries should enter stock purchase option grant contracts with the Company, through
which the Beneficiaries have the option of purchasing batches of stock issued by the Company,
according to the terms and conditions of the corresponding Plan and Program. The contract shall
define the number of shares that the Beneficiary shall be entitled to acquire or subscribe when
exercising each option, the price of exercise per option, the term of the option and the date on
which the exercise of the option and all resulting rights shall expire, as well as the term for
delivery of the shares that are the object of each option exercised, according to the Program, and
any other terms and conditions that are not in disagreement with the Plan or the respective
Program.
73
The Beneficiaries shall have none of the rights and privileges of the Company's stockholders
beyond those referred to in the Option Plan in regards to the options that are the object of the
contract. Beneficiaries shall only be entitled to the rights and privileges inherent to the
stockholder upon the effective delivery of the shares resulting from the exercise of each option.
The Board of Directors or the Committee, according to each case, shall establish in each
Program the rules applicable to cases of termination of Company Beneficiaries, due to the
termination of the employment or service provision contract, end of term in office, dismissal or
resignation from an executive office, as well as cases of retirement, permanent invalidity or
death of Beneficiaries.
Currently, the Company has the following Programs in effect: (i) program approved in a
Committee meeting on September 30, 2013 ("2013 Program"); (ii) program approved in a
Committee meeting on June 30, 2014 ("2014 Program"); (iii) program approved on a
Committee meeting on June 30, 2015 ("2015 Program"), (iv) program approved on a Committee
meeting on March 10, 2016 ("2016 Program") and (v) program approved on a Committee
meeting on July 6, 2017 ("2017 Program").
The programs that are currently in effect (Programs 2013 through 2017) provide options
comprised by two batches observing specific conditions, including that the Beneficiary shall
allocate a specific percentage of the bonus attributed by the Company to the full or partial
exercise of the Options that comprise Batch A and Batch B. The Options of Batch A and the
Options of Batch B entitle the beneficiary to the acquisition of a specific quantity of shares, as
given below:
Batch A: Each Option of Batch A entitles the beneficiary to acquire one (1) preferred share
issued by the Company.
Batch B: Each Option of Batch A entitles the beneficiary to acquire up to five (5) preferred
shares issued by the Company.
Restricted Share Plan
In relation to the Restricted Share Plan, the Board of Directors may define a grace period and
condition participation to the eligibility and/or effective participation of the respective
Beneficiary in Company stock purchase option plans or programs, as well as establishing, as a
condition for the reception of restricted shares, the effective exercise of options granted within
said plans or programs.
Upon the launch of each Program in the Restricted Share Plan, the Board of Directors or the
Committee, according to each case, shall determine the terms and conditions of each grant in a
restricted share grant contract, to be entered by the Company and each Beneficiary. The contract
shall define the number of shares that the Beneficiary shall be entitled to receive, the conditions
for reception and the grace period for the transfer of restricted shares to the Beneficiary,
according to the respective restricted share concession Program, and any other complementary
terms and conditions to the Restricted Share Plan or the respective restricted share concession
Program.
The Beneficiary shall only be entitled to the rights and privileges inherent to the condition of
stockholder with the effective transfer of Restricted Shares, which shall occur only after the end
of the grace period.
There are no current restricted share Programs on this date.
74
b. main goals of the plan
The main goals of the Option Plan are: (a) stimulating the expansion, success and corporate
goals of the Company and the interests of its shareholders, allowing executives and top-level
employees to acquire Company stock, according to the terms, conditions and mode provided in
the Option Plan, thus promoting the integration of these executives and employees with the
Company; and (b) enabling the Company to obtain and maintain the services of high-level
executives and employees, offering said executives and employees the additional advantage of
becoming Company shareholders.
The main goals of the Restricted Share Plan are: (a) stimulating the expansion, success and
corporate goals of the Company and the interests of its shareholders, granting executives and
top-level employees with the gratuitous right to receive stock issued by the Company, according
to the terms, conditions and mode provided in the Restricted Stock Plan, thus promoting the
integration of these executives and employees with the Company; and (b) enabling the
Company to obtain and maintain the services of high-level executives and employees, offering
said executives and employees the additional advantage of becoming Company shareholders,
according to the terms, conditions and the mode provided in the Restricted Stock Plan.
c. how the plan contributes to these goals
The possibility of acquiring or receiving shares issued by the Company under specific
conditions allows for the creation of considerable incentives so that Company employees and
managers become committed to the creation of value. Beneficiaries are invited to commit their
own funds to the stock purchase options, so they should seek the future value increase of the
shares, since they shall only be available for alienation in the long term. With that, there is an
attempt to retain executives and top-level employees in the Company.
The possibility of granting restricted shares works as an additional incentive and retention fator,
by enabling the Beneficiary to receive even more shares issued by the Company in the future,
after observing the grace period and the effective participation of the respective Beneficiary in
Company stock purchase option plans or programs.
d. how the plan fits the Company's remuneration policy
The Plans are part of the Company's long-term variable remuneration mechanism, strongly
grounded in promoting employee commitment to the Company's performance in the long term.
The Plan contains elements that require immediate action from the Beneficiaries by allocating
their own funds to the exercise of options and, on the other hand, enables an attractive return in
case Company stock increases in value, wich shareholders receiving returns in the long run.
The Plans fit the policy of concentrating manager and top-level employee incentives in variable
components linked to the Company's performance.
e. how the plan aligns the interests of managers and the Company in the short, medium
and long term
Grants made based on the Plans provide mechanisms that allow for the alignement of manager
interests in different timeframes, regardless of the fact that the Plans' greater goals are related to
the alignment of long-term interests.
The Option Plan provides periods of restriction to the transfer of shares acquried by
Beneficiaries (lock-up periods, as explained in item "l" below), encouraging executives to
increase Company share value in the medium and long term. Additionally, in the short term,
75
Plan Beneficiaries, while holders of Company shares, become entitled to receive dividends and
interest on shareholder equity from the moment they exercise their options. With that, we expect
effective contribution to the Company's growth with solid grounds and in a durable manner,
besides the creation of a lasting bond between the executives and the Company. In the short
term, and according to the structure of the grands made within each specific program to be
approved, immediate destination of Beneficiary funds is required for the exercise of the options.
Additionally, Plan Beneficiaries, while holders of Company shares, become entitled to receive
dividends and interest on shareholder equity regarding Company shares. In the medium and
long term, all options may be immediately exercised, whereas (i) shares delivered in the act of
exercise may not be alienated for a lock-up period of at most five years, and (ii) a portion of the
shares may be subject to future delivery and to specific conditions, especially Company
performance goals. With the existence of a lock up period and a grace period during which the
shares shall not be delivered to the Beneficiary, the Beneficiary is expected to align their
interests with the expectation of value increase of Company shares in the long term.
The Restricted Share Plan establishes a grace period for the reception of restricted shares by the
Beneficiary. Additionally, the Board of Directors may condition participation in the Restricted
Share Plan to the eligibility and/or effective participation of the respective Beneficiary in
Company stock purchase option plans or programs, as well as establishing, as a condition for
the reception of restricted shares, the effective exercise of options granted within said plans or
programs. With that, we expect effective contribution to the Company's growth with solid
grounds and in a durable manner, besides the creation of a lasting bond between the executives
and the Company.
f. maximum number of shares involved
The largest number of shares that may be granted in options and/or restricted shares equals 5%
of the total shares of the Company's capital on the date of concession, as described in item "g"
below. On the date of this document, this amount corresponds to 79,871,589 shares issued by
the Company.
g. maximum number of options to be granted
The maximum limit for the granting of options pursuant to the Option Plan is shared with the
limit of the Restricted Share Plan. Thus, the Restricted Share Plan and the Option Plan shall be
jointly limited to 5% of the total shares of the Company's capital existing on the date of
concession, considering, in this total, the dilution effect resulting from the exercise of all options
granted and not yet exercised within the Option Plan, as well as the restricted shares that have
not yet been effectively transferred to Beneficiaries.
h. share acquisition conditions
Option Plan
The Board of Directors may establish the division of the batch of shares that is the object of the
grant in relation to a specific Program in sub-batches, with each sub-batch having its own
characteristics, terms and conditions. Also, options granted pursuant to the Option Plan may
have one or more Shares as an object, the delivery of which may be subject to specific
deadlines, as well as to specific terms and conditions (such as the permanence of the Beneficiary
in the performance of their functions at the Company, observance of lock-up periods and
compliance with performance goals established by the Company), as established by the Board
of Directors for each Program.
76
The Board of Directors or the Committee, according to each case, may also adjust the number of
Shares to which the Beneficiary shall be entitled, without changing the global amount
represented by the multiplication of the Exercise Price by the original number of granted
options, so as to attribute an additional quantity of shares.
Specifically in relation to the current programs (programs 2013 through 2017), the share
delivery conditions are the following:
Once the Options are exercised, whether from Batch A or Batch B, and on the date of the
exercise, the Company shall provide the Beneficiary with (i) one (1) Share for each Option of
Batch A; and (ii) one (1) Share for each Option of Batch B. The other four (4) Shares that
comprise each Option of Batch B (the "Additional Shares") and the Complementary Shares (as
defined below) corresponding to each Option of Batch B shall be delivered after a grace period
of 60 months counting from the date of the respective Program ("Grace Period").
The value of dividends and interest on stockholder equity attributed to Additional Shares during
the Grace Period shall be converted into shares upon each distribution, to an amount calculated
based on the Market Value of the shares issued by the Company on the date of payment of the
dividends or interest on stockholder equity (the "Complementary Shares").
Also, the Additional and Complementary Shares shall only be delivered to the Beneficiary after
the Grace Period if the following conditions are observed: (i) permanence of the Beneficiary in
the performance of their functions at the Company or any controlled companies, controllers or
affiliates during said Grace Period; (ii) the Share lock-up period must be observed; and (iii)
other conditions provided in the stock purcahse option grant contract. In case any of those
conditions are not verified, the right to receive Additional and Complementary Shares shall be
automatically terminated, unless otherwise decided by the Board of Directors or Committee.
Restricted Share Plan
The Board of Directors shall have powers, respecting the terms of the Restricted Share Plan, to
organize and manage the Restricted Share Plan and the grants of restricted shares.
The Board of Directors shall create restricted share concession programs, which shall define: (i)
the respective Beneficiaries; (ii) the number and type of Company shares to be granted, with
optional adjustments to reflect prior distribution of dividends and other elements; (iii)
conditions to receive restricted shares and the grace period after which ownership over restricted
shares shall be transferred to the Beneficiary; (iv) rules on the transfer of restricted shares and
any restrictions to the restricted shares received; (v) rules applicable to termination, retirement,
death or permanent invalidity of Beneficiaries; (vi) any penalties due to lack of compliance with
obligations; (vii) any goals related to the performance of the Beneficiaries or to the global
performance of the Company or the respective area, or any other conditions for the full or
partial delivery of restricted shares; and (viii) any other terms and conditions that do not
contradict the Restricted Share Plan.
No restricted share shall be transferred to the Beneficiary unless all contractual, legal and
regulatory requirements are fully met.
i. criteria for the fixation of the acquisition or exercise price
Option Plan
The general rule of the Option Plan is that the exercise price shall be established by the Board of
Directors or by the Committee, using the average closing prices of shares negotiated at B3,
during a specific period prior to the concession of the option.
77
The exercise price may be corrected based on the variation of a price index to be determined by
the Board of Directors or by the Committee, according to each case, with added interest, as per
the rate determined by the Board of Directors or by the Committee.
The Board of Directors or the Committee, according to each case, may determine, upon the
launch of the Program, the concession to Beneficiaries of a discount of up to 20% in the fixation
of the exercise price on the value determined as above.
Specifically in relation to current programs (Programs 2013 to 2017), the exercise price of each
option from Batch A and Batch B shall equal the average quotation of shares issued by the
Company in B3's last 22 trading sessions, to which a discount of 10% shall be applied.
Restricted Share Plan
The Restricted Share Plan grants the Beneficiary with the right to receive restricted shares,
gratuitously, after the grace period and observing the other conditions that may be established
by the Board of Directors in the respective Programs.
j. criteria for the fixation of the exercise term
Option Plan
The Board of Directors or the Committee, according to each case, observing the long-term
commitment goals and the limits established by the Option Plan, shall be competent to establish,
upon each grant (made through specific Programs) the exercise terms applicable to the options,
which includes grace periods during which the options may not be exercised or the
corresponding shares cannot be delivered, periods and deadlines for the exercise and extinction
term after which the options shall expire.
Specifically in relation to current programs (Programs 2013 to 2017), Batch A and Batch B may
be fully or partially exercised until a limit date provided in each Program, whereas Batch B may
only be exercised in case Batch A has been fully exercised. Options that are not exercised
within the provided term shall be legally terminated.
Restricted Share Plan
In the Restricted Share Plan, the Board of Directors or the Committee, according to each case,
observing the long-term commitment goals and the limits established, shall be competent to
establish, upon each grant (made through specific Programs), the grace periods for the reception
of restricted shares, along with other conditions to be determined by the Board of Directors in
the respective Programs.
k. settlement form
Option Plan
Usually, shares acquired as a result of the exercise of options granted to Beneficiaries are issued
by the Company and the corresponding capital increase, respecting the authorized capital limit,
is ratified by the Board of Directors. The Company may also offer treasury shares for the
exercise of options. In the Programs, the exercise price may be paid in full or in installments, as
emphasized in item h above. The Company recognizes the fair value of the employee's service
as an expense, received in exchange for the grant of instruments of the stock-based
remuneration plan (both options and subscriptions).
The total value to be recognized is determiend in reference to the fair value of the granted
instruments, which is calculated on the grant date of the stock purchase programs, based on
78
pricing models usually adopted by the market. These models are calculated using assumptions
such as the share's market value, option exercise price, Company share price volatility
(calculated based on the shares' price history), risk-free interest rate, vesting period and dividend
distribution expectation.
The amounts received, net of any directly attributable transaction costs, are credited to the share
capital (nominal value) and to the premium reserve, if applicable, when the options are
exercised.
Social contributions to be paid as a result of the concession of stock options are considered an
integral part of the concession itself, and the collection shall be treated as a cash-settled
transaction.
Restricted Share Plan
Restricted shares may be delivered with treasury shares. Observing the conditions provided in
the Restricted Share Plan and in the respective Program, restricted shares shall be delivered, at
the end of the grace period, gratuitously.
l. restrictions to share transfer
Option Plan
The model to be used for the grant of options to be made within the Option Plan, pursuant to the
Programs, may require that (i) shares delivered in the act of exercise may not be alienated for a
lock-up period of at most five years, according to the plan, and (ii) a portion of the shares may
be subject to future delivery and to specific conditions, especially Company performance goals.
Specifically in relation to current programs (Programs 2013 to 2017), Shares received upon the
exercise of the Options may only be transferred after the corresponding lock-up period, counting
from a date provided in each Program, as indicated below.
Batch A: Shares received upon the exercise of the Options may only be transferred after the 30
month term, for 50% of the Shares; and after 60 months, for the remaining 50% of the Shares.
Batch B: Shares received upon the exercise of the Options may only be transferred after the 60
month term.
Finally, in case the Beneficiary intends to sell, transfer or in any way alienate the shares
subscribed or acquired due to the exercise of the option, they shall give the right of first refusal
to the Company, pursuant to the Option Plan. The price per share to be paid by the Company to
the Beneficiary shall equal the weighted average of Company shares in the B3 trading session of
the first business day immediately prior to the date of sale of the shares.
Restricted Share Plan
The model used to grant restricted shares shall require the shares to be delivered after a grace
period to be determined by the Board of Directors.
The Board of Directors may also subordinate the delivery of restricted shares to specific
conditions, as well as imposing restrictions to their transfer, reserving repurchase options and/or
rights of first refusal to the Company in case of alienation by the Beneficiary of said restricted
shares.
79
m. criteria and events that, when verified, shall cause the suspension, alteration or
extinction of the plan
The Plans may be altered or terminated by the Board of Directors. The competence of the Board
of Directors notwithstanding, no decision may alter the rights or obligations of any current
contract.
Additionally, in the case of dissolution, transformation, merger, acquisition, spin-off or
restructuring of the Company, in which the Company is not the surviving company, the Plans
shall be terminated. In this case: (1) any option granted pursuant to the Option Plan shall be
terminated, unless, in relation to said operation (and when applicable), (i) the Board of Directors
approves the anticipation of the final term for the exercise of the option, or (ii) establishes in
writing the permanence of the Option Plan and the assumption of options granted by the
successor Company or its affiliate or subsidiary; and (2) the restricted shares granted pursuant to
the Restricted Share Plan that, according to the conditions of each restricted share Program,
have not yet been transferred to the Beneficiary, shall have the treatment determined by the
Board of Directors.
n. effects of the exit of the manager from Company entities on their rights provided in the
stock-based remuneration plan
Option Plan
The Option Plan provides that, in case of resignation, retirement, permanent invalidity or death
of the beneficiary, the Board of Directors or the Committee, according to each case, shall
establish in each Program the applicable rules. The Program shall define: (i) the treatment to be
given to options that are granted and not exercised; (ii) the treatment to be given to shares
acquired and not yet delivered to the beneficiary, if said delivery is conditioned to the
permanence of the beneficiary in their functions; (iii) any permanence of the restrictions to the
availability of the Shares; (iv) the possibility of a more favorable treatment to beneficiaries that
agree to sign non-competition contracts with the Company, complying with said contract for the
term given by the Board of Directors or the Committee, according to the case; and (v) any other
terms and conditions that do not contradict the Option Plan.
Restricted Share Plan
The Board of Directors or the Committee, according to each case, shall establish in each
restricted share Program the rules applicable to cases of termination of Company Beneficiaries,
due to the termination of the employment or service provision contract, end of term in office,
dismissal or resignation from an executive office, as well as cases of retirement, permanent
invalidity or death of Beneficiaries.
In said cases, the Program shall define: (i) the treatment to be given to restricted shares that are
granted and not transferred to the Beneficiary; (ii) any permanence of any restrictions to the
availability of the shares received as a result of the grant of restricted shares; (iii) the possibility
of a more favorable treatment to Beneficiaries that agree to sign non-competition contracts with
the Company, complying with said contract for the term given by the Board of Directors or the
Committee, according to the case; and (iv) any other terms and conditions that do not contradict
the Restricted Share Plan.
80
13.5 In relation to the stock-based remuneration recognized in the income of the last three fiscal years and the one forecast for the current fiscal year
for the board of directors and the officers, prepare a table with the following content:
Stock-based remuneration – Current Fiscal Year (2018)
2013 Program 2014 Program 2015 Program 2016 Program 2017 Program
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Total number of members 7 11 7 11 7 11 7 11 7 10
Number of paid members 0 8 0 7 0 8 0 8 0 7
Grant of
stock
purchase
options:
Grant date N/A 09.30.2013 N/A 06.30.2014 N/A 06.30.2015 N/A 03.10.2016 N/A 07.06.2017
Quantity of
options granted 0 1,077,658 0 1,667,635 0 1,365,903 0 1,732,647 0 926,770
Term for the
options to be
exercised
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
Maximum term
for the exercise of
the options
N/A 12.31.2013 N/A 12.31.2014 N/A 12.31.2015 N/A 12.31.2016 N/A 12.31.2017
Share transfer
restriction period N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
Fair value of the
options on the
grant date
N/A 13.64 N/A 10.26 N/A 14.49 N/A 13.62 N/A 12.36
Average
weighted
exercise
price:
(a) Of outstanding
options at the
start of the fiscal
year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
81
(b) Of options lost
during the fiscal
year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
(c) Of options
exercised during
the fiscal year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
(d) Of options
expired during the
fiscal year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Potential dilution in case all
granted options are exercised N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5%
Stock-based remuneration – Fiscal Year of 2017
2013 Program 2014 Program 2015 Program 2016 Program 2017 Program
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Total number of members 7 11 7 11 7 11 7 11 7 11
Number of paid members 0 8 0 7 0 8 0 8 0 8
Grant of
stock
purchase
options:
Grant date N/A 09.30.2013 N/A 06.30.2014 N/A 06.30.2015 N/A 03.10.2016 N/A 07.06.2017
Quantity of
options granted 0 1,077,658 0 1,667,635 0 1,365,903 0 1,732,647 0 963.970
Term for the
options to be
exercised
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
Maximum term
for the exercise of
the options
N/A 12.31.2013 N/A 12.31.2014 N/A 12.31.2015 N/A 12.31.2016 N/A 12.31.2017
Share transfer
restriction period N/A
Batch A:
50% in 30
months
50% in 60
N/A
Batch A:
50% in 30
months
50% in 60
N/A
Batch A:
50% in 30
months
50% in 60
N/A
Batch A:
50% in 30
months
50% in 60
N/A
Batch A:
50% in 30
months
50% in 60
82
months
Batch B: 60
months
months
Batch B: 60
months
months
Batch B: 60
months
months
Batch B: 60
months
months
Batch B: 60
months
Fair value of the
options on the
grant date
N/A 13.64 N/A 10.26 N/A 14.49 N/A 13.62 N/A 12.36
Average
weighted
exercise
price:
(a) Of outstanding
options at the
start of the fiscal
year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
(b) Of options lost
during the fiscal
year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
(c) Of options
exercised during
the fiscal year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
(d) Of options
expired during the
fiscal year
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Potential dilution in case all
granted options are exercised N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5%
Stock-based remuneration – Fiscal Year of 2016
2013 Program 2014 Program 2015 Program 2016 Program
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Total number of members 7 11 7 11 7 11 7 11
Number of paid members 0 8 0 7 0 8 0 8
Grant of
stock
purchase
options:
Grant date N/A 09.30.2013 N/A 06.30.2014 N/A 06.30.2015 N/A 03.10.2016
Quantity of
options granted 0 1,077,658 0 1,667,635 0 1,365,903 0 1,732,647
Term for the
options to be N/A
options may
be exercised N/A
options may
be exercised N/A
options may
be exercised N/A
options may
be exercised
83
exercised from the
grant date
onward
from the
grant date
onward
from the
grant date
onward
from the
grant date
onward
Maximum term
for the exercise of
the options
N/A 12.31.2013 N/A 12.31.2014 N/A 12.31.2015 N/A 12.31.2016
Share transfer
restriction period N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
Fair value of the
options on the
grant date
N/A 13.64 N/A 10.26 N/A 14.49 N/A 13.62
Average
weighted
exercise
price:
(a) Of outstanding
options at the
start of the fiscal
year
N/A N/A N/A N/A N/A N/A N/A N/A
(b) Of options lost
during the fiscal
year
N/A N/A N/A N/A N/A N/A N/A N/A
(c) Of options
exercised during
the fiscal year
N/A N/A N/A N/A N/A N/A N/A 13.62
(d) Of options
expired during
the fiscal year
N/A N/A N/A N/A N/A N/A N/A N/A
Potential dilution in case all
granted options are exercised N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5%
84
Stock-based remuneration – Fiscal Year of 2015
2013 Program 2014 Program 2015 Program
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Total number of members 7 11 7 11 7 11
Number of paid members 0 8 0 7 0 8
Grant of
stock
purchase
options:
Grant date N/A 09.30.2013 N/A 06.30.2014 N/A 06.30.2015
Quantity of
options granted 0 1,077,658 0 1,667,635 0 1,365,903
Term for the
options to be
exercised
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
N/A
options may
be exercised
from the
grant date
onward
Maximum term
for the exercise of
the options
N/A 12.31.2013 N/A 12.31.2014 N/A 12.31.2015
Share transfer
restriction period N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
N/A
Batch A:
50% in 30
months
50% in 60
months
Batch B: 60
months
Fair value of the
options on the
grant date
N/A 13.64 N/A 10.26 N/A 14.49
Average
weighted
exercise
price:
(a) Of outstanding
options at the
start of the fiscal
year
N/A N/A N/A N/A N/A N/A
(b) Of options lost
during the fiscal
year
N/A N/A N/A N/A N/A N/A
(c) Of options
exercised during N/A N/A N/A N/A N/A 14.49
85
the fiscal year
(d) Of options
expired during
the fiscal year
N/A N/A N/A N/A N/A N/A
Potential dilution in case all
granted options are exercised N/A
Less than
0.5% N/A
Less than
0.5% N/A
Less than
0.5%
86
13.6 In relation to outstanding options of the board of directors and the officers at the end of the last fiscal year, prepare a table with the following
content:
At the end of the fiscal year ended on December 31, 2017, there were no outstanding officer options. As informed in items 13.4 and 13.5 above, all options
may only be exercised within the fiscal year in which they are granted.
Regarding options of Batch B, Beneficiaries receive 1 preferred share on the date of exercise of the option and 4 shares within 60 months counting from the
grant date, conditioned to the requirements provided in the programs (for more information on the requirements, see item "H" of section 13.5 of this Reference
Form).
We present below the statement of shares to be delivered to Beneficiaries of the 2016, 2015, 2014, 2013 and 2012 plans that were outstanding on December
31, 2017:
2017 2016 2015 2014 2013
Number of shares estimated by the Company to
be subscribed and maintained after the vesting
period
1,407,265 2,052,832 1,638,819 2,179,721 1,412,901
Grant date 07.06.2017 03.10.2016 06.30.2015 06.30.2014 09.30.2013
Vesting Period 60 months 60 months 60 months 60 months 60 months
87
13.7 In relation to options exercised and shares delivered relative to the stock-based remuneration of the board of directors and the officers, in the
last three fiscal years, prepare a table with the following content:
Options exercised - Fiscal year ended on 12/31/2017
2013 Program 2014 Program 2015 Program 2016 Program 2017 Program
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Total number of members 7 11 7 11 7 11 7 11 7 11
Number of paid members 0 8 0 7 0 8 0 8 0 8
Options
exercised
Number of shares 0 0 0 0 0 0 0 0 0 963,970
Average weighted
exercise price
(BRL)
N/A N/A N/A N/A N/A N/A N/A N/A N/A 12.36
Difference
between the
exercise value and
the market value
of shares relative
to the options
exercised (BRL)
N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.37
Shares
delivered
Number of shares
delivered 0 0 0 0 0 0 0 0 0 963,970
Average weighted
exercise price
(BRL)
N/A N/A N/A N/A N/A N/A N/A N/A N/A 12.36
88
Difference
between the
acquisition value
and the market
value
of the shares
acquired (BRL)
N/A N/A N/A N/A N/A N/A N/A N/A N/A 1.37
(1) Regarding Batch "B" of the 2017 Program, up to 1,407,265 preferred shares are estimated by the Company to be delivered and maintained after the vesting period. For more information
on these shares, see item 13.6 of this Reference Form.
Options exercised - Fiscal year ended on 12/31/2016
2013 Program 2014 Program 2015 Program 2016 Program
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Total number of members 7 11 7 11 7 11 7 11
Number of paid members 0 8 0 7 0 8 0 8
Options
exercised
Number of shares 0 0 0 0 0 0 0 1,732,647
Average weighted
exercise price
(BRL)
N/A N/A N/A N/A N/A N/A N/A 13.62
Difference
between the
exercise value and
the market value
of shares relative
to the options
exercised (BRL)
N/A N/A N/A N/A N/A N/A N/A 1.51
89
Shares
delivered
Number of shares
delivered 0 0 0 0 0 0 0 1,732,647
Average weighted
exercise price
(BRL)
N/A N/A N/A N/A N/A N/A N/A 13.62
Difference
between the
acquisition value
and the market
value
of the shares
acquired (BRL)
N/A N/A N/A N/A N/A N/A N/A 1.51
(1) Regarding Batch "B" of the 2016 Program, up to 2,052,832 preferred shares are estimated by the Company to be delivered and maintained after the vesting period. For more information
on these shares, see item 13.6 of this Reference Form.
Options exercised - Fiscal year ended on 12/31/2015
2013 Program 2014 Program 2015 Program
Board of
Directors Officers
Board of
Directors Officers
Board of
Directors Officers
Total number of members 7 11 7 11 7 11
Number of paid members 0 8 0 7 0 8
Options
exercised
Number of shares 0 0 0 0 0 1,365,903
Average weighted
exercise price
(BRL)
N/A N/A N/A N/A N/A 14.49
90
Difference
between the
exercise value and
the market value
of shares relative
to the options
exercised (BRL)
N/A N/A N/A N/A N/A 1.61
Shares
delivered
Number of shares
delivered 0 0 0 0 0 1,365,903
Average weighted
exercise price
(BRL)
N/A N/A N/A N/A N/A 14.49
Difference
between the
acquisition value
and the market
value
of the shares
acquired (BRL)
N/A N/A N/A N/A N/A 1.61
(1) Regarding Batch "B" of the 2015 Program, up to 1,638,819 preferred shares are estimated by the Company to be delivered and maintained after the
vesting period. For more information on these shares, see item 13.6 of this Reference Form.
13.8. Information necessary to understand the data disclosed in items 13.6 to 13.8 (including the
pricing method for the share and option values):
a. pricing model
According to experts hired by the Company, the Black-Scholes-Merton and Hull's Binomial pricing
models, usually employed to measure the fair value of stock purchase options, are not applicable to the
Company Plan. Thus, the benefits were measured by their "intrinsic value".
d. data and assumptions used in the pricing model, including the average weighted price of shares,
exercise price, expected volatility, expiration term of the option, expected dividends and the risk-
free interest rate:
Calculation date
According to the Technical Announcement CPC 10 – Stock-based Payment, options should be assessed
on the respective grant date (in this case, the date of approval of the corresponding Program).
Average weighted stock price
The price of Company stock considered as the basis when calculating the value of the respective options
is the Market Value, as defined below, basis for the calculation of exercise prices.
Exercise price
Options are exercised for a price equivalent to the average closing price of Company shares in the 22
trading sessions prior to the option grant, at the B3 S.A. - Brasil, Bolsa e Balcão ("Market Value"),
applying a discount of 10%.
According to the new wording of the plan, if approved, the options' exercise price shall correspond to the
average, in a specific period prior to the options' grant date, of the closing prices of shares of the same
type negotiated at B3 S.A. – Brasil, Bolsa e Balcão, with the application of a discount of up to 20%. The
exercise price may be corrected based on the variation of a price index to be determined by the Board of
Directors or by the Committee, with added interest, according to the rate determined by the Board of
Directors or by the Committee. Each option may have more than one Company share as an object, the
delivery of which, however, may be subject to specific deadlines, as well as to specific terms and
conditions (such as the permanence of the Beneficiary in the performance of their functions at the
Company, observance of lock-up periods and compliance with performance goals of the Company), as
established by the Board of Directors for each program.
Expected volatility
The forecast volatility is calculated based on the use of the annual standard deviation of the natural
logarithms of the historic daily variations of Company stock prices.
Option expiration term
Considering the term of 5 years for the exercise of the options, their expiration term is of 5 years. This
term would remain in case of the approval of the new plan wording, considering the maximum term of
restriction to the transfer of shares, which is also of 5 years.
Expected dividends (dividend distribution rate)
The dividend distribution rate is the ratio of the dividend per share, paid in a specific period, and the
92
stock's market price. This variable was calculated with the historic dividend distribution by the
Company.
Risk-free interest rate
Risk-free interest rates were obtained with the Brazilian Central Bank and refer to the SELIC rates on the
respective grant dates.
c. method used and assumptions for the incorporation of the expected advanced exercise effects
Not applicable.
d. form of determination of the expected volatility
The forecast volatility is calculated based on the use of the annual standard deviation of the natural
logarithms of the historic daily variations of Company stock prices.
e. if any other option characteristic was incorporated to the measurement of its fair value
Not applicable.
13.9. Inform the quantity of shares or membership interests directly or indirectly held, in Brazil or
abroad, and other securities convertible into shares or membership interests, issued by the issuer,
direcet or indirect controllers, controlled companies or companies under mutual control, by
members of the board of directors, officers or members of the audit committee, grouped by entity
Lojas Americanas S.A.
12/31/2017
Bond (private subscription) Common shares Preferred shares
Entity Quantity Quantity Quantity
Controller 0 334,108,212 314,320,493
Board of Directors 0 9,781,648 36,497,019
Officers 0 2,810,935 22,843,264
Audit Committee 0 0 0
TOTAL 0 346,700,795 373,660,776
B2W – Companhia Digital (1)
12/31/2017
Common shares Preferred shares
Entity Quantity Quantity
Board of Directors 15,946 0
Officers 4,889,316 0
Audit Committee 0 0
TOTAL 4,905,262 0
(1) Company controlled by Lojas Americanas S.A.
Base date on December 31, 2017, based on the instruction of the Circular Letter/CVM/SEP/No. 02/2018 and information
presented in article 11 of CVM Instruction no. 358/2002.
93
13.10 Information on the current pension plans granted to members of the board of directors and
officers:
None.
13.11. In a table, indicate, for the last three fiscal years, in relation to the board of directors,
officers and audit committee
Justification for not filling in the table:
The Company has, in its board of directors and audit committee, professionals associated with the
Brazilian Finance Executive Institute IBEF - Rio de Janeiro ("IBEF"). IBEF, on March 2, 2010,
obtained, with the 5th Federal Court of the Judiciary District of Rio de Janeiro (proceeding
20105101002888-5), a preliminary injunction with the following content: "Therefore, I APPROVE the
injunction, determining the suspension of efficacy of sub-item 13.11 of annex 24 of CVM Instruction
480 in relation to IBEF associates and, therefore, companies to which they are related, prohibiting the
application of any sanction to the associates or to the companies to which they belong, until a later
decision by this Court." On May 17, 2013, the merit was judged in said proceeding, through which the
aforementioned injunction was ratified and the request formulated by IBEF was approved, with the
defendant - CVM - being determined to: "...refrain from implementing the requirement contained in sub-
item 13.11 of Annex 24 of CVM Instruction 480, as well as from the application of any penalty related to
the lack of compliance with said requirement, to associates of the IBEF and the companies to which they
are related...". CVM lodged an appeal, which was received only with devolutive effect, and the record
was sent to the Regional Federal Court of the 2nd Region, as per the order given in the first-degree court
on 12.19.2013. The reason for refraining to disclose the maximum, medium and minimum remuneration
values of members of the board of directors and audit committee of companies is based on the
preservation of individual rights to privacy and safety of the individuals that are part of said entities.
Respecting these individual rights and the abovementioned court decision, the Company shall not
disclose said information unless otherwise determiend in court.
13.12 Contractual arrangements, insurance policies or other instruments that represent
remuneration or compensation mechanisms for managers in case of dismissal or retirement
(including financial consequences for the Company):
There are no contractual arrangements, insurance policies or other instruments that represent
remuneration or compensation mechanisms for managers in case of dismissal or retirement.
13.13. In relation to the last three fiscal years, indicate the percentage of total remuneration of
each entity recognized in the issuer's income referring to members of the board of directors,
officers or members of the audit committee that are related to controllers, direct or indirect, as
defined by the accounting rules that govern the matter
Board of
Directors
Executive
Board
Fiscal
Council
Board of
Directors
Executive
Board
Fiscal
Council
Board of
Directors
Executive
Board
Fiscal
Council
% 43% 0% 0% 43% 0% 0% 46% 0% 0%
31/12/2017 31/12/2016 31/12/2015
94
13.14. In relation to the last three fiscal years, indicate the values recognized in the issuer's income
as remuneration of members of the board of directors, officers or members of the audit committee,
grouped by entity, for any reason other than their function, such as commissions and consulting or
advisory services provided
None.
13.15. In relation to the last three fiscal years, indicate the values recognized in the issuer's
controllers, direct or indirect, companies under mutual control and controlled company's income
as remuneration of members of the board of directors, officers or members of the audit committee
of the issuer, grouped by entity, specifying how said amounts were attributed to said individuals
None.
13.16. Provide other information considered relevant by the issuer
None.
ANNEX VI – PROPOSED ALTERATIONS TO THE ARTICLES OF INCORPORATION
PROPOSED ALTERATIONS, ORIGIN AND RATIONALE AND ANALYSIS OF THE LEGAL AND ECONOMIC EFFECTS (as per art. 11 of CVM Instruction 481/09)
I. Report detailing the origin and rationale of the proposed alterations and analyzing their legal and economic effects
Current Consolidated Bylaws New Wording of the Articles of
Incorporation
New Wording Compared Rationale
Art. 5 - The share capital amounts to
three billion, eight hundred and sixty
eight million, nine hundred and thirty
six thousand, eight hundred and
fourteen reais and twenty cents (BRL
3,868,936,814.20), represented by
one billion, five hundred and eighty
two million, eight hundred and sixty
two thousand and three hundred and
two (1,582,862,302) shares, whereas
five hundred and thirty nine million,
nine hundred and forty three
thousand, six hundred and thirty
(539,943,630) are common shares
and one billion, forty two million,
nine hundred and eighteen thousand,
six hundred and seventy two
(1,042,918,672) are preferred shares,
all registered and without par value.
Art. 5 - The share capital amounts to
four billion, nineteen million, three
hundred and fifty seven thousand, three
hundred and thirty five reais and ninety
four cents (BRL 4,019,357,335.94),
represented by one billion, five hundred
and ninety seven million, four hundred
and thirty one thousand and seven
hundred and seventy one
(1,597,431,771) shares, whereas five
hundred and thirty nine million, nine
hundred and forty three thousand, six
hundred and thirty (539,943,630) are
common shares and one billion, fifty
seven million, four hundred and eighty
eight thousand, one hundred and forty
one (1,057,488,141) are preferred shares,
all registered and without par value.
Art. 5 - The share capital amounts to four
billion, nineteen million, three hundred
and fifty seven thousand, three hundred
and thirty five reais and ninety four cents
(BRL 4,019,357,335.94)three billion, eight
hundred and sixty eight million, nine
hundred and thirty six thousand, eight
hundred and fourteen reais and twenty
cents (BRL 3,868,936,814.20), represented
by one billion, five hundred and ninety
seven million, four hundred and thirty one
thousand and seven hundred and seventy
one (1,597,431,771) one billion, five
hundred and eighty two million, eight
hundred and sixty two thousand and three
hundred and two (1,582,862,302) shares
shares, whereas five hundred and thirty
nine million, nine hundred and forty three
thousand, six hundred and thirty
(539,943,630) are common shares and one
billion, fifty seven million, four hundred
and eighty eight thousand, one hundred
and forty one (1,057,488,141) one billion,
forty two million, nine hundred and
eighteen thousand, six hundred and
seventy two (1,042,918,672) are preferred
shares, all registered and without par
value.
Alteration of Article 5 of the Company's
Articles of Incorporation to reflect the
capital increases approved by the Board of
Directors within the authorized capital
limit, according to meetings of the Board
of Directors held on (i) September 8, 2017,
(ii) September 15, 2017, (iii) September
29, 2017, (iv) November 8, 2017, and (v)
December 27, 2017.
ANNEX VII – CONSOLIDATED ARTICLES OF ORGANIZATION
LOJAS AMERICANAS S.A.
Publicly Traded Company
Corporate Taxpayer ID (CNPJ/MF) no. 33.014.556/0001-96
State Enrollment Number (NIRE) No. 33.300.028.170
CHAPTER I
Name, Headquarters, Duration and Purpose of the Company:
Art. 1. The company LOJAS AMERICANAS S.A. ("Company"), established in Rio de Janeiro,
on May 2, 1929, shall be governed by these articles and by applicable current legislation.
Sole Paragraph – With the admission of the Company in the special listing segment named
Level 1 of Corporate Governance of B3 S.A. – Brasil, Bolsa, Balcão ("B3"), the Company, its
shareholders, Managers and members of the Audit Committee, when opened, are subject to the
provisions of the Level 1 Corporate Governance Listing Regulation of B3 ("Regulation of Level
1").
Art. 2. - The Company is headquartered in the city of Rio de Janeiro, capital of the state of Rio
de Janeiro.
Sole Paragraph – The Board may, with the authorization of the Board of Directors, create
offices, agencies, stores, goods deposits and other establishments necessary for the company's
develoment. Said establishments, however, shall not have their own capital, with general
accounting taking place at the headquarters.
Art. 3. - The company shall last indefinitely.
Art. 4. - The purpose of the company is general trade, including supermarkets and food
concession stands, convenience stores, in retail and wholesale, through stores and deposits, of
any goods and the provision of technical, market, administrative, publicity, marketing and
merchandising assistance, bank correspondence, mobile phone recharge, rotating parking and
other services related, directly or indirectly, to the main activities of the Company; the
assignment of rights to use computer software; the import and export of goods in general,
destined to be commercialized by itself or by third-parties, raw or industrialized materials; the
intermediation of foregn trade transactions, the assignment of rights to use products or assets
destined for domestic entertainment, such as movies, audiovisual works, computer games,
videos and laser disks, and similar products; the lease and sublease of mobile assets, such as
videocassette devices, "videogames" and similar products and the commercialization of
products, possibly acquiring interest in other companies.
CHAPTER II
On the Share Capital
Art. 5 - The share capital amounts to four billion, nineteen million, three hundred and fifty
seven thousand, three hundred and thirty five reais and ninety four cents (BRL
4,019,357,335.94)three billion, eight hundred and sixty eight million, nine hundred and thirty
97
six thousand, eight hundred and fourteen reais and twenty cents (BRL 3,868,936,814.20),
represented by one billion, five hundred and ninety seven million, four hundred and thirty one
thousand and seven hundred and seventy one (1,597,431,771) one billion, five hundred and
eighty two million, eight hundred and sixty two thousand and three hundred and two
(1,582,862,302) shares shares, whereas five hundred and thirty nine million, nine hundred and
forty three thousand, six hundred and thirty (539,943,630) are common shares and one billion,
fifty seven million, four hundred and eighty eight thousand, one hundred and forty one
(1,057,488,141) one billion, forty two million, nine hundred and eighteen thousand, six hundred
and seventy two (1,042,918,672) are preferred shares, all registered and without par value.
1.- Share capital may be represented in up to 2/3 of preferred shares.
2.- The capital stock may be increased by the Board of Directors, regardless of statutory reform,
pursuant to paragraphs 4 and subsequent of this article, up to the limit of 2,000,000,000
common and/or preferred shares.
§1 - Preferred and common shares of the minority shareholders shall have the right to be
included in public control alienation offerings, in the conditions provided in article 254-A of
Law no. 6.404/76, assuring a price equivalent to 100% of the one paid for shares with the right
to vote that are part of the control block.
§2 - Preferred shares shall not entitle their holder to vote and shall have the priority in the
reception of dividends and the reimbursement of capital.
§3 - The current capital corresponds to the subscribed capital, excluding shares held by the
controller shareholder, by people related to him, by Company Managers and treasury shares.
§4 - Within the limits of authorized capital, and regardless of modifications to the Articles of
Incorporation, the Board of Directors shall resolve on the issuance of shares.
§5 - Resolutions of the Board of Directors on the issuance of shares shall be transcribed to a
specific Book, containing: the number and type of shares issued, as well as to whether by
capitalization of reserves or subscription; if the subscription shall be public or private;
conditions of payment in currency, rights or assets, term and installments of paymant; fixed
minimum values for which shares may be placed or subscribed; and the term of subscription for
each share.
§6 - When the issuance of shares admits payment in installments, the resolution of the Board of
Directors and the subscription Bulletin shall determine the down payment or installment
amounts, as well as the respective payment dates.
§7 - The lack of performance by the shareholder, in the conditions provided in the Subscription
Bulletin, of any installment corresponding to the subscribed shares shall cause, regardless of
notification, the establishment of the shareholder in default, being subject to the payment of the
installment value, as well as the inflation adjustment according to the tax debit update indexes, a
fine of five per cent (5%) and interest of six per cent (6%) per year over the debt total.
§8 - The Board of Directors may approve the suppression of the right of first refusal to new
subscriptions in the cases provided in art. 172 of Law no. 6404/76.
98
§9 - All company shares are book registered, remaining at the deposit account of Banco
Bradesco S.A., headquartered in Osasco, state of São Paulo, pursuant to articles 34 and 35 of
Law no. 6.404 of 12/15/76, with shareholders being charged the remuneration discussed in §3 of
art. 35 of said legal diploma.
CHAPTER III
On Company Management
Art. 6. - The company shall be managed by the Board of Directors and by the Board, pursuant to
the Law and these Articles of Organization.
Art. 7. - The Directors and Officers shall be invested in their offices through the signature of the
terms of investiture in the book of minutes of the Board of Directors or the Board, according to
the case, conditioned to the prior subscription of the Manager Term of Consent, pursuant to the
provisions of Regulation Level 1 of Corporate Governance of B3 S.A. – Brasil, Bolsa, Balcão.
Of the Board of Directors
Art. 8. - The Board of Directors shall be composed by at least 3 and at most 10 members,
elected by the General Meeting, with a unified mandate of 2 years, with allowed reelections.
Art. 9. - The Chairman shall be chosen among the Directors in the Meeting in which they take
office, which shall take place right after the General Meeting that elects them.
Sole Paragraph – The functions of chairman of the board of directors and of chief executive
officer of the Company may not be performed by the same person.
Art. 10 - The Directors shall reside in the Country or Abroad and may be reelected.
Sole Paragraph – Non-reelected directors shall perform their functions until their substitutes
take office.
Art. 11. - The Board of Directors shall gather at the headquarters whenever called by the
Chairman or by the majority of the Directors, with the Directors being represented by another
Director through proxy, letter or e-mail.
§1 - Minutes shall be issued and submitted to approval in the subsequent Meeting, representing
events relevant to the meeting.
§2 - Resolutions shall be made by a majority of votes, among Directors in attendance, with the
Chairman having the decisive vote along with a personal vote.
§3 - Meetings of the Board of Directors may occur through phone conference, videoconference
or any other means of communication that enables the identification of the participant and
simultaneous communication with all other participants of the meeting.
99
Art. 12 - The Board of Directors has the attributions granted by Law and by these articles, being
responsible for: Electing and dismissing company Officers, determining their attributions and
the criteria for their substitution, observing the provisions of these Bylaws; Determining the
distribution of remuneration decided by the General Meeting for members and Officers;
Deciding on the issuance of shares and subscription bonuses and commercial promissory notes
(CVM Instruction no. 134, of 11.1.90); Approving the acquisition of shares by the Company to
maintain as treasury or cancellation; Decide on the issuance of subscription bonuses and credit
instruments to acquire funds, including bonds, promissory notes, commercial papers or other
marketable securities, as well as convertible and non convertible bonds within the limits of
authorized capital.
Art. 13 - In case the Director seat is vacant, the Board of Directors shall appoint a substitute,
who shall perform said function until the end of the mandate of the substituted Director; in case
of vacancy of the Chairman's seat, their substitute shall be chosen in the subsequent meeting of
the Board of Directors.
Board
Art. 14 - The Board shall comprise 2 to 12 Officers, with one being the Officer Superintendent
and the others lacking specific designation, elected for one (1) year by the Board of Directors
and with possible reelection.
§1 - The Officers shall be individuals residing in the country.
§2 – Non-reelected officers shall perform their functions until their substitutes take office.
Art. 15 - If the Officer seat is vacant in a definitive or temporary capacity, the Board of
Directors shall elect the new Officer or designate a substitute, determining in both cases their
term of office, which shall not exceed that of the substituted officer.
Sole Paragraph – If the Officer is substituted by another Officer, the latter shall not accumulate
votes or the respective remunerations.
Art. 16 - The Board shall work as a collegiate entity in resolutions on all matters that, by law
and these articles, must be submitted to the Board of Directors, notably the Annual Report and
Financial Statements, Monthly Balance Sheets, proposals for capital increase and dividend
distribution, and any other resolutions that transcend the ordinary limits of the specific
attributions of each Officer.
Sole Paragraph – The alienation of fixed assets from the permanent assets, as well as the
establishment of real burdens on them, depend solely of the signature of two Officers.
Art. 17 – The Board shall meet at the headquarters, when necessary.
Sole Paragraph – The Officer Superintendent shall have a personal and a decisive vote in case of
a tie.
Art. 18 - All acts that create obligations for the company or that exempt third parties from
obligations with it, including contracts in general, endorsed checks, promissory notes, letters of
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credit, duplicates and any credit securities, debt confessions, the granting of endorsements and
guarantees to subsidiaries, credit opening contracts and others of the sort, shall only be valid in
relation to the Company when signed jointly by two Officers or by an Officer and a proxy
established pursuant to article 20.
§1 - The issuance of checks and payment orders shall be valid when signed by two (2) proxies
established in the form given by the power of attorney.
§2 - The company may be represented outside the headquarters by an Officer or a proxy with
specific powers granted by two (2) Officers, pursuant to article 20.
§3 - The Company may not grant endorsements, guarantees or any other securities to
individuals or legal entities, except when in favor of subsidiary companies.
Art. 19. Endorsements in favor of banks, checks, negotiable invoices and other deeds,
exclusively for credits for the benefit of the company, and the issuance of trade bills may be
subscribed by a proxy with special powers.
Art. 20 - The establishment of proxies to represent the company, including for the purposes of
Arts. 18 and 19 above, shall be made by two Officers. The instrument shall mention the powers
granted and the duration of the mandate, which shall not exceed one year.
Sole Paragraph – The judicial mandate may be granted for an indefinite term.
Art. 21 - The Officer Superintendent shall represent the company in an active and passive
capacity. Sole Paragraph – When judicially summoned to testify for the company, the Officer
Superintendent may designate for that purpose another Officer or proxy/representative for
specific purposes.
Art. 22 - In case of absence, fault or hindrance, the Officer Superintendent shall be substituted
by any of the other officers to the discretion of the Board of Directors. The other members of
the Board shall be reciprocally substituted in the form established by the Board of Directors.
Art. 23 - On Common Provisions for Managers. The Managers - Board of Directors and
Officers – shall receive the monthly fees determined in the General Meeting, with the amounts
being divided as decided by the Board of Directors.
§1 - Members of the Board of Directors that are also Officers shall not receive the fees
determined for said Board while they hold both offices.
§2 - The members of the Board that are not contractually employed by the company shall be
under the Severance Pay Indemnity Fund regime.
CHAPTER IV
Audit Committee
Art. 24 - The company shall have an Audit Committee, in a non-permanent capacity,
comprising three to five effective members and an equal number of deputies, with the powers
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and attributions granted by law and observing the legal precepts relative to requirements,
hindrances, remuneration, composition, installation, operation, duties and responsibilities.
CHAPTER V
On the Shareholder Meetings
Art. 25 - The Ordinary General Meeting shall take place on an annual basis in the first four
months after the end of the fiscal year, and the Extraordinary General Meeting shall take place
whenever the Law and company interests require manifestation of the shareholders.
Sole Paragraph – When the General Meeting is called, share transfers may be suspended until
the realization of the meeting, but not for over fifteen (15) days.
CHAPTER VI
Fiscal Year
Art. 26 - The fiscal year shall start on January 1 and shall end on December 31, when the
financial statements required by law shall be prepared.
Art. 27 - By resolution of the Board of Directors, the company may draw interim balance sheets
respecting legal provisions.
Art. 28 - From the year's income, preliminarily, there will be a deduction of any accumulated
losses and provisions for income tax; from the remaining profit, the deductions shall be the
following, in this order: a) the amount to be distributed as employee shared profits, at an amount
that will not exceed 6% of the net profit, and according to the criteria approved annually by the
Board of Directors, taking into account, among other factors, service time at the company,
responsibility, efficiency, interest and zeal for the service; b) Officers' interest, distributed as
decided by the Board of Directors, respecting the legal limits; and c) to the discretion of the
Board of Directors, the amount approved as contribution for the assistance or pension fund or
institution for employees that may be organized for this purpose, or in which the company takes
part.
Art. 29 - After the deductions mentioned in the previous article and on the net profit assessed,
five per cent (5%) shall be transmitted to the legal reserve, a reserve that shall not exceed twenty
per cent (20%) of the share capital.
Art. 30 - Shareholders shall receive, as dividends, at least the amount corresponding to twenty
five per cent (25%) of the net profit of the year, duly adjusted according to the Law, with the
General Meeting being responsible for approving the form and date of said payments, as
proposed by the Board of Directors.
Sole Paragraph – Dividends shall not incur interest and those not received shall suffer the statute
of limitations provided by law.
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Art. 31 - The Board of Directors is authorized to declare dividends on the profit account in
compliance with the interim balance sheets mentioned in Art. 27 of these articles, or even
pursuant to §2 of art. 204 of Law no. 6404 of 12/15/76.
Art. 32 - The General Meeting may, upon proposal of the management entities, allocate a
portion of the net profit to the formation of reserves with the purpose of compensating, in the
future, the profit reduction resulting from a likely loss, the amount of which may be estimated,
or from the realization of investments and the expansion of company business, which may not
exceed the limit of share capital.
§1 - The proposal of the management entities shall indicate the cause of the forecast lost and
justify, with a prudent rationale, the establishment of the reserve.
§2 - The reserve shall be reverted in the year during which the reasons justifying its
establishment cease to be or in which the loss occurs.
Art. 33 - The balance of the profit after the aforementioned determinations shall be allocated to
the discretion of the Board of Directors.
CHAPTER VII
General and Temporary Provisions
Art. 34 - By resolution of the Board of Directors, and obeying the rules issued by the Brazilian
Securities and Exchange Commission, the company may acquire its own shares for the purposes
provided in items "b" and "c" of art. 30 of Law no. 6404 of 12/15/76.
Art. 35 - The Company may grant a stock option, pursuant to §3 of art. 168 of Law no.
6.404/76, according to the plan approved by the General Meeting.
Art. 36 - The Company shall assure to the members of the Board of Directors, Officers and
members of the Audit Committee or members of any company entities with technical functions
destined to advise managers, defense in judicial and administrative lawsuits filed by third
parties, during or after their respective mandates, by acts practiced in the exercise of their
functions, including through a permanent insurance contract, so as to protect them from
responsibilities for acts resulting of the exercise of the office or function, with the payment of
procedural expenses, lawyer fees and compensation resulting from said lawsuits.
§1 - The guarantee provided in the caput of this article extends to employees that regularly act
to comply with a mandate granted by the Company or its controlled companies.
§2 - If any of the persons mentioned in the caput or in §1 are condemned, by an unappealable
judicial decision, due to omission or willful misconduct, they shall reimburse the Company with
all costs and expenses with legal aid, pursuant to the law.
Art. 37 - Cases of omission are governed by current legislation.
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ANNEX IV – RESTRICTED SHARE PLAN
STOCK-BASED REMUNERATION PLAN
1. Provide a copy of the proposed plan
Available in Annex I of the document.
2. Inform the main characteristics of the proposed plan, identifying:
a. Potential benficiaries
The people eligible to take part in the Restricted Share Incentive Plan of LOJAS
AMERICANAS S.A. ("Company" and "Restricted Share Plan") are the managers, employees
and service providers of the Company and its controlled companies (included in the concept of
Company for the purposes of the Restricted Share Plan), as selected for each Restricted Share
concession program to be approved by the Board of Directors or by the Committee, according to
each case ("Beneficiaries"), who, pursuant to the conditions provided in the Restricted Share
Plan, are eligible to receive shares issued by the Company gratuitously ("Restricted Shares").
b. Maximum number of options to be granted
The maximum limit for the granting of Restricted Shares pursuant to the Restricted Share Plan
is shared with the limit of the Stock Purchase Option Plan approved on April 30, 2012 ("Option
Plan"). Thus, the Restricted Share Plan and the Option Plan shall be jointly limited to 5% of the
total shares of the Company's capital existing on the date of concession, considering, in this
total, the dilution effect resulting from the exercise of all options granted and not yet exercised
within the Option Plan, as well as the restricted shares that have not yet been effectively
transferred to Beneficiaries.
c. maximum number of shares involved in the plan
The maximum number of shares encompassed by the Restricted Share Plan, according to the
maximum limit provided in item "b" above is, on the date of this Management Proposal,
equivalent to 79,871,588.
d. acquisition conditions
The Board of Directors or the Committee, according to each case, may condition participation in
the Restricted Share Plan to the eligibility and/or effective participation of the respective
Beneficiary in Company stock purchase option plans or programs, as well as establishing, as a
condition for the reception of restricted shares, the effective exercise of options granted within
said plans or programs.
e. detailed criteria for the fixation of the exercise price
The Restricted Share Plan grants the Beneficiary with the right to receive restricted shares,
gratuitously, after the grace period and observing the other conditions that may be established
by the Board of Directors in the Restricted Share Concession Plan.
f. criteria for the fixation of the exercise term
Restricted Shares shall be subject to the grace period to be determined by the Board of Directors
in the Restricted Share Concession Programs.
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g. option settlement form
Restricted shares may be delivered with treasury shares.
h. criteria and events that, when verified, shall cause the suspension, alteration or
extinction of the plan
The Board of Directors or the Committee may, according to each case, at any time and
observing the provisions of item 4.2.1 of the Restricted Share Plan (i) alter or extinguish the
Restricted Share Plan; (ii) alter the Restricted Share grant conditions, observing the provisions
of the Restricted Share Plan and the rights assured to Beneficiaries; and (iii) establish the
regulation applicable to cases of omission.
In cases of dissolution, transformation, merger, acquisition, spin-off or restructuring of the
Company, in which the Company is not the surviving company or, if it is the surviving
company, if it ceases from having shares admitted to negotiation in the stock market, the
Restricted Shares granted that, in accordance with the conditions of each Restricted Share
Program, have not yet been transferred to the Beneficiary, shall have the treatment determiend
by the Board of Directors or by the Committee, according to each case.
4. Justify the proposed plan, explaining:
a. The main goals of the plan
The goal of the Restricted Share Plan is to stimulate the expansion, success and corporate goals
of the Company and the interests of its shareholders, granting executives and top-level
employees with the gratuitous right to receive stock issued by the Company, according to the
terms, conditions and mode provided in the Restricted Stock Plan, thus promoting the
integration of these executives and employees with the Company.
b. How the plan contributes to these goals
The Restricted Share Plan enables the Company to obtain and maintain the services of high-
level executives and employees, offering said executives and employees the additional
advantage of becoming Company shareholders, pursuant to the Restricted Share Plan.
c. How the plan fits the Company's remuneration policy
The Restricted Share Plan us part of the Company's long-term variable remuneration
mechanism, strongly grounded in promoting employee commitment to the Company's
performance in the long term. The delivery of Restricted Shares to the Beneficiary is
conditioned to a grace period allowing the alignment of interests of the Beneficiary with those
of the Company in the long term. The Restricted Share Plan fits the policy of concentrating
manager and top-level employee incentives in variable components linked to the Company's
performance.
According to the Restricted Share Plan, the Board of Directors or the Committee, according to
each case, may condition participation in the Restricted Share Plan to the eligibility and/or
effective participation of the respective Beneficiary in Company stock purchase option plans or
programs, as well as establishing, as a condition for the reception of restricted shares, the
effective exercise of options granted within said plans or programs.
d. how the plan aligns the interests of beneficiaries and the Company in the short, medium
and long term
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The Company's remuneration policy incorporates elements of alignment with the Company's
short, medium and long-term interests. In the short term, the results of the Company and the
Managers shall define the amount to be distributed as variable remuneration (bonus) to the
Officers.
Medium and long-term alignment is obtained in the Restricted Share Plan through the grace
period for the reception of Restricted Shares and in conditioning the Beneficiary to the
eligibility and/or effective participation of the respective Beneficiary in the Company's share
program or plan.
5. Estimate company expenses resulting from the plan, according to the accounting rules
that discuss the subject
The value of estimated Plan expenses, according to CPC 10 R1 approved by CVM Resolution
650 of December 16, 2010, discussing stock-based payment, is estimated at four million, three
hundred and thirty eight thousand, one hundred and ten reais (BRL 4,338,110.00). Said estimate
is made solely for accounting purposes, in compliance with relevant regulations, and does not
imply an alteration of the nature of the Plan or of the rules or conditions established therein.
106
ANNEX I
LOJAS AMERICANAS S.A.
Publicly Traded Company
CNPJ/MF. 33.014.556/0001-96
NIRE 3330002817.0
INCENTIVE PLAN WITH RESTRICTED COMPANY STOCK
1. Restricted Share Plan Goals
1.1. The Restricted Share Plan of LOJAS AMERICANAS S.A. ("Company" and "Restricted
Stock Plan"), has the purpose of (a) stimulating the expansion, success and corporate goals of
the Company and the interests of its shareholders, granting executives and top-level employees
with the gratuitous right to receive stock issued by the Company, according to the terms,
conditions and mode provided in this Restricted Stock Plan ("Restricted Shares"), thus
promoting the integration of these executives and employees with the Company; and (b)
enabling the Company to obtain and maintain the services of high-level executives and
employees, offering said executives and employees the additional advantage of becoming
Company shareholders, according to the terms, conditions and the mode provided in this
Restricted Stock Plan.
2. Eligible Persons
2.1. The people eligible to take part in the Restricted Share Incentive Plan are the managers,
employees and service providers of the Company and its controlled companies (included in the
concept of Company for the purposes of the Restricted Share Plan), as selected for each
Restricted Share concession program to be approved by the Board of Directors or by the
Committee, according to each case ("Beneficiaries").
3. Shares Included in the Restricted Share Plan
3.1. The maximum limit for the granting of Restricted Shares pursuant to the Restricted Share
Plan is shared with the limit of the Stock Purchase Option Plan approved on April 30, 2012
("Option Plan"). Thus, the Restricted Share Plan and the Option Plan shall be jointly limited to
5% of the total shares of the Company's capital existing on the date of concession, considering,
in this total, the dilution effect resulting from the exercise of all options granted and not yet
exercised within the Option Plan, as well as the restricted shares that have not yet been
effectively transferred to Beneficiaries.
3.2. Restricted shares may be delivered with treasury shares.
4. Plan Management
4.1. The Restricted Share Plan shall be managed by the Board of Directors or, if the latter so
chooses, by a committee comprising three members, with at least one being a member (effective
or alternate) of the Board of Directors ("Committee").
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4.1.1. Members of the Committee, but not of the Board of Directors, when installed as a
Committee, cannot take part in the Restricted Share Plan as Beneficiaries.
4.2. The Board of Directors or the Committee, according to each case, shall have broad powers,
respecting the terms of the Restricted Share Plan and, in the case of the Committee, the
directives of the Company's Board of Directors, to organize and manage the Restricted Share
Plan and the grants of Restricted Shares, also to authorize specific treatment of benficiaries in
conditions they consider exceptional and to decide on cases omitted from this Restricted Share
Plan or in any Restricted Share Concession Program.
4.2.1 Regardless of the provisions of the caput, no decision of the Board of Directors or
Committee may, with the exception of the adjustmetns allowed by the Restricted Share Plan, (i)
increase the total limit of Restricted Shares that may be delivered, as per item 3.1 above, or (ii)
alter or hinder any rights or obligations of any agreement existing on restricted shares, without
the consent of the Beneficiary.
4.3. The Board of Directors or the Committee may, according to each case, at any time and
observing the provisions of item 4.2.1 of the Restricted Share Plan (i) alter or extinguish the
Restricted Share Plan; (ii) alter the Restricted Share grant conditions, observing the provisions
of this Restricted Share Plan and the rights assured to Beneficiaries; and (iii) establish the
regulation applicable to cases of omission.
4.4. In the exercise of its powers, the Board of Directors or the Committee, according to each
case, shall be subject solely to the limits established by law and the Restricted Share Plan, with
it being clear that they may treat Beneficiaries in a similar situation differently, without being
bound by any isonomy rule to extend conditions to all that apply only to a few.
4.5. The resolutions of the Board of Directors or the Committee, according to each case, bind
the Company and the beneficiaries regarding all subjects related to this Restricted Share Plan.
5. Restricted Share Grant
5.1. On an annual basis, or whenever considered convenient, the Board of Directors or the
Committee, according to each case, shall create programs for the concession of Restricted
Shares ("Restricted Share Concession programs") which shall define: (i) the respective
Beneficiaries; (ii) the number and type of Company shares to be granted, with optional
adjustments to reflect prior distribution of dividends and other elements; (iii) conditions to
receive restricted shares and the grace period after which ownership over restricted shares shall
be transferred to the Beneficiary; (iv) rules on the transfer of restricted shares and any
restrictions to the restricted shares received; (v) rules applicable to termination, retirement,
death or permanent invalidity of Beneficiaries; (vi) any penalties due to lack of compliance with
obligations; (vii) any goals related to the performance of the Beneficiaries or to the global
performance of the Company or the respective area, or any other conditions for the full or partial
delivery of restricted shares; and (viii) any other terms and conditions that do not contradict this
Plan.
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5.2. The delivery of Restricted Shares may be subject to specific conditions, to the discretion of
the Board of Directors or the Committee.
5.3. Upon the launch of each Program, the Board of Directors or the Committee, according to
each case, shall determine the terms and conditions of each grant in a restricted share grant
contract ("Contract"), to be entered by the Company and each Beneficiary. The contract shall
define the number of shares that the Beneficiary shall be entitled to receive, the conditions for
reception and the grace period for the transfer of restricted shares to the Beneficiary, according
to the respective restricted share concession Program, and any other complementary terms and
conditions to the Restricted Share Plan or the respective restricted share concession Program.
5.4. The Board of Directors or the Committee, according to each case, may also subordinate the
delivery of restricted shares to specific conditions, as well as imposing restrictions to their
transfer, without prejudice to the provisions of item 8.1 below, reserving repurchase options
and/or rights of first refusal to the Company in case of alienation by the Beneficiary of said
restricted shares.
5.6. The Board of Directors or the Committee, according to each case, and respecting the global
limit provided in item 3.1, may add new Beneficiaries to the current Restricted Share
Concession Programs.
5.7. No restricted share shall be transferred to the Beneficiary unless all contractual, legal and
regulatory requirements are fully met.
5.8. No provision of the Restricted Share Plan, of any Restricted Share Concession Program or
of the Contract shall grant any Beneficiary rights regarding the permanence of the manager or
employee of the Company and shall not interfere, in any way, with the rights of the Company to
interrupt, at any time, the mandate of the manager or the employment contract of the employee.
5.9. The Beneficiary shall only be entitled to the rights and privileges inherent to the condition
of stockholder with the effective transfer of Restricted Shares, which shall occur only after the
end of the grace period.
6. Binding to Stock Purchase Option Plans and Programs
6.1. Without prejudice to the other terms and conditions established in the respective Contracts,
the Board of Directors or the Committee, according to each case, may condition participation in
the Restricted Share Plan to the eligibility and/or effective participation of the respective
Beneficiary in Company stock purchase option plans or programs, as well as establishing, as a
condition for the reception of restricted shares, the effective exercise of options granted within
said plans or programs.
7. Restrictions to the Transfer of Shares
7.1. The Board of Directors or the Committee, according to each case, may establish that the
alienation of Restricted Shares, after their reception, shall take place respecting the Company's
right of first refusal. In this case, the Company may appoint one or more third-parties to exercise
109
the pruchase option, whether they are Beneficiaries or not of the Restricted Share Plan, in the
same conditions, observing the specific conditions established in the respective Restricted Share
Concession Plans.
7.2. The Board of Directors or the Committee, acording to each case, may impose other
restrictions to the transfer of the Restricted Shares, after their reception, without prejudice to the
provisions of item 8.1. below, as established in the respective Restricted Share Programs.
8. Dismissal, Retirement, Permanent Invalidity or Death of the Beneficiary
8.1. The Board of Directors or the Committee, according to each case, shall establish in each
restricted share Program the rules applicable to cases of termination of Company Beneficiaries,
due to the termination of the employment or service provision contract, end of term in office,
dismissal or resignation from an executive office, as well as cases of retirement, permanent
invalidity or death of Beneficiaries. In said cases, the Restricted Share Program shall define: (i)
the treatment to be given to restricted shares that are granted and not transferred to the
Beneficiary; (ii) any permanence of any restrictions to the availability of the shares received as a
result of the grant of restricted shares; (iii) the possibility of a more favorable treatment to
Beneficiaries that agree to sign non-competition contracts with the Company, complying with
said contract for the term given by the Board of Directors or the Committee, according to the
case; and (iv) any other terms and conditions that do not contradict this Restricted Share Plan.
9. Adjustments due to Group Formations or Spin-offs
9.1. If the number of existing Company shares is increased or reduced as a result of groupings
or unfoldings of shares, adjustments shall be made to the number of shares that are not delivered
granted as Restricted Shares, as the Board of Directors or the Committee consider necessary to
assure the maintenance of the grant conditions.
9.1.1. Adjustments according to the conditions of item 9.1 above shall be made by the Board of
Directors or by the Committee, according to each case, and said decision shall be definitive and
mandatory. No fraction of shares shall be sold or issued due to any of these adjustments, being
cancelled for all intents and purposes.
9.2. In cases of dissolution, transformation, merger, acquisition, spin-off or restructuring of the
Company, in which the Company is not the surviving company or, if it is the surviving
company, if it ceases from having shares admitted to negotiation in the stock market, the
Restricted Shares granted that, in accordance with the conditions of each Restricted Share
Program, have not yet been transferred to the Beneficiary, shall have the treatment determiend
by the Board of Directors or by the Committee, according to each case.
10. Effective Term of the Restricted Share Plan
10.1. The Restricted Share Plan shall come into effect with its approval by the General Meeting
of the Company and may be extinct, at any time, by a decision of the Board of Directors,
without prejudice (i) to the prevalence of restrictions to the transfer of shares, pursuant to item
7; (ii) to the provisions of item 4.2.1; and (iii) to the right of beneficiaries to receive Restricted
Shares that have already been granted, according to the respective terms and conditions.
110
11. Complementary Obligations
11.1. Adhesion. The signature of the Contract shall imply the express acceptance of all terms of
the Restricted Share Plan and the Restricted Share Concession Program by the Beneficiary,
which undertakes to fully meet them.
11.2. Mandate. For the perfect execution of the provisions of the Restricted Share Plan, of the
Restricted Share Programs and the Contracts, the Beneficiary shall appoint and establish the
Company as its proxy, irrevocably and irreversibly granting powers to sign all instruments
necessary, including the power to delegate.
11.3. Specific Execution. The obligations contained in the Restricted Share Plan, in the
Restricted Share Programs and in the Contract are assumed irrevocably, serving as an executive
extrajudicial instrument pursuant to civil procedural legislation, binding the contractual parties
and their successors of any kind and at any time. The parties establish that said obligations have
specific execution, pursuant to article 501 and subsequent of the Civil Subsequent Code.
11.4. Assignment. The rights and obligations resulting from the Restricted Share Plan and the
Contract are personal and cannot be assigned or transferred, in full or in part, by any of the
parties, or given as guarantee of obligations.
11.5. Novation. It is expressly agreed that refraining from any part of the exercise of any right,
power, resource or faculty assured by law, by the Restricted Share Plan or by the Contract shall
not constitute novation or tolerance to delays in compliance with obligations by any of the
parties, which shall not prevent the other party, to their sole discretion, from exercising at any
time these rights, powers, resources or faculties, which are cumulative and not excludent in
relation to those provided by law.
11.6. Annotation. The text of the Contract serves as a Shareholder Agreement and shall be
annotated to the margin of the corporate records of the Company, for all purposes of article 118
of Law no. 6.404/76.
11.7. Jurisdiction. The district court of the city of São Paulo, state of São Paulo, with the
exclusion of any other, however more privileged it may be, to solve the controversies that may
appear in relation to the Restricted Share Plan.
11.8. Omitted Cases. Omitted cases or doubts and divergences that may appear at the Company
and the Beneficiaries in relation to the grants of this Program shall be presented to the Board of
Directors, which shall have a term of fifteen (15) calendar days to present its interpretation or
solution for the case, whenever decided by the majority of voters. Any option granted according
to the Restricted Share Plan is subject to all terms and conditions established herein, which shall
prevail in case of inconsistencies with provisions of any Contracts or documents mentioned in
this document.