1. Thailand and International Accounting 2007 Jesse Kedy

2. Overview I. Demographics II. Economy, FDI, and Terms of Trade III. Tsunami IV. Leadership V. Thai Airways VI. Southwest Airlines VII. Accounting Differences 2007 Jesse Kedy

3. Demographics Population: 65 million Mostly rural (82% in provinces) Biggest city: Bangkok (about 6 mil.; 50% of GDP) Ethnicities: - Thai 75% - Chinese 14% - Other 11% Major Religions: - Buddhist 94.6% - Islam 4.6% 2007 Jesse Kedy

4. Economics Developed infrastructure Free-enterprise economy; pro-investment policies GDP/ capita: $8,300 (PPP) Economy growth: -2003: 6.9% -2004: 6.1% -2005: 5% 2007 Jesse Kedy

5. Economics (cont) Unemployment: 1.4% (2005) By sector: Labor GDP Agriculture: 49% 9.3% (40% in 1980) Industry: 14% 45.1% Services: 37% 45.6% Poverty rate: 10% Income disparity (Gini): 43.2 2007 Jesse Kedy

6. Gini Coefficient since WWII Income Disparity (0 = Perfect Equality; 100 = Perfect Inequality)

7. World Map, Gini Coefficient

8. Foreign Direct Investment World's 4th most attractive nation for FDI (2004-2007) (after China, India, and the US) FDI During Asian Economic Crisis: 2007 Jesse Kedy

9. Declining Terms of Trade Export Revenue Growth Import Costs Increase Source: http://www.nesdb.go.th/econSocial/macro/outlook_data/econ_outlook_q2_48/q22548_press_eng_colour.pdf 2007 Jesse Kedy

10. 26 December, 2005: Tsunami 2007 Jesse Kedy

11. Impact 8,500 dead Massive destruction of property in southern provinces of Krabi, Phangnga, and Phuket High oil prices, weak demand from Western markets, severe drought in rural regions, decline in tourism, lower consumer confidence 2007 Jesse Kedy

12. Leadership: Thaksin Shinawatra Shin Corporation Thais Love Thais Anti-corruption campaign Rural Populism at the Expense of Upper-class Prime Minister since 2001 2007 Jesse Kedy

13. Leadership: Thaksin Shinawatra (cont) Thaksinomics - Subsidized universal health care - Village-managed development - Low-cost universal access to funds HIV medication - Low-interest agricultural loans - Privatized Oil & Gas GOES - Infrastructure development in rural areas Who would these policies appeal to? 2007 Jesse Kedy

14. Thaksin: Results Controversy 1997 Economic Crisis PM or Domineering CEO? Thailands savior Insider knowledge (1997) IMF loan 2 years early Near conviction GDP/ capita up 49% concealing business Overall GDP up 45% assets (2001) Balanced budget Bribery? Refused Tsunami Aid $667 million in tax savings Thailand is strong enough to cope 2007 Jesse Kedy

15. Thai Airways (THAI) History Formed in 1951 as a national airline Rapid growth early on Present Thailands biggest airline Several operations (especially Cargo Division) Fleet: 87 Aircraft (mixed) 72 destinations in 37 countries 2007 Jesse Kedy

16. Thai Airways Risks Tourism Recovering Rising Fuel Prices Foreign Currency Exchange Revenue in 40 Currencies Investments New Aircraft Suvarnabhumi Airport (new operations base) 2007 Jesse Kedy

17. Southwest Airlines (LUV) Incorporated in Texas in 1967 Focus: Short, High-Frequency Flights Fleet: 445 Boeing 737 aircraft 61 destinations in 31 states Biggest US Carrier (Domestic Flights) Lowest Operating Costs of all Major Airlines 1. Single Aircraft Type 2. Point-to-Point Route Structure 3. Dedicated employees 2007 Jesse Kedy

18. Differences in the Detail Examples Thai Air Southwest Pages per statement 2 1 CF, Operating Activities 26 Items 10 Items Non-Current Assets 14 items PP&E Non-Current Liabilities See Handouts Accountability The accompanying notes See are an integral part of accompanying these financial statements. notes. 2007 Jesse Kedy

19. Comparing Financial Statements Most differences based on THAIs statements being more detailed. Why? Wouldnt an American company be subject to stricter accounting standards than a Thai company? 1. Internationalvs. Domestic Airlines 2. Additional Risks (FX, Fuel, Tourism, Investments) 3. Global Investors (demand more information) 4. US Financial Markets more popular 2007 Jesse Kedy

20. Questions??? 2007 Jesse Kedy