taipei office 117, sec. 2, chang-an e. rd., taipei, taiwan ... · 1 financial and operating...
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EVA Airways Corporation376, Sec. 1, Hsin-nan Rd. Luchu, Taoyuan County, TaiwanTel: 886-3-351-5151Internet Address: http://www.evaair.com
Taipei Office117, Sec. 2, Chang-an E. Rd., Taipei, TaiwanTel: 886-2-8500-2345
Spokesman Kuo-Wei NiehExecutive Vice President, Public Relation DivisionTel: 886-2-2500-1122e-mail: [email protected] Spokesperson Katherine Ko Junior Vice President, Public Relation DivisionTel: 886-2-2500-1122 e-mail: [email protected]
Shareholder ServicesAddress: 2F, 166, Sec. 2, Minsheng E. Rd., Taipei, Taiwan Tel: 886-2-2500-1668Internet Address: http://stock.evergreen.com.tw
AuditorsKPMG68F, 7, Sec. 5, Xinyi Road, Taipei, Taiwan (TAIPEI 101 Tower)Tel: 886-2-8101-6666Internet Address: http://www.kpmg.com.tw
Financial CalendarYear ended December 31, 2010
Contents
Financial and Operating Highlights 1
To Shareholders 2
2010 Result 2
2011 Preview 5
Future Development Strategies 6
Competition, Legal Issues and Operating Environment 6
The Company 8
Major Milestones 8
Calendar of 2010 Events 10
Directors and Supervisors 11
Principal Officers 18
Capital and Shares 25
EVA Air People 29
The Fleet 31
The Network 35
Principal Subsidiaries 36
Important Resolutions by Shareholders and BOD 37
Financial and Operating Results 39
Financial Results 39
Operating Results 45
Financial Statements 46
Independent Auditors’ Report 47
Balance Sheets 49
Statements of Operations 50
Statements of Changes in Stockholders' Equity 51
Statements of Cash Flows 52
Notes to Financial Statements 53
Consolidated Balance Sheets 99
Consolidated Statements of Operations 100
Consolidated Statements of Changes in Stockholders' Equity 101
Consolidated Statements of Cash Flows 102
1
Financial and Operating Highlights 2010 2009 % Change
Financial
Income Statement
Revenue NT$ thousand 104,410,011 73,279,511 42.48%
Passenger Revenue NT$ thousand 56,397,432 43,950,215 28.32%
Cargo Revenue NT$ thousand 41,293,552 24,207,472 70.58%
Total Costs NT$ thousand 91,761,263 76,099,735 20.58%
Operating Profit NT$ thousand 12,648,748 (2,820,224) (548.50%)
Net Profit NT$ thousand 12,016,736 (2,844,254) (522.49%)
EPS NT$ 4.06 (1.14) (456.14%)
Profit Margin % 11.51% (3.88%) 15.39ppt
Balance Sheet
Total Assets NT$ thousand 148,029,519 149,936,736 (1.27%)
Total Liabilities NT$ thousand 107,394,257 117,909,623 (8.92%)
Total Equity NT$ thousand 40,635,262 32,027,113 26.88%
Total Capital NT$ thousand 29,626,772 29,626,772 -
Book Value per Share NT$ 13.72 10.81 26.88%
Debt Ratio % 72.55% 78.64% (6.09ppt)
Operating
Overall Capacity Thousand 8,838,400 7,188,408 22.95%
Overall Traffic Thousand 7,294,269 5,672,316 28.59%
Overall Load Factor % 82.53% 78.91% 3.62ppt
Overall Yield NT$ 13.39 12.02 11.46%
Passenger Capacity Thousand 29,632,492 29,311,228 1.10%
Passenger Traffic Thousand 23,627,111 22,689,099 4.13%
Passengers Carried No. of Passengers 6,435,807 6,021,733 6.88%
Passenger Load Factor % 79.73% 77.41% 2.32ppt
Passenger Yield NT$ 2.39 1.94 23.24%
Cargo Capacity Thousand 6,171,476 4,550,398 35.62%
Cargo Traffic Thousand 5,167,829 3,630,297 42.35%
Cargo Carried Tons 850,617 609,734 39.51%
Cargo Load Factor % 83.74% 79.78% 3.96ppt
Cargo Yield NT$ 7.99 6.67 19.83%
Unit Cost NT$ 10.38 10.59 (1.93%)
Number of Employees 5,121 4,486 14.16%
Capacity per Employee Thousand 1,726 1,602 7.71%
Traffic per Employee Thousand 1,424 1,264 12.65%
Revenue per Employee NT$ thousand 20,389 16,335 24.81%
2
To Shareholders
2010 Result In 2010, we carried a total of 6.44 million
passengers and 850,000 tons of cargo, with a total
load factor of 83%. Audited financial statement
shows annual operating revenue for the year was
NT$104.41 billion, an increase of 43% compared
to 2009, and annual after-tax net profit of NT$12.02 billion.
Passenger revenue reached NT$56.4 billion,
an increase of 28% to NT$12.5 billion over
2009
The global economic recovery and robust
passenger demand led to stronger pricing power
while increased cross-strait flight frequency and
added destinations boosted passenger revenue.
Fuel prices were also less volatile, contributing to
a stunning profit over the previous year‟s loss and record revenue.
Cargo revenue reached NT$41.3 billion, up
71% to NT$17.1 billion over 2009
Economic recovery also spurred a rebound in
the airfreight market. The roll out of a new
generation of 3C products for smartphones
strengthened the upswing, encouraging inventory
policy reviews and a jump in demand for
re-stocking. Accommodating market dynamics,
EVA increased capacity and cargo turnover, resulting in profitability and growth.
Expanded fleet to 56 aircraft and
continued to replace older models
At year-end 2010, the Company operated a
56-aircraft fleet made up of 39 passenger jets and
17 freighters. The types of aircraft in the fleet are
shown in the table below:
Aircraft Type Quantity
B747-400 3
B747-400 Combi 4
B747-400 (Freighter) 9
MD-11 (Freighter) 8
MD-90 6
B777-300ER 15
A330-200 11
Total 56
Aircraft in the Company‟s second-generation
fleet include 11 Airbus 330-200 aircraft, currently
in operation, and 15 Boeing 777-300ERs that are
also fully deployed in 2010. EVA took delivery of
the last of its brand-new B777s in December 2010.
Aviation safety and quality services
acclaimed for excellence
EVA is dedicated to safety and service
quality. The Company has been consistently
recognized for our outstanding aviation safety
record and we fly a young fleet of Airbus
A330-200 and Boeing B777-300ER aircraft. We
began taking delivery of our brand-new
A330-200s in 2003 and deployed the first of our
B777-300ERs in 2005. Our passengers enjoy
exceptionally comfortable flights in
state-of-the-art cabins. In the Premium Laurel
Class top cabins, they travel in ultra-long
hard-shell seats with a roomy 61-inch pitch,
10.4-inch LCD touch-panel AVODs, have a short
message service right at their fingertips, check in
for their flights at a dedicated counter and have the
option of pre-ordering meals from an extensive
menu as late as 24 hours before departure.
Along with the Company‟s outstanding
aviation safety record, our excellent service is
widely recognized at home and globally. In
October 2009, EVA was designated as the official
carrier for the 2010 Taipei International Flora
EXPO, enlisting the Evergreen Group‟s global
aerial network to join us in conveying news of this
significant event to every corner of the world.
Starting around the same time, a strategic alliance
with the Shanghai Municipal Tourism
Administration promoted not only travel to the
Yangtze River Delta region but also international
tourism to both the Shanghai International Expo
and the Taipei Flora Expo.
Results Compared to Projections
Our 2010 operating revenue forecast was
NT$98.03 billion, actual operating revenue was
NT$104.41 billion, and our achievement ratio was
106.51%. Expected pre-tax net profit was
NT$7.53 billion and actual pre-tax net profit was
NT$12.05 billion.
Analysis of Financial Results and Profitability
Total revenue: NT$105.89 billion
Total operating revenue in 2010 reached
NT$104.41 billion, a jump of 43% over 2009.
Due to the bounce back of the business travel and
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tourism markets, passenger revenue rose 28%
over the previous year. And as the global
economy regained strength, the cargo market
surged, picking up 71% in cargo revenue over the
previous year.
Total expenses: NT$93.84 billion
Annual operating expense for 2010 were
NT$91.76 billion, an increase of 20.58% over
2009 attributable to a relative increase in operating
revenue.
Profitability analysis:
Return on total assets: 9.05%
Return on shareholders‟ equity: 33.08%
Ratio of operating profit to paid-in capital:
42.69%
Return on sales: 11.51%
Earnings per share: NT$4.06
Research and development
Responding to the Taiwan government‟s
cross-strait direct link open policy, the
Company has strategically developed
destinations in China and established an
extended service network. To effectively
align our e-services with operation of China
services, we have focused on building our
system, code sharing and e-commerce
development on each route. Our objective is
to quickly establish an EVA presence in first-
and second-tier cities connected by multiple
routes. The Company is also strategically
pursuing cooperative partnerships with
China‟s leading carriers to leverage services
and strengthen our competitive position in
cross-strait markets.
To enhance efficiency of collaboration
between EVA and travel agents, we have
expanded the scope of our B2B sales and
services features to favor proliferation of
e-commerce. We have also simplified and
sped up the process to provide fast,
convenient reservations and ticket issuing
channels, saving manpower in sales, ticketing
and reservations and achieving top-notch
results.
The Company has extended sales and
passenger services by introducing
self-service kiosks, upgrading service quality
and saving manpower and resources.
Following positive results from self-service
kiosks we initiated at Taoyuan International
Airport in 2009, EVA have also installed
them in Taipei‟s Songshan International
Airport, using Common Use Self-Service
(CUSS) software applications and getting
extremely positive results. As a service to our
internet-savvy passengers, we introduced
website check-in in 2010. Passengers simply
go to our EVA website to check in online and
print their boarding passes. At the airport,
they can go directly to the gate and avoid the
inconvenience of standing in line at the
check-in counter to get their boarding passes
for flights to some destinations.
The Company‟s air freight e-commerce
system is poised to provide a
business-contact platform link to forwarders.
Building on this pipeline will enhance service
quality and fortify sales channels. In addition,
development of e-Booking enables agents or
shippers to control freight-space allotments in
an environment they can access from their
own computers. Our e-freight system also
enables EVA to give air cargo customers
seamless services and prompt response to
inquiries about flight schedules, shipment
status and billing information.
Applications for our powerful Electronic
Data Warehouse (EDW) system give us tools
to analyze our business units in real time,
make sound business decisions quickly and
maximize revenue. We used EDW in 2010 to
closely monitor route P&Ls, perform
comprehensive network analyses and give us
a framework for both passenger and cargo
operational strategies with multiple
dimensions and variables. This depth of
analysis facilitates route segmentation and
fare adjustments, enabling us to project the
most advantageous combinations of
operational efficiencies balanced against
future route contributions and optimize flight
schedules.
The Company is uncompromising towards
even a hint of a threat to aviation safety and
EVA‟s ability to maintain our “zero incident”
record. We strengthened flight-safety
incident management and safety-margin risk
analysis in 2010 by integrating flight-safety
incident reports, including aircraft ground
incident management, flight management
incidents, cabin safety incidents and aviation
security event management with all
applicable management mechanisms into one
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comprehensive information platform. This
system identifies problems or threats and
produces an essential risk enhancement plan,
equipping us to achieve effective incident
prevention and strengthen overall aviation
safety.
5
2011 Preview Operation Guidelines
We will uphold the Company‟s philosophy of
providing reliable aviation safety, convenience
and friendly, comprehensive services. We further
upgraded service quality in 2010 by taking
delivery of the last of the 15 advanced
B777-300ERs, elevating passenger safety and
ensuring exceptionally comfortable flight
experiences. We are utilizing fleet resources to
improve route competitiveness and flexibility, and
to positively influence our bottom line.
Estimated Air Traffic and Basis
Passenger service:
We forecast carrying 7.09 million passengers
in 2011, a 10.1% increase compared to 6.44
million passengers in 2010.
Estimation Basis:
The 2011 passenger market focus will expand
in the Mainland China market and our flight quota
will gradually be increased to a total of 370 per
week. At the same time, the quota for tourists from
Mainland China arriving in Taiwan will increase
from 3,000 per day to 4,000. Individual Mainland
China travel programs will also become available
during the first half of 2011. Combined with
visa-exempt programs in Europe and Canada, we
anticipate a higher volume of sales.
Mainland China has now opened 37 regular
flight destinations. EVA is serving nine of them,
including Beijing, Shanghai Pudong, Shanghai
Hongqiao, Guangzhou, Hangzhou, Tianjin,
Ningbo, Zhengzhou and Jinan. Going forward, we
will continue to evaluate feasibility of serving
additional destinations in China and add routes
based on market demand and progress of
cross-strait negotiations. The Company will
continually seek cross-strait business/passenger
sources and strive to develop Taoyuan
International Airport into a global hub.
Cargo service:
We forecast carrying 885,000 tons of
airfreight in 2011, an increase of 4.12% compared
to 850,000 tons in 2010.
Estimation Basis:
Starting in November 2010, as it has become
apparent that the economy is recovering in Asia,
we have initiated freight service to thriving cities
such as Nanjing, Xiamen and Chongqing. And
we will continue to focus on market expansion in
Mainland China and Asia. We have also returned
an MD11 freighter to service, deploying it on
existing long-haul routes and networks to the US
and Europe. We expect greater freight-traffic
growth in 2011.
Key Marketing Strategies
Passenger Service
In 2011, we are operating a total of 15
B777-300ERs. We plan to place three leased
A330-300 aircraft in service during the fourth
quarter of 2011. As the Company optimizes
opportunities in the recovering global
economy, the fuel-saving advantages and
advanced cabin amenities of our fleet are expected to boost our operating profits.
We will continue to develop e-services, such
as online check-in, self-print boarding passes,
etc. to further reduce our operating costs.
We will adjust destinations, reconfigure
aircraft and fine-tune flight schedules to most
effectively capture market demand, leverage
fleet capacity and boost route profitability.
We will continue to strengthen code-sharing
relationships with other major airlines such
as American Airlines, Continental, US
Airways, All Nippon Airways, Qantas,
Air China, Hainan Airlines, Bangkok
Airways, etc. As an example, we are
expanding our code-sharing with All Nippon
Airways to serve 12 destinations in Japan‟s
domestic market with 37 flights.
We will proceed toward our goal of joining
global alliances and tap into any available
opportunities to form strategic alliances with
regional proxy carriers.
We will respond to the administration‟s
cross-strait open policies and closely monitor
any changes, relaxation or amendment in
travel requirements. We will also concentrate
on capturing potential incoming individual
travelers from Mainland China.
Cargo service
Now that the regular cross-strait flights have
been established, we will make full use of
bellyhold space aboard passenger aircraft to
increase destinations and routes. In addition
to maintaining cooperation with Air China
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Cargo to swap regular cross-strait cargo
space on the Taoyuan - Shanghai route, we
are aggressively seeking cooperation on
regular cross-strait freight service with other
carriers.
The Company will continue to strengthen
code-sharing relationships with the objective
of doubling service frequencies and actively
seek new alliances to add destinations.
As the ASEAN Plus One free trade zone is
integrated and China becomes an even
greater economic force, catalyzing excess
market demand, we will continue to
strengthen our existing Europe/US market
share and work to nurture the import market
in Asia.
IATA has ranked EVA ninth among 31
e-freight carriers participating in its
environmental protection and carbon
reduction campaign. The Company is also
participating in IATA‟s e-AWB program to
improve overall airfreight efficiency and cut
costs effectively.
Future Development Strategies The Company has extended our flight
network globally, linking major cities in
Europe, America, Asia and Oceania. We will
use our far-reaching route network to provide
convenient air services, and commit to
developing Taoyuan International Airport
into a global hub within the near future.
In response to the open policy of cross-strait
regular service, our company has actively
engaged with the expansion of direct link
service network and acting flexibly upon the
amendment of the flight agreement to capture
potential passenger and cargo markets to
retain our utmost competitiveness.
After acquiring the last of 15 new-generation
fuel-saving B777-300ER aircraft in 2010,
we‟ve also upgraded cabin equipment on
these aircraft to give our passengers safer and
more comfortable flight services. In 2011 we
plan to take delivery of three A330-300
aircraft equipped with the latest seat
technology, inflight entertainment and much
more. These fleet additions will strengthen
our regional presence. As we continue to
focus on safety and service quality, we will
also review our fleet portfolio and identify
opportunities to optimize capacity as the
cross-strait market continues its high-growth
development.
Currently, the Company is jointly
cooperating with 11 airlines, including
American Airlines, Continental, US Airways,
All Nippon Airways, Qantas, Air China,
Hainan Airlines, Bangkok Airways, British
Airways (cargo), Air China Cargo, FedEx
(cargo). We are committed to joining a key
global alliance. And we will continue to
expand and strengthen our cooperation with
other airlines, combining flight networks and
beneficial advantages, driving down
operating costs in order to diversify risk and
giving our passengers faster, more convenient
flight services.
Competition, Legal Issues and
Operating Environment
Competition
The global economic recovery continues to
be somewhat murky and has impacted
corporate business travel budgets, affecting
business and leisure markets, passenger
volume and fare levels.
Low-cost carriers are entering the passenger
market with rock-bottom fares and Taiwan‟s
high-speed rail has driven domestic airlines
to transform themselves. These factors are
affecting the competitive landscape and the
supply-demand balance in regional passenger
and cargo markets. The outcome has skewed
regional short-haul supply-demand dynamics.
More nations are deregulating aviation
policies. As an example, the United States
and Japan have adopted an open-sky policy
that is likely to intensify competition for
regional and inter-continental passengers and
uplift capacity.
China‟s growing demand for air transport is
expected to continue to dominate Asian
markets. In addition to cross-strait passenger
and cargo volumes that repeatedly reach new
highs, related businesses such as aviation
products manufacturing, aviation personnel
and maintenance are also thriving. This trend
creates significant opportunities for
Taiwanese companies alike.
7
Legal Environment
Political and economic stability has a direct
impact on the ups and downs of passenger
and cargo markets.
It‟s critical that the airline industry be
vigilant and ready to respond to changes as
cross-strait open policies on direct flights are
still in initial stages and support measures
remain somewhat fragmented,
Increasing consumer awareness and changes
in regulations are burdening the airline
industry. A prime example is the penalty
imposed by the European Union for
overselling airline seats and inclusion of the
industry in the EU‟s Emission Trading
Scheme (ETS) that takes effect in 2012.
Mainland China‟s opening up of its
passenger transit policy would affect
international transit network competitiveness
for Taiwan‟s carriers.
Operating Environment
The global economy is on its way to emerge
from the deepest downturn since the Great
Depression and the liquidity crunch has
limited increases in demand. World-trade
volumes aren‟t yet stable but Mainland
China‟s economic development has
continued in an encouraging pattern likely to
provide momentum for economic growth.
Still, confidence in the market is lagging.
The gradual economic recovery and
expansion of emerging markets in Asia, the
Middle East and South America have
sustained growth in both passenger and
freight market in 2011. At the same time,
sluggish growth in Europe and US markets
and stubbornly high unemployment levels
create uncertainty for airline prospects.
Repeated catastrophes stemming from
climate change are impacting the operating
environment for air transport.
Volatile international fuel prices affect
profitability for the airline industry.
Though the Company‟s 2010 performance
was stunning, fuel-price spikes, climate change
and political unrest are severe challenges that the
airline industry faces in the coming year. Along
with widening market exposure, strengthening
business management procedures and further
improving cost management and risk controls, the
Company will sustain steady growth in direct
cross-strait service flights. EVA will also identify
opportunities associated with the ROC‟s
Centennial Celebrations and take advantage of EU
countries‟ visa-exemptions. With these measures
and the flexibility to respond quickly to changes in
the market, we are confident that we can address
the challenges we face and achieve another peak
performance in 2011 again
.
8
The Company
EVA Air was founded in March 1989 as a
100% privately owned Taiwan-based airline.
It is an affiliate of Evergreen Marine
Corporation, the world‟s leading
container-shipping line.
From its maiden flight on July 1, 1991, EVA
Air has grown steadily and today, serves
more than 50 major destinations on four
continents and in Oceania with a fleet of 56
aircraft (as of December 2010). The carrier
has flourished as it has continued to expand
its fleet and operation network.
In 1997, after carefully nurturing an
environment where faultless service quality
and flight safety are the standard, EVA Air
became the first airline in Taiwan to achieve
official ISO 9002 Certification in three areas
at the same time -- passenger, cargo and
maintenance operations. Diligently upholding
these objectives, EVA Air earned
ISO-9001:2000 Certification for all
categories of operation in 2001.
In addition, EVA has ensured quality, smooth
ongoing operations and reduced costs by
investing capital and expertise in
airline-related companies, including
Evergreen Sky Catering Corporation,
Evergreen Airline Services Corporation,
Evergreen Air Cargo Service Corporation,
and other selected subsidiaries.
Operating strategies developed by the carrier
are far-reaching. Company goals place equal
importance on its passenger and cargo
services, and it works in cooperation with
affiliated carriers to maximize mutual
efficiencies and effectively compete on a
global scale. Its worldwide hub of operations
at Taoyuan International Airport in Taiwan
has proven to be both successful and
strategic.
EVA Air listed its stock on Taiwan‟s
TAISDAQ Market in October 1999, and
moved to the main board, TSE, in September
2001.
Major Milestones
1988~1990
On September 1, 1988 at the celebration for
the 20th birthday of Evergreen Marine Corporation,
Group Chairman Y. F. Chang announced that
Evergreen would launch an international airline.
EVA Air was officially formed in March 1989.
After careful deliberation, the fledgling airline
signed a contract with Boeing/McDonnell Douglas
for 26 aircraft at a total purchase value of US$3.6
billion, and immediately captured the attention of
the global airline market.
1991
EVA Air accepted delivery of its first two
B767-300ERs in April, and made its inaugural
flight on July 1. Within that first week, the new
airline opened five destinations in Asia -- Bangkok,
Seoul, Jakarta, Kuala Lumpur and Singapore.
1992
The comprehensive EVA Training Center
opened in July, and the carrier‟s first two
all-passenger B747-400s were delivered in
November. EVA used the first flights of the new
aircraft to launch its Taipei-Los Angeles route and
introduce its four classes of cabin service,
including the debut of its trend-setting Evergreen
Deluxe Class in-between Economy and Super
Business.
1993
EVA Air set new standards and heightened
expectations by expanding its network to more
than half a dozen new destinations, and by
launching service to London, Paris, Seattle, New
York, San Francisco, Brisbane, Sydney and Dubai.
1994
EVA made the greatest number of new
aircraft additions to its fleet this year, purchasing a
total of eight, including three MD-11s, one
B747-400 and four B767-200s. The airline also
added Bali, Fukuoka and Auckland routes to its
network.
9
1995
The carrier purchased three MD-11 freighters
and began to vigorously develop air cargo
operations. It set goals emphasizing passenger and
cargo services equally. And it used joint operations
and land transportation to successfully extend
EVA Cargo services worldwide.
1996
Enhancing the high quality of its operations,
EVA applied for ISO-9002 certification. Within
the next year, its passenger service, cargo service
and aviation maintenance operations were all three
granted ISO-9002 international certifications
simultaneously. EVA achieved ISO-9001:2000
certification in 2001.
1997
Ensuring consistent service quality, EVA and
Singapore Airlines formed Evergreen Sky
Catering Corporation as a joint venture and in
February, began providing in-flight catering
services.
1998
Promoting air safety, EVA signed a
joint-venture contract with General Electric and
established Evergreen Aviation Technologies
Corporation on February 24. That same day, a
powerful new engine test cell was placed in
operation, and the new joint venture began an
aggressive campaign to raise the standards of the
aircraft maintenance business.
1999
Earning brilliant results with both passenger
and cargo service, EVA produced outstanding
operating performances for five successive years.
The Securities and Futures Commission (SFC) of
Taiwan approved its admission to the exchange,
and on October 27, EVA Air shares began to be
traded on the over-the-counter market.
2000
In anticipation of future needs and to expand
its fleet, EVA signed a purchase contract in June
with the Boeing Company for 15
B777-200X/300Xs that included a firm order for
seven of the aircraft and an option for eight more.
Deliveries began in 2005. The carrier relocated its
hub to the brand-new Terminal 2 at Taoyuan
International Airport at the end of July.
2001
EVA committed to add more new,
technologically advanced aircraft to its fleet in
March by signing a purchase contract for eight
Airbus A330-200s and making plans to start
taking deliveries in 2003. EVA Air also secured
approval to transfer its stock listing from OTC and
on 17 September, moved its shares to the Taiwan
Security Exchange (TSE).
2002
EVA launched its online booking system on
January 9. It gained approval to add 24 passenger
flights on its thriving Hong Kong route and to
begin new freighter service. It also introduced a
new slogan “Just relax, your home in the air.”
2003
EVA debuted stylish new cabin-crew
uniforms on April 1, took delivery of its first
A330-200 on June 26 and introduced its new
generation of a top cabin class, Premium Laurel,
along with an upgraded economy class and an
awesome, state-of-the-art Audio/Video on
Demand system.
2004
EVA Air exercised an option for eight B777s
that was part of the firm purchase contract
executed with Boeing in June 2000, expanding its
fleet by a total of 15 brand-new B777s. Deliveries
of the new aircraft started in 2005 and will
continue through 2010.
2005
EVA took delivery of its first two of 15
B777s and introduced the extra-roomy,
exceptionally comfortable new aircraft to
passengers on the Bangkok and London with an
inviting new slogan, “Sharing the World, Flying
Together.”
2006
EVA Air opened its new Southern China
Cargo Center in Hong Kong, enabling it more
efficiently and quickly to move air freight
shipments in and out of the region.
2007 EVA Air received 2007 The Richard Teller
Crane Founder‟s Award from the international
10
Flight Safety Foundation for “its corporate
leadership in aviation safety programs and its
superb safety records.” In the five years since the
coveted award was established, EVA is the first
Asian airline and only the second airline among
all recipients to receive it.
2008 Readers selected EVA Air as the Best Airline
for Premium Economy in Global Traveler
magazine‟s fifth annual GT Tested Survey. The
international business-travel publication surveyed
its readers between Jan. 1 and Aug. 31, 2008,
inviting them to identify “the best” in 55
categories of business and luxury travel. Readers
returned 31,457 completed questionnaires.
2009
EVA Air rated as one of World‟s Best
International Airlines Prestigious Travel & Leisure
readers‟ survey identified top-ten carriers. Results
of the publication‟s prestigious annual survey
place EVA in ninth position, barely one-tenth of a
point behind number six Using cabin comfort,
in-flight service, customer service and value as
rating characteristics.
Calendar of 2010 Events
February
EVA and US Airways expanded co-sharing
services. The agreement extended trans-Pacific
routes to Charlotte, Philadelphia and Phoenix on
February 12, 2010.
March
EVA resumed its freighter service, Taipei to
Vienna with two flights weekly which
significantly lifted Central and Eastern European
airfreight export capacity on March 18, 2010. EVA
expanded Canada service and launched nonstop
Toronto passenger service with three flights
weekly on March 29, 2010.
May
EVA and Bangkok Airways started
code-sharing to Thai vacation destinations and
new service extended EVA routes from Bangkok
to Phuket, Koh Samui, Chiang Mai started from
May 3, 2010.
June
EVA added new service from Taipei‟s
Songshan Airport to Shanghai‟s Hongqiao
International Airport started from June 14, 2010. It
complemented EVA‟s current nine flights a week
between Taoyuan International Airport and
Pudong International Airport.
September
EVA passengers got convenience of self-print
boarding passes service now available at 17
gateways around the world. Departing passengers
who are not checking luggage can print their
boarding passes and go directly to the EVA and
UNI gates 30 minutes before scheduled take-off.
October
EVA/UNI Air teamed up with Air
China/Shenzhen Air to increase China service
started from October 31, 2010. The arrangement
was doubling the frequency of EVA and UNI
flights on eight Taiwan-China routes.
EVA initiated the new service on October 31,
2010 with two flights a day plus two more through
a code share with Air Nippon Airways (ANA)
between the close-in airports in both cities,
Taipei's Songshan International Airport and
Tokyo's Haneda Airport.
December
EVA introduced regularly scheduled flights
to Zhengzhou on December 10, 2010 and UNI Air
will start flying to Ningbo on December 20, 2010.
EVA also initiated passenger service to Jinan on
December 18, 2010 with weekly charters.
11
Directors and Supervisors
April 30, 2011
Title
Name
Date of
Election
(Inaugu-
ration)
Tenure
Date of
Initial
Election,
Appoint-
ment
Shareholding
When Elected
Present
Shareholdings
Shares Held by
Spouses &
Dependents
Shares Held
by Third
Parties
Education &
Experience
Concurrent
Positions in Other
Companies
Other Managers, Directors or
Supervisors Related by Marriage
or Within Second-degree Blood
Relationship of Each Other
Number (%) Number (%) Number (%) Number (%) Title Name Relationship
Chairman Evergreen Marine
Corp.
2009.06.16 3 Years 1989.03.31 750,571,262 19.04 572,257,481 19.32 0 0.00 0 0.00 President, EVA
Airways Corp.
Tamkang University
Director, Uni Airways
Corp.
Director, Evergreen
Sky Catering Corp.
Director, Evergreen
Aviation Technologies
Corp.
Director, Evergreen
Airline Services Corp.
Chairman, Hsiang-Li
Investment Corp.
- - -
Representative:
Lin Bou-Shiu
2009.06.16 3 Years 2004.06.15 0 0.00 288,246 0.00 14,079 0.00 0 0.00
Vice
Chairman
Chang Yung-Fa
Foundation
2009.06.16 3 Years 2009.06.16 100,000 0.00 116,000 0.00 0 0.00 0 0.00 Chairman, Uni
Airways Corp.
PhD in Traffic and
Transportation,
National Chiao-Tung
University
Director, Evergreen
Sky Catering Corp.
Director, Evergreen
Aviation Technologies
Corp.
Director, Evergreen
Air Cargo Service
Corp.
Director, Hsiang-Li
Investment Corp.
- - -
Representative:
Jeng Kung-Yeun
2009.06.16 3 Years 2009.06.16 0 0.00 90,182 0.00 0 0.00 0 0.00
Director Chang Yung-Fa 2009.06.16 3 Years 1989.03.31 155,810,004 3.95 89,418,364 3.02 14,867,731 0.50 0 0.00 Chairman, Evergreen
Marine Corp.
Taipei Commercial
High School
Director, Evergreen
Marine Corp.
Director, Evergreen
International. Corp.
Director Chang
Kuo-Hua
Son
Director Chang Yung-Fa
Foundation
2009.06.16 3 Years 2009.06.16 100,000 0.00 116,000 0.00 0 0.00 0 0.00 Chairman, Evergreen
Marine Corp.
National Taipei
University
Director, Evergreen
Marine Corp.
Director, Evergreen
International Storage
& Transport Corp.
- - -
Representative:
Lin, Sun-San
2009.06.16 3 Years 2009.06.16 0 0.00 0 0.00 0 0.00 0 0.00
Director Evergreen Marine
Corp.
2009.06.16 3 Years 1989.03.31 750,571,262 19.04 572,257,481 19.32 0 0.00 0 0.00 Executive Vice
President, Evergreen
Shipping Agency
(America) Corp.
National Kaohsiung
Normal University
Director, Evergreen
Security Corp.
Director Chang
Yung-Fa
Second-degree
relatives
Representative:
Lin, Long-Hwa
2009.08.27 2 Years
10 months
2009.08.27 0 0.00 1,536,207 0.05 135,106 0.00 0 0.00
12
Director Chang Yung-Fa
Foundation
2009.06.16 3 Years 2009.06.16 100,000 0.00 116,000 0.00 0 0.00 0 0.00 President, Evergreen
International. Corp.
National Chiao-Tung
University
Vice Chairman,
Evergreen Airline
Services Corp.
Director, GRETEC
Construction Corp.
- - -
Representative:
Chang, Ming-Yuh
2009.06.16 3 Years 2009.06.16 0 0.00 0 0.00 0 0.00 0 0.00
Director Evergreen Marine
Corp.
2009.06.16 3 Years 1989.03.31 750,571,262 19.04 572,257,481 19.32 0 0.00 0 0.00 Vice Chairman,
Evergreen Marine
Corp.
Taipei College of
Maritime
Technology
Director, Evergreen
Marine Corp.
Director, Evergreen
International Storage
& Transport Corp.
Director, Evergreen
International. Corp.
Director Chang
Yung-Fa
Father
Representative:
Chang, Kuo-Hua
2009.06.16 3 Years 1989.03.31 0 0.00 47,733,244 1.61 15,500,064 0.52 0 0.00
Supervisor Evergreen
International
Corp.
2009.06.16 3 Years 1993.04.30 408,289,450 10.36 426,926,600 14.41 0 0.00 0 0.00 Executive Vice
President, Evergreen
International Corp.
Keelung Girls‟
Senior High School
Director, Taiwan High
Speed Rail Corp.
Supervisor, Evergreen
Marine Corp.
Supervisor, Evergreen
International Storage
& Transport Corp.
Supervisor, Evergreen
International Corp.
Supervisor, Uni
Airways Corp.
- - -
Representative:
Ko Li-Ching
2009.06.16 3 Years 1992.05.02 0 0.00 82,358 0.00 0 0.00 0 0.00
Supervisor Evergreen
International
Corp.
2009.06.16 3 Years 1993.04.30
408,289,450 10.36 426,926,600 14.41 0 0.00 0 0.00 Executive Vice
President, EVA
Airways Corp.
MBA, Sun Yat Sen
University
Chief Financial
Officer, Evergreen
Marine Corp.
Supervisor, Evergreen
International Storage
& Transport Corp.
Supervisor, Central
Reinsurance Corp.
- - -
Representative:
Wu Kuang-Hui
2010.12.01 1 Year 7
Months
2010.12.01
0 0.00 30,167 0.00 0 0.00 0 0.00
Supervisor Evergreen
International
Corp.
2009.06.16 3 Years 1993.04.30
408,289,450 10.36 426,926,600 14.41 0 0.00 0 0.00 President, Italia
Marittima S.p.A.
Soochow University
Senior Vice
Senior Vice President,
Evergreen
International Storage
& Transport Corp.
- - -
Representative:
Chen Cheng-Pang
2009.06.16 3 Years 2001.04.19 0 0.00 4,579 0.00 4,545 0.00 0 0.00
Note 1: As of April 30, 2011 the Company has issued 2,962,677,277 shares
13
Major Shareholder of EVA Air’s Institutional Shareholder April 30, 2011
Name of Institutional Shareholder Major Shareholders of Institutional Shareholder
Evergreen Marine Corp. Evergreen International S.A. (Panama)(10.64%),
Chang Kuo-Hua (7.56%),
Evergreen International Corp. (7.16%),
Chang Yung-Fa (6.00%),
Ultra International Investments Ltd. (4.25%),
Chang Kuo-Cheng (4.24%),
Chang Kuo-Ming (3.17%),
Cheng Shen-Chin (2.12%),
Chang Shu-Hua (2.02%),
Cathay Life Insurance Co., Ltd. (1.99%)
Chang Yung-Fa Foundation Non-profit organization
Evergreen International Corp. Chang Yung-Fa Foundation (28.86%),
Chang Kuo-Cheng (16.67%),
Chang Kuo-Hua (12.90%),
Chang Kuo-Ming (12.19%),
Lee Yu-Mei (7.14%),
Chen Hui-Chu (5.81%),
Yang Mei-Chen (5.10%),
Chang, Lin Ching-Chi (5.00%),
Chang Yung-Fa (5.00%),
Tseng Chiung-Hui (1.33%)
If the Above-mentioned Shareholders of Major Shareholder of EVA Air’s
Institutional Shareholder are Corporations, the Principal Shareholders of these
Corporations are as follows: April 30, 2011
Name of Institutional Shareholders Major Shareholders of Institutional Shareholders
Evergreen International S.A.(Panama) Chang Yung-Fa (20%),
Chang Kuo-Hua (20%),
Chang Kuo-Ming (20%),
Chang Kuo-Cheng (20%),
Pieca Corp. (20%)
Ultra International Investments Ltd. 100% shareholders of bearer share certificates
Cathay Life Insurance Co., Ltd. Cathay Financial Holding Co., Ltd. (100%)
Chang Yung-Fa Foundation Non-profit organization
14
Criteria for Expertise and Independence of Directors and Supervisors
Qualifications
Name
Meet One of the Following Qualification Requirements, Together with at Least
Five Years Work Experience Independence Criteria
Concurrently Serving as an Independent Director/ Number of Other Public Companies
An Instructor
or Higher
Position in a
Department of
Commerce,
Law, Finance,
Accounting, or
Other
Academic
Department
Related to the
Business Needs
of the
Company in a
Public or
Private Junior
College,
College or
University
A Judge, Public
Prosecutor, Attorney,
Certified Public
Accountant, or Other
Professional or
Technical Specialists
Who Has Passed a
National
Examination and
Been Awarded a
Certificate in a
Profession Necessary
for the Business of
the Company
Have Work
Experience
in the Area
of
Commerce,
Law,
Finance, or
Otherwise
Necessary
for the
Business of
the
Company
1 2 3 4 5 6 7 8 9 10
Lin Bou-Shiu -
Chang Yung-Fa -
Lin, Sun-San -
Lin, Long-Hwa -
Chang, Ming-Yuh -
Jeng, Kung-Yeun -
Chang, Kuo-Hua -
Ko Li-Ching -
Wu Kuang-Hui -
Chen Cheng-Pang -
(1) Not an employee of the Company or any of affiliated companies.
(2) Not a director or supervisor of the Company or any of its affiliates. The same does not apply, however, in case
where the person is an independent director of the company, its parent company or any subsidiary in which the
company holds, directly or indirectly, more than 50% of the voting shares.
(3) Not an individual shareholder who holds shares, together with those held by the person‟s spouse, minor children,
or held by the person under others‟ names, in an aggregate amount of 1% or more of the total number of issued
shares of the company or ranking in the top 10 in holdings.
(4) Not a spouse, relative within the second degree of kinship, or lineal relative within the fifth degree of kinship, of
any of the persons in the preceding three subparagraphs.
(5) Not a director, supervisor, or employee of a corporate shareholder that directly holds 5% or more of the total
number of issued shares of the company or that holds shares ranking in the top five in holdings.
(6) Not a director, supervisor, officer, or shareholder holding 5% or more of the shares, of a specified company or
institution that has a financial relationship with the company.
(7) Not a professional individual who, or an owner , partner, director, supervisor, or officer of a sole proprietorship,
partnership, company, or institution that, provides commercial, legal, financial, accounting services or consultation
to the company or any affiliate of the company, or a spouse thereof.
(8) Not having a marital relationship, or a relative within the second degree of kinship to any other director of the
company.
(9) Not been a person of any conditions defined in Article 30 of the Company Code.
(10) Not a government, institutional person or its representative as defined in Article 27 of the Company Code.
15
Compensation for Directors
December 31, 2010
NT$(Thousand)
Title Name
Remuneration Paid to Directors Directors Salary,
Pension,
Compensation,
and Allowance as
% 2009 Net Profit
Compensation Earned as Employee of EVA or EVA Subsidiary Affiliates Total
Compensation
Paid to Directors
as % 2009 Net
Profit Other
Compensa
tion from
Non-Subs
idiary
Affiliates
Salary Pension Compensation Allowance Salary, Bonus etc. Pension Employee Profit Sharing Employee Stock
Option
EVA
Consolidate
d
Subsidiaries
of EVA
EVA
Consolidate
d
Subsidiarie
s of EVA
EVA
Consolidated
Subsidiaries of
EVA
EVA
Consolidated
Subsidiaries
of EVA
EVA
Consolidat
ed
Subsidiarie
s of EVA
EVA
Consolidated
Subsidiaries
of EVA
EVA
Consolidated
Subsidiaries
of EVA
EVA
Consolidated
Subsidiaries
of EVA
EVA
Consolidate
d
Subsidiaries
of EVA
EVA
Consolidat
ed
Subsidiarie
s of EVA
Cash Stock Cash Stock
Chairman
Evergreen
Marine Corp.
Lin Bou-Shiu
3,324
3,324
-
-
42,000
46,400
-
-
0.37 0.40
3,000
3,000
485
485
20
-
20
-
-
-
0.40
0.42
1,302
Director Chang
Yung-Fa
Director
Chang
Yung-Fa
Foundation
Lin, Sun-San
Director
Evergreen
Marine Corp.
Lin,
Long-Hwa
Director
Chang
Yung-Fa
Foundation
Chang,
Ming-Yuh
Director
Chang
Yung-Fa
Foundation
Jeng,
Kung-Yeun
Director
Evergreen
Marine Corp.
Chang,
Kuo-Hua
16
Compensation for Supervisors
December 31, 2010
NT$ (Thousand)
Title Name
Remuneration paid to Directors Supervisors Salary, Pension,
Compensation, and Allowance as % of
2009 Net Profit
Other Compensation from
Non-Subsidiary Affiliates
Salary Pension Compensation Allowance
EVA
Consolidated
Subsidiaries of
EVA
EVA
Consolidated
Subsidiaries of
EVA
EVA
Consolidated
Subsidiaries of
EVA
EVA
Consolidated
Subsidiaries of
EVA
EVA
Consolidated
Subsidiaries of
EVA
Supervisor
Evergreen
International Corp.
Ko Li-Ching
-
- 11,000 13,992
-
- - - 0.09 0.11 2,183
Supervisor
Evergreen
International Corp.
Owng Rong-Jong
(Note)
Supervisor
Evergreen
International Corp.
Wu Kuang-Hui
(Note)
Supervisor
Evergreen
International Corp.
Chen Cheng-Pang
Note: Evergreen International Corp. appointed Mr. Wu Kuang-Hui as supervisor on December 1, 2010.
17
Principal Officers April 30, 2011
Title Name Date of
Inauguration
Shareholding Spouse & Dependent
Shareholding
Shares Held by
Other Nominal
Holder Education and Experience Concurrent Positions
with Other Companies
Manager Related by Marriage or
Within Second-degree Kinship
of Each Other
Number (%) Number (%) Number (%) Title Name Relationship
President Chang Kuo-Wei 2011.01.01 0 0 0 0 0 0
Master of Arts in Economics, California State
University, Long Beach
Executive Vice President,
Evergreen Aviation Technologies Corp.
Director, Uni Airways
Corp.
Director, Evergreen Sky
Catering Corp.
Director, Evergreen
Aviation Technologies
Corp.
Director, Evergreen
Airline Services Corp.
Director, Evergreen Air
Cargo Service Corp.
Director, Hsiang-Li
Investment Corp.
- - -
Executive Vice
President,
Flight Operations
Div.
Yuen Ping-Yu 2004.01.01 23 0 0 0 0 0 Bachelor degree in Electrical Engineering,
Cheng Kung University - - - -
Executive Vice
President,
Public Relations Div.
Nieh Kuo-Wei 2005.01.01 8,870 0 71 0 0 0
Master degree in Communications, Shih Hsin
University
Manager, Evergreen International. (UK) Ltd.
- - - -
Executive Vice
President,
Safety & Security
Div.
Ho Ching-Sheng 2005.01.01 183,259 0.006 0 0 0 0 Master degree in Flight Safety, University of
Missouri - - - -
Executive Vice
President,
Legal & Insurance
Div.
Tai Jiin-Chyuan 2005.07.01 10,750 0 0 0 0 0
Master degree in Maritime Law, National
Taiwan Ocean University
Manager, Evergreen International Corp.
- - - -
Executive Vice
President,
Engineering &
Maintenance Div.
Liou Jen-Chih
2010.01.01 47,427 0.002 0 0 0 0
Bachelor degree in Marine Engineering,
National Taiwan Ocean University
Vice Chairman, Evergreen Aviation
Technologies Corp.
-
Executive Vice
President, Computer
Div.
Fang
Gwo-Shiang 2007.01.01 102,133 0.003 0 0 0 0
Bachelor degree in Computer Science, Feng
Chia University
Deputy Junior Vice President, Evergreen IT
Corp.
- - - -
18
Executive Vice
President,
International Biz Div.
Li Shyn-Liang 2008.01.01 14,797 0 12 0 0 0 Bachelor degree in Traffic and Transportation
Management, Feng Chia University - - - -
Executive Vice
President,
Project Div.
Cheng Chuan-Yi 2011.03.14 144 0 0 0 0 0 Bachelor degree in International Trade,
Tunghai University - - - -
Executive Vice
President, (Financial
Officer)
Finance Div.
Tsai Ta-Wei 2011.01.01 535 0 592 0 0 0 Bachelor degree in Accounting, Chinese
Cultural University
Supervisor, Central
Reinsurance Corp.
Supervisor, Evergreen
Sky Catering Corp.
Supervisor, Evergreen
Aviation Technologies
Corp.
Supervisor, Hsiang-Li
Investment Corp.
- - -
Executive Vice
President,
Taoyuan Airport Div.
Chen Yeou-Yuh 2011.01.01 94 0 0 0 0 0 Bachelor degree in Maritime Science,
Tamkang University - - - -
Executive Vice
President,
Cargo Div.
Sun Chia-Ming 2011.04.01 25,567 0.001 0 0 0 0 Bachelor degree in International Trade,
Chinese Cultural University - - - -
Senior Vice
President, Personnel
Div.
Lu Yu-Chuan 2006.01.01 967 0 0 0 0 0
Bachelor degree in Business Administration,
Fu Jen University
Junior Vice President, Evergreen Aviation
Technologies Corp.
- - - -
Senior Vice
President,
Passenger Div.
Chen Chi-Hung 2011.01.01 0 0 0 0 0 0 Department of Mechanical Engineering
Hsinpu Institute of Technology - - - -
Senior Vice
President,
Cargo Div. Yang Yung-Heng 2006.04.15 16,000 0.001 0 0 0 0
Bachelor degree in Business Administration,
Chinese Cultural University - - - -
Senior Vice
President, Corporate
Coordination Div. Soong Allen 2007.01.01 177 0 0 0 0 0
Department of Tourism, World College of
Journalism - - - -
Senior Vice
President,
Auditing Div.
Li Ping-Yin 2008.01.01 59,730 0.002 637 0 0 0
Master degree in Management, Yuan Ze
University
Manager, Evergreen Heavy Industry Corp.
- - - -
Senior Vice
President, Computer
Div. Hou Hsien-Yu 2011.01.01 1,000 0 0 0 0 0
Master degree in Information Management,
National Taiwan University - - - -
Senior Vice
President,
Inflight Service Div.
Liu Ying 2011.01.01 8,487 0 0 0 0 0
Master degree in Graduate Institute of Human
Resource Management, National Central
University
- - - -
Deputy Senior Vice
President, Passenger
Div. Wu Su-Shin 2006.01.01 10,415 0 0 0 0 0
Bachelor degree in Sociology, Fu Jen
University - - - -
19
Deputy Senior Vice
President, Project
Div. Chai Chien-Hua 2011.01.01 545 0 18 0 0 0
Bachelor degree in International Trade, Chung
Yuan Christian University - - - -
Deputy Senior Vice
President,
International Biz Div.
Chuang
Shih-Hsiung 2011.01.01 0 0 0 0 0 0
Bachelor degree in Animal Science and
Biotechnology, Tunghai University - - - -
Deputy Senior Vice
President, Taoyuan
Airport Div. Chen Yao-Min 2011.01.01 1,218 0 0 0 0 0
Department of Tourism, World College of
Journalism - - - -
Deputy Senior Vice
President, Taoyuan
Airport Div.
Chang
Chun-Huei 2010.07.15 0 0 0 0 0 0
Bachelor degree in English Language and
Literature, Soochow University
Deputy Senior Vice President, Uni Airways
Corp.
- - - -
Deputy Senior Vice
President, Taoyuan
Airport Div. Yang Hsiu-Huey 2011.01.01 229 0 0 0 0 0
Department of Radio & Television, World
College of Journalism - - - -
Deputy Senior Vice
President, Corporate
Coordination Div. Tao Shin-Chien 2008.01.01 6,657 0 0 0 0 0
Bachelor degree in Business Administration,
National Chung Hsing University - - - -
Deputy Senior Vice
President, Corporate
Coordination Div. Tsai Zu-Ming 2010.10.18 15,006 0 0 0 0 0
Department of Navigation Technology,
National Taiwan College of Marine Science
and Technology
- - - -
Deputy Senior Vice
President,
Cargo Div. Lin Tsung-Yen 2008.01.01 0 0 0 0 0 0
Department of Navigation Technology,
National Taiwan College of Marine Science
and Technology.
- - - -
Deputy Senior Vice
President,
Engineering &
Maintenance Div.
Yeh Ching-Far 2008.01.11 1,919 0 0 0 0 0
Master degree in Business Administrations ,
National Cheng Chi University
Master degree in Mechanical Engineering,
Tatung College of Technology
- - - -
Deputy Senior Vice
President,
Cabin Service Div.
Chang Lih-Lih 2010.11.01 0 0 0 0 0 0
Bachelor degree in Statistics, Tamkang
University
Deputy Senior Vice President, Evergreen Sky
Catering Corp.
- - - -
20
Junior Vice
President,
(Accounting
Officer)
Finance Div.
Chen Chi-Ming 2010.12.01 0 0 0 0 0 0
Bachelor degree in Public Finance, National
Cheng Chi University
- - - -
21
Compensation for President and Executive Vice Presidents December 31, 2010
NT$ (Thousand)
Title Name
Salary Pension Bonus & Perquisite Employee Profit Sharing
Total Compensation to
President & EVPs as %
of 2009 Net Profit
Employee Stock
Options
Compensation
from Investments
Other than
Subsidiaries
EVA
Consolidated
Subsidiaries
of EVA
EVA
Consolidated
Subsidiaries
of EVA
EVA
Consolidated
Subsidiaries
of EVA
EVA Consolidated
Subsidiaries of EVA
EVA
Consolidated
Subsidiaries
of EVA
EVA
Consolidated
Subsidiaries
of EVA Cash Stock Cash Stock
President Jeng Kung-Yeun
17,834 17,834 2,674 2,674 6,520 6,520 183 - 183 - 0.23 0.22 - - 250
Chief Executive
Vice President Chang Kuo-Wei
Executive
Vice President Yuen Ping-Yu
Executive
Vice President Nieh Kuo-Wei
Executive
Vice President Ho Ching-Sheng
Executive
Vice President Tai Jiin-Chyuan
Executive
Vice President Liou Jen-Chih
Executive
Vice President Fang Gwo-Shiang
Executive
Vice President Li Shyn-Liang
Executive
Vice President Lin Jy-Jong
Executive
Vice President Wu Kuang-Hui (Note)
Note: Mr. Wu Kuang-Hui departed from the post on December 1, 2010
22
Net Changes in Shareholdings and Shares Pledged by Directors, Supervisors,
Managers and Major Shareholders
Title Name
2010 As of April 30, 2011
Increase
(Decrease) in
Shareholding
Increase
(Decrease) in
Shares Pledged
Increase
(Decrease) in
Shareholding
Increase
(Decrease) in
Shares Pledged
Chairman Evergreen Marine Corp. 0 0 0 0
Representative: Lin Bou-Shiu 0 0 0 0
Vice
Chairman
Chang Yung-Fa Foundation 58,611
(0) 0 0 0
Representative:
Jeng Kung-Yeun 0 0 0 0
Director Chang Yung-Fa 0 0 0 0
Director
Evergreen Marine Corp. 0 0 0 0
Representative:
Lin, Long-Hwa
0
(232,000) 0 0 0
Representative:
Chang, Kuo-Hua 0 0 0 0
Director
Chang Yung-Fa Foundation 58,611
(0) 0 0 0
Representative:
Lin, Sun-San 0 0 0 0
Representative:
Chang, Ming-Yuh 0 0 0 0
Supervisor
Evergreen International Corp. 51,102,462
(0) 0 0 0
Representative:
Ko Li-Ching 0 0 0 0
Representative:
Wu Kuang-Hui 0 0 0 0
Representative:
Chen Cheng-Pang 0 0 0 0
Major
Shareholder Evergreen Marine Corp. 0 0 0 0
Major
Shareholder Evergreen International Corp.
51,102,462
(0) 0 0 0
President Chang Kuo-Wei 0 0 0 0
Executive Vice
President Yuen Ping-Yu
0
(30,000) 0 0 0
23
Executive Vice
President Nieh Kuo-Wei 0 0 0 0
Executive Vice
President Ho Ching-Sheng
0
(40,000) 0 0 0
Executive Vice
President Tai Jiin-Chyuan
0
(36,000) 0
0 0
Executive Vice
President Liou Jen-Chih 0 0 0 0
Executive Vice
President Fang Gwo-Shiang
0
(18,000) 0 0 0
Executive Vice
President Li Shyn-Liang
0
(10,000) 0 0 0
Executive Vice
President Cheng Chuan-Yi 0 0 0 0
Executive Vice
President Tsai Ta-Wei 0 0 0 0
Executive Vice
President Chen Yeou-Yuh
0
(15,000) 0 0 0
Executive Vice
President Sun Chia-Ming 0 0 0 0
Senior Vice
President Lu Yu-Chuan
0
(10,000) 0
0
(8,000) 0
Senior Vice
President, Chen Chi-Hung
0
(26,000) 0 0 0
Senior Vice
President Yang Yung-Heng
0
(9,000) 0 0 0
Senior Vice
President Soong Allen 0 0 0 0
Senior Vice
President Li Ping-Yin
0
(27,000) 0 0 0
Senior Vice
President Hou Hsien-Yu 0 0 0 0
Senior Vice
President, Liu Ying
0
(108,000) 0 0 0
Deputy Senior
Vice President Wu Su-Shin
0
(94,000) 0 0 0
Deputy Senior
Vice President Tao Shin-Chien 0 0 0 0
Deputy Senior
Vice President Lin Tsung-Yen 0 0 0 0
24
Deputy Senior
Vice President Yeh Ching-Far
0
(105,000) 0 0 0
Deputy Senior
Vice President Tsai Zu-Ming 0 0 0 0
Deputy Senior
Vice President Chai Chien- Hua 0 0 0 0
Deputy Senior
Vice President Chuang Shih-Hsiung 0 0 0 0
Deputy Senior
Vice President Chang Lih-Lih 0 0 0 0
Deputy Senior
Vice President Chang Chun-Huei 0 0 0 0
Deputy Senior
Vice President, Chen Yao-Min 0 0 0 0
Deputy Senior
Vice President, Yang Hsiu-Huey 0 0 0 0
Junior Vice
President, Chen Chi-Ming 0 0 0 0
Information on Stock Transfer: Nil
Information on Stock Pledged: Nil
25
Capital and Shares
As of December 31, 2010, EVA Air had authorized share capital of 4,000,000,000 in common stock
at NT$10 par value per share with 2,962,677,277 shares issued and outstanding.
History of Capitalization
M o nth /Ye ar Pr ic e
Authori zed Capi tal Issued Capi tal
Sources of Capi tal
( ‘000)
Non-
Monetary
Capi tal
Expansion
Shares
( ‘000)
Amount
( ‘000)
Shares
( ‘000)
Amount
( ‘000)
03/2006 10 4 ,000 ,000 40,000,000 3 ,749,887 37,498,869 Cash offer ing
3 ,600,000 -
09/2006 10 4 ,000,000 40,000,000 3 ,874,979 38,749,794 Corp ora te bond
con vers ion 1 ,250,925 -
03/2008 10 4 ,000,000 40,000,000 3 ,906,815 39,068,150 Corp ora te bond
con vers ion 318,356 -
04/2008 10 4 ,000,000 40,000,000 3 ,942,677 39,426,773 Corp ora te bond
con vers ion 358,623 -
07/2009 10 4 ,000,000 40,000,000 2 ,262,677 22,626,773 Capi tal Reduct ion
16,800,000 -
09/2009 10 4 ,000,000 40,000,000 2 ,962,677 29,626,773 Cash offer ing
7 ,000,000 -
Status of Shareholders
As of April 12, 2011
Item Government
Agency
Financial
Institution
Other Legal
Entity
Domestic
Individual
Foreign
Institution or
Individual
Total
Number of
Shareholders 5 25 253 124,774 770 125,827
Shareholdings 36,437,011 119,170,045 1,171,161,025 1,194,399,507 441,509,689 2,962,677,277
Holding
Percentage 1.23 4.02 39.53 40.32 14.90 100.00
26
Distribution of Common Shares
As of April 12, 2011
Range of Shareholdings Number of
Shareholders Number of Shares %
1-999 36,442 12,086,357 0.41
1,000-5,000 57,864 138,154,446 4.66
5,001-10,000 15,901 127,729,043 4.31
10,001-15,000 4,546 58,092,223 1.96
15,001-20,000 3,564 67,287,771 2.27
20,001-30,000 2,649 69,104,155 2.33
30,001-50,000 2,256 92,686,404 3.13
50,001-100,000 1,475 109,346,329 3.69
100,001-200,000 584 85,722,186 2.89
200,001-400,000 256 73,636,604 2.49
400,001-600,000 98 48,644,035 1.64
600,001-800,000 41 29,139,279 0.98
800,001-1,000,000 33 30,899,970 1.04
1,000,001 and above 118 2,020,148,475 68.20
Total 125,827 2,962,677,277 100.00
27
Market Price, Net Worth, Earnings and Dividends per Share for Most Recent
Two Years
Year
Items
2009
(Distributed in 2010)
2010
(Distributed in 2011)
2010
(As of April 30)
Market Price
per Share
Highest NT$15.00 NT$33.27 NT$37.30
Lowest NT$5.90 NT$9.82 NT$21.80
Average NT$10.07 NT$21.37 NT$27.92
Net Worth
per Share
Before Distribution NT$10.81 NT$13.72 NT$13.75
After Distribution - NT$11.56 -
Earnings
per Share
Weighted Average Shares 2,496,011,000 shares 2,962,677,000 shares 2,962,677,000 shares
Earnings
per Share
Before Adjustment NT$(1.14) NT$4.06 NT$0.09
After Adjustment - NT$3.69 -
Dividends
per Share
Cash Dividends - NT$1.00 -
Stock
Dividends
Dividends from
Retained Earnings - NT$1.00 -
Dividends from
Capital Surplus - - -
Return on
Investment
Price/Earnings Ratio
(Note 1) - 5.79 -
Price/Dividend Ratio
(Note 2) - 21.37 -
Cash Dividend Yield Rate
(Note 3) - 4.68% -
Note 1: Price/Earnings Ratio = Average Share Price at Market Close for Current Fiscal Year/Earnings per Share
Note 2: Price/Dividend Ratio = Average Share Price at Market Close for Current Fiscal Year/Cash Dividend per
Share.
Note 3: Cash Dividend Yield Rate = Cash Dividend per Share/Average Market Closing Share Price for
Current Fiscal Year.
28
Dividend Policy and Implementation Status
Dividend Policy
In accordance with Article 26 of EVA‟s Articles
of Incorporation, any earning from the annual
settlement should first be used to offset
accumulated deficits for previous years, after
deducting all applicable taxes and, second,
10% of the balance should be set aside in a
legal reserve; any remainder will be added to
undistributed earnings from the prior period for
distribution after the board of directors
proposes a distribution program with employee
bonuses of no less than 1% and
director/supervisor compensation that does not
exceed 5% of the distributed amount and
submits the program at a shareholders‟ meeting
for resolution.
Since achieving growth status, EVA has
adopted a remainder appropriation method as
its dividend policy to accommodate future
operations and expansion, distributing cash
dividends that range from 0 to 50% and stock
dividends from 100% to 50% alternately. To
maintain profitability and govern the impact of
stock dividends on its operating performance,
EVA may adjust the distribution rate for cash
dividends to 100%~50% and stock dividends
to 0~50% in accordance with capital status if
estimated earnings per share for the current
fiscal year are 20% lower than those of the
previous year.
Dividend Distribution in Current Year
The board adopted a proposal for 2010
dividend distribution at its meeting on March
22, 2011 that the Company plans to pay a stock
dividend of 100 shares for every 1,000 shares
held by investors which amounts to
NT$2,962,677,280, along with a cash dividend
of NT$1 per share which amounts to
NT$2,962,677,277.
Employee Bonuses and Compensation Paid
to Directors and Supervisors
Range or Percentage of Employee Bonuses and
Compensation Paid to Directors and
Supervisors Specified in Article 26 of EVA‟s
Articles of Incorporation: Earnings, if any,
from the annual settlement should first offset
accumulated deficits for previous years after
all applicable taxes are deducted and, second,
10% of the balance should be set aside in a
legal reserve; any remainder will be added to
undistributed earnings from the prior period for
distribution after the board of directors
proposes a distribution program with employee
bonuses of no less than 1% and
director/supervisor compensation that does not
exceed 5% of the distributed amount and
submits the program at a shareholders‟ meeting
for resolution.
Proposed Employee Bonus Plan Approved
by Board of Directors
Employee Cash Bonus: NT$100,000,000
Employee Stock Bonus: Nil
Compensation Paid to Directors and
Supervisors: NT$53,000,000
Number of shares proposed for distribution to
employees and the percentage of the shares
above capitalized earnings: 0 share, 0%
Estimated EPS after deduction of employee
bonuses and compensation to directors and
supervisors: Not applicable.
Status of Stock Repurchased by EVA: N/A
29
EVA Air People
2009 2010
No. of Employees
Pilots 668 711
Cabin Crew 1,289 1,421
Dispatchers 32 32
Maintenance 84 98
Other 2,413 2,859
Total 4,486 5,121
Average Age 36.1 35.4
Average Seniority 11.3 9.7
Education Profile
Distribution
Doctorate 0.11% 0.10%
Master‟s 4.42% 5.27%
Bachelor‟s 88.27% 88.35%
High School 6.71% 5.87%
Other 0.49% 0.41%
30
Organization
Softw
are Desig
nin
g
Dep
t. I
Softw
are Desig
nin
g
Dep
t. II
Softw
are Desig
nin
g
Dep
t. III
Com
puter D
iv.
Perso
nnel D
iv.
Gen
eral Affairs D
ept.
Leg
al & In
suran
ce Div
.
Clin
ic Div
.
Fin
ance D
iv.
Rev
enue A
udit D
ept.
Fin
ance D
ept.
Serv
ice Co
-ord
inatio
n
Div
.
Safety
& S
ecurity
Div
.
Flig
ht C
ontro
l Dep
t.
Flig
ht O
peratio
ns D
iv.
Flig
ht M
anag
emen
t D
ept.
Pilo
t Adm
inistratio
n
Dep
t.
Flig
ht T
rainin
g D
ept.
Inflig
ht S
ervice D
iv.
Quality
Assu
rance D
ept.
Engin
eering D
ept.
Engin
eering &
M
ainten
ance D
iv.
Tao
yuan
Airp
ort D
iv.
Cab
in S
ervice D
iv.
Cab
in C
rew T
rainin
g
Dep
t.
Cab
in C
rew
Adm
inistratio
n D
ept.
Cab
in S
upply
&
Pro
visio
n D
ept.
Pro
curem
ent D
ept.
Public R
elations D
iv.
Project Div.
Passen
ger D
iv.
Busin
ess Dep
t.
Carg
o O
peratio
n D
ept.
Carg
o D
iv.
Reserv
ation D
ept.
Tick
eting D
ept.
Busin
ess Dep
t.
Operatio
n M
anag
emen
t D
ept.
Info
rmatio
n
Man
agem
ent D
ept.
Corp
orate C
oord
inatio
n
Div
.
Passen
ger M
anag
emen
t D
ept.
Carg
o M
anag
emen
t D
ept.
Taich
ung O
ffice
Passen
ger S
ervice D
ept.
Load
ing O
peratio
n D
ept.
System
Man
agem
ent
Dep
t.
Shareholders
Board of Directors
Chairman
Vice Chairman
Supervisors
Auditing Div.
Lab
or S
afety &
Health
Div
.
Foreig
n B
ranch
es
Execu
tive V
ice P
residen
t
Service Quality Committee
Safety Promotion Committee
Corporate Planning Committee
Execu
tive V
ice P
residen
t
Execu
tive V
ice P
residen
t
Execu
tive V
ice P
residen
t
Execu
tive V
ice P
residen
t
Execu
tive V
ice P
residen
t
Execu
tive V
ice P
residen
t
Executive Vice President
President
Intern
ational B
usin
ess D
iv.
Execu
tive V
ice P
residen
t
Kao
hsiu
ng O
ffice
Execu
tive V
ice P
residen
t
Execu
tive V
ice P
residen
t
31
The Fleet
June 2010 – one MD-11 put back into service.
December 2010 - took delivery of 15th
B777-300ER.
As of Dec. 2010
Aircraft Type Owned Capital
Lease
Operating
Lease Total
On Order
(Delivery date)
B747-400 3 - - 3
B747-400 Combi 4 - - 4
A330-200 3 - 8 11
MD-90 - - 6 6
MD-11 Freighter 7 - 1 8
B747-400 Freighter 5 4 - 9
B777-300ER 9 2 4 15
Total 31 6 19 56
32
The Market
Passenger Operations
Region
No. of Passenger RPK (Million) Revenue (Million)
2010 2009 % 2010 2009 % 2010 2009 %
America 1,108,358 1,085,038 2.15% 11,915 11,351 4.97% 22,016 17,521 25.65%
Europe 550,213 543,575 1.22% 4,175 4,255 (1.88%) 7,291 6,731 8.32%
Asia 4,729,434 4,332,535 9.16% 7,212 6,674 8.06% 26,469 19,067 38.32%
Oceania 47,946 60,585 (20.86%) 324 409 (20.78%) 621 631 (1.58%)
Total 6,435,951 6,021,733 6.88% 23,627 22,689 4.13% 56,397 43,950 28.32%
Cargo Operations
Region
Cargo carried (Tons) FTK (Million) Revenue (Million)
2010 2009 % 2010 2009 % 2010 2009 %
America 304,549 217,943 39.74% 3,637 2,526 43.98% 26,708 15,145 76.35%
Europe 74,852 54,932 36.26% 741 529 40.08% 5,536 3,541 56.34%
Asia 469,357 334,891 40.15% 777 562 38.26% 8,976 5,446 64.82%
Oceania 1,859 1,968 (5.54%) 13 13 - 73 75 (2.67%)
Total 850,617 609,734 39.51% 5,168 3,630 42.37% 41,293 24,207 70.58%
Major Competitors and Market Shares
Item 2009 2010
Number of Flights
EVA Airways 28,599 37,807
Taiwan 127,973 202,982
Market Share (%) 22.35 18.63
Number of Passengers
EVA Airways 5,507,837 6,267,704
Taiwan 24,339,515 29,556,305
Market Share (%) 22.63 21.21
Tons of Cargo
EVA Airways 438,679 500,693
Taiwan 1,240,226 1,812,829
Market Share (%) 35.37 27.62
Data Source: Monthly Digest of Statistics, CAA
33
2011 Outlook Increased cross-strait trade, gradual relaxation of policy limitations on visitors from Mainland China and frequent, regularly scheduled cross-strait flights will lead to higher volumes of business and leisure travel. Prospects for EVA‟s major routes are described in the paragraphs that follow.
American routes
The Company operates 45 direct passenger
flights to the United States and Canada weekly:
18 to Los Angeles, four to New York, 12 to San
Francisco, five to Seattle, three to Vancouver
and three to Toronto. We effectively extend
these routes in the respective domestic markets
by code sharing with other leading airlines,
including American Airlines, Continental
Airlines and US Airways.
EVA‟s freighter service to North America is our
major source of cargo revenue. Starting with
the 2011 summer schedule, we allocated 38
cargo flights a week to the North American
market. In addition to existing airfreight
gateways on the East and West Coasts and in
Middle America, i.e., Los Angeles, Atlanta,
Chicago, Dallas, Houston and New York etc.
we will add freighter stops in Seattle or San
Francisco. The additional cargo gateways will
enhance the flexibility of our existing freighter
routes, accommodate customer demands and
strengthen our cargo network between Asia and
North America. The Company will also
increase our North American freighter
frequency to most effectively meet market
demand, improve our operating efficiency and
upgrade our cargo network density in the
respective regions.
The International Air Transport Association
(IATA) forecasts that the North American
market for international airfreight will grow
7.6% over 2011-2014. We anticipate results in
this region that will continue to be positive for
EVA Air Cargo.
European routes
EVA has 16 scheduled nonstop passenger
flights a week to Europe, including three to
Amsterdam, three to Vienna, three to Paris and
seven to London. We give our passengers on
these routes comfortable and convenient
service. Starting with the 2011 summer
schedule, we allocated seven airfreight services
a week to London, Brussels and Frankfurt etc.;
The Company also has collaborated with global
celebrated carriers, British Airways, to offer
regular all-cargo joint services to extend the
European cargo network and upgrade the
overall operational performance in the region.
According to IATA, the European air cargo
market is projected to grow 6.5% during the
2011-2014 periods, suggesting slower growth
than in Asia Pacific and North American
regions. While IATA‟s forecast is cautiously
positive, it does point to recovery momentum
in the European economy. Besides operating
seven all-freighter services a week, The
Company has also collaborated with global
celebrated carriers including British Airways
(BA) and Lufthansa (LH) to offer regular joint
services to expand our European air cargo
network. In addition, the Company exercised
recently granted traffic rights to increase our
Vietnam - Europe air freight service. Using
strategies such as these enables us to upgrade
our overall operational performance on
European routes.
Australian routes
EVA‟s Australian route serves the tourism
market in particular. Taking into account of
market demand and operating costs, the
Company will continue our three weekly Taipei
- Brisbane flights and ongoing code-sharing
with Qantas Airlines.
Asian routes
Following our inauguration of regular
cross-strait services on August 31, 2009, EVA
and our regional subsidiary, UNI Air, have
operated 76 scheduled weekly flights between
Taiwan and China. We serve 17 destinations:
Beijing, Shanghai Pudong, Shanghai Hongqiao,
Guangzhou, Shenzhen, Fuzhou, Xiamen,
Hangzhou, Nanjing, Ningbo, Tianjin, Dalian,
Qingdao, Chongqing, Chengdu, Zhengzhou
and Jinan.
In addition to three-to-four regular weekly
freighter flights to Shanghai and Guangzhou,
the Company added one-to-two regular weekly
34
freight flights to Nanjing, Xiamen and
Chongqing. We anticipate that this level of
capacity and service will contribute positively
and substantially to cross-strait cultural,
economic, tourism and logistics efficiency to
deliver more profitability.
Taiwan‟s geographic location makes it an ideal
pivot point for traffic between North America
and Southeast Asia. The Company is
leveraging this geography superiority and, at
the same time, supporting the government‟s
goal of establishing Taiwan as the leading Asia
Pacific Operations Center with our extensive
route network connecting North America and
Southeast Asia.
In summary, gradual but steady economic
recovery combined with additions of more
regular cross-strait flights point to an optimistic
outlook for EVA. At the same time, we will
increase profitability by optimizing our
network and strategically extending our routes
through joint cooperation with other leading
carriers
Assuming global economic recovery, IATA
forecasts 9.8% growth in the international
freight market over the 2011-2014 periods for
five major Asian markets including Japan,
Korea, Hong Kong, China and Taiwan. This
is the highest growth rate IATA projects for
international freight in any market or region.
Among them China is the dominant growth
driver for the international freight market in the
Asia-Pacific region.
The Company will continue to optimize
opportunities such as those created by the
Economic Cooperation Framework Agreement
(ECFA) in the summer of 2010. Catalyzing
with the acceleration of domestic demand in
China and identifiable advantages stemming
from the ASEAN-Plus-One free-trade zone,
The Company will strategically seeks greater
shares of the China and Asia markets.
35
The Network
EVA Air resumed Taipei - Vienna freighter service in March 2010.
EVA Air launched Taipei (Songshan) - Shanghai (Hongqiao) passenger service in June 2010.
EVA Air launched Taipei - Xiamen freighter service in September 2010.
EVA Air launched Taipei (Songshan) - Tokyo (Haneda) passenger service in October 2010.
EVA Air launched Taipei - Nanjing freighter service in November 2010.
EVA Air launched Taipei - Zhengzhou passenger service in December 2010.
EVA Air launched Taipei - Jinan passenger service in December 2010.
EVA Air launched Taipei – Chongqing freighter service in December 2010.
As of Dec. 2010
North
America
Los Angeles San Francisco Seattle Anchorage Atlanta Chicago
Dallas Vancouver JFK Newark Houston Toronto
Oceania Brisbane
Europe Vienna London Frankfurt Amsterdam Brussels Paris
Asia
Osaka Fukuoka Taipei Kaohsiung Hong Kong Macau
Bangkok Kuala
Lumpur Penang Jakarta Bali Surabaya
Singapore Ho Chi Minh
City Seoul Manila Tokyo
(Narita) Sapporo
Phnom Penh Sendai Hanoi Delhi Nagoya Komatsu
Tokyo (Haneda)
Mainland
China
Shanghai (Pudong)
Beijing Guangzhou Hangzhou Tianjin Ningbo
Shanghai (Hongqiao) Xiamen Nanjing Jinan Zhengzhou Chongqing
Air cargo destination only
Total 56 destinations
36
Principal Subsidiaries
As of Dec. 2010
Company Principal
Activities Location
Date
Founded Capital Share%
Evergreen Airline
Services Corp.
Ground
handling Taiwan Oct. 1990 NT$379.83 million 56.33%
Evergreen Aviation
Technologies Co.,
Ltd.
Aircraft
repair and
maintenance
Taiwan Nov. 1997 NT$4.14 billion 80.00%
Evergreen Air
Cargo Service
Corp.
Cargo terminal
operation Taiwan Mar. 2000 NT$1.2 billion 60%
Evergreen Sky
Catering Corp. Airline catering Taiwan Oct. 1993 NT$1 billion 49.80%
Hsiang-Li
Investment Corp.
Investment
business Taiwan Jan. 2001 NT$25 million 100%
Evergreen Airways
Service (Macau)
Ltd.
Air transport
and investment
business
Macau Dec. 1994 US$12,488 99.00%
Green Siam Air
Services Co., Ltd. Travel business Thailand May 1990 THB20 million 49.00%
RTW Air
Services(S) Pte.
Ltd.
Travel business Singapore Oct. 1989 SG$1.5 million 49.00%
PT Perdana
Andalan Air
Service
Travel business Indonesia May 1991 IDR1.6 billion 51%
Sky Castle
Investment Ltd.
Investment
business Samoa Feb. 2005 US$5.5 million 100%
Concord Pacific
Ltd.
Investment
business Samoa Apr. 2005 US$23.8 million 100%
Sino Gain Limited Aircraft
Leasing Samoa Aug. 2009 US$25,000 100%
37
Important Resolutions by Shareholders and BOD
Important Shareholders’ Resolutions
Date of
Meeting Summary of Important Proposals
Result of
Resolutions Execution
June 14, 2010
1. Distribution of retained earnings:
2009 net deficit after tax is
NT$2,844,253,944. Including
previous accumulated deficit,
accumulated deficit reached to
NT$2,915,074,321. The
Company resolved to make up the
aforementioned deficit via capital
surplus which result in NT$0
available retained earnings for
distribution. After making up
deficiencies there is no
distributable earning for
dividends, remuneration for
directors and supervisors and
employee bonuses as well.
Accepted by all
present
shareholders
with unanimous
consent.
Being executed in
accordance with the
resolution.
2. To amend the Procedures for
Fund Lending to others and
Endorsements/Guarantees.
Accepted by all
present
shareholders
with unanimous
consent.
EVA operates in accordance
with amended Procedures
for Fund Lending to others
and Endorsements/
Guarantees.
Important Resolutions by the Board of Directors
Date of Meeting Important Proposals
March 19, 2010
1. To accept 2009 Report of Operation and 2009 Financial Statements.
2. To accept 2009 internal control and present a Declaration of Internal Control.
3. To accept 2010 Operation Plan.
4. To stipulate date and location for convening 2010 Annual General
Shareholders' meeting.
April 28, 2010
1. To accept 2009 Consolidated Financial Statements.
2. To approve the Company's 2009 surplus/deficit appropriation.
3. To issue new shares NT$5 billion.
4. To enter sale and installment buyback agreement with “Octostar B777-09
Limited” to procure one brand new B777-300ER(B-16717) passenger aircraft.
38
Date of Meeting Important Proposals
April 28, 2010
5. To amend the Procedures for Fund Lending and Endorsements/Guarantees.
6. To amend the Procedures for Internal Material Information Handling.
7. To amend Internal Control Procedures and Detailed Rules for the Internal
Auditor.
August 16, 2010
1. To accept 20101H Financial Statements and Consolidated Financial
Statements.
2. To rescind unsecured corporate bond issue.
October 29, 2010 To issue 15th
secured corporate bond
November 18, 2010
1. To rescind issuance of new share plan.
2. To establish branches in Mainland China.
3. To reconfigure 15 B777-300ER fleet plan.
4. To appoint Mr. Tsai Ta-Wei and Mr. Chen Chi-Ming as Financial Officer and
Accounting Officer respectively effective from December 1, 2010.
December 15, 2010
1. To participate with capital increase & capitalization of capital surplus of
China Cargo Airlines via capital increase on an affiliate, Concord Pacific
Limited.
2. To rescind indirect investment of Shanghai International Cargo Ltd. via an
affiliate, Concord Pacific Limited.
3. To amend 2011 Internal Audit Plan.
4. To elect Mr. Jeng Kung-Yeun as Vice Chairman
5. To re-appoint Mr. Chang Kuo-Wei as President and Taipei Branch Manager.
March 22, 2011
1. To accept 2010 Report of Operation and Financial Statement.
2. To accept 2010 Profit Distribution proposal.
3. To accept new share issuance through capitalization of earnings.
4. To accept 2010 Declaration of Internal Control.
5. To amend Internal Control Procedures & Detailed Rules for Internal Auditor.
6. To accept 2011 Operation Plan.
7. To amend the Procedures for Fund Lending to others and
Endorsements/Guarantees.
8. To re-elect Directors and Supervisors.
9. To release re-electing Directors and Supervisors from non-competition
activities.
10.To stipulate date and location for 2011 Annual General Shareholders' meeting.
April 29, 2011
1. To amend Article of Incorporation.
2. To amend election rule of Directors and Supervisors.
3. To amend 2011 Annual General Shareholder Meeting agendas and notices.
39
Financial and Operating Results
Financial Results
Balance Sheet NT$ (Thousand)
Year
Item 2010 2009
Variance
Amount %
Current Assets 34,373,857 25,588,374 8,785,483 34.33
Funds and Investments 11,850,022 11,211,034 638,988 5.70
Fixed Assets 91,105,911 102,606,655 (11,500,744) (11.21)
Intangible Assets 149,633 238,093 (88,460) (37.15)
Other Assets 10,550,096 10,292,580 257,516 2.50
Total Assets 148,029,519 149,936,736 (1,907,217) (1.27)
Current Liabilities 36,392,207 37,732,901 (1,340,694) (3.55)
Long-Term Liabilities 69,054,677 78,143,293 (9,088,616) (11.63)
Other Liabilities 1,947,373 2,033,429 (86,056) (4.23)
Total Liabilities 107,394,257 117,909,623 (10,515,366) (8.92)
Common Stock 29,626,772 29,626,772 - -
Capital Surplus 2,649,436 5,564,505 (2,915,069) (52.39)
Retained Earnings(Deficit) 12,016,736 (2,915,074) 14,931,810 (512.23)
Other Adjustments (3,657,682) (249,090) (3,408,592) 1,368.42
Total Stockholders’ Equity 40,635,262 32,027,113 8,608,149 26.88
40
Income Statement
NT$(Thousand)
Year
Item 2010 2009
Increase
(Decrease)
Amount
Change
(%)
Operating Revenue 104,410,011 73,279,511 31,130,500 42.48
Operating Cost 84,789,200 70,191,396 14,597,804 20.80
Gross Profit from Operations 19,620,811 3,088,115 16,532,696 535.37
Operating Expenses 6,972,063 5,908,339 1,063,724 18.00
Operating Income 12,648,748 (2,820,224) 15,468,972 (548.50)
Non-Operating Income and
Gain 1,476,477 1,124,674 351,803 31.28
Non-Operating Expense and
Loss 2,079,958 2,029,783 50,175 2.47
Income before Income Tax 12,045,267 (3,725,333) 15,770,600 (423.33)
Income Tax Benefit
(Expense) (28,531) 881,079 (909,610) (103.24)
Net Income 12,016,736 (2,844,254) 14,860,990 (522.49)
Analysis of deviation of more than 20% in gross profit margin:
NT$(Thousand)
Before and After Period
of Increase (Decrease)
Change Amount
Favorable (Unfavorable) Variance
Item Variance in
Sales Price
Variance in
Cost Price
Variance in Sales
Segmentation
Variance in
Volume Other
Passenger 9,164,335 10,209,337 (1,695,383) 527,151 123,230 -
Cargo 8,436,002 5,434,166 342,735 2,260,809 398,292 -
Other (1,067,641) - - - - (1,067,641)
Total 16,532,696 15,643,503 (1,352,648) 2,787,960 521,522 (1,067,641)
Variance in sales price: The price increase stemming from global economic recovery led to a
favorable result amounting to NT$15,643,503,000.
Variance in cost price: Fuel price spike led to a negative result amounting to
NT$1,352,648,000.
Variance in sales segmentation: Acceleration of passenger and cargo volume and higher route
profit margin fueled by economic recovery led to a favorable
result amounting to NT$2,787,960,000.
Variance in volume:
Passenger: The increase of China and US routes passengers led to a positive result amounting
to NT$123,230,000.
41
Cargo: Economic recovery spurred a rebound in every airfreight market led to a favorable
result amounting to NT$398,292,000.
Integrating the above variances led to positive results amounting to NT$521,522,000.
Other: Increase in miscellaneous and other operating cost led to an unfavorable result
amounting to NT$1,067,641,000.
Cash Flow Analysis
Changes in cash flow analysis over recent two years
Year
Item 2010 2009
Change
(%)
Ratio of Cash Flow (%) 52.96 0.00 -
Cash Flow Adequacy Ratio (%) 35.00 8.99 289.32
Ratio of Re-investment for Cash (%) 12.19 0.00 -
Global recovery in 2010 has contributed a net cash inflow from operating activity as compared
with a net cash outflow in 2009. The results lead to relatively increases in the Ratio of Cash
Flow, Cash Flow Adequacy Ratio and Ratio of Re-investment for Cash.
Remedy Measures for Inadequate Liquidity
EVA expects to cut bond-like mutual fund short-term investment, financing through mid and
long-term mortgage loans and unsecured loans.
Liquidity Analysis for the Coming Year
NT$(Thousand)
Initial Cash
Balance
(1)
Net Cash Flow
from Operations
During This Year
(2)
Cash Outflows
During This Year
(3)
Cash Balance
(Negative)
(1)+(2)-(3)
Remedy Measures for Negative
Cash Balance
Investment Plans Financing Plans
14,145,427 10,633,539 25,993,945 (1,214,979) 2,333,937 7,100,000
Operating activities: The Company estimated cash flow from operations in the next one year
accumulate to NT$10,633,539,000.
Investment activities: The estimated long-term equity investment and equipment purchase reach
NT$2,711,201,000.
Financing activities: The estimated both mid and long-term mortgage loans and cash dividend
payout reach NT$23,282,774,000.
42
Remedy Measures for Inadequate Cash Liquidity
Operating activities: The Company redeemed monetary-like mutual fund estimated
NT$2,333,937,000.
Financing activities: The Company structured mid- and long-term mortgage loans and issue
secured corporate bond which estimated to obtain NT$7,100,000,000
approximately.
Impact of Major Capital Expenditures on Financial Operations in Recent Years
The Company entered aircraft procurement agreement with Boeing Company to purchase 15
Boeing 777 passenger aircrafts in June, 2000 and April, 2004 which have been fully delivered
by 2010 and settled down the payment accordingly.
Recent Reinvestment Policy, Major Reason of Profit & Loss, Remedy Actions
and Forward Investment Plan
The recent reinvestments entered mainly concentrate on integration of aviation relative business
to ensure service quality. Stemming from outstanding operating performance of subsidiaries
including Evergreen Aviation Technologies Co., Ltd., Evergreen Sky Catering Corp., Evergreen
Airline Services Corp., and Evergreen Air Cargo Service Corp., the Company booked
investment income of NT$1,055,194,000.
The Board resolution convened on December 15, 2010 announced that the Company acquired
16% stake of China Cargo Airlines Ltd. for RMB328 million via its affiliate, Concord Pacific
Limited, to participate with capital increasing of China Cargo Airlines.
43
Concise Balance Sheet for 2006 - 2010
NT$(Million)
Item 2010 2009 2008 2007 2006
Current Assets 34,374 25,588 21,412 27,700 28,646
Fixed Assets 91,106 102,607 97,874 94,867 78,892
Total Assets 148,030 149,937 143,254 149,138 138,150
Current Liabilities 36,392 37,733 41,228 31,486 31,233
Long-term Liabilities 69,055 78,143 74,085 70,767 58,641
Total Liabilities 107,394 117,910 117,512 104,950 92,010
Share Capital 29,627 29,627 39,427 38,750 38,750
Shareholders‟ Equity 40,635 32,027 25,742 44,188 46,141
Concise Income Statement for 2006 - 2010 NT$(Million)
Item 2010 2009 2008 2007 2006
Operating Revenue 104,410 73,280 90,656 93,103 93,904
Operating Costs 91,761 76,100 99,262 95,377 97,242
Operating Profit 12,649 (2,820) (8,607) (2,274) (3,338)
Non-operating
Income 1,476 1,125 965 2,623 3,101
Non-operating
Expenses and Loss 2,080 2,030 9,749 2,307 2,027
Income before Tax 12,045 (3,725) (17,390) (1,958) (2,264)
Tax (29) 881 501 86 417
Net Income 12,017 (2,844) (16,890) (1,872) (1,687)
Earnings Per Share
(EPS) 4.06 (1.14) (4.30) (0.48) (0.45)
Revenue by Business Segment
NT$(Million)
Year Passenger Cargo Other Total
2010 56,397 54% 41,294 40% 6,719 6% 104,410 100%
2009 43,950 60% 24,207 33% 5,123 7% 73,280 100%
2008 50,057 55% 35,310 39% 5,288 6% 90,656 100%
2007 48,956 53% 38,238 41% 5,909 6% 93,103 100%
2006 46,326 49% 41,382 44% 6,196 7% 93,904 100%
44
Financial Ratio
Item Type of ratio 2010 2009 2008 2007 2006
Financial Structure
(%)
Debt Ratio 72.55 78.64 82.03 70.37 67.32
Ratio of Long-Term Liabilities and
Stockholders‟ Equity to Fixed Assets 120.40 107.37 102.00 121.18 132.82
Solvency
(%)
Current Ratio 94.45 67.81 51.94 87.97 92.45
Quick Ratio 66.23 42.70 27.19 54.62 54.23
Times Interest Earned Ratio(Times) 6.97 (0.83) (4.82) 0.10 0.05
Operating
Performance
Average Collection Turnover (Times) - - - - -
Average Collection Days for Receivables - - - - -
Average Inventory Turnover (Times) - - - - -
Average Days for Sale of Goods - - - - -
Fixed Assets Turnover (Times) 1.08 0.73 0.94 1.07 1.28
Total Assets Turnover (Times) 0.70 0.49 0.63 0.62 0.67
Profitability
Return on Total Assets (%) 9.05 (0.93) (10.15) (0.15) (0.16)
Return on Stockholders‟ Equity (%) 33.08 (9.85) (48.30) (4.14) (3.74)
Operating Income to Paid -in Capital (%) 42.69 (9.52) (21.83) (5.87) (8.61)
Return on Sales (%) 11.51 (3.88) (18.63) (2.01) (1.80)
Earnings per Share (NTD) 3.69 (1.14) (7.49 ) (0.48) (0.45)
Cash Flow
Ratio of Cash Flows 52.96 - - 23.39 13.05
Cash Flow Adequacy Ratio 35.00 8.99 27.69 41.71 81.82
Ratio of Re-Investment for Cash 12.19 - - 4.80 2.71
Leverage Degree of Operating Leverage 274.94 (660.86) (146.81) (9.65) (1.70)
Financial Leverage 116.24 58.83 75.95 0.51 0.63
Note:
(1) Debt Ratio: Total Liabilities/Total Assets
(2) Ratio of Long-term Liabilities and Stockholders‟ Equity to Fixed Assets:
(Net Stockholder Equity + Long-term Liabilities) / Net Fixed Assets
(3) Current Ratio: Current Assets/Current Liabilities
(4) Quick Ratio: Liquid Assets/Current Liabilities
(5) Times Interest Earned Ratio (Times): Earning Before Taxes and Interest Expense/Interest Expense
(6) Fixed Assets Turnover: Net Sales/ Fixed Assets
(7) Total Assets Turnover: Net Sales/Total Assets
(8) Return on Total Assets: (Income after Tax + Interest Expenses)/Total Assets
(9) Return on Stockholders‟ Equity: Income after Tax/Average Stockholders‟ Equity
(10) Operating Income to Paid -in Capital: Operating Income/Capital
(11) Return on Sales: Income after Tax/ Net Sales
(12) Ratio of Cash Flows: Fund from Operating/Current Liability
(13) Cash Flow Adequacy Ratio: 5-Year Sum of Cash from Operation/5-Year Sum of Capital Expenditures, Incremental
Inventory, and Cash Dividends
(14) Ratio of Re-investment for Cash: (FFO- Cash Dividend)/ (Gross Fixed Assets + Long-term Investment + Other Assets +
Working Capital)
(15) Degree of Operating Leverage: (Net Sales – Operating Variable Cost and Expense) / Operating Income
(16) Financial Leverage: Operating Income / (Operating Income – Interest Expense)
45
Operating Results
Item 2010 2009 2008 2007 2006
Overall Capacity (Million) 8,838 7,188 7,957 8,986 9,778
Overall Traffic (Million) 7,294 5,672 6,142 6,954 7,344
Overall Load Factor (%) 82.5 78.9 77.2 77.4 75.1
Overall Yield (NT$) 13.39 12.02 13.90 12.54 11.94
Passenger Capacity (Million) 29,632 29,311 28,853 29,785 30,367
Passenger Traffic (Million) 23,627 22,689 22,944 24,226 24,277
Passengers Carried („000) 6,436 6,022 5,788 6,181 6,172
Passenger Load Factor (%) 79.7 77.4 79.5 81.3 80.0
Passenger Yield (NT$) 2.39 1.94 2.18 2.02 1.91
Cargo Capacity (Million) 6,171 4,550 5,360 6,305 7,045
Cargo Traffic (Million) 5,168 3,630 4,077 4,774 5,160
Cargo Carried (Tons) 850,617 609,734 681,289 785,222 829,952
Cargo Load Factor (%) 83.7 79.8 76.1 75.7 73.2
Cargo Yield (NT$) 7.99 6.67 8.66 8.01 8.02
Unit Cost (NT$) 10.38 10.59 12.47 10.61 9.94
Number of Aircraft 56 55 53 52 49
Number of Employees 5,121 4,486 4,772 5,153 5,312
Capacity per Employee
(Thousand) 1,726 1,602 1,667 1,744 1,841
Traffic per Employee
(Thousand) 1,424 1,264 1,287 1,350 1,383
Revenue per Employee
(Thousand) 20,389 16,335 18,997 18,068 17,678
46
EVA AIRWAYS CORP.
Financial Statements
December 31, 2010 and 2009
(With Independent Auditors' Report Thereon)
Address: No. 376 Hsin-nan Road, Sec. 1, Luchu, Taoyuan Hsien, Taiwan
Telephone No.: 886(03)3515151
47
Independent Auditors’ Report
The Board of Directors
EVA Airways Corp.:
We have audited the balance sheets of EVA Airways Corp. (the “Company”) as of December 31, 2010 and 2009, and the
related statements of operations, changes in stockholders’ equity, and cash flows for the years ended. These financial
statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audits. We did not audit the financial statements of certain non-consolidated investee
companies. The Company’s investments in these companies as of December 31, 2010 and 2009, were evaluated using
the equity method, and the resulting book values of these investments amounted to NT$3,295,808 thousand (US$
113,141thousand), constituting 2.23% of total assets, and NT$2,995,084 thousand (US$93,509 thousand), constituting
2.00% of total assets, respectively. The cumulative translation adjustments from the aforementioned investments
amounted to NT$5,683 thousand (US$195 thousand) and NT$9,495 thousand (US$296 thousand), respectively. The
resulting investment gains amounted to NT$417,043 thousand (US$13,231 thousand), constituting 3.46% of income
before income tax, and NT$233,430 thousand (US$7,065 thousand), constituting (6.27)% of loss before income tax, for
the years 2010 and 2009, respectively. The financial statements of these companies were audited by other auditors,
whose reports were furnished to us, and our opinion, insofar as it relates to these amounts included for the said investee
companies, is based solely on the reports of the other auditors.
We conducted our audits in accordance with the “Regulations Governing Auditing and Certification of Financial
Statements by Certified Public Accountants” and auditing standards generally accepted in Republic of China. Those
standards and regulations require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits and the reports of the other auditors provide a reasonable basis for our opinion.
In our opinion, based on our audits and the reports of the other auditors, the financial statements referred to in the first
paragraph present fairly, in all material respects, the financial position of the Company as of December 31, 2010 and
2009, and the results of its operations and its cash flows for the years ended, in conformity with the “Guidelines
Governing the Preparation of Financial Reports by Securities Issuers”, the related financial accounting standards of the
“Business Entity Accounting Act” and of the “Regulation on Business Entity Accounting Handling”, and accounting
principles generally accepted in Republic of China.
48
The Company adopted newly issued SFASs, the effects of which are as stated in note 3 to the accompanying financial
statements.
The accompanying financial statements as of and for the years ended December 31, 2010 and 2009, have been translated
into United States dollars. We have audited the translation, and in our opinion, the financial statements expressed in
New Taiwan dollars have been translated into United States dollars on the basis set forth in note 2(c) of the notes to the
accompanying financial statements.
Taipei, Taiwan (the Republic of China)
March 10, 2011
Note to Readers
The accompanying financial statements are intended only to present the financial position, results of operations and cash flows in accordance
with the accounting principles and practices generally accepted in the Republic of China and not those of any other jurisdict ions. The standards,
procedures and practices to audit such financial statements are those generally accepted and applied in the Republic of China.
This document is an English translation of a report originally issued in Chinese. In the event of a conflict between the English translation and
the original Chinese version, the Chinese language auditors’ report shall prevail.
49
EVA AIRWAYS CORP.
Balance Sheets
December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars and U.S. Dollars)
2010 2009
Assets NT dollars US dollars NT dollars US dollars
Current assets:
Cash and cash equivalents (note 4(a)) $ 14,145,427 485,597 4,218,748 131,712
Financial assets at fair value through profit or loss－current (note
4(b)) - - 17,247 539
Available-for-sale financial assets－current (note 4(b)) 1,943,977 66,735 4,491,553 140,230
Notes receivable 230,608 7,916 289,200 9,029
Accounts receivable, net 7,441,116 255,445 6,805,453 212,471
Accounts receivable－related parties (note 5) 190,539 6,541 162,968 5,088
Other receivables 75,538 2,593 22,449 701
Other receivables－related parties (note 4(d) and 5) 74,920 2,572 105,923 3,307
Inventories (notes 4(c), 5 and 6) 8,526,069 292,690 8,690,370 271,320
Other prepayments 499,163 17,136 564,048 17,610
Deferred income tax assets－current (note 4(m)) 1,210,647 41,560 199,042 6,214
Other current assets 35,853 1,231 21,373 667
Total current assets 34,373,857 1,180,016 25,588,374 798,888
Funds and investments:
Available-for-sale financial assets－noncurrent (note 4(b)
and 6) 991,131 34,024 878,472 27,427
Financial assets carried at cost－noncurrent (note 4(b)) 2,251,437 77,289 2,252,588 70,327
Long-term equity investments under equity method
(note 4(d)) 8,607,454 295,484 8,079,974 252,263
Total funds and investments 11,850,022 406,797 11,211,034 350,017
Property, plant and equipment (notes 4(e), 4(f), 6 and 7):
Land 1,869,572 64,180 1,869,572 58,369
Buildings 4,543,278 155,966 4,543,278 141,845
Machinery and equipment 7,165,744 245,992 6,771,808 211,421
Aircraft 98,145,977 3,369,241 101,316,455 3,163,174
Leased assets 14,736,589 505,890 16,198,639 505,733
126,461,160 4,341,269 130,699,752 4,080,542
Less: accumulated depreciation (46,652,712) (1,601,535) (42,209,332) (1,317,806)
Advances for purchases of equipment 11,297,463 387,829 14,116,235 440,719
Net property, plant and equipment 91,105,911 3,127,563 102,606,655 3,203,455
Intangible assets:
Deferred pension cost (note 4(l)) 149,633 5,137 238,093 7,433
Other assets:
Refundable deposits (note 7) 1,733,899 59,523 1,696,935 52,979
Deferred charges (note 4(g) and 5) 4,765,125 163,581 3,981,534 124,306
Deferred income tax assets－noncurrent (note 4(m)) 3,332,996 114,418 3,624,677 113,165
Other assets (note 6) 718,076 24,651 989,434 30,891
Total other assets 10,550,096 362,173 10,292,580 321,341
Total assets $ 148,029,519 5,081,686 149,936,736 4,681,134
2010 2009
Liabilities and Stockholders’ Equity NT dollars US dollars NT dollars US dollars
Current liabilities:
Short-term borrowings (note 4(h)) $ - - 979,994 30,596
Financial liabilities at fair value through profit or loss－current
(note 4(b)) - - 685,797 21,411
Derivative financial liabilities for hedge purposes－current (note 4(p)) - - 897,196 28,011
Accounts payable 1,589,218 54,556 1,168,413 36,479
Accounts payable－related parties (note 5) 2,473,943 84,928 1,078,180 33,661
Accrued expenses 7,234,011 248,335 5,856,614 182,848
Other payables－related parties (note 5) 153,394 5,266 148,940 4,650
Other payables (notes 4(k), 5 and 6) 3,520,070 120,840 3,483,026 108,743
Unearned revenue 6,620,271 227,266 5,980,215 186,707
Current portion of long-term liabilities (notes 4(i), 4(j) and 6) 11,756,574 403,590 14,563,908 454,696
Other current liabilities (note 4 (f)) 3,044,726 104,522 2,890,618 90,247
Total current liabilities 36,392,207 1,249,303 37,732,901 1,178,049
Long-term liabilities:
Bonds payable (note 4(j)) 5,000,000 171,644 9,000,000 280,987
Long-term borrowings (notes 4(i) and 6) 38,237,583 1,312,653 47,319,280 1,477,342
Installment accounts payable (notes 4(k), 5 and 6) 15,460,630 530,746 9,622,736 300,429
Lease liability－noncurrent (note 4(f)) 10,356,464 355,526 12,201,277 380,932
Total long-term liabilities 69,054,677 2,370,569 78,143,293 2,439,690
Other liabilities:
Accrued employee retirement liabilities (note 4(l)) 398,222 13,670 268,961 8,397
Other liabilities 1,549,151 53,181 1,764,468 55,088
Total other liabilities 1,947,373 66,851 2,033,429 63,485
Total liabilities 107,394,257 3,686,723 117,909,623 3,681,224
Stockholders’ equity (notes 4(b), 4(l), 4(m), 4(n) and 4(p)):
Common stock 29,626,772 1,035,332 29,626,772 1,035,332
Capital surplus 2,649,436 82,625 5,564,505 178,675
Retained earnings (accumulated deficit) 12,016,736 381,242 (2,915,074) (111,306)
Other stockholders’ equity adjustments:
Cumulative translation adjustments (3,554,690) (105,448) 423,833 (84,439)
Net loss not yet recognized as net pension cost (511,128) (16,846) (157,412) (4,703)
Unrealized gains or losses on financial instruments 408,136 18,058 (515,511) (13,649)
Total other stockholders’ equity adjustments (3,657,682) (104,236) (249,090) (102,791)
Total stockholders’ equity 40,635,262 1,394,963 32,027,113 999,910
Commitments and contingencies (notes 5 and 7)
Total liabilities and stockholders’ equity $ 148,029,519 5,081,686 149,936,736 4,681,134
See accompanying notes to financial statements.
50
EVA AIRWAYS CORP.
Statements of Operations
For the years ended December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars and U.S. Dollars, Except Earnings per Share)
2010 2009
NT dollars US dollars NT dollars US dollars
Operating revenue (note 5) $ 104,410,011 3,312,500 $ 73,279,511 2,217,903
Operating cost (notes 4(c), 4(l), 5 and 10) (84,789,200) (2,690,013) (70,191,396) (2,124,437)
Gross profit from operations 19,620,811 622,487 3,088,115 93,466
Operating expenses (notes 4(l), 5 and 10) (6,972,063) (221,195) (5,908,339) (178,824)
Operating income (loss) 12,648,748 401,292 (2,820,224) (85,358)
Non-operating income and gains:
Interest income 83,542 2,650 31,254 946
Investment income (note 4(d) 1,055,194 33,477 278,177 8,420
Gains on disposal of property, plant and equipment 23,794 755 52,672 1,594
Gains on valuation of financial liabilities (note 4(q)) 5,151 164 638,026 19,311
Other income (note 4(b)) 308,796 9,797 124,545 3,769
1,476,477 46,843 1,124,674 34,040
Non-operating expenses and losses:
Interest expenses (notes 4(e) and 5) (1,767,564) (56,077) (1,973,576) (59,733)
Exchange losses, net (286,872) (9,101) (21,184) (641)
Other losses (25,522) (810) (35,023) (1,060)
(2,079,958) (65,988) (2,029,783) (61,434)
Income (loss) from continuing operations before income tax 12,045,267 382,147 (3,725,333) (112,752)
Income tax benefit (expenses) (note 4(m)) (28,531) (905) 881,079 26,667
Net income (loss) $ 12,016,736 381,242 $ (2,844,254) (86,085)
Income before Loss before
income tax Net income income tax Net loss
NT US NT US NT US NT US
dollars dollars dollars dollars dollars dollars dollars dollars
Basic earnings (losses) per share
(expressed in dollars) (note 4(o)):
$
4.07
0.13
4.06
0.13
(1.49)
(0.05)
(1.14)
(0.03)
Diluted earnings per share
(expressed in dollars) (note 4(o)):
$ 4.06
0.13
4.05
0.13
-
-
-
-
See accompanying notes to financial statements.
51
EVA AIRWAYS CORP.
Statements of Changes in Stockholders' Equity
For the years ended December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars and U.S. Dollars)
NT Dollars US Dollars
Common
Stock
Capital
Surplus
Legal
Reserve
Retained
Earnings
(Accumulated
Deficit)
Cumulative
Translation
Adjustments
Net Loss Not
Yet Recognized
As Net Pension
Cost
Unrealized
Gains or losses
on Financial
Instruments
Total
Common
Stock
Capital
Surplus
Legal
Reserve
Retained
Earnings
(Accumulated
Deficit)
Cumulative
Translation
Adjustments
Net Loss Not
Yet Recognized
As Net Pension
Cost
Unrealized
Gains or losses
on Financial
Instruments
Total
Balance on January 1, 2009 $ 39,426,772 4,866,753 18,864 (16,889,684) 1,491,895 (162,517) (3,009,945) 25,742,138 1,332,170 157,445 586 (535,670) (74,754) (4,862) (91,527) 783,388
Make-up of accumulated deficit by capital reduction (16,800,000) - - 16,800,000 - - - - (509,863) - - 509,863 - - - -
Make-up of accumulated deficit - - (18,864) 18,864 - - - - - - (586) 586 - - - -
Cash subscription 7,000,000 420,000 - - - - - 7,420,000 213,025 12,781 - - - - - 225,806
Share options granted to employees - 282,100 - - - - - 282,100 - 8,585 - - - - - 8,585
Increase in net equity due to change in percentage of capital surplus in long-term equity investments
under equity method - (4,348) - - - - - (4,348) (136) - - - - - (136)
Increase in net equity due to recording net loss not yet recognized as net pension cost in long-term
equity investments under equity method - - - - - 18,744 - 18,744 - - - - - 585 - 585
Recognized net loss not yet recognized as net pension cost - - - - - (13,639) - (13,639) - - - - - (426) - (426)
Increase in net equity due to change in percentage of unrealized gains or losses on financial instruments
in long-term equity investments under equity method
-
-
-
-
-
-
18,034
18,034
-
-
-
-
-
-
563
563
Change in unrealized gains on financial instruments - - - - - - 2,476,400 2,476,400 - - - - - - 77,315 77,315
Net loss for the year ended December 31, 2009 - - - (2,844,254) - - - (2,844,254) - - - (86,085) - - - (86,085)
Translation adjustments for the year ended December 31, 2009 - - - - (1,068,062) - - (1,068,062) - - - - (9,685) - - (9,685)
Balance on December 31, 2009 29,626,772 5,564,505 - (2,915,074) 423,833 (157,412) (515,511) 32,027,113 1,035,332 178,675 - (111,306) (84,439) (4,703) (13,649) 999,910
Make-up of accumulated deficit
- (2,915,074) - 2,915,074 - - - - -
(111,306)
- 111,306 - - - -
Increase in net equity due to change in percentage of capital surplus in long-term equity investments
under equity method - 5 - - - - - 5 - - - - - - -
Increase in net equity due to recording net loss not yet recognized as net pension cost in long-term
equity investments under equity method - - - - - (44,828) - (44,828) - - - - - (1,539) - (1,539)
Recognized net loss not yet recognized as net pension cost - - - - - (308,888) - (308,888) - - - - - (10,604) - (10,604)
Increase in net equity due to change in percentage of unrealized gains or losses on financial instruments
in long-term equity investments under equity method
-
-
-
-
-
-
18,217
18,217
-
-
-
-
-
-
625
625
Change in unrealized gains on financial instruments - - - - - - 905,430 905,430 - - - - - - 31,082 31,082
Net gain for the year ended December 31, 2010 - - - 12,016,736 - - - 12,016,736 - - - 381,242 - - - 381,242
Translation adjustments for the year ended December 31, 2010 - - - - (3,978,523) - - (3,978,523) - 15,256 - - (21,009) - - (5,753)
Balance on December 31, 2010 $ 29,626,772 2,649,436 - 12,016,736 (3,554,690) (511,128) 408,136 40,635,262 1,035,332 82,625 - 381,242 (105,448) (16,846) 18,058 1,394,963
52
EVA AIRWAYS CORP.
Statements of Cash Flows
For the years ended December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars and U.S. Dollars)
2010 2009
NT dollars US dollars NT dollars US dollars
Cash flows from operating activities:
Net income (loss) $ 12,016,736 381,242 (2,844,254) (86,085)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation 8,159,478 258,867 8,144,425 246,502
Amortization and maintenance expense 1,142,167 36,236 1,239,578 37,517
Investment losses (income) (1,055,194) (33,477) (278,177) (8,420)
Proceeds from cash dividends on long-term equity investments 367,650 11,664 113,916 3,448
Losses on disposal and obsolescence of property, plant and equipment 6,127 194 6,645 201
Deferred income tax benefit - - (901,698) (27,291)
Amortization expense recorded as interest expenses 83,158 2,638 33,728 1,021
Amortization of other deferred gain (53,636) (1,702) (129,598) (3,922)
Losses (gains) on sale of investments (3,376) (107) (6,419) (194)
Salary expenses－share options granted to employees - - 282,100 8,538
Changes in operating assets and liabilities, net:
Changes in operating assets, net:
Financial assets at fair value though profit or loss 17,247 547 407,773 12,342
Notes receivable 58,592 1,859 (90,516) (2,739)
Accounts receivable (635,663) (20,167) (996,228) (30,152)
Accounts receivable－related parties (27,571) (875) 2,165 65
Other－receivable (53,089) (1,684) 159,500 4,827
Other receivables－related parties 111,059 3,523 (111,474) (3,374)
Inventories 164,314 5,213 (59,548) (1,802)
Other prepayments 64,885 2,059 48,365 1,464
Other current assets (14,480) (459) 1,837 56
Changes in operating liabilities, net:
Financial liabilities at fair value through profit or loss (685,797) (21,757) (5,100,887) (154,385)
Accounts payable 420,805 13,350 229,858 6,957
Accounts payable－related parties 315,284 10,003 349,437 10,576
Accrued expenses 1,377,397 43,699 76,654 2,320
Other payables－related parties 4,454 141 (98,752) (2,989)
Other payables (3,138,768) (99,580) 41,587 1,259
Unearned revenue 640,056 20,306 (532,017) (16,102)
Other current liabilities 163,804 5,197 (467,178) (14,140)
Accrued employee retirement liabilities (147,321) (4,674) (135,498) (4,101)
Other liabilities (26,266) (833) 24,962 755
Net cash provided by (used in) operating activities 19,272,052 611,423 (589,714) (17,848)
Cash flows from investing activities:
Decrease (increase) in available-for-sale financial assets－current 2,625,966 83,311 (3,614,340) (109,393)
Payments for purchase of long-term equity investments under equity method - - (253,559) (7,674)
Withdrawal of financial assets carried at cost 12,871 408 27,052 819
Payments for purchase of property, plant and equipment (3,215,793) (102,024) (14,167,167) (428,788)
Proceeds from disposal of property, plant and equipment 1,151 37 3,975 120
Decrease (increase) in refundable deposits (144,692) (4,591) 3,148,396 95,290
Increase in deferred charges (928,437) (29,455) (477,787) (14,461)
Decrease (increase) in other assets 271,358 8,609 (187,637) (5,679)
Net cash used in investing activities (1,377,576) (43,705) (15,521,067) (469,766)
Cash flows from financing activities:
Decrease in short-term borrowings (979,994) (31,091) (1,319,052) (39,923)
Issuance of bonds payable - - 5,000,000 151,332
Redemption of bonds payable (3,100,000) (98,350) (2,646,700) (80,106)
Increase in long-term borrowings (including installment accounts payable) 20,791,400 659,626 21,604,046 653,876
Redemption of long-term borrowings (including installment accounts payable) (23,222,197) (736,745) (11,545,521) (349,441)
Redemption of lease liability (1,457,006) (46,225) (1,411,331) (42,716)
Cash subscription - - 7,420,000 224,576
Net cash provided by (used in) financing activities (7,967,797) (252,785) 17,101,442 517,598
Effect of exchange rate changes on cash - 38,952 - 3,490
Net increase in cash and cash equivalents 9,926,679 353,885 990,661 33,474
Cash and cash equivalents at beginning of year 4,218,748 131,712 3,228,087 98,238
Cash and cash equivalents at end of year $ 14,145,427 485,597 4,218,748 131,712
Additional disclosure of cash flow information:
Interest paid $ 1,894,742 60,112 2,153,844 65,189
Less: capitalized interest 214,189 6,795 145,600 4,389
Interest paid (excluding capitalized interest) $ 1,680,553 53,317 2,008,838 60,800
Income tax paid $ 32,676 1,037 23,336 706
Supplemental schedule of noncash investing and financing activities:
Current portion of long-term liabilities and bonds payable $ 11,756,574 403,590 14,563,908 454,696
Inventory transferred from fixed assets $ 13 - 18 -
Translation adjustments $ (3,978,523) (21,009) (1,068,062) (9,685)
Unrealized gains or losses on financial instruments (including investee) $ 923,647 31,707 2,494,434 77,878
Increase in deffered charges $ 2,008,916 63,734 477,787 14,461
Less: Accounts payable－related parties (1,080,479) (34,279) - -
Cash paid for deffered charges $ 928,437 29,455 477,787 14,461
(Continued)
53
EVA AIRWAYS CORP.
Notes to Financial Statements
December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars and U.S. Dollars Unless Otherwise Specified)
1. Organization and Business Scope
EVA Airways Corp. (the Company) was incorporated on April 7, 1989, as a corporation limited by
shares under special permission of the Ministry of Transportation and Communications and under the
Company Act of the Republic of China (ROC). The Company commenced commercial operations on
July 1, 1991.
The Company’s business activities are
1.1 to engage in fixed-wing aircraft transport business, scheduled air transport business, and
nonscheduled air transport business;
1.2 to carry on the business of freight agent, including operation, transportation and maintenance;
1.3 to repair and maintain fuselages, aircraft engines, navigational instruments and related equipment,
etc.;
1.4 to carry on the business of marketing aircraft facilities, equipment, and fittings;
1.5 to process and manufacture machinery and spare parts;
1.6 to publish magazines in the field of aviation;
1.7 to provide on-the-job training delegated by other organizations and entities (no recruitment from the
general public is allowed);
1.8 to engage in maintaining flying facilities for navigational training;
1.9 to engage in import and export trading for the foregoing activities (excluding businesses requiring a
permit);
1.10 to provide consultant services for business operation and management;
1.11 to provide general advertising services;
1.12 to engage in the retailing of tobacco and alcohol;
1.13 to engage in general merchandise activities;
1.14 to engage in the retailing of food and beverages;
1.15 to engage in the retailing of apparel;
1.16 to engage in the retailing of umbrellas;
1.17 to engage in the retailing of hats and caps;
1.18 to engage in the retailing of books and stationery;
1.19 to engage in the retailing of sporting goods;
1.20 to engage in the retailing of toys and amusement goods;
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
54
1.21 to engage in the retailing of watches and clocks;
1.22 to engage in the retailing of glasses;
1.23 to engage in the retailing of weights and measures;
1.24 to engage in the retailing of jewelry and precious metals;
1.25 to engage in the retailing of telecommunication equipment;
1.26 to engage in the retailing of photographic equipment;
1.27 to carry out any business which is not forbidden or restricted by the applicable laws and regulations,
excluding those requiring licensing.
As of December 31, 2010 and 2009, the Company had 5,121 and 4,486 employees, respectively.
2. Summary of Significant Accounting Policies
The financial statements are the English translation of the Chinese version prepared and used in the
Republic of China. If there is any conflict between, or any difference in the interpretation of, the
English and Chinese language financial statements, the Chinese version shall prevail.
The Company prepared the accompanying financial statements in accordance with ROC generally
accepted accounting principles. The preparation of financial statements in conformity with the
aforementioned guidelines, the “Guidelines Governing the Preparation of Financial Reports by Securities
Issuers”, the “Business Entity Accounting Act” and the “Regulation on Business Entity Accounting
Handling”.
The major accounting policies and basis of measurement used in preparing the financial statements are
summarized below.
(a) Use of estimates
The preparation of the accompanying financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the reporting periods. Actual results could differ from these estimates.
(b) Foreign currency transactions and translations
The Company maintains its books in New Taiwan dollars. Foreign currency transactions during the
year are translated at the exchange rates on the transaction dates. Foreign currency-denominated
assets and liabilities are translated into New Taiwan dollars at the exchange rate prevailing on the
balance sheet date, and the resulting translation gains or losses are recognized as non-operating
income or expenses. In accordance with amended Statement of Financial Accounting Standards
(SFAS) No. 14 “The Effects of Changes in Foreign Exchange Rates”, non-monetary assets and
liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currencies that are stated at fair value are translated into NT dollars at foreign exchange rates
ruling at the dates the fair value was determined. If the financial assets or liabilities are evaluated at
fair value through profit or loss, the resulting unrealized exchange income (loss) from such
translations is reflected in the accompanying statements of operations. If the adjustments of
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
55
financial assets or liabilities are evaluated at fair value through stockholders’ equity, the resulting
unrealized exchange income (loss) from such translations is recorded as a separate component of
stockholders’ equity.
For equity investments in foreign companies which are accounted for by the equity method, the
translation differences resulting from translating foreign financial statements from the functional
currency into the reporting currency are reported as cumulative translation adjustments. Cumulative
translation adjustments are reported as a separate component of stockholders’ equity.
(c) Convenience translation into U.S. dollars
The financial statements are stated in New Taiwan dollars. Assets and liabilities are translated at
the rate of exchange at the balance sheet date. Statement of operations accounts are translated at the
average rates during the year. The related translation adjustments are reported as a component of
shareholders’ equity.
(d) Translation of foreign currency for foreign operating units
The Company regards the aircraft purchased with its own US dollar funds and US dollar loans and
operated for international passenger and cargo transportation business as “foreign operating units”.
The US dollar-denominated aircraft purchase costs and the related US dollar loans at the balance
sheet date are translated into New Taiwan dollars at the exchange rates prevailing on the balance
sheet date. The US dollar-denominated aircraft depreciation amounts are translated into New
Taiwan dollars at the current year’s average exchange rate. The translation differences resulting
from these translations are reported as cumulative translation adjustments.
The US dollar-denominated lease assets and lease liability arising from capital lease of aircraft at the
balance sheet date are translated into New Taiwan dollars at the exchange rates prevailing on the
balance sheet date. The US dollar-denominated leased aircraft depreciation amounts are translated
into New Taiwan dollars at the current year’s average exchange rate. The translation differences
resulting from these translations are reported as cumulative translation adjustments.
In addition, the translation differences resulting from the translation of refundable deposits for
aircraft leases into New Taiwan dollars at the exchange rate prevailing on the balance sheet date are
also reported as cumulative translation adjustments.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
56
(e) Classification of current and noncurrent assets and liabilities
Cash or cash equivalents, and assets that will be held primarily for the purpose of being traded or are
expected to be realized within 12 months after the balance sheet date are classified as current assets;
all other assets shall be classified as noncurrent.
Liabilities that will be held primarily for the purpose of being traded or are expected to be settled
within 12 months after the balance sheet date are classified as current liabilities; all other liabilities
shall be classified as noncurrent.
(f) Asset impairment
The Company assesses at each balance sheet date whether there is any indication that an asset
(individual asset or cash-generating unit) may have been impaired. If any such indication exists, the
Company estimates the recoverable amount of the asset. The Company recognizes impairment loss
for an asset whose carrying value is higher than the recoverable amount.
The Company reverses an impairment loss recognized in prior periods for assets other than goodwill
if there is any indication that the impairment loss recognized no longer exists or has decreased. The
carrying value after the reversal should not exceed the recoverable amount or the depreciated or
amortized balance of the assets assuming no impairment loss was recognized in prior periods.
The Company assesses the goodwill and intangible assets that have indefinite lives or that are not yet
available for use on an annual basis and recognizes an impairment loss on the carrying value in
excess of the recoverable amount.
(g) Cash and cash equivalents
Cash and cash equivalents includes cash on hand, savings and checking deposits, fixed time deposits,
miscellaneous petty cash. Cash equivalents represent highly liquid debt instruments, such as
commercial paper and bank acceptances with original maturities of three months or less. Cash
equivalents also include other highly liquid investments which do not have a significant level of
market risk related to potential interest rate changes.
(h) Financial instruments
The Company adopted transaction-date accounting for financial instrument transactions. At the
beginning of recognition, financial instruments are evaluated at fair value. Except for financial
instruments held for trading, acquisition cost or issuance cost is added to the original recognized
amount.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
57
The financial instruments the Company held or issued are classified into the following accounts in
accordance with the purpose of holding or issuing after the original recognition.
1. Financial assets/liabilities at fair value through profit or loss: The main purposes of the financial
instruments are selling or repurchasing in the short term. Except for the derivatives that the
Company held for hedging purposes and are considered to be effective, all derivatives should be
classified into this account. Financial instruments at fair value through profit or loss are
measured at fair value, and changes therein are recognized in profit or loss.
2. Available-for-sale financial assets: These are measured at fair value, and changes therein, other
than impairment losses and foreign exchange gains and losses on available-for-sale monetary
items, are recognized directly in equity. When an investment is derecognized, the cumulative
gain or loss in equity is transferred to profit or loss. If there is objective evidence which indicates
that a financial asset is impaired, a loss is recognized in earnings. If, in a subsequent period, the
amount of the impairment loss decreases, for equity securities, the previously recognized
impairment loss is reversed to the extent of the decrease and recorded as an adjustment to equity;
for debt securities, the amount of the decrease is recognized in profit or loss, provided that the
decrease is clearly attributable to an event which occurred after the impairment loss was
recognized.
3. Financial assets carried at cost: Equity investments which cannot be evaluated at fair value are
booked at original cost. If there is evidence of impairment, impairment loss should be
recognized, and the impairment amount cannot be reversed.
(i) Hedge accounting
Derivative financial instruments held by the Company were to manage the fluctuation risk of foreign
exchange rate, interest rate and fuel prices exposure on operating, investing, financing activities of the
company. According to this policy, derivative financial instruments held or issued by the Company
were for hedging. When derivative financial instruments are no longer for hedging, they are treated as
financial instruments held for trading.
Hedge accounting recognizes the offsetting effects on profit or loss of changes in the fair values of the
hedging instrument and the hedged item. If hedging relationships meet the criteria for hedge
accounting, they are accounted for as follows:
1. Fair value hedges
Changes in the fair value of a hedging instrument designated as a fair value hedge are recognized
in profit or loss. The hedged item also is stated at fair value in respect of the risk being hedged,
with any gain or loss being recognized in profit or loss.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
58
2. Cash flow hedges
Changes in the fair value of the hedging instrument designated as a cash flow hedge are
recognized directly in equity. If a hedge of a forecasted transaction subsequently results in the
recognition of an asset or a liability, the amount recognized in equity is reclassified into profit or
loss in the same period or periods during which the asset acquired or liability assumed affects
profit or loss. For hedges other than those covered by the preceding statement, the associated
cumulative gain or loss that had been recognized in equity shall be reclassified to profit or loss in
the same period or periods during which the hedged forecast transaction affects profit or loss.
3. Hedge of net investment in foreign operation
Changes in the fair value of the hedging instrument are recognized directly in equity. The gain or
loss on the hedging instrument relating to the effective portion of the hedge that has been
recognized directly in equity is recognized in profit or loss on disposal of the foreign operation.
(j) Inventories
Inventories represent parts and supplies for maintenance of aircraft, and merchandise to sell during
flights. Except for merchandise, which is stated at the lower of cost or market value, parts and
supplies are stated at cost less allowance for slow-moving and obsolete items. Cost is calculated by
the weighted-average method, and market value represents net realizable value.
(k) Long-term equity investments
Long-term equity investments in which the Company owns more than 20% or less than 20% of the
investee’s voting shares but is able to exercise significant influence over the investee’s operating and
financial policies are accounted for by the equity method. In accordance with ROC SFAS No.23
“Interim Financial Reporting”, the Company recognizes investment gains/ losses under the equity
method quarterly.
The difference between the selling price and the book value of the long-term equity investments under
the equity method is recognized as disposal gain or loss in the accompanying non-consolidated
statements of operations. If there is capital surplus or cumulative translation adjustments resulting
from long-term equity investments, the capital surplus or cumulative translation adjustments should
be debited/credited to disposal gain/loss based on the disposal ratio.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
59
If the differences between investment cost and shareholding equity come from assets that can be
depreciated, depleted or amortized, the Company shall amortize such differences over estimated
remaining economic lives. If the differences come from discrepancies between the carrying amounts
of assets and their fair market values, the Company shall offset all unamortized differences when
conditions making such over- or under-valuation are no longer present. When the investment cost
exceeds the fair value of identifiable net assets acquired, the excess should be recorded as goodwill.
When the fair value of identifiable net assets acquired exceeds the cost, the difference should be
assigned to non-current assets acquired proportionate to their respective fair values. If these assets
are all reduced to zero value, the remaining difference should be recognized as extraordinary gain.
If an investee company issues new shares and original shareholders do not purchase or acquire new
shares proportionately, the investment percentage, the equity in net assets for the investment that an
investor company has invested, will be changed. Such difference shall be used to adjust the
additional paid-in capital and the long-term investments accounts. If the adjustment stated above is
to debit the additional paid-in capital account and the book balance of additional paid-in capital from
long-term investments is not enough to be offset, the difference shall be debited to the retained
earnings account.
Unrealized gains or losses resulting from inter-company transactions between the Company and its
investees accounted for by the equity method are deferred. Unrealized gains or losses derived from
transactions involving depreciable or amortizable assets are amortized over the useful lives of the
related assets. Gains or losses from other transactions are recognized when realized.
If the stockholders’ equity of an investee company becomes negative, and the Company guaranteed
the investee company’s liability or made financial commitments to the investee company, or the deficit
appears to be short term, the Company continues to record investment losses thereon; if the book
value of long-term investment is insufficient to offset against investment losses, the Company offsets
it against accounts receivable and recognizes liabilities.
When the Company has significant influence, according to ROC SFAS No. 7 “Consolidated
Financial Statements”, consolidated financial statements should be provided at the end of the first
quarter, half-year, third quarter and fiscal year.
(l) Property, plant, and equipment, and related depreciation
Property, plant, and equipment are stated at acquisition cost. For construction of buildings and
purchase of machinery and equipment, the Company capitalizes as part of the costs of related assets
the related interest costs incurred before commencing to use such assets. Routine repair and
maintenance are charged to current operations. Major repairs and maintenance, additions,
enhancements and replacements, and the costs of dismantling and removing the items and restoring
the site on which they are located, are capitalized in the cost of related assets.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
60
The Company accrues for the removal and recovery costs for fixed assets during the non-production
period in accordance with Interpretation (97) 340 issued by the Accounting Research and
Development Foundation (ARDF). When parts of an item of property, plant and equipment have
different useful lives, they are accounted for as separate items (major components) of property, plant
and equipment. The Company evaluates the useful lives and depreciation method at the end of every
year. Any changes in the useful lives and depreciation method are accounted for as changes in
accounting estimates.
Depreciation of plant and equipment is provided over the estimated useful lives of the respective
assets using the straight-line method. Leasehold improvements are depreciated over the shorter of
the lease term or estimated useful lives using the straight-line method. The useful lives of main
property, plant and equipment are as follows:
Buildings: 55 years
Machinery and equipment: 3~18 years
Aircraft: 7~18 years
Other equipment: 5~18 years
Gains (losses) on disposal of such asset are presented as non-operating income and gains (expenses
and losses).
(m) Lease
The leased property is valued at the smaller of the following two values: (a) the present value of all
future rental payments (less the lessor’s executor costs) plus the bargain purchase price or the lessee’s
guaranteed residual value and (b) the market value of leased property at the inception date of the lease.
All leased properties under capital leases are depreciated. If the lease contract contains a bargain
purchase option or allows the transfer of ownership at the end of the term, the properties under this
type of lease are depreciated based on the leased property’s useful economic life, otherwise the lease
term is used.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
61
The lessee’s periodic rental payment covers two parts: (i) the purchase price of the leased property
and (ii) the interest expense due to long-term or installment financing. Therefore, the lessee
recognizes both a lease liability and interest expense in each period. The interest expense is
determined using the following rules:
a) If the value of the leased property is determined using the maximum borrowing rate for
nonfinancial institutions (determined by the ROC Ministry of Finance) on the inception date of
the lease, the interest expense is calculated based on the beginning balance of the lease payable
and the maximum borrowing rate.
b) If the value of the leased property is determined by its market price, the interest expense is also
calculated based on the beginning balance of the lease payable and the maximum borrowing rate.
However, a service charge is calculated based on the beginning balance of the lease payable and
the difference between the lessor’s interest rate implicit in the lease and the maximum borrowing
rate.
If there is any unguaranteed residual value at the end of the lease term, the lessee calculates the
imputed interest expense based on the rental payments, the guaranteed residual value, and the leased
property’s market value using the rules described in the two paragraphs above.
The lessee’s lease payable is determined by subtracting the interest expense and the service charge
from the periodic rental payment.
The lease liability is classified as either a current liability or long-term liability, depending on the
expiration date.
The Company sold and leased back aircraft under operating lease agreements. If the translation
differences resulting from the translation of the foreign currency cost of the aircraft and the related
US dollar loans into New Taiwan dollars at the exchange rate prevailing on the selling date and
historical rates and the gains or losses from disposal of the aircraft resulting from the translation of
the US dollar selling price and US dollar book value of aircraft at the exchange rate prevailing on the
selling date were net gains, these gains should be deferred using the unearned gain on sales－
leaseback account according to ROC SFAS No. 2 “Leases”, otherwise they should be taken as a loss.
The amortization of unearned gain on sales－leaseback depends on the nature of the lease. For
operating leases, the unearned gain is amortized to rental expense using the lease term. For capital
leases, however, the unearned gain is amortized to depreciation expense using the leased property’s
useful economic life or lease term based on the nature of those transactions.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
62
(n) Deferred charges
Deferred charges principally include the capitalized costs for computer software, leasehold
improvements, “D” check maintenance for aircraft and engines and others. These costs are
amortized using the straight-line method over the shorter of the estimated years in which such assets
are economically beneficial to the Company’s operation or the lease terms. In accordance with
SFAS No. 37, an intangible asset shall be measured initially at cost. After initial recognition, an
intangible asset shall be measured at its cost less any accumulated amortization and any accumulated
impairment losses.
(o) Employee retirement plan
The Company has established an employee noncontributory defined benefit retirement plan (the
“Plan”) covering full-time employees in the ROC. In accordance with the Plan, employees are
eligible for retirement or are required to retire after meeting certain age or service requirements.
Payments of retirement benefits are based on an employee’s average monthly salary for the last six
months before the employee’s retirement and the number of points accumulated by the employee
according to his/her years of service. Each employee receives 2 points for each service year from
year 1 to year 15, and 1 point thereafter. A lump-sum retirement benefit is paid through the
retirement fund. Under this retirement plan, the Company is responsible for making the entire
pension payment.
Starting from July 1, 2005, the enforcement rules of the newly enacted Labor Pension Act (the “New
Act”) require the following categories of employees to adopt the New Act’s defined contribution plan:
(i) employees who were covered by the Plan and opted to be subject to the pension mechanism under
the New Act; and
(ii) employees who commenced working after the enforcement date of the New Act.
In accordance with the New Act, the rate of the employer’s monthly contribution to an individual
labor pension fund account per month shall not be lower than 6% of the worker’s monthly wages.
The Company adopted ROC SFAS No. 18 “Accounting for Pensions” for its retirement plan.
SFAS No. 18 requires a company to have an actuarial calculation of its pension liability using the
balance sheet date as the measurement date. The excess of accumulated benefit obligation over the
fair value of pension plan assets is deemed as the minimum pension liability and is recognized as
accrued pension liability. The Company provides contributions to the retirement fund monthly equal
to 11.9% of the paid salaries and wages. The funds are deposited with Bank of Taiwan.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
63
For the portion of the retirement plan adopting the defined contribution scheme, in accordance with
the New Act, the Company provides monthly contributions to the Bureau of Labor Insurance equal to
6% of the worker’s monthly wages. The amount of contribution is recognized as expense of the
current period.
(p) Revenue recognition
Ticket sales for passengers and cargo are recorded as unearned revenue, included in current liabilities,
and recognized as revenue when the services are provided.
(q) Employee bonuses and directors’ and supervisors’ remuneration
Employee bonuses and directors’ and supervisors’ remuneration appropriated after January 1, 2008,
are accounted for by Interpretation (96) 052 issued by the Accounting Research and Development
Foundation. The Company estimates the amount of employee bonuses and directors’ and
supervisors’ remuneration according to the Interpretation and recognizes it as expenses. Differences
between the amount approved in the shareholders’ meeting and recognized in the financial statements,
if any, are accounted for as changes in accounting estimates and recognized as profit or loss. In
addition, the number of shares distributed to employees as employees’ bonuses is calculated based on
the closing price on the day before the shareholders’ resolution date, and the closing price is adjusted
retroactively for dividends that had been distributed.
(r) Income tax
The Company adopted ROC SFAS No. 22 “Income Taxes”. Under this method, the amounts of
deferred income tax assets or liabilities are recognized for future tax effects attributable to temporary
differences, loss carryforwards, and investment tax credits. The measurement of deferred income
tax assets or liabilities is based on provisions of enacted tax law. A valuation allowance is provided
on deferred income tax assets that may not be realized in the future.
When a change in the tax laws is enacted, the deferred tax liability or asset should be recomputed
accordingly in the period of change. The difference between the new amount and the original
amount, that is, the effect of changes in the deferred tax liability or asset, should be reported as an
adjustment to income tax expense (benefit) for income from continuing operations currently.
Deferred income tax assets or liabilities are classified as current or noncurrent based on the
classification of the related assets or liabilities. If no assets or liabilities are related, deferred income
tax assets or liabilities are classified according to the period of realization.
The tax imputation system was adopted in accordance with the amendment of the ROC Income Tax
Law. Under the new system, the Company may retain the earnings after December 31, 1997, by
paying a 10% surtax on such undistributed earnings, and the surtax is accounted for as income tax
expenses in the following year when the shareholders approved a resolution not to distribute the
earnings.
The Company adopted ROC SFAS No. 12 “Accounting for Income Tax Credits”, whereby income
tax is reduced by investments tax credits in the year when the credit arises.
(s) Earnings per share (EPS)
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
64
The earnings per share are computed by dividing the amount of net income attributable to common
stock outstanding for the period by the weighted-average number of common shares outstanding
during the period.
The convertible bonds issued by the Company belong to potential common stock. When computing
diluted EPS, potential common shares are included in the denominator if they are dilutive. Anti-
dilutive potential common shares are ignored in calculating diluted EPS.
The calculation of diluted EPS is consistent with the calculation of basic EPS while giving the effects
of all dilutive potential common shares that were outstanding during the reporting period. When
calculating diluted EPS, the net income attributable to common stockholders and the weighted-
average number of shares outstanding are adjusted for the effects of all dilutive potential common
shares.
The weighted-average number of common shares outstanding shall be adjusted currently and
retroactively for the increase in common shares outstanding from stock issuance through the
capitalization of retained earnings, additional paid-in capital, or employees’ bonuses. For
calculation of diluted EPS, all employees’ bonus accrued at the end of reporting period are deemed to
be distributable in the form of shares, and bonuses are included in the calculation of the weighted-
average number of shares at market price on the balance sheet date.
3. Reason for and Effect of Accounting Changes
The Company adopted the amended ROC SFAS No. 10 “Inventories” issued by the Accounting
Research and Development Foundation commencing from January 1, 2009. There were no impacts on
the financial statements for the year ended December 31, 2009.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
65
4. Important Accounts
(a) Cash and cash equivalents
The components as of December 31, 2010 and 2009, were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Cash on hand $ 101,216 3,475 99,811 3,116
Cash in bank 14,044,211 482,122 4,118,937 128,596
$ 14,145,427 485,597 4,218,748 131,712
(b) Financial instruments (including derivative and non-derivative)
The components as of December 31, 2010 and 2009, were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Available-for-sale financial assets－current:
Mutual funds $ 1,943,977 66,735 4,491,553 140,230
For the years ended December 31, 2010 and 2009, gains on disposal of available-for-sale financial
assets－current amounted to NT$7,597 (US$241) and NT$6,419 (US$194), respectively, which
were recorded under other income.
2010 2009
NT dollars US dollars NT dollars US dollars
Available-for-sale financial assets－noncurrent:
Trade-Van Information Services Co., Ltd. $ 171,749 5,896 170,049 5,309
Central Reinsurance Corp. 631,090 21,664 447,022 13,957
U.S. Treasury notes 188,292 6,464 261,401 8,161
$ 991,131 34,024 878,472 27,427
For the years ended December 31, 2010, loss on disposal of U.S. Treasury notes which were recorded
as available-for-sale financial assets-noncurrent was NT$4,221 (US$134), and was recorded as a
reduction of other income.
On September 18, 2009, Trade-Van Information Services Co., Ltd. decreased issued stock by 24%,
and the Company withdrew NT$27,052 (US$819) in cash in proportion to the Company’s ownership
percentage.
As of December 31, 2010 and 2009, the changes in fair value of available-for-sale financial assets
from subsequent remeasurement were NT$380,897 (US$13,076) and NT$193,224 (US$6,033),
respectively, and were recorded as other stockholders’ equity adjustment.
The Company’s investment in U.S. Treasury notes is for contract performance guaranties. The
pledge for the investment is disclosed in note 6.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
66
Financial assets carried at cost－noncurrent:
2010 2009
Shareholding Book value Shareholding Book value
Investee
percentage
(%)
NT dollars
US dollars
percentage
(%)
NT dollars
US dollars
Taiwan High Speed Rail Corp. 1.20 $ 1,246,549 42,793 1.20 1,246,549 38,918
Evergreen Development Corp. 9.35 870,000 29,866 9.35 870,000 27,162
Abacus International Holding Ltd. 2.11 115,743 3,973 2.11 115,743 3,614
Technology Partner II Venture Capital Corp. 5.88 6,294 216 5.88 6,294 196
Chung Hwa Express Co., Ltd. 10.00 10,000 343 10.00 10,000 312
Pan-Pacific Venture Capital Co., Ltd. 2.30 2,851 98 2.30 4,002 125
Total $ 2,251,437 77,289 2,252,588 70,327
The Company’s investments in Taiwan High Speed Rail Corp., Evergreen Development Corp., etc.,
had no publicly traded prices, and their fair values were difficult to determine. Therefore, the
investments were stated at cost.
On June 11, 2010, Pan-Pacific Venture Capital Co., Ltd. decreased issued stock by 33%, and the
Company withdrew NT$1,151 (US$36) in cash in proportion to the Company’s ownership
percentage.
On September 30, 2009, Evergreen Development Corp. merged with Green Steel Structure Corp. and
increased issued shares from 403,409 thousand to 408,402 thousand, which caused the Company’s
ownership percentage to decrease to 9.35%.
As of December 31, 2010 and 2009, the components of derivative financial instruments were as
follows:
2010 2009
Nominal
Amount
Book Value
Nominal
Amount
Book Value NT dollars US dollars NT dollars US dollars
Derivative financial assets:
FX swap agreements USD - $ - - USD 60,000 17,247 539
Derivative financial liabilities:
Fuel option agreements $ - - 685,797 21,411
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
67
Details of derivative financial assets and liabilities as of December 31, 2010 and 2009, were as
follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Financial assets at fair value through
profit or loss－current $ - - 17,247 539
Financial liabilities at fair value through
profit or loss－current $ - - 685,797 21,411
(c) Inventories
The components as of December 31, 2010 and 2009, were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Aircraft spare parts $ 7,764,552 266,548 8,123,407 253,619
Consumables for use and
merchandise for sale during flight 537,651 18,457 351,388 10,971
Fuel for aircraft 223,866 7,685 215,575 6,730
$ 8,526,069 292,690 8,690,370 271,320
For the years ended December 31, 2010 and 2009, the movement of allowance for obsolete
inventories was as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Beginning balance $ 951,909 29,719 750,221 22,831
Addition 1,188,484 37,706 590,059 17,859
Write-off (901,563) (28,603) (388,371) (11,755)
Effect of exchange rate - 3,706 - 784
Ending balance $ 1,238,830 42,528 951,909 29,719
For the years ended December 31, 2010 and 2009, the Company recognized related losses on
inventories as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Losses on inventory obsolescence $ 1,188,484 37,706 590,059 17,859
The pledge for these inventories is disclosed in note 6.
(d) Long-term equity investments under equity method
Details as of and for the years ended December 31, 2010 and 2009, were as follows:
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
68
2010
Book value Investment income
(loss)
Investee
Shareholding
percentage (%)
NT dollars
US dollars
NT dollars
US dollars
Evergreen Airline Services Corp. 56.33 $ 638,909 21,933 81,997 2,601
RTW Air Services (S) Pte. Ltd. 49.00 27,572 946 6,251 198
Green Siam Air Services Co., Ltd. 49.00 24,604 845 8,344 265
Evergreen Sky Catering Corp. 49.80 912,536 31,326 138,706 4,401
Evergreen Airways Service (Macau) Ltd. 99.00 111,363 3,823 41,967 1,331
Uni Airways Corp. 15.67 496,642 17,049 73,401 2,329
Evergreen Aviation Technologies Corp. 80.00 4,830,096 165,812 433,220 13,744
Evergreen Security Corp. 31.25 77,345 2,655 3,425 109
Evergreen Air Cargo Services Corp. 60.00 1,046,689 35,932 98,669 3,130
Hsiang-Li Investment Corp. 100.00 50,453 1,732 3,177 101
PT Perdana Andalan Air Service 51.00 71,511 2,455 6,250 198
Concord Pacific Ltd. 100.00 43,795 1,503 126,155 4,003
Sky Castle Investment Ltd. 100.00 275,190 9,447 33,515 1,063
SINO GAIN LIMITED 100.00 749 26 117 4
$ 8,607,454 295,484 1,055,194 33,477
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
69
2009
Book value Investment income
(loss)
Investee
Shareholding
percentage (%)
NT dollars
US dollars
NT dollars
US dollars
Evergreen Airline Services Corp. 56.33 $ 586,165 18,300 85,622 2,591
RTW Air Services (S) Pte. Ltd. 49.00 20,825 650 (1,342) (41)
Green Siam Air Services Co., Ltd. 49.00 21,946 685 6,165 186
Evergreen Sky Catering Corp. 49.80 848,530 26,492 90,121 2,728
Evergreen Airways Service (Macau) Ltd. 99.00 174,933 5,462 8,681 263
Uni Airways Corp. 15.67 426,602 13,319 28,932 876
Evergreen Aviation Technologies Corp. 80.00 4,603,406 143,722 328,715 9,949
Evergreen Security Corp. 31.25 73,920 2,308 9,938 301
Evergreen Air Cargo Services Corp. 60.00 949,482 29,644 19,311 585
Hsiang-Li Investment Corp. 100.00 44,666 1,394 (589) (18)
PT Perdana Andalan Air Service 51.00 67,614 2,111 (5,317) (161)
Concord Pacific Ltd. 100.00 (80,056) (2,499) (324,998) (9,836)
Sky Castle Investment Ltd. 100.00 261,180 8,154 33,037 1,000
SINO GAIN LIMITED 100.00 705 22 (99) (3)
Add: recorded as reduction of account
receivables－related parties
7,999,918 249,764 278,177 8,420
80,056 2,499
$ 8,079,974 252,263
As of December 31, 2010 and 2009, the cumulative translation adjustment were NT$4,508 (US$155)
and NT$30,347 (US$947), respectively.
Details of increases in long-term equity investments under the equity method of the Company in 2010
and 2009 were as follows:
Unit: thousands of shares
2009
Investee Shares NT dollars US dollars
Concord Pacific Ltd. 7,500 $ 252,750 7,650
SINO GAIN LIMITED 25 809 24
$ 253,559 7,674
There was no such transaction in 2010.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
70
On June 30, 2010, Hsiang-Li Investment Corp.’s stockholders resolved to make up deficiencies from
the decrease issued stock and cash subscription. Hsiang-Li Investment Corp. decreased issued stock
by 94.57% on July 5, 2010, and the Company withdrew NT$11,720 (US$372) in cash in proportion
to the Company’s ownership percentage.
(e) Property, plant and equipment
For the years ended December 31, 2010 and 2009, the Company capitalized the interest expenses on
purchase of assets amounting to NT$214,189 (US$6,795) and NT$145,006 (US$4,389), respectively.
The monthly interest rates on the above transactions were 0.13%~0.14% and 0.13%~0.20%,
respectively. The pledge for this property, plant and equipment is disclosed in note 6.
(f) Leased assets
The details were as follows:
Present value of leased assets at the transaction date
2010 2009
Lease item
Leaser
Lease
term
Terms of lease contract
NT dollars
US dollars
NT dollars
US dollars
Aircraft GECAS 2004.4.13~
2017.6.21
The rent is payable monthly, and
the lease term is equal to 75%
or more of the total estimated
economic life of the leased
property
$ 5,516,972 189,391 6,066,207 189,391
Aircraft C&L Leasing
Co., Ltd.
2007.5.31~
2019.12.27
The rent is payable every three
months, and the present value
of payment for future rental is
higher than 90% of the fair
value of the leased asset
9,169,062 314,764 10,081,877 314,764
Computer
equipment
IBM 2009.5.25~
2014.6.24
The rent is payable monthly, and
the lease transfers ownership
of the leased property by the
end of the lease term 50,555 1,735 50,555 1,578
14,736,589 505,890 16,198,639 505,733
Less: accumulated depreciation (3,495,270) (119,988) (2,628,835) (82,074)
$ 11,241,319 385,902 13,569,804 423,659
The discount rate for leased assets was 1.18%~6.93%.
The abovementioned aircraft was financed under sale and leaseback arrangements. The differences
(treated as unrealized gain on sale and leaseback) between sales price and book value of equipment
are recorded as a reduction of depreciation expenses over the lease term.
As of December 31, 2010 and 2009, the book value and present value of lease liability were as
follows:
2010 2009
Year due NT dollars US dollars NT dollars US dollars
January 1, 2010~December 31, 2010 $ - - 2,083,324 65,043
January 1, 2011~December 31, 2011 1,976,611 67,855 2,060,131 64,319
January 1, 2012~December 31, 2012 1,953,912 67,076 2,037,432 63,610
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
71
January 1, 2013~December 31, 2013 1,930,224 66,262 2,013,744 62,870
January 1, 2014~December 31, 2014 1,902,231 65,301 1,985,751 61,996
January 1, 2015~December 31, 2015 1,874,238 64,340 1,957,758 61,123
And after 4,412,117 151,463 4,485,070 140,027
Book value 14,049,333 482,297 16,623,210 518,988
Less: unrealized interest expenses (2,255,929) (77,443) (2,975,297) (92,891)
Present value 11,793,404 404,854 13,647,913 426,097
Less: current portion (1,436,940) (49,328) (1,446,636) (45,165)
$ 10,356,464 355,526 12,201,277 380,932
The current portion of lease liability was recorded under other current liabilities.
(g) Deferred charges
As of December 31, 2010 and 2009, deferred charges, net of amortization, consisted of the following:
2010 2009
NT dollars US dollars NT dollars US dollars
Leasehold improvements $ 1,950,981 66,975 2,273,097 70,968
Major overhaul for aircraft and engines 2,707,252 92,937 1,629,231 50,866
Others 106,892 3,669 79,206 2,472
$ 4,765,125 163,581 3,981,534 124,306
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
72
(h) Short-term borrowings
The components as of December 31, 2010 and 2009, were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Unsecured loans $ - - 730,000 22,791
Commercial paper issued (net of prepaid
interest of NT$6 (US$-) - - 249,994 7,805
$ - - 979,994 30,596
The interest expense on the aforementioned short-term borrowings and commercial paper payable is
calculated based on floating interest rates. For the year ended December 31, 2009, the interest rates
were 0.80%~2.95%. As of December 31, 2010 and 2009, the unused credit line amounted to
approximately NT$8,361,864 (US$287,053) and NT$5,067,683 (US$158,217), respectively.
(i) Long-term borrowings
As of December 31, 2010 and 2009, the details of long-term borrowings were as follows:
2010 2009
Nature Interest rate Interest rate
(%) NT dollars US dollars (%) NT dollars US dollars
Secured loans:
Land and buildings 0.89~1.35 $ 2,514,286 86,313 0.89~2.96 1,628,571 50,845
Aircraft 0.94~1.50 38,463,071 1,320,394 0.93~2.73 45,251,471 1,412,784
Engines 1.31~2.30 1,997,000 68,555 1.26~2.75 3,184,609 99,426
Subtotal 42,974,357 1,475,262 50,064,651 1,563,055
Unsecured loans: 1.19~2.26 3,019,800 103,666 1.03~2.86 8,718,537 272,199
Total 45,994,157 1,578,928 58,783,188 1,835,254
Less: current portion (7,756,574) (266,275) (11,463,908) (357,912)
$ 38,237,583 1,312,653 47,319,280 1,477,342
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
73
As of December 31, 2010, the remaining balances of the borrowings were due as follows:
Year due NT dollars US dollars
January 1, 2011~December 31, 2011 $ 7,756,574 266,275
January 1, 2012~December 31, 2012 6,562,719 225,291
January 1, 2013~December 31, 2013 6,632,499 227,686
January 1, 2014~December 31, 2014 4,900,280 168,221
January 1, 2015~December 31, 2015 4,786,973 164,331
And after 15,355,112 527,124
$ 45,994,157 1,578,928
As of December 31, 2010 and 2009, the unused credit lines for long-term borrowings both amounted
to NT$0 (US$0). The pledge for these long-term borrowings is disclosed in note 6.
(j) Bonds payable
Details of bonds payable as of December 31, 2010 and 2009, were as follows:
Description 2010 2009
Guaranteed by
Annual
interest rate
Issue
date NT dollars US dollars NT dollars US dollars
Bonds payable Bank of Taiwan 2.11% 2005.01 $ - - $ 500,000 15,610
Taiwan Cooperative Bank 2.11% 2005.01 - - 500,000 15,610
Bonds payable Far-Eastern International Bank 1.85% 2005.08 - - 500,000 15,610
Shanghai Commercial &
Savings Bank
1.85% 2005.08 - - 500,000 15,610
Chinatrust Commercial Bank 1.85% 2005.08 - - 600,000 18,733
Hua Nan Bank 1.85% 2005.08 - - 500,000 15,610
Bonds payable Cathay United Bank 2.08% 2006.01 2,000,000 68,658 2,000,000 62,442
Bonds payable Hua Nan Bank 2.29% 2006.07 500,000 17,164 500,000 15,610
Taipei Fubon Bank 2.29% 2006.07 500,000 17,164 500,000 15,610
Bank of Taiwan 2.29% 2006.07 500,000 17,164 500,000 15,610
Taiwan Cooperative Bank 2.29% 2006.07 500,000 17,164 500,000 15,610
Ordinary corporate bonds payable issued in private
placement
2.00% 2009.10 5,000,000 171,645 5,000,000 156,106
Subtotal 9,000,000 308,959 12,100,000 377,771
Less: current portion (4,000,000) (137,315) (3,100,000) (96,784)
$ 5,000,000 171,644 $ 9,000,000 280,987
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
74
(k) Installment accounts payable
The Company purchased aircraft, engines and inventories by installments. As of December 31,
2010 and 2009, the details were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Aircraft payable $ 17,996,868 617,812 11,496,051 358,915
Others 932,333 32,006 1,595,500 49,813
18,929,201 649,818 13,091,551 408,728
Less: current portion (3,468,571) (119,072) (3,468,815) (108,299)
$ 15,460,630 530,746 9,622,736 300,429
The current portion of aircraft payable was recorded as other payables. As of December 31, 2010,
the remaining balances of installment accounts payable were due as follows:
Year due NT dollars US dollars
January 1, 2011~December 31, 2011 $ 3,468,571 119,072
January 1, 2012~December 31, 2012 3,130,751 107,475
January 1, 2013~December 31, 2013 2,621,226 89,984
January 1, 2014~December 31, 2014 1,599,864 54,922
January 1, 2015~December 31, 2015 1,347,092 46,244
And after 6,761,697 232,121
$ 18,929,201 649,818
The interest expenses of the aforementioned installment payable are calculated based on floating
interest rates. For the years ended December 31, 2010 and 2009, the average interest rates were
0.25%~6.77% and 0.28%~6.77%, respectively. The pledges for the aircraft payable are disclosed
in note 6.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
75
(l) Retirement plans
Net retirement plan liabilities based on the actuarial computation on December 31, 2010 and 2009,
were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Benefit obligation:
Vested benefit obligation $ 302,470 10,383 201,502 6,291
Nonvested benefit obligation 2,572,508 88,311 2,322,531 72,511
Accumulated benefit obligation 2,874,978 98,694 2,524,033 78,802
Projected effects of salary adjustments 1,062,009 36,458 313,214 9,779
Projected benefit obligation 3,936,987 135,152 2,837,247 88,581
Plan assets at fair value (2,476,756) (85,024) (2,255,072) (70,405)
Projected benefit obligation in excess of
plan assets 1,460,231 50,128 582,175 18,176
Unrecognized net transition obligation (27,300) (937) (54,594) (1,704)
Unrecognized pension loss (1,565,704) (53,749) (451,865) (14,108)
Unrecognized prior service cost (122,333) (4,200) (183,499) (5,729)
Pension liabilities that need to be accrued 653,328 22,428 376,744 11,762
Accrued employee retirement liabilities $ 398,222 13,670 268,961 8,397
Actuarial assumptions at December 31, 2010 and 2009, were as follows:
2010 2009
Discount rate 1.75% 2.25%
Rate of increase in future compensation levels 1.50%~3.00% 0.59%~3.275%
Expected long-term rate of return on plan assets 1.75% 2.25%
As of and for the years ended December 31, 2010 and 2009, the details of the retirement plans were
as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Balance of the retirement fund:
Bank of Taiwan $ 2,476,756 85,024 2,255,072 70,405
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
76
The components of pension cost under defined benefit pension plan were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Service cost $ 115,250 3,656 119,346 3,612
Interest cost 63,691 2,021 72,313 2,189
Actual return on plan assets (36,616) (1,162) (14,139) (428)
Unrecognized net transition obligation 78,741 2,498 1,322 40
Net pension cost $ 221,066 7,013 178,842 5,413
The pension cost under defined
contribution plan
$ 135,468
4,298
110,024
3,330
(m) Income tax
(1) For the years ended December 31, 2010 and 2009, the components of estimated income tax
benefits (expenses) were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Income tax expenses－current $ (28,531) (905) (20,619) (624)
Income tax benefits－deferred - - 901,698 27,291
$ (28,531) (905) 881,079 26,667
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
77
The deferred income tax benefits were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars Loss carryforwards $ (1,960,521) (62,199) 1,795,822 54,353
Investment tax credits 177,853 5,642 74,015 2,240
Unrealized exchange losses (gains) 4,084 129 (1,482) (45)
Provision for loss on inventory market
price decline 166,155 5,271 20,055 607
Purchase of fixed assets in installments,
adjusted for tax purposes (31,241) (991) (22,879) (692)
Accrued employee retirement liabilities (27,642) (877) (29,157) (883)
Unrealized losses (gains) on financial
instruments (113,654) (3,605) (1,014,797) (30,714)
Effect of change in income tax rate on
valuation allowance for deferred
income tax assets (914,212) (29,004) (1,371,765) (41,518)
Others 170,405 5,406 (4,892) (148)
Valuation allowance for deferred income
tax assets
2,528,773
80,228
1,456,778
44,091
$ - - 901,698 27,291
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
78
(2) According to the announcement of the revised ROC Income Tax Act on May 27, 2009, the
Company is subject to an income tax rate of 20% commencing in 2010. Also, according to the
announcement of the latest revised ROC Income Tax Act on June 15, 2010, the income tax rate
will be decreased from 20% to 17% commencing in 2010. Therefore, for the year ended
December 31, 2010 and 2009, the Company was subject to ROC income tax at a maximum rate
of 17% and 25%, respectively, and calculated the amounts of the basic tax in accordance with
the “Income Basic Tax Act.” The differences between expected income tax benefit at statutory
rates and income tax benefit (expense) as reported in the accompanying financial statements for
the year ended December 31, 2010 and 2009, were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars Income tax benefits calculated on pre-
tax financial loss at statutory income
tax rate
$ (2,047,695) (64,965) 931,333 28,188
Gain on disposal of investments 1,291 41 1,605 48
Investment income recognized under
equity method－unrealized 179,383 5,691 69,544 2,105
Dividend income 5,586 177 (28,481) (862)
Increase in investment tax credits 210,580 6,681 47,168 1,428
Exchange losses recorded as translation
adjustments (19,330) (613) 4,501 136
Effect of change in statutory income tax
rate (914,212) (29,004) (1,523,687) (46,116)
Others 27,093 859 (77,682) (2,351)
Valuation allowance for deferred income
tax assets
2,528,773
80,228
1,456,778
44,091
$ (28,531) (905) 881,079 26,667
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
79
(3) The components of the deferred income tax assets (liabilities) as of December 31, 2010 and 2009,
were as follows:
2010 2009
Amount Tax effect Amount Tax effect
NT dollars US dollars NT dollars US dollars NT dollars US dollars NT dollars US dollars
Deferred income tax assets－current
Allowance for obsolete inventories $ 3,605,418 123,770 612,921 21,041 2,628,035 82,049 525,607 16,410
Unused investment tax credits 1,253,630 43,036 1,253,630 43,036 259,139 8,091 259,139 8,091
Unused loss carryforwards 3,367,000 115,585 572,390 19,649 - - - -
Unrealized exchange losses 64,265 2,206 10,925 375 40,240 1,256 8,048 251
Unrealized losses on financial
instruments - - - - 668,550 20,873 133,710 4,174
Others 3,041 104 517 18 286,420 8,942 57,284 1,788
2,450,383 84,119 983,788 30,714
Less: Valuation allowance for deferred
income tax assets (1,239,736) (42,559) (784,746) (24,500)
Deferred income tax assets, net－
current $ 1,210,647 41,560 199,042 6,214
Deferred income tax assets (liabilities)
－noncurrent:
Unused investment tax credits $ 1,773,258 60,874 1,773,258 60,874 $ 2,589,896 80,858 2,589,896 80,858
Accrued employee retirement
liabilities (255,106) (8,756) (43,368) (1,489) (92,505) (2,888) (18,501) (578)
Purchase of fixed assets in
installments, adjusted for tax
purposes 2,878,906 98,830 489,414 16,801 3,062,675 95,619 612,535 19,124
Unused loss carryforwards 8,377,127 287,577 1,424,112 48,888 23,276,609 726,713 4,655,321 145,342
Cumulative translation adjustments
4,282,759 147,022 728,069 24,994
529,790 16,541 105,958 3,308
Others 2,505,341 86,006 425,908 14,621 638,140 19,923 127,628 3,985
4,797,393 164,689 8,072,837 252,039
Less: Valuation allowance for deferred
income tax assets (1,464,397) (50,271) (4,448,160) (138,874)
Deferred income tax assets, net－
noncurrent $ 3,332,996 114,418 3,624,677 113,165
(4) The Company was granted investment tax credits for investment in certain high-tech industries,
for purchases of automatic machinery and equipment, and for expenditures in research and
development and employee training. These investment tax credits can be used to reduce the
income tax liability in the current year and in the following four years at an amount not exceeding
50% of the income tax liability for each year during the first four years, with full utilization of
the balance of the remaining unused investment tax credits in the final year.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
80
As of December 31, 2010, unused investment tax credits available to the Company were as
follows:
Year granted Unused investment tax credits Expiry year
NT dollars US dollars
2007 $ 1,253,630 43,036 2011
2008 621,622 21,340 2012
2009 1,151,636 39,534 2013
$ 3,026,888 103,910
(5) The Company’s income tax returns have been examined by the local tax authorities through 2008.
According to a new amendment to the Income Tax Act, the loss carryforward tax credit period is
extended from 5 years to 10 years. As of December 31, 2010, unused loss carryforward tax
credits available to the Company were as follows:
Year Unused loss carryforward Expiry year
NT dollars US dollars
2008 $ 3,367,000 115,585 2018
2009 8,377,127 287,577 2019
$ 11,744,127 403,162
(6) Imputation credit account (ICA) and creditable ratio:
2010 2009
NT dollars US dollars NT dollars US dollars
Unappropriated earnings before 1997 $ - - - -
Unappropriated earnings after 1998 12,016,736 381,242 (2,915,074) (111,306)
$ 12,016,736 381,242 (2,915,074) (111,306)
ICA $ 1,035,572 35,550 900,664 28,119
2010 2009
Creditable ratio for earnings distribution
to domestic shareholders
8.62% (estimated)
- (actual)
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
81
(n) Stockholders’ equity
(1) Common stock
As of December 31, 2010 and 2009, the Company’s authorized share capital consisted of
4,000,000 thousand shares of common stock, at NT$10 par value per share, of which 2,962,677
thousand shares, were issued and outstanding.
On June 16, 2009, the Company’s stockholders approved a resolution to make up the
accumulated deficit by capital reduction amounting to NT$16,800,000 (US$509,863). On
August 14, 2009, the board of directors approved a cash subscription amounting to
NT$7,000,000 (US$213,025) by issuing 700,000 thousand shares at NT$10.6 per share. The
aforementioned capital reduction and cash subscription were approved by and registered with the
government authorities.
(2) Capital surplus, legal reserve, and restrictions on appropriations of earnings
The details of capital surplus as of December 31, 2010 and 2009, were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
Cash subscription in excess of par value of shares $ 29,672 1,008 2,934,333 96,756
Share options granted to employees 282,100 8,585 282,100 8,585
Additional paid-in capital from bond conversion 1,411,829 43,699 1,422,243 44,001
Gain on disposal of property, plant and equipment
of investee company 1,668 53 1,668 53
Increase in net equity due to investee company
issuing new shares and the Company not
purchasing proportionately 50,318 1,531 50,318 1,531
Increase in net equity due to change in percentage
of ownership in long-term investments under
equity method 225,369 7,161 225,363 7,161
Donated assets 648,480 20,588 648,480 20,588
$ 2,649,436 82,625 5,564,505 178,675
The ROC Company Act stipulates that realized capital surplus should not be credited to capital
except for making up deficiencies of the Company. The realized capital surplus includes the
premiums from issuance of shares in excess of par value and gifts received. In addition, the
capital surplus which is credited to capital should not exceed 10 percent of the amount of paid-in
capital in one year in accordance with the “Criteria Governing the Offering and Issuance of
Securities by Securities Issuers”.
The ROC Company Act stipulates that the Company must retain 10% of its annual earnings, as
defined in the Act, until such retention equals the amount of authorized share capital. This
retention is accounted for by transfers to legal reserve, upon approval at the stockholders’
meeting. Legal reserve may be used to offset an accumulated deficit and cannot be distributed
as cash dividends to stockholders. However, one-half of legal reserve may be converted to share
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
82
capital when it reaches an amount equal to one-half of issued share capital, upon approval by the
Company’s stockholders.
The Company’s articles of incorporation stipulate that the Company must appropriate
employees’ bonuses of not less than 1% of estimated earnings of each year, and less than 5% of
estimated earnings of each year for remuneration of directors and supervisors. Such
appropriations can only be made after offsetting accumulated deficit, and appropriation of legal
reserve, and appropriation of special reserve from unappropriated earnings at an amount equal to
the net debit balance of those accounts in stockholders’ equity.
To promote long-term development, the Company has adopted a steady dividend policy, in which
a cash dividend of around 0~50% of the appropriated dividend is distributed and a stock dividend
of around 50%~100% of the appropriated dividend is distributed. However, if the expected
earnings per share in the year when stock dividends are distributed decline to 20% or working
capital is low, a cash dividend of 50%~100% of the appropriated dividend is distributed and a
stock dividend of 0~50% of the appropriated dividend is distributed.
For the year ended December 31, 2010, the Company recognize the amount of employee bonus
and directors’ and supervisors’ remuneration, NT$100,000 (US$3,173) and NT$53,000
(US$1,681), respectively. According to the Interpretation (96) 052 issued by meeting and these
amounts recognized in the financial statements, if any, will be accounted for as changes in
accounting estimates and recognized in profit or loss in the following year. The appropriation
for the 2010 employee bonuses and directors’ and supervisors’ remuneration is subject to the
resolutions of the Company’s directors and stockholders. Moreover, the Company did not
estimate stockholders’ bonuses, employees’ bonuses, and directors’ and supervisors’
remuneration for the year ended December 31, 2009 because of the accumulated deficit.
Information related to the appropriation of employee bonuses and remuneration for directors and
supervisors can be found on web sites such as the Market Observation Post System after the
stockholders’ meeting.
On June 14, 2010, the Company’s stockholders resolved to make up deficiencies from capital
surplus of NT$2,915,074 (US$111,306) and not to appropriate dividends, employees’ bonuses,
and directors’ and supervisors’ remuneration.
On June 16, 2009, the Company’s stockholders resolved to make up deficiencies from legal
reserve of NT$18,864 (US$586) and from a decrease in capital of NT$16,800,000
(US$509,863). Therefore, the Company did not appropriate dividends, employees’ bonuses,
and directors and supervisors’ remuneration.
(3) Cumulative translation adjustments
According to the accounting treatment of note 2(d), the cumulative translation adjustments had a
debit balance of NT$3,559,198 (US$122,183) and a credit balance of NT$393,486 (US$12,285)
as of December 31, 2010 and 2009, respectively.
(o) Earnings (Loss) per share
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
83
For the years ended December 31, 2010 and 2009, earnings (losses) per share were calculated as
follows:
NT dollars
2010
US dollars
2010
NT dollars
2009
US dollars
2009
Basic (losses) earnings per share:
Before
Income Tax
After Income
Tax
Before
Income Tax
After Income
Tax
Before
Income Tax
After Income
Tax
Before
Income Tax
After Income
Tax
Net income (loss) $ 12,045,267 12,016,736 382,147 381,242 (3,725,333) (2,844,254) (112,752) (86,085)
Weighted-average number of shares
outstanding during the year
(thousand shares)
2,962,677 2,962,677 2,962,677 2,962,677 2,496,011 2,496,011 2,496,011 2,496,011
Basic EPS (dollars) $ 4.07 4.06 0.13 0.13 (1.49) (1.14) (0.05) (0.03)
Diluted (losses) earnings per share:
Net income (loss) for calculating
diluted EPS
$ 12,045,267 12,016,736 382,147 381,242
Weighted-average number of shares
outstanding during the year
(thousand shares)
2,962,677 2,962,677 2,962,677 2,962,677
Employees’ bonus that may be
settled in shares (thousand
shares)
2,717 2,717 2,717 2,717 (note)
Weighted-average number of shares
outstanding for calculating
diluted EPS (thousand shares)
2,965,394 2,965,394 2,965,394 2,965,394
Diluted EPS (dollars) $ 4.06 4.05 0.13 0.13
(note) The Company did not calculate the diluted EPS due to the net loss in the year of 2009.
(p) Hedge accounting
The Company needs fuel for operating, and the future cash flows for fuel fluctuate due to the floating
market prices, and therefore cash flow risk occurs. The Company evaluates the risk as significant,
and thus hedges the risk by signing fuel option or swap agreements.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
84
As of December 31, 2010 and 2009, the cash flow hedging items and derivative financial hedging
instruments were as follows:
Hedging
Fair value of assigned hedging instrument
Period of
generating
Hedged item instrument 2010 2009 cash flow Account
NT dollars US dollars NT dollars US dollars
Floating price of
fuel
Fuel option
agreements
$ - - (897,196) (28,011) 2009~2010 Derivative financial
liabilities for hedge
purposes－current
As of December 31, 2010 and 2009, the unrealized valuation loss on financial instruments due to
hedging of cash flow amounted to NT$0 (US$0) and NT$897,196 (US$28,011), respectively,
recorded under stockholders’ equity.
(q) Disclosure of financial instruments
(1) Fair value of financial instruments
The details of financial instruments as of December 31, 2010 and 2009, were as follows:
2010
NT dollars US dollars
Fair value Fair value
Book value
Public quote
value
Assessment
value Book value
Public quote
value
Assessment
value
Financial assets:
Cash and cash equivalents $ 14,145,427 - 14,145,427 485,597 - 485,597
Notes and accounts receivable (including
receivables from related parties) 7,862,263 - 7,862,263 269,902 - 269,902
Other receivables (including receivables from
related parties) 150,458 - 150,458 5,165 - 5,165
Available-for-sale financial assets－current 1,943,977 1,943,977 - 66,735 66,735 -
Available-for-sale financial assets－
noncurrent－stock 802,839 802,839 - 27,560 27,560 -
Available-for-sale financial assets－
noncurrent－Treasury notes 188,292 188,292 - 6,464 6,464 -
Financial assets carried at cost－noncurrent 2,251,437 - - 77,289 - -
Other assets 718,076 - 718,076 24,651 - 24,651
Financial liabilities:
Accounts payable (including payable from
related parties) 4,063,161 - 4,063,161 139,484 - 139,484
Accrued expenses 7,234,011 - 7,234,011 248,335 - 248,335
Other payable (including payable from related
parties) 204,893 - 204,893 7,034 - 7,034
Bonds payable (including current portion) 9,000,000 2,015,043 7,032,803 308,959 69,174 241,428
Long-term borrowings
(including current portion) 45,994,157 - 45,994,157 1,578,928 - 1,578,928
Installment accounts payable
(including current portion) 18,929,201 - 19,202,199 649,818 - 659,190
Lease liability (including current portion) 11,793,404 - 12,223,564 404,854 - 419,621
Off-balance-sheet financial instruments:
Letters of credit - - 1,685,720 - - 57,869
Guaranteed borrowings - - 1,420,088 - - 48,750
2009
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
85
NT dollars US dollars
Book value
Public quote
value
Assessment
value Book value
Public quote
value
Assessment
value
Financial assets:
Cash and cash equivalents $ 4,218,748 - 4,218,748 131,712 - 131,712
Notes and accounts receivable (including
receivables from related parties) 7,257,621 - 7,257,621 226,588 - 226,588
Other receivables (including receivables from
related parties) 128,372 - 128,372 4,008 - 4,008
Available-for-sale financial assets－current 4,491,553 4,491,553 - 140,230 140,230 -
Available-for-sale financial assets－
noncurrent－stock 617,071 617,071 - 19,266 19,266 -
Available-for financial assets－noncurrent－
Treasury notes 261,401 261,401 - 8,161
8,161 -
Financial assets carried at cost－noncurrent 2,252,588 - - 70,327 - -
FX swap agreements 17,247 - 17,247 539 - 539
Other assets 989,434 - 989,434 30,891 - 30,891
Financial liabilities:
Short-term borrowings 979,994 - 979,994 30,596 - 30,596
Accounts payable (including payable from
related parties) 2,246,593 - 2,246,593 70,140 - 70,140
Accrued expenses 5,856,614 - 5,856,614 182,848 - 182,848
Other payables (including payable from
related parties) 163,151 - 163,151 5,094 - 5,094
Bonds payable (including current portion) 12,100,000 5,136,439 7,166,991 377,771 160,363 223,759
Long-term borrowings
(including current portion) 58,783,188 - 58,783,188 1,835,254 - 1,835,254
Installment accounts payable
(including current portion) 13,091,551 - 13,491,876 408,728 - 421,226
Lease liability (including current portion) 13,647,913 - 14,278,343 426,097 - 445,780
Fuel option agreements 1,582,993 - 1,582,993 49,422 - 49,422
Off-balance-sheet financial instruments:
Letters of credit - - 1,356,688 - - 42,357
Guaranteed borrowings - - 2,081,950 - - 65,000
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
86
(2) Methods and assumptions to measure the fair value of financial instruments
i) The maturity dates of short-term financial instruments, including cash and cash equivalents,
notes and accounts receivable/payable (including related parties), other receivables (including
related parties), other assets, short-term borrowings, accrued expenses, and other payables
(including related parties), are within one year of the balance sheet date, and therefore, their
book value is equal to their fair value.
ii) If public quoting of financial assets and liabilities is available, the quote price will be the fair
value. If market value is not available, an assessment method will be used. The
assumptions used should be the same as those used by the financial market traders when
quoting their prices.
iii) The assessed value of bonds payable, long-term borrowings, installment accounts payable
and lease liability is the discounted future cash flows, and the discount rates during the years
ended December 31, 2010 and 2009, were 0.25%~6.77% and 0.28%~6.93% p.a.,
respectively.
iv) The fair value of letters of credit is based on the amount of the contract.
v) The fair value of guaranteed borrowings is based on the amount of the contract.
(3) For the years ended December 31, 2010 and 2009, the evaluation gain or loss on financial assets
at fair value through profit or loss amounted to gains of NT$5,151 (US$164) and losses of
NT$638,026 (US$19,311), respectively.
(4) Disclosure of financial risks
(i) Market risk
As of December 31, 2010 and 2009, the bonds payable, installment accounts payable, and
lease liability with the risk arising from floating interest rates amounted to NT$16,622,697
(US$570,638) and NT$22,251,251 (US$694,700), respectively.
The Company’s securities were recorded as available-for-sale financial assets and measured
at fair value. The Company had the risk of changes in market price.
The Company is exposed to foreign currency risk on accounts receivable which are
denominated in a currency other than New Taiwan dollars. The above foreign currency risk
will be offset by the same risk related to those accounts payable which are denominated in a
foreign currency. Therefore, the Company believes its exposure to foreign currency risk is
low.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
87
(ii) Credit risk
The Company has major credit risk involving cash and cash equivalents, securities, and
accounts receivable. The Company deposited the cash in different financial institutions.
The Company owns securities by purchasing publicly traded bonds and stocks. Derivative
counterparties are limited to high-credit-quality financial institutions. The Company is
exposed to credit risk in every financial institution. However, the credit risk involving
cash, derivatives and securities is not significant.
The Company guarantees bank loans of an investee which is 100% owned by the Company,
and therefore the Company concluded that it was not exposed to credit risk for this
transaction.
Accounts receivable were due from many customers. Therefore, there was no
concentration of credit risk. In order to decrease the credit risk of accounts receivable, the
Company continually evaluated each client’s financial situation and requested clients to
provide guaranties.
(iii) Liquidity risk
The Company’s capital, operating funds and financing are sufficient to fulfill all obligations.
Therefore, the Company did not have liquidity risk.
The Company’s derivative financial instruments are expected to sell at the rational price.
Therefore, liquidity risk is not significant.
The Company’s available-for-sale financial assets had publicly traded prices and were
expected to be sold promptly at close to their fair values. Therefore, liquidity risk is not
significant.
Liquidity risk resulted from financial assets carried at cost that had no publicly traded price.
(iv) Cash flow risk related to the fluctuation of interest rates
The Company’s short-term and long-term borrowings, installment accounts payable, lease
liability carried floating interest rates. As a result, the effective interest rate changes along
with the fluctuation of the market interest rate and thereby influences the Company’s future
cash flow.
As of December 31, 2010 and 2009, the financial liabilities with the risk arising from
floating interest rates amounted to NT$69,094,065 (US$2,371,921) and NT$76,351,395
(US$2,383,746), respectively.
5. Transactions with Related Parties
(a) Name and relationship of related parties
Name Relationship with the Company
Evergreen Marine Corp. Major shareholder
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
88
Name Relationship with the Company
Evergreen International Corp. Major shareholder
Falcon Investment Services Ltd. Major shareholder
Evergreen International Storage & Transport Corp. Major shareholder
Evergreen Airline Services Corp. Subsidiary
Evergreen Sky Catering Corp. Subsidiary
Evergreen Aviation Technologies Corp. Subsidiary
Evergreen Air Cargo Services Corp. Subsidiary
Hsiang-Li Investment Corp. Subsidiary
RTW Air Services (S) Pte. Ltd. Subsidiary
Green Siam Air Services Co., Ltd. Subsidiary
Evergreen Airways Service (Macau) Ltd. Subsidiary
PT Perdana Andalan Air service Subsidiary
Concord Pacific Ltd. Subsidiary
SINO GAIN LIMITED Subsidiary
Uni Airways Corp. Investee company accounted for by equity method
Evergreen Security Corp. Investee company accounted for by equity method
Evergreen Reinsurance Company Limited Investee company of the Company’s major shareholders
Greencompass Marine S.A. Grand-investee company of the Company’s major
shareholders
Evergreen International S.A. Investee company of the Company’s shareholders
Shanghai Airlines Cargo International Co., Ltd. Investee company of the Company’s subsidiary
Chang Yung-Fa Charity Foundation Directors
Chang Yung-Fa Foundation It’s chairman being the Company’s directors
Directors, Supervisors, and Managers The Company’s directors, supervisors and major
management
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
89
(b) Significant transactions with related parties
(1) Revenue, cost and expenses
During the years ended December 31, 2010 and 2009, the Company’s transactions with related
parties were as follows:
Revenue 2010 2009
NT dollars US dollars Percentage NT dollars US dollars Percentage
Uni Airways Corp. $ 515,504 16,355 0.49 304,407 9,213 0.42
Evergreen Aviation Technologies Corp. 365,217 11,587 0.35 333,730 10,101 0.45
Shanghai Airlines Cargo International
Co., Ltd 60,530 1,920 0.06 102,340 3,098 0.14
Evergreen International Corp. 41,835 1,327 0.04 26,198 793 0.04
Evergreen Air Cargo Services Corp. 15,912 505 0.02 1,960 59 -
Others 3,648 116 - 4,417 134 0.01
$ 1,002,646 31,810 0.96 773,052 23,398 1.06
Uni Airways Corp. leased aircraft from the Company to operate cross-strait scheduled flights
between mainland China and Taiwan. The rental is charged by actual flight hours and recorded
under operating revenue.
Cost 2010 2009
NT dollars US dollars Percentage NT dollars US dollars Percentage
Evergreen Aviation Technologies Corp. $ 4,783,273 151,754 5.71 2,905,394 87,936 4.14
Evergreen Sky Catering Corp. 1,140,946 36,198 1.36 962,750 29,139 1.37
Evergreen Airline Services Corp. 951,580 30,190 1.13 846,542 25,622 1.21
Uni Airways Corp. 671,454 21,302 0.80 636,466 19,264 0.91
Evergreen Air Cargo Services Corp. 285,774 9,066 0.34 201,008 6,084 0.29
Shanghai Airlines Cargo International
Co., Ltd 220,018 6,980 0.26 83,111 2,515 0.12
Evergreen Reinsurance Company Limited 207,922 6,597 0.25 219,600 6,646 0.31
Others 49,300 1,564 0.06 45,339 1,372 0.06
$ 8,310,267 263,651 9.91 5,900,210 178,578 8.41
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
90
Expenses 2010 2009
NT dollars US dollars Percentage NT dollars US dollars Percentage
Evergreen International Corp. $ 136,957 4,345 1.97 125,625 3,802 2.12
Uni Airways Corp. 86,936 2,758 1.25 40,608 1,229 0.69
Green Siam Air Services Co., Ltd. 72,606 2,304 1.04 58,075 1,758 0.98
RTW Air Services (S) Pte. Ltd. 50,521 1,603 0.73 25,988 786 0.44
Evergreen Security Corp. 41,682 1,322 0.60 40,229 1,218 0.68
PT Perdana Andalan Air Service 38,944 1,236 0.56 25,477 771 0.43
Evergreen Airline Services Corp. 28,150 893 0.40 27,072 819 0.46
Evergreen Sky Catering Corp. 22,673 719 0.33 7,526 228 0.13
Evergreen Aviation Technologies Corp. 8,045 255 0.12 12,212 370 0.21
Others 101,560 3,222 1.45 1,069 32 0.02
$ 588,074 18,657 8.45 363,881 11,013 6.16
Evergreen International Storage & Transport Corp. provides public transportation services.
There were no differences on the services and prices between the related parties and non-related
parties. Therefore, the expenses were recorded but not disclosed.
The Company sold spare parts to Evergreen Aviation Technologies Corp. amounting to
NT$438,716 (US$13,919) and NT$153,887 (US$4,658) for the years ended December 31, 2010
and 2009, respectively.
Evergreen Aviation Technologies Corp. provides maintenance services for aircraft and engines
for the Company. As of December 31, 2010 and 2009, the aforementioned balance amounted to
NT$2,707,252 (US$92,937) and NT$1,629,231 (US$50,866), respectively, recorded under
differed charges.
(2) Financing from related parties
The Company engaged in financings from Evergreen International Corp. and certain related
parties. The interest expense was calculated based on floating rates. For the year ended December
31, 2009, the maximum balance and the interest expense were NT$8,729,942 (US$272,555) and
NT$97,270 (US$2,944), respectively. As of December 31, 2009, the aforementioned financings
had been redeemed.
There was no such transaction in 2010.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
91
(3) Property transaction
The Company sold two aircraft for US$97,067 to SINO GAIN LIMITED on November 27,
2009, and immediately bought them back by installments. There were no gains or losses on
disposal recorded for this sale and buyback transaction. As for the years ended December 31,
2010, and 2009 installment payments amounted to NT$1,420,088 (US$48,750) and
NT$2,081,950 (US$65,000), respectively, recorded under installment accounts payable.
(4) Endorsement and guarantees
As of December 31, 2010, and 2009, the details of guarantees to related parities were as follows:
2010 2009
NT dollars US dollars NT dollars US dollars
SINO GAIN LIMITED $ 1,420,088 48,750 2,081,950 65,000
(5) The abovementioned transactions with related parties were made with no significant difference
from those with non-related parties, but sometimes the payments were overdue. Receivables and
payables as of December 31, 2010 and 2009, resulting from the aforementioned transactions
were as follows: 2010 2009
NT dollars US dollars NT dollars US dollars
Accounts receivable－related parties:
Uni Airways Corp. $ 138,108 4,741 73,829 2,305
Evergreen Aviation Technologies Corp. 27,782 954 39,930 1,247
Shanghai Airlines Cargo International Co., Ltd 19,064 654 45,108 1,408
Evergreen International Corp. 3,308 114 3,145 98
Others 2,277 78 956 30
$ 190,539 6,541 162,968 5,088
Other receivables－related parties:
Uni Airways Corp. $ 36,825 1,264 56,972 1,779
Shanghai Airlines Cargo International Co., Ltd 29,878 1,026 102,747 3,208
Evergreen Aviation Technologies Corp. 7,655 263 10,928 341
Others 562 19 15,332 478
74,920 2,572 185,979 5,806
Less: credit to long-term equity investments
under equity method - - (80,056) (2,499)
$ 74,920 2,572 105,923 3,307
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
92
Note: As of December 31, 2010 and 2009, the overdue accounts receivable transferred to other
receivables. The aging for the abovementioned overdue accounts receivable is shown below:
2010
Aging for overdue accounts receivable
NT dollars US dollars
Name Amount
Over 1-6
months
Over 7-
12
months
Over one
year Amount
Over 1-6
months
Over 7-
12
months
Over one
year
Shanghai Airlines Cargo
International Co., Ltd. $ 28,755 16,112 2,303 10,340 987 553 79 355
2009
Aging for overdue accounts receivable
NT dollars US dollars
Name Amount
Over 1-6
months
Over 7-
12
months
Over one
year Amount
Over 1-6
months
Over 7-
12
months
Over one
year
Shanghai Airlines Cargo
International Co., Ltd. $ 96,345 43,098 31,565 21,682 3,008 1,346 985 677
2010 2009
NT dollars US dollars NT dollars US dollars
Accounts payable－related parties:
Evergreen Aviation Technologies Corp. $ 1,892,867 64,980 585,669 18,285
Evergreen Sky Catering Corp. 177,885 6,107 179,214 5,595
Evergreen Airline Services Corp. 164,878 5,660 148,683 4,642
Uni Airways Corp. 82,979 2,848 47,125 1,471
Shanghai Airlines Cargo International Co., Ltd. 54,880 1,884 15,756 492
Evergreen Air Cargo Services Corp. 53,385 1,833 57,447 1,794
Green Siam Air Services Co, Ltd. 12,172 418 13,583 424
RTW Air Services (S) Pte Ltd. 10,729 368 8,537 267
Evergreen International Corp. 9,757 335 8,943 279
Others 14,411 495 13,223 412
$ 2,473,943 84,928 1,078,180 33,661
Other payables－related parties:
Evergreen Airline Services Corp. $ 78,873 2,708 60,571 1,891
Evergreen International Corp. 34,371 1,180 27,447 857
Uni Airways Corp. 15,861 544 12,063 377
Evergreen Air Cargo Services Corp. 8,391 288 8,653 270
Evergreen Aviation Technologies Corp. 8,056 277 33,784 1,055
Evergreen Security Corp. 3,766 129 3,663 114
Others 4,076 140 2,759 86
$ 153,394 5,266 148,940 4,650
(c) Summary of payroll and remuneration of the Company’s directors, supervisors and major
management
For the years ended December 31, 2010 and 2009, the related information about payroll and
remuneration of major management, such as directors, supervisors and managers, received from the
Company was as below:
2010 2009
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
93
NT dollars US dollars NT dollars US dollars
Salaries $ 76,832 2,438 20,650 625
Bonus and extra payment 8,814 280 2,990 90
Employee bonus 183 6 - -
For the details of the estimated remuneration of directors and supervisors and employee bonus, please
see note 4(n).
6. Pledged Assets
The book values of the pledged assets as of December 31, 2010 and 2009, were as follows:
2010 2009
Pledged assets Object NT dollars US dollars NT dollars US dollars
Land Long-term borrowings $ 1,863,910 63,986 1,863,910 58,193
Buildings Long-term borrowings 2,172,929 74,594 2,235,703 69,800
Aircraft Long-term borrowings,
Installment accounts
payable
55,652,842 1,910,499 63,542,064 1,983,830
Simulators－included in
machinery and equipment
Installment accounts
payable
438,801 15,064 503,000 15,704
Engines-included in
machinery and equipment
Long-term borrowings 2,733,104 93,824 3,103,851 96,904
Advances for purchases of
equipment
Long-term borrowings 10,924,674 375,032 5,423,849 169,337
Time deposit－included in
other assets
Customs duty and
contract performance
guaranties
718,076 24,651 989,434
30,891
Spare parts-included in
inventories
Installment accounts
payable
1,000,062 34,331 1,300,081
40,589
US treasury note-included in
available-for-sale financial
assets-noncurrent
Contract performance
guaranties
188,292
6,464
261,401
8,161
$ 75,692,690 2,598,445 79,223,293 2,473,409
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
94
7. Commitments and Contingencies
(a) The Company entered into aircraft, and building lease contracts using the operating lease or capital
lease method. As of December 31, 2010, the Company had paid NT$1,487,169 (US$51,053) as
refundable deposits. According to these contracts, future lease payments in the following five years
are as follows:
Year due NT dollars US dollars
January 1, 2011~December 31, 2011 $ 7,083,959 243,184
January 1, 2012~December 31, 2012 6,494,691 222,955
January 1, 2013~December 31, 2013 6,048,614 207,642
January 1, 2014~December 31, 2014 6,025,420 206,846
January 1, 2015~December 31, 2015 5,799,220 199,081
And after 11,580,155 397,534
$ 43,032,059 1,477,242
(b) As of December 31, 2010, the details of guarantees to related parties are disclosed in note 5(b).
(c) The Company is the subject of investigations by the related authorities of the United States, and these
investigations are focused on air cargo competition and oil surcharges. The Company has been
cooperating with the United States government and appointed a legal counsel in connection with these
investigations. On December 31 2010, the investigations are ongoing, and the results are uncertain.
8. Important Damage Losses: none
9. Important Subsequent Events: none
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
95
10. Others
(a) Total personnel expenses, depreciation and amortization for the years ended December 31, 2010 and
2009, were as follows:
2010
By function NT dollars US dollars
Operating Operating Operating Operating
By item cost expenses Total cost expenses Total
Personnel expenses
Salaries $ 3,322,531 2,833,038 6,155,569 105,410 89,881 195,291
Insurance 153,070 125,508 278,578 4,856 3,982 8,838
Pension 230,663 125,871 356,534 7,318 3,993 11,311
Others (meal
allowances, etc) 1,123,244 175,227 1,298,471 35,636 5,559 41,195
Depreciation 8,024,318 135,160 8,159,478 254,579 4,288 258,867
Amortization 1,081,617 60,550 1,142,167 34,315 1,921 36,236
2009
By function NT dollars US dollars
Operating Operating Operating Operating
By item cost expenses Total cost expenses Total
Personnel expenses
Salaries $ 3,036,856 2,526,968 5,563,824 91,915 76,482 168,397
Insurance 130,167 118,481 248,648 3,940 3,586 7,526
Pension 169,604 119,262 288,866 5,133 3,610 8,743
Others (meal
allowances, etc) 1,048,278 202,505 1,250,783 31,728 6,129 37,857
Depreciation 7,991,648 152,777 8,144,425 241,878 4,624 246,502
Amortization 1,142,363 97,215 1,239,578 34,575 2,942 37,517
(b) Reclassification
Certain amounts in the financial statements for the year ended December 31, 2009, have been
reclassified to conform with the presentations of the financial statements for the year ended
December 31, 2010, for purposes of comparison. These reclassifications do not have a significant
impact on the financial statements.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
96
(c) The information of significant foreign currency of financial assets and liabilities.
2010.12.31 2009.12.31
Financial assets
Local Amount Exchange
Rate
NT dollars
Local
Amount
Exchange
Rate
NT dollars
Currency
USD $ 114,709 29.1300 3,341,473 83,210 32.0300 2,665,230
EUR 3,596 38.8769 139,783 3,112 46.1200 143,522
JPY 465,946 0.3581 166,847 221,049 0.3474 76,784
HKD 248,237 3.7473 930,230 193,787 4.1305 800,437
CNY 848,713 4.4203 3,751,594 229,572 4.6920 1,077,152
8,329,927 4,763,125
Long-term equity
investment
under equity
method
USD 14,799 29.1300 431,098 11,190 32.0300 358,400
2010.12.31 2009.12.31
Financial
liabilities
Local Amount Exchange
Rate
NT dollars
Local
Amount
Exchange
Rate
NT dollars
Currency
USD 189,845 29.1300 5,530,173 109,813 32.0300 3,517,315
EUR 7,361 38.8769 286,176 5,482 46.1200 252,814
JPY 1,597,227 0.3581 571,938 779,792 0.3474 270,868
HKD 26,543 3.7473 99,465 31,248 4.1305 129,070
CNY 107,039 4.4203 473,149 59,941 4.6920 281,245
6,960,901 4,451,312
11. Segment Financial Information
(a) Diversified industry:
The Company mainly operates an international air transportation business.
EVA AIRWAYS CORP.
Notes to Financial Statements
(Continued)
97
(b) Geographic area information:
2010 2009
NT dollars US dollars NT dollars US dollars
Asia:
Operating revenue $ 39,790,741 1,262,397 24,994,021 756,478
Gain (loss) from operations $ 4,820,448 152,933 (961,916) (29,114)
Identifiable assets $ 816,677 28,036 951,546 29,708
North America:
Operating revenue $ 21,483,468 681,582 16,907,594 511,731
Gain (loss) from operations $ 2,602,614 82,570 (650,703) (19,694)
Identifiable assets $ 133,152 4,571 274,405 8,567
Other foreign areas:
Operating revenue $ 6,151,949 195,176 5,482,715 165,942
Gain (loss) from operations $ 745,278 23,644 (211,007) (6,387)
Identifiable assets $ 197,208 6,770 111,162 3,470
Domestic:
Operating revenue $ 36,983,853 1,173,345 25,895,181 783,752
Gain (loss) from operations $ 4,480,408 142,145 (996,598) (30,163)
Identifiable assets $ 135,032,460 4,635,512 137,388,589 4,289,372
Total operating revenue $ 104,410,011 3,312,500 73,279,511 2,217,903
EVA AIRWAYS CORP.
Notes to Financial Statements
98
2010 2009
NT dollars US dollars NT dollars US dollars
Income (loss) from operations $ 12,648,748 401,292 (2,820,224) (85,358)
Investment income, net 1,055,194 33,477 278,177 8,420
General income 108,889 3,455 790,290 23,919
Interest expenses (1,767,564) (56,077) (1,973,576) (59,733)
Income (loss) before income tax $ 12,045,267 382,147 (3,725,333) (112,752)
Total identifiable assets $ 136,179,497 4,674,889 138,725,702 4,331,117
Long-term equity investments 11,850,022 406,797 11,211,034 350,017
Total assets $ 148,029,519 5,081,686 149,936,736 4,681,134
(c) Major customer information - The Company operates an air transportation business with no
specific major customers.
(d) Export sales information - The main business of the Company is to provide international
air transportation services. Consequently, it is not practical to
separate export and domestic sales.
2010 2009 2010 2009
NT dollars NT dollars NT dollars NT dollars
Assets Liabilities and Stockholders’ Equity
Current assets: Current liabilities:
Cash and cash equivalents $ 16,575,505 6,619,728 Short-term borrowings $ 3,004,087 2,916,401
Financial assets at fair value through profit or loss－current 1,628 27,304 Financial liabilities at fair value through profit or loss－current - 690,979
Available-for-sale financial assets－current 2,136,713 4,734,650 Derivative financial liabilities for hedge purposes－current - 897,196
Notes receivable 527,081 533,421 Accounts payable 2,317,139 2,169,883
Accounts receivable, net 9,722,132 7,983,598 Accounts payable－related parties 156,693 81,090
Accounts receivable－related parties 420,718 546,180 Tax payables 157,344 241,081
Other receivables 162,465 144,955 Accrued expenses 7,954,527 6,413,811
Other receivables－related parties 292,305 123,630 Other payables－related parties 80,501 67,734
Inventories 12,601,237 11,643,967 Other payables 3,375,244 2,982,190
Other prepayments 788,339 1,221,039 Unearned revenue 7,131,673 6,291,354
Deferred income tax assets－current 1,324,309 282,393 Current portion of long-term liabilities 13,679,723 15,634,058
Other current assets 43,081 44,059 Other current liabilities 3,114,936 2,997,058
Total current assets 44,595,513 33,904,924 Total current liabilities 40,971,867 41,382,835
Funds and investments:
Available-for-sale financial assets－noncurrent 1,040,261 913,272 Long-term liabilities:
Financial assets carried at cost－noncurrent 2,255,826 2,257,414 Bonds payable 5,000,000 9,000,000
Long-term equity investments under equity method 929,111 885,742 Long-term borrowings 41,860,567 51,901,811
Total funds and investments 4,225,198 4,056,428 Installment accounts payable 14,513,905 8,061,274
Lease liability－noncurrent 10,356,464 12,201,687
Property, plant and equipment: Total long-term liabilities 71,730,936 81,164,772
Land 2,550,924 2,550,924
Buildings 13,361,864 13,355,457 Other liabilities:
Machinery and equipment 12,692,031 12,080,066 Accrued employee retirement liabilities 613,223 475,874
Aircraft 98,145,977 101,316,455 Other liabilities 1,270,175 1,461,802
Leased assets 14,739,099 16,201,120 Total other liabilities 1,883,398 1,937,676
141,489,895 145,504,022 Total liabilities 114,586,201 124,485,283
Less: accumulated depreciation (53,839,916) (48,703,865)
Advances for purchases of equipment 11,303,772 14,118,078 Stockholders’ equity:
Net property, plant and equipment 98,953,751 110,918,235 Common stock 29,626,772 29,626,772
Capital surplus 2,649,436 5,564,505
Intangible assets: Retained earnings(accumulated deficit) 12,016,736 (2,915,074)
Deferred pension cost 188,486 262,810 Other stockholders’ equity adjustments:
Cumulative translation adjustments (3,554,690) 423,833
Other assets: Net loss not yet recognized as net pension cost (511,128) (157,412)
Refundable deposits 1,759,269 1,706,336 Unrealized gains or losses on financial instruments 408,136 (515,511)
Deferred charges 4,783,235 4,052,074 Total other stockholders’ equity adjustments (3,657,682) (249,090)
Accounts receivable－related parities－noncurrent 79,373 138,844 Total stockholders’ equity 40,635,262 32,027,113
Deferred income tax assets－noncurrent 3,354,468 3,676,788 Minority interest 3,470,038 3,222,238
Other assets 752,208 1,018,195 Total stockholders’ equity and minority interst 44,105,300 35,249,351
Total other assets 10,728,553 10,592,237
Total assets $ 158,691,501 159,734,634 Total liabilities and stockholders’ equity $ 158,691,501 159,734,634
99
EVA AIRWAYS CORP. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars)
2010 20072009
NT dollars NT dollars
Operating revenue $ 114,054,453 81,496,329
Operating cost 92,496,725 76,795,004
Gross profit from operations 21,557,728 4,701,325
Operating expenses 7,383,397 6,400,945
Operating income (loss) 14,174,331 (1,699,620)
Non-operating income and gains:
Interest income 93,714 42,912
Investment income 280,688 -
12,713 52,823
Gains on valuation of financial liabilities 10,333 632,844
Other income 363,566 263,337
761,014 991,916
Non-operating expenses and losses:
1,839,710 2,058,221
Investment losses - 188,001
Exchange losses, net 318,497 33,690
Other losses 64,028 122,113
2,222,235 2,402,025
Income (loss) from continuing operations before income
tax12,713,110 (3,109,729)
Income tax benefit (expenses) (289,262) 524,723
Net income (loss) $ 12,423,848 (2,585,006)
Income (loss) attributable to:
Parent company 12,016,736 (2,844,254)
Minority interest 407,112 259,248
$ 12,423,848 (2,585,006)
Net income Net loss
NT dollars NT dollars
Basic earnings (losses) per share (expressed in New
Taiwan dollars)$ 4.06 (1.14)
Diluted earnings per share (expressed in New Taiwan
dollars)$ 4.05 -
100
EVA AIRWAYS CORP. AND SUBSIDIARIES
Consolidated Statements of Operations
For the years ended December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars, Except Earnings per Share)
Interest expenses
Gains on disposal of property, plant and equipment
Balance on January 1, 2009 $ 39,426,772 4,866,753 18,864 (16,889,684) 1,491,895 (162,517) (3,009,945) 2,966,638 28,708,776
Make-up of accumulated deficit by capital reduction (16,800,000) - - 16,800,000 - - - - -
Make-up of accumulated deficit - - (18,864) 18,864 - - - - -
Cash subscription 7,000,000 420,000 - - - - - - 7,420,000
Share options granted to employees - 282,100 - - - - - - 282,100
Increase in net equity due to change in percentage of capital surplus in long-
term equity investments under equity method - (4,348) - - - - - - (4,348)
Increase in net equity due to recording net loss not yet recognized as net
pension cost in long-term equity investments under equity method - - - - - 18,744 - - 18,744
Recognized net loss not yet recognized as net pension cost - - - - - (13,639) - - (13,639)
Increase in net equity due to change in percentage of unrealized gains or losses
on financial instruments in long-term equity investments under equity method - - - - - - 18,034 - 18,034
Change in unrealized gains on financial instruments - - - - - - 2,476,400 - 2,476,400
Decrease in minority interest - - - - - - - (3,648) (3,648)
Net income (loss) for the year ended December 31, 2009 - - - (2,844,254) - - - 259,248 (2,585,006)
Translation adjustments for the year ended December 31, 2009 - - - - (1,068,062) - - - (1,068,062)
Balance on December 31, 2009 29,626,772 5,564,505 - (2,915,074) 423,833 (157,412) (515,511) 3,222,238 35,249,351
Make-up of accumulated deficit - (2,915,074) - 2,915,074 - - - - -
Increase in net equity due to change in percentage of capital surplus in long-
term equity investments under equity method - 5 - - - - - - 5
Increase in net equity due to recording net loss not yet recognized as net
pension cost in long-term equity investments under equity method - - - - - (44,828) - - (44,828)
Recognized net loss not yet recognized as net pension cost - - - - - (308,888) - - (308,888)
Increase in net equity due to change in percentage of unrealized gains or losses
on financial instruments in long-term equity investments under equity method - - - - - - 18,217 - 18,217
Change in unrealized gains on financial instruments - - - - - - 905,430 - 905,430
Decrease in minority interest - - - - - - - (159,312) (159,312)
Net gain for the year ended December 31, 2010 - - - 12,016,736 - - - 407,112 12,423,848
Translation adjustments for the year ended December 31, 2010 - - - - (3,978,523) - - - (3,978,523)
Balance on December 31, 2010 $ $29,626,772 2,649,436 - 12,016,736 (3,554,690) (511,128) 408,136 3,470,038 44,105,300
Cumulative
Translation
Adjustments
EVA AIRWAYS CORP. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
For the years ended December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars)
Net Loss Not Yet
Recognized As Net
Pension Cost
Unrealized Gains or
Losses on Financial
Instruments
Minority
Interest
TotalRetained Earnings
(Accumulate Deficit)
Legal ReserveCommon Stock Capital
Surplus
101
2010 2009
NT dollars NT dollars
Cash flows from operating activities:
Net income (loss) $ 12,423,848 (2,585,006)
Adjustments to reconcile net income (loss) to net cash flow provided by (used in)
operating activities:
Depreciation 8,873,711 8,906,010
Amortization and maintenance expense 1,227,270 1,311,730
Investment loss (income) (280,688) 188,001
Proceeds from cash dividends on long-term equity investments 89,016 78,115
Losses on disposal and obsolescence of property, plant and equipment 4,866 15,927
Gains on sale of investments, net (3,711) (8,807)
Deferred income tax benefit 31 (912,751)
Impairment loss - 56,719
Amortization expense recorded as interest expenses 83,158 33,728
Amortization expense recorded as other expenses 154 154
Amortization of other deferred gain (53,636) (129,598)
Salary expenses－share options granted to employees - 282,100
Changes in operating assets and liabilities, net:
Changes in operating assets, net:
Financial assets at fair value though profit or loss 25,676 408,346
Notes receivable 6,340 (334,372)
Accounts receivable (1,738,534) (775,893)
Accounts receivable－related parties 125,462 (253,844)
Other receivable 5,143 42,451
Other receivables－related parties (168,675) (41,115)
Inventories (957,257) (778,865)
Other prepayments 432,700 (445,838)
Other current assets 978 49,735
Accounts receivable－related parities－noncurrent 59,471 (89,561)
Changes in operating liabilities, net:
Financial liabilities at fair value through profit or loss (690,979) (5,095,705)
Accounts payable 147,256 601,420
Accounts payable－related parties (1,004,876) 18,358
Tax payable (83,737) 133,906
Accrued expenses 1,540,716 68,625
Other payables－related parties 12,767 5,791
Other payables (1,573,760) (85,660)
Unearned revenue 840,319 (424,084)
Other current liabilities 127,164 (375,160)
Accrued employee retirement liabilities (177,565) (171,372)
Other liabilities 94,002 (19,548)
Net cash provided by (used in) operating activities 19,386,630 (326,063)
Cash flows from investing activities:
Decrease (increase) in available-for-sale financial assets 2,682,135 (3,574,971)
Withdrawal of financial assets carried at cost 1,151 27,052
Payments for purchase of long-term equity investments under equity method - (234,367)
Payments for purchase of property, plant and equipment (3,447,180) (14,421,777)
Proceeds from disposal of property, plant and equipment 3,826 6,533
Decrease (increase) in refundable deposits (160,661) 3,156,148
Increase in deferred charges (961,264) (509,936)
Decrease (increase) in other assets 265,987 (168,608)
Net cash provided by (used in) investing activities (1,616,006) (15,719,926)
Cash flows from financing activities:
Increase (decrease) in short-term borrowings 87,686 (1,562,696)
Issuance of bonds payable - 5,000,000
Redemption of bonds payable (3,100,000) (2,646,700)
Increase in long-term borrowings (including installment accounts payable) 21,919,400 24,663,996
Redemption of long-term borrowings (including installment accounts payable) (24,930,109) (14,231,408)
Redemption of lease liability (1,457,006) (1,411,733)
Decrease in minority interest (159,312) (3,648)
Cash subscription - 7,420,000
Net cash provided by (used in) financing activities (7,639,341) 17,227,811
Effect of exchange rate changes on cash (175,506) 43,597
Net increase (decrease) in cash and cash equivalents 9,955,777 1,225,419
Cash and cash equivalents at beginning of year 6,619,728 5,394,309
Cash and cash equivalents at end of year $ 16,575,505 6,619,728
Additional disclosure of cash flow information:
Interest paid $ 1,975,770 2,240,511
Less: capitalized interest 214,189 145,006
Interest paid (excluding capitalized interest) $ 1,761,581 2,095,505
Income tax paid $ 378,004 252,990
Supplemental schedule of noncash investing and financing activities:
Current portion of long-term liabilities and bonds payable $ 13,679,723 15,634,058
Inventory transferred from fixed assets $ 13 18
Unrealized gains or losses on financial instruments (including investee) $ 923,647 2,494,434
Translation adjustments $ (3,978,523) (1,068,062)
EVA AIRWAYS CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended December 31, 2010 and 2009
(Expressed in Thousands of New Taiwan Dollars)
102
