2004 - EVA Air

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2004 - EVA Air Powered By Docstoc
					Financial and Operating Highlights         2        Important Resolution by Shareholders
To Shareholders                            3        and BOD                                  58
    2004 in Review                         3        Corporate Governance                     61
    2005 Preview                           5
                                                Financial and Operating Statistics           64
The Company                                 8       Financial Results                        64
   Major Milestones                         9       Operating Results                        70
   Calendar of 2004 Events                 11
   Directors and Supervisors               12   Financial Statements                         72
   Principal Officers                      18       Auditors' Report                         72
   Capital and Shares                      26       Balance Sheets                           73
   EVA Air People                          32       Statements of Operations                 74
   The Fleet                               34       Statements of Changes in Stockholders'
   The Market                              35       Equity                                   75
   The Network                             54       Statements of Cash Flows                 76
   Principal Subsidiaries                  55       Notes to Financial Statements            78
   Litigation or Non-litigious Proceedings 56
   Impact of Changes in Policies and Laws
   on the Company's Finance Corresponding
   Strategies                              57




                                                                                                  1
Financial and Operating Highlights

              Financial and Operating Highlights
                                                             2004          2003       % Change
              Financial
              Income Statement
              Revenue                  NT$ thousand       82,655,351    65,387,596     26.4%
              Passenger revenue        NT$ thousand       38,348,799    29,196,261     31.3%
              Cargo revenue            NT$ thousand       38,534,229    31,570,153     22.1%
              Total costs              NT$ thousand       77,939,994    62,893,909     23.9%
              Operating profit         NT$ thousand        4,715,357    2,493,687      89.1%
              Net income               NT$ thousand        3,242,935    1,396,182      132.3%
              EPS                           NT$              1.06          0.53        100.0%
              Profit margin                  %              5.70%         3.80%        1.90ppt
              Balance Sheet
              Total assets             NT$ thousand       117,704,996   114,668,211     2.6%
              Total liabilities        NT$ thousand       74,596,784    76,455,172     -2.4%
              Total equity             NT$ thousand       43,108,212    38,213,039     12.8%
              Total capital            NT$ thousand       32,714,259    27,534,330     18.8%
              Book value per share          NT$             13.18         13.88        -5.1%
              Debt ratio                     %              63.38%        66.68%       -3.3ppt
              Operating
              Overall capacity           Thousand          9,884,479    8,727,247      13.3%
              Overall traffic            Thousand          7,439,441    6,345,099      17.3%
              Overall load factor            %              75.26%        72.70%       2.56ppt
              Overall yield                 NT$             10.33          9.58         7.9%
              Passenger capacity         Thousand         27,353,095    25,022,543      9.3%
              Passenger traffic          Thousand         21,754,920    18,134,025     20.0%
              Passengers carried      no. of passengers    5,438,255    4,321,605      25.8%
              Passenger load factor          %              79.53%        72.47%       7.06ppt
              Passenger yield               NT$              1.76          1.61         9.5%
              Cargo capacity              thousand         7,422,701    6,475,218      14.6%
              Cargo traffic               thousand         5,481,499    4,713,037      16.3%
              Cargo carried                 tons           858,989       734,900       16.9%
              Cargo load factor              %              73.85%        72.79%       1.06ppt
              Cargo yield                   NT$              7.03           6.7         4.9%
              Unit cost                     NT$              7.89          7.21         9.4%
              Number of employees                           4,934         4,469        10.4%
              Capacity per employee       thousand          2,003         1,953         2.6%
              Traffic per employee        thousand          1,508         1,420         6.2%
              Revenue per employee     NT$ thousand         16,752        14,631       14.5%




2
To Shareholders
                 2004 In Review                       trends and improve operating efficiencies, but
2004 Review                                           also produced multiple network services such as
      Fully recovered from the effects of the 2003    online reservations, e-ticketing, hotel and car-
SARS outbreak, EVA Air has matched market             rental bookings, and more. We designed our sys-
demand and optimized capacity, achieving high         tem to be user friendly and to make it easy and
operating profits with aggressive marketing and       convenient for passengers to arrange their travel
flexible fleet deployment. Despite significantly      schedules. As an added benefit, this system has
high fuel costs, global economic recovery, vigor-     also proven to be an effective tool for reducing
ous capital markets, and improving fundamentals       operating costs and expenses. We complemented
are signs of encouragement for our industry.          our virtual services by creating a brand-new EVA
Audited financial results show that EVA Air met       vacation product, the "évasion", and it has been
financial forecasts. Total operating revenues are     very positively received.
up 26% from NTD 65.3 billion in 2003 to NTD                We amplified 2004 cargo capacity by con-
82.6 billion in 2004, and earnings after tax          verting one MD-11 passenger aircraft into a
reached NTD 3.243 billion.                            freighter and wet leasing another, enlarging our
      EVA Air continued to enhance passenger          cargo fleet to 17 airplanes. We started air cargo
business and give travelers comfortable, innova-      services to Osaka on March 4 with one flight per
tive services by following the 2003 introduction of   week and have already tripled that frequency. We
two brand-new Airbus A330-200s on our Tokyo           began expanding our cooperative arrangements
and Hong Kong routes with the addition of four        with Mainland China-based carriers in April,
more in 2004 that enabled us to extend use of         upping capacity by 3,000 tons per month and
these aircraft to our Brisbane, Vienna, Osaka,        positioning EVA to capture a larger share of the
Macau and Bangkok flights. Operating a fleet of       burgeoning air freight business in that region. In
33 passenger aircraft, EVA increased 2004 capaci-     June, we won the TSMC transport project and
ty by 9.3% over 2003 and raised the load factor to    successfully carried a highly sensitive, fragile and
79.5%. We also improved revenue, which was            oversized eight-inch wafer fabrication plant to
driven by recovered economies in Japan and            Shanghai. Implementing a strategy to further sat-
America, higher airfares, and greater demand in       isfy the air cargo needs of Taiwanese businessmen
Northeast Asia and on transpacific routes.            operating in Mainland China, EVA entered a
      Optimizing advantages of today's electronic     cooperative agreement with Air Macau in August
business model, EVA not only established an           to serve the Xiamen-Macau-Taipei route. And on
enterprise data warehouse system to track market      February 25, EVA began a cooperative service



                                                                                                             3
To Shareholders



    with Transmile Air on its scheduled three weekly    import/export volume, in addition to paving
    Boeing 727 flights between Phnom Penh and           the way for our continuing growth in both busi-
    Penang, strengthening both our cargo service net-   ness sectors. An international, in-depth indus-
    work and capacity.                                  try analysis performed by Airbus points to more
         Subjectively and objectively analyzing 2004    rapid expansion in Asia-Pacific regions and
    market conditions, EVA cargo operating per-         Mainland China than in other parts of the
    formance reached a peak with capacity that was      world, suggesting enormous potential for EVA's
    14.6% higher than it was in 2003 and a load fac-    continuing development within the Asia-Pacific
    tor that reached 73.9%.                             market.
         Taiwan's strategic geographic location aug-        Looking ahead at 2005 and facing fierce
    mented by its regional advantages as a hub for      competition within the industry, EVA's corporate
    Northeast and Southeast Asia, its vast interna-     spirit of teamwork, service and innovation
    tional trade resources and high income has          remains at the forefront while we continue to
    made it Asia's thriving golden A-1 route. The       focus on improving operating efficiency, reducing
    combination of these factors has spurred EVA's      costs and rising to meet any business challenges
    steady growth in both passenger and cargo           we may encounter.


    Results Compared to Projections
                                                                                        NT$(Thousand)
                   Item                Budget                     Actual                Hit Ratio
    Operating revenues                76,778,361              82,655,351                 107.7%
    Operating costs                   65,499,136              71,114,492                 108.6%
    Gross profit                      11,279,225              11,540,859                 102.3%
    Operating expenses                 6,474,446               6,825,502                 105.4%
    Operating income                   4,804,779               4,715,357                  98.1%
    Non-operating income                 616,346               1,122,125                 182.1%
    Non-operating expenses             2,299,685               2,154,853                  93.7%
    Income before taxes                3,121,440               3,682,629                 118.0%
    Taxes on income                      336,933                  439,694                130.5%
    Net income                         2,784,507               3,242,935                 116.5%




4
Analyses of Financial Results                         tion. In addition to offering online booking
Total Revenues: NTD 83,777,476,000                    and e-ticketing conveniences, EVA unveiled
     Operating revenues for 2004 increased by         our ow n brand-new vacation package -
26% over 2003 to NTD 82,655,351,000.                  évasion. And, on December 15, 2004, we intro-
Passenger revenue grew by 31% primarily due           duced our Cargo Industr y Information
to the steady recovery of the global economy          Network and Electronic Data Interchange
and industry. Cargo revenues climbed by 22%           Platform, further improving service quality
due to fleet expansion and rising market              and becoming more competitive.
demand. Non-operating income was 24% high-
er at NTD 1,122,125,000 due to strong invest-                         2005 Preview
ment gains.                                           Operating Guidelines:
                                                           We expect continued operating revenue
Total Expenses: NTD 80,094,847,000                    growth in 2005. Upholding the values of avia-
     Consolidated operating expenses rose by          tion security and traditionally friendly servic-
24% from 2003 to NTD 77,939,994,000 in 2004           es, we operate and maintain a fleet of 50 air-
as a result of rising fuel costs and expenses asso-   craft, applying efficient fleet management
ciated with fleet expansion and increased cargo       and enhancing service quality at every oppor-
loads. Non-operating expenses were down 1%            tunity.
at NTD 2,154,853,000 due to lower interest
costs.                                                EVA Air Traffic Projections
                                                      Passenger Services:
Profitability Analysis                                     Passenger traffic is estimated at 5.71 million
Return on total assets: 4.01%                         passengers in 2005.
Return on shareholders' equity: 8%                    Basis of Estimation:
Ratio of operating profit to paid-in capital: 14%          We anticipate continuation of the stable
Return on sales: 4%                                   markets seen in 2004. We will retire six Boeing
Earnings per share: NTD 1.06                          B767s from the fleet and add four brand-new
                                                      Airbus A330-200s in March, May, July and
Research and Development:                             October plus the first two of our Boeing B777-
    EVA has adopted an effective new enterprise       300ERs in July and August. We will continue to
data warehouse system to track market move-           operate 33 passenger aircraft though we will
ment and better serve the e-business genera-          increase capacity by 5.7%.



                                                                                                            5
To Shareholders



    Cargo Services:                                     • EVA commenced service to Vientiane, Laos
        Cargo volume will reach an estimated 840         on February 24, 2005 with three flights per
    thousand tons in 2005.                               week.
    Basis of Estimation:                                • EVA secured permission to upgrade charter
        Along with a neutral economic outlook for        service to operate regular, scheduled flights to
    markets worldwide in 2005, indicators point to       Korea on March 1, 2005 via an official aviation
    rapid growth in mainland China. We are inten-        rights amendment.
    sifying our efforts in the Greater China region     • EVA w ill fly five weekly flig hts to
    to grow existing business and explore new            Vancouver, Canada during the March 27
    opportunities. Consequently, we expect to            and October 29, 2005 summer season in
    increase cargo yield. A lease for one B747           addition to continuing its alliance with Air
    freighter ended in January and another for a         Canada.
    MD-11 cargo aircraft will be discharged in June.    • EVA placed a wet-leased MD-90 in service on
    These freighters are being replaced with two         March 27, 2005 between Taipei and Macau.
    wet-leased MD-11s, one that began operating in      • EVA expanded Kaohsiung-Macau service
    March and the second to be added in August.          on March 27, 2005 by adding a third daily
    EVA will maintain its 17-aircraft freighters and     flight.
    estimates a cargo load capacity increase slightly   • EVA will increase Taipei - Vienna service,
    over 2004.                                           s t a r t i n g May 1 7 , 2 0 0 5 b y a d d i n g t wo
                                                         flights to the three it currently provides
    Key Marketing Strategies                             each week.
    Passenger Market                                    • EVA will expand service between Taipei and
    • EVA will replace six B767s with four A330-200s     Seoul from seven to nine flights each week,
      and two brand-new B777-300ERs for use on           starting May 17, 2005.
      routes linking Asia, Australia, New Zealand and   • EVA will introduce a brand-new, techno-
      Europe.                                            logically advanced Boeing B777-300ER on
    • EVA successfully provided "Chinese New Year        our Taipei-London route star ting July,
      Cross-Strait Charter Flights" between January      2005.
      29 and February 20, 2005, flying a total of
      four flights, Taipei - Beijing and Taipei -       Cargo Market
      Shanghai.                                         • EVA expanded capacity with one MD-11




6
 freighter in March and will add a second in           • EVA increased freighter service to Osaka from
 August in response to growing market                   one to three weekly flights at the end of March
 demands.                                               2005.
• EVA will adjust existing routes and re-assess less   • EVA will continue to develop collaborative
 profitable ones to ensure the most efficient           service networks to expand and strengthen our
 deployment of our cargo load capacity.                 reach in the Great China region.




                                                                                                          7
The Company

              The Company
                   EVA Air was founded in March 1989             In addition, EVA has ensured quality,
              as a 100% privately owned Taiwan-based        smooth, ongoing operations and reduced
              airline. It is an affiliate of Evergreen      costs by investing capital and expertise in
              Marine Corporation, the world's leading       airline-related companies, including
              container-shipping line.                      Evergreen Sky Catering Corporation,
                   From its maiden flight on July 1,        Evergreen Airline Services Corporation,
              1991, EVA Air has grown steadily and          Evergreen Air Cargo Service Corporation,
              today, serves 43 major destinations on        and other selected subsidiaries.
              four continents and in Oceania with a fleet        Operating strategies developed by the
              of 50 aircraft(as of Dec.2004) The carrier    carrier are far-reaching. Company goals
              has flourished as it has continued to         place equal importance on its passenger
              expand its fleet and operation network.       and cargo services, and it works in cooper-
                   In 1997, after carefully nurturing an    ation with affiliated carriers to maximize
              environment where faultless service quali-    mutual efficiencies and effectively compete
              ty and flight safety are the standard, EVA    on a global scale. Its worldwide hub of
              Air became the first airline in Taiwan to     operations      at   Chiang        Kai-Shek
              achieve official ISO 9002 Certification in    International Airport in Taiwan has
              three areas at the same time -- passenger,    proven to be both successful and strategic.
              cargo and maintenance operations.                  EVA Air listed its stock on Taiwan's
              Diligently upholding these objectives, EVA    TAISDAQ Market in October 1999, and
              Air earned ISO-9001:2000 Certification        moved to the main board, TSE, in
              for all categories of operation in 2001.      September 2001.




8
               Major Milestones                         than half a dozen new destinations, and by
1988~1990                                               launching service to London, Paris, Seattle, New
       On September 1, 1988 at the celebration for      York, San Francisco, Brisbane, Sydney and Dubai.
the 20th birthday of Evergreen Marine                   1994
Corporation, Group Chairman Y. F. Chang                      EVA made the greatest number of new air-
announced that Evergreen would launch an inter-         craft additions to its fleet this year, purchasing a
national airline. EVA Air was officially formed in      total of eight, including three MD-11s, one B747-
March 1989. After careful deliberation, the fledg-      400, and four B767-200s. The airline also added
ling     airline   signed    a    contract     with     Bali, Fukuoka and Auckland routes to its network.
Boeing/McDonnell Douglas for 26 aircraft at a           1995
total purchase value of US$3.6 billion, and imme-            The carrier purchased three MD-11
diately captured the attention of the global airline    freighters, and began to vigorously develop air
market.                                                 cargo operations. It set goals emphasizing passen-
1991                                                    ger and cargo services equally. And it used joint
       EVA Air accepted delivery of its first two       operations and land transportation to successfully
B767-300ERs in April, and made its inaugural            extend EVA Cargo services worldwide.
flight on July 1. Within that first week, the new       1996
airline opened five destinations in Asia -                   Enhancing the high quality of its operations,
Bangkok, Seoul, Jakarta, Kuala Lumpur and               EVA applied for ISO-9002 certification. Within
Singapore.                                              the next year, its passenger service, cargo service
1992                                                    and aviation maintenance operations were all
       The comprehensive EVA Training Center was        three granted ISO-9002 international certifica-
inaugurated in July, and the carrier's first two all-   tions simultaneously. EVA achieved ISO-
passenger B747-400s were delivered in November.         9001:2000 certification in 2001.
EVA used the first flights of the new aircraft to       1997
launch its Taipei-Los Angeles route and introduce            Ensuring consistent service quality, EVA and
its four classes of cabin service, including the        Singapore Air formed Evergreen Sky Catering
debut of its trend-setting Evergreen Deluxe Class       Corporation as a joint venture and in February,
in-between Economy and Super Business.                  began providing in-flight catering services.
1993                                                    1998
       EVA Air set new standards and heightened              Promoting air safety, EVA signed a joint-ven-
expectations by expanding its network to more           ture contract with General Electric and established



                                                                                                               9
 The Company



     Evergreen Aviation Technologies Corporation on       ically advanced aircraft to its fleet in March by
     February 24. That same day, a powerful new           signing a purchase contract for eight Airbus A330-
     engine test cell was placed in operation, and the    200s and making plans to start taking deliveries in
     new joint venture began an aggressive campaign       2003. EVA Air also secured approval to transfer its
     to raise the standards of the aircraft maintenance   stock listing from OTC and on 17 September,
     business.                                            moved its shares to the Taiwan Security Exchange
     1999                                                 (TSE).
          Earning brilliant results with both passenger   2002
     and cargo services, EVA produced outstanding              EVA launched its online booking system on
     operating performances for five successive years.    January 9. It gained approval to add 24 passenger
     The Securities and Futures Commission (SFC) of       flights on its thriving Hong Kong route and to
     Taiwan approved its admission to the exchange,       begin new freighter service. It also introduced a
     and on October 27, EVA Air shares began to be        new slogan "Just relax, your home in the air."
     traded on the over-the-counter market.               2003
     2000                                                      EVA debuted stylish new cabin-crew uni-
          In anticipation of future needs and to expand   forms on April 1, took delivery of its first A330-
     its fleet, EVA signed a purchase contract in June    200 on June 26 and introduced its new generation
     with the Boeing Company for 15 B777-                 of a top cabin class, Premium Laurel, along with
     200X/300Xs that included a firm order for seven      an upgraded economy class.
     of the aircraft and an option for eight more.        2004
     Deliveries are scheduled to begin in 2005. The            EVA Air exercised an option for eight B777s
     carrier relocated its hub to the brand-new           that was part of the firm purchase contract execut-
     Terminal 2 at Chiang Kai-Shek International          ed with Boeing in June 2000, expanding its fleet by
     Airport at the end of July.                          a total of 15 brand-new B777s. Deliveries of the
     2001                                                 new aircraft start in 2005 and continue through
          EVA committed to add more new, technolog-       2009.




10
           Calendar of 2004 Events                     increase of NT$2.2 billion and the second issuance
February                                               of convertible bonds in the amount of NT$ 4.5
     EVA/UNI Air upgraded its Web site booking         billion to purchase aircraft, repay debt and
and buying services, making features more user         improve financial structure.
friendly, inviting and accessible in four languages.
                                                       July
March                                                         EVA converted the last MD-11 passenger air-
     EVA launched a new weekly Taipei-Osaka            craft in its fleet into a freighter.
cargo service with a B747-400 freighter, wet-leased
a MD-11 freighter from World Airways for use on        August
US routes, and increased Taipei-Hong Kong pas-                EVA began a cooperative arrangement with
senger frequency from 40 to 49 flights per week.       Air Macau on Xiamen-Macau-Taipei cargo
                                                       services.
April
     EVA exercised its option with Boeing              September
Commercial Airplanes and GE Aircraft Engines,                 EVA launched Taipei-Sendai services with
confirming the purchase of eight more B777s and        two flights a week.
increasing its total order for these aircraft from
seven to 15.                                           October
                                                              The EVA Board of Directors approved invest-
May                                                    ment in Xiamen International Airport Air Cargo
     EVA partnered with Austrian Airlines for          Storage Co.Ltd. through Evergreen Airways
three weekly Taipei-Vienna cargo flights.              Service (Macau) Ltd.


June
     EVA's general shareholders voted to author-
ize an increase in capital to NT$40 billion. Its
Board of Directors approved a cash capital




                                                                                                            11
 The Company



                                                  Directors and Supervisors


                                                                   Date of                                              Shares Held by
                                          Date of                               Shareholding           Present
                                                                    Initial                                               Spouses,
          Title          Name            Election      Tenure                   When Elected        Shareholdings
                                                                  Election,                                              Dependents
                                      (Inauguration)
                                                                 Appointment
                                                                               Number       (%)    Number       (%)     Number     (%)
        Chairman      Lin Bou-Shiu     2004.06.15      3 years   2004.06.15     236,587     0.00     367,815    0.01    17,968     0.00




        Director     Chang Yung-Fa     2004.06.15      3 years   1989.03.31 660,454,669 22.75 685,687,207 20.75        23,667,231 0.72
                        (Note 1)



        Director    Chang Kuo-Cheng    2004.06.15      3 years   1989.03.31 660,454,669 22.75 685,687,207 20.75            -        -
                        (Note 1)




        Director     Chang Kuo-Wei     2004.06.15      3 years   2001.04.19    70,977,610   2.44   73,689,295   2.23       -        -



        Director      Lin Ching-En     2004.06.15      3 years   2001.04.19     3,690,013   0.13    4,032,311   0.12       -        -


        Director       Lin Shin-I      2004.06.15      3 years   1998.05.06             -    -              -    -         -        -



        Director    Kao Ruey-Perng     2004.06.15      3 years   2002.06.18          275    0.00       1,038    0.00       -        -



       Supervisor     Ko Li-Ching      2004.06.15      3 years   1992.05.02      136,887    0.00     142,116    0.00       -        -




       Supervisor   Owng Rong-Jong     2004.06.15      3 years   1996.03.21 660,454,669 22.75 685,687,207 20.75            -        -
                       (Note 1)




       Supervisor   Chen Cheng-Pang    2004.06.15      3 years   2001.04.19        5,770    0.00       6,336    0.00     6,290     0.00



     Note 1: Representative of Evergreen Marine Corp.
     Note 2: As of April 30, 2005 the Company has issued 3,304,389,553 shares.




12
                                                                                                                         April 30, 2005

                                                                                                         Other Managers, Directors or
Shares Held by                                                                                         Supervisors Related by Marriage or
                                                             Concurrent Positions
 Third Parties       Education & Experience                                                              Within Second-degree Blood
                                                             in Other Companies                           Relationship of Each Other
Number    (%)                                                                                  Title             Name             Relationship
  -        -     Tamkang University                  Director,
                 President,                          Uni Airways Corp.
                 Evergreen Airlines Services Corp.   Dircector, Evergreen
                                                     Sky Catering Corp.
   -       -     Taipei Commercial High School       Director,                                Director     Chang Kuo-Cheng            Son
                 Chairman, Evergreen                 Evergreen Marine Corp.                   Director      Chang Kuo-Wei             Son
                 Marine Corp.                        Director, Evergreen Intl.
                                                     Corp.
   -       -     BA, Boston University               Chairman, Evergreen Marine Corp.         Director       Chang Yung-Fa           Father
                 Chairman,                           Director, Evergreen Intl.                Director       Chang Kuo-Wei           Brother
                 Evergreen International Corp.       Storage & Transport Corp.
                                                     Director, Evergreen Intl. Corp.
                                                     Director, Evergreen Sky
                                                     Catering Corp.
   -       -     Master of Arts in Economics,        President , EVA Airways                  Director      Chang Yung-Fa            Father
                 California State University,        Director, Evergreen                      Director     Chang Kuo-Cheng           Brother
                 Long Beach, Chief EVP, EVA Airways. Sky Catering Corp.
   -       -     MBA, Kobe University, Japan         Chairman, Evergreen                         -                  -                   -
                 EVP, EVA Airways, America.          Air Cargo Service Corp.
   -       -     BA in Political Science, NTU.       Chairman, United
                 Director, China Development         Holdings Corp.                              -                  -                   -
                 Industrial Bank
   -       -     Keelung Commercial School           Director of Chang Yung-Fa                   -                  -                   -
                 Director, Evergreen Container       Charitable Fund
                 Terminal Corp.
   -       -     Keelung Girl's Senior High School Supervisor, Evergreen Marine Corp.            -                  -                   -
                 Executive VP,                       Supervisor , Evergreen Intl.
                 Evergreen International Corp.       Storage & Transport Corp .
                                                     Supervisor , Central Reinsurance Corp.
   -       -     EMBA Department of Business         Exec.VP, Evergreen Marine Corp.             -                  -                   -
                 Administration,                     Supervisor , Evergreen Intl.
                 College of Business ,               Storage & Transport Corp .
                 National Taipei University          Director , Central
                 Executive Vice President,           Reinsurance Corp.
                 Evergreen Marine Corp.
   -       -     BA, Soochow University              Senior VP,                                  -                  -                   -
                 Senior VP, Uniglory Marine Corp. Lloyd Triestino Di
                                                     Navigazione S.P.A




                                                                                                                                                 13
 The Company



     Major Shareholder of EVA Air's Institutional Shareholders
                                                                                                                April 30, 2005
             Name of Institutional Shareholder (Note 1)                      Major Holder of Institutional Shares (Note 2)
        Evergreen Marine Corp.                                          Evergreen International SA (Panama)
        Evergreen International Corp.                                   Chang Kuo-Cheng, Chang Kuo-Hua,
                                                                        Chang Kuo-Ming, Chang Kuo-Wei,
                                                                        Chang Yung-Fa Charitable Fund
     Note 1: For institutional shareholders, it is important to note the names of the institutional shareholders and the names
             of the shareholders of the institutional shareholders with shareholding percentage of more than 10% of the
             Company's top 10 shareholdings.
     Note 2: If the major shareholders of the institutional shareholder are institutional shareholder's representatives, it is
             important to note the names of the second level of the institutional shareholders and fill in the following table.




     Representatives with Major Holdings of Institutional Investors
                                                                                                                April 30, 2005
              Name of Institutional Shareholder (Note)                      Major Shareholder of Institutional Shareholder
        Evergreen International SA (Panama)                             Chang Yung-Fa, Chang Kuo-Hua,
                                                                        Chang Kuo-Ming, Chang Kuo-Cheng
                                                                        Chang Kuo-Wei
        Chang Yung-Fa Charitable Fund                                   -
     Note:   If the second level of the institutional shareholder is an institutional shareholder's representative, it is important
             to note the name of the institutional shareholder and the names of the shareholders of those institutional share-
             holders who have a shareholding percentage greater than 10% or the company's top 10 shareholdings.




14
Criteria for Expertise and Independence of Directors and Supervisors

              Qualification          More than 5 years of                     Independence Criteria
                                  experience in business, law,                                              Remarks
                                                                                     (Note 2)
 Name(Note 1)                   finance or areas relevant to the                                             (Note 3)
                                    mission of the Company                1     2   3    4      5   6   7
 Lin Bou-Shiu                                       √                           √   √    √      √   √   √
 Chang Yung-Fa                                      √                     √
 Chang Kuo-Cheng                                    √
 Chang Kuo-Wei                                      √                                    √      √   √   √
 Lin Ching-En                                       √                           √   √    √      √   √   √
 Lin Shin-I                                         √                     √     √   √    √      √   √   √
 Kao Ruey-Perng                                     √                     √     √   √    √      √   √   √
 Ko Li-Ching                                        √                           √   √               √   √
 Owng Rong-Jong                                     √                     √     √   √               √
 Chen Cheng-Pang                                    √                     √     √   √    √      √   √   √
Note 1: The number of columns may be adjusted in accordance with actuality.
Note 2: Check marks designate the items of criteria met by each Director or Supervisor.
        (1) Not an employee of the Company or a director, supervisor or employee of affiliated companies; but an inde-
            pendent director or independent supervisor of the Company's parent company or affiliated companies would
            not be subject to this criteria.
        (2) Not an individual shareholder directly or indirectly holding 1% or more of the total shares issued by the
            Company or one of the top 10 individual shareholders.
        (3) Not a spouse or relative of the second-degree or closer to persons referenced in the previous two columns.
        (4) Not a director, supervisor or employee of the institutional shareholder directly or indirectly holding 5% or
            more of the total stocks issued by the company or a director, supervisor or employee of one of the top five
            institutional shareholders.
        (5) Not a director, supervisor, manager or a shareholder holding 5% or more of the outstanding shares issued
            by certain companies or institutions that have financial or business relationships with the Company.
        (6) Not an owner, partner, director, supervisor or manager of any sole proprietorship, partnership, company or
            institution and his/her spouse, or a specialist and his/her spouse who has provided financial, commerce, or
            legal consultation and services to the Company or affiliated companies within one year.
        (7) Not an institutional body or its representative as described in Article 27 of the Company Law.
Note 3: If an independent director or independent supervisor of the Company serves as an independent director or
        independent supervisor for other companies, the number of such companies should be specified in this column.




                                                                                                                           15
 The Company



     Compensation for Directors
                                                                                                                                Dec. 31, 2004
                                                                                                                           NT$ (Thousand)
                                                                                                                       Number of
                                 Travel                       Employee Bonus from Earnings                  Total
                                             Compensation                                                              Employee        Other
       Title                   Expenses                              Distribution (Note 2)        Total   Amount in
                  Name                       from Earnings                                                            Stock Options Compensation
     (Note 1)                     and                                                            Amount Net Profit
                                              Distribution    Cash             Stock Dividends                          Granted       (Note 4)
                              Compensation                                                                   (%)
                                                             Dividends Shares Price Amount                               (Note 3)
                Chang Kuo-
     Chairman
                  Cheng
                  Chang
     Director
                 Yung-Fa
                 Lin Bou-
     Director
                   Shiu
                Chang Kuo-
     Director                    5,365           9,700          14         -         -       -   15,079    1.08%            -            -
                   Wei
                 Kitty Yen
     Director
                 (Note 5)
                Lin Ching-
     Director
                    En
                Kao Ruey-
     Director
                  Perng
     Director    Lin Shin-I
     Note 1: Names of directors are listed separately but the amount of travel expenses, earnings distribution, and other
             compensation is disclosed in total.
     Note 2: If a director serving as an employee or manager concurrently is granted an employee bonus, including stock
             and/or cash, the net is listed.
     Note 3: If a director serving as an employee concurrently is granted employee stock options, they will be reflected on
             the table above.
     Note 4: If cars, houses, and other personal expenses are paid, the asset nature and cost, including actual or market-
             value based rent and other payment, is disclosed as well.
     Note 5: Kitty Yen resigned on June 15,2004.




16
Compensation for Supervisors
                                                                                                      Dec. 31, 2004
                                                                                                     NT$ (Thousand)
                                       Travel      Compensation                     Total Amount          Other
    Title
                    Name          Expenses and from Earnings Total Amount            in Net Profit     Compensation
  (Note 1)
                                  Compensation      Distribution                         (%)             (Note 2)
 Supervisor      Ko Li-Ching
 Supervisor   Owng Rong-Jong             -               300             300            0.02%               -
 Supervisor Chen Cheng-Pang
Note 1: Names of supervisors are listed separately but the amount of travel expenses, earnings distribution, and other
        compensation is disclosed in total.
Note 2: If cars, houses and other personal expenses are paid, the asset nature and cost, including actual or market-
        value based rent and other payment, is disclosed.




                                                                                                                         17
 The Company



                                                    Principal Officers

                                                                                               Spouse &             Shares Held
                                                     Date of         Shareholding              Dependent             by Other
            Title (Note 1)           Name
                                                   Inauguration                               Shareholding         Nominal Holder

                                                                  Number            (%)      Number     (%)        Number     (%)

     President                   Chang Kuo-Wei     2005.01.01     73,689,295         2.232        --          --     --       --




     Executive Vice President,    Nieh Kuo-Wei     2005.01.01        53,268          0.002     3,770   0.000         --       --

     Public Relations Div.

     Executive Vice President,   Kao Wan-Hsin      2003.07.01        88,615          0.003        --          --     --       --

     Corporate Planning Div.

     Executive Vice President,   Chen Hsing-Te     2002.01.01       264,868          0.008        --          --     --       --

     Passenger Div.



     Executive Vice President,    Lin Chen-Tsai    2002.01.01       206,432          0.006        --          --     --       --

     Cargo Div.



     Executive Vice President,    Yuen Ping-Yu     2004.01.01        69,577          0.002        --          --     --       --

     Flight Operations Div.

     Executive Vice President,   Kou Jin-Cheng     2005.01.01       302,474          0.009        --          --     --       --

     Cabin Service Div.



     Executive Vice President,     Chiu Ke-Tai     2001.04.19       220,851          0.007        --          --     --       --

     CKS Airport Div.



     Executive Vice President,   Ho Ching-Sheng    2005.01.01       402,057          0.012        --          --     --       --

     Flight Safety Div.

     Senior Vice President,      Tai Jiin-Chyuan   2003.01.01        64,720          0.002        --          --     --       --

     Legal & Insurance Div.



     Senior Vice President,      Wu Kuang-Hui      2004.07.01        86,756          0.003        --          --     --       --

     Finance Div.

     Senior Vice President,      Chen Yeou-Yuh     2004.07.01        26,328          0.001        --          --     --       --

     Corporate Planning Div.


18
                                                                                                                  April 30, 2005

                                                  Concurrent Positions     Manager Related by Marriage or Within Second-Degree

       Education and Experience (Note 2)               with Other                      Blood Relationship of Each Other

                                                       Companies
                                                                               Title               Name             Relationship

Master of Arts in Economics,                     Director, Evergreen Sky

California State University, Long Beach          Catering Corp.

Chief Executive Vice President,

EVA Airways Corp.

Master in Communications, Shih Hsin University

Manager, Evergreen Intl.(UK) Ltd

BA in French, Fu Jen University

Senior Vice President, UNI Air

BA in Transportation Technology &

Management, Chiao-Tung University

Senior Vice President, Evergreen Intl. Corp.

BA in International Trade, Tunghai University

Senior Vice President,

Evergreen Marine Corp.

BA in Electrical Engineering,

Cheng Kung University

BA in Maritime Science, Ocean University

Deputy Senior Vice President,

Evergreen Sky Catering Corp.

BA in Politics, Chinese Cultural University

Junior Vice President,

Evergreen Construction Corp.

Graduate Institute of Flight Safety,

University of Missouri

Graduate Institute of Maritime Law,

Ocean University

Manager, Evergreen Intl. Corp.

MBA, Sun Yat Sen University

Junior VP,Evergreen Intl.Corp.

BA in Maritime Science,

Tamkang University


                                                                                                                                   19
 The Company




                                                                                                   Spouse &             Shares Held
                                                          Date of        Shareholding              Dependent             by Other
            Title (Note 1)                Name
                                                        Inauguration                              Shareholding         Nominal Holder

                                                                       Number           (%)      Number     (%)        Number     (%)

     Senior Vice President,             Han Jei-Li      2003.01.01        63,088         0.002        --          --     --       --

     Flight Operations Div.

     Senior Vice President,            Chang Lih-Lih    2004.01.01       133,690         0.004        --          --     --       --

     Inflight Service Div.

     Senior Vice President,           Kuo Sheng-Yih     2003.01.01        89,329         0.003     8,810   0.000         --       --

     Engineering& Maintenance Div.

     Senior Vice President,          Chuang Leng-Yuan   2003.01.01       100,028         0.003        --          --     --       --

     Computer Div.

     Senior Vice President,          Fang Gwo-Shiang    2004.01.01       103,150         0.003        --          --     --       --

     Computer Div.

     Deputy Senior Vice President,      Li Ping-Yin     2005.01.01        41,620         0.001      815    0.000         --       --

     Auditing Div.



     Deputy Senior Vice President,     Lu Yu-Chuan      2004.01.01          960          0.000        --          --     --       --

     Personnel Div.



     Deputy Senior Vice President,      Tsai Ta-Wei     2004.07.01        43,364         0.001      757    0.000         --       --

     Finance Div.

     Deputy Senior Vice President,      Li Jen-Ling     2004.01.01        73,982         0.002     5,491   0.000         --       --

     Corporate Planning Div.

     Deputy Senior Vice President,     Lin Jyh-Jong     2004.01.01       144,643         0.004        --          --     --       --

     Corporate Planning Div.



     Deputy Senior Vice President, Cheng Chuan-Yi       2004.07.01        33,231         0.001        --          --     --       --

     Corporate Planning Div.

     Deputy Senior Vice President,     Soong Allen      2005.04.01         2,288         0.000        --          --     --       --

     CKS Airport Div.

     Deputy Senior Vice President,    Sun Cyai-Ming     2005.02.01        82,651         0.003        --          --     --       --

     Cargo Div.




20
                                                        Concurrent Positions   Manager Related by Marriage or Within Second-Degree

       Education and Experience (Note 2)                     with Other                    Blood Relationship of Each Other

                                                            Companies
                                                                                   Title               Name             Relationship

BA in Soil & Water Conservation,

Tamkang University

BA in Statistics, Tamkang University,

Secretary, Evergreen Intl. Corp.

Dept. of Marine Engineering,

Kaohsiung Institute of Marine Technology

BA in Applied Mathematics, Cheng Chi University

Deputy Manager, Evergreen IT Corp.

BA in Computer Science, Feng Chia University

Deputy Junior Vice President, Evergreen IT Corp.

Dept. of Mechanical Engineering,

Pingtung Agricultural College

Manager, Evergreen Heavy Industry Corp.

BA in Business Administration,

Fu Jen University, Junior Vice President,

Evergreen Aviation Technologies Corp.

BA in Accounting, Chinese Cultural University



BA in Industrial & Business Management, NTU



Graduate School of Maritime Science,

Chinese Cultural University, Deputy Manager,

Evergreen America Corp.

BA in International Trade, Tunghai University



Dept. of Tourism, Shin-Hsin University


BA in International Trade,Chinese Cultural University




                                                                                                                                       21
 The Company



     Compensation for President and Executive Vice President
                                                                                                                                     Dec. 31, 2004
                                                                                                                                 NT$ (Thousand)
                                                              Employee bonus from earnings                                   Number of
                                                                                                                  Total
                                               Reward and             distribution (Note 2)                                  employee        Other
          Title                                                                                         Total   amount in
                        Name          Salary extraordinary                   Stock dividends                                stock options compensation
        (Note 1)                                               Cash                                    amount net profit
                                                 charge                           Market                                      granted       (Note 4)
                                                             dividends Shares                 Shares               (%)
                                                                                   Price                                      (Note 3)
       President      Lin Bou-Shiu
         Chief
     Executive Vice Chang Kuo-Wei
       President
     Executive Vice
                      Lin Chen-Tsai
       President
                                      21,278       -            49          -        -          -      21,327    1.52%           -             -
     Executive Vice
                       Chiu Ke-Tai
       President
     Executive Vice
                      Chen Hsing-Te
       President
     Executive Vice
                      Kao Wan-Hsin
       President
     Executive Vice
                      Yuen Ping-Yu
       President
     Note 1: Names of the President and Executive Vice President are listed separately but the amounts of the salary,
             reward, extraordinary charge, travel expenses, earnings distribution, and other compensation are shown in
             total.
     Note 2: If the President or Executive Vice President is granted an employee bonus, including stock and/or cash, the
             table above and the following table are complete.
     Note 3: If the President or Executive Vice President is granted employee stock options, they are reflected on the table
             above.
     Note 4: If cars, houses, and other personal expenses are paid, the asset nature and cost of actual or market-value
             based rent and other payments are disclosed as well.




22
Names of Managers Granted Employee Bonuses, Distribution
                                                                                                                 Dec. 31, 2004
                                                                                                                NT$ (Thousand)
                         Title                    Name                Stock Bonus         Cash Bonus    Total     Total Amount in
                        (Note 1)                 (Note 1)       Shares   Price   Amount    Amount      Amount      Net Profit (%)
            President                          Lin Bou-Shiu
            Chief Executive Vice President    Chang Kuo-Wei
            Executive Vice President           Lin Chen-Tsai
            Executive Vice President            Chiu Ke-Tai
            Executive Vice President          Chen Hsing-Te
            Executive Vice President           Kao Wan-Hsin
            Executive Vice President           Yuen Ping-Yu
            Senior Vice President             Ho Ching-Sheng      -        -        -        160        160           0.01%
            Senior Vice President            Fang Gwo-Shiang
            Senior Vice President             Kuo Sheng-Yih
            Senior Vice President            Chuang Leng-Yuan
 Managers




            Senior Vice President             Chen Yeou-Yuh
            Senior Vice President              Chang Lih-Lih
            Senior Vice President               Han Jei-Li
            Senior Vice President             Wu Kuang-Hui
            Senior Vice President              Nieh Kuo-Wei
            Senior Vice President             Tai Jiin-Chyuan
            Senior Vice President             Kou Jin-Cheng
            Deputy Senior Vice President       Lu Yu-Chuan
            Deputy Senior Vice President        Li Jen-Ling
            Deputy Senior Vice President       Lin Jyh-Jong
            Deputy Senior Vice President        Tsai Ta-Wei
            Deputy Senior Vice President      Cheng Chuan-Yi
Note 1: Names of managers are listed separately, but distribution of earnings is shown in total.




                                                                                                                                    23
 The Company



     Net Change in Shareholdings and Shares Pledged by Directors, Supervisors,
     Managers and Major Shareholders
                                                                       2004                         As of April 30,2005
                                                                             Increase
                                                               Increase                            Increase       Increase
                Title (Note 1)                Name                         (Decrease) in
                                                             (Decrease)                          (Decrease)     (Decrease) in
                                                                              Shares
                                                           in Shareholding                     in Shareholding Shares Pledged
                                                                              Pledged
     Chairman                    Lin Bou-Shiu                    131,228                   -                -               -
                                 Evergreen Marine Corp.        71,614,727                  -                -               -
                                 Representative:
                                                                3,714,596                  -                -               -
     Director                    Chang Yung-Fa
                                 Representative:
                                                                3,991,706                  -                -               -
                                 Chang Kuo-Cheng
     Director & President        Chang Kuo-Wei                  2,711,685                  -                -               -
     Director                    Lin Ching-En                    352,298                   -         (20,000)               -
     Director                    Kao Ruey-Perng                      763                   -                -               -
     Director                    Lin Shin-I                             -                  -                -               -
     Supervisor                  Ko Li-Ching                        5,229                  -                -               -
                                 Evergreen Marine Corp.        71,614,727                  -                -               -
     Supervisor                  Representative:
                                                                    2,734                  -                -               -
                                 Owng Rong-Jong
     Supervisor                  Chen Cheng-Pang                     566                   -                -               -
     Major shareholder           Evergreen Marine Corp.        71,614,727                  -                -               -
                                 Evergreen International
     Major shareholder                                         13,751,250                  -                -               -
                                 Corp.
     Executive Vice President,
                                 Nieh Kuo-Wei                    (12,261)                  -                -               -
     Public Relations Div.
     Executive Vice President,
                                 Kao Wan-Hsin                     78,038                   -                -               -
     Corporate Planning Div.
     Executive Vice President,
                                 Chen Hsing-Te                    47,356                   -                -               -
     Passenger Div.
     Executive Vice President,
                                 Lin Chen-Tsai                    61,237                   -         (20,000)               -
     Cargo Div.
     Executive Vice President    Ho Ching-Sheng                   26,945                   -                -               -
     Executive Vice President    Yuen Ping-Yu                     68,945                   -          (9,000)               -
     Executive Vice President    Kou Jin-Cheng                    (4,696)                  -                -               -
     Executive Vice President    Chiu Ke-Tai                      57,078                   -                -               -
     Senior Vice President       Tai Jin-Chyuan                   63,153                   -                -               -
     Senior Vice President       Wu Kuang-Hui                      11,124                  -                -               -
     Senior Vice President       Chen Yeou-Yuh                     25,118                  -         (12,000)               -




24
                                                                   2004                         As of April 30,2005
                                                                         Increase
                                                           Increase                            Increase       Increase
         Title (Note 1)                     Name                       (Decrease) in
                                                          (Decrease)                         (Decrease)     (Decrease) in
                                                                          Shares
                                                       in Shareholding                     in Shareholding Shares Pledged
                                                                          Pledged
Senior Vice President          Han Jei-Li                      63,007                  -                -               -
Senior Vice President          Chang Lih-Lih                   28,879                  -          (6,000)               -
Senior Vice President          Kuo Sheng-Yih                   62,622                  -                -               -
Senior Vice President          Chuang Leng-Yuan                 4,389                  -                -               -
Senior Vice President          Fang Gwo-Shiang                 57,646                  -         (18,000)               -
Deputy Senior Vice President   Li Ping-Yin(Note 2)                  -                  -                -               -
Deputy Senior Vice President   Lu Yu-Chuan                         35                  -                -               -
Deputy Senior Vice President   Tsai Ta-Wei                     63,032                  -         (20,000)               -
Deputy Senior Vice President   Li Jen-Ling                     63,982                  -                -               -
Deputy Senior Vice President   Lin Jyh-Jong                     4,858                  -                -               -
Deputy Senior Vice President   Cheng Chuan-Yi                  63,020                  -         (30,000)               -
Deputy Senior Vice President   Soong Allen (Note 2)                 -                  -                -               -
Deputy Senior Vice President   Sun Cyai-Ming(Note 3)                -                  -                -               -
Note 1: Shareholders holding more than 10% of the Company's stock are noted as "major shareholders" and listed
        respectively.
Note 2: Deputy Senior Vice President Li Ping-Yin ,Soong Allen were inaugurated on January 1, 2005.
Note 3: Deputy Senior Vice President Sun Cyai-Ming was inaugurated on February 1, 2005.


Information on Stock Transfer: Nil
Information on Stock Pledged: Nil




                                                                                                                            25
 The Company



                  Capital and Shares
         As of 31 December, 2004, EVA Air had                  mon stock, valued at NT$10 par value per share
     authorized share capital of 4,000,000,000 in com-         with 3,271,426,000 shares issued and outstanding.

     History of Capitalization
                         Authorized Capital       Issued Capital                                              Non-
      Month/             Shares     Amount      Shares     Amount             Sources of Capital            Monetary
                Price
       Year               ('000)     ('000)      ('000)      ('000)                  ('000)                  Capital
                                                                                                            Expansion
      03/1989    10     1,000,000 10,000,000    250,000   2,500,000 Cash founding 2,500,000                     -

      10/1990    10     1,000,000 10,000,000    350,000   3,500,000 Cash offering 1,000,000                     -

      08/1991    10     1,000,000 10,000,000    700,000   7,000,000 Cash offering 3,500,000                     -

      05/1992    10     1,000,000 10,000,000 1,000,000 10,000,000 Cash offering 3,000,000                       -

      10/1992    10     1,800,000 18,000,000 1,200,000 12,000,000 Cash offering 2,000,000                       -

      08/1993    10     1,800,000 18,000,000 1,400,000 14,000,000 Cash offering 2,000,000                       -

      05/1994    10     1,800,000 18,000,000 1,800,000 18,000,000 Cash offering 4,000,000                       -

                                                                      Capital reduction(6,300,000)
      09/1995    10     2,000,000 20,000,000 1,500,000 15,000,000                                               -
                                                                      Cash offering 3,300,000

      06/1996    10     2,000,000 20,000,000 1,800,000 18,000,000 Cash offering 3,000,000                       -

      06/1997    10     2,000,000 20,000,000 2,000,000 20,000,000 Cash offering 2,000,000                       -

                                                                      Capital surplus 300,000
      07/2000    10     2,400,000 24,000,000 2,100,000 21,000,000                                               -
                                                                      Capitalization of profit 700,000

      08/2001    10     2,400,000 24,000,000 2,205,000 22,050,000 Capitalization of Profit 1,050,000            -

      12/2002    10     3,000,000 30,000,000 2,425,000 24,250,000 Cash offering 2,200,000                       -

                                                                      Capitalization of profit 485,000
      10/2003    10     3,000,000 30,000,000 2,632,580 26,325,800                                               -
                                                                      Corporate bond conversion 1,590,800

      12/2003    10     3,000,000 30,000,000 2,753,433 27,534,330 Corporate bond conversion 1,208,530           -

      03/2004    10     3,000,000 30,000,000 2,892,904 28,929,038 Corporate bond conversion 1,394,708           -

      07/2004    10     3,000,000 30,000,000 2,934,369 29,343,694 Corporate bond conversion 414,656             -

      08/2004    10     4,000,000 40,000,000 3,046,477 30,464,767 Capitalization of Profit 1,121,073            -

      09/2004    10     4,000,000 40,000,000 3,266,477 32,664,767 Cash offering 2,200,000                       -

      12/2004    10     4,000,000 40,000,000 3,271,426 32,714,259 Corporate bond conversion 49,492              -

      03/2005    10     4,000,000 40,000,000 3,304,390 33,043,895 Corporate bond conversion 329,636             -


26
Shareholders Structure

                                                                 Evergreen
                                                                International
                                 Others                             Corp.
                                  28%                               11%
                                                                                   Evergreen
                                                                                  Marine Corp.
                                                                                    (Taiwan)
                                                                                      21%



                   Foreign
                 Institution &                                           Chang Family
                  Individual                                                17%
                      23%




Status of Shareholders
                                                                                               As of 18 April, 2005
                                                                                           Foreign
                         Government       Financial      Other Legal       Domestic
                                                                                         Institution &    Total
                            Agency        Institution      Entity          Individual
                                                                                          Individual
Number of shareholders            0           0                     94          72,577            807       73,478
Shareholdings                     0           0         1,179,168,877 1,377,270,022 747,950,654 3,304,389,553
Holding percentage                0           0                35.68             41.68          22.64       100.00




                                                                                                                      27
 The Company



     Distribution of Common Shares
                                                                           As of 18 April, 2005
      Range of Shareholdings   Number of Shareholders   Number of Shares          %
              1- 999                  20,240                5,021,535          0.1520
           1,000-5,000                26,387               61,053,500          1.8479
           5,001-10,000               10,295               74,164,103          2.2444
          10,001-15,000                5,647               66,858,395          2.0233
          15,001-20,000                2,278               41,217,720          1.2474
          20,001- 30,000               2,930               71,321,885          2.1584
          30,001-50,000                2,422               94,502,667          2.8599
          50,001-100,000               1,926              130,949,569          3.9629
         100,001-200,000                734                98,647,103          2.9853
         200,001-400,000                284                78,202,740          2.3666
         400,001-600,000                  72               34,645,464          1.0485
         600,001- 800,000                 37               25,647,159          0.7762
        800,001-1,000,000                 27               24,762,692          0.7494
       1,000,001 and above              199             2,497,395,021         75.5781
              Total                   73,478            3,304,389,553        100.0000




28
Market Price, Net Worth, Earnings and Dividends Per Share for Most Recent Two Years
                                            Year          2003                    2004
                                                                                                   As of April 30, 2005
 Items                                             (Distributed in 2004)   (Distributed in 2005)
                            Highest                     NT$17.60                 NT$22.5                NT$16.90
 Market Price
                            Lowest                       NT$9.30                NT$12.05                NT$13.05
  Per Share
                            Average                     NT$13.11                NT$14.98                NT$15.36
  Net Worth           Before Distribution               NT$13.88                NT$13.18                    -
  Per Share            After Distribution               NT$13.32                NT$13.05                    -
                  Weighted Average Shares          2,528,790,000 shares 3,057,121,000 shares                -
                                  Before
 Earnings Per                                            NT$0.55                 NT$1.06                    -
                 Earnings       Adjustment
    Share
                Per Share          After
                                                         NT$0.53                     -                      -
                                Adjustment
                       Cash Dividends                        -                   NT$0.5                     -
                              Dividends from
  Dividends                                           NT$0.382048                NT$0.1                     -
                   Stock    Retained Earnings
  Per Share
                Dividends     Dividends from
                                                             -                      0                       -
                              Capital Surplus
                     Price/Earnings Ratio
                                                          23.84                   14.13                     -
                            (Note 3)
  Return on          Price/Dividend Ratio
                                                             -                    29.96                     -
  Investment                (Note 4)
                  Cash Dividend Yield Rate
                                                             -                    3.34%                     -
                            (Note 5)
Note 1: The Company adjusted the stock dividend for shareholders from NT$0.4 to NT$0.382048 due to conversion of
        its convertible bond.
Note 2: According to the dividend distribution program proposed by the board of directors on April 19, 2005 and submit-
        ted at the general shareholders' meeting of 2005 for resolution.
Note 3: Price/Earnings Ratio = Average Share Price at Market Close for Current Fiscal Year/Earnings Per Share
Note 4: Price/Dividend Ratio = Average Share Price at Market Close for Current Fiscal Year/Cash Dividend Per Share.
Note 5: Cash Dividend Yield Rate = Cash Dividend Per Share/Average Market Closing Share Price for Current Fiscal
        Year.




                                                                                                                          29
 The Company



     Company's Dividend Policy and                        rent fiscal year are 20% lower than those of the
     Implementation Status                                previous year.
                                                          Dividend Distribution in Current Year
      Company's Dividend Policy                           It was resolved in the dividend distribution
      In accordance with Article 26 of EVA's              program, which was proposed by the board of
      Articles of Incorporation, any earning from         directors on April 19, 2005 and passed at the
      the annual settlement should first be used to       general shareholders' meeting in 2005, that
      offset accumulated deficits from previous           stock dividends of NT$0.1 per share and cash
      years, after deducting all applicable taxes and,    dividends of NT$0.5 per share will be distrib-
      second, 10% of the balance should be set            uted to shareholders.
      aside in a legal reserve; any remainder will be
      added to undistributed earnings from the            Impact of Proposed Stock Dividends on
      prior period for distribution after the board       Company Operating Results and
      of directors proposes a distribution program        Earnings Per Share
      with employee bonuses of no less than 1%            In addition to the balance of cash and stock
      and director/supervisor compensation that           dividends, the dividend distribution program
      does not exceed 5% of the distributed amount        also accounted for a potential dilution effect
      and submits the program at a shareholders'          that could result from increased capital. The
      meeting for resolution.                             Company's current paid-in capital is
      Since achieving growth status, the Company          NT$33,043,895,530. Capitalization of profit is
      has adopted a remainder appropriation method        estimated at NT$329,229,550. After capitaliza-
      as its dividend policy to accommodate future        tion, paid-in capital will amount to
      operations and expansion, distributing cash         NT$33,373,125,080. A preliminary calculation
      dividends and stock dividends alternately with      indicates that the impact on operating per-
      cash dividends that range from 0 to 50% and         formance and earnings per share is insignifi-
      stock dividends from 100% to 50%. To main-          cant.
      tain profitability and govern the impact of stock
      dividends on its operating performance, the         Employee Bonuses and Compensation
      Company may adjust the distribution rate for        Paid to Directors and Supervisors
      cash dividends to 100%~50% and stock divi-          Range or Percentage of Employee Bonuses
      dends to 0~50% in accordance with capital sta-      and Compensation Paid to Directors and
      tus if estimated earnings per share for the cur-    Supervisors Specified in Article 26 of EVA's



30
Articles of Incorporation: Earnings, if any,     Distribution of Employee Bonus and
from the annual settlement should first offset   Compensation Paid to Directors and
accumulated deficits for previous years after    Supervisors in Prior Year:
all applicable taxes are deducted and, second,   Employee Cash Bonus: NT$ 29,001,860
10% of the balance should be set aside in a      Employee Stock Bonus: Nil
legal reserve; any remainder will be added to    Compensation Paid to Directors and
undistributed earnings from the prior period     Supervisors: NT$ 10,000,000
for distribution after the board of directors    Number of shares proposed for distribution to
proposes a distribution program with             employees and the percentage of the shares
employee bonuses of no less than 1% and          above capitalized earnings: 0 share; 0%.
director/supervisor compensation that does       Estimated EPS after deduction of employee
not exceed 5% of the distributed amount and      bonus and compensation to directors and
submits the program at a shareholders' meet-     supervisors: NT$ 0.54
ing for resolution.
                                                 Status of Stock Repurchase by the
Proposed Employee Bonus Plan                     Company: N/A
Approved by Board of Directors
Employee Cash Bonus: NT$ 51,173,775
Employee Stock Bonus: Nil
Compensation Paid to Directors and
Supervisors: NT$ 20,400,000
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
Bonus and Compensation to Directors and
Supervisors: NT$ 1.04




                                                                                                 31
 The Company



                                                     EVA Air People
                                                                       2004     2003
                                            Pilots                       719      687
                                         Cabin Crew                    1,470    1,196
                                         Dispatchers                      44       41
      No. of Employees
                                     Maintenance                          79       77
                                           Others                      2,622    2,468
                                            Total                      4,934    4,469
                       Average Age                                      32.7     32.7
                     Average Seniority                                   7.0      7.2
                                          Doctorate                   0.06%    0.07%
                                          Master's                    3.15%    2.67%
         Education                        Bachelor                    85.91%   80.91%
                                         High School                  10.21%   10.87%
                                           Other                      0.67%    5.48%




32
                                                                                                                                                                                                                  33
                                                                                                                                                                                 Public Relations Div.
                                                                                                                                                                                 General Affairs Dept.
                                                                                                                                                                                 Personnel Div.
                                                                         Auditing Div.
                             Supervisor




                                                                                                                                                                                 Legal & Insurance Div.
                                                                                                                                                                                 Finance Div.
                                                                                                                                                                                 Corporate Planning Div.
                                                                                                                                                                                 Service Co-Ordination Div.
                                                                                                                                                                                 Passenger Div.
                                          Board of Director




                                                                                                                                                                                 Cargo Div.
               Shareholder




                                                              Chairman


                                                                         President
                                                                                                                                                                                 Flight Safety Div.
                                                                                                                                                                                 Flight Operations Div.
                                                                                                                                                                                 Inflight Service Div.




                                                                                                                     Corporate Planning Committee
                                                                                                                                                    Safety Promotion Committee
                                                                                                                                                                                 Cabin Service Div.




                                                                                         Service Quality Committee
                                                                                                                                                                                 Engineering & Maintenance Div.
                                                                                                                                                                                 CKS Airport Div.
                                                                                                                                                                                 Taichung office
Organization                                                                                                                                                                     Computer Div.
                                                                                                                                                                                 Clinic Div.
                                                                                                                                                                                 Labor Safety & Health Div.
 The Company



                          The Fleet
       February 2004 - EVA took delivery of its third            action will add a total of 15 B777s to the EVA fleet.
       and fourth Airbus A330-200s. The fifth was
       delivered in April and the sixth in November.             April 2004 - EVA bought three B747-400 pas-
                                                                 senger aircraft and negotiated a sale/lease-back
       March 2004 - EVA wet-leased one MD-11                     agreement.
       freighter from World Airways.
                                                                 April 2004 - EVA leased one MD-90 from UNI
       April 2004 - EVA Air exercised its option and             Airways Corp.
       firmed an order for eight additional Boeing B777-
       300ERs. The option was part of a June 2000 pur-           May 2004 - EVA sold one B747-400 Combi to
       chase contract for seven of these aircraft. The           be leased back.

                                                                                                             Daily Avg.
                                  Financial   Operating                    Age              On Order
       Aircraft Type      Owned                            Total                                             Utilization
                                   Lease       Lease                  (as of Dec. 04)    (Delivery Date)
                                                                                                             (hrs) - 2004
         B747-400           1          3         2          6              9.30                                 14.09
      B747-400 Combi        0                    9          9             10.42                                 14.53
        B767-300ER          0                    4          4             13.07                                 9.36
         B767-200           4                    0          4             10.87                                 7.57
                                                                                         5 (March, May,
         A330-200           0                    6          6              0.76             July, Oct.,         9.05
                                                                                        2005/ June 2006)
          MD-90             0                    4          4              7.66                                 7.80
      MD-11 Freighter       9                    4          13             8.12                                 15.25
     B747-400 Freighter     3                    1          4              3.23                                 15.29
                                                                                         3 (March, June
        B777-200LR                                                                                               NA
                                                                                        2008/ March 2009)
                                                                                         12 (July, August
                                                                                         2005/ May,Oct.
                                                                                         2006/ Jan.,April,
        B777-300ER                                                                                               NA
                                                                                         July,Dec.,2007/
                                                                                          May,July,Oct.,
                                                                                        2008/ Jun., 2009)
           Total            17         3         30         50             7.84                                 12.50


34
               The Market
Industry Overview                                      ics-related industries to relocate manufacturing
                                                       facilities to Mainland China. Though this has
Current Conditions and Industry Outlook                caused Taiwan's export volume to drop dramati-
     The International Air Transport Association       cally in recent years, the shortage of cargo capacity
(IATA) forecasts an average annual growth rate of      out of Mainland China has opened the door for
six percent for global passenger and cargo trans-      EVA to cooperate with other airlines to increase
portation for 2004 through 2008. Indications are       transitional volume and compensate for decreased
that the airline industry will experience a positive   exports. Because Mainland China does not have
upturn, especially in Asia-Pacific regions and         adequate cargo capacity to handle the demand,
Mainland China where development may occur             the prospects for Taiwan's air transportation
more rapidly than in other areas.                      industry are excellent. Improved cross-strait rela-
     As the global economy gains strength, its         tionship and widely held expectations on the
vigor is reflected in Taiwan where there is a          establishment of the three links across the straits
thriving business and leisure travel market. The       encouraged by successful charter flights during the
potential for travel business is high as numbers       2005 Chinese New Year have set a strong prece-
of passengers increase and airfares rise back to       dent for more chartered services for passengers on
more profitable levels. Indepenent tour travel         selected holidays and for cargo. EVA Air is fully
has become more common in Taiwan and has               prepared to quickly respond to developments in
created a need for a diverse range of flexible         this promising market within every conceivable
air/hotel packages. EVA is responding to this          scenario.
growing market niche by creating an array of
travel packages along with varied airfare prices       Interaction Among Upstream, Midstream and
and flight schedules that include options such as      Downstream Industries
charter flights designed to satisfy Independent             Those of us in the airline business provide
tour travelers. EVA is keeping airfare prices sta-     transportation services for passengers and cargo.
ble and meeting differing customer needs by            Carriers with superior services that meet cus-
emphasizing product design rather than price or        tomers' expectations require steady support and
service competition.                                   coordination from upstream, midstream and
     Developments in cargo transportation are          downstream industries. The following chart illus-
influenced by the trend among Taiwan's electron-       trates relationships among these enterprises.




                                                                                                               35
 The Company




                    Upstream                                                           Midstream                                                        Downstream


            Aircraft Manufacturing                              Air Transportation                                                                         Public


                 Aircraft Engines
                  Manufacturing                                                                                                                       Travel Agencies


            Manufacturing of Ground        Petroleum Industry                                                                                         Cargo Forwarders

                                                                Aircraft Maintenance

                                                                                          Sky Catering

                                                                                                         Ground Services

                                                                                                                           Ground Transport Service
              Service Equipment

                                                                                                                                                      Express Delivery
                 Leasing Services




     Upstream Industries                                                                                 suppliers that best fit their own aircraft specifi-
     Aircraft Manufacturing: EVA is building its                                                         cations, budgets, technologies and mainte-
     fleet with aircraft from the world's leading                                                        nance standards.
     commercial aircraft manufacturers, e.g. Boeing                                                      Ground Service Equipment Manufacturers:
     Corp., McDonnell Douglas (both merged into                                                          Tractors, trailers and implements used for
     Boeing Commercial Airplanes Group in 1997),                                                         apron operations are ground service equip-
     and Airbus S.A.S. We expand and renew our                                                           ment.
     fleet by purchasing or leasing aircraft, based on
     the most advantageous tactic for us in each                                                         Midstream Industries
     transaction. As we define relationships, the                                                        Petroleum Companies: Fuel expenses account
     aircraft charter service is also an upstream                                                        for a huge part of airline operating costs. Fuel
     industry.                                                                                           prices are influenced by factors that include
     Aircraft Engine Manufacturing: Powering the                                                         changing international conditions, reduced
     aircraft, engines provide range and efficiency,                                                     production by petroleum exporting coun-
     and are the most important part of the air-                                                         tries, fluctuating foreign exchange rates, and
     plane. GE, Pratt & Whitney and Rolls Royce are                                                      high demand. This makes it difficult to con-
     among the world's leading aircraft engine man-                                                      trol fuel costs. To counter these variables and
     ufacturers. Carriers typically select engines and                                                   effectively control costs, EVA has long-term


36
contracts with the world's major fuel             Evergreen Air Service Corp. as our service
providers and when appropriate, uses deriva-      provider and by selecting only those operators
tive instruments to hedge prices.                 that meet the highest standards at our interna-
Aircraft Maintenance: Regular and irregular (in   tional gateways.
an emergency or unusual situation) inspection     Air Cargo Transportation: Further enhancing
and maintenance are vital to flight safety.       service quality, EVA Air has appointed
When EVA began operations, it made a large        Evergreen International Storage & Transport
investment and established a huge, modern air-    Corp. to transport crew and passenger luggage
craft maintenance center, later transformed       in Taiwan.
into Evergreen Aviation Technology Corp
(EGAT). EGAT handily earned multiple FAA          Downstream Industries
certifications and ISO-9002 designations.         Public: As trade has been developed and per-
EGAT also entered into an alliance with GE,       sonal income has risen, the people worldwide
which has reinforced its aircraft and engine      have gained more international business and
maintenance technology and given EVA Air          leisure travel opportunities. Our target cus-
added safety assurance.                           tomers are the general tourists.
Sky Catering Industry: Sky catering quality is    Travel Agencies: EVA consistently works with
closely associated with airlines and has tradi-   travel agencies, designing products such as
tionally been a vital part of operations. EVA     charter flights that meet their needs and pro-
ensured consistency and quality in inflight       vide profits. In addition, EVA benefits from
meal service by selecting Evergreen Sky           travel and tour operators' marketing networks,
Catering Corp. as the supplier in Taipei and by   which reach both the general tourist and busi-
applying strict criteria to its sky caterers in   nesses.
other gateways.                                   Cargo Carriers: The business model for a cargo
Ground Service Industry: Ground service is        carrier can include import/export transporta-
part of airport operations and includes varied    tion, freight handling and inland transporta-
functions such as passenger check-in at airport   tion for airfreight, and customs declarations.
counters; apron operations (aircraft landing      Cargo carriers can also provide ground trans-
and departure navigation); handling and trans-    portation for shipments, e.g. Federal Express,
porting luggage, cargo and mail; packing, load-   TNT, etc. In addition to goods and products,
ing and unloading, and more. We ensure qual-      EVA has carried priceless art collections for
ity of Taiwan operations by relying on            important international exhibitions. Such



                                                                                                    37
 The Company



       services not only provide profits but also          Global airline industry synchronization
       enhance EVA's reputation in the international       Responding to ongoing demands for airline
       marketplace and demonstrate our reliability.        industry globalization, the International Air
       Express Delivery: The combination of express        Transportation Association (IATA) is promot-
       delivery services via land and air emphasizes       ing E-ticketing, Common Use Self-Service
       convenience and immediacy and create a foun-        (CUSS), Bar-Coded Boarding Pass (BCBP),
       dation for a wider selection of products in the     Radio Frequency Identification (RFID), Cargo
       future.                                             Paperless Environment (CPE) and more.
                                                           These uniformly applied procedures and tech-
     Product Development Trends                            nologies simplify airlines' operating proce-
       Lifted Restrictions on International and            dures for passenger and cargo transportation
       Domestic Aviation Markets                           worldwide. By establishing operating standard
       The trend for long-term development of the          procedures (OSP), airlines can more smoothly
       international airline business points to opening    integrate systems for joint flights, reducing
       markets. For many years, the United States has      costs, fully utilizing respective databases and
       been one of the most liberalized markets            linking relevant sectors such as airports, ware-
       though it imposes controls concerning free          houses, airlines, customs, passengers and cargo
       competition and protection of consumer rights       agents.
       in addition to increasingly strict customs,
       immigration and security procedures. The out-       More rigid airline industry safety and
       flow effect of US government policies and the       security standards
       powerful influences of market demands               Because terrorist attacks are likely to remain a
       encourage other countries around the world to       viable threat into the foreseeable future and to
       adopt compatible policies and procedures. The       provide a standard of best practices, IATA will
       Taiwan market has not yet been fully liberalized    continue to enhance aviation safety by imple-
       nor have its various controls been lifted. If the   menting and expanding its Operational Safety
       government eliminated airline market barriers       Audits (IOSA). The growing number of
       and allowed qualified companies to upgrade          IOSA-certified airlines will not only upgrade
       and progress toward liberalization and interna-     flight safety, but will also significantly simpli-
       tionalization, trade and transportation indus-      fy airport re-check-in procedures for joint
       tries would flourish.                               flights.




38
  Development of Strategic International                  networks and provide more efficient services
  Alliances                                               for travelers and air freight shippers. By shar-
  Limitations created by markets and traffic              ing operating resources and applying economic
  rights make it prudent for airlines to form             benefits of scale, these alliances reduce costs
  strategic alliances with other carriers, and to         and also facilitate transportation. There are
  develop joint transportation or maintenance             three large alliance groups that hold 60% of the
  services on selected routes to expand service           passenger market share globally.



Largest Airline Alliance Groups
               Star Alliance                      One World                             Sky Team
   Air Canada                         AerLingus                           AeroMexico
   Air New Zealand                    British Airways                     Czech Airlines
   All Nippon Airways                 Cathay Pacific                      Delta Airlines
   Austrian Airlines                  Finnair                             Korean Air
   British Midland                    Iberia                              Air France
   LOT Polish Airlines                LanChile                            Alitalia
   Lufthansa                          Qantas                              Royal Dutch Airlines (KLM)
   Asiana Airlines                    American Airlines                   Continental Airlines
   SAS                                                                    Northwest Airlines (NWA)
   TAP Portugal
   Singapore Airlines
   Thai Airways
   Spanair
   United Airlines
   Varig
   U.S. Airways
Data Source: Star Alliance Web site




  Steady Growth in Passenger and Cargo                    span from 1999 to 2019, rising from 1,852,641
  Transport Markets                                       to 4,168,701. Airbus also expects demand for
  Forecasts by Airbus Industries, one of the              aircraft to escalate from 10,349 to 19,173 and
  world's leading aircraft manufacturers, indicate        the average number of seats per aircraft to grow
  that the total number of passenger seats are            from 179 to 217 over the same period. Forecast
  going to more than double during the 20-year            details are revealed below.



                                                                                                             39
 The Company



                                          Passenger Aircraft Only
                                                End 1999              End 2009                End 2019
     World RPKs (billion)                         3,080.1               5,100.2                 7,985.7
     World ASKs (billion)                         4,378.5               7,076.9                10,864.2
     Number of Aircraft                           10,349                 14,815                  19,173
     Number of Installed Seats                  1,852,641             2,834,332               4,168,701
     Seats Per Aircraft                              179                    191                     217
     Seats Per Departure                             158                    168                     190
     Average Flight Distance (km)                  1,370                  1,414                   1,444
     Block Hour Per Aircraft Per Year              3,502                  3,636                   3,736


     • The pivotal development of Northeast and              show tremendous development potential. A
      Southeast Asia plus Taiwan's strong interna-           December 2000 Boeing analysis points to glob-
      tional trade position, high per capita income,         al transportation demand for 470 billion RTKs
      and strategic location are driving increasing          (Revenue, Ton, Km) by 2019, more than three
      demand        for     passenger   seats      and       times the 137.1 billion RTKs in volume during
      import/export cargo capacity. As Airbus pre-           1999. Boeing's projections also indicate that
      dicted, air transportation is now growing              the number of aircraft will increase to 31,755 in
      faster in Asia-Pacific regions and Mainland            2019 from 13,670 in 1999.
      China than elsewhere. In 1999 for example,            • An International Air Transport Association
      an analysis of aircraft owned and correspon-           (IATA) report released in October 2000 shows
      ding capacity showed an average seat-count             steady air transportation growth globally for
      per plane of 242 vs. 179 worldwide. Estimates          years to come. Between 2000 and 2004, passen-
      are that the per plane average will increase to        ger services expanded by an average of 5.6%
      307 seats by 2019. This volume of growth               and cargo services by 6.7%. Recognizing that
      suggests rich opportunity and encourages               the industry may grow in spurts due to finan-
      EVA's continuing development of services               cial downturns similar to those that have
      within the Asia-Pacific region, including              beset Asia-Pacific economies in past years,
      Mainland China.                                        there is long-term potential for significantly
      The Boeing Corp. forecasts global growth for           increasing volume in air transportation serv-
      cargo transportation to be 6% annually for the         ices. Economies throughout the region are
      first 20 years of the 21st Century (2000-2020).        rising steadily, living standards are higher,
      The Asia-Pacific region, especially cross-strait       and business and tourism travel opportunities
      markets, e.g., Taiwan and Mainland China,              are expanding. EVA Air has established a


40
  timeline for initiating new routes, introducing             reliable and convenient services. Now that
  new destinations and launching new aircraft                 Taiwan and Mainland China have both joined
  that is designed to meet this growing market                the WTO, expectations are that the cross-
  demand. By using advanced aircraft with                     strait cargo market will soon be booming.
  state-of-the-art performance capabilities, our              IATA forecasts are summarized in the follow-
  goal is to give our customers the most secure,              ing table.



                                         Passenger                                   Cargo
                                 2004                2004-2008               2004             2004-2008
Northern Atlantic                7.7%                  5.2%                  8.5%                4.8%
Trans-Pacific                    9.9%                  5.9%                  10.3%               4.6%
Europe/Asia- Pacific             14.9%                 7.1%                  11.4%               7.0%
Europe/Mid- East                 18.9%                 7.7%                  7.8%                6.1%
Europe/Africa                    7.2%                  5.5%                  7.4%                5.6%
Asia-Pacific                     19.5%                 8.3%                  12.0%               6.1%
Within Europe                    7.5%                  4.8%                  7.8%                5.7%
South/Central America            9.3%                  5.4%                  4.4%                3.7%
Total                            11.0%                 6.0%                  10.1%               6.0%




  Extending             Flight      Capabilities,             airplanes. These huge, new aircraft are going to
  Enhancing the Cabin Environment                             be deployed in booming markets and be used
  The comfort, convenience, reliability and speed             to fly distant transcontinental routes without
  of air transportation is a huge incentive for pas-          stopping while passengers enjoy amenity-laden
  senger travel and air cargo movement. The lat-              cabins and airfreight reaches customers in
  est aerospace technology makes it possible to               record time.
  whisk loads of passengers and cargo weighing
  more than 100 tons across oceans and around                 Top-Quality Service
  the world. But capability is not enough to meet             Service quality is more important than ever to
  demand on certain busy routes between large                 business travelers, tourists and shippers.
  metropolitan areas and in regions with boom-                They demand increasingly convenient, com-
  ing economies. Aircraft manufacturers are                   fortable, safe and punctual air transportation
  addressing this demand by building even larger              services. Airlines can only satisfy this expec-



                                                                                                                 41
 The Company



     tation by providing air transportation with a      services. Our expectation is that two distinct
     perfect flight safety record, reliable service,    operating models will emerge within the airline
     comfortable cabin spaces with excellent facili-    industry, giving customers very defined air-
     ties, and punctual arrivals and departures.        transport options.
     Only carriers that meet and exceed these
     expectations can survive in this fiercely com-     Completing the Picture with Related
     petitive market.                                   Airline Service Industries
                                                        The success of every flight rests on the support
     Cost-cutting Strategies for the Airline            of other divisions such as air catering, ground
     Industry                                           handling and apron operations, maintenance
     Though operating costs are increasing daily,       and aircraft upkeep, ground transportation,
     fierce competition is forcing airlines to reduce   travel agency coordination and more. These
     fares and making it mandatory that carriers fol-   support functions are critical. Airlines seek
     low cost-cutting strategies. Low-cost and dis-     partners that share similar operating strategies
     count carriers are surviving and even thriving     or join in reinvestment alliance ventures inte-
     in some regions while other airlines are trying    grated at different levels of the industry that can
     to reduce costs by simplifying operating proce-    deliver top quality services, cut operating costs
     dures and providing high-quality, value-added      and increase revenue.


     Review of Operations

        2004 Passenger Revenue Composition                     2004 Cargo Revenue Composition




                                                                 18%
     44%                                   America        1%                                    America
                                 36%
                                           Europe                                               Europe
                                           Oceania                                              Oceania
                                                         22%                          59%
                                           Asia                                                 Asia
                3%        17%




42
  Passenger Operations
                     ASK (Million)                      RPK (Million)                   Load Factor (%)
            2004         2003          %       2004         2003          %      2004        2003          %
America    12,807       12,226         4.8%   10,636        9,029       17.8%    83.1        73.9          9.3
Europe      5,096        4,561        11.7%    3,985        3,318       20.1%    78.2        72.8          5.5
Asia        8,263        7,187        15.0%    6,251        5,009       24.8%    75.7        69.7          6.0
Oceania     1,187        1,049        13.1%      882          778       13.4%    74.3        74.2          0.1
Total      27,353       25,022         9.3%   21,754       18,134       20.0%    79.5        72.5          7.0



                     Passenger No.                    Revenue (Million)                   Yield (NT$)
            2004         2003          %       2004         2003          %      2004        2003          %
America    989,486      837,690       18.1%   13,870       10,402       33.3%     1.3        1.15         13.0%
Europe     510,225      412,034       23.8%    6,583        5,140       28.1%    1.65        1.55         6.5%
Asia      3,820,850 2,967,302         28.8%   16,566       12,527       32.2%    2.65         2.5         6.0%
Oceania    117,694      104,579       12.5%    1,329        1,127       17.9%    1.51        1.45         4.1%
Total     5,438,255 4,321,605         25.8%   38,348       29,196       31.3%    1.76        1.61         9.3%




  Cargo Operations
                     AFTK (Million)                     FTK (Million)                   Load Factor (%)
            2004         2003          %       2004         2003          %      2004        2003          %
America     4,773        3,988        19.7%   3,408        2,800        21.7%    71.4        70.2          1.7
Europe      1,497        1,435        4.3%    1,288        1,191          8.1%     86          83          3.0
Asia        1,108        1,016        9.1%      752          690          9.0%   67.9        67.9          0.0
Oceania       44            36        22.2%      33           32          3.1%   67.9        88.9         -21.5
Total       7,423        6,475        14.6%   5,481        4,713        16.3%    73.9        72.8          1.3



               Cargo Carried ( Tons)                  Revenue (Million)                   Yield (NT$)
            2004         2003          %       2004         2003          %      2004        2003          %
America   288,010       238,211       20.9%   23,200       17,736       30.8%    6.81        6.33          7.6%
Europe    133,885       119,290       12.2%    8,380        7,586       10.5%     6.5        6.37          2.0%
Asia      432,625      372,975        16.0%    6,732        6,072       10.9%    8.95         8.8          1.7%
Oceania      4,470        4,424        1.0%     222           176       26.1%    6.64        5.42         22.5%
Total     858,989      734,900        16.9%   38,534       31,570       22.1%    7.03         6.7          4.9%




                                                                                                                  43
 The Company



        Major Competitors and Market Shares
              Item / Year                                              2004                          2003
                                          EVA Airways                   24,862                        21,765
          Number of Flights                  Taiwan                    131,706                       112,168
                                        Market Share (%)                 18.87                         19.40
                                          EVA Airways                4,976,282                  4,028,470
        Number of Passengers                 Taiwan                 24,211,111                 19,089,442
                                        Market Share (%)                 20.55                         21.10
                                          EVA Airways                  478,507                       440,526
            Tons of Cargo                    Taiwan                  1,770,084                  1,566,605
                                        Market Share (%)                 27.03                         28.12
     Data Source: 1. Taiwan: Monthly Digest of Statistics, CAA
                  2. EVA Airways: Provided by EVA Airways




     2005 Outlook                                                joint operations.
          The vigorous global economy in tandem with             We expand cargo capacity between the West
     surging cross-strait economic currents and an               and East Coasts of the US by leasing two addi-
     inevitable removal of the ban against travel from           tional MD-11 freighters in 2005. The added
     Mainland China to Taiwan will create a robust               capacity will enable us to provide more than 40
     business and tourism travel market. Analyses of             weekly cargo flights to America, and to more
     growth potential for EVA within this future mar-            ably meet our customers' demands for air-
     ket shows:                                                  freight services between Mainland China and
                                                                 the US and Canada.
       America
       EVA Air now has 37 direct passenger flights to            Europe
       the US and Canada. We have cooperative rela-              To make our network in Europe more compre-
       tionships with American Airlines, Air Canada,             hensive, EVA increases frequency to Vienna
       Continental Airlines and America West Airlines            from three to five flights per week with A330-
       that give passengers convenient transit service           200 fleet, starting May 17, 2005.
       to domestic destinations throughout the US                EVA currently operates 11 freighter trips a
       and Canada. During the summer season                      week to Europe. We expanded our lift capa-
       (March 27-October 29), EVA and Air Canada                 bilities in this market further through joint
       are raising frequency on the Vancouver route              operating alliances with the European lead-
       from four-to-five flights per week through their          ing carriers among the top 10 global airlines,



44
British Airways (BA)in U.K. and Lufthansa            tages of Taiwan's location, EVA has built a
(LH) in Germany. In addition, we estab-              comprehensive airline network linking
lished EVA Cargo Center, Europe in Belgium           Southeast Asia and America. EVA is meeting
that opened for business in August 18, 2003,         market needs within Asia and extending our
to integrate cargo network throughout                reach by wet-leasing a MD-90 and launching
Europe.                                              service to Vientiane, Laos starting with three
                                                     flights per week on February 24, 2005. With
New Zealand and Australia                            an optimistic view of the "Cross-Strait Direct
Passenger flights to New Zealand and Australia       Air Links" between Taiwan and Mainland
consistently have stable passenger loads, prima-     China, we believe we have tremendous
rily due to international students and immi-         growth potential in the future.
grants. New Zealand and Australia also attract       EVA also plans to increase services to Northeast
large numbers of tourists. After carefully evalu-    Asia in 2005 to address strong travel demand,
ating customer convenience, market demand            take advantage of the Japanese Government's
and operating costs, EVA introduced A330-200         waiver of visa requirements for Taiwanese
service on our Brisbane and Sydney routes then       tourists during the Aichi Expo, and utilize our
added flights after new traffic rights were grant-   traffic rights to fly to South Korea. Starting
ed. We also have cooperative agreements for          March 1, our seven weekly charter flights to
joint services with Qantas Airways on our            Seoul will be transformed into scheduled serv-
Australia routes and Air New Zealand on our          ice and increased to nine trips from May
Auckland route. Furthermore, EVA and Air             17,2005, making full use of our new traffic
New Zealand are able to shift in turn the sum-       rights. And on March 27, 2004, we increased
mer and winter flight operation as a result of       cargo service to Osaka to three flights per week,
our cooperation.                                     further developing our airfreight network in
                                                     Northeast Asia.
Asia                                                 The airline market is thriving in concert with
The International Civil Aviation Organization        the global economy. Following the successful
(ICAO) offers an optimistic outlook for air-         charter-flight program between Taiwan and
line market development in Asia. Within the          Mainland China during the Chinese New Year,
Asia-Pacific region, Taiwan is situated to be        expectations for growth in both the passenger
the pivotal point for traffic between Southeast      and    cargo      markets    are    optimistic.
Asia and America. To maximize the advan-             Development of anticipated "Direct Air Links



                                                                                                         45
 The Company



       Service" would be the positive news for EVA.        aircraft, EVA has also outfitted our fleet with
       But until all appropriate agreements are in         precise, technologically advanced equipment,
       place, our plans are to continue to nurture         including Aircraft Condition Monitoring
       and grow markets we now serve, in addition          Systems       (ACMS)         and      Air-Ground
       to pursuing additional gateways that have           Communication Networks (ACARS). Starting
       promising potential or complement for the           in 2005, EVA will introduce the first of 15
       existing services.                                  Boeing B777-300s into the fleet, all equipped
                                                           with leading-edge Electronic Flight Bags
     Competitive Strengths                                 designed to enhance aviation safety, passenger
       Excellent Flight Safety Record                      flight reliability and flight efficiency.
       From the day it was formed, EVA Air has been
       guided by the Evergreen Group's 36 years of         New Aircraft, an Advanced Fleet and
       experience in international transportation, and     Worldwide Service Network
       has upheld that legacy by giving passengers         By the end of 2004, the EVA Air was operat-
       convenient, secure and comfortable flights          ing a fleet of 50 aircraft that averaged 7 years
       with quality service. We promote flight safety      in age. To maintain our fleet as one of the
       and assure full awareness with regular Joint        most advanced in the industry, retain our
       Security Committee and monthly fly-safe             competitive edge, and continue to give our
       meetings where staff and crewmembers review         customers the most comfortable and reliable
       all related issues. After conducting                flight services available, we began the process
       Comprehensive Air Safety Investigations, both       of introducing the newest generation of
       the U.S. Federal Aviation Administration            brand-new aircraft in June 2003, starting
       (FAA) and Taiwan's Civil Aeronautic                 with the first of 10 Airbus A330-200s. In
       Administration (CAA) have ranked EVA Air's          2005, we will continue to hire 4 Airbus A330-
       safety standards and practices among the best       200s and begin to take delivery of the first
       in the airline industry. EVA has upheld that        two of 15 Boeing B777s. This fleet of techno-
       finding by establishing an excellent flight-safe-   logically advanced, high performance aircraft
       ty record. This exceptional record qualifies        is equipping us to set a higher industry stan-
       EVA for reduced rates on fleet insurance every      dard, and it is the key to our steadily expand-
       year, bringing down costs and elevating the         ing route network. We now serve more than
       company's reputation.                               45 major destinations in Europe, America,
       To further safeguard our passengers, crews and      Asia and Oceania, and have built an efficient,



46
effective service network for passenger and        and hardware features that expand upon the
cargo transportation. We are creating the          trend-setting amenities we unveiled with our
infrastructure and deploying the equipment         A330s, including newly designed seats and
not only to meet customer needs by provid-         state-of-the-art Audio/Video on Demand per-
ing the best services available, but also to       sonal entertainment systems in all classes of
produce greater business opportunities and a       service. We are configuring our B777s with our
better operating environment for the world-        next generation of top cabin service, Premium
wide transportation industry.                      Laurel Class, further upgrading our highly suc-
                                                   cessful Evergreen Deluxe Class, and enhancing
More Efficient B777-300s                           Economy class. These innovations are going to
EVA will deploy the B777-300 with its advanced     be especially appreciated by our valued busi-
aerospace technology to sharpen our competi-       ness travelers, and will give all our passengers
tive edge. The new aircraft model has uniquely     more comfortable long-distance flights.
raked tips on wings designed for enhanced
pneumatic movement that reduce distance            Professional Management with a Wealth
needed for takeoff, accelerate climbing speed      of Experience
and lower oil consumption. EVA is also equip-      "A comfortable flight comes with confidence in
ping the aircraft with fuel-efficient GE90-115B    flight safety." Combining a wealth of experi-
motors that have high thrust power and use less    ence with a highly trained staff, EVA is dedicat-
oil, too. These innovations are going to put us    ed to providing the very best in-flight service.
in a better position to meet the challenges of     From organizational management and risk
today's soaring fuel costs.                        management to actively hosting air- safety sem-
To give our new B777-300 aircraft additional       inars and workshops, EVA aggressively pro-
advantages, we are outfitting them with the lat-   motes staff and crew awareness of flight safety.
est Flight Control Systems and Integrated          We also use an advanced monitoring system to
Aircraft Electronic Instruments Systems, both      help standardize flight operations and provide
of which will contribute to increased stability    a targeted and comprehensive approach to air
and flight safety. Our equipment choices for       safety. And we are continually upgrading pro-
the new EVA B777-300s will give the aircraft a     grams, systems and equipment at the Evergreen
remarkably high 99.38% dispatch rate and           Aviation Training Center, a facility we estab-
greater reliability than many other aircraft.      lished shortly after we started EVA. The train-
The B777-300's roomy cabins have software          ing courses we offer there today include the lat-



                                                                                                       47
 The Company



      est in Aviation Training, Flight Crew Training,      will bring stiff competition for Taiwan's carriers
      Ground Handling Service Training and                 and to effectively serve passengers traveling to
      Maintenance Training. It is this kind of high-       and from Taiwan, service quality and air trans-
      level professional training that forms the           portation networks must be upgraded.
      framework for our quality services.                  Nevertheless, the opportunities beneficial for
                                                           EVA are the rapidly increasing numbers of pas-
     Analyses of Future Developments and                   sengers visiting Taiwan and Taiwanese tourists
     Response Measures                                     traveling abroad which are the obvious targets
      Cross-Strait Direct Air Links Opportunities          for future market development. And the
      The economy and international trade market           Taiwan's excellent geographic position which
      in Mainland China are accelerating and cre-          makes it an ideal traffic center for the Asia
      ating a huge demand for air transportation.          Pacific region.
      Airlines from all over the world are pursuing
      the obv ious business oppor tunities.                Fuel Price Fluctuation
      Following the success of charter flight servic-      Fuel expenses are a large part of operating costs
      es during Chinese New Year, the govern-              for air transportation. Fuel price fluctuation
      ments are weighing additional passenger              has a direct bearing on an airline's operations
      charter services during holiday periods as           and profits. However, EVA has adopted the
      well as cargo charters. Anticipating the pos-        successful fuel-hedging strategies early on , and
      sibility that the Taiwan government could lift       we have been able to exercise some control over
      its ban against cross-strait Direct Air Links        our fuel costs.
      within the near future, EVA Air is preparing
      to jump into this market by preparing plans        Technology and R&D
      for fleet adjustment, including aircraft main-       Using Technology Effectively and
      tenance and technologies that would allow            Creating New Products
      us to quickly expand our operating scale.          • Embracing the e-trend, EVA is connected to
                                                           domestic and international travel agencies
      International        Competition           and       through the ABACUS and WORLDSPAN
      Opportunity                                          Global Distribution System (GDS). Travelers
      In contrast with big international carriers,         can buy EVA e-tickets through major travel
      Taiwan's airlines are smaller and lack experi-       agencies worldwide.
      ence in global operations. Market liberalization   • We have made online booking and ticketing



48
  for flig hts on the EVA Web site at                for joint flight services. We are using the most
  www.evaair.com , an easy and convenient            effective technologies available to continuously
  service for travelers. And we have made it         improve our services.
  even more convenient by linking to online
  t r avel   por tal,   including   Yam.com,         R&D Programs and Best Practices
  Expedia.com and Octopustravel.com , so             EVA Air will initiate and expand cooperative
  travelers can make hotel and rental car            alliances with other airlines, developing joint
  reservations when they book their flights.         operations that extend reach and convenience
  In addition, Evergreen Club members can            for both passengers and shippers. We have
  redeem and transfer mileage credits, earn          developed plans to invest in airline-related
  e-mileage and dow nload elect ronic                businesses in Mainland China. We have a
  upgrade certificates online any time.              timetable for retiring aircraft in our fleet and
• The EVA Air Web site integrates technology         deploying the most advanced new aircraft avail-
  designed especially for airfreight customers,      able. We are also engaged in a continuous
  including our Automated Manifest System            process of improving pilot and crew training,
  (AMS), Cargo E-Billing Service, and more.          further improving service quality at the same
  On December 15, 2004 we launched our               time. Our implementation of ISO-9001 stan-
  Cargo Information Web site and Electronic          dards is ongoing, and our application of best
  Data Exchange Platform that are further            practices continues.
  enhancements for our service quality and
  market competitiveness.                          Business Development, Short-Term and
• Our brand-new EVA vacation package, the          Long-Term
  "évasion" was introduced at the end of             Short-Term Plans
  2004 to meet our customers' wide-ranging         • Replacing medium- and short-range passen-
  needs for air fare/hotel packages. We              ger aircraft and introducing new, long-range
  designed it to provide high quality services       aircraft
  with flight tickets and hotel rooms plus           Consistent with our founding goals, we con-
  att ract ive t ravel opt ions and exclusive        tinue to upgrade the EVA fleet with brand-
  amenities.                                         new, advanced technology aircraft. By the
• We created an EVA Enterprise Data Warehouse        end of 2004, we were operating a fleet of 50
  that enables us to quickly and thoroughly ana-     aircraft, serving passengers with 15 B747-
  lyze market trends, and to originate e-tickets     400s, six A330-200s, eight B767s and four



                                                                                                        49
 The Company



       MD90s, and air cargo customers with 13 MD-            sion and aircraft acquisition by major Asian
       11 and four B747-400 freighters. In 2005, we          carriers show this to be an accurate predic-
       are introducing four more brand-new Airbus            tion. Facing increasingly fierce competition,
       A330-200s and our first two Boeing B777-              EVA has considered reviewing our Asia
       300ERs, and will use these aircraft to replace        routes as top priority. At the same time, we
       six B767s we have been flying for several             are seeking more mutually beneficial cooper-
       years. This will give us the benefits and             ative arrangements with other airlines, which
       advantages of a passenger fleet of modern,            will reduce operating demands and costs,
       top-performing aircraft equipped with the             and enhance our products by integrating
       latest technology. And we will continue to            them with services from related sectors such
       strengthen our cargo fleet by extending our           as hotels, car rental services, travel insurance
       lease for one MD-11 freighter for another             providers, and more.
       year, and leasing two more MD-11s from              • Developing passenger and cargo markets with
       World Airways owning to resigning leases for          high-growth potential
       one B747-400 and one MD-11 freighter.                 EVA is aggressively developing passenger and
     • Providing digital-age conveniences with elec-         cargo business in markets with high- growth
       tronic operating systems                              potential in a number of countries, including
       EVA has made it easier and far more convenient        Mainland China, India, South Korea, Japan,
       for passengers to book itinerary and at the           etc. We are using our broad-based trans-
       same time has saved operating costs by cooper-        portation network and joint routes to link
       ating with other airlines to develop e-ticketing      these burgeoning gateways with trading part-
       and online booking services. We have also             ners worldwide and to enhance our competi-
       steadily upgraded and integrated interfaces           tive edge.
       among our ticketing offices, airport service
       counters and branches worldwide, making our           Long-Term Plans
       communications more timely, reducing costs          • Upgrading long-range aircraft and maintaining
       and promoting service consistency.                    freighter fleet growth
     • Proactively building alliance with other airlines     EVA will continue to improve service quality
       and related sectors                                   and safeguard our competitive advantages by
       Studies have shown Asia to be a hot market            introducing a total of 15 advanced, long-range
       for the airline industry and to hold enor-            B777-300ER aircraft, lowering operating costs
       mous growth potential. Continued expan-               in the process. We will replace current B747-



50
  400s with passenger aircraft outfitted with the        ships with industry leaders such as well-known
  latest cabin technology and equipped with the          resorts and top travel agencies, and by working
  most advanced Audio/Video on Demand                    with these travel and hospitality experts to cre-
  entertainment systems. And we will upgrade             ate products, share resources and maximize
  our younger B747-400s with all the features            efficiencies. We have also developed our own
  and technologies of our elevated customer              full-service capabilities so that we are prepared
  services. Always catering to market demands,           to react to advantageous business opportunities
  we will sell remaining B747-400s or convert            whenever they come up.
  them into freighters, strategically using these      • Risk management
  huge aircraft to expand cargo capacity when            The international air transportation industry is
  and where we need it.                                  vulnerable to risks related to numerous vari-
• Reinvest in related air transportation industries      ables including weather, international politics,
  EVA's invest in related businesses such as air         and more. Carefully developed risk manage-
  catering, ground handling, maintenance and             ment policies and procedures are in place to
  air transportation that provide lateral and verti-     ensure that EVA remains in continuous opera-
  cal services is ongoing. By constructing a com-        tion and that we will be prepared to also pro-
  plete air transportation infrastructure, we can        tect our competitive edge in the event of a risk
  cap operating costs at lower levels, and achieve       arisen. Risk management measures both in
  maximum operating performance.                         place and ready for immediate deployment
• Work with related tourism industries                   include fleet, passengers and staff insurance;
  EVA meets the demand for high-quality                  loss prevention strategies and training; security
  tourism services by forming strategic relation-        management and risk response.




                                                                                                             51
 The Company




52
53
 The Company



                     The Network                                weekly Taipei-Vienna cargo flights in May 2004.
     • EVA launched Taipei-Osaka cargo service with         • EVA began a cooperative cargo alliance with
       one flight per week using a B747-400 freighter           Air Macau in August 2004.
       in March 2004.                                       • EVA launched Taipei-Sendai service with two
     • EVA increased Taipei-Hong Kong frequency                 weekly flights on September 1, 2004.
       from 40 to 49 flights per week starting in           • EVA increased frequency on our Taipei-
       March 2004.                                              Sapporo route from three to six weekly flights
     • EVA partnered with Austrian Airlines for three           on September 1, 2004.


                            Los        San
                                                    Seattle          Anchorage        Atlanta          Chicago
         North            Angeles    Francisco
        America
                           Dallas    Vancouver          JFK           Newark

         South
                         Brisbane     Sydney       Auckland
         Pacific

                          Vienna      London            Paris        Amsterdam       Brussels           Milan
         Europe
                         Frankfurt


                           Osaka     Fukuoka        Taipei           Kaohsiung      Hong Kong          Macau

                                       Kuala                                         Denpasar
                         Bangkok                    Penang            Jakarta                       Surabaya
                                      Lumpur                                            Bali
          Asia
                                      Ho Chi
                         Singapore                 Bombay              Manila           Tokyo          Sapporo
                                     Minh City
                          Phnom
                                       Hanoi        Seoul              Delhi          Sendai        Vientiane
                           Penh
         Middle
                           Dubai
          East
        Air cargo destination only
        Total 45 destinations




54
          Principal Subsidiaries                       Evergreen Aviation Technologies Corp. pros-
    Focusing on delivering the best perform-           pered due to thriving markets and strong
ance and services, EVA concentrated its 2004           management, rewarding EVA with 2004 prof-
invest ments w ithin the airline indust r y.           its of NT$ 605,629,000. No additional invest-
Investments in Evergreen Sky Catering Corp.,           ments in subsidiary companies are planned
Evergreen Airways Service (Macau) Ltd, and             for 2005.



EVA subsidiary companies are presented in the following table.
                                                                                         As of Dec. 2004
                           Principal
     Company                               Location    Date Founded        Capital             Share %
                           Activities
 Evergreen Airline         Ground
                                            Taiwan       Oct. 1990    NT$361.75 million        56.33%
  Services Corp.           handling
      RTW Air
                       Travel business     Singapore     Oct. 1989      SG$1.5 million         49.00%
 Service(S) Pte. Ltd
  Green Siam Air
                       Travel business     Thailand      Mar. 1996      THB20 million          49.00%
 Services Co., Ltd.
   Evergreen Sky
                        Airline catering    Taiwan       Oct. 1993       NT$1 billion          49.80%
  Catering Corp.
     Evergreen           Air transport
  Airways Service        and aircraft       Macau        Dec. 1994     US$5.68 million         99.00%
    (Macau) Ltd.            leasing
 Evergreen Aviation     Aircraft repair
 Technologies Co.,     and maintenance      Taiwan       Nov. 1997       NT$3 billion          80.00%
        Ltd.
     Hsiang-Li            Investment
                                            Taiwan       Jan. 2001       NT$1 billion           100%
 Investment Corp.          business
   Evergreen Air        Cargo terminal
                                            Taiwan       Mar.2000       NT$1.2 billion           60%
 Cargo Service Co.        operation
  UNI Japan Co.,
                       Travel business      Japan        Feb.2002       JPY10 million          49.50%
        Ltd




                                                                                                           55
 The Company



      Litigation or Non-Litigious Proceedings              Evergreen Airline Services Corp., 14 former
          For cases involving litigation/non-litiga-       employees in the Kaohsiung office filed a lawsuit
     tion, names of directors, supervisors, the presi-     in March 2001 claiming compensation for over-
     dent, individual(s) in charge, and shareholders       time work. In November 2003, a judgment was
     holding more than 10% of shares must be dis-          awarded in their favor requiring Evergreen Airline
     closed in addition to any judgment or major           Services Corp. to pay NT$1,814,000. Twelve of
     pending litigation proceeding, non-litigation         the same plaintiffs filed an additional lawsuit
     proceeding or regulatory petition pertaining to       claiming severance pay in March 2001. The court
     the Company. If results of the litigation/non-liti-   ruled against the plaintiffs in August 2002, but one
     gation matter could affect stockholders' equity       plaintiff appealed.
     or stock prices, the claims, exposure amounts,             Another former employee in the Kaohsiung
     dates of proceedings, identities of claimants and     office filed a lawsuit in March 2003 demanding
     status of settlements as of the print date of the     to be rehired, claiming compensation of
     annual report must be disclosed.                      NT$1,509,000 plus another NT$46,000 per
                                                           month from May 19, 2003 until employment is
     Evergreen Airline Services Corp.                      resumed. This proceeding is still in the Taiwan
         After terminating labor contracts with            High Court.




56
 Impact of Changes in Major Domestic or                 asset value.
 International Policies and Laws on the               • Transfer Pricing Audit Rules: As declared and
 Company's Finance in the Latest Fiscal                 submitted by Taiwan headquarters, the
 Year and Corresponding Strategies                      Company is not in a manufacturing or trading
     The Company has addressed all known                industry and its sales income is generated from
changes in major domestic or international poli-        passenger and cargo transportation, thus no
cies and laws and their impacts on finances in the      personal gain is involved. But the Company is
most recent fiscal year by initiating corresponding     operating in full compliance with applicable
strategies.                                             laws.


 Starting in 2005, the Company adapted                  Impacts of New Labor Pension Act:
  measures to respond to requirements of              • Employee Enrollments: No impact so far.
  updated statements of financial                     • Cost structure: No impact so far.
  accounting standard (SFAS):                         • Funding: Pensions are funded through
• SFAS No. 7: A consolidated statement will be          deductions amounting to 11.9% of employ-
  disclosed with semi-annual financial state-           ees' monthly salaries. The Company will
  ments.                                                evaluate the program after the government
• SFAS No. 34: The company has adopted                  announces enforcement rules and employ-
  International Accounting Standards (IAS) No.          ees' choices of either the old or new pension
  39, "Financial Instruments: Recognition and           system have been established. Initial analysis
  Measurement" in the guidance of derivatives.          does not indicate any major impact on the
• SFAS No. 35: No major impact; because earn-           Company's capital allocation.
  ings are expected to grow steadily, all aircraft    • Pension generation: Pension funds are being
  are in operation, reinvested companies are            deposited in an assigned, interest-generating
  operating normally, investment gains/losses           account subject to regulations.
  are recognized based on the equity method,          • Impact period: The new pension system is
  and EVA's market value is greater than net            mandated from July 1, 2005.




                                                                                                          57
 The Company



     Important Resolutions by Shareholders                Important resolution by the Board of
     and BOD                                              Directors:
       Important shareholders' resolution:              • March 25, 2004:
       Proposal for Distribution of Net Income in         In accordance with future fleet plan, the
       2003: Total distributable earnings of              Company resolved to purchase five Boeing
       NT$2,764,840,531 were derived from after-          747-400s from Chailease Finance Co., Ltd,
       tax net income of NT$1,396,182,496 plus            Chailease Business Co., Ltd, Future Leasing
       initial     retained     earnings.      After      Co., Ltd, and Free Leasing Co., Ltd, for a
       NT$139,618,250 is set aside for legal reserve,     total amount of NT$10,290,855,909.
       the remaining earnings will be distributed as
       indicated and in compliance with Corporate       • April 13, 2004:
       Law and our Articles of Incorporation: 40          Proposal 1: Reduce costs, improve the finan-
       shares of stock dividends will be distributed                   cial structure, and enhance market
       for ever y 1,000 shares, amounting to                           competitiveness by selling six
       NT$1,121,072,560. Remuneration for direc-                       Boeing 747-400s and three Boeing
       tors and super v isors amounted to                              777-300ERs to GECAS Aircraft
       NT$10,000,000 and employee bonuses were                         Leasing Netherlands B.V. through
       NT$29,001,860.                                                  a sale/lease-back agreement total-
                                                                       ing US $381,648,000 and US
       Execution:                                                      $560,310,000.
     • The increase in capital with recapitalized         Proposal 2: To expand its fleet and advance
       earnings was effective with Approval Letter                     operating abilities, the Company
       (Tai-Tsai-Cheng-Yi-Tze) No. 0930128657                          will purchase eight Boeing 777-
       dated June 29, 2004 from the Securities and                     300ERs for US $1,491,496,000
       Futures Commission, Ministry of Finance.                        from the Boeing Company.
       Newly issued stocks were distributed and
       available to buy/sell from October 12, 2004.     • May 24, 2004:
     • Remuneration for directors and supervisors,        The Company purchased back the first unse-
       and employee bonuses were distributed on July      cured convertible bonds issued with cash
       31, 2004.                                          and filed an application with the Gretai




58
  Securities Market (OTC) to terminate OTC             NT$1,500,000,000 to reduce interest costs by
  transactions, recording July 15 as the date of       paying installment payments on aircraft parts
  stock retrieval and July 16 as the date for ter-     and debts.
  mination of OTC transactions.
                                                     • July 26, 2004:
• June 15, 2004:                                       Proposal 1: The Company adjusted the stock
  Proposal 1: Mr. Chang Kuo-Cheng was elected                       dividend rate for shareholders to
              as Chairman of the Company.                           38.2048 shares for every 1,000 in
  Proposal 2: T h e     Co m p a ny       issued                    holdings. It set August 15, 2004
              220,000,000 shares valued at                          as the date of record for dividend
              NT$2,200,000,000 to raise cap-                        distribution and capital increase
              ital to purchase aircraft and                         with no stocks to be transferred
              equipment, and repay debts.                           during the period of August 11
  Proposal 3: The Company resolved to issue                         through August 15 as stipulated
              its second unsecured corporate                        by law.
              bond to raise NT$4,500,000,000           Proposal 2: The Company adjusted the stock
              to purchase aircraft and equip-                       option rate to 59.9788 shares for
              ment, and repay debts.                                ever y 1,000 in holdings, and
                                                                    issued new shares at NT$11.5
• June 23, 2004:                                                    each. It set August 15, 2004 as
  The Company resolved to reduce costs,                             the date of record for dividend
  improve financial structure and enhance mar-                      distribution and capital increase
  ket competitiveness by selling and leasing back                   with no stock to be transferred
  12 spare engines from Taiwan Life Insurance                       during the period of August 11
  Financing and Lease Co., Ltd. for a total                         through August 15 as stipulated
  amount of NT$1,787,495,411 to be amortized                        by law. Shareholder and employee
  over seven years.                                                 payments were required to be
                                                                    made between August 21 and
• July 7, 2004:                                                     September 20, and the balance
  The Company resolved to issue its 10th secured                    was paid on September 23 by spe-
  corporate bond in the amount of                                   cific persons assigned by the




                                                                                                         59
 The Company



                   Chairman. The Company set              corporate bond in the amount of
                   September 24 as the date of            NT$1,000,000,000 to pay down debt and
                   record for capital increase.           reduce interest costs.


     • August 11, 2004:                                 • December 23, 2004:
       On August 15, 2004, the price of the second        Proposal 1: The Company elected Mr. Lin
       unsecured corporate bond issued by the                          Bou-Shiu as Chairman effective
       Company was adjusted to NT$13.8.                                January 1, 2005.
                                                          Proposal 2: The Company appointed Mr.
     • October 6, 2004:                                                Chang Kuo-Wei as President of
       Evergreen Airways Service (Macau) Ltd. invest-                  the Company to replace Mr. Lin
       ed RMB$13,440,000 (approximately US                             Bou-Shiu effective January 1,
       $1,700,000) and acquired 12% of the shares of                   2005.
       Xiamen International Airport Air Cargo
       Storage Co., Ltd.                                • April 11,2005:
                                                          The Company resolved to purchase one spare
     • December 13, 2004:                                 engine from GE for an amount of approximate-
       The Company resolved to issue its 11th secured     ly US$24,000,000.




60
                                                   Corporate Governance
                                                                                                 Variation from Corporate Governance
                                                                                                      Best-Practice Principles for
                   Items                                        Governance
                                                                                                     TSEC/GTSM-Listed Companies
                                                                                                     and Reasons for Such Variation
1. Shareholder structure and shareholders'
  rights
  (1) Procedures for handling sharehold- The Company's stock affair department
      ers' propositions or to settle their handles shareholder communications.
      disputes                                  Designated departments are responsible
  (2) Major shareholders with actual con- for these functions.
      trol over the Company and the con-                                                       N/A
      trolling party(ies) of the major share-
      holders
  (3) Risk management mechanism and Risk management procedures have been
      firewall from affiliated enterprises      stipulated within the operating system for
                                                internal control.




2. Formation and duties of the board of                                                        Though none of the directors in the
  directors                                                                                    Company are independent, the board of
  (1) Independent directors                     The requirement for independent directors directors carries out its functions subject to
                                                is still under consideration.                  applicable laws, Articles of Incorporation,
                                                                                               and shareholder meeting resolutions.
  (2) Regular assessment of the inde- The Company assesses the independence N/A
      pendence of CPAs.                         of its CPAs every year.
3. Formation and duties of Supervisors                                                         Though none of the supervisors in the
  (1) Independent supervisors                   The requirement for independent supervi- Company are independent, the Company's
                                                sors is still under consideration.             supervisors perform their functions of mon-
                                                                                               itoring corporate management and over-
                                                                                               seeing audits of financial statements in
                                                                                               accordance with the Company's rules in
                                                                                               good faith.
  (2) Communication between supervi- Employees and shareholders may directly N/A
      sors and employees/shareholders           or indirectly submit oral or written propos-
                                                als to supervisors.
4. Establishment of communication chan- Certain departments are responsible for N/A
  nels with stakeholders.                       stakeholders.
5. Disclosure of Information
  (1) Disclosure of financial and corporate The Web site has been completed and N/A
      governance information through the information is being disclosed in accor-



                                                                                                                                             61
 The Company



                                                                                                 Variation from Corporate Governance
                                                                                                      Best-Practice Principles for
                        Items                                      Governance
                                                                                                    TSEC/GTSM-Listed Companies
                                                                                                    and Reasons for Such Variation
           Company's Web site                       dance with applicable regulations.
       (2) Disclosure of information (e.g. con- The Company has appointed responsible N/A
           structing an English Web site, personnel and              established a spokesman
           appointing personnel responsible for system.
           collecting and disclosing Company Internet address: http://www.evaair.com
           information, establishing a spokesper-
           son system, summarizing details of
           an institutional investor meeting on
           the Web site, etc.)
     6. Operation of functional committees, e.g. Formation of an audit committee is still Though an audit committee has not been
       an audit committee, etc., established by under consideration.                           formally established, all supervisors have
       the Company                                                                             accounting or financial backgrounds and
                                                                                               fulfill their corporate management monitor-
                                                                                               ing functions in good faith.

     7. If the company has stipulated corporate governance rules according to Corporate Governance Best-Practice Principles for
       TSEC/GTSM-Listed Companies, please specify the governance and variation in any of the rules EVA Air has stipulated
       above.
       The Company has not yet stipulated corporate governance rules.
     8. Other important information helpful for better understanding of corporate governance (such as continuous education of directors
       and supervisors, attendance of directors or attendance of supervisors as non-voting delegates to BOD meetings, risk manage-
       ment policies and standards for risk assessment, consumers' rights protection, abstention of directors from interest-related pro-
       posals, purchase of liability insurance for directors and supervisors):
       (1) Chairman Lin Bou-Shiu attended "Taipei Corporate Governance Forum 2004" organized by Financial Supervisory
           Commission Executive Yuan on November 5, 2004 and "Introduction and Promotion of Corporate Governance in Taiwan"
           offered by the Securities and Futures Institution on January 19, 2005.
           Director Chang Kuo-Cheng attended "Introduction and Promotion of Corporate Governance in Taiwan" produced by the
           Securities and Futures Institution on January 19, 2005.
           Director Chang Kuo-Wei attended "Corporate Governance Summit" held by Council for Economic Planning and Development
           Executive Yuan on September 22, 2004, and "Introduction and Promotion of Corporate Governance in Taiwan" offered by the
           Securities and Futures Institution on January 19, 2005.
           Director Lin Ching-En attended "Introduction and Promotion of Corporate Governance in Taiwan" presented by the Securities
           and Futures Institution on January 19, 2005.
           Director Lin Shin-I attended "Introduction and Promotion of Corporate Governance in Taiwan" offered by the Securities and
           Futures Institution on January 19, 2005.
           Director Kao Ruey-Perng attended "Introduction and Promotion of Corporate Governance in Taiwan" held by the Securities
           and Futures Institution on January 19, 2005.
           Supervisor Ko Li-Ching attended "Introduction and Promotion of Corporate Governance in Taiwan" held by the Securities and




62
   Futures Institution on January 19, 2005.
   Supervisor Owng Rong-Jong attended "Introduction and Promotion of Corporate Governance in Taiwan" produced by the
   Securities and Futures Institution on January 19, 2005.
(2) The Company's directors and supervisors maintain good attendance at board meetings in compliance with applicable laws
   (please visit http://newmops.tse.com.tw for details).
(3) If an action is in any way related to any of directors' interests, the director(s) are required to abstain and avoid any conflict of
   interest.
(4) EVA Air has not yet purchased liability insurance for directors and supervisors, and the Company will purchase it in the future
   if necessary.
(5) EVA Air has made donations to charitable and educational foundations to support and encourage public benefit pro-
   grams.




                                                                                                                                           63
 Financial and Operating Statistics

               Financial and Operating Statistics
                                              Financial Results
               Balance Sheet
                                                                             NT$(Million)
                                     2004      2003       2002      2001        2000
                Current assets      25,762    24,694      22,417   20,938      18,715
                Fixed assets        60,493    59,102      62,019   62,075      64,017
                Total assets        117,705   114,668    115,513   113,402    107,874
                Current
                                    33,975    28,863      28,687   28,409      21,944
                liabilities
                Long-term
                                    37,937    45,165      49,782   52,725      52,191
                liabilities
                Total liabilities   74,597    76,455      80,467   83,736      76,273
                Share capital       32,714    27,534      24,250   22,050      21,000
                Shareholders'
                                    43,108    38,213      35,046   29,665      31,601
                equity




               Income Statement
                                                                             NT$(Million)
                                     2004      2003       2002      2001        2000
                Operating
                                    82,655    65,387      64,577   52,451      54,529
                revenue
                Operating
                                    77,940    62,894      59,520   52,123      49,570
                costs
                Operating
                                      4,715     2,494      5,058      329       4,959
                profit
                Non-operating
                                      1,122      905        593       771       1,425
                income
                Non-operating
                expenses and          2,155     2,182      3,233    4,385       3,860
                loss
                Income before
                                      3,683     1,216      2,417   (3,285)      2,523
                tax
                Tax                    440       180        220       110        (12)
                Net income            3,243     1,396      2,637   (3,175)      2,511
                Earnings per
                                       1.06      0.53       1.19    (1.44)        1.2
                share (EPS)




64
                                        Revenue and Profit Margin
                      Million


                 90,000                                                10.00%

                 80,000                                                9.00%

                 70,000                                                8.00%
                                                                       7.00%
                 60,000
                                                                       6.00%        Revenue
                 50,000
                                                                       5.00%
                 40,000                                                             Profit
                                                                       4.00%
                                                                                    Margin
                 30,000
                                                                       3.00%
                 20,000                                                2.00%
                 10,000                                                1.00%
                      0                                                0.00%
                                2000   2001     2002    2003    2004




Operating Revenue
                                                                                                      NT$(Million)
                Passenger                         Cargo                         Other                Total
   2004      38,349              46%           38,534          47%        5,772         7%       82,655      100%
   2003      29,196              45%           31,570          48%        4,621         7%       65,388      100%
   2002      32,514              50%           27,519          43%        4,545         7%       64,577      100%
   2001      29,550              56%           20,643          39%        2,258         5%       52,451      100%
   2000      29,405              54%           23,433          43%        1,691         3%       54,529      100%




                                              Total Revenue-2004

                                                                            Other
             Cargo services                                                  7%
                47%




                                                                            Passenger services
                                                                                 46%




                                                                                                                     65
 Financial and Operating Statistics



     Operating Costs
                                                                                                    NT$(Million)
                                         2004              2003              2002           2001       2000
     Fuel                               23,474             15,300           13,637         12,348     12,393
     Staff                               8,050              7,009            6,324          6,328      6,291
     Lease rental                        9,406              8,384            7,442          6,838      6,241
     Depreciation and amortization       4,863              4,813            4,734          4,734      4,184
     Commissions                         7,240              6,188            5,853          4,719      4,955
     Landing, parking and routes         8,764              7,515            7,121          6,283      5,557
     Maintenance                         5,835              5,283            5,703          3,805      2,955
     Others                             10,308              8,402            8,706          7,068      6,994
     Total                              77,940             62,894           59,520         52,123     49,570




                                                       Costs-2004



                                                     13%                 10%
                                      11%


                                                                                       30%
                                     12%
                                                6%         9%             7%




                           Staff                       Fuel                          Maintenance
                           Commissions                 Depreciation & amortization   Lease rental
                           Landing,parking& routes     Others




66
Financial Ratio Analysis
            Item                               Year                       2004       2003       2002       2001       2000
                             Debt ratio                                    63         67         70         74         71
Financial Structure (%)      Ratio of long-term liabilities and stock-
                                                                           134        141        137       133        131
                             holders' equity to fixed assets
                             Current ratio                                 76         86         78         74         85
Solvency (%)                 Quick ratio                                   44         51         45         38         39
                             Times interest earned ratio (times)           275        153        178        10        161
                             Average collection turnover (times)            -          -          -          -          -
                             Average collection days for receivables        -          -          -          -          -
Operating Performance Average inventory turnover (times)                    -          -          -          -          -
Analysis                     Average days for sale of goods                 -          -          -          -          -
                             Fixed assets turnover (times)                1.38       1.08       1.04       0.85       0.85
                             Total assets turnover (times)                0.70       0.57       0.56       0.46       0.51
                             Return on total assets (%)                   4.01       2.61       4.21         -          5
                             Return on stockholders' equity (%)             8          4          8        (10)         9
                             Operating income to paid-in capital
Profitability                                                              14          9         21          1         24
                             (%)
                             Return on sales (%)                            4          2          4         (6)         5
                             Earnings per share (NTD)                     1.06       0.55       1.19      (1.44)       1.2
                             Ratio of cash flows                           25         25         33          2         32
Cash flow                    Cash flow adequacy ratio (%)                  235        233        136        43         60
                             Ratio of re-investment for cash                8          6          8          -          7
                             Degree of operating leverage                  14         21         10        125          9
Degree of leverage
                             Financial leverage                           1.67       7.14       2.35      (0.10)        4
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)



                                                                                                                                 67
 Financial and Operating Statistics



     Cash flow Analysis
        Change of Cash Flow During This Year:
                                                                                                          NT$(Thousand)
                           Net Cash Flow                                                  Compensating Measures for
                                                 Cash Used          Cash Balance
     Initial Cash Balance from Operating                                                     Negative Cash Balance
                                               During this Year       (Negative)
              (1)         Activities During
                                                      (3)             (1)+(2)-(3)       Investing Plans    Financing Plans
                             thisYear (2)
          1,700,082           8,656,303           8,883,784           1,472,601                -              7,075,000
     • Operating activities: Cash inflows increased significantly due to global economic recovery and improved operating per-
       formance.
     • Investing activties: Short-term bond fund investments were decreased.
     • Financing activities: Capital increase of NT$2.53 billion by cash and the second issuance of convertible bond in the
       amount of NT$ 4.54 billion.




        Compensating Measures for Negative Cash Balance and liquidity Analysis:
        Conduct Capital increase by cash and issuance of convertible bonds to pay advance payment of air-
        craft, repay loans and debts as well as improve the financial structure.



        Cash Liquidity Analysis for the Coming Year:
                                                                                                          NT$(Thousand)
                           Net Cash Flow                                                  Compensating Measures for
                                                 Cash Used          Cash Balance
     Initial Cash Balance from Operating                                                     Negative Cash Balance
                                               During this Year       (Negative)
              (1)         Activities During
                                                      (3)             (1)+(2)-(3)       Investing Plans    Financing Plans
                             thisYear (2)
          1,472,601           8,700,000           11,672,000         (1,499,399)               -              3,000,000
     • Operating activities: In 2005 Cash infow from operating acitivities is expected to be in the same level of 2004 because
       of continuous economic growth and operating performance.
     • Investing activities: Short-term bond fund investments are expected to be decreased.
     • Financing activities: Corporate bonds will be issued to pay back debts and improve the financial structure.




68
Impact of Major Capital Expenditures on Financial Operations in Recent Years
   Capital Utilization and Resource of Major Capital Expenditure
                                                                                                                      NT$(Thousand)
                      Actual or Expected Actual or Expected Total Capital                Actual or Expected Capital Utilization
      Items
                         Resources          Finish Date       Required       2004     2005       2006        2007       2008      2009
 Purchase of ULD
(Unit Load Devices)       Financing          2007.12.31        80,000       20,000    20,000     20,000     20,000          -      -
    equipment
    Purchase
                          Financing         2007.12.31        500,000       150,000   50,000    150,000    150,000          -      -
of other equipment
    Purchase
                          Financing          2009.06.30      78,871,229 5,562,662 18,370,120 17,141,816 19,404,457 14,209,349 4,182,825
    of aircraft




                                                                                                                                          69
 Financial and Operating Statistics



                                                          Operating Results
                                                    2004                2003         2002                2001           2000
     Overall capacity (million)                      9,884               8,727           7,758               6,791       6,718
     Overall traffic (million)                       7,439               6,345           5,882               4,879       5,273
     Overall load factor (%)                             75.3             72.7            75.8                71.8        78.5
     Overall yield (NT$)                             10.33                9.58           10.21               10.28       10.02
     Passenger capacity (million)                  27,353               25,023       25,184              23,728         25,297
     Passenger traffic (million)                   21,755               18,134       19,508              17,777         19,105
     Passengers carried ('000)                       5,438               4,321           4,794               4,179       4,108
     Passenger load factor (%)                           79.5             72.5            77.5                74.9        75.5
     Passenger yield (NT$)                               1.76             1.61            1.67                1.66        1.54
     Cargo capacity (million)                        7,423               6,475           5,491               4,656       4,441
     Cargo traffic (million)                         5,481               4,713           4,126               3,279       3,554
     Cargo carried (tons)                         858,989              734,900      619,435             486,915        512,556
     Cargo load factor (%)                               73.9             72.8            75.1                70.4        80.0
     Cargo yield (NT$)                                   7.03             6.70            6.67                   6.3      6.59
     Unit cost (NT$)                                     7.89             7.21            7.67                7.67        7.38
     Number of aircraft                                   50                 45            42                    37        36
     Number of employees                             4,934               4,469           4,394               4,552       5,290
     Capacity per employee (thousand)                2,003               1,953           1,765               1,492       1,270
     Traffic per employee (thousand)                 1,508               1,420           1,339               1,072        997
     Revenue per employee (thousand)               16,752               14,631       14,697              11,523         10,308




                                                  Passenger Carried and Load Factor                          %
                                 ('000)
                                          6,000                                                         85
                                          5,500                                                         80

                                          5,000                                                         75
                                                                                                        70
                                          4,500
                                                                                                        65
                                          4,000
                                                                                                        60
                                          3,500                                                         55
                                          3,000                                                         50
                                                  2000          2001      2002    2003           2004

                                                                       Pax        L/F




70
   Tons                       Cargo Carried and Load Factor                                   %
  ('000)
               900                                                                       85
               800
                                                                                         80
               700
                                                                                         75
               600
                                                                                         70
               500
                                                                                         65
               400
               300                                                                       60

               200                                                                       55

               100                                                                       50
                      2000         2001         2002          2003           2004


                                     Cargo tons             L/F




T-km
                                   Staff Productivity                                    NT$'000


        2,500                                                                            20,000

        2,000
                                                                                         15,000
        1,500
                                                                                         10,000
        1,000
                                                                                         5,000
           500

                0                                                                        0
                     2000         2001         2002         2003           2004


       Capacity per employee              Revenue per employee             Traffic per employee




       NT$/t-km             Yield, Unit Cost and Load Factor                                      %

        11                                                                                    85

        10                                                                                    80

           9                                                                                  75

           8                                                                                  70

           7                                                                                  65

           6                                                                                  60

           5                                                                                  55
                     2000         2001           2002             2003            2004

                      Unit cost             Overall Yield                Overall load factor




                                                                                                      71
 Financial Statements

               Financial Statements
                                                  Auditors’ Report

               The Board of Directors
               EVA Airways Corp.:
                     We have audited the balance sheets of EVA Airways Corp. as of December 31, 2004
               and 2003, and the related statements of operations, changes in stockholders' equity, and
               cash flows for the years then ended. These financial statements are the responsibility of
               the Company's management. Our responsibility is to express an opinion on these finan-
               cial 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, 2004 and 2003, were evaluated using the equity method, and the
               resulting book values of these investments amounted to NT$2,204,586 thousand
               (US$69,072 thousand) and NT$2,117,640 thousand (US$62,320 thousand), respectively.
               The resulting investment gains amounted to NT$206,836 thousand (US$6,192 thousand)
               and investment losses amounted to NT$22,745 thousand (US$660 thousand) for the
               years 2004 and 2003, 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 other auditors.
                     We conducted our audits in accordance with Republic of China generally accepted
               auditing standards and the "Rules Governing Auditing and Certification of Financial
               Statements by Certified Public Accountants". Those standards and rules 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 man-
               agement, 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 finan-
               cial statements of EVA Airways Corp. referred to in the first paragraph present fairly, in
               all material respects, the financial position of EVA Airways Corp. as of December 31,
               2004 and 2003, and the results of its operations and its cash flows for the years then
               ended, in conformity with Republic of China generally accepted accounting principles.



                    February 18, 2005

                    The accompanying financial statements are intended only to present the financial
               position, results of operations and cash flows in accordance with the accounting princi-
               ples and practices generally accepted in the Republic of China and not those of any other
               jurisdictions. The standards, procedures and practices to audit such financial statements
               are those generally accepted and applied in the Republic of China.
72
                                                                                                       EVA AIRWAYS CORP.
                                                                                                         Balance Sheets
                                                                                                       December 31, 2004 and 2003
                                                                                                    (expressed in thousands of dollars)
                                                                                NT dollars                  US dollars                                                                                 NT dollars                    US dollars
               Assets                                                    2004                2003       2004          2003         Liabilities and Stockholders' Equity                         2004                 2003        2004           2003

     Current assets:                                                                                                           Current liabilities:
         Cash and cash equivalents (note 4(1))                    $     1,472,601         1,700,082      46,138      50,032        Short-term borrowings (notes 4(9) and 7)                 $    1,600,000           3,360,000     50,130       98,882
         Short-term investments (note 4(2))                             5,350,027         6,243,203     167,623     183,731        Payable on commercial paper (note 4(9))                          99,958             819,516      3,132       24,117
         Notes receivable                                                 397,163           388,354      12,444      11,429        Notes payable                                                       242               3,805          7          112
         Accounts receivable, net                                       7,260,497         5,757,424     227,481     169,436        Accounts payable                                              1,264,961           1,607,623     39,633       47,311
                                                                                                                                   Accounts payable-related parties (note 5)                     1,032,424             816,351     32,347       24,024
         Accounts receivable-related parties (note 5)                      46,888            34,553       1,469       1,017
                                                                                                                                   Tax payable                                                     514,559                   -     16,122            -
         Other receivables-related parties (note 5)                       242,182           203,828       7,588       5,998
                                                                                                                                   Accrued expenses (note 4(18))                                 5,764,087           4,898,068    180,596      144,146
         Other financial assets-current (note 4(3))                       239,662           167,863       7,509       4,940
                                                                                                                                   Other payables-related parties (note 5)                          98,234              69,137      3,078        2,035
         Inventories (note 4(4))                                        7,246,633         6,983,468     227,046     205,517        Other payables (notes 4(12) and 4(13))                        2,590,916           3,520,779     81,177      103,613
         Prepaid expenses                                               2,468,125         1,679,889      77,329      49,438        Unearned revenue                                              7,430,350           5,323,404    232,802      156,663
         Other prepayments                                                288,614           365,708       9,043      10,762        Current portion of long-term liabilities (notes 4(10),
         Deferred income tax assets-current (note 4(15))                  454,783           973,875      14,249      28,660           4(11) and 6, 7)                                           12,480,472           8,018,157     391,029     235,967
         Other current assets (note 4(18))                                295,264           196,188       9,251       5,774        Other current liabilities (note 4(18))                          520,333             426,614      16,303      12,555
             Total current assets                                      25,762,439        24,694,435     807,170     726,734        Lease liability-current (note 4(7))                             578,659                   -      18,130           -
     Long-term equity investments (note 4(5)):                                                                                         Total current liabilities                                33,975,195          28,863,454   1,064,486     849,425
         Long-term equity investments under equity method               6,714,935         6,246,480     210,387     183,828    Long-term liabilities:
         Long-term equity investments under cost method                 4,067,360         4,280,626     127,436     125,975        Bonds payable (note 4(11))                                    6,973,154           6,410,500     218,478      188,655
                                                                                                                                   Long-term borrowings (notes 4(10), 6 and 7)                  11,679,522          21,458,585     365,934      631,506
             Net long-term equity investments                          10,782,295        10,527,106     337,823     309,803
                                                                                                                                   Other installments payable (note 4(12))                         493,905           1,673,641      15,475       49,254
     Property, plant and equipment (notes 4(6), 4(7), 6 and 7):
                                                                                                                                   Aircraft payable (note 4(13))                                12,764,324          15,621,978     399,922      459,740
         Land                                                            1,869,784        1,869,784       58,583      55,026
                                                                                                                                   Lease liability-noncurrent (note 4(7))                        6,025,726                   -     188,794            -
         Buildings                                                       4,391,446        4,391,446      137,590     129,236           Total long-term liabilities                              37,936,631          45,164,704   1,188,603    1,329,155
         Machinery and equipment                                         3,691,019        5,955,661      115,644     175,270   Other liabilities:
         Aircraft                                                       64,036,748       73,956,316    2,006,352   2,176,466       Accrued employee retirement liabilities (note 4(14))            833,969             817,121      26,129       24,047
         Rotable parts                                                     429,547          445,470       13,458      13,110       Other liabilities (note 4(18))                                1,850,989           1,609,893      57,994       47,378
                                                                        74,418,544       86,618,677    2,331,627   2,549,108           Total other liabilities                                   2,684,958           2,427,014      84,123       71,425
        Less: accumulated depreciation                                (28,318,551)     (29,740,205)    (887,256)   (875,227)           Total liabilities                                        74,596,784          76,455,172   2,337,212    2,250,005
        Leased assets, net                                               6,602,359                -      206,860           -   Stockholders' equity (note 4(16)):
        Construction in progress                                             4,868            4,868          152         143       Common stock                                                 32,714,259          27,534,330   1,123,557     970,537
                                                                                                                                   Capital surplus                                               3,099,862           2,599,741     102,271      87,450
        Advances for purchases of equipment                              7,785,375        2,219,021      243,926      65,304
                                                                                                                                   Retained earnings:
            Net property, plant and equipment                           60,492,595       59,102,361    1,895,309   1,739,328
                                                                                                                                      Legal reserve                                                403,372             263,754     11,690         7,636
     Other assets:
                                                                                                                                      Retained earnings                                          4,708,083           2,764,841    139,411        80,054
        Deferred pension cost (note 4(14))                                191,064           218,358       5,986       6,426            Total retained earnings                                   5,111,455           3,028,595    151,101        87,690
        Refundable deposits (note 7)                                   15,130,480        16,203,593     474,057     476,857        Other stockholders' equity adjustments:
        Deferred charges (note 4(8))                                    3,508,848         2,883,421     109,937      84,856           Deferred credit                                              334,275             193,865      10,144        5,745
        Deferred income tax assets-noncurrent                                                                                         Cumulative translation adjustments                         2,067,954           4,989,232    (29,883)     (23,015)
           (note 4(15))                                                   955,811           336,499      29,947       9,903           Net loss not yet recognized as net pension cost            (219,593)           (132,724)     (6,555)      (3,833)
        Other assets (note 6)                                             881,464           702,438      27,617      20,672            Total other stockholders' equity
            Total other assets                                         20,667,667        20,344,309     647,544     598,714                adjustments                                           2,182,636           5,050,373     (26,294)     (21,103)
                                                                                                                                       Total stockholders' equity                               43,108,212          38,213,039   1,350,635    1,124,574
                                                                                                                               Commitments and contingencies (note 7)
      Total assets                                                $ 117,704,996        114,668,211     3,687,846   3,374,579          Total liabilities and stockholders' equity            $ 117,704,996       114,668,211      3,687,846    3,374,579




73
 Financial Statements




                                                    EVA AIRWAYS CORP.
                                                  Statements of Operations
                                    For the years ended December 31, 2004 and 2003
                              (expressed in thousands of dollars, except earnings per share)

                                                                             NT dollars                         US dollars
                                                                      2004                2003           2004             2003

     Operating revenue (note 5)                                $    82,655,351        65,387,596       2,474,711       1,898,595

     Operating cost (notes 4(18), 5 and 10)                        (71,114,492)     (56,835,812)      (2,129,176)     (1,650,285)
              Gross profit from operations                           11,540,859        8,551,784          345,535         248,310

     Operating expenses (notes 5 and 10)                            (6,825,502)       (6,058,097)      (204,357)        (175,903)
              Operating income                                        4,715,357         2,493,687        141,178           72,407

     Non-operating income and gains:
         Interest income (note 5)                                       49,531              12,068         1,483             351
         Investment income, net (note 4(5))                            605,629             303,001        18,133           8,798
         Exchange gains, net (note 4(18))                                    -             112,808             -           3,275
         Recovery of unrealized loss on short-term investments               -              62,236             -           1,807
         Other income                                                  466,965             414,394        13,981          12,033
                                                                     1,122,125             904,507        33,597          26,264

     Non-operating expenses and losses:
         Interest expenses, net of capitalized interest of
            NT$140,923 thousand (US$4,219 thousand) and
            NT$56,556 thousand (US$1,642 thousand) in 2004
            and 2003, respectively (notes 4(6) and 4(18))           (1,887,263)       (2,144,560)       (56,505)         (62,269)
         Exchange losses, net (note 4(18))                            (173,839)                 -        (5,205)                -
         Other loss                                                    (93,751)          (37,452)        (2,807)          (1,088)
                                                                    (2,154,853)       (2,182,012)       (64,517)         (63,357)

     Income before income tax                                        3,682,629            1,216,182      110,258          35,314

     Income tax benefit (expenses) (note 4(15))                      (439,694)             180,000      (13,164)           5,226

     Net income                                                $     3,242,935            1,396,182       97,094          40,540

     Earnings per share (expressed in dollars) (note 4(17)):
          Basic earnings per share:
             Income before income tax                          $          1.20                 0.46         0.04            0.01
             Net income                                        $          1.06                 0.53         0.03            0.02
          Diluted earnings per share:
             Income before income tax                          $          1.09                 0.43         0.03            0.01
             Net income                                        $          0.96                 0.50         0.03            0.02




74
                                                                                                          EVA AIRWAYS CORP.
                                                                                              Statements of Changes in Stockholders' Equity
                                                                                                       For the years ended December 31, 2004 and 2003
                                                                                                               (expressed in thousands of dollars)
                                                                                                             NT dollars                                                                                                 US dollars
                                                                                                                                             Net Loss Not                                                                                              Net Loss Not Yet
                                                                                                                              Cumulative    Yet Recognized                                                                               Cumulative      Recognized
                                                       Common         Capital        Legal        Retained       Deferred     Translation   As Net Pension                  Common      Capital     Legal   Retained      Deferred       Translation   As Net Pension
                                                        Stock         Surplus       Reserve       Earnings        Credit      Adjustments        Cost          Total         Stock      Surplus        ve
                                                                                                                                                                                                   Reser    Earnings       Credit        Adjustments        Cost            Total

     Balance on December 31, 2002                    $ 24,250,000     2,352,079            -      2,637,542        115,228     5,788,070        (96,898)     35,046,021      875,214     80,261         -    76,252           3,431        (23,860)         (2,779)       1,008,519
     Appropriation of earnings (note 4(16)):
           Legal reserve                                          -             -    263,754       (263,754)              -            -              -               -            -          -     7,636     (7,636)                -           -               -                -
           Stock dividends                                  485,000             -          -       (485,000)              -            -              -               -       14,042          -         -    (14,042)                -           -               -                -
           Cash dividends                                         -             -          -       (485,000)              -            -              -        (485,000)           -          -         -    (14,042)                -           -               -          (14,042)
           Directors' and supervisors'
             remuneration                                         -             -          -        (10,000)              -            -              -         (10,000)           -          -         -      (290)                 -           -               -             (290)
           Employees' bonuses                                     -             -          -        (25,129)              -            -              -         (25,129)           -          -         -      (728)                 -           -               -             (728)
     Convertible bonds converted into common
       stock                                              2,799,330    250,170             -                 -            -            -              -       3,049,500       81,281      7,264         -          -                 -           -               -           88,545
     Transfer of interest-premium arising from
       conversion option exercised to capital
       surplus                                                    -      3,728             -                 -            -            -              -           3,728            -        110         -          -                                                            110
     Decrease in net equity due to the change in
       percentage of ownership in long-term
       equity investments under equity method                     -      (6,236)           -                 -            -            -              -          (6,236)           -       (185)        -          -                 -           -               -              (185)
     Recognized net loss not yet recognized as
       net pension cost                                           -             -          -                 -           -             -        (35,826)        (35,826)           -          -         -          -              -              -          (1,054)          (1,054)
     Deferred credit                                              -             -          -                        78,637             -              -          78,637            -          -         -          -          2,314              -               -            2,314
     Net income for the year ended December
       31, 2003                                                   -             -          -      1,396,182               -            -              -       1,396,182            -          -         -    40,540                  -           -               -           40,540
     Translation adjustments for the year ended
     December 31, 2003                                            -           -            -              -              -      (798,838)             -        (798,838)           -          -         -         -               -           845                -             845
     Balance on December 31, 2003                        27,534,330   2,599,741      263,754      2,764,841        193,865     4,989,232       (132,724)     38,213,039      970,537     87,450     7,636    80,054           5,745        (23,015)         (3,833)       1,124,574
     Appropriation of earnings (note 4(16))
           Legal reserve                                          -             -    139,618        (139,618)             -            -              -                 -          -          -     4,054     (4,054)                -            -              -                  -
           Stock dividends                                1,121,073             -          -      (1,121,073)             -            -              -                 -     32,551          -         -    (32,551)                -            -              -                  -
           Directors' and supervisors'
             remuneration                                         -          -                -     (10,000)              -            -              -         (10,000)           -          -         -      (290)                 -            -              -             (290)
           Employees' bonuses                                     -          -                -     (29,002)              -            -              -         (29,002)           -                    -      (842)                 -            -              -             (842)
     Cash subscription                                    2,200,000    330,000                -           -               -            -              -       2,530,000       64,735      9,710         -         -                  -            -              -           74,445
     Convertible bonds converted into common
       stock                                              1,858,856    159,944                -              -            -            -              -       2,018,800       55,734      4,816         -                            -            -              -           60,550
     Transfer of interest-premium arising
       from conversion option exercised to capital                                                                                     -              -
       surplus                                                    -      6,685                -              -            -                                       6,685            -        192         -                            -            -              -              192
     Transfer of donated assets of investee company
       under equity method to capital surplus
                                                                  -         30                -            -              -            -              -                30          -         1          -          -                 -            -              -                  1
     Increase in net equity due to the change in
       percentage of ownership in long-term equity                                                                        -            -              -
       investments under equity method                            -      3,462                -            -                                                      3,462            -        102         -                            -            -              -              102
     Increase in net equity due to recording net loss not
       yet recognized as net pension cost in long-term
       equity investments under equity method                                                                             -
                                                                  -             -             -            -                           -        20,429           20,429            -          -         -          -                 -            -            640              640
     Recognized net loss not yet recognized as net
       pension cost                                               -             -             -              -           -             -       (107,298)       (107,298)           -          -         -          -              -               -         (3,362)          (3,362)
     Deferred credit                                              -             -             -                    140,410             -              -         140,410            -          -         -          -          4,399               -              -            4,399
     Net income for the year ended December
       31, 2004                                                   -             -             -   3,242,935               -            -              -       3,242,935            -          -         -    97,094                  -            -              -           97,094
     Translation adjustments for the year ended
       December 31, 2004                                          -           -           -               -             -     (2,921,278)             -       (2,921,278)           -         -         -         -               -          (6,868)             -            (6,868)
     Balance on December 31, 2004                    $ 32,714,259     3,099,862     403,372       4,708,083       334,275     2,067,954        (219,593)     43,108,212     1,123,557   102,271    11,690   139,411          10,144        (29,883)         (6,555)       1,350,635




75
 Financial Statements




                                                  EVA AIRWAYS CORP.
                                                Statements of Cash Flows
                                      For the years ended December 31, 2004 and 2003
                                              (expressed in thousands of dollars)
                                                                                              NT dollars               US dollars
                                                                                       2004                2003     2004        2003
     Cash flows from operating activities:
      Net income                                                               $    3,242,935        1,396,182     97,094      40,540
      Adjustments to reconcile net income to net cash
        flow provided by operating activities:
        Depreciation                                                                 4,567,296       4,436,303    136,745     128,813
        Amortization and maintenance expense                                         1,159,289       1,118,123      34,709      32,466
        Recovery from loss on devaluation of short-term investments                            -       (62,236)           -    (1,807)
        Gain on disposal of short-term investments                                   (114,037)         (14,131)    (3,414)       (410)
        Loss on disposal and obsolescence of property, plant and equipment               19,785          20,402        592         592
        Gain on disposal of long-term equity investments                                 (1,016)        (1,869)        (30)        (54)
        Provision for unrealized exchange loss (gain) from long-term borrowings        (17,409)           1,774      (521)           52
        Investment income                                                            (605,629)       (303,001)    (18,133)     (8,798)
        Amortization of deferred gain from sale and leaseback of fixed assets        (174,800)       (231,566)     (5,234)     (6,724)
        Amortization of other deferred gain                                          (353,281)       (168,815)    (10,577)     (4,902)
        Proceeds from cash dividends on long-term equity investments                    116,606          94,811      3,491       2,753
        Deferred income tax benefit                                                  (100,220)       (203,717)     (3,001)     (5,915)
        Increase in notes receivable                                                     (8,809)       (74,809)      (276)     (2,202)
        Decrease (increase) in accounts receivable (including related parties)     (1,515,408)         723,174    (47,480)      21,282
        Decrease (increase) in other receivables from related parties                  (38,354)          87,705    (1,202)       2,581
        Increase in inventories                                                      (259,990)       (178,875)     (8,146)     (5,264)
        Decrease (increase) in prepaid expenses                                      (788,236)         102,133    (24,696)       3,006
        Decrease in other prepayments                                                    77,094          19,122      2,415         563
        Increase in other financial assets-current                                     (71,799)        (62,895)    (2,250)     (1,851)
        Increase in other current assets                                               (22,112)         (6,939)      (693)       (204)
        Increase in tax payable                                                        514,559                -     16,122            -
        Increase in notes and accounts payable (including related parties)             380,407         307,650      11,919       9,054
        Decrease in other payables (including related parties)                       (537,572)       (346,572)    (16,843)    (10,199)
        Increase in accrued expenses                                                   866,019           69,490     27,133       2,045
        Increase (decrease) in unearned revenue                                      2,106,946       (479,998)      66,013    (14,126)
        Increase (decrease) in other current liabilities                                 97,058        (30,661)      3,041       (902)
        Increase (decrease) in accrued employee retirement liabilities                 (63,156)          26,896    (1,979)         792
        Increase in other liabilities                                                  180,137       1,055,576       5,644      31,065
           Net cash provided by operating activities                                 8,656,303       7,293,257    260,443     212,246




76
Cash flows from investing activities:
 Decrease (increase) in short-term investments                               1,007,213    (2,302,299)       31,557 (67,755)
 Proceeds from disposal of long-term equity investments                          2,599        112,330            81    3,306
 Payments for purchase of long-term equity investments                       (148,317)      (122,545)       (4,647)  (3,606)
 Withdrawal of prepaid long-term equity investments                            360,000              -       10,529         -
 Proceeds from disposal of property, plant and equipment                     4,396,665          8,521      137,753       251
 Payments for purchase of property, plant and equipment                    (6,037,833)    (2,564,886)    (189,173) (75,482)
 Decrease in refundable deposits and other assets                               15,505        217,956           486    6,414
 Increase in deferred charges                                              (1,784,716)    (1,316,156)     (55,917) (38,733)
      Net cash used in investing activities                                (2,188,884)    (5,967,079)     (69,331) (175,605)
Cash flows from financing activities:
 Increase in short-term borrowings                                        14,067,352       23,037,158      440,748   677,962
 Increase in long-term borrowings                                          9,610,000        6,684,804      301,093   196,728
 Installment payments for purchase of property, plant and equipment      (2,000,584)      (2,035,148)     (62,681) (59,893)
 Payments of cash dividends                                                         -       (485,000)             - (14,042)
 Repayment of short-term borrowings                                     (16,546,910)     (23,648,434)    (518,436) (695,951)
 Repayment of long-term borrowings                                      (11,983,723)      (5,422,456)    (375,465) (159,578)
 Installment payments for purchase of inventories                        (1,915,872)        (932,288)     (60,027) (27,436)
 Redemption of lease liability                                             (416,161)                 -    (13,039)          -
 Proceeds from disposal of inventories                                              -       1,666,000             -   49,029
 Proceeds from issuance of common stock                                    2,530,000                 -      74,445          -
 Payment of employees' bonuses and directors' remuneration                   (39,002)         (35,129)      (1,132)   (1,018)
      Net cash used in financing activities                              (6,694,900)      (1,170,493)    (214,494) (34,199)
Effect of exchange rate changes on cash                                             -                -      19,488      3,147
Net increase (decrease) in cash and cash equivalents                       (227,481)          155,685       (3,894)     5,589
Cash and cash equivalents at beginning of year                             1,700,082        1,544,397       50,032    44,443
Cash and cash equivalents at end of year                               $ 1,472,601          1,700,082       46,138    50,032
Additional disclosure of cash flow information:
 Cash payments of interest (excluding capitalized interest expense)    $    1,892,176      2,261,506       56,652      65,665
 Cash payments of income tax                                                  $24,747         23,489          741         682
Supplemental schedule of noncash investing and financing activities:
 Current portion of long-term borrowings                               $ 12,480,472        8,018,157      391,029     235,967
 Inventory transferred from fixed assets                               $      3,175           56,154            99      1,653
 Translation adjustments                                               $ (2,921,278)        (798,838)       (6,868)       845
 Deferred credit                                                           $140,410           78,637         4,399      2,314
 Outstanding balance of lease liability resulting from lease assets    $ (6,787,889)                -    (212,673)          -




                                                                                                                                77
 Financial Statements



                                         EVA AIRWAYS CORP.
                                     Notes to Financial Statements
                                       December 31, 2004 and 2003
                   (amounts not otherwise specified are expressed in thousands of dollars)


     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 Law of the Republic of China (ROC). The Company commenced operations on July
        1, 1991.


        The Company's business activities are


        1.1   to engage in fixed-wing aircraft transport business, helicopter transport business, scheduled
              air transport business, and nonscheduled air transport business;
        1.2   to carry on the business of freight agent, including operations, transportation and mainte-
              nance;
        1.3   to repair and maintain fuselages, aircraft engines, navigational instruments and related equip-
              ment, 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;


78
   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;
   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 carry out any business which is not prohibited or restricted by the applicable laws and reg-
         ulations, excluding those requiring licensing.


   As of December 31, 2004 and 2003, the Company had hired 4,934 and 4,469 employees, respectively.


2. Summary of Significant Accounting Policies


   The Company prepared the accompanying financial statements in accordance with the Guidelines
   Governing the Preparation of Financial Reports by Securities Issuers and ROC generally accepted
   accounting principles. The major accounting policies and basis of measurement used in preparing
   the financial statements are summarized below.


   (1) Foreign currency transactions and translation


        The Company maintains its books in New Taiwan dollars. Transactions negotiated and settled
        in foreign currencies are recorded in New Taiwan dollars at the exchange rates prevailing on the
        transaction dates. Assets and liabilities denominated in foreign currencies at the balance sheet
        date are translated into New Taiwan dollars at the exchange rates prevailing on the balance
        sheet date, and unrealized exchange gains or losses are reflected in the statement of operations.




                                                                                                            79
 Financial Statements



           For equity investments in foreign subsidiary companies which are accounted for by the equity
           method, the translation differences resulting from translating foreign financial statements from
           the functional currency to the reporting currency are reported as cumulative translation
           adjustments. Cumulative translation adjustments are reported as a separate component of
           stockholders' equity.


       (2) US dollar financial statement presentation


           Financial statements stated in New Taiwan dollars are translated into US dollars at the
           exchange rates prevailing on the balance sheet date, with the exception of stockholders' equity
           accounts, which are translated at historical rates, and revenues, costs, and expenses, which are
           translated at the average exchange rates during the reporting period. Translation differences
           resulting from translation of the financial statements into US dollars are recorded as cumula-
           tive translation adjustments, a separate component of stockholders' equity.


       (3) 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 operat-
           ing units".


           The aircraft 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 translation
           differences resulting from the translation of the aircraft and the related US dollar loans into
           New Taiwan dollars at the exchange rate prevailing on the balance sheet date and historical
           rates are reported as cumulative translation adjustments. The aircraft stated in US dollars
           are depreciated by using the same method and the same useful lives, and the resulting US
           dollar depreciation amounts are translated into New Taiwan dollars at the current year's
           average exchange rate.


           The 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



80
    date. The translation differences resulting from the translation of the aircraft at the exchange
    rate prevailing on the balance sheet date and historical rates are reported as cumulative transla-
    tion adjustments. The leased aircraft stated in US dollars are depreciated by using the same
    method and the same useful lives, and the resulting US dollar depreciation amounts are trans-
    lated into New Taiwan dollars at the current year's average exchange rate.


    In addition, the translation differences resulting from the translation of the refundable deposits
    for aircraft leases into New Taiwan dollars at the exchange rate prevailing on the balance sheet
    date and historical rates are also reported as cumulative translation adjustments.


(4) Lease


    The Company sold and leased back aircraft under operating lease agreements. The translation
    differences resulting from the translation 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 disposing of 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 that should be deferred using the unearned gain on sales-leaseback account
    according to ROC Statement of Financial Accounting Standards (SFAS) No. 2, "Accounting for
    Leases", otherwise it should be taken as a loss.


    The Company sold and leased back aircraft under capital lease agreements. The disposal gains
    resulting from the differences between the US dollar selling price and the US dollar book value
    of the aircraft at the exchange rates prevailing on the selling date were deferred using the
    unearned gain on sales-leaseback account according to ROC SFAS No. 2, "Accounting for
    Leases", otherwise, if it was disposal loss, it should be recognized as a loss.


    The amortization of the unearned gain on sales-leaseback depends on the nature of the lease.
    For operating leases, the unearned gain should be amortized to rental expense using the lease
    term. For capital leases, however, the unearned gain should be amortized to depreciation
    expense using the leased property's useful economic life or lease term based on its nature.




                                                                                                         81
 Financial Statements



           The value of the leased property is the smaller of the following two values: (a) the present value
           of all future rental payments (less the lessee's executory costs) plus the bargain purchase price
           or lessee's guaranteed residual value and (b) the leased property's market value at the inception
           date of the lease.


           All leased property under capital leases should be depreciated. If the lease contract contains a
           bargain purchase option or allows the transfer of ownership at the end of the term, then the
           depreciation should be determined based on the leased property's useful economic life. The
           lease term is used otherwise.


           The lessee's periodic rental payment is composed of two parts: (i) the purchase of the leased
           property and (ii) the interest expense due to long-term or installment financing. Therefore,
           the lessee should recognize both a lease liability and interest expense in each period. The inter-
           est 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, Department of
              Treasury) on the inception date of the lease, then the interest expense is equal to the begin-
              ning balance of the lease payable times the maximum borrowing rate.


           b) If the value of the leased property is determined by its market price, then the interest
              expense is still equal to the beginning balance of the lease payable times the maximum bor-
              rowing rate. However, a service charge should be calculated by multiplying the beginning
              balance of the lease payable by 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 should calcu-
           late 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 above two paragraphs.


           The lessee's lease payable is determined by subtracting the interest expense and the service
           charge from the periodic rental payment.



82
    The lease liability should be classified as either a current liability or long-term liability, depend-
    ing on the expiration date.


(5) Cash and cash equivalents


    Cash includes cash on hand, savings and checking deposits, fixed time deposits, cash equiva-
    lents, etc. The Company considers all highly liquid debt instruments purchased with a maturi-
    ty of three months or less to be cash equivalents.


(6) Short-term investments


    Short-term investments are stated at the lower of aggregate cost or market value on the balance
    sheet date. Cost is determined by using the weighted-average method.


(7) 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.


(8) Long-term equity investments


    Long-term equity investments are accounted for by the equity method where the percentage of
    ownership in an investee is 20% or more. Otherwise, long-term equity investments are
    accounted for by the cost method.


    For a long-term equity investment accounted for by the equity method, where the investment
    cost is different from the Company's net equity in the investee company upon the investment,
    the difference is amortized over a period of 5 to 20 years. The period of amortization is
    assessed and determined on a case-by-case basis.


    When an investee issues new shares and the Company fails to subscribe to the new shares in

                                                                                                             83
 Financial Statements



           proportion to the Company's ownership percentage in the investee, thus resulting in a change
           of net equity in the investee, the resulting difference is accounted for as an increase or a
           decrease in capital surplus (or retained earnings, whenever there is no capital surplus resulting
           from long-term equity investment to be deducted) and long-term equity investment.


           Unrealized transaction gains or losses 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.


           The Company does not prepare consolidated financial statements to include the accounts of its
           subsidiaries over which the Company has, directly or indirectly, over 50% ownership and has
           controlling influence over their operating and financial policies and decisions. This is because
           all such controlled subsidiaries have total assets and operating revenues not exceeding 10% of
           the Company's non-consolidated total assets and operating revenues and thus are not consoli-
           dated in accordance with the ruling of the ROC Securities and Futures Commission (SFC).
           Under ROC SFC requirements, beginning in 1995, if the combined revenues and total assets of
           all such unconsolidated subsidiaries exceed 30 percent of the Company's unconsolidated total
           assets and operating revenues, then each individual subsidiary with total assets or operating
           revenues greater than 3 percent of the Company's respective unconsolidated amount shall be
           consolidated. Such subsidiaries shall be included in the consolidated financial statements
           thereafter, unless the percentage of the combined total amounts of such subsidiaries decreases
           to less than 20 percent of the Company's respective unconsolidated amounts. As of December
           31, 2004, the Company's non-consolidated subsidiaries included Evergreen Airline Services
           Corp., Evergreen Aviation Technologies Corp., Evergreen Airways Service (Macau) Ltd.,
           Evergreen Air Cargo Services Corp., and Hsiang-Li Investment Corp.


       (9) 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 related interest costs incurred



84
    prior to commencement of the use of such assets and includes such capitalized interest costs in
    the cost of related assets. Routine repairs and maintenance are charged to current operations.
    Major repairs and maintenance, additions, enhancements and replacements are capitalized in
    the cost of related assets.


    Depreciation of plant and equipment is provided over the estimated useful lives of the respec-
    tive assets using the straight-line method. Leasehold improvements are depreciated over the
    shorter of the lease term or estimate useful lives using the straight-line method. If the depre-
    ciable assets are still in use when the useful lives have expired, such assets can be depreciated by
    their scrap value over the estimated remaining useful lives. The useful lives of main property,
    plant and equipment were as follows:


    Buildings: 55 years


    Machinery and equipment: 3~18 years


    Aircraft: 18 years


    Rotable parts: 5~18 years


    Gains (losses) on disposal of such asset are presented as non-operating income and gains
    (expenses and losses).


(10) Deferred charges


    Deferred charges principally include costs for computer software, leasehold improvements,
    trademarks, air route development, training of navigators, and "D" check maintenance for air-
    craft and engines. 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 opera-
    tion or the lease terms.


(11) Derivative financial instruments



                                                                                                           85
 Financial Statements




            All derivatives are to be recognized as assets or liabilities on the balance sheet and measured at
            fair value. Change in the fair value of derivatives should be recognized either in net income or
            in deferred debit or credit (a separate component of stockholders' equity), depending on the
            designated purpose of the derivatives.


       (12) Other financial assets


            Other financial assets are financial assets other than cash and cash equivalents, accounts receiv-
            able and other receivables, long-term equity investments, and refundable deposits.


       (13) Employee retirement plan


            The Company has established a retirement plan pursuant to the ROC Labor Standards Law
            and contributed retirement funds consisting of 10.7% of total salaries from January 2003 to
            April 2003, and 11.9% of total salaries from May 2003, on a monthly basis to an account main-
            tained by the government-designated institution.


            The Company implemented ROC Statement of Financial Accounting Standards (SFAS) No.
            18, "Accounting for Pensions". SFAS No. 18 requires the Company to recognize a minimum
            pension liability, as of the balance sheet date, equal to the amount by which the actuarial pres-
            ent value of the accumulated benefit obligation exceeds the fair value of the retirement plan's
            assets, and to recognize net periodic pension costs. The net transition assets or obligations are
            amortized using the straight-line method over 15 years.


       (14) Convertible bonds


            The discount or premium on convertible bonds, which is measured as the difference between
            the issued price and par value, should be amortized over the period from issuance to maturity
            by using the interest method. The discount or premium on convertible bonds with a put
            option should be amortized over the period from its issuance date to the expiry date of the put
            option. The interest-premium of puttable convertible bonds, which is the difference between



86
    the specified put price and the par value, should be amortized by using the interest method
    and recognized as a liability over the period from the issuance date of the bonds to the expiry
    date of the put option.


    When the holder exercises the conversion option, the issuer should write off the unamortized
    discount or premium, issued costs, interest payable, pay-back interest from the holder, recog-
    nized interest-premium, and par value of the convertible bonds. The net written-off carrying
    amount of the convertible bonds over the par value of the common stock exchange certificate
    should be recognized as additional paid-in capital.


    If the holder of convertible bonds with a put option does not exercise the put option by the
    expiry date, the issuer should amortize the interest premium, which has been recognized as a
    liability, over the period from the expiry date to the maturity date by using the interest method.
    However, if the market price of exchangeable common stock is higher than the specified put
    price of the bond, the issuer should reclassify the interest-premium liability as additional paid-
    in capital.


(15) Revenue recognition


    Passenger ticket sales are recorded as unearned revenue, included in current liabilities, and rec-
    ognized as revenue when the services are provided.


(16) Income tax


    The Company adopted ROC SFAS No. 22, "Accounting for Income Tax". Under this method,
    the amounts of deferred tax liabilities or assets are recognized for future tax effects attributable
    to temporary differences, loss carryforwards, and investment tax credits. The measurement of
    deferred tax assets or liabilities is based on provisions of enacted tax law. A valuation
    allowance is provided on deferred tax assets that may not be realized in the future.


    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



                                                                                                             87
 Financial Statements



            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 when due.


       (17) Earnings per share


            The amount of earnings per share is computed by dividing the amount of net income attribut-
            able 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. On the contrary, anti-dilutive potential common shares are ignored in calculating
            dilutive 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 peri-
            od. When calculating diluted EPS, the net income (or loss) attributable to common stock-
            holders and the weighted-average number of shares outstanding shall be 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 (capitaliza-
            tion of retained earnings, additional paid-in capital, or employees' bonus).


       (18) Criterion to classify assets and liabilities as current or noncurrent


            Current assets are cash and other assets that a business will convert to cash or use up in a rela-
            tively short period of time, one year or one operating cycle, whichever is longer. Current liabil-
            ities are debts due within one year or one operating cycle, whichever is longer.

88
3. The Reason for and Effect of Accounting Changes: none.


4. The Important Accounts Are Listed Below:


   (1) Cash and cash equivalents


       The components as of December 31, 2004 and 2003, are summarized below:


                                                   NT dollars                   US dollars
                                                2004        2003         2004           2003
       Cash on hand                       $     69,278       61,411        2,170             1,807
       Cash in bank                           1,403,323 1,638,671         43,968         48,225
                                          $ 1,472,601 1,700,082           46,138         50,032


   (2) Short-term investments


       The components as of December 31, 2004 and 2003, are summarized below:


                                                   NT dollars                   US dollars
                                                2004        2003         2004           2003
       Mutual funds                       $ 5,350,027 6,193,776          167,623       182,277
       Publicly traded stock                           -     49,427                -         1,454
                                          $ 5,350,027 6,243,203          167,623       183,731
       Fair value                         $ 5,397,898 6,277,873          169,123       184,752




                                                                                                     89
 Financial Statements



       (3) Other financial assets-current


           The components as of December 31, 2004 and 2003, are summarized below:


                                                          NT dollars                US dollars
                                                       2004       2003         2004         2003
           Tax refund receivable                 $     200,174     85,450        6,272           2,515
           Non-operating revenues receivable            12,621         2,609        395            77
           Other receivables                            26,867    118,201           842          3,478
                                                       239,662    206,260        7,509           6,070
           Less: provision for doubtful accounts              -   (38,397)             -    (1,130)
                                                       239,662    167,863        7,509           4,940


       (4) Inventories


           The components as of December 31, 2004 and 2003, are summarized below:


                                                          NT dollars                US dollars
                                                       2004       2003         2004         2003
           Aircraft spare parts                  $ 8,312,905 7,718,824         260,454     227,158
           Consumables for use and merchandise
              for sale during flight                   400,846    403,957       12,559       11,888
           Fuel for aircraft                            35,887     29,362        1,124            864
           Allowance for obsolete inventories (1,503,005) (1,168,675)          (47,091)    (34,393)
                                                 $ 7,246,633 6,983,468         227,046     205,517


           The above inventories were fully insured.




90
(5) Long-term equity investments


      Details as of and for the years ended December 31, 2004 and 2003, were as follows:


                                                                                     2004

                                                           Book value               Cost              Investment income (loss)

                                        Shareholding
              Investee                 percentage (%) NT dollars US dollars NT dollars US dollars NT dollars US dollars

Accounted for by the equity method:

  Evergreen Airline Services Corp.           56.33    $ 388,721     12,179      111,174       3,483       51,468        1,541

  RTW Air Services(S) Pte. Ltd.              49.00        19,546         612     13,217        414          4,557         136

  Green Siam Air Services Co., Ltd.          49.00        24,253         760      9,421        295        15,215          456

  Evergreen Sky Catering Corp.               49.80       656,626    20,573      498,000      15,603       66,940        2,004

  Evergreen Airways Service (Macau) Ltd. 99.00           724,028    22,685      148,511       4,653      169,119        5,064

  Uni Airways Corp.                          17.92       194,067        6,080 3,277,238     102,680      (66,807)     (2,000)

  Evergreen Aviation Technologies Corp. 80.00          2,837,181    88,892 2,000,450         62,677      282,123        8,447

  Evergreen Security Corp.                   31.25        33,932        1,063    25,000        784          3,186          95

  Evergreen Air Cargo Services Corp.         60.00       886,065    27,762      726,098      22,750      132,133        3,956

  Hsiang-Li Investment Corp.                 100.00      949,140    29,738 1,000,000         31,331      (52,449)     (1,570)

  Uni Japan Co., Ltd.                        49.50         1,376          43      1,820         57           144            4

                                                       6,714,935   210,387 7,810,929        244,727      605,629      18,133

Accounted for by the cost method:

  Publicly traded securities

  Trade-Van Information Services Co., Ltd.    5.85        94,491        2,961    94,491       2,961              -           -

  Central Reinsurance Corp.                   6.14       312,349        9,786   312,349       9,786              -           -

                                                         406,840    12,747      406,840      12,747              -           -

Non-publicly traded securities

  Abacus International Holding Ltd.           2.11       115,743        3,626   102,233       3,202              -           -

  Sun Shine Finance Co., Ltd.                19.50        40,365        1,265    40,365       1,265              -           -

  Taiwan High Speed Rail Corp.                1.40     1,250,000    39,164 1,250,000         39,164              -           -

  Hsin-Tao Power Corp.                        9.69       484,612    15,184      484,612      15,184              -           -

  Technology Partner II Venture Capital Corp. 5.88        20,000         627     20,000        627               -           -




                                                                                                                                 91
 Financial Statements



       Chung Hwa Express Co., Ltd.                  10.00          20,000         627     20,000        627               -           -

       Taiwan Fixed Network Corporation              1.30         840,000    26,318      840,000      26,318              -           -

       Evergreen Development Corp.                   9.47         870,000    27,258      870,000      27,258              -           -

       Pan-Pacific Venture Capital Co., Ltd.         1.50          19,800         620     19,800        620               -           -

                                                                3,660,520   114,689 3,647,010        114,265              -           -

                                                                4,067,360   127,436 4,053,850        127,012              -           -

                   Total                                     $ 10,782,295   337,823 11,864,779       371,739      605,629      18,133



                                                                                              2003

                                                                    Book value               Cost              Investment income (loss)

                                                Shareholding
                     Investee                  percentage (%) NT dollars US dollars NT dollars US dollars NT dollars US dollars

       Accounted for by the equity method:

         Evergreen Airline Services Corp.           56.33      $ 367,818     10,825      111,174       3,272       54,142        1,572

         RTW Air Services(S) Pte. Ltd.              49.00          16,533         486     13,217        389          1,729          50

         Green Siam Air Services Co., Ltd.          49.00          22,495         662      9,421        277        12,056          350

         Evergreen Sky Catering Corp.               49.80         627,535    18,468      498,000      14,656       32,729          950

         Evergreen Airways Service (Macau) Ltd. 99.00             597,193    17,575      148,511       4,371      121,838        3,538

         Uni Airways Corp.                          17.92         275,717        8,114 3,277,238      96,446     (242,185)     (7,032)

         Evergreen Aviation Technologies Corp. 80.00            2,517,315    74,082 2,000,450         58,871      182,678        5,304

         Evergreen Security Corp.                   31.25          30,746         905     25,000        736          5,087         148

         Evergreen Air Cargo Services Corp.         60.00         775,532    22,823      726,098      21,368      113,770        3,304

         Hsiang-Li Investment Corp.                 100.00      1,014,332    29,851 1,000,000         29,429       21,230          616

         Uni Japan Co., Ltd.                        49.50           1,264          37      1,820         54           (73)          (2)

                                                                6,246,480   183,828 7,810,929        229,869      303,001        8,798

       Accounted for by the cost method:

         Publicly traded securities

         Trade-Van Information Services Co., Ltd.    5.95          96,074        2,827    96,074       2,828              -           -

         Central Reinsurance Corp.                   3.96         164,032        4,828   164,032       4,827              -           -

                                                                  260,106        7,655   260,106       7,655              -           -

       Non-publicy traded securities

         Abacus International Holding Ltd.           2.11         115,743        3,406   102,233       3,008              -           -




92
  Sun Shine Finance Co., Ltd.               19.50          40,365          1,188     40,365        1,188             -       -

  Taiwan High Speed Rail Corp.               1.62       1,250,000      36,786 1,250,000          36,786              -       -

  Hsin-Tao Power Corp.                       9.69         484,612      14,262       484,612      14,262              -       -

  Technology Partner II Venture Capital Corp. 5.88         20,000           589      20,000         589              -       -

  Chung Hwa Express Co., Ltd.               10.00          20,000           589      20,000         589              -       -

  Taiwan Fixed Network Corporation           1.30       1,200,000      35,315 1,200,000          35,315              -       -

  Evergreen Development Corp.                9.47         870,000      25,603       870,000      25,603              -       -

  Pan-Pacific Venture Capital Co., Ltd.      1.50          19,800           582      19,800         582              -       -

                                                        4,020,520     118,320 4,007,010          117,922             -       -

                                                        4,280,626     125,975      4,267,116    125,577              -       -

                  Total                              $ 10,527,106     309,803 12,078,045        355,446      303,001     8,798



     Details of increases in long-term equity investments of the Company in 2004 and 2003 were as
     follows:
                                                                                                  Unit: thousands of shares
                                                                    2004                                   2003

                                                                     Amounts                                  Amounts

                  Investee                            Shares NT dollars US dollars             Shares NT dollars US dollars

Accounted for by the equity method:

  Evergreen Air Cargo Services Corp.                         - $            -           -        5,039      51,398       1,512

  Uni Airways Corp.                                          -              -           -        4,871      48,714       1,434

  Hsiang-Li Investment Corp.                                 -              -           -            6          60          2

                                                                            -           -                  100,172       2,948

Accounted for by the cost method:

  Central Reinsurance Corp.                            11,553      148,317         4,647         2,029      22,373        658

                                                                   148,317         4,647                    22,373        658

                                                                 $ 148,317         4,647                   122,545       3,606
     Details of selling long-term equity investments of the Company in 2004 and 2003 were as
     below:




                                                                                                                                 93
 Financial Statements



                                                                                           Unit: thousands of shares
                                                                                      2004

                                                                          Cost                   Gain on disposal of
                                                                                               long-term investments

                    Investee                        Shares       NT dollars   US dollars      NT dollars    US dollars

       Accounted for by the cost method:

         Trade-Van Information Services Co., Ltd.     194           $ 1,583           50           1,016           30

         Taiwan Fixed Network Corporation           36,000          360,000       11,279           (Note)            -

                                                             $      361,583       11,329           1,016           30



            Note: On August 15, 2004, Taiwan Fixed Network Corporation decreased issued stock by 30%,
            and the Company withdrew NT$360,000 thousand (US$11,279 thousand) in cash in propor-
            tion to the Company's ownership percentage.


                                                                                      2003

                                                                          Cost                   Gain on disposal of
                                                                                               long-term investments

                    Investee                        Shares       NT dollars   US dollars      NT dollars    US dollars
       Accounted for by the equity method:

         Ever Voyage Transport Corp.                 6,550   $      108,552        3,195             834           24

       Accounted for by the cost method:

         Trade-Van Information Services Co., Ltd.     234             1,909           56           1,035           30

                                                             $      110,461        3,251           1,869           54



       (6) Property, plant and equipment


            In 2004 and 2003, the Company capitalized the interest expenses on construction of building
            and purchase of aircraft amounting to NT$140,923 thousand (US$4,219 thousand) and
            NT$56,556 thousand (US$1,642 thousand), respectively. The monthly interest rates on the
            above transactions were 0.23%~0.25% and 0.24%~0.30%, respectively.


            As of December 31, 2004 and 2003, insurance coverage for property, plant and equipment and
            inventories amounted to approximately NT$56,284,500 thousand (US$1,763,465 thousand)
            and NT$55,374,451 thousand (US$1,629,619 thousand), respectively.

94
(7) Lease assets


    The details were as follows:


   Lease item          Quantity        Lessor         Lease term      Terms of lease contract
Boeing 747 aircraft        3           GECAS          2004.4.13~     Pay rent monthly, and the
                                                      2016.11.12     lease term is equal to
                                                                     75% or more of the total
                                                                     estimated economic life
                                                                     of the leased property
Engines                    6         Taiwan Life      2004.6.29~     Pay rent every three
                                      Financing        2011.6.28     months, and the lease
                                       Co., Ltd.                     transfers ownership of
                                                                     the leased property by
                                                                     the end of the lease
                                                                     term
Computers                  1             IBM          2004.7.25~     Pay rent monthly,
                                                      2008.7.24      and the lease transfers
                                                                     ownership of the leased
                                                                     property by the end of
                                                                     the lease term


Discount rate of leased assets          Present value of leased assets at the transaction date
       3.50%~6.93%                      NT$6,426,010 thousand (US$201,335 thousand)
            1.76%                       NT$540,296 thousand (US$16,928 thousand)
            2.50%                       NT$41,844 thousand (US$1,311 thousand)


    The abovementioned aircraft and engines were financed by the sale and leaseback method. The
    differences (named unrealized gain on sale and leaseback) between sales price and book value
    of equipment were recorded as a reduction of depreciation expenses by lease term.




                                                                                                   95
 Financial Statements



           As of December 31, 2004, the details of leased assets were as follows:


                                                                NT dollars                    US dollars
           Aircraft                                              $6,426,010                        201,335
           Engines                                                   540,296                        16,928
           Computers                                                  41,844                          1,311
           Less: accumulated depreciation                          (405,791)                      (12,714)
                                                           $       6,602,359                       206,860


           As of December 31, 2004, insurance coverage for leased assets amounted to approximately
           NT$8,273,054 thousand (US$259,205 thousand).


           As of December 31, 2004, the book value and present value of lease liability were as follows:


                          Year due                              NT dollars                    US dollars
           As of December 31, 2005                                 $ 917,925                        28,760
           As of December 31, 2006                                   850,243                        26,639
           As of December 31, 2007                                   785,879                        24,623
           As of December 31, 2008                                   745,976                        23,372
           As of December 31, 2009                                   740,701                        23,207
           And after                                               4,738,715                       148,470
           Book value                                              8,779,439                       275,071
           Less: unrealized interest expenses                    (2,175,054)                      (68,147)
           Present value                                           6,604,385                       206,924
           Less: current portion                                   (578,659)                      (18,130)
                                                           $       6,025,726                       188,794


           There was no such transaction during 2003.




96
(8) Deferred charges

    As of December 31, 2004 and 2003, deferred charges, net of amortization, consisted of the fol-
    lowing:

                                                    NT dollars                   US dollars
                                                2004          2003           2004          2003
    Computer software                     $     309,968       244,614          9,712           7,199
    Leasehold improvements                      718,569          79,998       22,514           2,354
    Air flight route development cost            13,452          43,329          421           1,275
    Navigator training costs                     51,050       107,594          1,599           3,166
    Major overall for aircraft and
      engines                                 2,323,639     2,328,620         72,803          68,529
    Others                                       92,170          79,266        2,888           2,333
                                          $   3,508,848     2,883,421        109,937          84,856


(9) Short-term borrowings and payable on commercial paper

    Details were as follows:

                                                    NT dollars                   US dollars
                                                2004          2003           2004          2003
    Unsecured loans                       $   1,600,000     3,360,000         50,130          98,882
    Payable on commercial paper, net of
    prepaid interest of NT$42 thousand
    (US$1 thousand) for 2004 and NT$484
    thousand (US$14 thousand) for 2003           99,958       819,516          3,132          24,117
                                          $   1,699,958     4,179,516         53,262       122,999


    The interest expenses on the aforementioned short-term borrowings were calculated based on
    floating interest rates. For the years ended December 31, 2004 and 2003, the interest rates were
    0.90%~1.30% and 0.74%~1.47%, respectively. As of December 31, 2004 and 2003, the unused
    credit lines amounted to approximately NT$7,475,887 thousand (US$234,229 thousand) and
    NT$5,293,521 thousand (US$155,783 thousand), respectively.


                                                                                                       97
 Financial Statements



       (10) Long-term borrowings


           As of December 31, 2004 and 2003, the details of long-term borrowings were as follows:


                                                       2004                                              2003

                   Nature          Interest rate                                       Interest rate
                                        (%)          NT dollars       US dollars            (%)        NT dollars      US dollars

           Secured loans:
             Land and buildings 2.25~4.50           $ 1,400,000             43,864      3.25~6.00       1,820,000          53,561

             Aircraft

                   NT$ loans        1.76~4.95         4,689,046            146,914      1.22~5.83       6,246,285         183,822

                   US$ loans        1.95~3.58         3,426,787            107,365      1.95~2.72       4,907,551         144,425

                                                      8,115,833            254,279                     11,153,836         328,247

             Simulators

                   NT$ loans            -                         -                -    4.55~5.43         500,000          14,714

                   US$ loans        1.59~2.11           282,338              8,846      1.69~1.78         338,295           9,956

                                                        282,338              8,846                        838,295          24,670

             Subtotal                                 9,798,171            306,989                     13,812,131         406,478

           Unsecured loans:         1.25~6.50        10,401,823            325,902      1.30~6.50      14,464,611         425,680

           Total                                     20,199,994            632,891                     28,276,742         832,158

           Less: current portion                     (8,520,472)        (266,957)                      (6,818,157)      (200,652)

                                                $    11,679,522            365,934                     21,458,585         631,506



           As of December 31, 2004, the remaining balances of the loans were due as follows:


              Year due                                                        NT dollars                            US dollars
           2005                                                               $ 8,520,472                               266,957
           2006                                                                    4,785,213                            149,927
           2007                                                                    3,151,570                             98,743
           2008                                                                    1,724,502                             54,031
           2009                                                                    1,386,667                             43,446
           2010 and after                                                              631,570                           19,787
                                                                       $       20,199,994                               632,891


98
    Pursuant to the syndication loan agreement signed with Chiao-Tung Bank and fourteen other
    banks, the Company's liabilities-to-equity ratio and current ratio must be maintained at 300%
    and 75%, respectively, at the year-end. If any aircraft purchased with the financing of such
    loans is disposed of or sold, the Company must repay the loan immediately.


    As of December 31, 2004 and 2003, the unused credit lines for long-term borrowings amounted
    to NT$2,600,000 thousand (US$81,461 thousand) and NT$1,094,000 thousand (US$32,195
    thousand), respectively. The pledges for long-term borrowings are disclosed in note 6.


(11) Bonds payable


    Details of bonds payable as of December 31, 2004 and 2003, are as follows:


                         Description                                      NT dollars          US dollars

                                           Annual         Issue

        Guaranteed by                    interest rate    date         2004        2003     2004       2003

Bonds payable   Bank of Taiwan             6.450%        1999.01   $          -   500,000          -   14,714

Bonds payable   Central Trust of China     5.750%~

                                           6.080%        1999.07              -   300,000          -    8,829

                Bank of Taiwan             5.750%~

                                           6.080%        1999.07              -   400,000          -   11,772

Bonds payable   Farmers Bank               5.525%        2000.01       160,000    160,000    5,013      4,709

                Bank of Taiwan             5.525%        2000.01       400,000    400,000   12,532     11,772

Bonds payable   Shanghai Commercial

                & Savings Bank             5.470%        2000.07       300,000    300,000    9,399      8,829

                Chinatrust Commerical

                Bank                       5.530%        2000.07   1,000,000 1,000,000      31,331     29,428

                Bank of Panhsin            5.640%        2000.07       300,000    300,000    9,399      8,829

Bonds payable   International Commercial

                Bank of China               5.250        2000.12       500,000    500,000   15,666     14,714

                Cathay United Bank         5.250%        2000.12       500,000    500,000   15,666     14,714

                Bank of Taiwan             5.250%        2000.12       400,000    400,000   12,532     11,772




                                                                                                                99
  Financial Statements



                          Farmers Bank             5.250%     2000.12          400,000     400,000    12,532    11,772

        Bonds payable     Taipei Bank              3.700%     2001.07          500,000     500,000    15,666    14,714

        Bonds payable     Taiwan Cooperative Bank Floating    2004.02          500,000            -   15,666             -

        Bonds payable     Land Bank                2.25%      2004.07          500,000            -   15,666             -

                          Chang Hwa Bank           2.25%      2004.07          500,000            -   15,666             -

                          Taipei Bank              2.25%      2004.07          500,000            -   15,666             -

        Convertible

          bonds payable                               -       2003.06                 - 1,950,500          -    57,402

        Convertible

          bonds payable                               -       2004.08        4,473,154            - 140,150              -

        Subtotal                                                            10,933,154 7,610,500 342,550       223,970

        Less: current portion                                               (3,960,000) (1,200,000) (124,072) (35,315)

                                                                        $    6,973,154 6,410,500 218,478       188,655



             (a) Second convertible bonds payable


                   The Company issued NT$4.5 billion of Taiwan domestic convertible bonds on August 9,
                   2004, for which the final terms and conditions were as follows:


                   (i) Coupon rate: 0%


                   (ii) Issue period: From August 9, 2004, to August 8, 2009


                   (iii) Redemption: Except for the bonds that have already been redeemed, converted, or pur-
                       chased and cancelled, the bonds can be redeemed on the fifth anniversary of the issue
                       date at par value.


                   (iv) Redemption at the option of the Company: The Company may redeem the bonds in
                       whole, but not in part, provided that (1) the closing price of the common shares on the
                       Taiwan Stock Exchange for 30 consecutive trading days is at least 150% of the conver-
                       sion price then in effect, or (2) the bonds outstanding are less than 10% of the issue
                       amount.



100
   (v) Redemption at the option of the bondholders: The Company will, at the option of the
       bondholders, redeem such bond on the third anniversary of the issue date at par value.


   (vi) Conversion


   A) The bondholders can ask the Company to convert the convertible bonds to common
       stock during the period from one month after the issue date to ten days before the
       maturity date.


   B) Conversion price:


       The conversion price is set at NT$14.50, which is a premium of 111% over the base
       price. The base price is defined as the average of the closing prices of the issuer's com-
       mon shares traded on the Taiwan Stock Exchange for a period of 1, 3 or 5 trading days,
       whichever is chosen, immediately preceding but excluding the pricing date, which is
       July 26, 2004. The conversion price will be subject to adjustments in the event that any
       change occurs to the capital structure. As of December 31, 2004, the conversion price
       was NT$13.80.


(b) First convertible bonds payable


       The Company issued NT$5 billion Taiwan Domestic Convertible Bonds on June 6,
       2003, for which the final terms and conditions were as follows:


   (i) Coupon rate: 0%


   (ii) Issue period: From June 6, 2003, to June 5, 2008


   (iii) Redemption: Except for bonds that have already been redeemed, converted, or pur-
       chased and cancelled, the bonds can be redeemed on the fifth anniversary of the issue
       date at par value.




                                                                                                    101
  Financial Statements



                (iv) Redemption at the option of the Company: The Company may redeem the bonds in
                    whole, but not in part, provided that (1) the closing price of the common shares on the
                    Taiwan Stock Exchange for 30 consecutive trading days is at least 150% of the conversion
                    price then in effect, or (2) the bonds outstanding are less than 10% of the issue amount.

                (v) Redemption at the option of the bondholders: The Company will, at the option of the
                    bondholders, redeem such bonds on the third anniversary of the issue date at 100.6%.

            (c) Conversion

                (i) The bondholders can ask the Company to convert the convertible bonds to common
                    stock during the period from three months after the issue date to ten days before the
                    maturity date.

                (ii) Conversion price


                    The conversion price is set at NT$10.98, which is a premium of 104% of the base price.
                    The base price is defined as the average of the closing prices of the issuer's common
                    shares traded on the Taiwan Stock Exchange for a period of 10, 15 or 20 trading days,
                    whichever is the lowest, immediately preceding but excluding the pricing date, which is
                    May 9, 2003. The conversion price will be subject to adjustments in the event that
                    change occurs to the capital structure. The convertible bonds were all converted on
                    July 15, 2004.

        (12) Other installments payable

            The Company purchased aircraft spare parts by installments. As of December 31, 2004 and
            2003, the details were as follows:
                                                              NT dollars                    US dollars
                                                         2004            2003           2004           2003
            Installment amount payable            $ 1,173,635         3,089,507          36,772         90,921
            Less: current portion                     (679,730) (1,415,866)            (21,297)       (41,667)
                                                  $     493,905       1,673,641          15,475         49,254


102
    The current portion of other installments payable was recorded as other payables. As of
    December 31, 2004, the remaining balances of other installments payable were due as fol-
    lows:


     Year due                                            NT dollars                     US dollars
    2005                                           $         679,730                         21,297
    2006                                                     493,905                         15,475
                                                   $       1,173,635                         36,772


    The interest expenses of the aforementioned installments are calculated based on floating inter-
    est rates. For the years ended December 31, 2004 and 2003, the average interest rates were
    2.33%~3.19% and 2.11%~3.91%, respectively.


(13) Aircraft payable


    The Company purchased aircraft by installments. As of December 31, 2004 and 2003, the
    details were as follows:


                                                   NT dollars                      US dollars
                                               2004           2003               2004       2003
    Aircraft payable                     $ 14,656,281 17,651,552             459,200        519,469
    Less: current portion                   (1,891,957) (2,029,574)          (59,278)      (59,729)
                                         $ 12,764,324 15,621,978             399,922        459,740


    The current portion of aircraft payable was recorded as other payables. As of December 31,
    2004, the remaining balances of the aircraft payables were due as follows:


     Year due                                            NT dollars                     US dollars
    2005                                                $ 1,891,957                          59,278
    2006                                                   2,103,857                         65,917
    2007                                                   1,804,812                         56,547
    2008                                                   1,722,476                         53,967



                                                                                                       103
  Financial Statements



            2009                                                          1,749,252                             54,806
            2010 and after                                                5,383,927                           168,685
                                                                  $      14,656,281                           459,200


            The interest expenses of the aforementioned aircraft payable are calculated based on floating
            interest rates. For the years ended December 31, 2004 and 2003, the average interest rates were
            1.12%~6.77% and 1.11%~6.77%, respectively. The pledges for the aircraft payable are dis-
            closed at note 6.


        (14) Retirement plans


            Net retirement plan liabilities based on the actuarial computation at December 31, 2004 and
            2003, are detailed as follows:


                                                                  2004                               2003

                                                     NT dollars          US dollars     NT dollars          US dollars

            Benefit obligation:

                Vested benefit obligation        $        (86,487)            (2,710)       (70,741)             (2,082)

                Nonvested benefit obligation           (1,658,727)           (51,970)    (1,358,455)            (39,978)

                Accumulated benefit obligation         (1,745,214)           (54,680)    (1,429,196)            (42,060)

                Projected effects of

                salary adjustments                      (237,964)             (7,456)      (568,309)            (16,725)

            Projected benefit obligation               (1,983,178)           (62,136)    (1,997,505)            (58,785)

            Plan assets at fair value                     911,245             28,551         612,075             18,013

            Projected benefit obligation

                in excess of plan assets               (1,071,933)           (33,585)    (1,385,430)            (40,772)

            Unrecognized net

            transition obligation                         191,064              5,986         218,358               6,426

            Unrecognized pension loss                     443,831             13,906         666,878             19,626




104
Pension liabilities that

need to be accrued                               (396,931)            (12,436)      (316,927)             (9,327)

Accrued employee

retirement liabilities                $           (833,969)           (26,129)      (817,121)            (24,047)



The components of net pension cost are summarized as follows:


                                                           2004                               2003

                                              NT dollars          US dollars     NT dollars          US dollars



Service cost                              $        210,281              6,296         205,001               5,952

Interest cost                                       68,675              2,056          62,288               1,809

Actual return on plan assets                        (9,043)              (271)         (7,261)              (211)

Amortization:

    Unrecognized net transition obligation          34,958              1,047          34,323                997

Net pension cost

                                          $        304,871              9,128         294,351               8,547



Actuarial assumptions at December 31, 2004 and 2003, are summarized as follows:


                                                                    2004                             2003
Discount rate                                                           3.50%                            3.50%
Rate of increase in future compensation levels                          1.00%                            2.50%
Expected long-term rate of return on plan assets                        3.50%                            3.50%


As of December 31, 2004 and 2003, the retirement fund deposited in the Central Trust of China
was NT$911,245 thousand (US$28,551 thousand) and NT$612,075 thousand (US$18,013
thousand), respectively.




                                                                                                                    105
  Financial Statements



        (15) Income tax


            (a) The Company's earnings are subject to a maximum income tax rate of 25%. For the years
                ended December 31, 2004 and 2003, the components of estimated income tax benefits
                (expenses) were as follows:


                                                                 2004                                    2003
                                                       NT dollars       US dollars         NT dollars       US dollars
            Income tax expenses-current $ (539,914)                           (16,165)        (23,717)                (689)
            Income tax benefits-deferred                   100,220               3,001        203,717                5,915
                                                   $ (439,694)                (13,164)        180,000                5,226


            (b) For the years ended December 31, 2004 and 2003, the differences between expected income
                tax expenses at statutory rates and income tax benefits (expenses) as reported in the accom-
                panying financial statements were as follows:


                                                                     2004                                2003

                                                        NT dollars          US dollars      NT dollars          US dollars

            Expected income tax expenses                  $ (920,657)           (27,565)       (304,046)             (8,828)

            Gain on disposal of investments                   28,949                867            8,344                242

            Investment income recognized under

               equity method-unrealized                      151,407              4,533           75,750               2,199

            Surtax on undistributed earnings               (105,021)             (3,144)        (89,832)             (2,608)

            Dividend income                                   15,557                466           19,016                552

            Permanent difference in depreciation

               expenses                                      (94,549)            (2,831)       (133,421)             (3,874)

            Exchange losses recorded as translation

               adjustments                                   105,061              3,145          115,724               3,360

            Increase in investment tax credits                50,790              1,521           97,952               2,844

            Valuation allowance for deferred tax

               assets, net                                   467,629             14,001          222,461               6,459

            Others                                         (138,860)             (4,157)         168,052               4,880

                                                   $        (439,694)           (13,164)         180,000               5,226


106
(c) For the years ended December 31, 2004 and 2003, the deferred income tax benefits were as
    follows:


                                                         2004                                 2003

                                            NT dollars          US dollars       NT dollars          US dollars

Loss carryforwards                      $      (522,588)            (15,646)        (353,052)            (10,251)

Unrealized exchange losses                        32,676                978            (9,295)              (270)

Investment tax credits                          (112,772)            (3,376)         (40,394)             (1,173)

Provision for reducing inventory to

   market price                                   83,592              2,503            99,132               2,878

Purchase of fixed assets by

   installments, adjusted for tax purposes       126,967              3,801           134,887               3,917

Deferred gains on disposal of fixed

   assets, adjusted for tax purposes              24,716                740           166,537               4,836

Valuation allowance for deferred tax

   assets, net                                   467,629             14,001           222,461               6,459

Others                                                    -                  -       (16,559)               (481)

                                        $        100,220              3,001           203,717               5,915


(d) The components of the deferred income tax assets as of December 31, 2004 and 2003, are
    summarized as follows:


                                                         2004                                 2003

                                            NT dollars          US dollars       NT dollars          US dollars

Deferred income tax assets-current:

   Unrealized exchange losses           $         79,032              2,476            46,356               1,364

   Loss carryforwards                                     -                  -        522,588             15,379

   Investment tax credits                                 -                  -        112,772               3,319

   Allowance for obsolete inventories            375,751             11,773           292,159               8,598

                                        $        454,783             14,249           973,875             28,660




                                                                                                                    107
  Financial Statements



            Deferred income tax assets

                -noncurrent:

                Purchase of fixed assets by

                installments, adjusted for tax

                purposes                         $    631,511         19,786         504,544         14,848

                Deferred gains on disposal of

                fixed assets, adjusted for tax

                purposes                              324,300         10,161         299,584          8,817

            Less: valuation allowance for

                deferred income tax assets                  -              -       (467,629)        (13,762)

                                                 $    955,811         29,947         336,499          9,903


            The above-mentioned investment tax credits as of December 31, 2004, means that application
            tax credits for investing in equipment, personnel training, venture investment business, tourism
            or important investment business had been used in full.


            The Company's income tax returns have been examined and assessed through 2001 by the ROC
            income tax authority.


        (16) Stockholders' equity


            (a) Common stock


                As of December 31, 2004, 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 3,271,426 thou-
                sand shares were issued and outstanding.


                As of December 31, 2003, the Company's authorized share capital consisted of 3,000,000
                thousand shares of common stock, at NT$10 par value per share, of which 2,753,433 thou-
                sand shares were issued and outstanding.


                On June 11, 2003, the Company's stockholders resolved to transfer unappropriated earnings
                of NT$485,000 thousand by issuing 48,500 thousand shares of common stock, at NT$10 par


108
    value per share. The stock issuance was authorized by and registered with the government
    authorities on October 19, 2003.
    On June 15, 2004, the Company's stockholders resolved to transfer unappropriated earnings
    of NT$1,121,073 thousand by issuing 112,107 thousand shares of common stock, at NT$10
    par value per share. The stock issuance was authorized by and registered with the govern-
    ment authorities on September 13, 2004.


(b) Capital surplus, legal reserve, and restrictions on appropriations of earnings

    The details as of December 31, 2004 and 2003, were as follows:

                                                        2004                              2003

                                           NT dollars          US dollars    NT dollars          US dollars

Cash subscription in excess of par

   value of shares                     $      1,794,333             61,794      1,464,333             52,084

Gain on disposal of property, plant

   and equipment of investee company              1,668                 53          1,668                     53

Additional paid-in capital from bond

   conversion                                   420,527             12,382        253,898               7,374

Increase in net equity due to change

   in percentage of ownership in

   long-term investments under

   equity method                                234,600              6,816        231,138               6,714

Donated assets                                  648,734             21,226        648,704             21,225

                                       $      3,099,862            102,271      2,599,741             87,450


    The ROC Company Law 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 on shares issued above their par value. In addition, the transferred
    capital surplus from issuance of shares or other events in accordance with Article 8 of the
    ROC Securities and Exchange Law and the ROC Company Law can be credited to capital
    upon the condition that the aforementioned capital surplus has been approved by and regis-
    tered with the competent authority in the previous year.


                                                                                                                   109
  Financial Statements



              Furthermore, the amount of the capital surplus from the premiums on shares issued above
              their par value and earnings from gifts received credited to capital should not exceed 10 per-
              cent of the amount of paid-in capital in one year.


              The ROC Company Law stipulates that the Company must retain 10% of its annual earn-
              ings, as defined in the Law, until such retention equals the amount of authorized share capi-
              tal. This retention is accounted for by transfers to legal reserve, upon approval at the stock-
              holders' 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 capital when it reaches an amount equal to one-half of issued share capi-
              tal, 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 to appropriate of each year,
              and remuneration of directors and supervisors of not more than 5% of estimated earnings
              to appropriate of each year. Such appropriations can only be made after offsetting accumu-
              lated deficit and appropriation of legal reserve, and must be accounted for as a reduction in
              retained earnings.


              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 predicted earnings per share of a year in which stock dividends are distributed decline
              to 20% or working capital is low, a cash dividend of 50%~100% of the appropriated divi-
              dend is distributed and a stock dividend of 0~50% of the appropriated dividend is distrib-
              uted.


              The related information on employees' bonuses and directors' and supervisors' remunera-
              tion appropriated from 2003 earnings was as follows:




110
                                                                          2003
                                                      NT dollars                    US dollars
Employees' bonuses-cash                           $        29,002                           842
Directors' and supervisors' remuneration                   10,000                           290
                                                  $        39,002                         1,132


   If the related expenditures listed above were taken as expenses incurred in 2003, the related
   imputed earnings per share (after tax) would be NT$1.05 (US$0.03).


   According to ROC SFC regulations, beginning 2002, information related to the appropria-
   tion of employees' bonuses and bonuses for directors and supervisors can be found on web
   sites such as the Market Observation Post System after the stockholders' meeting.


(c) Unappropriated earnings, imputation credit account, and creditable ratio


   The details of unappropriated earnings as of December 31, 2004 and 2003, were as follows:


                                               2004                              2003
                                    NT dollars        US dollars    NT dollars      US dollars
Unappropriated earnings
   after 1998                     $ 4,708,083           139,411       2,764,841          80,054


   The details of the ICA for the years ended December 31, 2004 and 2003, and the related
   creditable ratio for the year ended, 2003 and 2002, were as follows:


                                               2004                              2003
                                    NT dollars        US dollars    NT dollars      US dollars
ICA                               $     116,460            3,649          158,274         4,658
                                               2003                              2002
Creditable ratio                              6.94%                              6.14%




                                                                                                   111
  Financial Statements



        (17) Earnings per share

                                                           NT dollars                                            US dollars
                                                               2004                                                2004
                                             Dollars           Shares Earnings per Share            Dollars        Shares Earnings per Share
                                      Before       After                 Before   After    Before        After                Before   After
                                      Income     Income                  Income Income     Income       Income                Income
                                       Tax         Tax                    Tax     Tax       Tax           Tax                  Tax     Tax
        Net income                 $ 3,682,629 3,242,935                                   110,258       97,094
        Basic earnings per share:
        Net income belonging to
          common stockholders $ 3,682,629 3,242,935 3,057,121            $ 1.20    1.06    110,258       97,094 3,057,121       0.04     0.03
        Diluted earnings per share:
        Net income belonging to
          common stockholders $ 3,682,629 3,242,935 3,057,121                              110,258       97,094 3,057,121
        Effect in the period of
        dilutive potential
        common shares                                      -   310,345                                           - 310,345
                                   $ 3,682,629 3,242,935 3,367,466       $ 1.09    0.96    110,258       97,094 3,367,466       0.03     0.03



                                                           NT dollars                                            US dollars
                                                               2003                                                2003
                                             Dollars           Shares Earnings per Share            Dollars        Shares Earnings per Share
                                      Before       After                 Before   After    Before        After                Before   After
                                      Income     Income                  Income Income     Income       Income                Income
                                       Tax         Tax                    Tax     Tax       Tax           Tax                  Tax     Tax
        Net income                 $ 1,216,182 1,396,182                                    35,314       40,540
        Basic earnings per share:
        Net income belonging to
          common stockholders $ 1,216,182 1,396,182 2,640,897            $ 0.46    0.53     35,314       40,540 2,640,897       0.01     0.02
        Diluted earnings per share:
        Net income belonging to
          common stockholders $ 1,216,182 1,396,182 2,640,897                               35,314       40,540 2,640,897
        Effect in the period of
          dilutive potential
          common shares                 6,827          6,827   180,937                        198             198 180,937
                                   $ 1,223,009 1,403,009 2,821,834       $ 0.43    0.50     35,512       40,738 2,821,834       0.01     0.02


        (18) Financial instruments

               (a) Derivative financial instruments

                    (i) As of December 31, 2004 and 2003, the nominal amounts and market value of deriva-
                             tive financial instruments were as follows:


112
                                                           2004                                    2003

                                                 Nominal             Market            Nominal              Market
                                                 Amount              Value             Amount               Value

Interest rate swap agreements               USD    120,000         USD    1,564      NTD    700,000    NTD (3,339)

  (recorded as other current liabilities) NTD 4,600,000

Option agreements (recorded as

  other liabilities)                        US             -       USD           -   USD     13,000    USD        136

Forward exchange contracts (recorded

  as other current liabilities)             USD     19,000         USD    (101)                    -                    -

Fuel price option agreements (recorded

as other current assets and other assets)                  -       USD    8,909                    -   USD       5,804


    (ii) The Company engaged in derivative financial instruments for the years ended
         December 31, 2004 and 2003. Details were as follows:

                                                           2004                                    2003

                                             NT dollars             US dollars        NT dollars          US dollars
Interest rate swap agreements:
  Interest expenses (recorded as nonoperating $ 36,225                    1,085             125,431              3,642
    expenses and losses - interest expenses)
  Interest receivable (recorded as other
    financial assets - current) and interest
    payable (recorded as accrued expenses)             6,875                  215             1,234                    36
Option agreements:
  Gain on derivatives (recorded as
    nonoperating income and gains)                    18,370                  550             6,183               180
  Future net cash outflow                                      -                 -          101,940              3,000
  Future net cash inflow                                       -                 -          103,650              3,050
Forward exchange contracts:
  Future net cash outflow                            609,657             19,101                    -                    -
  Future net cash inflow                             606,423             19,000                    -                    -
Fuel price option agreements:
  Net gains (recorded as adjustment of
    operating cost)                                1,264,493             37,859            1,081,494           31,402



                                                                                                                            113
  Financial Statements



              (iii) Purposes and risks of engaging in derivative financial instruments


                   1) Interest rate swap agreements


                     For the years ended December 31, 2004 and 2003, the Company had several interest
                     rate swap agreements to hedge its exposure to fluctuations in interest rates on long-
                     term borrowings.


                     The counter-parties to the swap transactions were international financial institu-
                     tions with excellent reputations. Management believed that the risk of loss due to
                     non-performance of the counter-parties was remote.


                   2) Option agreements


                     The Company entered into several interest rate and currency option agreements for
                     hedging purposes.


                     The related option agreements were all expired for the year ended December 31,
                     2004.


                   3) Forward exchange contracts


                     The Company enter into several forward exchange contracts to hedge the risk of
                     changes in exchange rates of foreign currency receivable and payables.


                   4) Fuel price option agreements


                     The Company entered into several fuel price option agreements to hedge the risk of
                     fluctuations in fuel price.




114
     (b) Fair value of non-derivative financial instruments


          There were no significant differences between the book value and the fair value for cash and
          cash equivalents, notes and accounts receivable (including related parties), other receivables
          (including related parties), prepaid expenses, other prepayments, other current assets,
          short-term borrowings, notes and accounts payable (including related parties), other
          payables (including related parties), tax payable, accrued expenses, unearned revenue, other
          current liabilities, current portion of long-term liabilities, and lease payable because of the
          proximity of their due dates.


          The details of other non-derivative instruments as of December 31, 2004 and 2003, are sum-
          marized as follows:


                                                                        2004
                                                      NT dollars                     US dollars
Non-derivative financial instruments          Book value      Fair value       Book value    Fair value
Assets:
  Short-term investments                      $ 5,350,027     5,397,898           167,623       169,123
  Long-term equity investments:
    Fair value can be estimated in fact           406,840       449,671            12,747         14,089
    Fair value can not be estimated in fact 10,375,455                  -         325,076                 -
Long-term liabilities:
  Bonds payable                                 6,973,154     7,290,045           218,478       228,406
  Long-term borrowings                         11,679,522 11,679,522              365,934       365,934
  Other installments payable                      493,905       493,905            15,475         15,475
  Aircraft payable                             12,764,324 12,764,324              399,922       399,922
  Lease payable                                 6,025,726     6,025,726           188,794       188,794
  Off-balance-sheet financial instruments:
    Letters of credit                                     -     517,952                  -        16,228
    Financing guaranty                                    -             -                -                -




                                                                                                              115
  Financial Statements



                                                                               2003
                                                             NT dollars                      US dollars
        Non-derivative financial instruments          Book value      Fair value      Book value     Fair value
        Assets:
          Short-term investments                      $ 6,243,203     6,277,873          183,731        184,752
          Long-term equity investments:
            Fair value can be estimated in fact           260,106       321,515            7,655             9,462
            Fair value can not be estimated in fact 10,267,000                  -        302,148                  -
        Long-term liabilities:
          Bonds payable                                 6,410,500     6,730,239          188,655        198,065
          Long-term borrowings                         21,458,585 21,458,585             631,506        631,506
          Other installments payable                    1,673,641     1,673,641           49,254            49,254
          Aircraft payable                             15,621,978 15,621,978             459,740        459,740
          Off-balance-sheet financial instruments:
            Letters of credit                                     -     571,480                  -          16,818
            Financing guaranty                                    -       80,000                 -           2,354


             (c) Methods and assumptions to measure the fair value of financial instruments


                  1) The fair value of short-term investments is market value.


                  2) The fair value of long-term equity investments is market value if they are traded on the
                      public market.


                  3) The fair value of convertible bonds is market value.


                  4) The fair value of long-term liabilities (except convertible bonds) is the discounted future
                      cash flows, and the discount rates during 2004 and 2003 were 2.93% and 3.18%, respec-
                      tively.


                  5) The fair value of letters of credit and financing guaranty is based on the contract.




116
   6) The fair value of the derivative instruments is based on the receipt or payment if the
       Company terminates the contracts on the balance sheet date, and generally includes the
       unrealized gain or loss of the unexpired contracts. Most of the derivative financial
       instruments have quotations from financial institutions.



(d) Off-balance-sheet credit risk financial instruments


   Financing guaranty: As of December 31, 2004 and 2003, the Company had provided a guar-
   anty for an investee company amounting to NT$0 and NT$80,000 thousand (US$2,354
   thousand), respectively. The guaranty was used to guarantee financial borrowings, which
   have an off-balance-sheet credit risk. Credit risk means the probable accounting loss from a
   counter-party who violates the contract and/or a significant decrease in the value of a mort-
   gage. If the credit line of the guarantee is used up and the borrowing still cannot be
   redeemed, the Company's credit risk is equal to the amount of the contract. The counter-
   party did not provide a mortgage when the Company promised to provide the financing
   guaranty.


(e) Concentrations of credit risk


   The Company's primary potential credit risk is accounts receivable. However, there was no
   concentration of credit risk because there was more than one counter-party. To decrease the
   credit risk of accounts receivable, the Company continually evaluated the collectibility of
   accounts receivable and recognized allowance for doubtful accounts. All bad debts were
   within management's expectations.




                                                                                                   117
  Financial Statements



      5. Transactions with Related Parties


          (1) Name and relationship of related parties

                                  Name                                            Relationship with the Company
          Evergreen Marine Corp.                                     Major shareholder
          Evergreen International Corp.                              Major shareholder
          Evergreen International Storage & Transport Corp.          Investee company of the Company's major shareholders
          Ever Voyage Transport Corp. (merged with Evergreen Ex-investee company accounted for by equity method
          International Storage & Transport Corp. on May
          1, 2003)
          Evergreen Airline Services Corp.                           Subsidiary
          RTW Air Services (S) Pte. Ltd.                             Investee company accounted for by equity method
          Green Siam Air Services Co., Ltd.                          Investee company accounted for by equity method
          Uni Airways Corp.                                          Investee company accounted for by equity method
          Evergreen Sky Catering Corp.                               Investee company accounted for by equity method
          Evergreen Aviation Technologies Corp.                      Subsidiary
          Evergreen Security Corp.                                   Investee company accounted for by equity method
          Evergreen Air Cargo Services Corp.                         Subsidiary
          Hsiang-Li Investment Corp.                                 Subsidiary
          Uni Japan Co., Ltd.                                        Investee company accounted for by equity method
          Evergreen Airways Service (Macau) Ltd.                     Subsidiary


          (2) Significant transactions with related parties


               (a) Revenue, costs and expenses


                     During the years ended December 31, 2004, and 2003, the Company's transactions with
                     related parties were as follows:


                                                              NT dollars                 US dollars         Percentage

                                Revenue                     2004         2003        2004        2003      2004        2003

               Evergreen Airline Services Corp.            $ 1,845        1,812          55           53          -           -

               Uni Airways Corp.                            43,454       36,175      1,301       1,050       0.06        0.06

               Evergreen Aviation Technologies Corp.       198,225      244,954      5,935        7,113      0.24        0.37




118
Evergreen Air Cargo Services Corp.          8,489    14,124      254           410     0.01        0.02

Evergreen International Corp.               3,639     4,279      109           124          -      0.01

Others                                      2,544     2,390       76           69           -          -

                                        $ 258,196   303,734     7,730     8,819        0.31        0.46



                                             NT dollars           US dollars          Percentage

               Cost                        2004      2003      2004       2003       2004       2003

Evergreen International Corp.            $ 45,785    60,350     1,371     1,752        0.06        0.11

Evergreen International Storage &

  Transport Corp.                          60,429    60,404     1,809     1,754        0.09        0.10

Evergreen Airline Services Corp.          807,976   778,477   24,191     22,604        1.14        1.37

Evergreen Sky Catering Corp.              811,471   711,913   24,296     20,671        1.14        1.25

Uni Airways Corp.                         707,956   476,859   21,196     13,846        1.00        0.84

Evergreen Aviation Technologies Corp. 3,892,027 4,018,645     116,528   116,686        5.47        7.07

Evergreen Air Cargo Services Corp.        358,647   244,663   10,738      7,104        0.50        0.43

Others                                      1,305     3,044       39            88          -      0.01

                                     $ 6,685,596 6,354,355 200,168      184,505        9.40     11.18



                                             NT dollars           US dollars          Percentage

             Expenses                      2004      2003      2004       2003       2004       2003

Evergreen International Corp.           $ 121,931    99,411     3,651     2,886        1.79        1.64

Evergreen International Storage &

  Transport Corp.                          21,809    15,814      653           459     0.32        0.26

Evergreen Airline Services Corp.           26,053    24,081      780           699     0.38        0.40

Evergreen Sky Catering Corp.               24,207    19,518      725           567     0.35        0.32

Uni Airways Corp.                         112,532     4,916     3,369          143     1.65        0.08

Evergreen Aviation Technologies Corp.      16,212    12,847      485           373     0.24        0.21

Evergreen Security Corp.                   43,108    43,288     1,291     1,257        0.63        0.72

RTW Air Services (S) Pte. Ltd.             47,956    40,165     1,436     1,166        0.70        0.66

Green Siam Air Services Co., Ltd.          75,931    68,873     2,273     2,000        1.11        1.14

Others                                     21,114     4,396      632           128     0.31        0.07

                                        $ 510,853   333,309   15,295      9,678        7.48        5.50




                                                                                                           119
  Financial Statements



            (b) Financing to others


                The Company's financing to a related party for the year ended December 31, 2003, was as
                follows:


                              Maximum balance          Ending balance                          Interest income

                            NT dollars US dollars NT dollars US dollars Interest rate (p.a.) NT dollars US dollars
            Uni Airways Corp. $ 150,000     4,414           -           -       4.0%            1,496            43



                There were no such transactions during the year ended December 31, 2004.


                There was no security for the abovementioned transaction.


            (c) Guaranty


                The Company's guaranties to a related party for the year ended December 31, 2004 and
                2003, were as follows:


                                                                                2004
                                                       Maximum balance                   Ending balance
                                                    NT dollars US dollars NT dollars                US dollars
                Uni Airways Corp.                   $ 80,000                2,507               -                 -


                                                                                2003
                                                       Maximum balance                   Ending balance
                                                    NT dollars US dollars NT dollars                US dollars
                Uni Airways Corp.                   $ 80,000                2,354        80,000            2,354


            (d) The abovementioned transactions with related parties were made with no significant differ-
                ence from those with non-related parties, but sometimes the payments were overdue.
                Receivables and payables as of December 31, 2004 and 2003, resulting from the aforemen-
                tioned transactions are summarized as follows:



120
                                                       NT dollars                            US dollars
                                                   2004           2003                 2004             2003
Accounts receivable-related parties:
Uni Airways Corp.                           $       13,809          7,208                    433           212
Evergreen Aviation Technologies Corp. 32,550                       25,302                   1,020          745
Others                                                  529         2,043                     16               60
                                                    46,888         34,553                   1,469         1,017
Other receivables-related parties:
Uni Airways Corp.                                  163,934       170,698                    5,136         5,023
Evergreen Air Cargo Services Corp.                   3,822          3,996                    120            117
Evergreen Aviation Technologies Corp. 48,246                       25,103                   1,512          739
Evergreen Airline Services Corp.                     8,538                104                267                  3
Evergreen International Corp.                        3,100          2,871                     97               85
Uni Japan Co., Ltd.                                 12,376                   -               388                  -
Others                                               2,166          1,056                     68               31
                                                   242,182       203,828                    7,588         5,998
Total receivables-related parties $                289,070       238,381                    9,057         7,015


Note: As of December 31, 2004 and 2003, the overdue accounts receivable transferred to other
receivables were NT$34,687 thousand (US$1,087 thousand) and NT$28,481 thousand (US$838
thousand), respectively. The aging reports for the abovementioned overdue accounts receivable
were as shown below:


                                                                          2004

                                                   Aging report for overdue accounts receivable

                        Amount           Over 1~6 months        Over 7~12 months               Over one year

                   NT            US        NT        US           NT             US            NT         US

                 dollars     dollars     dollars    dollars     dollars      dollars         dollars    dollars

Uni Airways Corp. $ 34,687       1,087    13,671          429    13,127               411       7,889       247




                                                                                                                      121
  Financial Statements



                                                                                          2003

                                                                   Aging report for overdue accounts receivable

                                    Amount              Over 1~6 months         Over 7~12 months                Over one year

                               NT            US           NT         US           NT             US             NT         US

                             dollars     dollars        dollars    dollars      dollars      dollars          dollars   dollars

            Uni Airways Corp. $ 28,481            838     6,548           193    10,425               307      11,508         338


                                                                        NT dollars                            US dollars
                                                                   2004           2003                  2004            2003
            Accounts payable-related parties:
               Evergreen International Corp.               $          9,435          19,208                   296            565
               Evergreen Airline Services Corp.                    160,386        143,871                    5,025          4,234
               Evergreen Sky Catering Corp.                        130,810        133,906                    4,098          3,941
               Uni Airways Corp.                                   142,577         111,437                   4,467          3,279
               Evergreen Aviation Technologies Corp.               520,568        362,676                   16,310         10,673
               Evergreen Air Cargo Services Corp.                   56,754           29,346                  1,778           864
               Green Siam Air Services Co., Ltd.                      7,490            6,635                  235            195
               RTW Air Services (S) Pte. Ltd.                         4,057            3,328                  127               98
               Others                                                   347            5,944                    11           175
                                                                  1,032,424       816,351                   32,347         24,024


            Other payables-related parties:
               Evergreen International Corp.                        28,350           24,033                   888            707
               Evergreen Airline Services Corp.                     32,827           30,097                  1,029           886
               Evergreen Sky Catering Corp.                           2,436               424                  76               12
               Uni Airways Corp.                                    19,406             5,049                  608            149
               Evergreen Aviation Technologies Corp.                  2,817            2,075                   88               61
               Evergreen Air Cargo Services Corp.                     2,328            2,356                   73               69
               Evergreen International Storage &
                  Transport Corp.                                     6,053            1,171                  190               35
               Others                                                 4,017            3,932                  126            116
                                                                    98,234           69,137                  3,078          2,035
            Total payables-related parties                 $      1,130,658       885,488                   35,425         26,059


122
6. Pledged Assets


   The book values of the pledged assets as of December 31, 2004 and 2003, were as follows:


                                                                 NT dollars              US dollars
      Pledged assets                 Object               2004           2003         2004      2003
   Land                       Long-term borrowings     $ 1,864,122     1,864,122      58,405     54,859
   Buildings                  Long-term borrowings       2,667,079     2,766,601      83,563     81,419
   Aircraft                   Long-term borrowings      34,488,218    43,818,771 1,080,559 1,289,546
   Engines-included in        Long-term borrowings         137,712     1,210,719        4,315    35,630
     machinery and equipment
   Simulators-included in     Long-term borrowings         343,221       602,274      10,754     17,724
     machinery and equipment
   Time deposit-included in Customs duty and
   other assets               contract performance         605,242       475,297      18,963     13,988
                              guaranties              $ 40,105,594    50,737,784 1,256,559 1,493,166


7. Commitments and Contingencies


   (1) As of December 31, 2004, the outstanding contracts for purchases of aircraft were as follows:

                                                        Total price of
                                                          contract
                                                      USD unit: thousand
   Entering date       Type of aircraft    Quantity        dollars               Prepayments (Note)
   June 2000           Boeing 777             7       US$ 1,260,851           NT$4,140,625 (US$129,731)
   March 2001          Airbus A330-200        2       US$ 234,269             NT$2,296,143 (US$71,941)
   April 2004          Boeing 777             8       US$ 1,491,496           NT$194,515 (US$6,094)
   November 2004       Airbus A330-200        1       US$ 138,608             NT$673,440 (US$21,100)


   Note: The prepayments were recorded as advances for purchases of equipment.




                                                                                                          123
  Financial Statements



         (2) As of December 31, 2004, the Company had issued a total of NT$5,929,116 thousand
             (US$185,767 thousand) in promissory notes to banks for obtaining guaranties for credit lines.
             As of December 31, 2004, the Company had obtained guaranties from ABN-AMRO Bank,
             Citibank, Bank of America, HSBC Bank, and Cathay United Bank amounting to NT$539,332
             thousand (US$16,898 thousand).


         (3) The Company entered into aircraft, land and engine lease contracts using the operating lease or
             capital lease method. As of December 31, 2004, the Company had paid $15,067,043 thousand
             (US$472,070 thousand) as refundable deposits. According to the contracts, future lease pay-
             ments in the following five years are as follows:


                      Year due                                    NT dollars                  US dollars
             As of December 31, 2005                             $ 8,688,920                      272,235
             As of December 31, 2006                                6,458,429                     202,351
             As of December 31, 2007                                4,303,728                     134,841
             As of December 31, 2008                                2,825,437                       88,525
             As of December 31, 2009                                2,528,859                       79,232
                                                                 $ 24,805,373                     777,184


      8. Important Damage Losses: none


      9. Important Subsequent Events: none




124
10. Others


   (1) Total personnel, depreciation and amortization expenses for the years ended December 31,
       2004 and 2003, are summarized below:


                                                             NT dollars
             By function                         2004                              2003
                                  Operating   Operating             Operating     Operating
              By item                cost     expenses    Total       cost        expenses    Total
       Personnel expenses
         Salaries                $ 3,310,924 2,812,000 6,122,924 2,939,446 2,305,920 5,245,366
         Insurance                  114,902   102,091     216,993    112,253      100,296     212,549
         Pension                    177,837   127,034     304,871    154,728      139,623     294,351
         Others (meal
             allowances, etc.)    1,161,367   198,255 1,359,622 1,051,435         195,271 1,246,706
       Depreciation               4,356,802   210,494 4,567,296 4,226,426         209,877 4,436,303
       Amortization                 942,512   216,777 1,159,289      867,837      250,286 1,118,123


                                                             US dollars
             By function                         2004                              2003
                                  Operating   Operating             Operating     Operating
              By item                cost     expenses    Total       cost        expenses    Total
       Personnel expenses
         Salaries                  $ 99,129    84,192     183,321     85,350       66,954     152,304
         Insurance                    3,440     3,057       6,497         3,260      2,912      6,172
         Pension                      5,325     3,803       9,128         4,493      4,054      8,547
         Others (meal
             allowances, etc.)       34,771     5,936      40,707     30,529         5,670     36,199
       Depreciation                 130,443     6,302     136,745    122,719         6,094    128,813
       Amortization                  28,219     6,490      34,709     25,199         7,267     32,466




                                                                                                        125
  Financial Statements



         (2) Reclassification


             Certain amounts of the financial statements for the year ended December 31, 2003, have been
             reclassified to conform with the presentation of the financial statements for the year ended
             December 31, 2004, for purposes of comparison. These reclassifications do not have a signifi-
             cant impact on the financial statements.


      11. Segment Financial Information


         (1) Diversified industry:


             The Company mainly operates an international air transportation business.


         (2) Geographic area information:


                                                               NT dollars                US dollars
                                                        2004           2003         2004          2003
             South East Asia:
                Operating revenue             $ 22,452,705           20,125,540   672,237       584,365
                Income from operations        $    1,348,505            941,137     40,374        27,327
             Identifiable assets              $         291,944         635,261      9,147        18,695
             North America:
                Operating revenue             $ 11,401,497            8,657,559   341,362       251,381
                Income from operations        $         684,772         404,856     20,502        11,755
             Identifiable assets              $         447,225         281,181     14,012         8,275




126
                                                    NT dollars                      US dollars
                                             2004              2003            2004             2003
    Other foreign areas:
       Operating revenue              $ 16,447,653         10,639,722         492,445          308,935
       Income from operations         $       987,842          497,549         29,576           14,447
    Identifiable assets               $    1,136,626           499,877         35,612           14,711
    Domestic:
       Operating revenue              $ 32,353,496         25,964,775         968,667          753,914
       Income from operations         $    1,943,144         1,214,199         58,178           35,256
    Identifiable assets               $ 105,046,906 102,724,786             3,291,252         3,023,095
         Total operating revenue $ 82,655,351              65,387,596       2,474,711         1,898,595
    Income from operations            $    4,964,263         3,057,741        148,630           88,785
    Investment income, net                    605,629          303,001         18,133            8,798
    Interest expenses                     (1,887,263)      (2,144,560)        (56,505)         (62,269)
    Income before income tax          $    3,682,629         1,216,182        110,258           35,314
    Total identifiable assets         $ 106,922,701 104,141,105             3,350,023         3,064,776
    Long-term equity investments          10,782,295       10,527,106         337,823          309,803
         Total assets                 $ 117,704,996 114,668,211             3,687,846         3,374,579


(3) Major customer information - The Company operates an air transportation business with no
    specific major customers.


(4) Export sales information - The main business of the Company is international air transporta-
    tion services. Consequently, it is not practical to separate export and domestic sales.




                                                                                                          127
      EVA Airways Corporation
      376 Sec. 1 Hsin-nan Rd. Luchu, Taoyuan Hsien, Taiwan
      Tel:886-3-351-5151
      Internet Address:http://www.evaair.com

      Taipei Office
      117 Sec.2, Chang-an E. Rd.,Taipei, Taiwan
      Tel:886-2-8500-2345

      Spokesman
      Kuo-Wei Nieh
      Executive Vice President , Public Relations Division
      Tel:886-2-2500-1122
      e-mail:kwnieh@evaair.com

      Deputy Spokesperson
      Julie Liu
      Junior Vice President, Public Relations Division
      Tel:886-2-2500-1122
      email: Julieliu@evaair.com

      Shareholder Service
      Address:B1, No.114, Sec.2 Cheng -kuo N. Rd. Taipei
      Tel: 02-2509-8720
      Fax: 02-2509-9180
      Internet Address :http://stock.evergreen. com.tw

      Auditors
      KPMG
      6F, 156, Sec.3, Min-sheng E. Rd. Taipei, Taiwan
      Tel:886-2-2715-9999
      Internet Address:http://www.kpmg.com.tw

      Financial Calendar
      Year ended 31st December 2004


128

				
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