European Aeronautic Defence and Space Company EADS N.V.

Annual Report 2001

Contents
EADS at a Glance 2
Key Figures 4
Message from the Chairmen 6
CEOs: Answering to our Stakeholders 8

Financial Markets & Policy 10
Strategic Overview 12
Market Overview 14
Feature Section 18
Business Structure 30

EADS in 2001
Revenues
Order intake
Order book
EBIT* Earnings before interest and taxes
Earnings per share*
Work force (number of employees)*pre-goodwill amortisation and exceptionals€30.8bn€60.2bn€183.3bn€1.7bn€1.16
102,967

Airbus 32
Military Transport Aircraft 38
Aeronautics 40
Defence & Civil Systems 44
Space 48

EADS International 52
Headquarters Organisation 54
Human Resources 55
Corporate & Social Responsibility 56
Corporate Governance 58

Financial Statements 60
Addresses 98
Shareholder Information 100

European Aeronautic Defence
and Space Company
The Group was formed in 2000 by the merger of aerospace and defence industry leadersin France, Germany and Spain sharing a common vision of the future. EADS is today thesecond largest global aerospace and defence group in the world. We hold commanding
market positions in civil and military aircraft businesses, space technology, helicopters,
missile systems and support services.
Our clear, integrated business strategy is focussed on growing profitably by meeting
and anticipating the needs of our customers. We employ world-class advanced
technology, and seek constant improvement to our products, processes and waysof doing business. In a fast-developing field, the diversity, creativity and openness
to change of our entire workforce are key competitive advantages.
Our actions are driven by one overriding principle: reliability. We deliver what
we promise.

We are committed to adding value for all our stakeholders by being
adaptable, market driven and innovative.

EADS 2001

1

EADS at a Glance
EADS is a leading global aerospace and defence company, with a unique portfolio
of products, systems and services ranging from space launchers, satellites and missile
systems to jet airliners, military transport and fighter aircraft, helicopters as well as
maintenance and conversion services.

AirbusMilitary Transport Aircraft

p.32–37

p.38–39

Description of the business

Now an integrated company, 80%
owned by EADS, Airbus produces theworld’s best-selling family of jet airliners.
Airbus jets have incorporated manytechnical breakthroughs, such as
fly-by-wire systems, and offer airline
operators considerable advantages
in terms of economical operationand environmental responsibility.

This Division produces light and medium
military transport aircraft and Airbus
military derivatives. It also manages the
A400M heavy military transport aircraft
programme. The A400M uses Airbus
technology and design, and will offer
unique operational flexibility.

Highlights of the year 2001

• 1,575 aircraft in order book

• 8 countries sign up for the A400M
heavy military transport programme• 85 firm orders and 12 customer
commitments for A380
• A380 development programme on
track and on budget• Contract signed for 8 C-295s for
the Polish Air Force and acquisitionof 51% in Polish PZL Warszawa
Okecje• A340-500/-600 to enter service
in 2002• CN-235s ordered for the
French Air Force• A318 readied for test flight• The CN-235 selected as the fixed
wing platform for the US Coast
Guard’s Deepwater programme• ACJ corporate jetliner takes
increasing share of its market

Airbus A380

A400M
2001 (in €bn)
Revenues

0.5

Order book1.3

Order book/revenues
2.6 Years

2

EADS 2001 EADS at a GlanceAeronautics

Defence & Civil Systems

Space

p.40–43

p.44–47

p.48–51

This Division includes Eurocopter, theworld number 1 in civil and militaryhelicopter orders, and manufactures
combat aircraft like Eurofighter, regional
airliners, general aviation and businessaircraft. The Division also provides
maintenance and aircraft conversion
for both military and civilian users.

This Division offers customers
a comprehensive portfolio of products
and services – missile systems, defence
electronics including surveillance andreconnaissance systems, radar, avionics
and electronic warfare products, secure
telecommunications, test solutions andsupport and engineering services forgovernmental customers worldwide.

This Division is the third-largest spacesystems unit in the world, designing,developing and manufacturing telecomand earth observation satellites, orbital
infrastructure and launchers, as well as
providing services related to spacetelecommunications and being active in
optronics and laser technologies.

• Eurocopter share of the civilian
market rises to 57%• MBDA created – the world’s
second largest missile systems
company• Ariane 4 gains new
reliability record• Over 500 military helicoptersin order book; major export
successes for Tiger and NH90
in 2001• Step 3 of the Ariane 5
programme approved by
the ESA Ministerial Conference• Strengthening of Systems andDefence Electronics activities
through partnerships andcontracts, e.g. in the UAV field• Skynet 4 successfully
accomplished• ATR Integrated created• Strengthening of secure telecom
business through acquisition of
the UK encryption leader (Cogent)• A €1.1 billion contract signed
for Eurofighter training aids

• Early 2002: UK MoD decides on
Skynet 5, Astrium to supply
satellites• Creation of a dedicated “Services”
unit, concentrating particularly on
outsourced government services

Eurofighter

Aster missile

Envisat2001 (in €bn)

2001 (in €bn)

2001 (in €bn)

Revenues

5.1

Revenues

3.3

Revenues

2.4

Order book

13.7

Order book9.1

Order book

3.8

Order book/revenues

Order book/revenues

Order book/revenues

2.7 Years

2.8 Years

1.6 Years

EADS 2001 EADS at a Glance

3Key Figures
In 2001, EADS outperformed all set financial targets. EBIT margin pre-R&D increased
to 12.1% and year-end net cash position was positive, at €1.5 billion.

• Revenues grew by 27% to€30.8 billion, a 10% growth
excluding Airbus 100% firsttime consolidation

Revenues

EBIT pre-goodwill
amortisation &exceptionals

Internallyfinanced R&D• EBIT margin pre-R&D increased
from 11.3% to 12.1%, in spite ofheavy non-recurring expenses• Internally financed R&D rose,as anticipated, from 5.5% ofrevenues to 6.6%, mostly due
to the development of the value
creating A380 programme• Free Cash Flow reached €774
million, and thus contributed tothe positive net cash position of€1.5 billion at year-end 2001

00* 01■ 30,798■ 24,20800* 01■ 1,694■ 1,39900* 01■ 2,046■ 1,339

All figures are in millions of euros*2000 is proforma figures; Airbus
100% consolidation from 2001

Net Result

Net Cash (debt)
position

Free Cash Flow

01

• Order book reached €183.3 billion,
a 39% growth from 2000, or 16%
excluding the effect of Airbus
100% first time consolidation00*■ 1,372■ (909)00*

01

EADS increased revenues by 27% in 2001
to €30.8 billion, exceeding the 20% growthtarget. Revenue growth was 10% without
the effect of the first time Airbus SAS 100%
consolidation, reflecting higher Airbus
deliveries and strong growth in all divisions
except for Space Division. EBIT (Earnings
before interest and taxes, pre-goodwill andexceptionals) of €1.7 billion was up by 21%,
surpassing the 15% initial growth target.
2001 EBIT includes the first time 100%
consolidation of Airbus and the planned
increase in Research & Development(R&D) expenses. Moreover, the EBIT target
was exceeded despite non-recurring
expenses at the Defence and Civil Systems
Division and at the Space Division, mostly
resulting from continuing restructuring
4

EADS 2001 Key Figures■ 1,533■ 2,143

00*

01

■ 774
■ 1,531

charges and exceptional depreciation ofassets; these were offset by a better than
expected performance in other Divisions
and by over €100 million of additionalsavings resulting from merger integration
synergies. Indeed, the Group hasoutperformed its target for 2001 and isahead of initial plans to deliver €600 millionof recurring synergies by 2004.
Net Result reached €1.4 billion, including
exceptional items namely from the Airbus
SAS and MBDA creation. Net result pregoodwill and exceptionals turned positivefrom a loss of €45 million in 2000 to €936
million in 2001, representing €1.16
earnings per share.

Order Intake

00

01

Order Book

■ 60,208■ 49,079

00

Revenue breakdown by market■ 183,256■ 131,874

01

Revenue breakdown by geography
11%

20%
10%

45%

80%

■ Civil 80%■ Defence 20%

Free Cash Flow reached €0.8 billion,
reflecting a strong operating cash flow andthe continuing tight control of working
capital requirement, while we havemaintained our investment effort to secure
our future growth.
At the year-end, we still posted a solid
positive net cash position of €1.5 billion.
Order intake was up 23% to €60.2 billion,
twice as high as revenues. This strong
performance illustrates not only the
success of the A380 project for which we
booked 85 firm orders; it also clearly
demonstrates the competitiveness of ourmilitary programmes in export markets:with the NH90 ordered by Portugal,

34%■ Europe 45%■ North America 34%■ Asia 10%■ Rest of the world 11%

Finland, Norway and Sweden, and theC-295 military transport aircraft ordered by
Poland. The €18 billion A400M project is
not included in the 2001 order intake.
At year-end 2001, the order book of€183.3 billion was unparalleled in theindustry; it represents more than six yearsof revenues and each of our five Divisions
has a backlog exceeding one year anda half of revenues.

EADS 2001 Key Figures5

Message from the Chairmen
Welcome to this report on the first full operating year of the European Aeronautic
Defence and Space Company.

Last year, we spoke of setting out on an exciting journey.
Today, we are happy to report on the first successful steps ofthat journey. Our financial performance and the strong market
position of our products equip us well to cope with a particularly
challenging environment for our industry.

Synergies achieved through Group sourcing deserve special
mention, and other initiatives include the exchange of bestpractice, technologies and knowledge throughout theGroup in the areas of Research and Technology (R&T),
manufacturing, engineering and product support.

Since its inception in July 2000, EADS has established itself
firmly as the second largest company in the aerospace anddefence industry, winning important new customers in export
markets, making new technological advances, launching new
products such as the Airbus A380 and markedly improving its
financial results.

As a leader in the aerospace and defence industry, EADS
continued to drive further integration and industry consolidationin 2001. Among other initiatives, we established Airbus as a fullyintegrated business and created MBDA, the world’s no. 2 missile
systems company.

We have made substantial progress with the integration of theGroup’s operations. About 670 merger integration projects are
currently under way to create value through inter-company
synergies and performance improvements and the more efficientuse of existing know-how and capital investment. This includes
276 projects with a direct impact on EBIT. The results alreadyachieved are well in excess of expectations.

We are well-positioned to face thefuture’s challenges, and we have the will
and resources to emerge all the stronger
for meeting them head-on.
Looking to the future
The year, of course, was dominated by the appalling events of
11th September. Inevitably, these have had an important impact
on our different businesses, and there is no doubt whatsoeverthat we face major challenges in the years ahead.

6

EADS 2001 Message from the Chairmen

Manfred Bischoff and Jean-Luc Lagardère

However, we have full confidence in the strategy laid down by
the Board, and we are further strengthening the Group’s
efficiency and profitability. Financial stability and soundness is ourclear priority. Airbus is already operating more efficiently as anintegrated company, and has confirmed the encouraging
potential for the A380 superjumbo; MBDA has led consolidationin the field of missiles; and we are forging new partnerships with
US industry – another of our major priorities.

Most importantly, we have a unique team of talented, resourcefuland committed people, capable of developing the new ideas,
products, services and technologies that our customers – and theworld at large – will need in the future.

It also remains a fact that we have a very strong portfolio
of products, which gives us a robust competitive position inworld markets, whatever the conditions may be. These include
new-generation commercial aircraft designed around ourcustomers’ requirements for economy, environmental safety andoperating efficiency, as well as technologically-advanced defence
systems which are able to contribute significantly to militaryeffectiveness and – ultimately – to political stability. We have,too, a growing capability to provide support services forcustomers both civil and military, in an increasing numberof countries and locations.

We are going forward, fully committed to safeguarding the bestinterests of our shareholders, customers and employees; and welook forward to reporting further progress in the coming months.

In short, we are well-positioned to face the future’s challenges,
and we have the will and resources to emerge all the stronger
for meeting them head-on.

Manfred Bischoff
Chairman

Jean-Luc Lagardère
Chairman

EADS 2001 Message from the Chairmen

7Answering to our Stakeholders
The Chief Executive Officers address some of today’s key questions.

What, for EADS, was the most important feature of the2001 financial results?
We have once again fulfilled the promises we made at the outsetof the year. EADS is one of the few companies in our industry tohave met, and even surpassed, its financial targets despite theevents of 11th September, with sales up more than 27%, EBIT*
up to €1.69 billion and a net cash position of €1.5 billion at the endof 2001. This was achieved despite some heavy non-recurring
expenses – mostly in the Space Division, but also in Defence
and Civil Systems Division. Moreover, our free cash flow
generation demonstrated again that we can self-finance the Airbus
A380 programme, without jeopardising our financial situation.
Can you point to some of the more significant events of
the year?
Our defence business strengthened in 2001. The biggest single
piece of news was the agreement by eight countries in
December 2001 to go ahead with the A400M military transport
aircraft. This is the first European aircraft in a market segment up
to now dominated by US suppliers. EADS is the prime contractor
for this programme which secures over €18 bn of revenues andstrong EBIT from 2002 to 2018; the overall project stake for EADS
being almost 90% (including 100% Airbus consolidation).

Our new-generation military helicopters – Tiger and NH90 –won contracts worth over €1.6 billion from Australia, the Nordic
countries and Portugal, against heavy competition. We now haveover 500 military helicopters in our order book. This shows justhow competitive our military products are in export markets –which is an excellent sign for the future.
Another significant step in defence was the creation of the
MBDA company in partnership with BAE Systems from the UK
and Finmeccanica from Italy. MBDA is the second-largest missile
company in the world. It has an outstanding order bookamounting to €12 billion – nearly six years’ revenues. We’ve also
reinforced EADS military telecom activity by the acquisition of
COGENT, the UK leader in communication encryption.
In our civil business, Airbus was the clear market leader in 2001,
taking 61% of global gross orders in value. The A380 programmealso got off to an excellent start, with 85 firm orders and 12
customers commitments being signed with nine different clients.
Importantly, 37 of those 85 were signed after the 11th September,demonstrating the strong market demand for this programme,
even in a downturn.
Even so, the slump in air travel is going to hurt thegroup, isn’t it?
It is a challenge – particularly for Airbus. Airlines are having severe
problems. One immediate effect is that we had to stabilise Airbus
deliveries planned now at 300 for 2002, whereas we werepreviously planning to increase our production rate significantly.

*EBIT pre-goodwill and exceptionals.

Future A380 building

8

EADS 2001 Answering to our Stakeholders

Philippe Camus and Rainer Hertrich

But air traffic indicators show a slight recovery at the beginningof 2002. Going forward, we believe that the traffic growth willcontinue at an underlying average rate of about 5% per year.
Moreover, new products like the Airbus A380 will be entering
service at exactly the right time to benefit from the upturn.
How well can EADS cope with the current uncertainty?
We start with some tremendous strengths – including a current
order book of €183.3 billion, or six years’-worth of revenues.
It’s bigger than any of our competitors’.
Immediately after 11th September, we implemented a number ofconcrete actions to secure cash and profitability; these include thefreeze of all investments and hiring (excluding for the A380
programme), and new cost saving plans. Thanks to the very highdegree of flexibility built into our production organisation,
including the high proportion of subcontracting, flexible work
agreements and contracts and short production lead times, we
are well prepared to weather the storm and secure future profits.
Moreover, we have a leading and growing defence business,
which will partly offset the effects of the civil aviation downturn.

2001, representing 20% of our total revenues. Looking at ourorder book, we foresee that our defence revenues will grow by
more than 50% by 2004, including the A400M programme to bebooked this year. At the same time, the profitability of the
defence business should dramatically improve as we complete
our restructuring and enter into the delivery phase for most of
our military programmes.
What are your priorities for the coming year?
Our highest priority is to continue to build shareholder value. We
will achieve this by growing our defence business and securing
our activities in commercial aircraft. This will also involve reducing
working capital, tight control of customer financing, a freeze on
capital expenditure except for the A380 programme and theactive control of all costs. Our management objective is simple:“Cost Down, Cash Up, Contracts In”.

How do you plan to develop your defence business?
We are already a defence leader, number two in Europe. Our
defence business (including military aircraft of all types andhelicopters, military satellites, missiles, defence electronics,
secured telecommunication) has strong positions in all segments
and produces combined revenues of €6.1 billion of revenues in

Philippe Camus
Chief Executive Officer

Rainer Hertrich
Chief Executive Officer

EADS 2001 Answering to our Stakeholders

9Financial Markets and Policy
During the year under review, the EADS share price went throughfour main phases.

Share price movements
Stock price evolution as of March 2002
EADS

CAC

DAX

IBEX

BASE 100
150

EADS Stock Price in €26.4

HIGH 25.07

24.5
22.8
21.0
19.3
100

17.5
15.8
14.0
12.3
10.5

50
Jul

Aug

Sep
Oct
2000

Nov

Dec

Jan

Feb

Mar

Apr

From January to June 2001, EADS shares traded in a range of€20 – €23. This was in fact a good performance at a time whenthe major stock indices were moving significantly downwards.
Then, for much of the summer, it varied between €23 and €25 –reaching its all year high of €25.07 thanks to the very encouraging
level of orders announced at the Paris Air Show.
The third phase started mid August, when the financial markets
began to worry about the economic outlook and airline passenger
traffic and wondered whether we had reached the peak of thecycle in the aerospace segment. The share price went down tothe €18/€19 level.
The fourth phase was triggered by the events of 11th September,
following which the financial markets became extremely
pessimistic about the economy and airline traffic. All markets
suffered, but EADS stock like that of other companies of theaerospace sector, was among the worst-hit, following the haltingof air traffic in the US and the unprecedented 30% fall in air trafficin September/October 2001.
10

EADS 2001 Financial Markets and Policy

May

Jun

Jul
2001

Aug

Sep

LOW 9.14
Oct
Nov

8.8
Dec

Jan

Feb
2002

Mar

Between 7th and 21st September, our shares lost half of their value,
reaching an all time low of €9.14.This was followed by a gradual
recovery, up to €13/14 at the end of 2001 implying that acatastrophic scenario was now behind us. This level is a low
price compared to historical high levels but still represents
a better performance than stock market indices (CAC 40 namely).
On 28th December 2001, the closing price was €13.64 –a recovery of 49.2% from the year’s low.
The average volume of trading for the year 2001 was around
1.7 million shares a day.
The continuing recovery of the economy and airline traffic at the
beginning of 2002 as well as defence growth opportunities (suchas Paradigm and A400M) have already started to support the
EADS stock price. Moreover, Airbus has confirmed deliveries
around 300 aircraft in 2002, which is close to the 2001 level (325).
The medium and long term fundamentals of the industry remain
solid with an expected underlying average air traffic growth ofabout 5% and good opportunities for aircraft replacement.

Axel Arendt
Chief Financial Officer
EADS Executive Committee Member
EADS Board Member

Managing challenge and securing growth
Following 11th September, EADS management
reacted immediately to safeguard value creationin this challenging environment.
Preservation of solid profitability and cash levels
Immediately after 11th September, EADS Finance createda new business plan based upon revised market assumptions.
As a first consequence this led to an adjustment of the Airbus
production capacity which is being implemented. Companywide, all major investments with the exception of the Airbus
A380 programme have been screened again, recruitment has
been frozen and additional cost saving targets have been set. All
Business Units have been challenged to generate and implement
additional measures in order to preserve solid profitability andcash levels.
The benefits from these additional cash and cost saving measures
will come on top of our goals set at the time of the EADS creation.
We confirm our target to deliver a recurring €600 million of
additional EBIT by 2004 resulting mainly from group-widepurchasing, production and R&D synergy projects, and we
expect that by 2002 we will have achieved half of this amount.
The €100 million of additional value created in 2001 (well aheadof target) vindicates this expectation. Combined with our strong
positive cash position at year-end 2001, this will enable us tocontinue with the ramp up of the A340-500/-600 production andthe development of the A380 programme – securing our
profitable revenues of tomorrow.

Value Based Management
To focus even more on cash, EADS has designed a newcorporate performance metric following the Value BasedManagement approach. The future top financial performanceindicator will be named ‘Cash Value Added (CVA)’ (definition
below). This will foster a company wide management cultureof value creation. Beginning with this year’s planning process wewill use CVA for our internal financial target setting.
Our financial policy is driven by our commitment tocreating value, which motivates the investment into
profitable businesses and stimulates synergies while
maintaining a healthy balance sheet.
Definition:
The Cash Value Added (CVA) will be calculated by subtracting
a “capital charge” – using the company’s weighted average costof capital – from the “Gross Cash Flow”. The CVA will be used
as a financial target and performance measure on EADS groupand division level. CVA/Delta CVA will be an element of thecompensation evaluation for executives from 2003 onwards.

EADS 2001 Financial Markets and Policy

11Strategic Overview
EADS today is the second-largest group in the global aerospace and defence
industry, with a unique range of products and services.

In 2001, EADS made enormous progress in
its portfolio strategy of strong, balanced growth
between commercial aerospace and defence.
This portfolio strategy means:• Taking a leading role within the aerospaceand defence Industry on a European,transatlantic and global level; and• Pursuing new defence opportunities.
Improved Market Position
We aim to achieve a highly visible position in all major aerospaceand defence markets around the world.
Central to this objective is our active leadership of European
aerospace and defence consolidation. The creation of the Airbus
integrated company has triggered increased efficiency andopportunities, whether in new commercial ventures such as theA380 or in the defence area with the A400M. The formation of
MBDA has established the world’s number two company inmissile systems. We shall continue to pursue the necessary
restructuring of the European industry, particularly in space(Astrium and EADS Launch Vehicles), military aircraft anddefence systems activities.

Beyond Europe, we are actively building international
partnerships in order to strengthen access to growing markets.
Such strategically-driven moves have included the acquisition
by our secured telecom subsidiary EADS Defence and Security
Networks (EDSN) of Cogent, the UK’s leading encryption andsecure communications company, which has strengthened ourparticipation in the Bowman UK defence telecommunication
programme. Other examples have been the purchase of a stakein Patria, the aerospace leader in Finland, PZL Warszawa Okecje
in Poland and Hawker Pacific of Australia. These market footholds
have already helped us to win export contracts worth over €2billion. And we are pursuing partnership opportunities in Russia,
Korea, Japan and China, as well as in the Middle East andSouth America.

From the outset, we have actively soughtinternational partnerships in order tostrengthen access to growing markets.
Expanding our access to the growing US defence market isa necessary component of our strategy. We are currently working
successfully with Northrop Grumman (on Unmanned Aerial
Vehicles (UAV) and NATO’s Alliance Ground Surveillance), with
Boeing (on Theatre Ballistic Missiles Defence) and Lockheed
Martin (on Medium Extended Air Defence System – MEADS),
as well as discussing partnerships on mission aircraft and defence
electronics.
We anticipate that this trend will continue as we pursue
opportunities in areas such as multi-mission aircraft, tankers,
and missile defence.

12

EADS 2001 Strategic Overview

Jean-Louis Gergorin
Executive Vice President
Head of Strategic Coordination
EADS Executive Committee Member

Our ambition is to make EADS the world
leader of aeronautics, defence and space.
Integrated Defence Strategy
With €6.1 billion of defence revenues in 2001, EADS is the clear
No. 2 European player. Our defence businesses, including
military aircraft and helicopters, military satellites, missiles anddefence electronics currently contribute about 20% of Grouprevenues. In the medium term, we aim to increase these defence
revenues by more than 50%.
Our defence strategy is focused on those mission areas
we believe represent the greatest potential growth.
Coordinated by its Defence Strategy Coordination Group,
EADS is harnessing resources from across the company in thefollowing fields: Intelligence (C4ISR), Deterrence and Power
Projection, Survivability and Homeland Security.

Looking to the Future
One year after the merger, EADS has secured a leadership
position in its commercial and defence businesses.
Our experience confirms our strategy, which is that a balanced
position between commercial and defence lessens our exposure
to market cycles and ensures steady growth over time. We can
expect to see EADS building value through organic growth,synergies between commercial and defence businesses, andthrough new alliances and acquisitions that increase our presencearound the world.

Current offerings in these areas are:• Intelligence (C4ISR): the Helios remote surveillance satellites,
the Eurohawk unmanned aerial vehicle (UAV), the Rubis andAcropol encrypted mobile communication networks and theC-295 Maritime Patrol Aircraft• Deterrence and Power Projection: the M51 ballistic missile,the Eurofighter combat aircraft1, the Scalp Storm Shadow cruise
missiles, the Meteor air-to-air missile, the A400M and theCN-235 and C-295 military transport aircraft• Survivability and Homeland Security: the Asterand Meads missile systems.

1

In addition, EADS is a major financial investor in Dassault Aviation (45.94%) which manufactures

Mirage and Rafale fighter aircraft, and the Falcon business jets

EADS 2001 Strategic Overview

13Market Overview
A turbulent 2001 offered both challenge and opportunity. The commercial businessfaced increased pressures, and in defence, the need was confirmed for new
and technologically-advanced solutions for defence strategy and procurement.
As the global environment improves, the EADS portfolio of leading commercial
and defence products is strongly positioned to emerge stronger and more profitable.

Competitive times for our clients
The large commercial aircraft market
2001 will be remembered as the first year since the Gulf War
in which the long-term growth in air passenger traffic suffereda sharp setback – with obvious repercussions for aircraft
manufacturers.

3.5

2.5

Through the years, the challenge for aircraft manufacturers has
been to provide new aircraft which are more cost-effective tooperate and can meet tougher environmental and noise
constraints. In the first half of 2001 the signs of a downturn inthe commercial aviation industry were already visible. Annualinternational air traffic growth dropped to 2% and US airlines,
for example, had already started predicting losses of up to
US$2 billion.

0.0
1970

While it is only to be expected that 2002 will be a slow one forthe industry, the longer-term prospects are positive. The US
Government has acted swiftly and has decisively limited damage
to airlines by offering, amongst other measures, a US$15 billion
rescue package (of which US$5 billion were cash injections andUS$10 billion were guarantees) and passenger numbers haverecovered more quickly than expected. Meanwhile, major US
airlines have reported “bottoming-up” of traffic. While in October
2001 air traffic declined to 78% of the previous year’s, it climbed
back to 85/90% in December 2001.

EADS 2001 Market Overview

1970–7911%

1980–90
5.8%

3.0Over the past 40 years, air traffic growth has averaged around
7.5% per year, as the world GDP (Gross Domestic Product) anddisposable consumer income have followed a consistent upward
trend. Deregulation allowed airlines to compete on price and,coupled with network expansion, to attract millions of new
customers. The large commercial aircraft market is a dynamic
one, driven by airlines’ changing policies on route structures,
demanding a wide and continually-evolving mix of aircraft types.

After the events of 11th September, however, airlines
experienced an additional sharp drop in traffic and have shed
their excess capacity.

14

RPK trillion

1998–2000
7.1%

Gulf war
Oil crisis &Iran/Iraq war

2.0
1.5

1991–97
5.8%

Asian crisis

Oil crisis

1.0
0.5
1975

1980

1985

1990

1995

2000

World Annual Traffic(in Revenue Passenger Kilometers, RPK trillion)
Source: ICAO

A solid recovery is expected, but to predict its timing is still adelicate task. On the one hand, US consumer debt andunemployment levels pose risks. On the other, the US economy
is expected to return to health during 2002 and customers’confidence in the air transport system is returning. This will
inevitably lead airlines, once they have rebuilt their cash positions,
to re-equip, since much of the capacity they have shed in the
downturn consisted of older aircraft, due in any case forreplacement. Airlines are also likely to continue the trend towards
harmonised fleets consisting of a smaller number of types.
In such an environment, the market-leading Airbus product family– covering all types of routes from ultra long-haul to short-haulwith latest-generation designs, outstanding performance, highly
cost-effective profiles and extensive operational commonality –should enjoy considerable competitive advantages.

Airbus A310 freighter

EC135 on a rescue mission

The defence market
The September events have accelerated a number ofdevelopments in the defence environment, re-definedtransatlantic strategic relationships between the US and Europe,and generated unique and technologically advanced needs forgovernments and defence ministries throughout the world.
Following a US government decision prior to 11th September,the US defence budget for 2002 has been raised towards
US$334 billion. Further increases are expected from the UnitedStates, including an investment of US$13.7 billion to responddirectly to the attacks. Still more raises – up to US$48 billion – in
US defence budget are expected for the budget year 2003 tocarry on the transformation of defence.
Now more than ever, Europe and many other governments
are increasing their efforts to analyse their role in global andhomeland security. There are a number of factors that will

Aircraft mission planninginfluence the market for defence equipment and services in the
short and medium term future.
First, there is a stronger awareness of European gaps in terms ofthe capabilities required of national armed forces. There will be
an increased emphasis on homeland protection (better C4ISR,
border surveillance, protection against NBC threats, perhaps
including some form of ballistic missile defence), force projection
and deployment – the ability to mount remote operations and to
supply and reinforce troops far from their home bases. This has
evident implications for the demand for military transport andmission aircraft, light, medium and heavy alike. In particular
military transport aircraft and military helicopters will be the key
strategic segments to ensure logistics support in the newforce projection policy.
Also relevant to power projection, the importance of advanced
technology has been confirmed by the conflict in Afghanistan,which has demonstrated the vastly increased ability of force
commanders to attack targets with total precision – bothenhancing the effectiveness of attacks and minimising casualties.
It has again underlined the value of intelligence derived fromsatellites, unmanned aerial vehicles (UAVs) and unmanned
combat aerial vehicles (UCAVs), real time command and control
systems, smart munitions and cruise missiles for deep strikes.
Together with the trend to increased system sophistication
there will be a request to improve integration, flexibility andinteroperability. The key will be the ability of complex systems
to provide a seamless flow of information at all stages from
intelligence gathering through decision-making andimplementation as well as throughout all systems in theoperational theatre. Electronic warfare and secured, deployable
telecom are amongst key assets to be procured.

Total US and Europe Defence Procurement Budget
Source: NATO, JP Morgan and others

EADS 2001 Market Overview

15Market Overview
continued

In addition, the market driver that remains is the pressure on
manufacturers to provide ever-increasing value for money,
despite the growing complexity of their products. This altogether
could increasingly lead to further consolidation within themarketplace, as well as to increasing numbers of international
partnerships. In addition, we expect many armed forces todiscover the virtues of outsourcing repair and maintenanceactivities, in the drive for cost-effectiveness across all
their operations.
We believe that EADS’ “young” defence portfolio is well-suited tocontribute to and to benefit from virtually all these trends in thesphere of national and international defence.
Other commercial markets
Civil Helicopters
The world-wide market for civil helicopters has been growing
during 2001 from 474 deliveries in 2000 to 495 in 2001. This ranges
from helicopters for corporate executives and diverse commercial
applications to offshore oil operators and state agencies including
police forces, medical services and fire fighting teams. Especiallyafter 11th September, the demand for parapublic helicopters has
increased significantly. Civil helicopter markets should remainstrong over the next five years.

Polyphem missile

16

EADS 2001 Market Overview

Civil Space
2001 saw difficult conditions in the field of space activity.
European institutional budgets were stable or at best slightly
increasing, and commercial orders were below last year’s level forseveral reasons: first, the slower-than-expected development of
the market for new telecommunications applications likebroadband; second, the ongoing consolidation and restructuring
process among major operators, the consequence of which was a
reduced or delayed demand for new satellites. In this market,
space manufacturers, including Astrium, the 75% controlled
EADS subsidiary, generally recognise an over-capacity situationin the telecom satellite market. The global economic environment
in 2001 affected overall demand for telecom satellite capacity.
The launcher segment was therefore affected by a decline in
the total number of commercial launches as well as from heavy
competition and pricing from launchers supplied from easterncountries and operated by US companies.

EADS 2001 Market Overview

17Airbus A300-600ST‘Beluga’

Astrium – Re-Entry
System IRDTOur ability to adapt swiftly and effectively to change

adaptable

New ways of thinking are second nature to companies who
depend on developing and using leading-edge technologies.
But at EADS with our multicultural organisation, this adaptability
and openness to change isn’t just a matter of technology;
it’s fundamental to the way we approach our whole business,
our customers and our other stakeholders. And it’s drivinga process of change that is already achieving results.
Improving the organisation
From day one, EADS has been aware that opportunities could
be created by sharing the resources, experience and know-how
of its Business Units. This process – Merger Integration – hasproved to be a principal building-block for the Group’s future andhas already produced substantial added value.
Some 670 Merger Integration projects including 276 with direct
impact on EBIT have already been implemented to strengthen thetransfer of best practice and the sharing of means, tools andknowledge between Divisions and Business Units. These include
initiatives in Research and Technology, manufacturing,
18

EADS 2001 Adaptableengineering, purchasing and product support – and during 2001,
they have already delivered value creation of more than€100 million additional EBIT – over 60% above target. Our goal isto achieve recurrent additional EBIT of over €600 million by 2004.
And our new marketing and sales operation – EADS International –is just one more example of the strengths of our merged operations.
Sharing knowledge, improving products
Another major advantage for the Group comes from its ability
to make use of technologies across national and Divisionalboundaries. Increasingly, this is being put into practice, with
Airbus skills, for example, being used to develop and produce
the A400M.
We are also among the global leaders in partnerships,
working closely and effectively with companies ranging fromBAE Systems, Thales, Finmeccanica in Europe to Northrop
Grumman and Boeing in the US; sharing information, risk andtechnology in order to produce better solutions for the customer
at a competitive price.

Eurofighter

EADS 2001 Adaptable19

In a year of dramatic change for the aerospace and defence industries, the abilityof EADS to adapt its operational approach swiftly and effectively has already proved
its value.

Keeping Airbus on course –and climbing
The appalling events of 11th September
impacted on the whole world, accelerating
the onset of a global economic recession,and aggravating the cyclical downturn inthe civil aeronautical sector in particular.
Thanks to its built-in organisational
production flexibility, Airbus has been able
to react quickly to this new environment.

First, Airbus conducted with its customers
an in-depth analysis of its order book, toconfirm that it is made up of orders from
customers who are still capable of taking
delivery of their aircraft as scheduled.
The company also decreased its customer
gross financial exposure for the third
consecutive year, thus ensuring greater
flexibility to cope with the current difficult
period.

A330 Air Tanker version

Engineer servicing an A310 engine

20

EADS 2001 Adaptable

Next, Airbus reviewed its production plansfor 2002 and 2003. Having foreseena cyclical downturn long before the eventsof 11th September, Airbus had alreadybegun to slow production ramp-up in thesummer of 2001, and currently expects todeliver approximately 300 aircraft in 2002,
whereas it was previously planned toincrease annual production rates up to
400 aircraft.

This is not a drastic reduction from the2001 level (325), but rather corresponds toa freeze of production rate. Organisational
flexibility has allowed Airbus to adapt tothis level with no dramatic effect on its
workforce, whose valuable skills will beessential to ensure its continued success inthe anticipated recovery.

The A400M, the large European militarytransport aircraft representing the biggest
contract for EADS since its creation, is an
outstanding example of our ability toadapt to these changing needs. The
A400M transforms civil technology intoa military product, proving our ability toachieve synergies through cross Business
Unit activities, and uses the same flexible
production system as used for Airbus.

Using established skills in a
new context
EADS is determined to grow the proportionand importance of its defence activities
within its business portfolio – adapting toa global environment in which security
and defence issues will be emphasised
much more than during the 1990’s.

At the same time, the A400M is able tomeet the requirements of eight nations
and their armed forces, as well as of otherfuture customers. And the product itself isvery adaptable: it can be used for thetransport of troops, materials or large
equipment, such as helicopters or armed
vehicles.

Envisat is placed in an Astrium anechoic
chamber to check compatibility of thevarious radio frequencies

EADS 2001 Adaptable

21

First flight
Airbus A340-600

A400M

What do customers want today?
How can we listen to their needs most effectively?
What are they likely to need tomorrow?

market driven
EADS is committed to the creation of maximum value forits stakeholders – customers, shareholders, employees, local
communities and the wider national and international public.
To achieve that aim we need to understand our stakeholders,
their businesses, their needs and their objectives. And our trackrecord of doing precisely that is unsurpassed in the industry.
The A380 has been designed in consultation with over 80
different airlines, following research among commercial airlines
managers, pilots, airport authorities – and even passengers. Our
civil aircraft are not only state-of-the-art; they are also backed bycustomer service oriented support.
Our family of helicopters, now complete, is designed to covervirtually all customer needs from civil and parapublic transport
to military and naval attack – while in the field of military aircraft,
we can offer not only the most advanced machines, but also
integrated logistic support and training simulators.
The military tactical transport aircraft A400M was conceived
not simply as a result of a military specification, but tailored to fit
a wide variety of defence requirements, answering the demandfor high payload, long range and high cruise speed.

22

EADS 2001 Market Driven

In the field of mission aircraft, we draw on all existing knowledge
and capabilities within the relevant business units. This “oneface to the customer” approach creates clear communication –and best technological solutions into the bargain. One example:
the bid to supply Maritime Surveillance Aircraft to the US Coast
Guard, where all contenders propose to make use of the EADS
aircraft CN-235 as the fixed-wing platform.
Other examples of major European projects in which EADS plays
a key role to meet new market requirements on the military side:• the Skynet 5 satellite programme, in which Astrium will offer a
new generation of secured telecommunications services to the
UK MoD• the UK MoD Future Tanker aircraft Bid offer, for which the
EADS solution meets all the Air Force specifications.
And as a global company with a worldwide reach and state-ofthe-art products, EADS Business Units can stay close to theircustomers, continuously meeting demands and offering tailormade solutions. Eurocopter, for example, has created a global
network of subsidiaries to keep in direct, day-to-day contact
with its individual regional markets.

Tiger HAP

EADS 2001 Market Driven

23

From mass-market air travel to the most advanced space systems, EADS is staying
ahead of market trends to deliver more of what our customers want in a morecost-effective form.

The ongoing success of Airbus has
been based on the company’s ability
to develop new programmes adapted
to market demand.
Airbus now offers a complete range ofcivil aircraft stretching from 100 to morethan 500 seats in capacity, with a uniquedegree of interoperability and common
servicing requirements. This choice,combined with the reduced operating
costs of Airbus aircraft and their ability
to conform to the strictest environmental
and safety standards, is in line withcustomers’ priorities as confirmed by thecurrent slow-down, since it allows airlines
to fine-tune their fleet organisation to
optimise efficiency.

24

EADS 2001 Market Driven

Hellas obstacle warning system forhelicopters

The latest programmes such as the A380,
the A340-500/-600 and the future military
A400M are all on track and runningon schedule.

A market opportunity that’s
literally out of this world
Satellite-based navigation, positioning andaccurate timing information is increasingly
significant in many sectors of commercial
activity – and the market potential is huge.
Estimates suggest that over the 20-year
period from 2005 (beginning of the
deployment phase) the European market
for satellite user equipment and related
services could be worth around€200 billion. The positioning signals
available today come from the UnitedStates’ Global Positioning System (GPS)and, to a lesser extent, the Russian Global
Navigation Satellite System (Glonass).

EC130Both were designed for military purposes
and neither system can provide the quality
and reliability of service to meet modern
demands for safety, efficiency andcompetitivity: Glonass currently operates
only around half its satellites and the GPS
signal is deliberately and variably
downgraded according to US strategic
imperatives.

The European Union has identified a needfor a global navigation service underinternational civil control, and the result is
Galileo, a proposed satellite navigation
system. The system will be interoperablewith GPS and leveraging position
information into other systems extends
the benefits of Galileo. For example, theintegration of a Galileo receiver into a
GSM handset will provide access to awhole range of personalised ‘position
related information services’.
Galileo is a major opportunity for the
space industry in the widest sense.
Through Astrium, with its extensive
experience of satellite navigation, EADSis playing a major role in the design anddevelopment of the system.

Columbus research laboratory for theInternational Space Station (ISS)EADS 2001 Market Driven

25

MAKO

NH90

Pushing the boundaries of technology andnew thinking

innovative

EADS today is working on some of the most advanced projects
in our industry; among them the A380, the Eurofighter, theA400M, the Herschel space telescope and the new generation
ram jet air-to-air missile.
For tomorrow, we have unique resources in our Research andTechnology Development activities – which are focused onstrengthening our core competencies and delivering improved
bottom-line benefits for customers.
A structure that delivers results
Operating both through the recently-established EADS Research
and Technology Network (tasked with achieving synergies
throughout the Group) and the Corporate Research Centre,
our research activities are currently concentrated on five coretechnologies which have been identified as major competitive
strengths.

26

EADS 2001 Innovative

These are:• Advanced materials, structures and manufacturing forcost-effective production;• Electronics, microelectronics/optronics and microwave
technologies to provide integrated, “smart” products;• The physics of flight, propulsion, energy and acoustics,
to aid the production of environmentally friendly aircraft
and high performance vehicles;• Systems and related services to create robust intelligent
systems which will extend our business opportunities; and• Information and software technologies and advanced
processes which will address economic and cost issues through“virtual product engineering”.
The EADS Corporate Research Centre with its national
centres and its Paris central management is increasingly seen
by European Governments and research establishments as amodel for international integration which respects national
strengths. Research co-operation across Europe and acrossGroup activities is strengthening our ability to deliver theadvances in technology that our customers demand.

ISS

EADS 2001 Innovative

27

EADS has a unique heritage of innovations – including the first turbine helicopter,the shrouded helicopter tail rotor (Fenestron), the first twin-engined widebody jet
airliner, the first fly-by-wire systems for commercial aircraft and military helicoptersand the application of lightweight carbon fibre composites in Airbus.
And tomorrow is another day . . .

Maintaining leadership in research
We are now moving to create the
EADS Common Research Programme
2002–2004. In the short term, this willallow us to select and refine our portfolio
of projects in order to optimise thecreation of added value.

Airbus laser welding

In 2002, we shall continue to apply our
R&T abilities to improving productivity,
performance and environmental
compatibility for the benefit of ourcustomers. We will also continue
to take an active role in the International
Aerospace Quality Group (IAQG).
Looking further ahead, we see an evergrowing demand for improvements insafety in many aerospace product areas,
and we shall be following a structured
approach, leveraging our considerable
intellectual capital, to provide theappropriate technology-based solutions.

28

EADS 2001 Innovative

Aerodynamic study in a wind tunnel

Safeguarding the future
Eurofighter is the most advanced
multi/swing-role combat aircraft for the
decades to come. By fully exploiting theunique direct voice input (DVI) principle
in latest-generation fighter aircraft, theEurofighter sets new standards in“care-free handling” and an optimum
human machine interface.

State-of-the-art avionics, the ‘glass
cockpit’ design, and the latest
technologies for electronic self-defence,
weapon deployment, navigation, systemmonitoring, and communications/data linkensure a high degree of efficiency. The
multiple redundant digital Flight Control
System (FCS) in conjunction with two
newly developed high-performanceengines safeguard both excellent flight
performance and reliability.
Uncovering the secretsof the Universe
Pioneering research and development
by Astrium is set to revolutionise spacetelescopes, allowing us to see further thanever into deep space, and into the mistsof time.

The European Herschel Space
Observatory, to be launched in 2007, will
carry an Astrium-built 3.5-metre-diameter
primary mirror, the largest imaging
telescope ever launched, and will bring
us closer to understanding how theearliest stars and galaxies formed
about 13 billion years ago.
This has been made possible by the use
Mars Express with Beagle 2
of silicon carbide (SiC), a highly stablematerial which allows the manufacture ofvery large ultra-lightweight mirrors. It is
the result of investments made by Astrium
in joint research and development
activities carried out with Boostec inFrance since 1992.

EADS 2001 Innovative

29

Business StructureWith the streamlined management structure that EADS has set up, the Heads
of five operating Divisions – Airbus, Military Transport Aircraft, Aeronautics,
Defence and Civil Systems, Space – report directly to the CEOs. Each of the fiveoperating Division Heads is responsible for profit and loss as well as for meeting
profitability targets.

Executive Committee
The CEOs are supported in theiroperational tasks by an Executive
Committee made up of the Heads of each
operational Division and of the Heads ofthe three major functions of the Company.
Such Executive Committee chaired by theCEOs is made up of 11 members.

AirbusMilitary Transport AircraftNoël Forgeard

Alberto Fernández

AirbusNoël Forgeard

EADS CASA(Military Transport Aircraft)
Alberto Fernández

Members of the Executive Committee

Back row(left to right)

Front row(left to right)

30

Dietrich Russell
François Auque Jean-Paul Gut
Aeronautics Division Space Division
EADSInternational
Axel Arendt
Chief Financial
Officer

EADS 2001 Business Structure

Rainer Hertrich
Chief Executive
Officer

Jean-Louis Thomas Enders Gustav Humbert
Gergorin
Defence and Civil Airbus Chief
Strategic
Systems Division Operating Officer
Coordination

Philippe Camus
Chief Executive
Officer

Alberto Fernández
Military Transport
Aircraft DivisionNoël Forgeard
Airbus President
and Chief
Executive OfficerAeronautics

Defence & Civil Systems

Space

Dietrich Russell

Thomas Enders

François Auque

EADS Military Aircraft
Aloysius Rauen

Systems and Defence Electronics
Stefan Zoller

Astrium

Eurocopter
Jean-François Bigay

EADS Services
Jacques Vannier

EADS Launch Vehicles
Philippe Couillard

EADS ATR
Jean-Michel Léonard

MBDA
Fabrice BrégierEADS CASA Espacio
Pedro Mendez

EADS EFW
Dierk Minke

EADS LFK
Werner Kaltenegger

EADS Space Services
Ulrich Aderhold

EADS Sogerma Services
Yves Richard

EADS Telecom
Jacques Payer

EADS Sodern
Henri Dugré

EADS Socata
Philippe Debrun

Antoine Bouvier
Joseph Kind
Evert Dudok
Chris Chant

EADS Cilas
Jacques Battistella

EADS 2001 Business Structure31

Airbus
In its first full year as an integrated company, Airbus continued to achieve healthy
commercial results. Airbus delivered a record 325 aircraft, captured a 61% share of the
global market in terms of order value and strengthened its profitability pre-R&D.
At the same time Airbus took immediate actions to preserve cash and margins in thecurrent commercial aviation downturn.

• 1,575 aircraft in order book• 85 firm orders and 12 customers
commitments for A380
• A380 development programme on
track and on budget• A340-500/-600 to enter service
in 2002• A318 readied for test flight• ACJ corporate jetliner takes
increasing share of its market

2001 Results
Airbus has been operating effectively on an integrated basis since the beginning of 2001
and its results are 100% consolidated in EADS accounts for the first time in 2001.
Mainly due to this consolidation, revenues increased by 38%. On a comparable basis,
they increased by 10%.
Airbus delivered a record 325 aircraft – 257 single-aisles and 68 wide-bodied andlong-range aircraft, generating revenues of €20.5 billion – making 2001 the first year
in history in which its revenues have exceeded €20 billion.
This continued healthy commercial result was achieved despite a general economic
slowdown, which deteriorated significantly after 11th September.
New orders
While the number of units ordered for Airbus was lower than the 2000 peak (520 grossorders), Airbus won – in line with its forecasts – 375 gross orders representing 53% of
the market in terms of aircraft units, and an impressive 61% market share in terms ofvalue. Firm orders booked in 2001 comprised 175 A320 family aircraft, 61 A300/A310
widebody twins, 54 long-range A330/A340s and 85 for the future A380.
The events of 11th September naturally produced a rapid change that radically affected
the airlines. A sharp downturn in air traffic numbers put most of them in a difficult
situation. Airbus decided to adopt a very conservative approach and to write off 101
orders from its order book – mostly with airlines in bankruptcy.

Airbus A340-600

AIRBUS
millions of euros

REVENUESEBIT*ORDER INTAKEORDER BOOK

EADS 2001 Airbus

2000**

14,856
1,412
34,158104,387

in number of aircraft

2001

2000

DELIVERIESORDER BOOK

325
1,575

311
1,626

*
**

32

2001

20,5491,655
50,279156,075

pre-goodwill amortisation and exceptionals
pro forma, excluding Airbus UK

variation

+ 38%
+ 17%
+ 47%
+ 50%

+ 5%
– 3%

Noël Forgeard
Airbus President and Chief Executive Officer
EADS Executive Committee Member
EADS Board Member

20.5bn €156bn€

revenues

order book

However the order book of 1,575 aircraft worth €156.1 billion at the end of 2001 is wellahead of the competition for the second year running. This gives Airbus more than
five years of production ahead at the expected rate of 2002. On the basis of detailed
discussions with individual customers, Airbus expects to deliver approximately 300 aircraftin 2002.
Key events of the year
Since July 2001, Airbus has been an integrated, stand-alone company with a single
management team. This has represented a major step forward for the company, which
has focused on getting the organisational structure up and running effectively.
Integration is now fully operational, with single reporting lines and an impressive teamspirit, Airbus is now a fully-fledged enterprise in its own right.
By 2004, Airbus will contribute €350 million to the EADS €600 million additional EBIT
target from Merger Integration value creation.
Airbus is also actively managing the downturn in the post-September civil aviation
market, and has taken company-wide measures to maintain profitability pre-R&D. These
include the stabilisation of deliveries at about 300 units, a pause in recruitment (except
on the A380 programme) and the implementation of a further number of ongoingcost savings plans. These steps, combined with highly flexible production systems,
should allow Airbus to maintain in 2002 production costs per unit, despite the decreasein deliveries. The overall Airbus target is to reduce costs by €600 million per year:€200 million through R&D reductions on non-critical programmes and €400 million in
overhead cost savings.
A318 Assembly line

Moreover, at a time when customers may require more financing facilities, Airbus has theflexibility to make decisions to support its customers on a case-by-case basis. Indeed, forthe third consecutive year, Airbus has reduced its customer financial gross exposure
despite the increase in deliveries, and now has the flexibility to increase this exposure, if
needed, under tight control.

EADS 2001 Airbus

33

Airbuscontinued

Product Milestones
ACJ
Increasing demand for flexibility and security are favouring the Airbus Corporate
Jetliner (ACJ), of which Airbus has now sold 30 units into a growing market. Uniquely,
the ACJ can be converted back to normal commercial format for airline use, and theaircraft is attracting interest from airlines willing to offer high-level corporate service tomajor customers.
A318
In mid January 2002 the 107-seat A318 successfully completed its maiden flight.
The A318 is the latest addition to Airbus range, and is designed to serve markets withfrequent services on low-density routes. As part of the Airbus 320 family, offering
identical conditions of comfort and operation, it allows customers to manage theirfleets more flexibly and to optimise load factors. Airbus has firm orders for 114 A318s,
which will begin to enter service in 2003.

34

EADS 2001 Airbus

Gustav Humbert
Executive Vice President
Airbus Chief Operating Officer
EADS Executive Committee Member

A340-500/-600
The A340-500 and -600 are the latest ultra long range, high-capacity additions to Airbus’
portfolio of products. Designed in consultation with airlines around the world, they offer
new levels of comfort and refinement as well as lower operating costs and better
revenue potential than their competitors. Airbus has firm orders for 62 of these aircraft.
Airbus currently has three A340-600 aircraft in flight test, where they have been meeting(and frequently surpassing) expectations. Certification is due in May 2002, and entry
into service in June 2002. The first A340-500 flew in February, should be certified in
October and is expected to enter service in November 2002.

Airbus A320 family

A330 and A340 final assembly line

EADS 2001 Airbus

35

Airbuscontinued

A380
The A380 programme to develop and manufacture the world’s first 555-seat aircraft
is running on time and within budget, particularly with reference to the objective of
making the first deliveries in first quarter 2006. Total development costs have been heldat US$10.7 billion, and the financing is almost entirely in place. Risk-sharing partners
have been found for up to US$3.1 billion of non-recurring costs.
More than 4,000 people are currently working on the project, and this will rise toa maximum of 6,500 by the middle of 2002. Offices have been built and facilities
including the final assembly line sites in Toulouse and Hamburg are under construction.
Airbus firmly believes that the civil aviation market will continue to grow strongly in themedium and long term, and is convinced that it will demand this aircraft for its
performance. This is confirmed by its customers who placed 85 firm orders during
the year (of which 37 came after the events of 11th September), as well as a further
12 commitments which are expected to be turned into orders in 2002. Since the A380
will be the youngest product on the market, Airbus will be able to integrate the latest
standards of security. Moreover, it will be delivered at a time when the civil aviation
market should have already recovered.

36

EADS 2001 Airbus

Above: Airbus A380
Top Left: A320 family cockpit
Below left: Airbus A318

A380 interiors

OutlookDownturn in the airline industry notwithstanding, Airbus believes that it is exceptionallywell-positioned to meet the present and future challenges of the market place.
Airbus has a unique range of products, stretching from 107 to 555 seats. Each on its own
offers the customer solid advantages of cost and performance; together, they forma family with a high degree of commonality and interoperability, for more efficient fleet
operation that can be responsive to market changes. Customers are increasingly focusing
on the economy and environmental friendliness of aircraft; and also on these criteria, theAirbus offering is exceptional.
Airbus also has a highly efficient work force. More than 45,000 employees are to deliver
300 new aircraft in 2002, as well as continuing to develop three major new programmes,
giving Airbus a dramatic advantage over the competition. Staffing arrangements andconditions of employment are flexible.
This flexibility, the complete range of Airbus products meeting market requirements,
and its robust backlog are key assets for the successful management of the current civil
aviation downturn.

EADS 2001 Airbus

37

Military Transport Aircraft
With an exceptional rise in revenues and orders, the Division confirmed its leadership
position in the field of medium military transport aircraft, and is preparing for the
A400M programme. Aerostructures won considerable business from otherimportant manufacturers.

• 8 countries sign up for the A400M
heavy military transport programme• Contract signed for 8 C-295 for
the Polish Air Force and acquisitionof 51% in Polish PZL Warszawa
Okecje• CN-235 ordered for the
French Air Force• The CN-235 selected as the fixed
wing platform for the US Coast
Guard’s Deepwater programme

The Division recorded revenues of €547 million; an increase of 73% on the previous year.
This was mainly due to new deliveries of the C-295 and to the conversion of two A310s
to VIP configuration for the Spanish Air Force, and was achieved with a small increase instaff (from 3,548 to 3,573).
Even more impressive was the rise in order intake from €0.5 billion to €1 billion– with the total order book growing from €0.9 billion at the end of 2000 to €1.3 billion
by the end of 2001. This represents more than two years’ production for the Division.
Military Transports
Heavy airlifters: A400M
The inter-governmental Memorandum of Understanding to develop the advanced
A400M military heavy transport aircraft was signed at the Le Bourget Air Show in June
2001, and on 18th December 2001, eight nations signed a contract for the development
and production of 196 aircraft – Germany (73), France (50), Spain (27), United Kingdom(25), Turkey (10), Belgium plus Luxembourg (8) and Portugal (3). The contract
enforcement is expected this year. The Division will provide technical and industrial
logistic support (ILS) leadership on the project – in which EADS has an 89.5% stake(including 100% Airbus consolidation) – as well as being responsible for the final
assembly line at San Pablo, near Seville, Spain.
Medium Military Transport Aircraft
The order for the Polish Air Force signed on 28th August 2001 for eight C-295 aircraft
together with product support services was a major step forward in the positioning of
this product as the world’s leading new-generation medium military transport. EADSCASA raised its stake in PZL Warszawa Okecje, the main Polish aeronautic company,
to 51%, thus increasing the overall industrial presence of EADS in east Europe.

A400M

MILITARY TRANSPORT AIRCRAFT DIVISION
millions of euros

REVENUESEBIT*ORDER INTAKEORDER BOOK
*
**

38

EADS 2001 Military Transport Aircraft

pre-goodwill amortisation and exceptionals
pro forma

2001

2000**

variation

547
1
993
1,320

316
(63)
493
873

+73%
–
+101%
+51%

Alberto FernándezEADS CASA Chief Executive Officer
Head of Military Transport Aircraft Division
EADS Executive Committee Member

0.5bn €1.3bn€

revenues

order book

The Division´s CN-235 and C-295 have achieved a market share of 71% in year 2001.
The first three C-295 aircraft were handed over to the Spanish Air Force, and four
CN-235s were delivered under an Industrial Collaboration Programme with Turkey.
Mission Aircraft and Derivatives
In February 2001, the Division flew for the first time the FITS (Fully Integrated Tactical
System) on board a modified CN-235 prototype aircraft. This system, a major innovation
for a new generation of Maritime Patrol, ASW (Anti Submarine Warfare) and related
mission aircraft, has been of capital importance for the success of the Division.
In March, the FITS-equipped C-295 ASW Maritime Patrol aircraft was selected as thewinner of the competition for the United Arab Emirates Navy’s Shaheen 1 project.
C-295

Also relevant is that the CN-235 has been selected as the fixed-wing platform by all threepotential main contractors – Boeing, Lockheed Martin and RAIS (Raytheon Aircraft
Integration System) – for the US Coast Guard’s Deepwater maritime patrol programme.
Moreover, the FITS system is included in the bids presented by Boeing and Lockheed
Martin. This contract is of major importance, for both qualitative and quantitative
reasons.
Within the A330 Airtanker consortium, the Division has presented a bid to the
UK Royal Air Force for the FSTA (Future Strategic Tanker Aircraft). This programme
has a huge economic magnitude – around €3 billion for aircraft – and under the
PFI (Private Finance Initiative) will provide the Royal Air Force with air refuelling services
for 27 years.

Mission system FITS (Fully Integrated
Tactical System)

The Division has also a substantial level of facility in aerostructures for various aircraft
manufacturers.
OutlookIn 2002, we expect to begin development work on the A400M, as well as the selectionof the prime contractor for the Deepwater programme. Following a successful 2001,
we expect even better results in the coming year, with EBIT continuing to improve andthe order book increasing substantially.

EADS 2001 Military Transport Aircraft

39

Aeronautics
Revenues rose by 8% to €5.1billion. Eurocopter consolidated its position as the global
market leader in civil helicopters as well as winning key military export orders. Military
Aircraft continued development and preparation for the first deliveries of the Eurofighter.
Demand for regional and light aircraft remained healthy. And our maintenance andconversion activities continued to make a valuable contribution.

• Eurocopter share of the civilian
market rises to 57%• Over 500 military helicoptersin order book; major export
successes for Tiger and NH90
in 2001

The Aeronautics Division achieved revenues of €5.1 billion with all Business Units
contributing to this increase. New orders at €5.3 billion were strong even after the
exceptional year of 2000.The order book stood at a healthy €13.7 billion at the year
end, covering the next three years’ business activities. Our involvement in three major
pan-European defence programmes – the Eurofighter combat aircraft and the Tiger
and NH90 military helicopters – and our growing ability to offer comprehensive
support packages for helicopters, fighters and transport and mission aircraft provide
a solid foundation on which to achieve our targeted growth in the defence sector.

• ATR Integrated created• A €1.1 billion contract is signed
for Eurofighter training aids

Eurocopter
In the civil and parapublic markets, 495 helicopters were delivered worldwide, of which
Eurocopter (the market leader), accounted for 280 – raising its market share from 51% to57%. This exceptional achievement is the result of Eurocopter’s product policy ofcontinuous improvements to meet customer requirements. Latest addition to the
product range during the year was the EC130 light single helicopter, one of the quietest
helicopters in the world. Development of the EC145, an extensively modified version of
the BK117, progressed well during the year.
In 2001, the market for military helicopters amounted to some US$7 billion andEurocopter captured 25% of the export market for military helicopters. With thedeliveries of NH90, Tiger and EC725 programmes, Eurocopter aims to capture about
20% of the market by 2008. Excluding the US, this will represent some 40% of the
defence helicopter market.

Engine maintenance

Major developments in the year included the preparations for serial production of
the Tiger 2-seat combat helicopter for the French and German armies. In December,
the Australian Government placed an order for 22 Tigers, underlining this machine’s
export potential. This €0.7 billion contract will be booked in 2002.

AERONAUTICS DIVISION
millions of euros

REVENUESEBIT*ORDER INTAKEORDER BOOK
*
**

40

EADS 2001 Aeronautics

pre-goodwill amortisation and exceptionals.
pro forma

2001

5,065
308
5,315
13,722

2000**

4,704
296
8,322
13,067variation

+8%
+4%
– 36%
+5%

Dietrich Russell
Executive Vice President
Head of Aeronautics Division
EADS Executive Committee Member

5.1bn €13.7bn€

revenues

order book

The NH90 – a new-generation transport helicopter for Army and Navy, developed in a
programme involving France, Germany, Italy and the Netherlands – is also getting readyfor serial production, with the first deliveries scheduled for the end of 2004. The NH90
also achieved a major export success worth €0.9 billion in total, with Portugal ordering
ten and the Nordic Standard Helicopter Project involving 52 aircraft for Finland, Sweden
and Norway, for which part of the order will be booked in 2002.
There are currently some 9,000 Eurocopter machines being operated by 2,065
customers in 133 countries. This creates a healthy market for our customer support
activities which represented 34% of our revenues in 2001, and whose availability, in turn,makes our aircraft more marketable in both new and second-hand markets.
Eurofighter

Military Aircraft:
Eurofighter
Eurofighter is the state-of-the-art, multipurpose combat aircraft for the coming decades
as well as an engineering project of key significance for its European partner countries,
which have ordered 620 units. EADS, with a 43% stake in the programme, produces
middle sections in Germany and starboard wings in Spain for all aircraft and assembles
the German and Spanish aircraft. During 2001, we focused on the final assembly andequipping of the first German Instrumented Production Aircraft, which will be deliveredin the second half of 2002, and on the first production aircraft for Spain. In April,
the contract was signed between the Eurofighter management company and Netma, thecustomers’ organisation, for the design, production and support of the Eurofighter
Aircrew Synthetic Training Aids (ASTA). We are actively marketing the Eurofighter topotential customers in Europe and Asia. Development of the multi-role functions of theaircraft continues and will be integrated in future contract tranches.
Tornado and other Fighter Upgrade Programmes
In September 2001, a contract for the basic integration programme of avionics for
the Tornados of the German and Italian air forces was signed by the Panavia
Tornado consortium and Netma. At the same time, we signed a contract for theRoyal Air Force’s Tornado upgrades, and are looking to extend this type of service
to other Tornado operators.
Other upgrade activities are being undertaken for the Hellenic Airforce’s F-4E,
the German F-4F, and for the Spanish Air Force’s F-5B and F-18 Hornets. On the basisof this experience we have submitted, together with Lockheed Martin, a proposal forthe modernisation of the Egyptian Air Force’s Phantoms.

EADS 2001 Aeronautics

41

Aeronautics
continued

The Mako Programme and Future Projects
The Mako programme is aimed at developing a next-generation family of high-performancetraining and light combat aircraft. Thirteen risk and revenue sharing partners have now
embarked on the definition phase based on a cooperation agreement with the UAE.
In November 2001, six countries mandated Alenia, BAE Systems, Dassault Aviation,
EADS and Saab to jointly undertake the European Technology Acquisition Programme(“ETAP”). This programme will identify, develop and evaluate the technologies which will
be required for flying weapons systems in the 2020s.
Other initiatives included an initial contract to develop a Global Positioning System(GPS)-controlled system for the more accurate targeting of drops from cargo aircraftat high altitudes, and the ground-testing of Autopol (automatic object recognition
for police helicopters).
Regional Aircraft
2001 saw the full integration of the ATR business in which we hold a 50% interest while our
Italian partner Finmeccanica holds the remaining 50%. The new structure will allow us to
substantially lower operational and production costs to better meet the needs of the turboprop market. We are already seeing benefits with EBIT which turned positive in 2001.
42

EADS 2001 Aeronautics

Twenty of the new ATR 42/72–500 family of aircraft were delivered in the course of theyear. The down-turn of commercial aircraft business and the events of September 11th
affected the turbo-prop aircraft less than the large airliners – being the low-cost alternativeon short-haul operations. In addition to new aircraft ATR has also marketed 23 secondhand aircraft during last year and has provided extensive product support to its worldwide
fleet of over 600 aircraft with more than 100 customers operating in 65 countries.
Light Aircraft
EADS Socata increased its revenues by 10% during 2001. This unit’s activity is divided
roughly 50/50 between Aerostructure and General Aviation, with the latter growing at ahigher rate. The USA accounts for 60% of revenues, and we are developing ourdistributor network in order to increase penetration in this market where the TBM 700
aircraft has been very successful over the last years. During the year, we signed asignificant agreement with Dassault, under which we became a risk-sharing partner in
the FNX business jet programme.
Above: Tiger
Top left: ATR: Close up front view
Bottom left: TBM 700
Top right: Eurofighter assembly line

Maintenance and Conversion
EADS Sogerma Services is initiating a facilities network for aircraft and components
maintenance, spanning an area from Bordeaux over the Mediterranean and Gulf regions.
The US business is developed through the Lake Charles maintenance operation facility
which was opened in 2000. We strengthened our position as an independent full service
provider by establishing partnerships with OEMs (original equipment manufacturers)
and gaining access to a new generation of products. And we are developing our totalcomponent support business for a growing number of customers.
EADS Sogerma Services also designs and manufactures cabin interiors at the Rochefort
plant. This Business Unit strengthened its military business in the C-130 market, with its
capabilities in structural and avionics modernisation. As an example, the ‘Blue Flash’
programme of modernisation and systems upgrade for 40 Mirage fighter aircraft.
With the delivery of a first converted Airbus A310-300 in February 2001 and the firstflight and certification of the first A300-600 in December 2001, EADS EFW confirmed its
ability to convert any widebody Airbus to fully-functional freight specification and offers
now all A300/A310 models with an OEM solution as freighter conversion.

EADS 2001 Aeronautics

43Defence and Civil Systems
2001 has been a year of intensive integration, restructuring and strategic adaptation –a year of severe market challenges but also of important successes which has provided
our businesses with a solid basis for growth and profitability in the years ahead.

• MBDA created – the world’s
second largest missile systems
company• Strengthening of Systems andDefence Electronics activities
through partnerships andcontracts, e.g. in the UAV field• Creation of a dedicated “Services”
unit, concentrating particularly on
outsourced government services• Strengthening of secured telecom
business through acquisition of
UK encryption leader (Cogent)With our unique portfolio of Intelligence, Surveillance, Command and Control Systems,
secure communication networks, missile systems and services we are very well
positioned to address the new demands in the post 11th September security anddefence markets. Defence and Civil Systems (DCS) Division recorded revenues of€3.3 billion, an increase of 15% compared with 2000 (€2.9 billion). This growth waslargely due to new activities in the telecommunications sector. With an order intake of€3.1 billion, our current order book covers business activity for more than two years.
A corporate structure to match our customers’ requirements
We have structured Defence and Civil Systems into four business areas in order toachieve optimal cost conditions for the anticipated build-up of mass-produced large-scale
programmes such as air-to-ground cruise missiles, surface-to-air anti-missile missiles andelectronic systems designed for Eurofighter. The four transnational business areas are:
• Missile systems – offering the world’s largest range of tactical missiles within
the newly-created MBDA and EADS LFK.
• Systems and Defence Electronics (S&DE) – covering surveillance and reconnaissancesystems, command and control systems, radar technology,
avionics and electronic warfare products.
• EADS Telecom – providing state of the art communication technology
for defence and security applications.
• EADS Services – supplying test solutions, support and engineering activities
for armed forces and government services, acting where required as an operator.
This customer-driven approach has already allowed us to achieve transnational synergies
and to contribute significantly to the harmonisation of European government purchases.

Milas missile

DEFENCE AND CIVIL SYSTEMS DIVISION
millions of euros

REVENUESEBIT*ORDER INTAKEORDER BOOK
*
**

44

EADS 2001 Defence and Civil Systems

pre-goodwill amortisation and exceptionals.
pro forma

2001

2000**

variation

3,345
(79)
3,081
9,094

2,909
(110)
3,857
9,722

+15%
–
– 20%
– 6%

Thomas Enders
Executive Vice President
Head of Defence and Civil Systems Division
EADS Executive Committee Member

3.3bn €9.1bn€

revenues

order book

We also anticipate that the new structure will enable us to broaden our markets by
establishing transatlantic programmes closely related to NATO’s Defence Capability
Initiative, and to meet our profitability objectives in 2002 and beyond.
A position of strength in our key markets
The integration and reorganisation of our activities has strengthened our competitive
position. Not only are we now a truly global player in the field of missile systems;
we are also the number three in Europe for systems and defence electronics.
We have continued to develop as one of the leaders in secure telecommunications
for military and public customers. Our Business Unit dedicated to services has been
geared up to meet the increasing demand of our national customers for outsourced
military facilities.
EADS has recognised from the very beginning the importance of synergies acrossthe various divisions to develop new business opportunities in defence and security,especially for more demanding customers looking for systems solutions. Initiatives havebeen launched to coordinate and integrate defence and security strategy globally,
and across business boundaries. Since 11th September, these have been focusing on
homeland security issues (including ballistic missile defence), commercial air transport
security – in cooperation with Airbus – and mission aircraft for intelligence andsurveillance, all areas where DCS has a key role to play.

Rubis (digital radio network system)

Missile Systems
An important development was the merger in December of Matra BAe Dynamics,
Aerospatiale Matra Missiles and the missile activities of Alenia Marconi Systems toform MBDA – the largest tactical missile systems company in Europe, and the secondlargest in the world.
Through MBDA, we offer a highly competitive product portfolio including criticalsubsystems such as warheads, seekers, propulsion, proximity fuses and guidancesystems. MBDA starts life with annual revenues of nearly €2 billion, a forward orderbook of approximately €12 billion, customers in 70 countries and 10,000 employees
at 12 main sites in Great Britain, France, Italy and the USA. MBDA also has strategic
alliances with the German missile industry (including LFK, an EADS and MBDA
common company) as well as in Spain, with the creation of a new missile company
named Inmize (owned by MBDA, Indra, Izar and EADS CASA).

EADS 2001 Defence and Civil Systems

45

Defence and Civil Systems
continued

Systems and Defence Electronics
This business was restructured and integrated in June 2001, to focus on four areas:
Airborne Systems; Intelligence, Surveillance and Reconnaissance (ISR) Systems;
Command, Control, Communication and Intelligence Systems; and Naval and Ground
Systems. Additionally, the unit Business Development and International secures S&DE’scompetitive position in the global markets.
This business now has the critical mass to achieve profitable growth at international level.
It has become the key European player in Unmanned Aerial Vehicles (UAVs) covering
all types from light tactical to strategic long range, and is working on the EuroHawk ina joint project with Northrop Grumman.
Other contracts S&DE has been awarded include core sensor and combat management
systems for the German K130 corvette, the Eurofighter Defensive Aids Subsystem(under a €700 million contract) and the Sostar X project to develop a synthetic-apertureradar for NATO’s airborne ground reconnaissance. S&DE’s position in the growth areaof naval combat systems was confirmed by the contract as a system integrator for
Finland’s Squadron 2000 programme.

46

EADS 2001 Defence and Civil Systems

Telecommunications
This EADS Telecom Business Unit was created in March 2001, and covers all our
activities in the areas of civil and defence telecommunications. The partnership between
EADS and Nortel Networks in secured telecommunications has been restructured in
EADS Defence and Security Networks (EDSN, owned 59% by EADS and 41% byNortel). Moreover, the EADS Telecom Business Unit has been enlarged with the transferof the UK Cogent Defence Systems, the enterprise business activities of Matra Nortel
Communications, Dasa Com Networks, the US company Intecom, the French
companies Matranet and Sycomore.
In the Public Safety field we won major contracts in France, Spain and Mexico with
the Tetrapol technology; in the defence market, we were contracted to supply over€120 million of communications equipment to the UK MOD (Cormoran contract).
In France, the Rubis network for the Gendarmerie now covers all 97 administrative
regions. It is the largest professional digital radio network in the world, based on
the Tetrapol technology retained for 59 networks in 28 countries.
Above: From information
to decision
Top left: AS30 laser
Bottom left: Multimoderadar TRS-3D
Top right: Eurofighter withMeteorOther successes included a contract with our US partner SAIC to equip the US Army’s
combat training centre, and the choice of the Succession/6500 communication systemby the University of Rennes, France, as a result of which we shall be setting the largest
telephony network based on Internet Protocol (IP) ever created.
Services
The Services Business Unit was created in January 2001 to serve the growing global
market in functions like infrastructure support and operations, equipment support
and training, which are being increasingly outsourced by governments. Our activities
are centred on automatic testing, systems engineering, engineering solutions andmilitary and other services.
In the domain of outsourced services, we are well positioned in logistics,
telecommunication and training for the French, German and Spanish armies.
OutlookWith a strong order book of €9.1 billion, the positive effects of a reorganised and more
efficient business and the transition from development to production of our major
programs, the profitability of DCS will increase significantly from 2002 and thereafter.

EADS 2001 Defence and Civil Systems

47

SpaceDespite a particularly difficult environment, EADS subsidiaries continued
to prove their technical expertise and competitiveness, for a wide rangeof clients which includes national governments, space agencies in Europe
as well as commercial industry customers.

• Step 3 of the Ariane 5
programme approved by
the ESA Ministerial Conference

It testifies to the high quality of the EADS Space Division that in a challenging
environment we were able to maintain our revenue levels close to those of 2000.
At €1.3 billion, the order intake for the year was, as anticipated, lower than the €3 billion
for 2000, which came from a particularly high number of orders in telecom satellite andbecause of the M51 ballistic missiles development programme. Nevertheless, at the endof the year, the order book covered future activity well into 2003.

• Skynet 4 successfully
accomplished

EADS is today the largest space systems manufacturing company in Europe, and thethird largest in the world.

• Early 2002: UK MoD decides on
Skynet 5, Astrium to supply
satellites

Through our subsidiaries Astrium (controlled 75% by EADS and 25% by BAE Systems),
EADS Launch Vehicles (EADS LV) and our Business Unit EADS CASA Espacio, we
design, develop and manufacture satellites, orbital infrastructures, launchers and ballistic
missiles.

• Ariane 4 gains new
reliability record

We provide launch services through our shareholdings in Arianespace, Starsem andEurockot and services related to telecommunications and earth observation satellites
through our Business Unit EADS Space Services and through joint ventures. Finally,
we are active in the field of optronics and space equipment including earth and starsensors (through EADS Sodern) and laser technologies (through EADS Cilas).
During the year, we took steps to strengthen the efficiency of our space activities inorder to improve profitability in a difficult market environment characterised by fierce
competition and industry overcapacity.
Ariane 5

We launched actions driven by:• an improved focus on customer satisfaction• cost reduction by strengthening integration• streamline of functions to improve management efficiency
SPACE DIVISION
millions of euros

REVENUESEBIT*ORDER INTAKEORDER BOOK
*
**

48

EADS 2001 Space

pre-goodwill amortisation and exceptionals.
pro forma

2001

2,439
(222)
1,327
3,796

2000**

2,535
67
3,024
4,826

variation

– 4%
–
– 56%
– 21%

François Auque
Executive Vice President
Head of Space Division
EADS Executive Committee Member

2.4bn €3.8bn€

revenues

order book

A major element in the programme is the decision to implement in 2002 an improvement
plan for satellite activities and to strengthen the cooperation between Astrium and EADS
LV in launcher and orbital infrastructure activities. This redefined focus should allow the
Astrium satellite business to meet its financial targets in the coming years, and willcontribute to the cost reduction targets of the Ariane 5 launcher which will allow us
to remain competitive and profitable in the market place.
ArianeOf the 12 commercial launches that took place world-wide in 2001, Ariane was
responsible for eight, six with Ariane 4 and two with Ariane 5.
In July 2001, during the second launch in the year of Ariane 5, an upper stage propulsion
problem was encountered. Subsequently, a detailed investigation was undertaken to
identify the source of the problem. The enquiry board has now reached its conclusions
and successful flight operations resumed successfully on 28th February 2002 with thelaunch of the Astrium-built earth observation giant, Envisat.
Automated Transfer Vehicle (ATV) for
the International Space Station (ISS)In November 2001, the European Space Agency (ESA) ministerial conference in Edinburgh
confirmed its commitment to Step 3 of the Ariane 5 programme, which will allow Ariane tocarry up to 12 tons into geotransfer orbit. The Edinburgh conference also allocatedsubstantial budgets to the Ariane 5 Research and Technology Accompaniment (ARTA)
programme, and to the financing of Kourou infrastructure. All these decisions are very
positive steps in reinforcing Ariane 5’s competitiveness. To this end, we have begun torestructure EADS launcher activities into a single company which will take responsibility forsystem prime contracting of Ariane development and production.
The International Space Station (ISS)EADS is playing a key role in the development and utilisation of the ISS, the world’s mostambitious space project. EADS LV is prime contractor for the development phase of theAutomated Transfer Vehicle, an unmanned transport system for regular delivery of fueland other supplies to the ISS, which will also provide reboost capability and a waste
disposal function. Astrium is prime system provider for the main European contribution,
Columbus, a manned module for zero-gravity research.
Other launcher activities
Eurockot Launch Services, a joint venture owned by Astrium (51%) and the Russian
Khrunichev space technology companies, won contracts to launch two micro-satellites,
the Canadian MOST space telescope and the Czech Mimosa.

EADS 2001 Space49

Spacecontinued

Starsem, a joint venture owned by EADS, Arianespace and Russian partners,
has worked to provide all necessary information to ESA, in view of a coming
decision to have the Soyuz launcher operated from Kourou.
Defence
The development programme for the new generation submarine-based
M51 missile moved forward successfully, and a test flight of the M4/M45
intercontinental ballistic missile in April 2001 was successfully conducted.
Astrium and EADS LV have been selected by NATO as members of atransatlantic consortium to carry out a Theatre Missile Defence feasibility study.
Skynet 4 and 5
The last Skynet 4 spacecraft – which carries UK military communications –was launched from Kourou in February 2001. In February 2002, following the
UK MoD decision, Astrium will supply the satellite system for the next
generation programme Skynet 5, worth in total £2 billion, under contract toParadigm SPC (jointly owned by EADS and BAE Systems).

50

EADS 2001 SpaceTelecommunications
Astrium was chosen by Eutelsat to provide the W3A communications satellite which
will be launched in mid-2003, and will also supply applications including business
communications, internet-based services and television transmission to a zone
covering Europe and Africa from 7o East.
Navigation
At its ministerial conference in Edinburgh, the ESA gave its approval for the Galileo
programme – the global satellite navigation system proposed jointly by the European
Commission and ESA – with a value of more than €500 million. Final go-ahead was given
from the Commission’s transport ministers in March 2002. As a 50% shareholder in
Galileo Industries S.A., Astrium is playing a crucial role in the design and developmentof Galileo, which is scheduled to be operational by 2008.

Above: Spot 5
Top left: Telecommunication satellite
in integration

Earth observation
On 20 November 2001, for the first time ever, a data link between satellites wasestablished using a laser beam as signal carrier. The Astrium-primed Silex(Semiconductor-laser Inter-satellite Link Experiment) system consists of two terminals,
one on board ESA’s Artemis communications satellite, the other on the CNES Earthobservation satellite Spot 4. Through the laser data link, high-definition video images
from Spot 4 can be transmitted in real time via Artemis to the image processing centre.

Bottom left: Helios II
Top right: Ariane 5 upper stage

Leadership in Science
Prestigious acknowledgement of Astrium’s expertise came in the form of the award to
the company by the ESA for the manufacture of the world’s largest silicon carbide space
imagery instrument, the Herschel space telescope, which is due for launch in 2007.
Outlook2002 will be focused on the reorganisation of the Division, with the aim of reinforcing
customer satisfaction and reducing costs through the streamlining of functions andimprovements to industrial organisation. These challenges will be eased by the two
recent successes in early 2002: Skynet 5 programme and Ariane 5 successfully launched
Envisat, paving the way for the first cryogenic upper stage flight in the summer.

EADS 2001 Space

51

EADS International
EADS International, the corporate entity in charge of international development of theGroup, is now fully operational as a single and multicultural team completely integrated
and entirely dedicated to winning business.

EADS International is a key partner in the
campaigns that build the success of EADS.

NH90 contract signing for the Nordic
countries

An Integrated Approach
Operating in close cooperation with theBusiness Units in a task-force approach,
EADS International provides them with awide range of high-level services in thefield of exports (including financial
engineering, off-sets, industrial cooperation, package-deal expertise andfocused countries analysis) These services
are key to successful businessapproaches. In addition, EADSInternational acts as a corporate catalyst,
playing on the strengths and size of thewhole Group to support each Business
Unit’s marketing approach.
With the support of its extensive
international network representative
offices and its team of international market
experts, EADS International has managed
to create a constructive team spirit with
BUs, whatever their size. It is now arecognised partner whose task-force
approach has been proven efficientthrough achieved results.

Airbus A380 in the colours of Emirates
Airlines, which ordered 22 aircraft andten options

52

EADS 2001 EADS International

2001’s Export Successes
EADS International was instrumental in
the campaigns that helped to create thesuccess of EADS in 2001. For example,
Eurocopter performed extremely well thisyear with EADS International supporting
its work in the Nordic Countries for the
NSHP/NH-90 campaign as well as in thefirst export of the Tiger with the AustralianGovernment official decision to acquire
22 helicopters.

International teams also participated inGroup achievements including Airbus inAustralia, Qatar and Taiwan and theofficial Spanish Hispasat decision infavour of Astrium’s Amazonas
Telecommunications satellite.
Its actions were also decisive in othercampaigns such as EADS CASA in the
UAE, EADS Sogerma Services in
Venezuela and Taiwan as well as Systems
and Defence Electronics in Estonia,
Singapore and Mexico.
New Challenges
EADS strategy is today focused onbalancing its civilian and governmental
activities, and EADS International is wellequipped to support programmes that arebecoming more important than ever, like
UAVs, C3I and C4ISR systems, A330MRTT and the A400M as well as Global
Air Defence with VL Mica and the Asterfamily.
At the same time, the team will continue
to support the Group’s civilian activities
including Astrium’s Telecommunications
satellites, ATR aircraft or Airbus in strategic
export campaigns.
EADS International is thus in the front line
to cope with these new challenges whereinternational markets are crucial to success.

Jean-Paul Gut
Executive Vice President
Head of EADS International
EADS Executive Committee Member

External offices

EADS CASA signed a contract with Poland
for the sale of eight C-295

Australia Brazil Canada Chile
China Croatia CzechRepublic
Egypt Finland Greece India
Indonesia Italy Japan Korea
Kuwait Malaysia Mexico Poland
Portugal Russia SaudiArabia
Singapore Slovenia SouthAfrica
Spain Taiwan Thailand Turkey
UnitedArabEmirates UnitedKingdom

Australia signed the contract of salefor 22 Tiger

EADS 2001 EADS International

53

Headquarters Organisation
The EADS Headquarters and its functions are located in Amsterdam and its Head Offices
in Madrid, Munich and Paris.

Corporate Functions

CHIEF EXECUTIVE OFFICER
Philippe Camus

CHIEF EXECUTIVE OFFICER
Rainer Hertrich

GENERAL SECRETARY
Pierre-Henri Ricaud

HUMAN RESOURCES
Jussi Itävuori

COMMUNICATIONS
Christian PoppeLEGAL AFFAIRSEric Thomas

PURCHASING
Hans-Erich Mundt

POLITICAL AFFAIRS
Wolf-Peter Denker
Carlos Grandal
Denis Verret

STRATEGIC COORDINATION
Jean-Louis Gergorin

EADS INTERNATIONAL
Jean-Paul Gut

CHIEF FINANCIAL OFFICER
Axel Arendt

STRATEGY AND PLANNING
Reinhold Lutz

CONTROLLING
Hans-Peter Ring

MERGERS AND ACQUISITIONS
Marwan Lahoud

FINANCE TREASURY
Gérard Adsuar

INDUSTRIAL, RESEARCH ANDTECHNOLOGY, QUALITY
Jean-Marc Thomas

INVESTOR RELATIONS
Marc Paganini

ACCOUNTING/TAX
Joachim Feyel

Members of the Executive Committee

After the merger in 2000, EADS
undertook an intensive study on thedefinition of the role of its Headquarters asa “Strategic Architect”. The Headquarters
is in charge of Finance, Merger andAcquisitions, Strategy and Planning for the
54

EADS 2001 Headquarters Organisation

overall Group development, coordinating
the businesses and creating the synergies
as well as providing support for Legal
Affairs, Human Resources and otheressential central functions. With the new
definition of its role, a restructuring

INFORMATION MANAGEMENT
Andreas Grothof the Headquarters has been initiated,
resulting in headcount reduction from morethan 1,000 people in 2000 to a target ofaround 540 in 2003 through early
retirement plans, outsourcing or transfers
to EADS Business Units.

Human Resources

Employees year-end 2001
EADS Group

102,967

Airbus45,543

Military Transport Aircraft

3,573

Aeronautics

24,230

Defence and Civil Systems

17,650Space

10,414

Headquarters and research centres

1,557

Our employees – a key factor
for future success
Surveys indicate that the new company
has already inherited the reputation of
its precursor companies as being among
the most attractive employers in its various
countries. EADS is regarded as one of
the top employers in Europe, among
both engineers and young managers.
Entrepreneurial awarenessIn order to foster entrepreneurial
awareness, employees have been offereda second opportunity to participate inan employee share ownership plan.
The response has been extremely positive
and the shares were over-subscribed.

that rewards personal performance and isalso linked to company earnings andincreased corporate value.
International careerdevelopment opportunities
A Group-wide system for identifying
and promoting future managers has
been introduced, and an internal job
market enables employees to apply forposts on offer – either in their own
country or abroad. Development of
EADS executives is promoted throughthe Corporate Business Academy, which
focuses on both the provision of training
and on the promotion of a common
corporate culture.
Flexibility at work – the benefits
11th September represented an
unprecedented challenge. Our existingemphasis on capacity flexibility is now
bearing fruit, and has so far enabled us to
avoid compulsory redundancies or highrestructuring costs – thus retaining
valuable expertise within the company
for the anticipated recovery.

Throughout EADS there is now a
remuneration structure for top managers

European Works Council
The European Works Council had to passits first tests during 2001. In addition to thebodies representing the entire workforce,

Working together: Engine maintenance
Test Cell

An intercultural working atmosphere ispart of EADS culture

Jussi Itävuori
Group Vice President
Human Resourcesinternational committees for sub-groups
have been set up, offering a common
platform for discussion of the challenges
we face and of the company’s future plans– both of which are usually internationalin nature.

Employees by country
France40.4%

Germany

37.3%

UK

11.4%

Spain

7.7%

Americas

2.1%

Rest of the World

1.1%

European Works Council of EADSEADS 2001 Human Resources

55

Corporate and Social Responsibility
EADS is committed to maintaining and defending irreproachable ethical standards in theGroup’s business relationships both inside and outside the company. These standards
are laid down in our Ethics Code, as well as in the Insider Trading Rules, which provide
general guidelines for behaviour towards internal and external parties alike.

EADS is an attractive industrial
employer: Recruiting event during
Le Bourget Airshow

The Environment
We accept our responsibilities towards theenvironment and have implemented a
Corporate Policy for Health, Safety andthe Environment to ensure that we comply
with the laws and regulations of eachcountry in which we operate, as well as
investing in research and development
designed to improve our ability to meetor exceed such regulatory standards.
We actively support the participation of
employees in pursuing new products
and technologies that promote resource
conservation, facilitate recycling andpreserve the natural environment as muchas possible.
Customers’ rights and international
trading
To defend and to enhance the confidenceof its customers in the Group is one of ourprime objectives. We can only achieve thisthrough the strictest respect for thecustomers’ rights.
As suppliers of goods and services togovernments and governmental agencies,
we comply with the rules and procedures
for acquisitions in force in each customer
country. National or international export
and customs laws may regulate where,
when and how we can sell products,
services and technology, or exchange
information. We require each employee
and all Business Units to comply fully withsuch laws.

Right: Music and the arts are at home
at EADS
Far right: Open doors at EADS Military
Aircraft in Manching near Munich.
50,000 visitors joined the “Family-day”

56

EADS 2001 Corporate and Social Responsibility

Respect for employees
We guarantee to all employees respect for
their dignity, their privacy, their safety atwork and their rights. This applies to all
employees regardless of age, disability,
national origin, sex, religion or opinion;
and we expect the same high standards
from our suppliers and business partners.
Shareholders’ rights andexpectations
Our relationships with shareholders are
based on the protection of their interestsand on their equal access to relevant,accurate and timely information.
As a Dutch listed company in France,
Spain and Germany, we fully comply
with the laws and regulations applicablein each country.
Conflicts of interest
We have no “privileged or special”
relationships with business partners or
suppliers, which would not be justified on
objective economic or technical grounds.
Relationships between employees andsuch parties must be governed bytransparency, in particular with respect topurchase contacts and sales relationships.
The acceptance or granting of gifts orother advantages is only authorised understrict conditions of mandatory disclosureand the approval of management.

Reliable Accountable Responsible Committed

Dealing in EADS shares
We encourage employees to hold EADS
shares. Employees may freely carry outtransactions in Group shares where suchoperations comply with the relevant
applicable law and with the provisions laid
down in the EADS Insider Trading Rules.

Astrium engineers working on the newEuropean weather satellite Metop

Some EADS employees have access by
virtue of their duties to privileged
information. In order to comply with theprohibitions provided by the national law
or national stock exchange market
authorities, such employees are legallyforbidden to provide third parties withsuch information, or to conduct financial
operations directly or indirectly except
during specific periods, and subject to theapproval of the Chief Financial Officer
acting as Compliance Officer. Any
beneficiary of privileged information islegally subject to the duty of discretion;
any breach of such legal duty being acriminal offence.

Behaving as good corporate citizens
As one of the largest European
companies, EADS is conscious of its
duties to the cultural, educational andsocial environment in each country.
We encourage active and responsible
participation to community events andeducational institutions in order topromote cooperation and development
provided that such participation does notcontravene EADS policies or interferewith employees’ duties. The EADS
response to big catastrophes has included
the donation of significant amounts to
support victims of the 11th September
terrorist attacks and their families,
and to the victims of the disaster inToulouse, which occurred on the
21st September.

Travelling on hydrofoils, the Hydroptère isa revolutionary seacraft design sponsored
by EADSEADS 2001 Corporate and Social Responsibility

57

Corporate Governance
The Company is governed by Dutch law and its Articles of Association. The Company
has a single-tier structure – the Board of Directors – combining both executive andnon-executive members. The Board is the highest decision-making body besides
the shareholders’ meeting.

The Board of Directors is responsible forthe affairs of the Company. The role of theBoard of Directors is to ensure that theCompany is operated to maximise
shareholder value in accordance to thelaw and the established rules of Corporate
Governance, whilst maintaining good
relationships with the Company’s
employees and customers.
The Board of Directors comprises elevenmembers, appointed and removed by
the shareholders’ meeting. The Boardof Directors has an equal number of
Directors proposed by DaimlerChrysler
AG and by SOGEADE1 respectively andone Director proposed by SEPI2, plus
two independent Directors who have noconnection with the DaimlerChrysler,
SOGEPA or Lagardère Groups or the
French State. One is nominated byDaimlerChrysler and one is nominatedby SOGEADE.
The Board of Directors has appointed fromamong its members the two Chief
Executive Officers (CEOs) responsible forthe day-to-day management of theCompany and has designated its two
Chairmen to ensure the smoothfunctioning of the Board of Directors andto support the Chief Executive Officers of
the Company with regard to top-levelstrategic discussions with outside partners.
Beyond applicable Dutch legal constraints,
the Board of Directors has also adopted its
own internal rules to provide modern
Corporate Governance principles. In
particular the Board of Directors hasformed two standing committees from its
members:• The Audit Committee, which makes
recommendations to the Board of
Directors on the appointment ofauditors, the approval of the annual
financial statements and the interim
accounts, and monitors the adequacyof EADS’s internal controls, accounting
policies and financial reporting. The
Audit Committee meets at least twicea year. It is chaired by Manfred Bischoffand Jean-Luc Lagardère and also
includes Eckhard Cordes andLouis Gallois.

• The Personnel Committee, whichmakes recommendations to the Boardof Directors regarding appointments tothe Executive Committee, remuneration
strategies and long-term remunerationplans and decides the service contracts
and other contractual matters in relation
to the Board of Directors and Executive
Committee members. The Personnel
Committee meets at least twice a year.
It is chaired by Manfred Bischoff andJean-Luc Lagardère and also includes
Philippe Camus, Eckhard Cordes,
Louis Gallois and Rainer Hertrich.
Topics discussed during the Board
meetings relate mainly to EADS strategy,
major business issues, major investment
projects, and financial results andforecasts.

Shareholder structure as of 31 December 2001
■ 30.2% DaimlerChrysler
30.2%

30.2%

■ 30.2% SOGEADE1■ 5.5% SEPI2■ 34.1% Public, including EADS employees andabout 3% held by DaimlerChrysler andthe French State

5.5%
34.1%

1
2

58

Lagardère SCA together with French financial institutions and SOGEPA (French state holding company).
Spanish state holding company.

EADS 2001 Corporate GovernanceMembers of the Board of Directors

Manfred Bischoff
Member of the Management
Board of DaimlerChrysler AG
Chairman of EADS Boardof Directors

Jean-Luc Lagardère
General and Managing Partner of
Lagardère SCA
Chairman of EADS Boardof Directors

Philippe Camus
EADS Chief Executive Officer

Rainer Hertrich
EADS Chief Executive Officer

Axel Arendt
EADS Chief Financial Officer

Eckhard Cordes
Member of the Management
Board of DaimlerChrysler AG

Pedro Ferreras
LawyerSEPI Representative
Jean-René Fourtou
Vice President of Aventis S.A.

Noël Forgeard
Airbus President and Chief
Executive Officer
Louis Gallois
President of SNCF

Michael Rogowski
Chairman of the Supervisory
Board of J.M.Voith AG
President of the Federation ofGerman Industry

EADS 2001 Corporate Governance59Analysis of the Financial Situation
2001 Audited Consolidated Financial Statements and 2000 Unaudited
Pro-Forma Consolidated Financial Statements
INTRODUCTION
The following discussion is based upon the audited consolidated financial statements of EADS for 2001 (the “2001 Financial Statements”)
and the unaudited pro-forma consolidated financial statements of EADS for 2000 (the “2000 Pro-Forma Financial Statements”).
The 2001 Financial Statements were prepared in accordance with the accounting standards issued by the International AccountingStandards Board (“IASB”) and the interpretations issued by the Standing Interpretations Committee of the IASB. The 2000 Pro-Forma
Financial Statements were prepared on the basis of the following:• the consolidated financial statements of EADS for 2000, prepared under IAS;
• the pro-forma effects of the 2000 transactions combining Aerospatiale Matra, Dasa and Casa (hereinafter, the “EADS Merger”); and• the pro-forma financial statements of Dasa and the pro-forma financial statements of Casa for the period in 2000 prior to the creation of
EADS on 10th July as reconciled to IAS as adopted by EADS and net of the cash amounts distributed by Dasa and Casa to theirrespective shareholders prior to the creation of EADS.
The unaudited pro-forma consolidated financial information of EADS for 2000 included herein is provided for illustrative purposes onlyand does not purport to represent what the financial position, results of operations or cash flows of EADS would actually have been if the
EADS Merger had occurred as of the dates indicated or to project the consolidated financial position, results of operations, or cash flows
for any future date or period.
The 2000 Pro-Forma Financial Statements refer to the scope of consolidation that resulted from the EADS Merger in 2000; as such, they
do not reflect changes in consolidated entities or accounting methods that occurred in 2001. Consequently, the scope of consolidationreferred to in the 2000 Pro-Forma Financial Statements differs significantly from that referred to in the 2001 Financial Statements.
ACCOUNTING CONSIDERATIONSCHANGES IN CONSOLIDATED ENTITIES AND MINORITY INTERESTSFormation of Airbus SAS: Airbus SAS, the newly formed company integrating all design, manufacturing and marketing activities ofAirbus, was established in July 2001 following the acquisition by EADS of Airbus UK and of the 20% stake in Airbus GIE held by BAE
Systems (the “Airbus Combination”). As consideration for this transaction and its subscription to a €754 million capital increase, BAE
Systems received 20% of the share capital of Airbus SAS through a capital increase while EADS’ interest was diluted to 80%.
EADS has fully consolidated Airbus since 1st January 2001, in light of the effective control it has exercised, by agreement withBAE Systems, over the Airbus assets and operations since that date.
Formation of MBDA: On 18th December 2001, EADS, BAE Systems and Finmeccanica formed MBDA, which combines thebusinesses of MBD and of AMM, and the missile systems activities of AMS. EADS and BAE Systems each hold a 37.5% stakein MBDA, with Finmeccanica holding the remaining 25%. Pursuant to the shareholder agreements relating to the MBDA group,
EADS and BAE Systems together exercise certain controlling rights over MBDA through MBDA Holdings, including the right ofMBDA Holdings to appoint MBDA’s CEO, COO-Operations and CFO.
In 2001, the consolidated statement of income reflects a 50% consolidation of MBD and a full consolidation of AMM through to theformation of MBDA on 18th December. From 18th December, as shown in the 2001 consolidated balance sheet, EADS has been
proportionally consolidating 50% of MBDA within the Defence and Civil Systems Division, in line with its ability to influence
operations, with Finmeccanica’s holding reflected as a 12.5% minority interest.
EDSN: Throughout 2001, EADS and Nortel Networks completed the reorganisation of their military telecommunication operations
within EDSN. Specifically (i) EADS and Nortel Networks contributed to EDSN the IP-capable switching activities of their joint venture
MNC on 1st May; (ii) EDSN purchased a 19.9% share of MNCD, which operates the distribution channel related to the IP-capableswitching activities, on 30th September; (iii) EADS contributed VEKN, a tactical communication networks business, to EDSN on
30th November; and (iv) Nortel Networks sold Cogent Defence Systems to EDSN on 1st December. As a result, Nortel Networks’minority interest decreased from 45% to 40.9%, while EADS fully consolidates EDSN within the Defence and Civil Systems Division.

60

EADS 2001 Analysis of the Financial SituationMNC and NNG: Mirroring the repositioning of military telecommunication activities within EDSN, and the disengagement of EADS’significant influence in MNC and NNG in response to the decreasing strategic importance of the civil telecommunications businesses
to EADS, EADS has been accounting for MNC and NNG (of which it still holds 45% and 42%, respectively) as non-consolidated
investments since 1st October 2001. The two companies, whose share capital was held jointly with Nortel Networks, wereconsolidated under the equity method prior to such date.
Acquisition of Tesat Spacecom: In 2001, Astrium, which is 75% proportionately consolidated by EADS, acquired Tesat Spacecom
GmbH & Co. KG, the satellite communications-payload business of Bosch. Astrium now fully consolidates Tesat Spacecom.
Dornier GmbH: Following the exercise by Dornier family members of a put option on Dornier GmbH shares, DADC, a fully
consolidated subsidiary of EADS, increased its interest in Dornier GmbH from 58.4% to 75.9%. While EADS has fully consolidated
Dornier GmbH in both of the periods under discussion, the minority interest decreased from 41.6% to 24.1%.
DILUTION GAINSThe 2001 transactions leading to the formation of Airbus SAS and MBDA resulted in a dilution of EADS’ economic ownership in
Airbus, MBD and AMM. These transactions required an assessment of the contributed businesses, whose market value, estimated in
the course of negotiations, exceeded the carrying value of their equity for EADS. Consequently, EADS recognised dilution gainsof €2,537 million for a 20% stake in Airbus, and of €257 million, net of transaction related charges, for 12.5% of MBD and 62.5%
of AMM. These dilution gains are reported in other income and are deemed exceptionals by EADS. See “Results of Operations –Use of EBIT and Net Income Pre-Goodwill Amortisation and Exceptionals”.
FAIR VALUE ADJUSTMENTS
In the process of the Airbus Combination, the acquisition of Airbus UK was recorded using the purchase method of accounting.
Accordingly, the book value of certain items, mostly property, plant and equipment and inventories, was adjusted by an aggregate€319 million, net of taxes, to reflect their respective fair market values (the “Fair Value Adjustments”) and a deferred tax liability of€137 was recorded. Depending on the nature of the asset, depreciation of Fair Value Adjustments is either recorded when theunderlying assets are consumed or is scheduled over their useful life, and gives right to a related reduction of deferred tax liabilities.
The excess of the purchase price of Airbus UK (including the 20% share in Airbus GIE) over the fair value of its net assets was recorded
as goodwill and amounted to €4,024 million. Amortisation of goodwill is scheduled over 20 years, and is mostly not tax deductible.
IMPAIRMENT OF ASSETS
When, in the view of Management, a triggering event such as a material market event or a significant change in forecasts orassumptions occurs, EADS performs an impairment test on the net assets of the business or businesses likely to be affected.
Impairment tests are typically performed using the discounted cash flow method.
In 2001, EADS conducted impairment tests on the goodwill of businesses in the Airbus Division, the Space Division and the
Defence and Civil Systems Division. In the Defence and Civil Systems Division, recognition of a restrictive government defence
spending policy led EADS to impair the goodwill of MS&I, a company within the Defence Electronics business (€240 million) and LFK(€170 million). Reduced market prospects for CAD/CAM software services led EADS to impair the goodwill of Matra Datavision by€170 million. In the Space Division, acknowledgement of the contraction in the commercial telecommunications market, coupled withlong-term overcapacity in the satellite business requiring substantial cost reductions and streamlining, resulted in a €210 million
impairment to the Astrium goodwill. An impairment test on Airbus, triggered by the events of 11th September and subsequentdevelopments, confirmed the value of the goodwill of Airbus.
RESEARCH AND DEVELOPMENT EXPENSES
EADS recognises internally-financed research and development costs as an expense in the year incurred. When research anddevelopment expenses are financed in whole or in part by the customer, the externally-financed portion is recognised as revenues.
While EADS’ internally-financed research and development costs are reflected in the income statement under research anddevelopment, the costs of externally-financed research and development are reflected in the income statement under cost of sales.
The accounting treatment for research and development costs adopted by EADS does not conform to IAS, which the Company
otherwise follows in the preparation of its consolidated financial statements. IAS requires that development costs be capitalised as anintangible asset in the period in which incurred if certain criteria for asset recognition are met. This departure from IAS makes EADS
more directly comparable with US companies in the same sector, and reflects a more conservative approach towards the accounting
treatment of research and development costs than that required by IAS.
EADS 2001 Analysis of the Financial Situation

61

Analysis of the Financial Situation
continued

SALES FINANCING POLICYEADS favours cash sales, and encourages independent financing by customers, in order to avoid retaining credit or asset risk inrelation to delivered products.
However, in order to support product sales, primarily at Airbus and ATR, EADS may agree to participate in the financing of customers,
on a case-by-case basis, directly or through guarantees provided to third parties. A dedicated team closely monitors total EADS
customer exposure and its evolution in terms of quality, volume and cash intensity. EADS aims to sell down exposure to outside
parties whenever feasible.
In determining the amount and terms of the financing transaction, Airbus and ATR take into account the airline’s credit rating as wellas risk factors specific to the intended operating environment of the aircraft and its expected future value. Market yields and current
banking practices also serve to benchmark the financing terms offered to customers, including price.
Sales financing transactions are generally collateralised by the underlying aircraft. Additionally, Airbus and ATR benefit from protective
covenants and from security packages tailored according to the perceived risk and the legal environment.
RESTRUCTURING AND OTHER COSTS
Total restructuring charges of €221 million were recorded in 2001. This included new provisions and same year charges primarily
related to (i) headcount reductions in the UK and early retirements in France at Airbus as part of adaptability measures following
11th September (€96 million); (ii) headcount reductions and early retirements at CELERG, LFK, AMM and EADS Telecom and a site
closure at the Services business unit in the Defence and Civil Systems Division (€34 million); and (iii) headcount reductions at EADS
Launch Vehicles in the Space Division (€91 million).
The balance of provisions for restructuring as at 31st December 2001 was €286 million.
RESULTS OF OPERATIONS
Year-to-year comparisons of results of operations are based upon the 2001 audited consolidated financial statements and the 2000
unaudited pro-forma consolidated financial statements. See “Introduction”.
The following table sets forth the consolidated income statement of EADS for the twelve-month periods indicated.
Statements of Income for the Years Ended 31st December 2001 and 2000

in €m

Revenues
Cost of sales
Gross margin
Selling, administrative and other expenses
Research and development expenses
Other income
Goodwill amortisation and impairment losses
Income before financial income and income taxes
Financial income (expense), net
Income (loss) before income taxes
Income taxes
Minority interests
Net income (loss)

62

EADS 2001 Analysis of the Financial Situation

Year ended
31st December
2001
2000
pro-forma

30,79824,208(25,235) (20,072)
5,563
4,136
(2,561)(2,510)(2,046)(1,339)3,024
342(1,466)
(429)
2,514
200
(513)
(1,315)2,001(1,115)
(646)
220
17
(14)
1,372
(909)

USE OF EBIT AND NET INCOME PRE-GOODWILL AMORTISATION AND EXCEPTIONALSEADS uses EBIT pre-goodwill amortisation and exceptionals and net income pre-goodwill amortisation and exceptionals as key
indicators of its economic performance. The term “exceptionals” refers to income or expenses of a non-recurring nature, such asamortisation expenses of fair value adjustments relating to the EADS Merger, the Airbus Combination and the formation of MBDA,
and impairment losses. In addition, “exceptionals” associated with net income are net of corresponding tax effects, and include
an exceptional allowance for deferred tax assets.
Set forth below is a table reconciling EADS’ income before financial income and income taxes with EADS’ EBIT pre-goodwill
amortisation and exceptionals.

in €mIncome before financial income and income taxes
Dilution gain Airbus, MBDA
Goodwill amortisation and impairment losses
Exceptional depreciation (fixed assets)
Exceptional depreciation (financial assets)
Exceptional depreciation (inventories)
Income from investments
EBIT pre-goodwill amortisation and exceptionals

Year ended
31st December
2001
2000
pro-forma

2,514(2,794)
1,466
260
315
275
(342)
1,694

200
–
429
176
–
483
111
1,399

The following table sets forth the net income and earnings per share pre-goodwill amortisation and exceptionals of EADS for thetwelve-month periods indicated.
Net income attributable to shareholders pre-goodwill amortisation and exceptionals
Basic earnings per share pre-goodwill amortisation and exceptionals

2001

2000
pro-forma

€936m
€1.16

€(45)m€(0.06)

Prior to the change in consolidation method from equity to cost of MNC and NNG, the value of these investments in the accounts of
EADS was reflected in aggregate goodwill of €516 million. Impairment tests conducted for these businesses in light of the downturnin the telecommunications sector led to an exceptional aggregate depreciation of €315 million for MNC and for NNG, which is lessthan the goodwill recorded for such businesses on the 2001 opening consolidated balance sheet. Consequently, for the purposeof computing exceptionals, such depreciation is being treated as a goodwill impairment and the aggregate loss of €315 million related
to MNC and NNG is being excluded from income from investments. Goodwill amortisation as recorded on the statement of income
does not include this €315 million amount.

EADS 2001 Analysis of the Financial Situation

63

Analysis of the Financial Situation
continued

CONSOLIDATED REVENUES AND EBIT BY DIVISION – SEGMENT INFORMATION
Set forth below is a breakdown of EADS’ consolidated revenues by Division for the past two years, as well as consolidated capital
expenditures (which include leased assets), consolidated research and development expenditures and consolidated EBIT pre-goodwill
amortisation and exceptionals.
Year ended 31st December 2001
CapitalExpenditures
R&D

in €m

Revenues

AirbusMilitary Transport Aircraft
Aeronautics
Space
Defence and Civil Systems
Subtotal
Eliminations and others(2)EADS

20,549
547
5,065
2,439
3,345
31,945(1,147)30,798

1,433
63
281
99
159
2,035
161
2,196

1,630
53
132
60
173
2,048
(2)
2,046

EBIT
PGE (1)

Revenues

1,655
1
308
(222)
(79)
1,663
31
1,694

14,856
316
4,704
2,535
2,909
25,320(1,112)
24,208Year ended 31st December 2000 (pro-forma)
Capital
EBIT
Expenditures
R&D
PGE (1)

657
55
307
145
117
1,281
70
1,351

920
59
128
61
161
1,329
10
1,339

1,412
(63)
296
67
(110)
1,602
(203)
1,399

(1) “EBIT PGE” refers to EBIT pre-goodwill amortisation and exceptionals. Eliminations and others includes income from the Dassault Aviation investment.
(2) Includes, in particular, adjustments and eliminations for intercompany transactions and revenues from leases of office space.

AIRBUS
Consolidated revenues of the Airbus Division increased by 38.3% from €14,856 million in 2000 to €20,549 million in 2001, mainly due
to the effects of the Airbus Combination, but also as a consequence of increases in aircraft deliveries from 311 aircraft in 2000 to 325
aircraft in 2001. As in 2000, most of the increase in deliveries occurred in the relatively lower-priced, single-aisle A319/A320/A321
aircraft family. Airbus delivered 257 units of this type of aircraft in 2001, compared with 241 in 2000. Revenues from 2000 to 2001
were only slightly affected by the strengthening of the dollar against the euro.
Consolidated capital expenditures increased by 118% from €657 million in 2000 to €1,433 million in 2001, primarily due to the
Airbus Combination and investments for the A380 program.
Consolidated R&D expenses increased by 77.2 % from €920 million in 2000 to €1,630 million in 2001, principally as a consequence ofthe ramp-up of the A380 development program and increased expenditures in connection with the continued development of the
A340-500 and A340-600 programs.
Consolidated EBIT pre-goodwill amortisation and exceptionals increased by 17.2% from €1,412 million in 2000 to €1,655 million in
2001. This increase was mainly a consequence of the Airbus Combination, as well as an increase in aircraft deliveries, productivity
improvements and, to a lesser extent, the positive impact of the dollar-euro exchange rate. Increased R&D expenses, additional
provisions related to restructuring and aircraft sales financing exposure partially offset the increase.
MILITARY TRANSPORT AIRCRAFT
Consolidated revenues in the MTA Division increased by 73.1% from €316 million in 2000 to €547 million in 2001, due principally
to increased sales under the C-295 contract with the Spanish Airforce and the CN-235 contract with Turkey.
Consolidated capital expenditures increased by 14.5% from €55 million in 2000 to €63 million in 2001.
Consolidated R&D expenses decreased by approximately 10.2 % from €59 million in 2000 to €53 million in 2001.
Consolidated EBIT pre-goodwill amortisation and exceptionals improved from a loss of €63 million in 2000 to a gain of €1 million
in 2001, principally as a result of a more favourable product mix and increased deliveries.

64

EADS 2001 Analysis of the Financial Situation

AERONAUTICS
Consolidated revenues in the Aeronautics Division increased by 7.7 % from €4,704 million in 2000 to €5,065 million in 2001, primarily
due to an increase in revenues from Eurocopter and from other military aircraft programs, including the Eurofighter series production
phase and, to a lesser extent, the maintenance business.
Consolidated capital expenditures decreased by 8.5% from €307 million in 2000 to €281 million in 2001.
Consolidated R&D expenses increased by 3.1% from €128 million in 2000 to €132 million in 2001.
Consolidated EBIT pre-goodwill amortisation and exceptionals increased by 4.1% from €296 million in 2000 to €308 million in 2001,
mainly due to increased deliveries of aircraft.
DEFENCE AND CIVIL SYSTEMS
Consolidated revenues in the Defence and Civil Systems Division increased by 15.0% from €2,909 million in 2000 to €3,345 million
in 2001. The increase related primarily to the effects of an enlarged scope of consolidation in the telecommunications business.
Consolidated capital expenditures increased by 35.9% from €117 million in 2000 to €159 million in 2001, primarily due to theacquisition of facilities by MBD.
Consolidated R&D expenses increased by 7.5% from €161 million in 2000 to €173 million in 2001.
Consolidated EBIT pre-goodwill amortisation and exceptionals improved from a loss of €110 million in 2000 to a loss of €79 million in
2001, mainly due to improved sales and margins, as well as the positive impact of previous restructuring on the Defence Electronics
business. The improvement was offset in part by the impact from January through September 2001 of negative performance of thecivil telecommunications joint ventures with Nortel.
SPACE
Consolidated revenues in the Space Division decreased by 3.8% from €2,535 million in 2000 to €2,439 million in 2001, primarily
due to fewer deliveries of Ariane 5 and Ariane 4 launchers during 2001.
Consolidated capital expenditures decreased by 31.7% from €145 million in 2000 to €99 million in 2001.
Consolidated R&D expenses remained stable, with €61 million of expenses in 2000 and €60 million in 2001.
Consolidated EBIT pre-goodwill amortisation and exceptionals decreased from a gain of €67 million in 2000 to a loss of €222 million
in 2001. The decrease is primarily attributable to write-downs of investments in Nahuelsat, Starsem, Arianespace and Spacehab
following a critical reassessment of the value of certain investments. Reduced sales, continued restructuring costs and new provisions
for restructuring associated with EADS Launch Vehicles contributed to the decrease.
RESULTS OF OPERATIONS OF EADS: 2001 COMPARED WITH 2000 (PRO-FORMA)CONSOLIDATED REVENUES
Total consolidated revenues of EADS increased by 27.2% from €24,208 million in 2000 to €30,798 million in 2001. Of the 27%
increase, approximately 17% was attributable to the effects of the Airbus Combination. The remainder of the increase was related toincreased deliveries of commercial aircraft by Airbus, from 311 aircraft delivered in 2000 to 325 aircraft in 2001. All other Divisions of
EADS, excluding the Space Division, contributed to the increase of consolidated revenues in 2001.
An additional factor that had a significant positive effect on EADS’ revenue stream in 2001, given the importance of EADS’ dollardenominated sales, was the strengthening of the dollar against the euro over the course of 2001.
CONSOLIDATED COST OF SALES
Consolidated cost of sales for EADS increased 25.7% from €20,072 million in 2000 to €25,235 million in 2001. This increase wasmainly attributable to the effects of the Airbus Combination. Costs associated with the increased deliveries of Airbus aircraft as well as
charges associated with restructuring in the Defence and Civil Systems Division and the Space Division were also significant factors
contributing to the increased consolidated cost of sales.

EADS 2001 Analysis of the Financial Situation

65

Analysis of the Financial Situation
continued

CONSOLIDATED SELLING, ADMINISTRATIVE AND OTHER EXPENSES
Consolidated selling, administrative and other expenses for EADS increased 2.0% from €2,510 million in 2000 to €2,561 million in
2001. The increase was mainly attributable to the effects of the Airbus Combination, including higher administrative expenses related
to the Airbus Combination. This increase was offset by lower expenses than in 2000, which had been impacted by a disposal loss andhigher provisioning.
CONSOLIDATED RESEARCH AND DEVELOPMENT EXPENSES
EADS’ consolidated research and development expenses increased 52.8% from €1,339 million in 2000 to €2,046 million in 2001,
primarily due to the full consolidation of Airbus and the ramping up of the A380 program. Expenses associated with the A340-600
certification remained high, while non-Airbus related research and development expenses were relatively unchanged from 2000.
CONSOLIDATED OTHER INCOME
Consolidated other income represents principally gains on sales of investments and fixed assets and rental income. EADS had otherincome in 2000 of €342 million, compared to €3,024 million in 2001. This increase is mainly due to the non-recurring effect of thedilution gains relating to the Airbus Combination (€2,537 million) and the MBDA transaction (€257 million, net of MBD goodwill
amortisation). See “Accounting Considerations – Changes in Consolidated Entities” and “Accounting Considerations – Dilution Gains”
AMORTISATION OF GOODWILL AND IMPAIRMENT LOSSES
Consolidated amortisation of goodwill and impairment losses increased from €429 million in 2000 to €1,466 million in 2001,
primarily as a result of (i) goodwill impairment losses in the Defence and Civil Systems Division (€580 million) and the Space Division(€210 million) and (ii) Airbus UK annual goodwill amortisation (€200 million). See “Accounting Considerations – Impairment of Assets”.
CONSOLIDATED FINANCIAL INCOME (EXPENSE), NET
Consolidated financial income (expense), net includes principally investment income (including profits and losses of companies
accounted for under the equity method and the write downs of non-consolidated investments), net interest expense and exchange rate
gains and losses. Financial income (expense) of EADS improved from a net loss of €1,315 million in 2000 to a net loss of €513 million
in 2001. Much of this variation was associated with negative investment income (€(342) million, including the €315 million impairment
of MNC and NNG) and, to a lesser extent, EADS’ remaining macro hedge portfolio (€(234) million). In 2001, most outstanding macro
hedges were tied to specific orders in the backlog to form valuation units and have been recorded as micro hedges as required by IAS 39
CONSOLIDATED INCOME TAXESIn 2000, EADS reported a consolidated income tax benefit of €220 million, compared to a tax expense of €646 million in 2001, mainly
related to the existence of positive taxable income in 2001, taking into account the non tax-deductible nature of goodwill amortisationand the mostly tax-free nature of dilution gains.
CONSOLIDATED NET INCOME
As a result of the factors discussed above, EADS recorded consolidated net income of €1,372 million in 2001, as compared to a
pro-forma consolidated net loss of €909 million in 2000.
CASH FLOW AND LIQUIDITY
The following table sets forth a summary of the consolidated statements of cash flows for the years ended 31st December 2001 and 2000.

in €m

Net cash flows provided by operating activities
Including changes in working capital
Net cash flows generated by (used in) investing Activities(1)Free cash flows
Net cash flows generated by (used in) financing Activities
Including capital increase
Effect of foreign exchange rate changes on cash and cash Equivalents
Net increase (decrease) in cash
(1) Excluding a €390 million investment in medium-term securities in 2001.

66

EADS 2001 Analysis of the Financial Situation

Year ended
31st December
2001
2000
pro-forma

2,656
2(1,882)
774
(677)
21
14
111

3,159
1,460
(1,628)
1,531
1,635
1,540
6
3,172

Cash flows provided by operating activities of €2,656 million were primarily generated from improved operating performance related
to increased sales of aircraft at Airbus, while working capital contribution to cash was neutral due to additional inventory required byincreased production volume, and lower customer advance receipts in relation to new Airbus orders.
Cash flows used in investing activities of €1,882 million were principally due to continued high levels of capital expenditures ontechnical plant and equipment, and the acquisition of Cogent, Tesat Spacecom and a share in Dornier GmbH, partially offset by
the sell-down of a portion of Airbus’ sales financing assets.
Cash flows used in financing activities of €677 million were principally related to dividend payments of €404 million.
CAPITAL EXPENDITURES
Capital expenditures incurred in 2001 were funded by net cash flows from operations and from the year’s opening cash position.
These capital expenditures related principally to various aircraft development programmes.
Overall, capital expenditures increased from €1,351 million in 2000 to €2,196 million in 2001. At Airbus, capital expenditures increased
from €657 million in 2000 to €1,433 million in 2001, reflecting the effects of the Airbus Combination, an increase in leased aircraft andinitial investments related to the A380 programme. Capital expenditures for the rest of EADS, including headquarters, remained
relatively unchanged from 2000.
For the period 2002 to 2004, it is estimated that most of the increase in EADS’ capital expenditure will occur in connection with
Airbus activities, such as the establishment and expansion of production facilities for Airbus aircraft. In particular, the development
programme for the A380 ultra-large aircraft will require substantial capital expenditures EADS expects to make additional capital
expenditures in connection with the sales financing of commercial aircraft through operating leases in response to increased demand
for such financing by its customers.
CAPITAL RESOURCES AND OTHER FINANCING
CASH FROM OPERATIONSEADS generally finances its manufacturing activities and product development programmes, and in particular the developmentof new commercial aircraft, through a combination of funds generated by operating activities, customers’ advance payments,
risk-sharing partnerships with sub-contractors and reimbursable launch investments. In addition, EADS’ military activities benefit
from government-financed research and development contracts.
CASH POOLING AND CASH MANAGEMENT
In 2001, one of the important accomplishments of the EADS integration process was the implementation of a cash pooling system,
which permits Management to assess reliably and instantaneously the cash position of each subsidiary within the Group. This systemenables Management to allocate cash optimally within the Group depending upon shifting short-term needs. A cash management
procedure is currently being rolled out on a trial basis within EADS. The procedure is designed to provide Management with amonthly updated perspective on cash generation and cash consumption for each subsidiary over the following twelve-month period.
In response to the events of 11th September 2001, and subsequent developments, Management assigned each subsidiary specificgoals to aggressively preserve cash in their operations.
FUNDINGIn July 2000, EADS completed a capital increase the proceeds of which have contributed significantly to the Company’s net cash
position. EADS continues to benefit from a strong cash position and has no current plans to increase borrowing or to issue new capitalin the financial markets. However, it is actively exploring several means of ensuring access to additional sources of financing.
Contemplated financing mechanisms include a syndicated back-up facility, a commercial paper programme and/or a medium-termnote programme. Management believes that the establishment of such financing schemes will enhance its presence and standing insegments of the capital markets where EADS is not yet active.
CREDIT RATINGSEADS currently is rated A3 with a stable outlook by Moody’s, and A/negative/A-1 by Standard and Poor’s.

EADS 2001 Analysis of the Financial Situation

67

Consolidated Financial Statements
Consolidated Income Statements for the years 2001 and 2000
2001
in €m

Revenues
Cost of sales
Gross margin
Selling, administrative and other expenses
Research and development expenses
Other income
Amortisation of goodwill
and related impairment losses
Income before financial result, income taxes
and minority interests

Note

5, 23
6

6

2000
pro-forma

30,79824,208(25,235) (20,072)
5,563
4,136

7

(2,561)(2,046)3,024(2,510)(1,339)342

10(1,466)

(429)

2,514

200

(513)

(1,315)2,001(1,115)

(646)
17

220
(14)

1,372

(909)

Financial result, net
Profit (loss) before income taxes
and minority interests

8

Income taxes
Minority interests

9

Net income

The accompanying notes are an integral part of these Consolidated Financial Statements.
EADS uses EBIT pre-goodwill amortisation and exceptionals as a key indicator of its economic performance. The term “exceptionals” refers to income or expenses of a non-recurring nature, such asamortisation expenses of Fair Value Adjustments relating to the EADS Merger, the Airbus Combination and the formation of MBDA, as well as impairment charges.
in €mIncome before financial income, income taxes
and minority interests
Dilution gain Airbus UK, MBDA
Goodwill amortisation and related
impairment charges
Exceptional depreciation (fixed assets)
Exceptional depreciation (financial assets)
Exceptional depreciation (inventories)
Income from investments
EBIT pre goodwill amortisation and exceptionals

68

EADS 2001 Consolidated Financial Statements

2001

2000
pro-forma

2,514(2,794)

200
–

1,466
260
315
275
(342)
1,694

429
176
–
483
111
1,399

Note

Consolidated Balance Sheets at 31st December 2001 and 2000
in €m

Note

2001

2000

AssetsIntangible assets
Property, plant and equipment
Investments and long-term financial assets
Fixed assets

10
10
11

10,58810,0504,726
25,364

8,165
8,120
4,609
20,894Inventories
Trade receivables
Other receivables and other assets
Securities
Cash and cash equivalents
Non-fixed assets

12
13
14
15

2,469
5,183
2,633
5,341
2,692
18,318

2,081
4,118
2,624
4,682
3,240
16,745

Deferred taxes
Prepaid expenses
Total assets

9

4,288
745
48,7153,151
654
41,44416

809
10,346(1,278)
9,877

807
9,359
84
10,25017

559
11,918

221
8,684

6,500
5,466
10,631
22,597806
2,958
48,715

5,779
4,268
8,200
18,247
1,128
2,914
41,444

Liabilities and stockholders’ equity
Capital stockReserves
Accumulated other comprehensive income
Stockholders’ equity
Minority interests
Provisions
Financial liabilities
Trade liabilities
Other liabilities
Liabilities
Deferred taxes
Deferred income
Total liabilities and equity

18
19
19
9

The accompanying notes are an integral part of these Consolidated Financial Statements.

EADS 2001 Consolidated Financial Statements

69

Consolidated Financial Statements
continued
Consolidated Statements of Cash Flowsfor the years 2001 and 2000 pro-forma
2001

2000
pro-forma

1,372
(17)

(909)
14

3,560
493
(2,817)
109
(71)
47
(22)
2
(655)
(894)
766
785
2,656

1,540
483
0
(611)
30
1,259
(107)
1,460
(1,201)
252
479
1,930
3,159

(2,196)(1,096)
402
850
138
(390)
20
(2,272)
(465)
253
(404)
(52)
21
(30)
(677)
14

(1,351)
(600)
292
187
(118)
0
(38)
(1,628)
83
0
(31)
0
1,540
43
1,635
6

(279)

3,172

7,760
7,481
552
8,033

4,750
7,760
162
7,922

(335)
(520)

(239)
(206)

in €m

Net income (loss)
Income applicable to minority interests
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortisation of fixed assets
Valuation adjustments
Dilution gain Airbus/MBDA
Change in deferred taxes
Results of fixed assets/businesses
Change in accrued liabilities
Result of companies accounted for by the equity method
Change in other operating assets and liabilities:– Inventories, net– Trade receivables– Trade liabilities– Other assets and liabilities
Cash provided by operating activities
Investments:– Purchases of fixed assets and increase in equipment of leased assets– Payments for investments in financial assets and acquisitions of subsidiaries– Proceeds from disposal of fixed assets and decrease in equipment of leased assets– Proceeds from disposals of financial assets and subsidiaries– Change in finance lease receivables
Acquisitions of securities
Cash from changes in consolidation
Cash used for investing activities
Change in financial liabilities
Cash contribution minority
Dividends paid
Repayments to minorities
Capital increase
OthersCash used for (provided by) financing activities
Effect of foreign exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents
Cash at beginning of period
Cash at end of period
additional securities medium-term
Cash and securities as stated in Balance Sheet
The following represents supplemental information with respect to cash flows from operating activities:
Interest paid
Income taxes paid
The accompanying notes are an integral part of these Consolidated Financial Statements. Cash and cash equivalents also comprise securities.

70

EADS 2001 Consolidated Financial Statements

Consolidated Statements of Changes in Shareholders’ Equity
for the years 2001 and 2000 pro-forma
Capitalstock

Accumulated
othercomprehensive
Reserves
incomeBalance at 1st January 2000 pro-forma

715

8,578

Capital increase
Capital increase ESOP (incl. discount)
IPO-Costs
Net loss
Depreciation first half-year goodwill
and fair values Dasa/Casa
Other changes

80
12

1,366
193
(56)
(909)

1,446
205
(56)
(909)

197
(10)

197
(10)

Balance at 31st December 2000
First application of IAS 39
Balance at 1st January 2001, adjusted

807

9,359

807

9,359

2

19
1,372
(404)

in €m

Capital increase ESOPNet profit
Dividend
Other comprehensive income
thereof changes in fair values of securities
thereof changes in fair valuesof hedging instruments
thereof currency translation adjustment

Note

22

24
23
16

84
(337)
(253)

(1,025)
(10)

22
22

Balance at 31st December 2001

84

Total

9,377

10,250
(337)
9,913
21
1,372
(404)
(1,025)

(878)
(137)
809

10,346(1,278)

9,877

The accompanying notes are an integral part of these Consolidated Financial Statements.

EADS 2001 Consolidated Financial Statements

71

Notes to Consolidated Financial Statements

BASIS OF PRESENTATION
1. THE COMPANY
The European Aeronautic Defence and Space Company EADS N.V. (“EADS” or the “Group”), a Dutch public company legally seatedin Amsterdam, is one of the leading manufacturers of commercial aircraft, civil helicopters, commercial space launch vehicles, missiles,
military aircraft, satellites and defence electronics. The Group is the result of the merger of the operations of Aerospatiale Matra S.A.
(“ASM”), the aerospace and defence activities of DaimlerChrysler AG (“Dasa”) and Construcciones Aeronauticas S.A. ("Casa") in
July 2000.
For accounting purposes, the combination of ASM, Dasa and Casa was treated as a business combination using the purchase methodof accounting with ASM as the acquirer. Adjustments have been made to allocate the excess of the fair values of Dasa and Casa overtheir historical costs amounting to €5,860 million and €1,095 million, respectively, to specifically identifiable assets acquired andliabilities assumed. Goodwill resulting from the acquisitions is amortised over 20 years, the expected period of benefit.
The consolidated financial statements of the Group have been prepared in accordance with the accounting standards issued by theInternational Accounting Standards Board (“IASB”) and the interpretations issued by the Standing Interpretations Committee of the
IASB, except that the Group expenses all development costs as incurred (see note 2). The financial statements were authorised for
issue by the Group’s Board of Directors on 15th March 2002.
Prior to the business combination which resulted in the formation of EADS, the consolidated financial statements of ASM wereprepared in accordance with French generally accepted accounting principles (“French GAAP”). In connection with the businesscombination, the consolidated financial statements of ASM for 1999 and for the period in 2000 prior to the business combination
were restated from French GAAP into IAS.
The Group is disclosing financial statements covering the periods 2001 and, on a pro-forma basis, 2000. Since EADS as a Group did
not exist throughout the total of the business year 2000, it cannot provide figures that cover all of this period. However, the group has
prepared pro-forma figures for the period 1st January 2000 to 31st December, 2000. These pro-forma consolidated figures of EADS,
which have not been audited, provide information as if EADS had already existed as of 1st January 2000 and are meant to reflect thedevelopment of EADS business as if it had taken place in 2000. Consequently, as the Airbus UK transaction and other transactions
occurred in 2001, the pro-forma figures for 2000 do not reflect these transactions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESConsolidation – The consolidated financial statements include all of the material subsidiaries under the control of EADS. Significant
investments in which EADS has a 20% to 50% ownership (“associated companies”) are generally accounted for using the equity
method. For investments in material joint ventures, EADS uses the proportionate method of consolidation (see Note 3). Other
investments are classified as available-for-sale financial instruments and are accounted for at fair value.
For business combinations accounted for under the purchase accounting method, all assets acquired and liabilities assumed arerecorded at fair value. An excess of the purchase price over the fair value of net assets acquired is capitalised as goodwill andamortised over the estimated period of benefit on a straight-line basis.
The effects of intercompany transactions are eliminated.

72

EADS 2001 Notes to Consolidated Financial Statements

Foreign Currencies – Transactions in foreign currencies are translated into euro at the foreign exchange rate in effect at the date of thetransaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into Euro at theforeign exchange rate in effect at that date. Foreign exchange gains and losses arising from translation are recognised in the income
statement. Non-monetary assets and liabilities denominated in foreign currencies, which are stated at historical cost, are translated into
Euro at the foreign exchange rate in effect at the date of the transaction.
Financial statements of foreign operations – The assets and liabilities of foreign entities, where the local currency is other than Euro,are generally translated using period-end exchange rates while the statements of income are translated using average exchange rates
during the period. Differences arising from the translation of assets and liabilities in comparison with the translation of the previous
periods are included as a separate component of shareholders’ equity (“Accumulated other comprehensive income”).
Revenue Recognition – Revenues are recognised upon the transfer of risk or the rendering of a service. For construction contracts,
revenues are recognised according to the percentage-of-completion method as contractually agreed-upon milestones are reached or
the work progresses. Changes in profit rates are reflected in current earnings as identified. Contracts are reviewed for possible losses
at each reporting period and provisions for estimated losses on contracts are recorded when identified.
Incentives applicable to performance on contracts are considered in estimated profit rates and are recorded when anticipated contract
performance is probable and can be reliably measured. Contract penalties are charged to expense in the period it becomes probablethat the Group will be subject to the penalties.
Sales of aircraft that include value guarantee commitments are accounted for as operating leases when these commitments
are considered substantial compared to the fair value of the related aircraft. Revenues then comprise lease income from suchoperating leases.
Revenues attributable to customer financing relate principally to the financing of commercial aircraft. Such revenues include
sales-type leases and finance income.
Product-Related Expenses – Expenses for advertising and sales promotion and other sales-related expenses are charged to expense
as incurred. Provisions for warranties are made at the time the related sale is recorded.
Research and Development Expenses – Research and development funded by the Group is expensed as incurred. Financed
research and development contracts are recorded as revenues.
Income Taxes –Deferred tax assets and liabilities reflect lower or higher future tax impacts that result for certain assets and liabilities
from temporary valuation differences between their carrying amounts and the tax bases as well as from net operating losses and tax
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates to apply to taxable income in the years inwhich those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of achange in tax rates is recognised in income in the period that includes the enactment date.
As deferred tax assets anticipate potential future tax benefits, they are recorded in the consolidated financial statements of EADS only
when the likelihood that the tax benefits will be realised is probable.
Intangible Assets – Purchased intangible assets, other than goodwill, are valued at acquisition cost and are generally amortisedover their respective useful lives (3 to 10 years) on a straight line basis. Goodwill arising from purchase accounting is amortised over
5 to 20 years.
Property, Plant and Equipment – Property, plant and equipment is valued at acquisition or manufacturing costs less accumulated
depreciation. Depreciation expense is recognised principally using the straight-line method. The costs of internally produced
equipment and facilities include direct material and labour costs and applicable manufacturing overheads, including depreciation
charges. The following useful lives are assumed: buildings six to 50 years; site improvements 6 to 20 years; technical equipment andmachinery 3 to 20 years; and other equipment, factory and office equipment 2 to 10 years. The cost of specialised tooling forcommercial production is capitalised and amortised over 5 years using the straight-line method. If the Group is liable for future
restoration of leased sites, it accrues for the amount not provided for by insurances.

EADS 2001 Notes to Consolidated Financial Statements

73

Notes to Consolidated Financial Statements
continued

Investment Property – The Group accounts for investment property using the cost model. Investment property is recorded onbalance sheet at book value, that is, at cost less any accumulated depreciation and any accumulated impairment losses.
Impairment of Long-lived Assets – The Group reviews long-lived assets to be held and used for impairment whenever events orchanges in circumstances indicate that the carrying amount of an asset may not be recoverable.
Lease – The Group is a lessee of property, plant and equipment. All leases that meet specified criteria intended to represent situations
where the substantive risks and rewards of ownership have been transferred to the lessee are accounted for as finance leases. Allother leases are accounted for as operating leases.
Non-fixed Assets – Non-fixed assets represent the Group’s inventories, receivables, securities and cash, including amounts to berealised in excess of one year. In the accompanying notes, the portion of assets and liabilities to be realised and settled in excess of
one year has been disclosed.
Inventories – Inventories are valued at the lower of acquisition or manufacturing cost or net realisable value. Manufacturing costs
comprise direct material and labour and applicable manufacturing overheads, including depreciation charges. Borrowing costs are
not capitalised.
Securities – Securities are accounted for at fair values, if readily determinable. Unrealised gains and losses on these investments areincluded within a separate component of stockholders’ equity (“Accumulated other comprehensive income”), net of applicabledeferred income taxes. All other securities are recorded at cost.
Cash and cash equivalents – Cash and cash equivalents consist of cash on hand, cash in bank, checks, and fixed deposits having ashort-term maturity.
Financial Instruments – EADS uses derivative financial instruments for hedging purposes. Financial instruments used in microhedging strategies to offset the Group’s exposure to identifiable and committed transactions are accounted for together with theunderlying business transactions (“hedge accounting”). The Group´s criteria for classifying a derivative instrument as a hedge include:(1) the hedge transaction is expected to be highly effective in achieving offsetting changes in cash flows attributable to the hedgedrisk, (2) the effectiveness of the hedge can be reliably measured, (3) there is adequate documentation of the hedging relationships at
the inception of the hedge. Derivative financial instruments are initially recognised in the balance sheet at cost and are subsequently
remeasured at fair value. The resulting gains and losses on forward contracts and options hedging cash flows mainly based on thefirm orderbook are included within a separate component of stockholders’ equity (“accumulated other comprehensive income”), netof applicable income taxes and are subsequently recognised in the income statement as a component of the related transactions,when realised (the "deferral method").
The fair values of the derivative instruments as well as the methods used by EADS to determine the fair values are disclosed in
Note 22.
When a hedging instrument expires or is terminated, any cumulative gain or loss existing in accumulated other comprehensive
income at that time remains in accumulated other comprehensive income and is recognised when the related committed transaction
is ultimately recognised in the income statement. If the committed transaction is no longer expected to occur, the cumulative gain orloss that was reported in accumulated other comprehensive income is immediately accounted for as financial result.
Financial instruments that have been previously used by EADS in macro-hedging strategies and do not qualify for hedge accounting
are accordingly classified as held-for-trading and carried at fair value, with changes in fair value included in other financial result.
In March 1999, the International Accounting Standards Committee issued International Accounting Standard (IAS) 39, “Financial
Instruments: Recognition and Measurement”. This Standard was effective for fiscal years beginning on or after 1st January 2001.
Following the introduction of IAS 39, all derivative financial instruments have been recognised as assets or liabilities. The opening
balance of equity as at 1st January 2001 has been adjusted. Prior year comparative figures have not been restated. Under the newstandard, the Group applies hedge accounting for certain foreign currency derivative contracts on qualifying cash flow hedges of
future sales as well as for certain interest rate swaps used as cash flow and fair value hedges of future interest payments. The financial
effects of adopting IAS 39 are disclosed in Note 22.

74

EADS 2001 Notes to Consolidated Financial Statements

Up to 31st December 2000, certain of the Group’s hedging instruments have been accounted for as macro hedges. In order toachieve the same treatment as for the existing micro hedges, EADS was able to document for most of these instruments that fromthe date of designation, a hedging relationship existed between each position being hedged and each hedging financial instrument.
The provision established for the mark to market valuation of those macro hedges as of 31st December 2000, will evolve until thecontractual term of these financial instruments.
Refundable Advances – Refundable advances from European governments are recorded as “Other Liabilities”.
Accrued Liabilities – Provisions for losses on completion of contracts – Provisions for losses on completion of contracts are recorded
when it becomes probable that total estimated contract costs will exceed total contract revenues. Such provisions are recorded as writedowns of work-in-process for that portion of the work, which has already been completed, and as provisions for risks for the remainder.
Losses are determined on the basis of estimated results on completion of contracts and regularly updated.
Provisions for financial guarantees corresponding to aircraft sales – Sales contracts for aircraft may stipulate financial guarantees
for lease payments, for the residual values of aircraft, for the repayment of the balance of outstanding borrowings and for the financingof the sales of certain aircraft on behalf of the Group. Guarantees may be sole, joint (e.g., with engine manufacturers) or restricted to aceiling defined in the contract. Provisions are recorded to reflect the underlying risk to the group in respect of guarantees given.
Retirement indemnities – When Group employees retire, they receive indemnities as stipulated in retirement or collective
agreements, in accordance with regulations and practices of the countries (principally Germany and France) in which theGroup operates.
French law stipulates that employees are paid retirement indemnities on the basis of the length of service. In Germany, retirement
indemnities are principally paid on the basis of salaries and seniority. Certain pension plans are based on salary earned in the last year oron an average of the last three years of employment while others are fixed plans depending on ranking (both salary level and position).
Actuarial assessments are regularly made to determine the amount of the Group’s commitments with regard to retirement
indemnities. This assessment includes an assumption concerning changes in salaries, retirement ages and long-term interest rates.
It comprises all the expenses the Group will be required to pay to meet these commitments.
The resulting obligation is recorded in the balance sheet as a provision. Actuarial gains and losses are deferred and recorded over theremaining average service life of employees.
Use of Estimates – The preparation of financial statements requires management to make estimates and assumptions that affect thereported amounts of assets and liabilities and disclosure of contingent amounts at the date of the financial statements and reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
3. SCOPE OF CONSOLIDATION
Perimeter of consolidation (31st December 2001) – The consolidated financial statements include, in addition to EADS N.V.:• 206 companies which are fully consolidated,• 33 companies which are proportionately consolidated,• 17 companies, which are investments in associates and are accounted for using the equity method.
The significant subsidiaries, associates, and joint ventures are listed in the appendix entitled “Information on principal investments”.
4. MAJOR EVENTS
Creation of EADSEADS was created as of 10th July 2000. For accounting purposes, the combination of ASM, Dasa, and Casa was treated as a businesscombination using the purchase method of accounting. As a result, the balance sheets of Dasa and Casa were revalued to reflect fairmarket value of acquired assets and liabilities, while the balance sheet of ASM was included in the EADS at historical cost.

EADS 2001 Notes to Consolidated Financial Statements

75Notes to Consolidated Financial Statements
continued

First Application of IAS 39
As of 1st January 2001, EADS applied IAS 39 “Financial Instruments: Recognition and Measurement”. For the vast majority ofderivative financial instruments used to hedge mainly firm commitments, EADS fulfils the qualifying criteria for hedge accounting.
As a result, provisions have increased by €1.9 billion to €3.7 billion as at 31st December 2001. The net effect is shown as a decrease inconsolidated equity, within a separate component of stockholders’ equity (“accumulated other comprehensive income”), net of
applicable deferred income taxes.
Airbus UK Transaction
As of 1st January 2001, the date when EADS gained economic control, the new integrated Airbus company (Airbus SAS) has been
consolidated 100% within EADS. Legal closing of the transaction was 11th July 2001. The new Airbus company is now held 80% by
EADS and 20% by BAE Systems (“BAES”).
The main accounting impacts of this transaction are as follows:• Airbus UK as well as its 20% participation in Airbus GIE have been transferred to EADS. In exchange for the contribution of Airbus
UK to Airbus SAS at fair value, BAES received 20% of Airbus SAS’s shares.
• The key financial impacts of this transaction include the recognition of a goodwill of about €4 billion, fair value adjustments ofapproximately €0.5 billion, and a dilution gain of about €2.5 billion.
Creation of MBDA
On 18th December 2001, EADS, BAES and Finmeccanica signed the agreement establishing MBDA as a legal operating entity.
MBDA is jointly owned with 37.5% by EADS and BAES, respectively and 25% by Finmeccanica.
The main accounting impacts are as follows:• EADS has transferred its shares in Aerospatiale Matra Missiles and Matra BAE Dynamics to MBDA in exchange for 37.5% of
Alenia Marconi Systems; the purchase accounting method was applied. The transaction resulted in a dilution gain amounting
to €0.3 billion.
• To better reflect the substance of the MBDA transaction, EADS consolidates proportionately 50% of MBDA with a disclosure of
12.5% minority interest instead of a proportionate consolidation of its economic interest of 37.5%. This method has been chosenbecause EADS together with BAES jointly controls the operations of MBDA.
Tesat-Spacecom
On 30th November 2001, Astrium Group, which is consolidated proportionally at 75% within EADS and as part of Space Division,acquired Tesat-Spacecom GmbH & Co. KG, Germany, (formerly Bosch-Satcom GmbH), the Space/Communications and related
businesses of Robert Bosch Group. The acquisition was accounted for under the purchase method. The initial goodwill was valued at€0.1 billion and will be depreciated over a period of 20 years. Astrium anticipates finalising the TESAT-COM purchase price allocation
during 2002.
Nortel Joint Ventures
As of the beginning of the fourth quarter 2001, modifications initiated by Nortel in the management structure of the Nortel joint
ventures led EADS to change its accounting treatment regarding its 42% investment in Nortel Networks Germany and its 45%
investment in Matra Nortel Communications. As a result, Nortel Networks Germany and Matra Nortel Communications are
now included in EADS’ financial statements as non-consolidated investments. Before 1st October 2001, the equity method had
been applied.
Dornier
In 2001 several Dornier family members being shareholders of Dornier GmbH exercised a put option and offered 17.5% of the sharesin Dornier GmbH to DaimlerChrysler. DaimlerChrysler in return had the right to have DADC Luft- und Raumfahrt Beteiligungs AG(“DADC”), a subsidiary of EADS, buy the shares at fair market value. As a result, EADS holds indirectly through DADC 76% of theshare capital of Dornier GmbH (2000: 58%).
CogentOn 1st December 2001, EDSN acquired Cogent Defence Systems. The acquisition was accounted for under the purchase method.
The initial goodwill was valued at €0.1 billion and will be depreciated over a period of ten years.

76

EADS 2001 Notes to Consolidated Financial Statements

NOTES TO THE CONSOLIDATED STATEMENTS OF INCOME
5. REVENUES
Revenues in 2001 reach €30,798 million (2000 pro-forma: €24,208 million). This increase is mainly due to the full consolidation of new
Airbus Group for the first time, to a growth in aircraft deliveries at Airbus as well as to the average currency exchange rate increase of
US dollar to euro from the prior year same period.
Revenues are comprised of sales of goods and services, which relate mainly to sales of commercial airplanes, as well as of revenues
associated with construction contracts accounted for under the percentage-of-completion-method, financed research anddevelopment, customer financing revenues and others.
6. FUNCTIONAL COSTS AND OTHER EXPENSES
Cost of sales and other functional costs include cost of materials as follows:in €mCost of raw materials, supplies and resale products
Cost of purchased services

Year ended
31st December
2001
2000

14,401
5,635
20,036

11,232
3,886
15,118Selling, administrative and other expenses are comprised of the following:in €mSelling expenses
Administration expenses
Other expenses

Year ended
31st December
2001
2000

800
1,386
375
2,561

710
1,180
620
2,510

Other expenses include losses from sales of fixed assets (€20 million and €50 million in 2001 and 2000, respectively) and additions toother accruals (€34 million and €124 million in 2001 and 2000, respectively).
Personnel expenses of €6,863 million are comprised of wages, salaries and social contributions amounting €6,606 million as well as
net periodic pension cost (see Note 17a) of €257 million.
7. OTHER INCOME
Other income mainly comprises the dilution gain as a result of the Airbus UK transaction (see Note 4) as well as a dilution gain as aresult of the MBDA transaction, totalling €2,817 million, rental income (€21 million and €49 million in 2001 and 2000, respectively).
8. FINANCIAL RESULTThe table below sets forth the financial result of the group:in €mIncome (loss) from investments
Interest income
Other financial loss

Year ended
31st December
2001
2000

(342)
63
(234)
(513)

111
10
(1,436)(1,315)The loss from investments in 2001 is mainly driven by a depreciation, following an impairment test, of Matra Nortel Communications
and Nortel Networks Germany totalling €(315) million. Additionally included is the result on equity investments of €22 million mainlycomprised of Dassault €(111) million and Nahuelsat (€(63) million).
Other financial loss in 2001 and 2000 mainly results from mark-to-market revaluation of financial instruments that do not qualify forhedge accounting (see Note 22 on Financial Instruments).

EADS 2001 Notes to Consolidated Financial Statements

77

Notes to Consolidated Financial Statements
continued

9. INCOME TAXES
Income (loss) before income taxes and minority interests amounted to €2,001 million for the year ended 31st December 2001
(2000: €(1,115) million).
The (expense) benefit for income taxes consists of the following:in €mCurrent tax expense
Deferred tax (expense)/benefit

Year ended
31st December
2001
2000

(549)
(97)
(646)

(405)
625
220

For the Group’s German subsidiaries, the deferred taxes at 31st December 2001 are calculated using a federal corporate tax rate of
25% (2000: 25%) plus a solidarity surcharge of 5.5% for each year on federal corporate taxes payable plus the after federal tax benefit
rate for trade tax of 12.125% (2000: 12.125%). Including the impact of the surcharge and the trade tax, the tax rate applied to Germandeferred taxes amounts to 38.5% (2000: 38.5%).
In 2000, the German government enacted new tax legislation which reduces the Group’s statutory corporate tax rate for its German
subsidiaries from 40% on retained earnings and 30% on distributed earnings to a uniform 25%, effective beginning 1st January 2001.
In France, the corporate tax rate in effect for 2000 was 331⁄3% plus a surcharge of 10%. The French government has established forthe years 2001 and 2002 a reduced surcharge of 6% in 2001 and 3% in 2002. Accordingly, deferred tax assets and liabilities for theGroup’s French subsidiaries were calculated using the enacted tax rate of 35.43% for temporary differences. The effects of the tax
rate reduction on the year-end 2001 and 2000 deferred tax assets and liabilities are reflected in the reconciliation presented below.
The following table shows a reconciliation from an expected income tax expense – using the Dutch corporate tax rate of 35% – to thereported tax expense (2000: benefit). The reconciling items represent non-taxable benefits or non-deductible expenses coming frompermanent differences between the local tax base and the reported financial statements according to IAS rules.
in €mProfit (loss) before income taxes and minority interests
x Corporate income tax rate
Expected benefit (expense) for income taxes
Effect of changes in tax laws
Foreign tax rate differential
Dilution gains
Goodwill amortisation
Write down of deferred tax assets
Tax credit for R&D expenses
Other
Reported tax benefit (expense)

Year ended
31st December
2001
2000

2,001
35%
(700)
(1)
(4)
936
(588)
(264)
48
(73)
(646)

In 2001, the tax effect of the non-deductable depreciation of certain investments is reflected above in other (€(73) million).

78

EADS 2001 Notes to Consolidated Financial Statements(1,115)
35%
390
88
24
–
(192)
(129)
28
11
220

Deferred income taxes reflect temporary valuation differences on certain assets and liabilities between their carrying amount in thefinancial statements and the tax bases. Future tax impact from net operating losses and tax credit carry forwards are also consideredin the deferred income tax calculation. Deferred income taxes are recorded on the following assets and liabilities:
31st December
2001
2000

in €m

Intangible assets
Investments and long-term financial assets
Inventories
Prepaid expenses
Net operating loss and tax credit carryforwards
Retirement plans
Other accrued liabilities
Liabilities
Deferred income
Write down of deferred tax assets
Deferred tax assets

12
–
379
174
613
498
2,239
585
870
5,370
(625)
4,745

20
12
193
203
343
473
1,059
743
594
3,640
(360)
3,280

Property, plant and equipment
Investments and long-term financial assets
Receivables
Other
Deferred tax liabilities
Deferred tax assets, net

1,046
81
107
29
1,263
3,482

975
–
259
23
1,257
2,023

At 31st December 2001, the Group had domestic corporate tax net operating losses (“NOLs”) amounting to €62 million, foreign NOLs
and credit carryforwards amounting to €1,568 million, and foreign trade tax NOLs amounting to €726 million. The amount of theGroup’s deferred tax valuation allowances is based upon management’s estimate of the level of deferred tax assets that will be
realised. In future periods, depending upon the Group’s financial results, management’s estimate of the amount of the deferred tax
assets considered realisable may change, and hence the write down of deferred tax assets may increase or decrease.
After netting of deferred income tax assets and liabilities within the same taxable entity and maturity, the deferred income tax assets
and liabilities in the consolidated balance sheets are as follows:in €mDeferred tax assets
Deferred tax liabilities
Deferred tax assets, net

31st December
2001
thereof
Total
non-current

4,288
(806)
3,482

2,924
(689)
2,235

31st December
2000
thereof
Total
non-current

3,151(1,128)
2,023

2,419
(691)
1,728

The deferred tax recognised directly in equity during the period is as follows:
in €m

2001

Effect of adopting IAS 39
Fair value reserves in equity:
Available-for-sale investments
Cash flow hedges
Total

222
1
606
829

EADS 2001 Notes to Consolidated Financial Statements

79Notes to Consolidated Financial Statements
continued

NOTES TO THE CONSOLIDATED BALANCE SHEETS
10. INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT, NET
Intangible assets
Intangible assets principally represent goodwill. Schedules detailing gross, accumulated depreciation and net values of intangible
assets are as follows:
Cost
in €m

Other intangible assets
Goodwill
Total

Balance at
1st January
2001

Exchangedifferences

Additions

Changes in
consolidation
scope

Reclassification

305
8,442
8,747

2
2
4

96
4,453
4,549

(3)
–
(3)

–
(389)
(389)

Balance at
1st January
2001

Exchangedifferences

Amortisation
chargeChanges in
consolidation
scope

Impairment
charge

(189)
(393)
(582)

(1)
(1)
(2)

(61)
(676)
(737)

3
–
3

–
(790)
(790)

Balance at
31st December
Disposals
2001

(22)
(245)
(267)

378
12,263
12,641

Amortisationin €mOther intangible assets
Goodwill
Total

Balance at
31st December
Disposals
2001

16
39
55

(232)
(1,821)(2,053)Carrying amountin €mOther intangible assets
Goodwill
Total

Balance atBalance at
1st January 31st December
2001
2001

116
8,049
8,165

146
10,442
10,588Goodwill increased mainly due to the purchase of Airbus UK and 20% stake in Airbus GIE.
Reclassification of goodwill €(389) million results from €(516) million related to the Nortel Joint Venture reclassified to financial assets,
partly offset by €127 million from other receivables and other assets to goodwill (see Note 14). As a result of the creation of MBDA,€209 million of goodwill considered at the time of the Aerospatiale Matra transaction have been included in the computation of the
net dilution gain and is shown within disposals.
Impairment loss
In 2001, following the events caused by the terrorist attacks on 11th September 2001, the Group performed an impairment test on
recognised goodwill for the Airbus division. The recoverable amount of Airbus, which is to be seen as a cash generating unit on its
own, is exceeding the carrying amount. Therefore, no goodwill has to be impaired.
Further impairment tests were performed for the Space and Defence divisions. Based on current forecasts the Group performed
impairment tests which resulted in impairment charges as follows:• Space division: Goodwill for Astrium had to be impaired by €210 million.
• Defence division: Impairment charges on goodwill for Systems & Defence Electronics (S&DE) of €240 million, LFK of €170 million
and Matra Datavision of €170 million had to be recognised.
The impairment tests had been performed using the discounted cash-flow method.

80

EADS 2001 Notes to Consolidated Financial Statements

Property, plant and equipment
Schedules detailing gross, accumulated depreciation and net values of property, plant and equipment show the following:
Cost

in €m

Land, leasehold improvements and buildings
including buildings on land owned by others
Technical equipment and machinery
Other equipment, factory and office equipment
Advance payments relating to plant and equipment
and construction in progress
Total

Balance at
1st January
2001

Additions

Change inconsolidation
scope andexchangedifferences

3,523
3,295
5,279

205
270
923

109
770
1,176

106
255
30

(67)
(78)
(189)

3,876
4,512
7,219

443
12,540

701
2,099

111
2,166

(342)
49

(101)
(435)

812
16,419Balance at
1st January
2001

Depreciation
chargeChange inconsolidation
scope andexchangedifferences

Reclassification(1,038)(1,875)(1,496)

(183)
(477)
(840)

(32)
10
(365)

(17)
21
(188)

3
62
56

(1,267)(2,259)(2,833)(11)(4,420)(1)(1,501)

–
(387)

2
(182)

–
121

(10)
(6,369)Reclassification

Balance at
31st December
Disposals
2001

Depreciationin €mLand, leasehold improvements and buildings
including buildings on land owned by others
Technical equipment and machinery
Other equipment, factory and office equipment
Advance payments relating to plant and equipment
and construction in progress
Total

Balance at
31st December
Disposals
2001

Carrying amountin €mLand, leasehold improvements and buildings
including buildings on land owned by others
Technical equipment and machinery
Other equipment, factory and office equipment
Advance payments relating to plant and equipment
and construction in progress
Total

Balance atBalance at
1st January 31st December
2001
2001

2,485
1,420
3,783

2,609
2,253
4,386

432
8,120

802
10,050Reclassification of other equipment, factory and office equipment (€188 million) includes an allocation of Aircraft financial risk
provisions for leased aircraft of €169 million.
Additions to property, plant and equipment represent largely leased aircraft at Airbus and Aeronautics divisions as well as additions tofacilities. The change in consolidation scope represents mainly the first time consolidation of Airbus UK and 20% stake in Airbus GIE.
Leased aircraft classified as operating lease equipment are included in the position “Other equipment, factory and office equipment”
and represent amounts at cost of €3,206 million and €2,816 million as at 31st December 2001 and 2000, respectively (net ofaccumulated depreciation of €1,384 million and €610 million). The related depreciation expense for 2001 amounts to €419 million(2000: €177 million). These aircraft classified as operating lease include aircraft that have been accounted for as leases because of
substantial value guarantee commitments of €1,912 million and other aircraft €1,294 million.

EADS 2001 Notes to Consolidated Financial Statements

81Notes to Consolidated Financial Statements
continued

Property, plant and equipment include buildings, technical equipment and other equipment accounted for in fixed assets underfinance lease agreements for net amounts of €169 million (net of accumulated depreciation of €273 million) as at 31st December 2001and €195 million as at 31st December 2000.
Non-cancellable future lease payments due from customers for equipment on operating leases to be included in revenues, at
31st December 2001 are as follows:
2002
2003
2004
2005
2006
thereafter

€195m
€193m
€191m
€189m
€178m
€443m

11. INVESTMENTS AND LONG-TERM FINANCIAL ASSETS
The following table sets forth the composition of investments and long-term financial assets:
31st December 31st December
2001
2000

in €m

Equity investments
Other investments
Other financial assets
Total

1,252
766
2,708
4,726

1,318
422
2,869
4,609

Equity investments comprise for 2001 the 45.96% (2000: 45.76%) interest in Dassault Aviation of €1,252 million (2000: €1,164 million).
A list of the investments in associates is included in Appendix “Information on principal investments”. All significant investments inassociates have been accounted for using the equity method.
Other investments comprise a 42% interest in Nortel Networks Germany of €156 million and a 45% interest in Matra Nortel
Communications of €119 million. At 31st December 2000, these investments had been recorded at equity with €55 million and€70 million, respectively. The increase in 2001 is mainly derived from the allocation of related goodwill. Other financial assets include
loans to customers of €949 million and finance lease receivables from aircraft financing operations of €514 million. Other financial
assets also include security deposits of €1,044 million and other loans, e.g. to employees of €201 million.
The components of investment in finance leases are as follows:
At 31st December
2001

in €m

Minimum lease payments receivables
Unearned finance income
Allowance
Total
Future minimum lease payments and investments in finance leases to be received are as follows:
2002
2003
2004
2005
2006
thereafter

82

€128m
€117m
€121m
€92m
€90m
€474m

EADS 2001 Notes to Consolidated Financial Statements

1,022
(222)
(286)
514

12. INVENTORIESAt 31st December
2001
2000

in €m

Raw materials and manufacturing supplies
Work in progress
Finished goods, parts and products held for resale
Advance payments to suppliers

929
6,590
3,314
1,230
12,063(9,594)2,469

Less: Advance payments received

749
5,045
2,027
1,125
8,946
(6,865)
2,081

13. TRADE RECEIVABLES
At 31st December
2001
2000

in €m

Receivables from sales of goods and services
Allowance for doubtful accounts

5,572
(389)
5,183

4,494
(376)
4,118

As of 31st December 2001, €155 million of the trade receivables mature after more than one year.
14. OTHER RECEIVABLES AND OTHER ASSETS
Other receivables and other assets include an amount of €454 million (2000: €771 million) corresponding to the remaining capitalised
settlement payment to the German Government with respect to refundable advances which is amortised through the income
statement at the delivery pace of the corresponding planes. Due to additional evidence regarding these refundable advances
subsequent to acquisition date (1st July 2000) resulting from a valuation study for Airbus long range airplanes, a part of the amountassigned to this asset was reclassified as goodwill. The adjustment to the fair value as compared to when the acquisition was originallyaccounted for amounts to a reduction of €206 million in other assets at the date of acquisition of Dasa by ASM to form EADS.
Corresponding to that, deferred tax liabilities have been reduced by €79 million and goodwill increased by €127 million.
Other receivables and other assets further comprise receivables from affiliated companies of €189 million (2000: €183 million) andreceivables from related companies of €352 million (2000: €398 million), net of allowance of €(112) million (2000: €(25) million).
As of 31st December 2001, €1,023 million of other receivables and other assets mature after more than one year (2000: €681 million).
15. SECURITIESThe securities of €5,341 million (2000: €4,682 million) comprise mainly “Available-for-Sales Securities” amounting to €5,317 million(2000: €4,655 million).
16. SHAREHOLDERS’ EQUITY
The issued share capital of the Group consists of 809,175,561 ordinary shares as at 31st December 2001 (2000: 807,157,667).
The authorised share capital consists of 3,000,000,000 shares. The shares have a par value of €1.00.
In connection with the ESOP 2001 – Employee Stock Ownership Plan – (see Note 24), EADS issued 2,017,894 shares with a nominal
value of €1.00, representing a nominal value of €2,017,894.00.
The Group’s Board of Directors took decisions on 12th July and 18th September 2001 to launch a share buy back plan as approved by
the general meeting of shareholders on 10th May 2001. As a result, the Board of Directors requested the Chief Executive Officers to
set up a buy back plan for 10,500,000 shares. In 2001, the Group has not bought back any shares.
On 10th May 2001, the general meeting of shareholders further decided to pay a cash dividend for 2000 for a gross amount of €0.50
per share, which was paid on 27th June 2001.
The change of shareholders’ equity is provided in the Consolidated Statements of Changes in Shareholders’ Equity.

EADS 2001 Notes to Consolidated Financial Statements

83

Notes to Consolidated Financial Statements
continued

17. PROVISIONSin €mRetirement plans (see Note 17a) and similar obligations
Other provisions (see Note 17b)

At 31st December
2001
2000

3,176
8,742
11,918

2,986
5,698
8,684

€3,128 million (2000: €2,836 million) of retirement plans and similar obligations and €4,460 million (2000: €2,894 million) of otherprovisions have a maturity of more than one year.
a) Retirement plans
When Group employees retire, they receive indemnities as stipulated in retirement agreements, in accordance with regulations andpractices of the countries (principally France and Germany) in which the Group operates. French law stipulates that employees arepaid retirement indemnities on the basis of the length of service. In Germany, retirement indemnities are paid on the basis of salaries
and seniority.
The following provides information with respect to the Group’s pension liabilities.
in €mChange in defined benefit obligations:Defined benefit obligations at beginning of year
Service cost
Interest cost
Plan amendments
Actuarial (gains) losses
Acquisitions and otherBenefits paid
Defined benefit obligations at end of year

At 31st December
2001
2000

3,512
84
220
(8)
191
12
(131)
3,880

3,510
81
195
3
(159)
1
(119)
3,512

The defined benefit obligation at end of the year is the present value, without deducting any plan assets, of expected future
payments required to settle the obligation resulting from employee service in the current and prior periods.
Change in plan assets:
Fair value of plan assets at beginning of year
Actual return on plan assets
Contributions
Benefits paid
Fair value of plan assets at end of year

682
(70)
1
(42)
571

594
88
38
(38)
682

The fair value of plan assets at end of the year comprises assets held by long-term employee benefit funds that exist solely to pay orfund employee benefits.
A reconciliation of the funded status to the amounts recognised in the consolidated balance sheets is as follows:in €mFunded status1
Unrecognised actuarial net gains (losses)
Net amount recognised
1 Difference between the defined benefit obligations and the fair value of plan assets.

84

EADS 2001 Notes to Consolidated Financial Statements

At 31st December
2001
2000

3,309
(158)
3,151

2,830
129
2,959

The net amount recognised represents the amount recognised as a defined benefit pension liability and is part of the caption“Retirement plans and similar obligations”. It includes the funded status, adjusted by actuarial net gains/losses, which do not have tobe recognised because they do not meet the recognition criteria. The difference between the net amount recognised as pension
liability (€ 3,151 million; 2000: € 2,959 million) and the total amount of retirement plans and similar obligations (€ 3,176 million;
2000: € 2,986 millions) is caused mainly by additional commitments for deferred compensation, which in the year of its origin do notform part of the net amount recognised as pension liability.
The weighted-average assumptions used in calculating the actuarial values of the retirement plans were as follows:
2001%

Assumptions as of 31st December:

Discount rate
Rate of compensation increase
Inflation rate

2000%

5.0 – 6.0 5.0 – 6.5
3.0 – 3.5 1.5 – 3.0
2.0 2.0 – 2.5

For the Group’s German entities, the applied interest rate used in the actuarial opinion dropped from 6.5% to 6.0%.
The components of the net periodic pension cost, included in Income before financial result income taxes and minority interests, wereas follows:
2001

2000
pro-forma

84
220
(47)
257

81
195
(48)
228

in €m

Service cost
Interest cost
Expected return on plan assets
Net periodic pension costb) Other provisions
Other provisions consisted of the following:in €mAircraft financial risksServices to be supplied
Contract losses
Warranties
Financial instruments
Other risks and charges

At 31st December
2001
2000

1,498
820
450
198
3,673
2,103
8,742

981
918
338
263
1,140
2,058
5,698

The increase in provision for Aircraft financial risks is mainly due to Airbus first time 100% consolidation and to the adaption of thelevel of the provision to the net exposure. The increase in provisions for financial instruments is due to IAS39 first-time application,
hedge portfolio increase and US$ strengthening against euro and UK£.
Development of provisions in €mas of 31/12/2000
Change in consolidation scope
Change in financial instruments (provision)
Reclassification from deferred income and prepaid
expenses to financial instruments (provision)
Additions/Utilisation
as of 31/12/2001

Total

5,698
591
1,695
607
151
8,742

EADS 2001 Notes to Consolidated Financial Statements

85

Notes to Consolidated Financial Statements
continued

18. FINANCIAL LIABILITIESin €mAt 31st December
2001
2000

Bonds
Liabilities to financial institutions
Liabilities to affiliated companies
Loans
Liabilities from finance leases
Others

426
286
90
106
110
444

270
379
52
97
75
130

Short-term financial liabilities (due within one year)
Bonds
Liabilities to financial institutions
thereof due in more than five years: 1,162 (2000: 1,031)
Liabilities to affiliated companies
thereof due in more than five years: 9 (2000: 0)
Loans
thereof due in more than five years: 1,217 (2000: 713)
Liabilities from finance leases
thereof due in more than five years: 1,094 (2000: 1,150)

1,462
195
1,541

1,003
599
1,447

18

0

1,648

1,169

1,636

1,561

5,038
6,500

4,776
5,779

Long-term financial liabilities

The rise in financial liabilities by €721 million to €6,500 million is caused by first time consolidation of Airbus UK and the additional
20% of Airbus GIE. Included in Others are financial liabilities against joint venture partners.
Aggregate amounts of financial liabilities maturing during the next five years and thereafter are as follows:in €mFinancial liabilities

2002

2003

2004

2005

2006

thereafter

1,462

497

319

313

427

3,482

19. TRADE AND OTHER LIABILITIESin €m

Trade liabilities
Other liabilities

At 31st December
2001
2000

5,466
10,631
16,0974,268
8,200
12,468In the trade liabilities as of 31st December 2001, €173 million (2000: €202 million) mature after more than one year. Included in“other liabilities” are €2,024 million (2000: €1,136 million) maturing after more than five years.
At 31st December 2001, other liabilities mainly comprise customer advance payments of €4,509 million (2000: €3,811 million), as wellas European Governments refundable advances of €3,469 million (2000: €2,088 million). They also include further liabilities to relatedparties of €68 million (2000: €103 million) and to affiliated parties amounting to €85 million (2000: €39 million). The increase inEuropean Governments refundable advances results mostly from the first consolidation of Airbus UK.

86

EADS 2001 Notes to Consolidated Financial Statements

OTHER NOTES
20. LITIGATION AND CLAIMS
Various legal actions, governmental investigations, proceedings and other claims are pending or may be instituted or asserted in the
future against the Group. Litigation is subject to many uncertainties, and the outcome of individual matters is not predictable withassurance. It is reasonably possible that the final resolution of some of these matters may require the Group to make expenditures,in excess of established reserves, over an extended period of time and in a range of amounts that cannot be reasonably estimated.
The term “reasonably possible” is used herein to mean that the chance of a future transaction or event occurring is more than remote
but less than likely. Although the final resolution of any such matters could have a material effect on the Group’s consolidated
operating results for the particular reporting period in which an adjustment of the estimated reserve is recorded, the Group believes
that any resulting adjustment should not materially affect its consolidated financial position.
21. COMMITMENTS AND CONTINGENCIESAt 31st December 2001, in relation to its Airbus and its ATR activities, EADS is contingently liable for credit guarantees and has
participations in financing receivables under certain customer finance programmes. When contracting such customer financing
exposure, Airbus and ATR have generally established a secured position in the aircraft being financed. EADS believes that theestimated fair value of the aircraft securing such commitments will substantially offset any potential losses from the commitments.
Provisions are taken to cover any shortfall between the amount of financing commitments given and the fair market value of theaircraft financed. Additionally, the Group entered into commitments to provide financing with respect to aircraft on order, including
options for delivery in the future. The risk that such commitments be exercised is considered remote. Exposure is only recognised
when a financing is in place, which occurs upon delivery of the aircraft.
Despite the underlying collateral, if Airbus should be unable to honour its obligations, certain EADS and BAE SYSTEMS groupcompanies retain joint and several liability for sales financing exposure incurred by Airbus prior to 1st January 2001. EADS’ exposure toliabilities incurred by Airbus following 1st January 2001 is limited by its status as a shareholder in Airbus SAS. With respect to ATR, eachshareholder is jointly and severally liable to third parties without limitation. The liability is limited to each partner’s proportionate share.
Commitments (€245 million; 2000: €299 million) include contingent liabilities principally representing guarantees of indebtedness,
contractual guarantees and commitments as to contractual performances.
In addition, the Group has granted some European governments and other customers performance bonds in connection with orders.
Operating lease commitments
Future nominal rental expenses for rental and lease agreements, which have initial or remaining terms in excess of one year at
31st December 2001 are as follows:
in €m

2002
2003
2004
2005
2006
thereafter

Operating leases

416
400
416
391
395
2,866

The total of these future commitments of €4,884 million includes aircraft lease commitments relating mostly to Airbus of €3,945
million and procurement operations (e.g., facility leases, car rentals) of €839 million. Aircraft lease commitments arise from aircraft
head-leases and are typically backed by corresponding sublease income from customers. A large part of these Airbus leasecommitments (€2,092 million) arises from transactions that were sold down to third parties, which assume liability for the payments.
The nominal value of future Airbus aircraft lease commitments where EADS bears the risk is €1,853 million. EADS determines its
gross exposure to such operating leases as the present value of the related payment streams.
22. INFORMATION ABOUT FINANCIAL INSTRUMENTSa) Financial risk management
By the nature of the activities carried out, EADS is exposed to a variety of financial risks, especially foreign currency exchange raterisks and interest rate risks, as explained below. The management of such financial risks at EADS is carried out by a central treasury
department under policies approved by the Board of Directors. The identification, evaluation and hedging of the financial risks is in
the responsibility of the operating companies.
EADS 2001 Notes to Consolidated Financial Statements

87

Notes to Consolidated Financial Statements
continued

Foreign currency exchange rate risks – EADS’ revenues are mainly denominated in US dollars, whereas the major portion of its
costs are incurred in euros. Consequently, to the extent that EADS does not use financial instruments to cover its foreign currency
exchange rate exposure from the time of a customer order of equipment to the time of its delivery, its profits will be affected bychanges in the euro-US dollar exchange rate. As the Group intends to generate profits only from its operations and not throughspeculation on foreign currency exchange rate movements, EADS uses hedging strategies to manage and minimise the impact of
exchange rate fluctuations on these profits. At inception of the Group, EADS’ foreign exchange hedge position was the result of the
combination of the outstanding hedging portfolio of ASM, Dasa and CASA.
EADS manages a long-term hedging portfolio with a maturity of several years covering US dollar sales, mainly from the activities ofAirbus. EADS is designating part of the underlying items as the hedged position to cover its US dollar exposure, primarily using
foreign currency forwards and option contracts. Apart from plain forwards, the other main currency strategy in place as of
31st December 2001 encompasses synthetic forwards, which are a combination of purchases of US dollar puts and sales of US dollar
calls, each with the same notional amount and maturity.
EADS endeavours to hedge the majority of its exposure based on the firm orderbook but with a decreasing hedging proportion
according to time. EADS hedges between 50% and 100% of firm sales in US dollar for the following year up to 2008. The coverage
ratio may be adjusted to take into account macroeconomic movements affecting the spot and interest rates, as applicable.
Interest rate risk – The Group uses several types of instruments to manage interest rate risk and thus to minimise its financial
expenses and achieve a better balance between fixed and variable rate debt or placements.
Hedging instruments that are specifically designated to debt instruments have at the maximum the same nominal amounts as well as
the same maturity dates compared to the hedged item, with the exception of a few residual positions with non-material positive markto-market effects. In general, EADS is only investing in short-term instruments and/or instruments that are related to a floating interest
index in order to further minimise any interest risk in its cash and securities portfolio.
Liquidity risk – The Group policy is to maintain sufficient cash and cash equivalents or have available funding through an adequate
amount of committed credit lines facilities to meet its future commitments. Any excess cash is invested in non-speculative financial
instruments, mostly listed securities that are actively traded.
b) Notional amounts and credit risk
The contract or notional amounts of derivative financial instruments shown below do not always represent amounts exchanged by theparties and, thus, are not necessarily a measure for the exposure of the Group through its use of derivatives.
The notional amounts of derivative financial instruments are as follows, specified by year of expected maturity:
Remaining Period

Not
exceeding
one year

One yearup tofive years

More than
five years

2001

2000

Foreign exchange contracts
Net forward sales contracts
Purchase put options, net

6,160
3,290

19,094
1,507

4,800
0

30,054
4,797

16,705
4,807

Sale of call options, net

4,184

1,507

0

5,691

9,236

Interest rate contracts:
Interest rate swaps
CAP purchases
Floor sales

287
16
16

715
45
45

0
0
0

1,002
61
61

963
144
69

in €m

88

EADS 2001 Notes to Consolidated Financial Statements

EADS may be exposed to credit-related losses to the extent of non-performance by counterparts to financial instruments. EADS has,
however, set up a credit line system, where every authorised counterpart (chosen among international financial institutions andcorporations) is granted a ceiling for outstanding market transactions. The ceilings are based on the ratings given by established rating
agencies and on the equity and profit figures of each counterpart. Exposure with respect to credit lines is regularly checked by therelevant control officers. Due to the quality of the selected counterparts, EADS believes that the overall credit risk related to financial
instruments is appropriate.
c) Fair value of financial instruments
The fair value of a financial instrument is the price at which one party would assume the rights and/or duties of another party.
Fair values of financial instruments have been determined with reference to available market information at the balance sheet date
and the valuation methodologies discussed below. Considering the variability of their value-determining factors and the volume offinancial instruments, the fair values presented herein may not be indicative of the amounts that the Group could realise in a current
market exchange.
The carrying amounts and fair values of the Group’s financial instruments are as follows:in €mBalance Sheet Treasury Instruments
Assets:Financial assets
Securities
Cash and cash equivalents
Liabilities:
Financial liabilities
Derivative Financial Instruments
Currency contracts with positive fair values
Currency contracts with negative fair values
Interest rate contracts with positive fair values
Interest rate contracts with negative fair values

At 31st December
2001
Carrying
Fair
amountvalue

At 31st December
2000
Carrying
Fair
amount
value

4,726
5,341
2,692

4,726
5,341
2,692

4,609
4,682
3,240

4,609
4,682
3,240

6,500

6,500

5,779

5,779

54
(3,673)38(29)

54(3,673)38(29)

0(1,746)0080(2,432)0
0

The fair value gains and losses at 31st December 2001 on open currency contracts which hedge future foreign currency sales will betransferred from the accumulated other comprehensive income to the income statement when the related transactions occur, atvarious dates between the balance sheet date and seven years from the balance sheet date.
Financial Assets and Liabilities – Fair values are based on estimates using various valuations techniques, such as present value of
future cash flows. However, methods and assumptions followed to disclose data presented herein are inherently judgmental andinvolve various limitations, including the following:• fair values presented do not take into consideration the effects of future interest rate and currency fluctuations,• estimates as of 31st December 2001 and 2000 are not necessarily indicative of the amounts that the Company would record uponfurther disposal/termination of the financial instruments.
The methodologies used are as follows:
Short-term investments, cash, short-term loans, suppliers – The carrying amounts reflected in the annual accounts are reasonableestimates of fair value because of the relatively short period of time between the origination of the instruments and its expected
realisation.

EADS 2001 Notes to Consolidated Financial Statements

89

Notes to Consolidated Financial Statements
continued

Long-term debt; short-term debt – The long- and short-term debt are not classified as liabilities held for trading, therefore no fairvalue computation is exercised.
Securities – The fair value of securities included in available-for-sale investments is estimated by reference to their quoted market
price at the balance sheet date.
Currency and Interest Rate Contracts – The fair value of these instruments is the estimated amount that the Company would
receive or pay to settle the related agreements as of 31st December 2001 and 2000.
d) Impact of adoption of IAS 39 on Shareholders’ equity and individual balance sheet captions
The Group adopted IAS 39 at 1st January 2001. In accordance with IAS 39, the comparative financial statements for periods prior to
the effective date of the standard have not been restated. The impact on “accumulated other comprehensive income”, a separate
category of equity, and on the related balance sheet captions is disclosed in the following tables.
Summary of impacts on “accumulated other comprehensive income”
in €mBalance of other comprehensive income at 31st December 2000
Adoption of IAS 39 at 1st January 2001:
Gains/losses on remeasurement to fair value
Deferred income taxes
Balance at 1st January 2001
Movements in year ended 31st December 2001:
Gains/losses from changes in fair value
Deferred income taxes

Transferred to income statement
Deferred income taxes

Balance at 31st December 2001:
Gross amount of gains and losses
Deferred income taxes

Minority interest

Available-forsale-Investments

Hedging
instruments

Total

84

–

84

–
–
–

(606)
222
(384)

(606)
222
(384)

(11)
1
(10)

(1,964)720(1,244)(1,975)721(1,254)

–
–
–

311
(114)
197

311
(114)
197

73
1
74

(2,259)828(1,431)(2,186)829(1,357)216(1,215)The amount of €(1,215) million refers to changes to other comprehensive income caused by hedging instruments after deducting
minority interests. It can be tied to the changes to other comprehensive income as stated in the Consolidated Statements of Changes
in Shareholders’ Equity as follows: €1,215 million comprise €(337) million resulting from the first-time application of IAS 39 and€(878) million that constitute changes in the fair value of hedging instruments during the year. The amount of €74 million comprises
the balance as of 31st December 2000 and changes in the fair value of securities of €(10) million, as disclosed in the Consolidated
Statements of Changes in Shareholders’ Equity, too.

90

EADS 2001 Notes to Consolidated Financial Statements

Summary of impacts on individual balance sheet captions on 1st January 2001
Available-forsale-Investments

Currency
contracts

Interest
contracts

Total

Other current assets

–

80

–

80

Provisions (Financial Liabilities)
Subtotal
Deferred income tax
Total net of deferred tax

–
–
–
–

(686)
(606)
222
(384)

–
–
–
–

(686)
(606)
222
(384)

in €m

23. SEGMENT REPORTING
The Group operates in five divisions; a description of the products and services, from which each segment derives its revenues, follows:• Airbus – Development, manufacturing, marketing and sale of commercial jet aircraft of more than 100 seats.
• Military Transport – Development, manufacturing, marketing and sale of light and medium military transport aircraft and special
mission aircraft.
• Aeronautics – Development, manufacturing, marketing and sale of civil and military helicopters, military combat and trainer
aircraft, regional turboprop aircraft and light commercial aircraft; and civil and military aircraft conversion and maintenance services.
• Defence and Civil systems – Development, manufacturing, marketing and sale of missiles systems; and provision of defence
electronics, military and commercial telecommunications solutions; and logistics, training, testing, engineering and otherrelated services.
• Space – Development, manufacturing, marketing and sale of satellites, orbital infrastructures and launchers; and provision oflaunch services.
Revenues are allocated to countries based on the location of the customer. Segment assets are allocated based on the location of
the respective units. Capital expenditures represent mainly the purchase of property, plant and equipment and the increase inleased assets.
Information with respect to the Group’s industry segments follows:
in €m

2001
Total revenues
Share of net profit of associates
EBIT pre goodwill amortisation and exceptionals
Identifiable segment assets (incl. goodwill)
Investments in equity method associates
Segment total liabilities
Capital expenditures
Depreciation,amortisation
and related impairment losses
Goodwill

AirbusMilitary
Transport

Aeronautics

Defenceand Civil
SystemsSpace

HQ/
Elimin.

Consolidated

20,549(12)
1,655
27,264025,532
1,433

547
0
1
568
0
365
63

5,065
0
308
7,187
0
5,869
281

3,345
(14)
(79)
5,583
0
3,545
159

2,439
(63)
(222)
3,462
0
2,601
99

(1,147)
111
31
4,651
1,252
367
161

30,79822
1,694
48,715
1,252
38,279
2,196

1,625
7,089

21
0

278
1,005

1,147
1,464

331
736

158
148

3,560
10,442EADS 2001 Notes to Consolidated Financial Statements

91

Notes to Consolidated Financial Statements
continued

2000 pro-forma
Total revenues
Share of net profit of associates
EBIT pre goodwill amortisation and exceptionals
Identifiable segment assets (incl. goodwill)
Investments in equity method associates
Segment total liabilities
Capital expenditures
Depreciation,amortisation
and related impairment losses
Goodwill

14,856
6
1,412
21,352
0
19,094
657

316
(1)
(63)
435
0
269
55

4,704
2
296
6,548
0
5,176
307

2,909
77
(110)
5,857
125
2,983
117

2,535
(16)
67
3,233
29
1,951
145

(1,112)
43
(203)
4,019
1,164
1,500
70

24,208111
1,399
41,444
1,318
30,973
1,351

622
3,310

28
0

226
1,056

221
2,675

165
915

278
93

1,540
8,049

Intercompany sales are principally realised on an arm’s length basis and are mainly between Aeronautics and Airbus.
Most assets of the Group are located in the European Union.
EADS uses EBIT pre-goodwill amortisation and exceptionals as a key indicator of its economic performance. The term “exceptionals”
refers to income or expenses of a non-recurring nature, such as amortisation expenses of Fair Value Adjustments relating to the EADS
Merger, the Airbus Combination and the formation of MBDA, as well as impairment charges. EBIT pre-goodwill and exceptionals is
treated by management as a key indicator to measure the segments economic performances.
2001

2000
pro-forma

2,514(2,794)

200
–

1,466
260
315
275
(342)
1,694

429
176
–
483
111
1,399

in €m

Income before financial income,income taxes and minority interests
Dilution gain Airbus UK, MBDA
Goodwill amortisation
and related impairment charges
Exceptional depreciation (fixed assets)
Exceptional depreciation (financial assets)
Exceptional depreciation (inventories)
Income from investments
EBIT pre goodwill and exceptionals
Revenues (by destination)
in €m

2001
2000 pro-forma

FranceGermany

Other
EuropeanCountries

3,521
3,408

3,588
3,461

6,728
5,934

North
America

Latin
America

Asia

Other
Countries

Consolidated

10,394
6,724

1,749
924

3,138
2,221

1,680
1,536

30,79824,208

24. STOCK-BASED COMPENSATION
Stock Option Plan
The Board of Directors of EADS approved the establishment of a stock option plan for the 11 members of the Executive Committee
and senior managers of the Group. Stock options for the purchase of 8,524,250 EADS shares were granted on 12th July 2001 of
which 780,000 were granted to the members of the Executive Committee. Approximately 1,600 employees of the Group were
granted options, which are only exercisable after a vesting period. The vesting period amounts to two years and four weeks fromthe date of granting with respect to 50% of the options and three years for the remaining options. The options expire ten years after
their grant.
The exercise price is equal to €24.66 representing 110% of fair market value of the shares at the date of grant. The options may not be
exercised during the period of three weeks before either the Annual General Meeting or the announcement of annual or semi-annualor quarterly results.

92

EADS 2001 Notes to Consolidated Financial Statements

The following table summarises the development of stock options:
Number of Options
2001

Balance at 1st January
Additions
Exercised
Forfeited

5,375,400
8,524,250–(597,825)

Balance at 31st December

13,301,825

2000

5,564,884(189,484)
5,375,400

No compensation expense was recognised in 2001 in connection with the Group’s stock option grants.
Employee Stock Ownership Plan (ESOP) 2001
In 2001, eligible employees were able to purchase a maximum of 500 shares per employee of previously unissued shares within
the ESOP 2001. The offer was broken down into two tranches which were available for all employees to choose. The subscription
price for tranche A was €10.70, calculated as a discount of €1.00 from the lowest market price on the Paris stock exchange on
12th October 2001 (fixed at €11.70), the day the Board of Directors granted the right to purchase shares within the ESOP 2001.
The subscription price for tranche B was the higher of the subscription price for tranche A or 80% of the average opening market
price for EADS shares on the Paris stock exchange during the 20 stock market days preceding 12th October 2001, resulting ina subscription price of €10.70, too.
During a vesting period of at least one year under tranche A or five years under tranche B, employees are restricted from selling theshares, but have the right to receive all dividends paid as well as have the ability to vote at the annual shareholder meetings. EADS
sold 2,017,894 ordinary shares with a nominal value of €1.00 under both tranches. No compensation expense was recognised inconnection with the ESOP 2001.
25. RELATED PARTY TRANSACTIONS
Related parties – The Group has entered into various transactions with related companies in 2001 and 2000 that have all been
carried out in the normal course of business at arm’s length. Transactions with related parties include the French State,
DaimlerChrysler, Lagardère, and SEPI (Spanish State). Except for the transactions with the French State the transactions are notconsidered material to the Group either individually or in the aggregate. The transactions with the French State include mainly sales
from the Aeronautics, Defence, and Space divisions.
Remuneration – The remuneration of Directors and pensions of/other contributions to retired Directors amount to €5.60 million.
Additionally exist accruals for pension obligations of €1.87 million. The above remuneration does not include any amounts for thevalue of options to subscribe for the ordinary shares in EADS granted to or held by the Directors. Reference is made to Note 24 of thefinancial statements.
EADS has not provided any loans to/advances to/guarantees on behalf of (retired) Directors.
26. INVESTMENT PROPERTYThe Group owns investment property, mainly contributed by Dasa to EADS, that is leased to third parties. The investment property
contributed by Dasa was recorded at fair value as of 1st July 2000. For the purposes of IAS 40 disclosure requirements, EADS
developed the fair values of investment property based on the values on the opening balance sheet of EADS.
The fair values have been determined using official guideline numbers for land and insured values as well as values reconciled fromrental income for buildings. The determination of fair values is mainly supported by market evidence and was performed with regard
to the fair values as of 1st July 2000 by a registered independent valuer having an appropriate recognised professional qualification
and recent experience in the location and category of the property being valued. As there have only been very minor changes sincethat date, the Group has not used an independent certifier since then.

EADS 2001 Notes to Consolidated Financial Statements

93

Notes to Consolidated Financial Statements
continued

Buildings held as investment property are depreciated on a linear basis over their useful life which is mainly around 40 to 50 years.
The values assigned to investment property are as follows:in €mBook value of Investment Property

Net at31st December
2000

Additions

Disposals

Depreciation/amortisation

87

11

0

1

Changes in
consolidation
scope/Net atexchange 31st December
differences
2001

0

97

The fair value of the Group’s investment property amounts to €98 million (2000: €87 million). Rental income is stated at €12 million(2000: €12 million), direct operating expenses arising from investment property that generated rental income comes to €7 million(2000: €7 million).
27. EARNINGS PER SHARE
Basic earnings per share – Basic earnings per share is calculated by dividing net income attributable to shareholders by the weighted
average number of issued ordinary shares during the year.
Net income attributable to shareholders
Balance of issued ordinary shares at beginning of year
5th December 2001 – Issue of new shares for cash (ESOP 2001)
Balance of issued shares at end of year
Weighted average number of ordinary shares in issue
Basic earnings per share

2001

2000
pro-forma€1,372m
807,157,667
2,017,894
809,175,561
807,295,879€1.70€(909)m
807,157,667
807,157,667
807,157,667€(1.13)For comparative reasons, the Group presents pro-forma earnings per share for 2000. Due to the foundation of the Group in July 2000,
accompanied by a significant increase in the number of shares as a result of the initial public offering on 10th July 2000, and theconcurrent acquisition by ASM of Dasa and Casa, whose revenues and expenses were not included in the EADS profit and loss
statement for the period 1st January to 30th June 2000, the pro-forma number of shares for 2000 is based on the number of issued
shares and stock options granted as at 31st December 2000.
Diluted earnings per share – For the calculation of the diluted earnings per share, the weighted average number of ordinary sharesis adjusted to assume conversion of all potential ordinary shares. The Group’s only category of dilutive potential ordinary shares isstock options. Since the exercise price of the stock options under both stock option plans initiated by the Group in 2001 and 2000
is exceeding the share price of EADS shares, to include these potential ordinary shares would be anti-dilutive. As a consequence, net
income as well as the weighted number of ordinary shares in issue is the same for both basic and diluted earnings per share.

Net income attributable to shareholders
Weighted average number of ordinary shares in issue
Diluted earnings per share

2001

2000
pro-forma€1,372m
807,295,879€1.70€(909)m
807,157,667€(1.13)

28. NUMBER OF EMPLOYEESThe number of employees at 31st December 2001 is 102,967 as compared to 88,879 at 31st December 2000.

94

EADS 2001 Notes to Consolidated Financial Statements

Appendix:
Information on principal investments

2000 2001

Company

Head office

Airbus SAS
Airbus France SAS
Airbus Holding SA
EADS CASA S.A. (Unit: EADS CASA Airbus)
SATIC G.I.E.
Airbus Finance Company Holdings BV
Airbus Finance Company Ltd
EADS Airbus Deutschland GmbHKID-Systeme GmbH
Aircabin GmbH
DEX Beteiligungs- und Verwaltungs GmbHZDW Beteiligungs- und Verwaltungs GmbHEADS Airbus Beteiligungs GmbH
Airbus Industrie G.I.E.
AVSA SARLAI Participations S.A.R.L.
Société Commerciale A-300 S.A.SOCA
Airbus Simulators Services S.N.C. (ASS)
Airbus Transport International S.N.C. (ATI)
Airbus Military Company SAS.
Groupemente Immobilier Aéronautique S.A. (GIA)
Airbus Mauritius limited
Alexandra Bail G.I.E
Airbus China limited
Aircelle SAS
Airbus Ré S.A.
AVSA Canada Inc
Airbus North American Holdings Inc. (AINA)
Airbus Service Company Inc. (ASCO)AI leasing Inc.
NorbusAINA Inc.
128829 Canada Inc.
Airbus Industrie Financial Service Holdings B.V. (AIFS)
Airbus Industrie Financial Service Holdings ltd.( AIFS)
Airbus Industrie Financial Service ltd. (AIFS)
AIFS (Cayman) ltd.
AIFS Cayman Liquidity ltd.
A 320 Financing limited
AIFI LLC
Frusco limited
Shadyac Limited
Airbus UK Limited
Airbus Invest
EADS Aéro
EADS Star Real Estate SAS
Tenzing communication inc

Toulouse (France)
Toulouse (France)
FranceMadrid (Spain)
Colomiers (France)
Amsterdam (Netherlands)
Dublin (Ireland)
Hamburg (Germany)
Buxtehude (Germany)
Laupheim (Germany)
Ottobrunn (Germany)
Munich (Germany)
Ottobrunn (Germany)
Blagnac (France)
Blagnac (France)
Blagnac (France)
Blagnac (France)
Blagnac (France)
Blagnac (France)
Toulouse (France)
FranceMauritius
FranceHong-Kong
FranceLuxembourg
Canada
USA
USA
USA
USA
USA
CanadaNetherlands
Ireland
Ireland
Cayman Isle
Cayman Isle
IrelandIsle Of Man
Ireland
IrelandUK
Toulouse (France)
Toulouse (France)
Boulogne (France)
USA

EADS Deutschland GmbH Verkehrsleittechnik TB67
FmElo Elektronik- und Luftfahrtgeräte GmbHHagenuk Marinekommunikation GmbHEUROBRIDGE Mobile Brücken GmbHEADS Deutschland GmbH – Verteidigung und Zivile Systeme
Dornier GmbH – Verteidigung und Zivile Systeme
EADS Funkkommunikation GmbHEwation GmbH
Matra Aerospace Inc. (M.A.I.)
Fairchild Controls Corporation
Germantown Holding Company
Manhattan Beach Holdings Co.
Matra Systemes & Information
APIC
G2I
EADS Services
Pentastar Holding
Aviation Defense Service S.A.
M.C.N. SAT HOLDING
MULTICOMS (MNC Sat Services)

Unterschleißheim (Germany)
Ulm (Germany)
Flintbek (Germany)
Friedrichshafen (Germany)
Ulm (Germany)
Friedrichshafen (Germany)
Ulm (Germany)
Ulm (Germany)
Frederick Maryland (USA)Frederick Maryland (USA)Frederick Maryland (USA)Frederick Maryland (USA)
Velizy (France)
Arcueil (France)
Velizy (France)
Boulogne (France)
Paris (France)
Saint-Gilles (France)
Velizy (France)
Sèvres (France)

Airbus
F
F
F
F
F
F
F
F
F
F
F
F
P
P
P
P
P
P
P
P
P
E
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P
P

F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
P
F
E
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
E

Additionally are consolidated 29 SPCs.

Defence & Civil Systems
–
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F

–
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F

F: Fully consolidated P: Proportionate

E: Equity method
EADS 2001 Appendix: Information on principal investments

95

Appendix:
Information on principal investments
continued
2000 2001
Defence & Civil Systems continued
F
F

F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
P
P
P
P
P
P
F
P

P
F
F
F
F
F
P
P
P
P
F
F
F
F
F
F
F
F
E
F
F
F
F
F
F
F
F

F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
P
P
P
P
P
P
P
P
P
P
P
P
P
F
F
F
F
F
P
P
P
P
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F

E

Company

Head office

Matra Global Netservices (Grolier Network)
International Test & Service
TYX Corp.
ARC
ARC-IAI
M.P. 13
EADS Matra Datavision S.A.
EADS Matra Datavision International
EADS Matra Datavision Ltd
EADS Matra Datavision AG
EADS Matra Datavision Benelux
EADS Matra Datavision Asia Pacific
EADS Matra Datavision B.V.
EADS Matra Datavision GmbHEADS Matra Datavision Iberia
EADS Matra Datavision Inc.
EADS Matra Datavision Kk
EADS Matra Datavision SpAOpen Cas CadeETP SPA
Matra Defense
Matra Holding GmbH
MBDA SAS
MBDA Management S.A.
ALKAN
MBDA France
MBDA UK Ltd.
Matra Electronique
MBDA Missiles S.A.
MBDA Inc
MBDA Italy SpA
MBDA Treasury
Marconi Overside Ltd.
AMS Dynamics Ltd.
CelergCelerg international
International de systemes propulsifs
LFK – Lenkflugkörpersysteme GmbH
TDW – Ges. für verteidigungstechnische Wirksysteme GmbHTAURUS Systems GmbH
Bayern-Chemie Gesellschaft für flugchemische Antriebe mbH
Propulsion Tactique S.A.
TDA – Armements SAS.
Forges de Zeebrugge S.A.
EADS Defence & Security Networks
Matra Radio Systems
AEG Mobile Communication
Matra Communications Mexico
EGT
MC Denmark
MC Italy
Matra Comunicaciones de Espana
Nortel Networks Germany GmbH & Co KG
Matra Nortel Holding (MNH)
MATRAnet
MATRAnet Inc.
Matra Communication USA Inc
Intecom Inc
Intecom Holding ULCIntecom Canada Inc
Pyderion Contact Technologies Inc.
CogentMatra Nortel Communications

Boulogne (France)
Velizy (France)
Reston, VA, USA
CA, USASan Antonio, TX, USA
Paris (France)
Paris (France)
Les Ulis (France)
CovAddition (UK)Regensdorf (Suisse)
Brussels (Belgium)
Wanchai (Hong Kong)
Leiden (Netherlands)
Munich (Germany)
Madrid (Spain)
Andover (USA)Tokyo (Japan)
Turin (Italy)
Paris (France)
Turin (Italy)
Velizy (France)Frankfurt (Germany)
Velizy (France)
Velizy (France)
Valenton (France)
Velizy (France)
Stevenage, Herts (UK)
La Croix Saint-Ouen (France)
Chatillon sur Bagneux (France)
Westlack, CA (USA)Roma (Italy)
Jersey (UK)
Chelmsford (UK)
Guernsey (UK)Le Plessis-Robinson (France)
Le Plessis-Robinson (France)
Paris (France)
Unterschleißheim (Germany)
Schrobenhausen (Germany)
Schrobenhausen (Germany)
Aschau/Inn
La Ferte Saint Aubin (France)
La Ferte Saint Aubin (France)
Herstal-Liege (Belgium)
Bois d’Arcy (France)
Madrid (Spain)
Ulm (Germany)
Mexico DF (Mexico)
Bruxelles (Belgium)
Copenhague (Denmark)
Milan (Italy)
Barcelona (Spain)
Friedrichshafen (Germany)
Paris (France)
Velizy (France)
Redwood shores, CA (USA)
Dallas, Texas (USA)
Dallas, Texas (USA)
Dallas, Texas (USA)
Dallas, Texas (USA)
Dallas, Texas (USA)UK
Quimper (France)

Aerospatiale Matra Lanceurs Stratégieuses et Spaciaux
Amanthea Holding B.V.
Astrium GmbH
Astrium Ltd.
Astrium N.V.

Paris (France)
Amsterdam (Netherlands)
München (Germany)
Stevenage (UK)The Hague (Netherlands)

Space
F
P
P
P

F
P
P
P

F: Fully consolidated P: Proportionate96

E: Equity method

EADS 2001 Appendix: Information on principal investments

2000 2001

Company

Head officeP

Astrium SAS
Computadoras, Redes e Ingenieria SA (CRISA)EADS CASA S.A. (Unit: EADS CASA Space)
EADS Deutschland GmbH – Space Services
EADS Dornier Raumfahrt Holding GmbHEADS Launch Vehicles
Global DASA LLC
Loral Dasa Globalstar L.P.
Matra Marconi Space UK Ltd.
Matra Space Systems Participations BV
MMS Space Holdings N.V.
MMS Systems Ltd
Nahuelsat S.A.
NRSCL Infoterra Ltd
SodernSpot ImageTESAT-Spacecom GmbH & Co. KG

Toulouse (France)
Madrid (Spain)
Madrid (Spain)
Munich (Germany)
Munich (Germany)
Vèlizy (France)
New York (USA)New York (USA)Stevenage (UK)The Hague (Netherlands)
Amsterdam (Netherlands)
Stevenage (UK)
Buenos Aires (Argentina)
Southwood (UK)
Limeil-Brevannes (France)
Toulouse (France)
Backnang (Germany)FF

EADS CASA S.A. (Unit: EADS CASA Military Transport Aircraft)

Madrid (Spain)

F

F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
P

Elbe Flugzeugwerke GmbHEADS EFW Beteiligungs- und Verwaltungsgesellschaft GmbHEADS Sogerma S.A.
EADS Seca S.A.
Barfield B.C.
EADS Revima S.A.
Composites Aquitaine S.A.
Maroc Aviation S.A
Noise Reduction Engineering B.C.
Aerobail GIE
EADS Aeroframe services LLC
EADS Sogerma Tunisie
Eurocopter Holding S.A.
Eurocopter S.A.
Eurocopter Deutschland GmbH
American Eurocopter Corp.
Eurocopter Canada Ltd.
Eurocopter South East Asia
Helibras – Helicopteros do Brasil S.A.
EADS Socata S.A.
EADS Deutschland GmbH – Military Aircraft
Dornier Flugzeugwerft GmbHEADS CASA S.A. (Unit: EADS CASA Military Transport Aircraft)
EADS ATR S.A.
ATR GIE
Fairchild Dornier Luftfahrt Beteiligungs GmbH

Dresden (Germany)
Munich (Germany)
Mérignac (France)
Le Bourget (France)
Miami, Florida (USA)Tremblay en France (France)
Salaunes (France)
Casablanca (Morocco)
Washington D.C. (USA)Paris (France)
Lake Charles, Louisiana (USA)Monastir (Tunisia)
Paris (France)
Marignane (France)
Munich (Germany)
Dallas, Texas (USA)
Ontario (Canada)
Singapore
Itajuba (Brazil)
Le Bourget (France)
Munich (Germany)
Manching (Germany)
Madrid (Spain)
Toulouse (France)
Toulouse (France)
Oberpfaffenhofen (Germany)

F
F
F
F
F
F
F
F
E
E
E
E
E
E
E
E
E
E
F

EADS France
EADS Deutschland GmbH – Zentrale
EADS Deutschland GmbH, LO – Liegenschaften OTN
EADS Deutschland GmbH, FO – Forschung
EADS Raumfahrt Beteiligungs GmbHDADC Luft- und Raumfahrt Beteiligungs AG
Dornier GmbH – Zentrale
EADS CASA S.A. (Headquarters)
Dassault Aviation
Dassault International France
Dassault Falcon Jet and subsidiaries
Sogitec Industries
Dassault Falcon Service
IPS
Dassault Aero Service
Dassault Assurances Courtage
Dassault lnternational lnc
Société Toulouse Colomiers
Airbus Finance Company Holding B.V.
S.C.I. Matra Toulouse

Paris (France)
Munich (Germany)
Munich (Germany)
Munich (Germany)
Ottobrunn (Germany)
Munich (Germany)
Friedrichshafen (Germany)
Madrid (Spain)
Paris (France)
Vaucresson (France)
Teterboro NJ (USA)Suresnes (France)

Space continued
P
F
F
F
F
F
E
P

P
P
F
F
F
F
F
E
P

P
P
E
F

P
P
E
P

Military Transport Aircraft
Aeronautics
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
F
P
E

Headquarters
F
F
F
F
F
F
F
F
E
E
E
E
E
E
E
E
E
E
F

F: Fully consolidated P: Proportionate

Paramus NJ (USA)
Dublin (Ireland)
Toulouse (France)

E: Equity method
EADS 2001 Appendix: Information on principal investments

97

EADS Addresses

HEADQUARTERS

Military Transport Aircraft

European Aeronautic Defence &Space Company EADS N.V.
Le Carré
Beechavenue 130 – 132
1119 PR Schiphol-Rijk
The Netherlands
Tel +31 20 655 4800

EADS CASA(Military Transport
Aircraft Division)
Avenida de Aragon 404
28022 Madrid
Spain
Tel +34 91 585 70 00

HEAD OFFICES

Aeronautics

In France
37, boulevard de Montmorency
75781 Paris cedex 16
FranceTel +33 1 42 24 24 24

EADS Military Aircraft
81663 Munich
GermanyTel +49 89 607 0

In Germany
81663 Munich
GermanyTel +49 89 607 0
In Spain
Avenida de Aragón 404
28022 Madrid
Spain
Tel +34 915 85 7000

Eurocopter
Aéroport International de MarseilleProvence
13725 Marignane
FranceTel +33 4 42 85 85 85
EADS ATR
1, allée Pierre Nadot
31712 Blagnac cedex
FranceTel +33 5 62 21 62 21

BUSINESS UNITS
AirbusAirbus1, rond-point Maurice Bellonte
31707 Blagnac
FranceTel +33 5 61 93 33 33

98

EADS 2001 Addresses

EADS EFW
Grenzstrasse 101109 Dresden
GermanyTel +49 351 8839 0
EADS Sogerma Services
Aéroport International
Bordeaux-Merignac
33701 Merignac
FranceTel +33 5 46 82 82 82

EADS Socata
Zone d’Aviation et d’Affaires
Le Terminal,
Bât 41393350 Le Bourget
FranceTel +33 1 49 34 69 69

Space

Defence and Civil Systems

EADS Launch Vehicles
66, Route de Verneuil
78133 Les Mureaux
FranceTel +33 1 39 06 12 34

EADS Systems andDefence Electronics
81663 Munich
GermanyTel +49 89 607 0
EADS Services
63, ter. Avenue Edouard Vaillant
92517 Boulogne Billancourt
FranceTel +33 1 58 17 77 77
MBDA
20 – 22, rue Grange Dame Rose
78140 Vélizy cedex
FranceTel +33 1 3488 3000
EADS LFK
Landshuter Strasse 26
85716 Unterschleissheim
GermanyTel +49 89 3179 0
EADS Telecom
Rue Jean-Pierre Timbaud
78392 Bois d’Arcy cedex
FranceTel +33 1 34 60 80 20

Astrium
37, avenue Louis Breguet
78146 Velizy-Villacoublay
FranceTel +33 1 34 88 30 00

EADS CASA Espacio
Avenida de Aragon 404
28022 Madrid
Spain
Tel +34 91 585 70 00
EADS Space Services
Eugen Sänger Strasse
Gebäude 58.0, Tor 385521 Ottobrunn
GermanyTel +49 89 607 0
EADS Sodern
20, avenue Descartes, BP 2394451 Limeil Brevannes cedex
FranceTel +33 1 45 95 70 00
EADS Cilas
Route de Nozay
BP 27
91460 Marcoussis
FranceTel +33 1 64 54 48 00

EXTERNAL OFFICES

Western Europe

Middle East/Maghreb

South Asia/PacificNorth America

Belgium
Tel +32 2 502 60 05
Fax +32 2 502 30 81

United Arab Emirates
Tel +97 12 681 28 78
Fax +97 12 68 11 027

Australia
Tel +61 2 9225 05 00
Fax +61 2 9225 05 01

FinlandTel +35 8 968 723 690
Fax +35 8 968 723 691

Egypt
Tel +20 2 794 86 71
Fax +20 2 795 73 17

India
Tel +91 11 301 74 91
Fax +91 11 301 74 94

Central & Eastern Europe

GermanyTel +49 30 259 26911
Fax +49 30 259 26919

KuwaitTel +96 5 5 31 31 05
Fax +96 5 5 31 31 07

Indonesia
Tel +62 21 573 57 33
Fax +62 21 573 59 23

Bulgaria
Tel +359 2 91 988
Fax +359 2 945 40 48

GreeceTel +30 1 69 83 871
Fax +30 1 69 83 870

Saudi Arabia
Tel +96 61 46 53 456
Fax +96 61 4 63 08 44

Malaysia
Tel +60 3 21 63 02 33
Fax +60 3 21 63 02 11

Croatia
Tel +385 1 48 91 500
Fax +385 1 48 91 501

Italy
Tel +39 06 85 35 35 15
Fax +39 06 841 62 26

AfricaSingaporeTel +65 737 50 77
Fax +65 733 58 15

Czech Republic
Tel +420 22 445 42 20
Fax +420 22 445 42 22

Portugal
Tel +351 21 313 94 20
Fax +351 21 313 94 29

Hungary
Tel +36 1 346 03 03
Fax +36 1 315 14 23

Spain
Tel +34 915 857 000
Fax +34 915 470 019

China
Tel +86 10 64 10 68 80
Fax +86 10 64 10 68 78

PolandTel +48 22 697 73 21
Fax +48 22 697 73 19

TurkeyTel +90 312 448 09 40
Fax +90 312 448 09 46

Japan
Tel +81 3 55 72 71 37
Fax +81 3 55 72 71 93

BrazilTel +55 61 323 44 64
Fax +55 61 323 44 77
Tel +55 11 37 41 58 24
Fax +55 11 37 41 17 17

RussiaTel +7 095 797 53 67
Fax +7 095 797 53 66

United Kingdom
Tel +44 207 766 3205
Fax +44 207 83 99 279

Korea
Tel +82 2 798 49 25
Fax +82 2 798 49 27

Chile
Tel +56 2 244 41 00
Fax +56 2 244 33 34

TaiwanTel +88 6 227 12 15 94
Fax +88 6 227 12 10 89

MexicoTel +52 5 488 20 41
Fax +52 5 488 20 45

CanadaTel +1 613 230 39 02
Fax +1 613 230 14 42
USA
Tel +1 202 776 09 88
Fax +1 202 776 90 80

Slovenia
Tel +386 1 588 37 97
Fax +386 1 588 37 99

South Africa
Tel +27 12 677 15 23
Fax +27 12 677 17 44

North Asia

ThailandTel +66 2 67 01 734
Fax +66 2 67 01 738

Latin America

EADS 2001 Addresses

99

Shareholder Information

Financial calendar 2002
Global Investor Forum:
7 – 8th February 2002 Marignane, France
Annual Results Presentation:
18th March 2002
Annual General Meeting:
17th May 2002 Amsterdam, The Netherlands
Interim Report Q1 – 3 months results:
17th May 2002
Interim Report Q2 – Half Year results:
25th July 2002
Interim Report Q3 – 9 months results:
14th November 2002

newsletter “aero-notes”

key figures

timetable

the teamshareholders meeting

annual reports

press releases

hotlinequestions/answers

financial results

general meetings@mailbox

financial glossary

analysts’ view point

how to become a shareholder

analyst meetingwww.eads.net
100

EADS 2001 Shareholder Information

Annual General Meeting in Amsterdam,
10th May 2001

Key information for Shareholders
An investor relations team is dedicated to provide periodic information to shareholders
whether they are individual shareholders, employees or institutions.
In 2002, EADS will continue to enhance shareholders communication with the
publication of quarterly full results.
The Investor Relations team also offers a variety of information sources
updating the shareholders on EADS progress such as the quarterly newsletter called“Aeronotes” and a monthly investor communiqué available on EADS website starting in
April 2002.
The EADS Web site, www.eads.net, also provides a wide range of information including
financial topics. Shareholders can contact us everyday on our special toll-free lines.
Investor Relations contact:
Toll Free Telephone Numbers:
France0 800 01 2001
Germany
00 800 00 02 2002
Spain
00 800 00 02 2002
Shareholders from other countries can contact us at+33 1 41 33 90 94
An e-mail box is dedicated to answering shareholders inquiries:
comfi@eads.net

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© Copyrights: Airbus, Airbus Military Company, Arianespace, Astrium, EADS Sogerma,
EADS CASA, EADS Socata Services, EIP, ESA, Eurocopter, I 3 m – Airbus, MBDA,
NH-industries, Nojaroff, Teamfoto Marquardt.
All rights reservedThis document is also available
at the following addresses:
European Aeronautic Defence andSpace Company – EADSIn France
37, boulevard de Montmorency
75781 Paris cedex 16 – France
In Germany
81663 Munich – Germany
In Spain
Avenida de Aragón 404
28022 Madrid – Spain

European Aeronautic Defence
and Space Company EADS N.V.
Le Carré
Beechavenue 130-132
1119 PR Schiphol-Rijk
The Netherlands
www.eads.net