Q1 2004 EarningsHans Peter Ring, CFO

Analysts Conference call – May 12, 2004

1Safe Harbor Statement
Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and otherforward-looking statements that are based on management‘s beliefs. These statements reflect the Company‘s views and assumptions
as of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in such statements.
When used in this document, words such as “anticipate ”, “believe ”, “estimate ”, “expect ”, “may ”, “intend ”, “plan to ” and “project ” areintended to identify forward-looking statements. Such forward-looking statements include, without limitation, projections for
improvements in process and operations, new business opportunities, revenues and revenues growth, operating margin growth, cash
flow, deliveries, launches, compliance with delivery schedules, performance against Company targets, new products, current andfuture markets for the Company products and other trend projections.
This forward looking information is based upon a number of assumptions including without limitation:·Assumption regarding demand·Current and future markets for the Company‘s products and services·
Internal performance including the ability to successfully integrate EADS‘ activities to control costs and maintain quality·
Customer financing·
Customer, supplier and subcontractor performance or contract negotiations·
Favourable outcomes of certain pending sales campaigns
Forward looking statements are subject to uncertainty and actual future results and trends may differ materially depending on varietyof factors including without limitation:·
General economic and labour conditions, including in particular economic conditions in Europe and North America,·Legal, financial and governmental risk related to international transactions·
The Cyclical nature of some of the Company‘s businesses·
Volatility of the market for certain products and services·
Product performance risks·
Collective bargaining labour disputes·
Factors that result in significant and prolonged disruption to air travel world-wide·
The outcome of political and legal processes, including uncertainty regarding government funding of certain programs·
Consolidation among competitors in the aerospace industry·
The cost of developing, and the commercial success of new products·
Exchange rate and interest rate spread fluctuations between the Euro and the U.S. dollar and other currencies·Legal proceeding and other economic, political and technological risk and uncertainties
Additional information regarding these factors is contained in the Company‘s “document de référence ” dated 1st April 2004.
The Company disclaims any intention or obligation to update these forward-looking statements. Consequently the Company is not
responsible for any consequencies from using any of the above statements.

21

Content

1.

Group overview

2.

Operating performance by division

3.

Financials

4.

Roadmap

3

Q1 Strong Performance…
• Airbus improves margin on higher deliveries and better mix• Space on track for breakeven in 2004
• Defence businesses driven by seasonal factors• Strong Free Cash Flow pre-customer financing• Customer financing activity: positive cash impact… confirms 2004 targets• EBIT* expected at 1.8 €bn (€ 1.5 bn in 2003)• Revenues in the € 29-30 bn range, based on average market rate of1 € =1.20 $• Free Cash Flow pre-customer financing positive• Order-intake higher than revenue level*pre goodwill and exceptionals

42

EADS Extends its International Footprint…
Asia-Pacific: • Partnership with Singapore Economic Development Board• Enhance cooperation with Japanese & Chinese industry• Airbus successes: Air Tahiti, Cathay
Russia:• Creation of EADS Russia ( OOO EADS)… and reaches for new level
Defence• Transatlantic alliance : EADS / NG team selected for NATOground surveillance system• Airbus derivatives : Australia pre-selects A330 Tanker• Eurofighter : integration and new management, tranche2
agreement with German customer
AirbusSpace• A380 takes shape with 1st assembly started• Towards profitability

We are delivering on our promises

5

Q1 2004 Financial Highlights :Overall performance improvement
in m€

Q1 2004

Q1 2003

Revenues

6,031 € m

5,520 € m

EBIT*
FCF before cust. financing**
Reported Net Profit***198 € m419 € m49 € m130 € m
( 309 € m)
28 € mNew orders

3,411 € m

5,378 € m

March 2004
3.4 € bn
178.8 € bn

Dec. 2003
3.1 € bn
179.3 € bn

45.6 € bn

45.7 € bnOf which Defence

in bn€Net Cash position
Total Order bookof which Defence

1,083 € m974 € m* pre goodwill and exceptionals** excl. investments in medium term securities and consolidation changes*** in compliance with IFRS 3, goodwill is not amortized linearly but tested for impairment
at least annually; 2003 figure is restated for comparison

63

Content

1.

Group overview

2.

Operating performance by division

3.

Financials

4.

Roadmap

7Airbus€mDeliveries

Q1 2004 Q1 2003 • Revenues increased 9% or 15%6765

Revenues
4,126
3,775
R&D self-financed463
445
in % of revenues
11.2%
11.8%
EBIT*
224
166
in % of revenues
5.4%
4.4%
Order book
140,911 ** 134,615
in units
1,397
1,476
* pre goodwill and exceptionals** including workshare on A400M:

with constant €-$ rate, thanks tomore deliveries and better mix• EBIT* margin increases at 5.4%
• Orders from Asia, Middle-Eastand Low-cost carriers feed theorder-book and confirm signs ofrecovery. 34 orders by April 30th

• Customer Financing gross
exposure reduced• A380 enters final assembly inApril, first flight scheduled in Q1
2005 as planned• R&D in line with plan; no impact
from capitalisation in Q1
84

Reduced Airbus customer financing exposurein €mTotal Gross exposureof which off-balance sheet

Estimated collateral value
Net exposure before provision
Provision
Residual Airbus net exposure
closing rate $/€* Adjusted for stipulated loss values

Airbus gross customer
financing exposurechanges in Q1 2004

115$m
Additions

March 2004

Dec. 2003

3,808 € m

3,822 € m

712 € m(2,222 € m)
1,586 € m
(1,586 € m)
0 €m
1.22(197$m)
Disposal

4,834 $m724 € m(2,229 € m)
1,593 € m
(1,593 € m)
0 €m
1.26

Amortization(72$m)

3,822 €m

4,680$m

Dec. 2003

3,808 €m
March’04
9MTA€mRevenues
R&D self-financed
in % of revenues
EBIT*Order bookQ1 2004

Q1 2003

101
7
6.9%

96
6
6.3%

(8)
19,980(11)677* pre goodwill and exceptionals• A400M work continues. No P&L
impact in Q1. Next key milestone
expected in Q3 2004.

• Airbus derivatives: A330 Tanker aircraft fullyrecognised as a globalstandard;
 FSTA and Australia undernegotiation• Order-book includes A400M
since May 2003

78%
defencebased on Q1 2004 external revenues

105

Aeronautics
Q1 2003 • Revenues decline reflects theQ1 2004 Pro-forma** slowdown in civil aircraft€mRevenues
R&D self-financed
in % of revenues
EBIT*
in % of revenues
Order book645

686

182.8%

172.5%

101.6%

16
2.3%

10,021

10,193* pre goodwill and exceptionals** excl. military aircraft unit

2% EFW
5% Socata

Sogerma

70%
civil

30%
defence

17%
ATR

9%

Eurocopter67%

maintenance and service
businesses• EBIT includes some
restructuring charge at Sogerma• Eurocopter seasonality: better
performance towards the end ofthe year
• Tiger first deliveries planned thisyear• Heli-Expo in the US reflects astrongly buoyant helicopter
marketbased on Q1 2004 external revenues

11Space€mRevenues
R&D self-financed
in % of revenues
EBIT*Order bookQ1 2004

Q1 2003

457
8
1.8%

403
11
2.7%

(11)
8,083

(21)
4,401

* pre goodwill and exceptionals

Space transportation
defence
30%
70%
civil

42%
51%

7%
Services

Astrium satellites
based on Q1 2004 external revenues• Revenues increase 13% thanks
to start of Paradigm services• EBIT* on track to FY breakeven• Restructuring implemented asplanned• Order-book includes Paradigm
large order since Q4 2003
• Order-book will be further
reinforced by : Anik F3 orderintake from Telesat (Canada) inApril, Signature of the € 3 bnlaunchers orders with
Arianespace in May• Paradigm revenues further
potential with the selection by
NATO in May• Ariane 5 (10t) ready for newlaunch in Q3 2004126

Defence and Security Systems€mRevenues
R&D self-financed
in % of revenues
EBIT*
Order bookQ1 2003
Q1 2004 Pro-forma** • Revenues +15% driven by
Military aircraft strong business
932813and missiles delivery ramp up.
40
4.3%

49
6.0%

(51)

(54)

14,976

13,521• Revenues and EBIT
seasonality: better performance
towards the end of the year

* pre goodwill and exceptionals** incl. military aircraft unit

• Costs associated with
Efficiency and restructuring
plans to weigh in Q2 EBIT*

Civil

LFK

12%
88%

Defence Electronics

8%
MBDA

9%

21%

defence• NATO AGS Downselection ofTIPS consortium (EADS is20% DCS
largest shareholder) to provide
5%
A321 platforms and radars

37%Services

Military Aircraft
based on Q1 2004 external revenues

13

Content

1.

Group overview

2.

Operating performance by division

3.

Financials

4.

Roadmap

14

7

Goodwill amortisation:
Application of IFRS3 “Business Combination”
from January 1st 2004

“Amortisation of goodwill with indefinite useful lives is prohibited.
Amortisation must be tested for impairment annually , or more frequently
if events or changes in circumstance indicate a possible impairment”.
Impact on EADS P&L
2003 goodwill amortisation was € 567 m pre-minority, or € 492 m postminority impact; From 2004, no further amortisation besides impairment
lossesOutstanding goodwill as of March 2004 : € 9.4 bn
Latest impairment tests performed in Dec. 2003 did not trigger any
impairment losses
15Profit & loss highlights
Q1 2004€mQ1 2003

in % ofRevenues€min % ofRevenues

9.6%
7.0%
2.4%
11.9%

Revenues
self-financed R&D
EBITDA
EBIT*EBIT* before R&D

6,031
535
526
198
733

8.9%
8.7%
3.3%
12.2%

5,520528389130658

Interest result
Other financial result
Taxes

(59)
15(42)(1.0%)
0.2%(0.7%)(18)(20)
1(0.3%)(0.4%)
0.0%

Net income**

490.8%

280.5%* pre goodwill and exceptionals** compliant with IFRS3 from 2004 ( no longer goodwill amortisation); 2003 restated forcomparison

168

Development of net cash
Q1 2004 Q1 2003

in € mNet cash at the beginning of the period

3,105

2,370

Gross Cash Flow from Operations*
Change in working capital

505
462

20102

Cash used for investing activities**

(481)

(510)

(501)
67(47)

(409)
(79)
(22)

Free Cash Flow**

486

(388)

Free Cash Flow before customer financing

419

(309)

Astrium first time 100% consolidation impact
Others

(147)

(74)
(224)

Net cash at the end of the period

3,444

1,684

of which Industrial Capex (additions)***of which Customer Financing net additionsof which Others*
gross cash flow from operations, excl. working capital change** excl. change in securities and consolidation changes*** excl. leased assets and financial assets

17

Hedge Policy is continued
Approx. 50% of EADS US$ revenues are naturally hedged by US$ procurement
Æ at around 300 a/c a year, annual net exposure is $9bn - $10bn

EADS hedge portfolio (US$ 42.2 bn) on March, 31st 2004 at an average 1 € = 0.99 $Q1 2004: US$ 1.9 bn gross additions to hedges
US$ bn
10
9
8
7
6
5
4
3
2
10

€ vs $£ vs $

9,0
7,1

8,2
7,0

6,2
3,1
1,1

0,4

2004
9-month

2005

2006

2007

2008

2009

2010

2011

0,96
1,55

0,98
1,49

1,00
1,49

1,02
1,48

1,02
1,48

1,02
1,50

1,04
1,53

1,13
1,54

Marked-to-market value = € 6.6 bn

18

9Content

1.

Group overview

2.

Operating performance by division

3.

Financials

4.

Roadmap

19EADS Management confirms 2004 target
2004 Guidance• Revenues

ca. 29 / 30 €bn **• EBIT*

1.8 €bn• Book-to-billover 1• FCF before cust.financing

Positive… and sees medium-term strong growthacross the board• Commercial aviation upturn within reach, A380 well on track
Space: • Set to be profitable; Robust order-book
Defence: • Deliver the growth embedded in the order-book after effort
Airbus:for efficiency improvement2010Appendix
21

Balance Sheet Highlights
in € mAssetsof which Goodwillof which cash & equivalents, securitiesof which positive hedge mark-to-market

March
2004
53,682

Dec. 2003
54,378

9,372
8,445
6,796

9,372
7,872
7,964

15,63816,149

5,374

5,934

2,051
8,822

2,179
8,726

3,827
187
4,808

3,772
100
4,854

5,675
21,496

6,122
21,202of which financial debts
of which European gvts refundable advances

5,001
5,176

4,767
4,851

Total liabilities and stockholders'equity

53,682

54,3781.22

1.26

Stockholders' equityof which OCI (Other Comprehensive Income)Minority interest
Total provisionsof which pensionsof which negative hedge mark-to-market
of which other provisions

Deferred tax liabilities & income
Liabilities

Closing rate €/$2211EBIT* calculation
March2004

March2003

118(96)

Income from investments **Exceptionals:Goodwill amortisation**Fair value adjustment

28

24

052

14062

EBIT*

198130in € mIncome from operating
activities* pre goodwill and exceptionals** IAS3 applied from 2004: goodwill only reduced by impairment

23

Restructuring, write-off and disposalitems included in EBIT*€m
Q1 2004
EBIT*
198
EBIT* margin (% of revenues)
3.3%

Q1 2003130
2.4%

EADS EBIT* includes the following items
DSRestructuring

(4)

(16)

AeroRestructuring

(5)

-*

pre goodwill and exceptionals

2412

Net Cash Positionin m€March 2004 Dec. 2003

Gross cash
Financial Debts*
Reported Net cash

8,445(5,001)
3,444

7,872(4,767)
3,105

non-recourse debt
Net cash excl. non-recourse
Main minority impact*Airbus 20% non-recourse debt
Net cash position net ofminority and non-recourse

757
4,201(54)
(151)

679
3,784
40(136)

3,996

3,688

* Mostly 20% in Airbus debt and 12.5% in MBDA cash

25

Net Income compliant with IFRS3 andpre-exceptionals
in € mNet Income compliant with IFRS3
Exceptionals:
Fair value adjustment on fixed assets
Fair value adjustment on inventories
Tax impact on exceptional fair value
Minorities on exceptional fair value
Net Income pre-exceptionals*EPS* (1)

March
2004

March
2003

49

28

520(19)(5)548(23)(5)77620.10 €0.08 €* pre exceptionals and compliant with IFRS 3(1) average number of shares outstanding: 800,957,248 in Q1 2003 and in Q1 2004

2613

A380 under final assembly
Self-financed R&D expensed by quarter in € m

250

740

628

650
450Cumulative
A380 R&D= 2.6 €bn356

101

93

64

445

412

403
126

150

528

480

473

322
154

273

262

193

548

628

535

485
228

319

289

50
Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004

A380 R&D

EADS total R&D

Cumulative
A380 Capex= 2.5 €bnCapex by quarter in € m

1500
1000

904704507330500305025815070175798626383230190558513315

19419058427412975285181590Q12001 Q2 2001 Q3 2001 Q4 2001 Q12002 Q2 2002 Q3 2002 Q4 2002 Q12003 Q2 2003 Q3 2003 Q4 2003 Q1 2004

A380 Capex

EADS total Capex*

27* including leased aircraft (2001: 604€m; 2002: 102€m; 2003: €279 m)

Customer Financing Exposure
all figures in € m

March

Dec.

Figures for 100% Airbus

2004

2003

closing rate € - $Total Gross exposure*of which off-balance sheet
Estimate value of collateralNet exposure
Provision
AIRBUS Net exposure after provision

1.22

1.26

3,808
712(2,222)
1,586(1,586)
0

3,822
724
(2,229)1,593(1,593)
0MarchDec.

Figures for 50% ATR

2004

2003

Total Gross exposureof which off-balance sheet
Estimate value of collateralNet exposureProvision
ATR Net exposure after provision399
127(361)
38(38)
0403
126(365)
38(38)
0* Adjusted for stipulated loss values

2814

Quarterly revenues breakdown(cumulative)in €m

Q1Q22004

2003

2004

Q3

2003

2004

Q4

2003

2004

2003

Airbus

4,126

3,775

8,773

12,05119,048

MTA

101

96

268

410

934

Aeronautics*

645

686

1,613

2,452

3,803

Space

457

403

1,008

1,473

2,424

DS*

932

813

1,902

2,957

5,165

HQ & Elim.

(230)

(253)

(504)

(807)

(1,241)

Total EADS

6,031

5,520

13,06018,53630,133* New format (Military Aircraft Unit included in DS)

29

Quarterly EBIT* breakdown(cumulative)

in €m

Q1

2004

Q2

2003

2004

Q3

2003

Airbus

224

166

621

2004

Q4

2003
701

2004

2003
1,353

MTA

(8)

(11)

(8)

(7)

30

Aeronautics**

10

16

59

112

217

Space

(11)

(21)

(131)

(184)

(400)

DS**

(51)

(54)

(28)

(18)

171

HQ & Elim.

343479180172

Total EADS

198

130592784

1,543* pre goodwill and exceptionals* *New format (Military Aircraft Unit included in DS)

30

15Quarterly Order-intake breakdown(cumulative )

in €m

Q1

Q2

2003

2004

Q4

2003

Airbus

1,068

3,416

33,17437,02839,904

MTA

100

122

20,104

20,19520,326

Aeronautics*

843

706

1,440

2,213

3,661

Space

2004

Q3

2004

2003

2004

2003

238

341

779

1,246

6,062

DS*

1,359

969

1,988

3,239

6,288

HQ & Elim.

(197)(176)(14,295)(14,468)(15,091)

43,19049,45361,150Total EADS
3,411
5,378
* New format (Military Aircraft Unit included in DS)

31

Quarterly Order-book breakdown

in €m

Q1

Q2

2004

2003

2004

Q3

2003

2004

Q4

2003

2004

2003

Airbus140,911

134,615

154,428

153,302141,836

MTA

19,980677

20,476

20,42920,007

Aeronautics*

10,021

10,193

9,828

9,719

9,818

Space

8,083

4,401

4,248

4,243

7,888

DS*

14,976

13,521

13,342

13,527

14,283

HQ & Elim.

(15,212)(689)(14,581)(14,510)(14,552)

Total EADS178,759

162,718

187,741

186,710

179,280* New format (Military Aircraft Unit included in DS)

32

16