European Aeronautic Defence and Space Company EADS N.V.

Milestones 2000

Corporate profile
Formed in July 2000 through the merger of the businessesof Aerospatiale Matra, DaimlerChrysler Aerospace AG(Dasa) and Construcciones Aeronauticas SA (CASA),
European Aeronautic Defence and Space Company EADS
N.V. (“EADS”) is Europe’s leading aerospace and defense
company and one of the three world largest in its industry.
In terms of market share, EADS is among the world’s
two largest manufacturers of commercial aircraft,
helicopters, commercial space launch vehicles and missile
systems. EADS is also a leading supplier of military
aircraft and satellites.

EADS in 2000
Millions of euros (pro forma) except work force

Revenues

24,208Order intake

49,079Order backlog

131,874

EBIT* (pre-goodwill amortization and exceptionals)

1,399Work force (number of employees)

88,879* Earnings before interest and taxes.

4

7

ORDER BACKLOG BY DIVISION

101(as %)

78

Airbus
Military Transport AircraftAeronautics
 
Space
Defence and Civil Systems

European
Aeronautic
Defence andSpace Company
EADS N.V.

Contents
Message from the Chairmen

2

Letter fromthe Chief Executive Officers

4

Key figures

6

Corporate governance8

Business structure

10Road maps for future growth12

Success through integration

14

EADS in financial markets

16

Review of operations
AirbusMilitary Transport Aircraft
Aeronautics
Space
Defence and Civil Systems

18

Human resources

52

Research and development

54

Financial policy

56

Consolidated pro forma
financial statements

58

Addresses

62

20
29
33
41
47

Message from the Chairmen
2

In terms of auspicious beginnings for a pioneering enterprise, the dawn of humankind’s
third millennium certainly qualifies. It was in the middle of the year 2000 that a vision— which the two of us had begun sharing much earlier — took corporate shape as
European Aeronautic Defence and Space Company. In just a few months, we have seen
how this single act has triggered far broader implications.
As the world’s defense and aerospace industries enter a new era, we are now sure that
EADS will be an essential participant: actively defining our roles in each segment that
we have chosen, seeking partners who complement our expertise — and being sought
as a required partner, too, by the industry’s major players. Witness the formidable
momentum built up as we created the integrated Airbus company, officially launched
the Airbus A380, and signed strategic agreements with Northrop Grumman in
defense electronics, with Finmeccanica in aeronautics and with Russian partners in a
number of areas. All this would not be happening now had EADS not been founded
last year.
In EADS we have built a robust platform that naturally draws highly talented people
from across Europe and even beyond the continent. Their enthusiasm in this centuryold aerospace industry is real, adding a still greater dimension to our undertaking. All
our people are committed to a single goal: going further with our successful enterprise by building industry-leading products and offering innovative customer-driven
services. We are proud to open this new chapter in aerospace conquest by enabling
our talented teams to be still more successful by launching major new programs suchas the A380 Superjumbo and the A400M military transport aircraft.

3

by Manfred Bischoff and Jean-Luc Lagardère

These lines that you are reading have been written for the entire EADS community,
inside and outside the enterprise. This community of our corporate stakeholders
ranges from those who own our shares to others who work in our ranks, and fromthose who rely on our products and services to still others who partner with us as suppliers.
We hope that you will read this report as a logbook of an exciting journey, and thatyou will want to join us in some way. Both of us guarantee you will get a warm welcome on-board.

Chairmen of the Board of Directors

To our shareholders
Letter from the Chief Executive Officers
4by Philippe Camus and Rainer Hertrich, Chief Executive Officers
2000 is a milestone in the history of aerospace. It was the year of the creation ofEurope’s first aeronautics, defense and space company. The leading French, German
and Spanish aerospace companies have united their forces to become a major international player on the aeronautics, defense and space markets.
The merger of Aerospatiale Matra, Dasa and CASA has been done in a very short time
— 7 months only separate the signature of the agreement between these companies
from the creation of EADS on July 10th, 2000.
This remarkable achievement was made possible by the commitment of the employees of EADS, who have received strong support from the shareholders. This support
has encouraged us in our efforts.
Relying on the strong confidence of our shareholders, we as a group have achievedmajor successes in 2000. We have established many co-operations and partnerships:with the Italian Finmeccanica in military aircraft and in missiles, with the British BAE
Systems to create the integrated Airbus company, with the American Northrop
Grumman in maintenance and with the Russian industry. The agreements we havereached will foster our growth for the coming years.
For order intake, 2000 has been an exceptional year: 49 billion euros, more than 50
percent higher than in 1999. As a consequence, our order backlog at year end reaches
a record level, covering more than 5 years worth of business.
In each division, major achievements have been realized: the launch of theSuperjumbo of Airbus, the A380, which will enable us to compete on an equal basiswith our main competitor; the big contracts for the transport helicopter NH90; themajor progress on the military fighter aircraft, the Eurofighter; the positive decisions

5

on the military transport aircraft A400M program; the big contracts in missiles andthe remarkable growth in encrypted digital telecommunications.
These good results have been reflected in the share value of EADS, which, at year
end, had climbed by more than 30 percent since the IPO (Initial Public Offering),
overperforming the stock market, which has decreased during the same period.
For 2001, several challenges are ahead of us, the most important of all being to succeed in the integration process and to create more value. The value of EADS is in thehands of the women and men who make up the Group. These people come from different cultural backgrounds, which is a great value for us, since this nurtures the creativity and the dynamism of our Group. We are making the most out of crosscultural exchanges through the fully integrated teams who work on each project.
Concerning value creation, we are fully committed to our targets. We have identified
the projects which will generate more than 600 million euros of additional profits by
2004. Two of these projects are the reorganization of the defense and space business,
which already started. The mission and organization of the headquarters will also be
rationalized to get a leaner and more efficient structure.
In addition, EADS Management is also focused on the implementation of businessinitiatives in the field of services and Internet technologies to streamline our businessactivities and processes.
Our ambition is to make EADS the world leader of aeronautics, defense and space.
We have had a good start in 2000, now we should capitalize on these successes andlaunch new programs which will drive our growth through the early decades of the
21st century.
Our motto has never been so true: let us do the step beyond!

Chief Executive Officers

6

Key figures
EADS’s pro forma consolidated revenues
for the full year 2000 rose 7.3 percent to24.2 billion euros.
In 2000, EADS’s profitability grew withpro forma earnings before interest andtaxes (EBIT)(1) reaching 1.4 billion euros,
11 percent higher than the 1999 pro
forma figure of 1.26 billion euros(adjusted for the gain of 182 million
euros on the disposal of an interest in
Sextant in 1999). This was achieved
after a sustained R&D effort representing
5.5 percent of revenues.

1110
REVENUE BREAKDOWNBY DIVISION (as %)Airbus
Military Transport AircraftAeronautics
 
Space
Defence and Civil Systems

59

19
1

24,20822,553

1,399
1,263*

Based on this very promising result,
EADS is developing a solid growthstrategy for the future, enabling the2004 profitability target(2) (set at the timeof the initial public offering, or IPO, at
8 percent) to be raised to 10 percent.

1,324

1,339

1999

2000

EADS recorded a net pro forma loss of
909 million euros mostly on the one handdue to the high goodwill amortizationand exceptional charges (in excess of 1
billion euros pretax) and on the other tothe accounting principles applied tohedging positions stemming from procedures used prior to the merger. From2001 onwards, the application of new
accounting rules (IAS 39) will enable
EADS to reduce substantially the volatility of the net income related to year-end
dollar fluctuation.
1999

1999

2000

REVENUES
Millions of euros (pro forma)

1999

2000

EBIT pre-goodwill amortization
& exceptionals
Millions of euros (pro forma)
* Excluding Sextant gain on disposal.

2000
NET RESULTINTERNALLY 
FINANCED R&D

Millions of euros (pro forma)

Millions of euros (pro forma)(909)(1,046)(1) Defined as earnings before interest and taxes (EBIT), pre-goodwill amortization and exceptionals.
(2) EBIT in percentage of revenues.

7

10

20

9

REVENUE BREAKDOWN
BY GEOGRAPHY (as %)53

REVENUE 
BREAKDOWN
BY MARKET 

28EuropeNorth America of the world
Rest
Asia

(as %)

80


 
Civil
Military

49,079131,874

2,143
1,531
102,400

32,700

198
1999

2000
NET CASH (DEBT)
POSITION

1999

2000

1999

2000

1999

2000

FREE CASH FLOWORDER INTAKEORDER BACKLOG

Millions of euros (pro forma)

Millions of euros (pro forma)

Millions of euros (pro forma)

Millions of euros (pro forma)(946)

At the end of 2000, EADS had a net
cash position of more than 2 billion
euros — an increase of 3 billion euros —due equally to the very strong free cash
flow (which increased nearly 8 times)
and to the capital increase resulting fromthe IPO.

The very strong order intake achieved in2000 amounted to 49.1 billion euros, up
50 percent, demonstrating the company’s
exceptional performance capability. At
year-end 2000, order backlog stood at 132
billion euros, representing more than five
years of pro forma revenues at current
levels.

8

Corporate governance
Board of Directors,
Chairmen and Chief
Executive Officers

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 and non-executive members. The Board is the highest decisionmaking body after the shareholders’meeting.
The Board of Directors is responsible forthe affairs of the Company. The role of
the Board of Directors is to ensure that
the Company is operated to maximize
shareholder value in accordance to thelaw and the established rules ofCorporate Governance, taking into
account maintaining good relationships
with the Company’s employees and customers.
The Board of Directors comprises elevenmembers, appointed and removed by theshareholders’ meeting. The Board of
Directors has an equal number of
Directors proposed by DaimlerChrysler
and by SOGEADE(1) respectively andone Director proposed by SEPI(2), plus
two independent Directors.
The Board of Directors has appointed
from among its members the two Chief
Executive Officers (CEOs) responsible
for the day-to-day management of theCompany and has designated its two
Chairmen to ensure the smooth functioning of the Board of Directors and to support the Chief Executive Officers of theCompany with regard to top-level strategic discussions with outside partners.

(1) Lagardère together with French financial institutions andSogepa (French state holding company).
(2) Spanish state holding company.

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
has formed 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,and the Audit Committee meets atleast twice a year. It is chaired by
Manfred Bischoff and Jean-Luc
Lagardère and also includes Louis
Gallois and Eckhard Cordes.
•The Personnel Committee, whichmakes recommendations to the Boardof Directors regarding appointments
to the Executive Committee, remuneration strategies and long-term
remuneration plans and decides theservice 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 chairedby Manfred Bischoff and Jean-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 and forecasts.

9Membersof the Board of Directors
Manfred Bischoff
Member of the Management Board of DaimlerChrysler
Chairman of the Board of Directors of EADS

Jean-Luc Lagardère
General and Managing Partner of Lagardère
Chairman of the Board of Directors of EADS

Philippe Camus
Chief Executive Officer of EADS

Rainer Hertrich
Chief Executive Officer of EADS

Axel Arendt
Chief Financial Officer of EADS

Eckhard Cordes
Member of the Management Boardof DaimlerChrysler

Pedro Ferreras
President of SEPINoël Forgeard
Airbus Chief Executive Officer

Jean-René Fourtou
Vice President of Aventis S.A.

Louis Gallois
President of SNCF

Michael Rogowski
Chairman of the Supervisory Board of J.M. Voith AG

Business structure
10

With the lean management structure that EADS has set up, the headsof five operating divisions — Airbus, Military Transport Aircraft, Aeronautics,
Space, Defence and Civil Systems — report directly to the CEOs.
Each of the five operating division heads is responsible for profit and loss
as well as meeting profitability targets.

EADS simplified operating structure
AirbusEADS AirbusNoël Forgeard

Military
Transport Aircraft
EADS CASA(Military Transport
Aircraft Division)
Alberto Fernàndez

Aeronautics
EADS Deutschland
Military Aircraft
Aloysius Rauen

Eurocopter
Jean-François Bigay

EADS ATR
Jean-Michel Léonard

EFW
Dierk Minke

EADS Sogerma
Yves Richard

EADS Socata
Philippe Debrun

Space

Defence & Civil
Systems

ASTRIUM
Armand Carlier,
Joseph Kind,
Klauss Ensslin

EADS Launch
VehiclesPhilippe Couillard

Defence Electronics
Stefan Zoller

Services
Jacques Vannier

Missiles MBD
Fabrice Brégier

Aerospatiale Matra
MissilesPierre Dubois

Missiles LFK
Werner Kaltenegger

Telecommunications
Jacques Payer

11

Executive Committee
The CEOs are supported in their operational tasks by an Executive Committee
made up of the heads of each operational
division and of the heads of the threemajor functions of the Company. Such
Executive Committee chaired by theCEOs is made up of 11 members.

François Auque
Philippe Camus

Members of the
Executive Committee
Front row (left to right)

Axel Arendt

Chief Executive Officer

Alberto Fernández
Military Transport Aircraft DivisionNoël Forgeard
Airbus Chief Executive Officer

Space Division

Jean-Paul Gut
MarketingJean-Louis Gergorin
Strategic Coordination

Thomas Enders

Chief Financial Officer

Back row (left to right)

Defence and Civil Systems Division

Rainer Hertrich

Dietrich Russell

Gustav Humbert

Chief Executive Officer

Aeronautics Division

Airbus Chief Operating Officer

Road maps for future growth
12

Maximizing benefits
from new opportunities
With the creation of EADS,
a whole new set of opportunities is open
for the future of the aeronautic,
defense and space industries.
Building on the strengthsof the successful integration of existing
businesses and the leverage of theresulting additional value, EADS isaddressing three main challenges:
further consolidation in Europe,in both the industry and our customer
base; transatlantic relationships
to achieve global reach; and businessinitiatives in cross-divisional activities,
e-business and full-package solutions.

Jean-Louis Gergorin
Executive Vice President,
Head of Strategic Coordination

Core integration advantages
The creation of EADS triggered themost significant step in the consolidation of the commercial aircraft industry.
After 30 years of partnership, a fully
integrated Airbus company is currently
being founded. This major step forward
was a direct consequence of the mergerof three of the four Airbus consortium
members into EADS. This new company is to be owned 80 percent by
EADS, and 20 percent by BAE Systems.
Announcement of the new Airbus company’s creation spurred the launch of thebiggest commercial aircraft ever, theA380, within a structure that combines
strengths and reduces costs.
At the same time, EADS’s missile systems operation (MBD and Aerospatiale
Matra Missiles), which were already
Europe’s largest, will be reinforced andextended with the contribution of
Aerospatiale Matra Missiles and the missile systems operations of Alenia Marconi
Systems, resulting in MBDA and achieving a leadership position in its industry.
Beyond redrawing existing partnerships,
EADS is also negotiating a new jointventure with Italy’s Finmeccanica
focused on military aircraft: European
Military Aircraft Company (EMAC).
As Europe’s first integrated aeronautic,
defense and space company, EADS is amajor contributor to the creation of a harmonized European government customer
base. Examples include the successes —against strong international competition— of the Airbus A400M military transport and the next-generation Meteor
medium-range air-to-air missile.
Clearly, within Europe’s aerospaceindustry, EADS is the prime mover andintegrator.

Transatlantic ties,
global reach and R&T
In transatlantic defense relations, EADS
has set up partnerships with major
American companies such as Northrop
Grumman for defense electronics, airground surveillance and maintenance,
Boeing for the Meteor missile, and is discussing potential co-operation agreementswith Lockheed Martin and Raytheon.
EADS is also extending its global reachby negotiating partnerships with strong
regional leaders such as Embraer andthrough global cooperation agreementswith some major countries like Russia.
Direct control of strategic technologies
is a key competitive edge for EADS.
Sharpening, owning and improving
technological advances have the highest
priority. Carbon fiber, avionics, adaptive structures and telecommunications
are all examples of dual-use technologies
which will ensure EADS a clear advantage in the years to come.

Business initiatives
Multi-divisional products —such as
mission aircraft, Unmanned Aerial
Vehicles (UAVs) and in-flight entertainment systems — are being emphasized,
enabling us to develop “full-package
solutions” that are tailored to evolving
customer needs. The range of EADS’s
in-house platforms gives us the potential to extend our prime contracting andleadership roles to most business segments.

As growth in services is much higher
than the average in industry, EADS hasan opportunity to develop existing activities further and expand our businessbase. We are focusing on customer preference for complete service solutions. In
particular, military outsourcing is expected to grow substantially, offering EADS
a business area that is both large andexpanding. We also believe in the profitability of customer support services,and have launched initiatives to addressthese needs, including acquisitions.
Lastly, e-business is strategic in streamlining our business processes. It is a key
driver of the integration process, accelerating information flows and boostingproductivity. We are currently focusing
on collaborative development of products and programs, supply chain integration beyond electronic data interchange(EDI), e-procurement of non-strategic
goods, sourcing management of strategic
goods, online customer care and services,
and improved internal process efficiency.

From left to right: ASAP5 structure, Airbus A380, A400M.

Even though the first major round ofrestructuring in Europe’s defense andaerospace industry has taken place, EADS
will implement continuous actions tostreamline our portfolio further, gain
greater market access and sharpen ourcompetitive edge, thus expanding ouropportunities for profitable business in all
major global markets.

From left to right: Ariane 4 and Ariane 5.

Success through integration
15

Integrated sales and marketing
A new, fully integrated internationalsales and marketing organization has
been set up and structured aroundregional directorates with centrally
based staff services. The French,
German and Spanish marketing organizations and international networks now
form a highly competitive, business-oriented unit dedicated to strengthening
EADS’s position in its export markets.

Jean Paul Gut
Executive Vive President,
Head of EADS International

By working closely with the divisions
and business units, EADS International
is also a platform for delivering customers optimum pre- and after-sales
services. With 32 offices covering 70
countries, it is critical in achieving the
70 percent of consolidated revenues
that EADS generates in markets outside its home bases and therefore a key
to business success.

The creation of EADS International
consolidates our worldwide operations
and forges new opportunities in suchhighly promising new markets such as
Australia, Singapore and the Middle East.

Merger integration
A dedicated company-wide Merger
Integration team has been set up to
ensure that value targets will be reached.
In a first phase, more than 600 projects
were identified that touch almost all
facets of the company.
Line management is fully committed tothis process, and the Merger Integrationteam is continuing to accompany andsupport the projects.

Harmonized purchasing
process
The corporate sourcing and purchaseorganization has been reshaped into asourcing network. A joint purchasesourcing strategy was defined to implement harmonized purchasing processes.
Special emphasis is being put on joint
procurement as well as on strategic
management of supplier relations.
Overall, our harmonized sourcing strategy will account for approximately halfof the recurring value creation of 600
million euros by 2004.

EADS in financial markets
16

SHARE PRICE FROM JULY 10 TO DECEMBER 29, 2000
Base 100, July 10, 2000

150

140

EADS
CAC 40IBEX
DAXSector index** BAE Systems, Boeing, Lockheed, Thales, SAAB,
Finmeccanica, Embraer and Dassault.

130

120

110

100

90

80
              10/31/00
              11/30/00
             12/29/00
               09/29/00
   
07/10/00
              08/31/00
          07/31/00■ Stock Market Places:

Paris, Frankfurt, Spanish markets■ Euroclear code: 5730
■ Number of issued shares:
807,157,667■ Par value: 1 euro

EADS SHARE PRICE EVOLUTION
FROM JULY 10 UNTIL DECEMBER 29, 2000 (in euros)
HighestLowestYear-end

ParisFrankfurt

25.20
25.90

16.05
16.00

23.66
23.10

Spanish markets

25.10

16.10

23.30

INVESTOR RELATIONS AND FINANCIAL COMMUNICATIONA dedicated eight-person investor relations
team was set up in 2000 to keepshareholders informed, whether they are
individual shareholders, employees
or institutions. To fulfil this role theInvestor Relations and Financial
Communication Department offersa variety of information sources.
Starting in April 2001, a quarterly newsletter
called Aero-notes provides information on
EADS’s finances, strategy and products.

A Web site, www.eads.net, also provides
a wide range of information including on
financial topics. Special toll-free lines areavailable to our shareholders:France: 0 800 01 2001
Germany: 00 800 00 02 2002
Spain: 00 800 00 02 2002
Investors from other countries may call
+33/1 4133-9094.
An email box is dedicated to answering
shareholders’ inquiries: comfi@eads.net

The Annual General Meeting andInformation Meetings in France, Germany
and Spain are still other opportunities
for shareholders to ask questions to EADS
management.

17

In 2000 EADS has created value
for its shareholders
The stock performance of EADS
since its inception has been strong
in terms of stock price evolution as
well as in terms of daily trading
volumes.
Since July 10, and as of year-end 2000,
the stock price has increased 31.4 percent to 23.66 euros compared to theintroduction price of 18 euros for individual shareholders.
In the same period, the market capitalization of EADS has grown from 14 billion
euros to more than 19 billion euros, creating value of over 5 billion euros for ourshareholders.
Having been integrated in the CAC 40,
EADS outperformed the index, whichitself decreased 8.6 percent during thesame period. This performance wasachieved in an environment of extreme
volatility and disappointment withtechnology companies.

order backlog) and its leading position in
growing markets. The great majority ofanalysts recommend buying the stock.
Volumes traded have also been satisfactory showing good liquidity, since theaverage daily trading volume has beenaround 1.8 million shares. This showsthat the 30-percent free float of EADS,
although small, has not been detrimental
to investors.

The EADS Board of Directors will propose to the Annual General Meeting
a dividend of 0.50 euro per share forthe 2000 financial year.

This is the recognition by financial markets of the strategic vision which led tothe creation of EADS. In a very volatileenvironment, EADS has gradually built
up a confidence level and become a preferred stock for many investors due toour exceptional visibility (a five-year

30.3

30.3

CAPITAL STRUCTURE ON 
JANUARY 10, 2001 (as %)

5.5
33.9

DaimlerChrysler
SOGEADE: Lagardère together with French financial institutionsand Sogepa (French state holding company)
 (Spanish state holding company)
SEPI
Public** Including EADS employees and about 3 percent
held directly by DaimlerChrysler and the French state.

18

Reviewof operations

From left to right: A340, NH90, Ariane 5, Mars Express, C295, Meteor, Eurofighter.

Worldwide leadership positions
Commercial aircraft

No. 2

Helicopters

No. 1

Commercial launchers

No. 1

Satellites

No. 3

Missile systems

No. 2

Military aircraft

No. 4

19

AIRBUS DIVISION
Millions of euros (pro forma)

2000

1999

Revenues

14,856

12,639Variation %+ 18%

EBIT**

1,412

925

+ 53%

Order intake

34,15820,700+ 65%

Order backlog

104,387

79,500+ 31%

Work force*

33,927

31,534+ 8%

In number of aircraft

Deliveries
Order backlog

311

294

+ 6%

1,626

1,445

+ 13%

Thanks to its strong market performanceand increase in aircraft deliveries, EADS
Airbus division’s EBIT rose 53 percent.
In total, at year-end 2000, Airbus had
an order backlog totalling 1,626 aircraft,covering five years of business activity
at current levels and placing Airbus
worldwide No. 1.

* In number of employees. **Pre-goodwill amortization and exceptionals.

Airbus21

Breaking downboundaries

Strength in an
expanding market

When first set up 30 years ago, Airbus’s
goal was to pool European capabilities
and technological resources to build anaircraft that would reliably and costeffectively carry passengers in truewide-body comfort. By the dawn of the
21st century, Airbus had far surpassed
those original ambitions, having developed an entire family of advanced aircraft to suit every need of the global
marketplace.

Operators of Airbus fleets love the family. With order intake exceeding deliveries, Airbus is increasing production
capacity to record levels. A total of 520
aircraft worth a record 33.6 billion euros
were ordered in 2000. For the sixth
consecutive year, order backlog continued to grow, reaching a record level of
1,626 aircraft worth 104 billion euros
and representing more than five years
of production at current levels.

With the launch of the A380, Airbus
has again demonstrated its market-driven
ability to see beyond the horizon, reinventing flight with imagination, skill,and proven technologies. And the A380
is just one facet of that ability. As people
all over the world discover the affordable
pleasures of living without boundaries,
they will also delight in the entirely new
way to fly that Airbus aircraft provide.

The market success of the A380 superjumbo crowns this exceptional sales
performance. The all-new A380 —capable of carrying 555 passengers
faster and in greater comfort than everbefore — won 50 customer commitments during 2000 from leading companies from all over the world (such customer commiments being subject tosigning final agreements). Airlines want
the A380 because it allows them toexpand their operations cost-effectively
with the most advanced and spacious
airliner in the market. Airports want
the A380 because it provides the best
response to growing air traffic.

Noël Forgeard
Airbus Chief Executive Officer,
EADS Board Member,Head of Airbus division

And passengers want the A380 because
it will set a new standard in comfort forall. Its advanced technology makes it
more friendly towards the environmentand operationally more profitable. In
short, it’s a win-win jet.

2000 HIGHLIGHTS

22

Above 4,000... and climbing
Next-generation
aerodynamics
Flight is a factor of speed and lift.
In the technologies and productsof the aerospace industry, Airbus has
more than achieved critical take-off
levels for speed and lift.
The name Airbus is synonymouswith lower operating costs for airlines,
greater passenger comfort andmore advanced flight technology:
flying faster, better andfarther with Airbus.

Gustav Humbert
Executive Vice President,
Airbus Chief Operating Officer

Climbing —at 4,000+ aircraft
The total number of orders for Airbus
aircraft since its creation surpassed
4,000 last year, and the order backlog
extended five years into the future,
totalling 1,626 aircraft. Customers in
the highly competitive industry of air
travel can hardly be wrong: they buy
the market’s most efficient products toenhance their profitability. In the airtransportation industry, the solution of
choice is clearly the Airbus family.
Because of this, Airbus has continually
increased its market share.
Why? Operational efficiency is thefirst and last word in analyzing Airbus’s
unique market success. This is because
every Airbus aircraft belongs to a single
family, sharing the same cockpit, flightdeck and spare parts, thus saving timeand money for operators in terms ofpilot training and maintenance as wellas in other areas. Airbus fleet operators
now number 188 — 10 more than in
the previous year. Deliveries reached arecord 311 aircraft, (6 percent higher
than in 1999), with a total of 2,499
delivered since the creation of Airbus
30 years ago.
This performance highlights Airbus’s
ability to meet sustained growth targets
by steadily increasing production output.

Performance milestones
Several important milestones werereached in Airbus’s most recently
launched programs. The high-capacity
and ultra long-range A340 models went
into final assembly, with the first A340600 completed in September 2000.
Following their installation in November
2000, the aircraft’s Trent 500 engines
gained flight certification ahead ofschedule. Production of the first A340500s (slated for delivery in 2002) is wellunder way.
At the other end of the scale, first metal
was cut for the A318, the newest andsmallest member of the A320 family.
Full-scale production is now progressing, with the aircraft’s first flight set forearly 2002.

Single management teamIn the middle of the year Airbus’s
shareholders — EADS with 80 percent
and BAE Systems with 20 percent —announced their decision to integrate all
Airbus operations in a single operatingcompany, replacing the “economic interest grouping” consortium structure(often referred to by its French acronym,“GIE”) which Airbus had outgrown.
Although the “GIE” was ideal for pooling skills and resources to establish aposition in a highly competitive market,
Airbus’s shareholders recognized thatthe company would benefit from a new
integrated corporate organization to centralize management control over every
aspect of the business. The decision tolaunch the A380 superjumbo project
reinforces the wisdom of the move.
In the wake of the announcement,
Airbus began restructuring its operations. All design, engineering and manufacturing assets located in France,
Germany, Spain and the U.K. are to
become part of the new Airbus company. It will be managed on a day-to-day
basis by a single management team.
This consolidation process continued
smoothly during the second half of2000, with the new operational structure largely in place by year-end 2000.
Formal completion of the agreements
related to the Airbus integrated company

INDUSTRY LEADERSHIP
With more deliveries in a single year thanever before, and with the strongest sales
on record, Airbus successfully maintained
its industry-leading position. Orders roseto 520 aircraft, worth 33.6 billion euros— 9 percent above the previous year’slevels — and four new customers werewelcomed on board. Year-end backlog
included 1,626 aircraft, ranking Airbus
No. 1 worldwide for the first time ever,with a market share slightly over
50 percent.

COMPANY STRUCTURE
ADOPTED The Airbus partners agreed
in 2000 to transform their consortium
structure into an integrated company
whose single management has profit andloss responsibility over every aspectof the business. The new structure will
increase savings and enhance efficiencies,
generating value creation.

RANKED FIRST AGAIN
For the third consecutive year, a pollof operators and investors conductedby Airfinance Journal ranked the A320
aircraft first in its class. The A320 family
in fact took the poll’s top three places,
and Airbus aircraft drew praise for their“re-marketability” potential and highresidual values.

23

From left to right: maintenance activity, Airbus A320, A321.

— known under French law as a “Sociétépar Actions Simplifiée” — is scheduled
for the first half of 2001, but withretroactive effect to January 1, 2001.

Additional value expected
So, in addition to marketing, customer
support, management and co-ordinationof manufacturing and engineering operations (previously consolidated in theGIE), Airbus is also becoming fully anddirectly responsible for all design, engineering and production operations.
With this full integration, Airbus
achieves even greater efficiencies
through concentration of purchasing
power, elimination of duplication,enhanced reactivity and direct control
over costs. The targeted amount ofrecurring value creation from synergies isapproximatively 350 million euros a yearby 2004.

By further consolidating its position as
market leader, Airbus is positioned to
face the challenges of the new century:
above all, delivering customer satisfaction and shareholder value.

2000 HIGHLIGHTS

Airbus24

Beluga.

The highly popular A320 family enjoyedanother successful year,
winning 388 firm orders from 35 customers (including 41 for the recently
launched 107-seat A318). Most of the year’s orders were repeats from existingcustomers, highlighting their satisfaction with the product. Overall, 130 airlines andoperators have selected the family, which maintains its leadershipin its category, with a 53-percent market share.
The A330/A340 family booked 130 orders from 14 customers for its medium- tolong-range airliners, giving the family a commanding lead in its market.
Breakthrough deals came from Australia’s Qantas in its first-ever order for Airbus,
and Scandinavia’s SAS, which became a new family customer during the year.
The high-capacity and ultra-long-range A340-500 and -600 aircraft drew renewedinterest, with orders for the family’s most recent arrivals rising to 124.
The A300/A310 family logged two orders for its freighter version(the A300-600R) and had an order backlog of 30 aircraft at year-end.

A380 LAUNCHCUSTOMERS Placing customer
commitments for 50 aircraft (plus options),
Airbus’s customers provided ample
momentum for the launch of the A380,
the world’s most advanced and spacious
airliner ever.
The flagship of the 21st century, when it
enters service in 2006, will feature double
decks with a capacity of 555 passengers
and a range of 14,200 kilometers to
16,200 kilometers.

RECORD LAUNCH SPEED

CORPORATE JETLINER
SUCCESS Qatar Airways has

The A380 launch decision was madeon December 19, 2000, in record time.
Only six months elapsed between the“Authorization to Offer” and the bookingof 50 customer commitments from six
world-renowned customers (in chronological order): Emirates, Air France, ILFC,
Singapore Airlines, Qantas, and Virgin
Atlantic — plus options for more. Earlyin 2001, the A380 program received 12
additional customer commitments fromtwo other airlines.

become the first airline customer for the
Airbus Corporate Jetliner (ACJ), placing
a firm order for one aircraft and taking
an option on another. Priced approximately the same as a top-of-the-line
business jet, the ACJ has the largest andmost flexible cabin available today, andshares full operational commonality withthe other members of the A320 family.

25

The Airbus family concept: existing and future programs
Seats
A380

500

400

A340-600

350
A340-500
A340-300

A330-300300
A300-600R

A340-200
A330-200

250
A310-300
200
A321

A320

150

A319
A318

100
2000

4000

6000

8000
Range (nautical miles)

2000 HIGHLIGHTS

26

The 21st-century Superjumbo
Imagining
the future of flight
Officially launched in December 2000,
the A380 is the most advanced
and spacious airliner ever designed.
It represents the culmination of the mostextensive peace-time engineering effort
in history, heralding a new age
in air transportation. When it entersservice in early 2006, the A380 will
boast more capacity and greater
passenger comfort than any
other aircraft to date. And it will set
a completely new standard
in the way people fly.

Responding to air traffic
evolution
Built to the latest and most stringent
certification requirements, the A380
will embody the most advanced technologies, deliver 15-20 percent lower
operating costs than the largest aircraft
flying today, 10-15 percent more range(14,800 km of range for the baseline
version) and seat 35 percent more passengers — up to 555 in three classes —on two decks that are nearly 50 percent
more spacious. In addition to a baseline
passenger aircraft, stretch, shrink andextended-range variants will become
available as and when the market
requires them.
The A380 has been designed in close
collaboration with 20 major airlines and50 airport hubs as well as many suppliers
and production partners to guarantee amarket-matched product. It is compatible
with planned infrastructure at all major
airports. The A380 will provide theoptimal solution for traffic growth andcongestion on high-capacity routes.

Filling a market gap
In-depth and continual analysis byAirbus and most industry experts
shows a market for some 1,235 aircraftwith more than 400 seats over the next
two decades — plus 315 freighters capable of lifting more than 80 metrictonnes. While Airbus was the first to
anticipate fragmentation (and alreadysupplies dedicated aircraft for the continued dispersion of service types), it
also foresaw an inevitable need for an
all-new very large aircraft for highcapacity trunk routes. This view has
since been proven by the market’s positive response to the A380.
Airbus intends to capture at least halfof this market of 1,550 aircraft, repre-

senting more than $343 billion in revenues for Airbus over the next 20 years.

High-tech harnessed
for competitivenessAll leading-edge technologies adopted
for the A380 have been carefully studied to determine their effects over theaircraft’s lifetime. They must be provento be fully mature and capable of delivering long-term benefits before selection. An array of new materials, manufacturing processes, systems, engines
and aerodynamic design will provide
considerable weight savings, lower fuelburn, reduced emissions and lower
operating costs.
Forty percent of the aircraft’s structure
and components will be manufactured
from the latest generation of carbon composites and advanced metallic materials,
which offer reduced weight andimproved maintainability. The A380
will be the first commercial airplane witha carbon fiber central wingbox, while theempennage, upper-deck floor beams andpressure bulkhead will be made of carbon fiber-reinforced plastic. Extensive
use will also be made of thermoplastics,
and the upper fuselage shell will be
manufactured from a new glass-fiber/aluminum laminate material which saves
weight and offers superior resistance tofatigue, damage, fire and corrosion.
Several innovative techniques will beapplied to A380 manufacturing. Laserbeam welding, for example (used toattach the lower fuselage shell stringers)
will eliminate fasteners, save weight,
offer superior damage and fatigue tolerance and be much faster than conventional riveting.
Used for the first time on a commercial
airplane, the A380’s variable-frequency

ADVANCED MATERIALSENGINEERING Carbon-fiber

A TRULY GLOBALPRODUCT Airbus centers of

reinforced plastic, advanced aluminumalloys and thermoplastics will be usedin manufacturing the A380, saving
weight and improving its aerodynamic
performance. Lower weight in turngenerates less fuel burn (reducing
emissions) and lower operating costs.

excellence spread across Europe are
joining forces with other world-classcompanies to build the A380, andframework agreements have been signedwith nine risk-sharing partners to date.
Engines will come from the U.K.’s Rolls
Royce and the U.S.’s Engine Alliance(a joint venture formed by General
Electric and Pratt & Whitney).

27

Interior of A380.

electrical generators will be simpler,
lighter, more efficient and twice as reliable as traditional constant-speed
drives, while the hydraulic system will
have an increased pressure of 5,000 psi,
instead of the traditional 3,000 psi. This
will provide the increased power needed
for the A380’s flying controls, while thereduction in component size, connections and piping will save weight andimprove maintainability.

Meeting environmental goals
At all levels, the A380 represents anadvance in environmental-friendliness.
Its engines, while delivering enormous
thrust, will feature reduced noise levels,
emissions and fuel consumption. Despite
its prodigious size, the A380 will in fact
be quieter than today’s largest airliner.
Burning 15 percent less fuel per passenger carried than the largest aircraft fly-ing today, the A380 will considerablyminimize polluting emissions in thelanding/take-off cycle as well as greenhouse gases in the higher atmosphere.

From top to the bottom: A400M - C295 - C212 Marine.

MILITARY TRANSPORT AIRCRAFT
Millions of euros (pro forma)

2000

1999

Variation %Revenues

316

241

N.C.**

EBIT***

(63)

(20)

N.C.**

Order intake

493

600

N.C.**

Order backlog

873

700

N.C.**

Work force*

3,548

3,201

N.C.**The Military Transport Aircraft division
recorded a decrease in its EBIT.
The division’s major future program,the Airbus A400M, is still in its predevelopment phase and there are further
investments in the C-295 military transport
aircraft and the aerostructure business.

* In number of employees.
** 1999 and 2000 are not comparable due to the evolution of perimeter.
***Pre-goodwill amortization and exceptionals.

Military Transport Aircraft
29

Efficient
force projection

Meeting
customer needs

The Military Transport Aircraft division
has held average market shares of 21
percent for the C-212 segment and 45
percent for the CN-235 and the C-295
segment over the last five years. With
the positive decision in 2000 of the
Airbus A400M program (the official
designation of what had been known as
Europe’s “future large aircraft”), EADS
will expand still further its ability toserve both armed and peacekeeping
forces around the world.

New customers continued to find competitive solutions to their military transport needs with us during the year. In a
major breakthrough swelling our orders
and year-end backlog, the Swiss Air
Force intends to choose our C-295 to add
to its fleet despite tough bidding from a
North America supplier. A Mexican
security force took delivery of a CN-235,
and their number in operation in the
French Air Force reached seven in 2000.
In the light transport family, orders for
C-212 aircraft from the Dominican air
force fueled both the order book and thesales achievements of 2000.

The division’s products cover a range of
fixed-wing air transport and specialmission needs, serving in forces frompolice and local levels to strategic international applications. From head offices
in Spain, it addresses global markets
with customized products and services.
The division is playing a strategic role
within EADS, supplying mission andderivate aircraft with division andAirbus platforms.

At the other end of the range and inservices, the division was selected toperform a fleet-wide upgrade of heavy
maritime patrol aircraft serving in the
Spanish air force. Also in services,

important certification of new maintenance programs was achieved in both
North America and Europe during theyear, paving the way for new revenue
streams such as “power by the hour” toa growing number of air forces.

Alberto Fernández
Executive Vice President,
Chairman of EADS CASA Board,
Head of Military Transport
Aircraft division

With responsibility for the overall
A400M program management exercisedby the Military Transport Aircraft division, and with Airbus Military Company
acting as prime contractor, the scope of
our expertise can only grow.

2000 HIGHLIGHTS

A400M: a European program30

From left to right: A400M and C295.

Cost-effective force deployment
Formed around the original Airbus partners along with newcomers,
a company dedicated to military transport was set up in 1999.
The company, known as Airbus Military Company (AMC), now includes members
hailing from nine NATO nations whose home defense ministries have announcedplans to order the Airbus A400 military aircraft. The result: volume productionof the A400M, the first in a new series of military transport aircraft —and a pioneer in next-generation defense procurement procedures basedon civil practices.

FAA SERVICECERTIFICATION The U.S.’sFederal Aviation Administration and
its Spanish counterpart have certified
the C-295 maintenance programs for bothmilitary and civil aircraft. Separately,
Austria’s and France’s air forces (bothCN-235 operators) as well as a Spanish
maritime C-212 operator are customersof the division’s full in-service support
services, known as “power by the hour”.

TURKISH TRANSFER The firstof nine CN-235s that are to come off anassembly line in Turkey reaches the final
stages. As a result of the industrial
cooperation program involving transfer toTurkey of the assembly capability, a totalof sixty-one CN-235s will be in service
in the country.

POSITIVE DECISIONON A400M This program received
in mid-2000 an official commitment
from the initial partner countries
for a total requirement of 225 aircraft.
Since then, Portugal has joined
the program, bringing the total“domestic market” to 229 aircraft.

31

Responding to security threats
EADS and BAE Systems, acting throughAirbus Industry, with the other industrial partners (Italy’s Alenia, Belgium’s
Flabel, Turkey’s TAI) have set up a
dedicated company “Airbus MilitaryCompany” to manage the A400M program.
Featuring greater range and higher
speed, the A400M will be built using asimilar management structure to the oneused by Airbus for civil applications. In
all, based on current orders, EADS workshare is amounting to 65.5 percent.
Along with other new projects launched
by EADS, the A400M secures future
profitable growth.
Europe’s air forces today rely on morethan 400 military transport aircraft mostof them being of 30 years old which
need to be replaced. Without the
A400M, these air forces would have noeuropean strategic and tactical transport
solution. Additionally, alternatives forfleet replacement outside of Europe
often lack the size, capability or priceoptions that the forces would like. In
contrast, the A400M is designed precisely to target these forces’ requirements, and it is being developed andbuilt with local European industrial
resources.
Governments also recognize the advantages procured for their defense budgets
when the commercial practices of civil
programs are used on military projects.
Additionally, the proven computerized
flight management and control systems
deployed throughout the Airbus family
can benefit the A400M along with
Airbus advances in alloys, composite
structures and aerodynamics as well as
integrated monitoring and diagnostic
maintenance.

Market-competitive
performance
Because the A400M was designed to fit
with the specifications set out by its
largest potential buyers, it beats themarket competition in terms of operational characteristics. It lands on andtakes off from unprepared runways(including “soft fields”) while still carrying large payloads. Powered by fourhigh-speed turboprop engines, which
optimize take-off and landing performance, the A400M cruises efficiently,
makes steep descents and maneuvers
easily on the ground. Per-mission fuelconsumption is 15 percent lower, too.
Its operating range of 2,500 nautical
miles enables the A400M to attain a
new level of effectiveness for a tacticalairlifter. It will be able to reach any
destination worldwide at high speed
and not only be refueled in flight ifnecessary but also — when configured
as a tanker — refuel large helicoptersand combat aircraft in flight.
Current customer commitments ensure
the A400M will make its first flight,
on schedule, in 2005.

Maritime patrol
The robustness of the division’s tacticaltransport aircraft is evident in theirability to be adapted and upgraded tovarious new mission capabilities andchallenges. Assignments for maritime
aircraft also include service-life extensions with technology retrofits. For the
Spanish air force’s fleet of P-3B Orion
aircraft, the division is performing amajor upgrade program. Experience
gained in this regard is useful positioning as other P-3 fleet operators seek toextend their aircraft’s service lifetimes.
For example, the U.S. Coast Guard isactively implementing its Deepwater

Capability Replacement Project toensure the timely acquisition of theresources that will satisfy the Coast
Guard’s mission needs. The Deepwater
Project seeks to renovate, modernize,
and/or replace the Coast Guard’s entire
portfolio of Deepwater ships and planes
with an integrated system of surface,
air, logistics and related capabilities.
For this project, the division is teamingwith the leading American players
to propose derivatives of the CN-235
platform and its fully integrated tacticalmission system. The cooperation on
this project is a further example of how
EADS seeks expanded transatlantic
relationships with a variety of U.S.
partners.

From top to the bottom: Eurofighter - EC135 - ATR 72-500 - TBM 700.

AERONAUTICS
Millions of euros (pro forma)

2000

1999

Revenues

4,704

4,280

Variation %+ 10%

EBIT**

296

202

+ 47%

Order intake

8,322

4,900

+ 70%

Order backlog

13,067

8,800

+ 48%

Work force*

23,091

22,716+ 2%

The Aeronautics division had a very
successful year 2000 with EBIT risingby 47 percent. Particularly successful werethe military aircraft business unit andEurocopter’s civil business.

* In number of employees.
** Pre-goodwill amortization and exceptionals.

Aeronautics
33

Air power leadership
Fixed- and rotary-wing aircraft for
defense and civil markets (except
Airbus and fixed-wing military transport aircraft) form the core business of
Aeronautics. The division is a leading
partner in three of Europe’s mostimportant aeronautical military programs: the four-nation Eurofighter jet
plus Eurocopter’s attack Tiger andNH90 transport helicopters. Expertise
also extends to regional and light-aviation aircraft.
Services, conversion, retrofits and maintenance are an important part of operations, too: the division services and performs upgrades for defense and civil aircraft, converts civil aircraft and maintains
key components. Finally, Aeronautics isthe largest aerostructures supplier to
Airbus, producing parts, subassemblies
and sections for all of the Airbus family.

Assured long-termdeliveries
The Aeronautics division had a very successful year 2000 with EBIT rising by
47 percent and revenues by almost 10
percent compared to 1999. The decisionby the four partner European nations tobegin volume production of the NH90
helicopter drove new Aeronautics orders
substantially higher. After adding 8.3
billion euros in orders during the year,
backlog at December 31 reached 13 billion euros, including major programs(the Eurofighter, NH90 and Tiger) that
ensure future growth.

In all, launch customers have ordered
620 jets. Substantial business also camefrom a program to upgrade the German
air force’s Tornados.

Dietrich Russell
In the helicopter market, Eurocopter has
consolidated its leadership position,
maintaining about a 50 percent share of
the worldwide civil market. Besides theEC135, which has already been successfully introduced in the civil market, alaunch customer has also signed for theEC635 military version.
In our fixed-wing defense business, weare preparing for start-up of volumedeliveries of the Eurofighter, generating
sales for the consortium of which we area leading member. The division in particular is substantially involved in producing the center fuselage, the rightwing and the flight control systems plus
performing final assembly for all 267
Eurofighters ordered by Germany andSpain.

Executive Vice President,
Head of Aeronautics division

In the regional aircraft market, we
maintained our industry leadership in
the 50- to 70-seater turboprop segment
as 14 airlines took delivery of 22 ATRs
in 2000. Light aircraft business also
grew, in part thanks to the mono turboprop pressurized TBM 700. And services
such as maintenance and conversion for
all aircraft types continued to provide
stronger revenues, representing sales
above 10 billion euros over the ten coming years — not counting opportunities
in new markets.

2000 HIGHLIGHTS

34

Eurocopter’s full market coverageStrong order book
With the merger of the rotary-wing
aircraft operations of the former
Aerospatiale and Dasa in the early
1990s to create Eurocopter, a platform
was established to capture market sharein both civil and defense applications,ranking us as the world’s largest player
in our industry. In the defense market,
where programs tend to be funded overlong periods, our early initiative is now
paying off as European armed forcesannounce firm plans to modernize,
expand and replace their fleets with
Eurocopter’s advanced aircraft. Our
broad product range covers around 85
percent of market requirements.
Additionally, an international
service network provides
a long-term revenue stream.
Customers outside of Eurocopter’s homebases in France and Germany
represented nearly two-thirds of 2000
sales. And with our innovativetechnology, Eurocopter captures justunder 50 percent of the civil
civil market, where there are around500 deliveries annually.

Quietly leading the way
In 2000 Eurocopter enjoyed a second
year of exceptional orders. The orderintake reached 531 helicopters, including a first batch of 243 NH90s. Twohundred eighty-nine helicopters weredelivered during the year, a 20 percent
increase compared to 1999.
Earlier investments in R&D produced
innovative products. The EC130 joined
the Ecureuil family, competitively positioned with the addition of an extra
passenger seat. The new helicopter has
23 percent more cabin space than otherversions in its family and can accommodate seven high-comfort seats (or eight in
its medium-density configuration).
Designed to comply with new regulations to limit helicopter noise, the EC
130 is one of the world’s quietest
machines, meeting for example the U.S.
standards set for aircraft flying overthe Grand Canyon National Park. To“quietly lead the way” has long been
Eurocopter’s development strategy.
The aircraft is equipped with an automatic rotor speed control system that
adapts to flight conditions, ensuring
noise is kept to a minimum.

Robust platforms
for combat roles
Eurocopter’s two stars in its defense
line-up — the new-generation Tiger
attack helicopter and the NH90 transport and naval helicopter — are proving
to be solid successes in their markets,particularly as they address two key
missions performed by armed forces.
Including the Tiger and NH90 programs, Eurocopter captured 38 percentof the available worldwide defense
orders in both 1999 and 2000. Whilemilitary sales were slightly less thanhalf Eurocopter’s 2000 total, in terms oforder intake the NH90 and Eurocopter’sother military helicopters accounted for
four out of five euros booked during
the year. Customers outside ofEurocopter’s home bases in France andGermany represented nearly two-thirdsof all sales.
Participants in the NH90 project are
Eurocopter (holding a 66-percent share),Italy’s Agusta and Stork Fokker, of theNetherlands. The NH90 has two basic
versions — the tactical transport helicopter and the NATO frigate helicopter— which are being planned for use in
the four partner nations’ land, air and sea
forces. Deliveries of the tactical transport version are set to begin in 2004.
The NH90’s design is based on the
toughest requirements jointly definedby the armed forces of France, Germany,
Italy and the Netherlands. The transport and naval variants share a common
basic helicopter platform configured inmodular design. Dedicated mission
equipment packages allow for maximum
flexibility in operations. The machine’s
superior handling qualities are enhanced
by a fly-by-wire flight control system,
making it the first production helicopter in the world to feature this advanced
technology.

NH90 PRODUCTIONCONTRACT The governmentsof France, Italy, Germany, and theNetherlands gave their go-ahead forthe production launch of the NH90
helicopter program on June 8, 2000,
during the ILA 2000 airshow in Berlin.
The four governments’ global intention
extends to acquisition of 595 of thelatest-technology, twin-engine aircraftin the 10-ton class.

SIMPLIFIED STRUCTURE

EC 130 B 4 CERTIFIEDIn September Eurocopter changed
its legal form from a joint stock company
to a simplified stock company with asingle chairman. The operation,
which was made possible by the creationof EADS, streamlines and simplifies
the company and represents a significant
step forward in the integration process.

The EC 130 helicopter received
certification from Europe’s JAA andthe U.S.’s FAA in December 2000.
Deliveries of this highly environmentfriendly helicopter to launch customers
started in the first quarter of 2001.

35

From left to right: NH90 and EC130.

Tiger on target
The family line-up of the two-seat combat attack helicopter Tiger includes ananti-tank version as well as one for support and protection. Both are in qualification testing with the French andGerman armed forces: the two countries have ordered 80 Tigers each, while
total requirements of 215 and 212 forFrance and Germany respectively wereconfirmed. By end-2000, the Tiger had
completed 90 percent of its development and had been tested by Frenchgovernment flight crews. They were
impressed by its remarkable flying
qualities and the excellent performanceof its weapons systems. In addition toits high maneuverability and easy handling, the Tiger boasts low electromagnetic and infrared signatures.

Meeting these milestones means the
Tiger program is right on schedule.
The first pre-production Tiger, entirely
built and assembled with the production tooling, left the assembly line andmade its first flight in December 2000
— on the contractual date defined in
the specifications.
France and Germany are due to receive
their first Tigers in 2003.

2000 HIGHLIGHTS

36

Next-generation fighter capabilities
Eurofighter delivers
Keeping air forces equippedwith state-of-the-art fightersis the mission of the military aircraft
people of the Aeronautics division.
With facilities in Germany and Spain,
EADS people are core team membersof the four-nation Eurofighter program,
helping ensure that it continues to meetits development, flight testing andproduction launch targets on time.
International customers and upgrade
programs also form a major partof its operations.

Swing-role capability
With 620 Eurofighters ordered for the
air forces of Germany, Italy, Spain andthe U.K., the program is already hugely successful — and is drawing strong
interest from members outside thefounding nations. EADS’s original 49percent share in the program will growto 62.5 percent with the creation ofEuropean Military Aircraft Company
with Italy’s Finmeccanica. The German
air force expects to take delivery of thefirst aircraft made on the regular production line in the second half of 2001.
Volumes will then progressively ramp
up.
The Eurofighter is a high-performance
multi-role combat aircraft optimized for
air superiority in complex air-combat
scenarios. It features beyond-visualrange missile capability along with closein combat agility.
The aircraft’s swing-role capability as
well as its excellent agility and performance combine to make it extremely
attractive to air forces outside its homemarkets. EADS is actively bidding thenext-generation fighter to possible customers across Europe and in Asia.
Further military aircraft programs
include a light-combat, high-performance trainer known as the Mako, which
incorporates Eurofighter technologies,
and the C-101 Aviojet, a training andground-attack jet.

Upgrade programs
Recent NATO peace-making exercises
have provided valuable performancedata on earlier-technology fighters stillin service in many air forces. Armedwith these data, the EADS military aircraft people are upgrading Germany’s
Tornado fighter-bombers with modern
weapons integration systems.

This far-ranging upgrade improvesavionics software, navigation accuracy,
cockpit displays and self-protection
capabilities (including integration of ahigh-speed anti-radiation missile). The
U.K.’s Royal Air Force has also asked
EADS to handle a mid-life fatigue program for 24 Tornados.
In Spain, we have begun work on a
mid-life upgrade of the air force’s F-18
and F-5 fleets. And for MiG upgrades,
based on experience with the “westernization” and improved logistics support
for the German air force’s MiG-29s, weare exploring opportunities to adapt
Russian-built aircraft to NATO standards and to extend their lifetimes.
EADS has a 50-percent stake in a
German-Russian joint venture known
as MAPS, set up for this purpose.
Separately, we completed a mid-term
upgrade program on 17 AWACS earlywarning NATO aircraft. They now benefit from:• Electronic support measures for passive detection• Electronic surveillance capability todetect and identify air and surfacebased emitters• A joint tactical information distribution system (JTIDS) to provide secure,anti-jam communication for information distribution, position locationand identification capabilities• Increased computer memory toaccommodate the JTIDS, EMS andfuture enhancements• Global positioning system (GPS) capability to provide precise navigation.

EUROFIGHTER The four-nation
next-generation fighter aircraft,the Eurofighter — for customers outsideof Europe also known as Typhoon — isthe most important current and future
program of EADS military aircraft.
In 2000, the final stage of development,
flight testing and launch of the series
production were on schedule. Also in
2000, EADS enhanced our core role in
the program by setting up with partner
Finmeccanica a joint venture that is
responsible for 62.5 percent of the shared Eurofighter work.

HELLENIC FIGHTERUPGRADE Following a joint productverification program for the upgradeof F-4 Phantom IIs flying in Greece’s airforce, EADS has been working with local
partner Hellenic Aerospace Industry
to enable it to undertake the retrofitof the twin-engine, all-weather fighterbombers, digitizing processes that werepreviously analog. Testing finishes
in May 2001.

X-31/VECTOR The U.S. andGermany officially launched the Vector
research program in January 2000.
The program is based on the famous X-31
stall-barrier breaker technology.
Successfully developed and tested
in the 1990s, Vector enhances fighter
maneuverability. EADS is emphasizing
application and evaluation of the integrated
flight-control system design and a major
supporting technology, the advanced air
data system.

37

From left to right: Mako aircraft, Pilot of Eurofighter, Tornado and Eurofighter.

Future systems
For future airborne weapons systems, weare performing studies for an uncrewed
combat air vehicle (UCAV) and a mission
control system demonstrator. We arealso actively working on future-oriented
technologies such as sensor fusion, modular avionics, automated target identification and signature reduction.

2000 HIGHLIGHTS

Global scope38

Top to bottom: ATR 42-500 - TB20GT.

Competence in aircraft,
maintenance and conversion
Through our partnership with Italy’s Alenia Aerospazio, we build the ATR familyof turboprop regional aircraft, which seat 50-74 passengers and in cargo versions also
carry freight. Socata manufactures a range of light aircraft for private markets
and aerostructures. We are also a major supplier of aircraft conversion
and maintenance services for both airlines and air forces.
This is done through Sogerma (based in France) and Elbe-Flugzeugwerke,or EFW (in Germany).

U.S. MAINTENANCE
PARTNER In October EADS
Sogerma and Northrop Grumman signed
a joint venture agreement to maintain,
repair and overhaul (MRO) largecommercial aircraft, as a result enlarging
and strengthening our operationsin the growing U.S. aerospace
maintenance market.

DHL SHIPS ON ATRJUST-IN-TIME PANELSInternational parcel carrier DHL was oneof the first customers for the newest
ATR family member, a regional cargo
aircraft based on the ATR passenger
design. Joining DHL in purchasing
the ATR workhorse was Farnair,a growing alliance of European cargo
airlines mainly operating in the express
and ad-hoc charter and relief mission
markets.

From its Dresden maintenance/conversion
facility Elbe-FLugzeugwerke delivered
100,000 m2 of sandwich panels“just in time” to the final Airbus
assembly lines — enough to cover theoutside of the entire Rockefeller Centerin midtown Manhattan. The panels areused to outfit various Airbus aircraft.

39

Greater flexibility with ATR
Fourteen airlines with routes operating
across Europe, Africa, Asia-Pacific andLatin America took delivery of 22 ATR
regional aircraft in 2000. The performance raises to more than 613 the number of units delivered to airlines since
the program’s beginning: 359 for the
ATR 42 and 254 for the ATR 72. This
performance ranks ATR first worldwide
in the 50- to 70-seat market segment.
In all, some 100 carriers or operators in
65 countries rely on this aircraft family.
The regional air transport market is
growing 10 percent annually both inEurope and the U.S. In this market,
turboprop demand has stabilized at 5070 aircraft annually. ATR holds about
half of the turboprop market. Comparedwith jets, turboprops offer advantages ofgreater flexibility (in terms of climate
and runway conditions — both short andunpaved), lower operating costs and pollution levels, plus improved passenger
comfort in the lastest-generation regional
aircraft.

Light aircraft
For general aviation applications, Socata
manufactures a range of piston-engine
and turboprop-engined aircraft. In
2000, Socata launched its new line of
TB GT piston single-engine planes.
Socata has also expanded operations in
the U.S. (which represents 70 percentof the worldwide general aviation market) by signing contracts with two new
distributors in the Northeast.
As a first-line subcontractor for complete assemblies, Socata also supplies
aerostructures for other EADS operations such as Airbus and Eurocopter,whose success in 2000 is reflected in
Socata’s own growth. Among its specialized expertise (enabling Socata tohandle design as well as production) arecomposite materials and metal-composite combination technologies.

Maintenance and conversion
Sogerma expanded its Bordeaux facility
in France significantly to meet market
demand. It performs a wide range ofservices, from maintenance, repair andoverhaul (MRO) to re-configuration ofpassenger cabin installations and maintenance of engines and landing gears.
In the U.S. Sogerma has expanded its
capacities through a new joint venturethat supplies airframe MRO for the rapidly expanding fleets of Airbus aircraft
flying in North America as well as forother aircraft. A record year for sales
in the U.S. commuter airline MRO
market was capped by a contract with
Continental Express for its entire fleetof Pratt & Whitney 100-series engines.
Elbe-Flugzeugwerke (EFW) in Dresden,
Germany, holds core competence for
Airbus passenger-to-freighter conversion within EADS. It is also responsible for manufacturing the fiber-reinforced furnishing components for theentire Airbus family. In 2000 U.S.
parcel-carrier Federal Express decided tocontinue its Airbus conversion programwith EFW. The decision follows conversion of 41 A310-200s already delivered to FedEx since 1994.

On the left Ariane 5 - Top to Bottom: Helios II - ISS - ATV.

SPACE
Millions of euros (pro forma)

2000

1999

Variation %Revenues

2,535

2,518

+ 1%

EBIT***

67**

97

- 31%

Order intake

3,024

2,200

+ 36%

Order backlog

4,826

4,400

+ 10%

Work force*

9,400

9,545

—

The Space division EBIT was impacted
mostly by costs covering restructuring
within the division. Continued successof the Ariane program and order intake,which rose 36 percent, show thecompetitiveness of our products.

* In number of employees.
** Including 65 million euros for restructuring and non-recurrent charges.
*** Pre-goodwill amortization and exceptionals.

Space
41

One-stop space shop
EADS is in the leading position in
Europe’s space industry with Astrium,
formed earlier in 2000 from themerger of Matra Marconi Space andDaimlerChrysler Aerospace’s space
division. Astrium is controlled 75 percent by EADS and 25 percent by BAE
Systems. EADS Space division also
includes EADS Launch Vehicles,
CASA Espacio, Space Services (all 100
percent owned by EADS) as well as
Sodern and Cilas, in which EADS has
major equity stakes.
Space at EADS is a family of launchers,ballistic missiles, orbital infrastructure,satellite platforms and payloads, andsatellite services — all tailored to customer needs: earth observation, scienceand telecommunications.

Reboundon market upturn
Our competitiveness in satellite telecommunications was proved as Astrium
logged orders for six spacecraft fromthe industry’s major satellite operators,
Intelsat, Eutelsat and Inmarsat, who are

expanding their in-orbit capabilities forprovision of TV and radio broadcast
and mobile communications.
Twelve Ariane launches confirmed theEuropean launcher’s leadership on thecommercial market and the outstanding
reliability of Ariane’s advanced technology. The Ariane 4 performance in2000 brought its tally of unbroken successful orbit deliveries to 59, and thereliability of our new Ariane 5 was
confirmed. Sixteen satellite orders were
won by Arianespace — half the total
contracts for the world civil market in
2000. In ballistic missiles, the contract
for the next-generation M51 development was signed at the end of the year
2000. Retrofit and in-service support
to currently operational ballistic missiles were also revenue generators.
With new orders worth more than 3 billion euros, up 36 percent from 1999,
and revenues of 2.5 billion euros, EADSSpace division ended the year with anorder backlog of 4.8 billion euros.

New strategic initiative
During the second half of the year, theprocess of restructuring EADS’s launcher and in-orbit infrastructure operations
was implemented, combining thelauncher and in-orbit infrastructurebusinesses of EADS’s Launch Vehicles
and Astrium into a new single entitythat will enable us to serve our customers better by increasing internal
synergies and efficiency throughrationalization.

François Auque
Executive Vice President,
Head of Space division2000 HIGHLIGHTS

Turnkey in-orbit delivery capability
42

From left to right: Inmarsat 3 and Spot 5.

Renewed strength as market recovers
Space: a near-vacuum environment that is home to ever more space-based
infrastructures whose owners/operators have specific, and differing, objectives
and expectations. Some customers require full control of their in-orbit systems after
delivery, while others appreciate the simplicity of supplier services which enable them
to focus on their own core business. EADS Space division has the capability
to meet individual customers’ technological, operational and financial needs,
with tailored products and services, from payloads and platforms to launchers
and in-orbit infrastructure management.

REVENUE GENERATORSThe summer of 2000 witnessed a remarkable achievement — the successful in-orbit
delivery of no less than three telecommunications satellites within a month:
Nilesat 102 (August 17), delivering broadcast and communications services in Egypt
and across the Middle East; Eutelsat W1(September 6), in telecoms for intraEuropean and intercontinental services; andAstra 2B (September 14), in multimedia
broadcast services.

EUROPEAN SPACESTRATEGY In November 2000, theEuropean Council and the European Space
Agency issued a common Resolution for
the establishment of a consolidated
European strategy for space. This strategy
includes major initiatives such as theGalileo system for delivery of localizationand navigation services worldwide for civiluse, and GMES (Global Monitoring forEnvironment and Security) to ensure thatthe benefits of earth observation andinformation technologies are leveraged
into environmental and security
management. Astrium is a major partnerin these initiatives, which will pave
the way for new space programs andservices.

43

Primary role in Europe’s earth
observation programs
Astrium has been involved in virtually
every European remote-sensing satellite.
For weather forecasting applications,Astrium supplies the payload for thesecond-generation Meteosat geostationary (GEO) satellites and is prime contractor for the new low earth orbit (LEO)
Metop system. Astrium’s Spot series of
optical satellites, built for the French
space agency, provides 60 percent of thecommercial imagery market, with Spot 5
due for launch in 2001. The next-generation LEO follow-on, Pleïades, is also
under Astrium prime contractorship.
Europe’s largest satellite Envisat, which
Astrium is building as prime contractor
for the European Space Agency (ESA),
will collect environmental data on theatmosphere, oceans, polar ice caps andland masses. The environmental mission’s on-board radar and many of its
advanced instruments are also supplied
by Astrium. Through future radar andoptical earth observation satellite programs, Astrium will provide a new generation of geoinformation services tobenefit key customer groups in agriculture, forestry, cartography, security,
exploration and risk management.

View from earth orbit
and beyond
The French-Italian-Spanish Helios program, Europe’s first military reconnaissance satellite system, for which
Astrium is prime contractor for both thesatellites and the user ground segment
ensures European technological independence in space-based surveillance.
Beyond the earth’s orbit, ESA uses
Astrium’s Soho solar observatory to lookdirectly into the sun. Four Cluster II
spacecraft, also built by Astrium andlaunched by Starsem, now complement
the Soho mission by studying the interaction between the sun and the earth’s
magnetic field. And further afield in
the galaxy, after voyaging for eight
years, ESA’s Rosetta probe, primed byAstrium, will reach its target of study,
the comet Wirtanen, and set down a lander on its surface.

Competitivenessof telecoms and navigation
satellites
As prime contractor for more than 50
civil and military GEO communications
satellites, Astrium supplies complete
turnkey systems, from spacecraft andpayloads to network control stations,
ground terminals and communications
services, and is a world-class supplier ofmajor subsystems and equipment,
including antennas, solar generators,
propulsion units and attitude and orbit
control systems. Advanced payloads
with digital processors and multi-beamantennas allow on-board flexibility for
multimedia applications.
The highly successful Eurostar platform
series, a modular family of high-performance telecommunications spacecraft, isideally positioned to meet all customer
requirements, from fixed services andTV and radio broadcast to mobile, broadband and multimedia applications.
In 2000, Astrium booked orders on 6
civil telecommunication satellites withthree world-class clients confirming thecompetitiveness of EADS platforms.
The new Eurostar 3000 provides thehighest power available from industry
today, and the series is constantly evolving to meet present and future market
needs, with the progressive introductionof new proven technologies.

Being at the forefront of telecommunications technology is also essential toprovide defense forces with the securecommunications systems and services
they require. Europe’s major supplierof dedicated military communications
satellites, Astrium is developing thenext generation of secure telecommunications systems. Through an innovative private finance initiative approachto satellite service provision, Astrium’s
Paradigm organization will not only
supply clients with the space and theground segments, but also operate thesystem during its life cycle.
In navigation, Astrium supplied theadvanced mobile payload for theInmarsat 3 satellites, which include
Europe’s first on-board navigation system. Astrium is playing a crucial rolein the design and development ofGalileo, the global satellite navigation
system proposed by the European
Commission and the European Space
Agency. It will participate fully, notonly in the manufacture of the spacecraft and their payloads, but also in theprovision and operation of the service.

2000 HIGHLIGHTS

44

Power, from launch pad to orbit
Lifting a payload into the right orbit,
and keeping it there, is an essential partof every space application. Since payload masses vary from one application toanother, launch capability must be
flexible, too. EADS Space offersa range of solutions for in-orbit delivery,
from the heavy-lift industry-leading
Ariane 5 launcher to smaller, niche-targeted rockets.
For our home-market defense forces, we
also maintain an advanced-technology
edge in strategic ballistic capability
derived from the competence we havedeveloped in civil launchers.

Complete, flexible
launch capability
As a major industrial shareholder in
Arianespace, EADS committed to theevolution of the Ariane 5 launcher intoa family of in-orbit delivery solutions
addressing the 21st-century challengesof space transportation. EADS Launch
Vehicle is industrial architect of both the
Ariane 4 and Ariane 5, and prime contractor for the main stages. Astrium,
responsible for complete stages, boosters,
infrastructures and electronic andavionics equipment, has also played arole in every Ariane launch to date.
To complete our family of Ariane
launchers, we have teamed up with theRussian company Krunichev to create
Eurockot to offer launch services for low
Earth-orbit satellites (or LEOs), responding to market demand for high-speed
mobile communications and e-commercetransactions for example. In anotherventure with Russian partners, Starsem(in which EADS holds a 35-percent stake
alongside Arianespace, with 15 percent)launched four rockets in 2000: two toqualify an enhanced version of the
inhabited Soyuz spacecraft, and two for
ESA’s Cluster earth-observation satellites. Ariane, Soyouz and Rockot are
integrated into the Arianespace rangeof launchers.
Looking ahead, EADS Space division is
involved in studies for next-generation
launchers — both reusable and singleuse options — with the aim of reducing
the cost of access to space.

Tomorrow’s sciencein space: ISS
Arguably the greatest “next step” formankind after the 1969 moonwalk, theInternational Space Station is intended
to contribute many positive benefits for

those of us on earth. Astrium is responsible for the core European contribution
to the ISS, the Columbus space laboratory, which provides an environment for
research in zero-gravity conditions, andalso for a range of other in-orbit functions that astro-researchers will need.
Our infrastructure enables in-orbit
engineers and scientists to pioneer
technologies in robotics, environmental
control and life support systems. The
Astrium-led initiative for industrialization covers all operation and utilization
services necessary for the full 12 to 15
years of the space station’s operational
lifetime, including a full range of services for institutional and industrial customers.
The automated transfer vehicle (ATV) is
a good example of how the EADS partners complement each other. The ATV
is an uncrewed transportation system
launched on Ariane 5, that reboots theISS into the desired orbit. It also carries fuel and supplies, and provides awaste recycling facility. EADS Launch
Vehicles is, as requested by ESA a few
years ago, prime contractor for the ATV
and manages the overall program, while
Astrium is responsible for the rendezvous, avionics, and propulsion systems
and series production. The future new
single EADS entity supplying launchersand orbital infrastructures will enable the
ATV program to be rationalized.

ARIANE’S HIGH RELIABILITY
With twelve successes out of twelve in
2000, Arianspace proved its reliability
and high level of performance, mission
after mission. On October 29, theEuropeStar communications satellite
was launched into orbit by Ariane 4.
The launch, with Ariane’s usual
precision, was also the 100th in the
Ariane 4 history — a record.

ARIANE 5: RECORDPAYLOAD During the night ofNovember 15, Ariane 5 sent into orbit
the PAS-1R telecommunications satellite
plus three auxiliary satellites. The morethan-6-ton payload was a record that
only Ariane 5 could have launched.

ISS PRIME FOR DELIVERY
For the International Space Station (ISS)— already in service, and yet still underconstruction, EADS Launch Vehicles isprime contractor for the uncrewed
Automated Transfer Vehicle (ATV) that
reboots the ISS into the desired orbit,
carries its fuel and other supplies, andrecycles its waste.

45

Ariane 5.

Unique European
competence: strategic ballistics
EADS LV has been responsible for thedesign and production of every Frenchballistic missile, be it earth-or sea-based,since the beginning of the 1960s.
EADS LV has pursued its tradition ofserving its national customers throughthe supply of in-service maintenanceand upgrade for in-service missiles. In
December 2000 the French Ministry of
Defense signed a development contract
for the new generation of sea-based missiles, the M51 worth 550 million euros.

From top to bottom: Eurofighter - Radar - Polyphem.

DEFENCE AND CIVIL SYSTEMS
Millions of euros (pro forma)

2000

1999

Variation %Revenues

2,909

3,830

- 24%

EBIT***(110)**

86—

Order intake

3,857

4,300

- 10%

Order backlog

9,722

9,000

+ 8%

Work force*

17,48520,085- 13%

The decrease in revenues of the Defence
and Civil Systems division stems froma change in perimeter and from the impact
of decreasing military budgets.
The negative EBIT was mainly due to theimplementation of a restructuring and reorganization program which, together with theyear-end order backlog is the basis forrenewed growth and return to profitability.

* In number of employees.
** Including 63 million euros for restructuring charges.
*** Pre-goodwill amortization and exceptionals.

Defence and Civil Systems
47

Anticipating trends
At 2.9 billion euros, 2000 revenues
were 24 percent under the previous
year’s level of 3.8 billion euros, adecline that was mainly caused bydeconsolidation of our civil telecom
joint ventures with Nortel Networks
and by the decrease of military budgets.
Despite reduced defense spending levels
in our home markets, we secured theleading position as Europe’s largest supplier of tactical missiles (second-ranked
worldwide) as well as third place inEurope for defense electronics. Together
with our partner Nortel Networks andthrough the newborn EADS Defense
and Security Networks (EDSN), we also
played a significant role among multinational telecommunications companies
serving the military and civil para-publicmarkets.

Cross-border integration
The defense markets in Europe werecharacterized by stagnant and shrinking
procurement budgets that are as well
expected to remain under pressure in themedium term. As the division faces atransition period between the development and production phases of the
major contracts in backlog, a comprehensive strategic and financial review of thedivision took place in the second half of2000. A restructuring and improvement
program was launched to enhance thedefense and civil businesses’ competitiveness, starting with a new structure
characterized by full cross-border integration of four core areas of expertise:• Missile systems, which compriseanti-tank, ground-to-air, air-toground, air-to-air and anti-ship missile systems with the future fournation MBDA at the core;• Services, which include test solutions, outsourced military and governmental services and system engineering as well as Internet and operator services.
This new organization is designed toreinforce synergies, improve profitability and facilitate growth through partnerships, acquisitions and enhanced
capabilities to serve global markets.

Thomas Enders
Executive Vice President,
Head of Defence
and Civil Systems division• Defense electronics, covering surveillance and reconnaissance, C3I systems, radar technologies, avionics
and electronic warfare products;• Telecommunications, centered around
EDSN with dual-use telecom products and services to develop, installand integrate secure digital networks;andAs future growth is backed by thestrong existing backlog, the goal of thedivision is to be profitable again in 2002.

2000 HIGHLIGHTS

Missile systems: a strong global player
48

From left to right: MICA production, Storm Shadow and Trigat.

Creation of MBDA
Assets in France, Germany and the U.K. offer broad capabilities in missile systems
and related technologies. While Aerospatiale Matra Missiles (AMM)
is mainly in France, Matra BAe Dynamics (MBD) is a Franco-British joint venture
between EADS and BAE Systems, and in Germany EADS missile operations
are those of LFK-Lenkflugkörpersysteme GmbH (LFK).
Order intake continued to be strong in 2000 with missiles domestic and export
successes such as Aster for Italy, France and UK, ASMP-A with France, Exocet
for Greece and South Africa, Scalp and Mica for Greece.
Alenia Missile Systems (AMS) is currently being integrated into MBD to form MBDA.
With its very competitive product portfolio, MBDA will be a strong missile systems
company with critical missile subsystems such as warheads, seekers, propulsion,
proximity fuses and guidance systems. EADS will hold a 37.5-percent stake of MBDA,
while BAE Systems will hold another 37.5 percent and Finmeccanica 25 percent.
Signature of respective shareholder agreements is expected in 2001.
MBDA will be the second-largest missile company in the world and the coreof our missile activities.

U.K. SELECTS METEORSTORM SHADOW SUCCESS

Meteor, the future air-to-air
interception missile, won the United
Kingdom’s support in one of the major
2000 decisions. It had already been
selected by five other European nations:France, Italy, Germany, Sweden andSpain. Meteor will defend Eurofighter,
Rafale and Gripen combat aircraft for the
next 20 years.

The first fully guided firing of the Storm
Shadow/Scalp EG stand-off air-to-surface
missile took place successfully at the endof 2000. Launched from a Mirage 2000N,
the missile conducted all operational
mission phases, from safe separation
and accurate mid-course maneuver
over sea and land, to autonomous target
recognition and precise impact.

PARTNERING WITH U.S.
MANUFACTURERS As Boeing
joined the Meteor program, enhancing
the chances to enter the U.S. market,
EADS signed a very promisingagreement with Northrop Grummanin the field of defense electronics.

49

Air-to-air missile systems
Test firings of ASRAAM (the Advanced
Short-Range infrared homing Air-to-Air
Missile) demonstrated the performance of
this missile in the presence of intenseelectronic warfare countermeasures.
Final phases of adaptation to the U.K.’s
Tornados and Harriers as well asAustralia’s F/A-18 Hornet are under way
including first F-18 ASRAAM releases.
The U.K.’s decision in favor of Meteor— the future air-to-air missile designed
by Matra BAe Dynamics (MBD) — wasa milestone in 2000 and represents a
decisive victory that confirms our ability to supply competitive European missile solutions. Meteor, which has also
been selected by France, Italy, Germany,
Sweden and Spain, will equip fighter
aircraft with a European air-to-air missile, thus creating interoperability andindependence for other world markets.
The overall market for Meteor is estimated at 15 billion euros over 20 years,
including 8 billion euros in Europe andexport, excluding the U.S.
Mica’s integration on the Rafale F1 wascompleted. In the context of major aircraft sales in 2000, we also succeeded inequipping aircraft in service with otherarmed forces with Mica multi-mission
missiles.

Air-to-surface missile systems
An important breakthrough was the successful first full-flight test at the end of
December 2000 of Storm Shadow/Scalp
EG, MBD’s long-range air-to-surface
standoff weapon. The missile, which
will go into mass production end of
2001, demonstrated all mission specifications including the metric accuracy.
The U.K., France and other NATO
allies ordered 2,000 units. The first
Scalp missile orders outside our domestic markets underline the competitive-

ness of this missile family. Since
October 2000, the Apache anti-runway
version is being produced for the
French Air Force. Major technical milestones were also reached with the second successful free flight of theGerman-Swedish Taurus KEPD 350
autonomous standoff missile systemand the first launch of the air-toground Autonomous Free Flight
Dispenser System (AFDS) missile froman A-7 aircraft, further demonstrating
our missile expertise.

sile designs. France’s defense ministry
has decided to prolong Exocet’s lifetime 20 more years by improving its
propulsion and electronics, and by integrating receiver kits to use signals fromthe Global Positioning System (GPS)satellite fleet.

With respect to ASMP/A, we received alaunch order from the French defense
procurement agency for a new supersonic air-to-ground missile with increased
range to equip the Mirage 2000 and
Rafale aircraft for French deterrent
forces.

Surface-to-air missiles

Air defense
European and other navies have selected
the Principal Anti-Aircraft Missile
System, or PAAMS — a tri-national
program involving France, Italy and the
U.K. — where Aerospatiale Missiles
Systems and MBD have considerable
stakes with respect to Aster. The French
defense procurement agency awarded usa first production contract for 120 Aster
missiles for the PAAMS program toequip the first two French and Italian
Horizon frigates. The French-Italian
contract will extend Aster’s ATBM capability. The first Aster contracts withcustomers elsewhere were signed inAugust, 2000.

Anti-ship missiles
Based on strong orders from customers
around the globe and order backlogs, theExocet production rate was increased in2000 to meet the needs of various
navies. The Exocet family is one of themost famous and versatile anti-ship mis-

The Sea Skua anti-ship missile system
was successfully presented to international customers and important missile
contracts were awarded for the U.K.’s
Sea Wolf program.

Adding to these successes, MBD wasawarded a contract in 2000 for Mistral
2 VSHORAD surface-to-air missile
systems. MBD products such as theRapier/Jernas air defense system werealso successfully demonstrated to international customers. As a manufacturerof Stinger, Lenkflugkörpersysteme (LFK)
topped the 10,000 sales mark for its year
2000 deliveries. And the German
defense ministry signed a contract with
LFK to extend the service life of theRoland anti-aircraft weapons system.

Versatile missile
The fiber-optic guided Polyphem missile
met its test flight expectations for 2000,
paving the way for its future international success. The Polyphem missile
family is particularly suited to support
future crises management and peacemaking operations due to its surgicalstand-off precision strike capability as
well as its unique fire-and-control targeting and reallocation ability, which
minimizes collateral damages.

2000 HIGHLIGHTS

50

Defence electronics:
ensuring theinformation chain
Armed forces worldwide benefit fromthe broad spectrum of our high-techdefense portfolio covering intelligence,
surveillance and reconnaissance, C3I,
ground and naval radars, airborne systems and avionics systems.
Future battlefields and net-centric warfare require robust C4ISR solutions.
NATO has awarded EADS a contract todevelop the mission planning part of the
program that is modernizing its air command and control system. There wasstrong demand for the division’s digital
map generators, armament control systems and transponders/interrogators
used for friend-or-foe identification(IFF). A contract for the STR2000 standard transponder contributed significantly to the defense electronics business and forms a sound basis for future
growth in the IFF market. In September
2000, the U.S. Navy selected EADS forthe delivery of critical parts for the
AN/APG-65 radar to extend the lifetimeof its F/A-18 Hornet fighters through2015, once again underscoring EADS’s
global competitiveness.
In November 2000, the German parliament approved the need for Eurofighter
defensive aids subsystems but made certain conditions on the expected procurements in 2001. This approval is important for the future of the airborne systems’ early warning capabilities.
Relations with Northrop Grumman
strengthened, especially in intelligence,
surveillance and reconnaissance (ISR)
and radar technologies. A memorandum of understanding was signed tosupport joint efforts with respect tomeeting European needs for highaltitude, long-endurance, uncrewed
aerial vehicle-based electronic intelligence (HALE UAV). Both companies
also intend to cooperate in the field of
air-to-ground surveillance. Moreover,
Northrop Grumman and EADS havedecided to team on the radar for the
Airbus A400M military transport aircraft.

Security Networks (EDSN), a joint venture 55-percent owned by EADS and 45
percent by Nortel Networks, is the centerpiece of our telecoms business. It
supplies secure private mobile radios(PMR) and military network technologies to defense and security customers
on the Tetrapol standard using Nortel
Network’s packet-switching expertiseand exploiting dual-use technologies.

The division signed a contract for an
upgrade of the CL 289 drone, which
performed excellently during the
Kosovo campaign. With respect to naval
and ground systems, mission support
systems for Eurocopter’s Tiger wereordered.

EDSN has a strong track record in the
French and German markets, but our
greatest strengths lie on the international scene. Thirty secure networks
have been deployed by EDSN in 18
countries. In 2000, major orders werereceived from customers in the Czech
Republic, France, Mexico and Spain.
These successes demonstrate the competitiveness of EDSN and confirm therapid growth enjoyed by these activities.

Leadership in C4ISR was confirmed
through both a U.S. Air Force contract
for a ground-based satellite station anda prime contractor role for the French
regiment information system known as
SIR. The division also signed an agreement with Brazil’s Embraer concerning
C4ISR technologies to be linked with
Embraer programs and export projects.
The U.S. Air Force announced the purchase of two more Eagle Vision transportable stations, which made thiscooperation program another showcase
for trans-Atlantic defense cooperation.
Lastly, the division was put in charge ofthe space-based data acquisition andprocessing segments of the Helios II
data interpretation program.

High-tech telecoms
In order to strengthen EADS’s positionin telecommunications and to benefit
from significant growth rates in thisindustry in particular in the secure network segment, EADS decided in june
2000 to combine all telecoms operations
into one subsidiary. EADS Defence and

EADS telecoms operations also comprisethe former Dasa Communications
Networks in Germany (which specializes
in military networks), Intecom in the
U.S. (specialized in call centers) andSycomore in France (a system integrator
and software house). Sycomore signed
contracts with leading French distributor
Auchan for an information system structure, and with Europol for a secure telecom network running Europe-wide.
Our telecoms business also includes
stakes in Matra Nortel Communications(a 45-percent stake) and Nortel Networks
Germany (a 42-percent stake).

RADAR FOR U.S. NAVY
As part of the second phase of its
program to extend the lifetimeof the F/A-18 Hornet aircraft through2015, the U.S. Navy asked EADS
to supply critical parts of AN/APG-65
radars. This order, which is an exceptional event for a non-U.S. company
underlines EADS’s international
competitiveness and is expected to spurfurther transatlantic business.

PRIME FOR S.I.R. France
selected the division for a Regiment
Information System (SIR) that will equip
up to 500 vehicles. The award goes tothe company’s engineers with expertisein C4ISR (command, control, communications, computers, intelligence, surveillance and reconnaissance). Selection
stems from our ability to meet the customer’s operational and interoperability
needs.

PMR SUCCESS IN CZECHREPUBLIC In advance of theSeptember 2000 meeting of anInternational Monetary Fund committee
in Prague, the recently created EDSN
successfully deployed in just six months
a secure digital private mobile radio(PMR) network for Czech security forces.
The robust network supports 7,000 users
and on cutover proved its ability to satisfy
their expectations in complex real-lifesituations.

51

Fresh service
approach
Outsourced governmental services represent an emerging market and a sizeable business in areas such as infrastructure support and operations, equipment
support and training. Defense businessin particular is becoming more and more
service-oriented, with customers asking
for package solutions, through-life support and flexible financing. The division received business opportunities in
the French and German markets.

Business-to-business markets were themain drivers for Internet- and operatorbased Matra Grolier Networks. In
industrial and manufacturing design,
strong sales of CATIA (an integrated
suite of CAD/CAM tools that provide
a comprehensive engineering solution)
drove Matra Datavision’s revenues 62
percent higher compared to 1999.
Test & Services supplies test benches forairlines’ and military’s clients equipment. In 2000, it delivered 18 Atec
Series 6 test benches to airlines andequipment manufacturers for Airbus andBoeing applications. The CH47 application of the Atec Series 6 was delivered to
the launch customer and the Mirage
2000-9 application of Atec 5000 entered
the development phase. Test & Services
also delivered nine Sesar 3000 test
benches for production and maintenanceof Rafale aircraft. Lastly, development of
the optronic version of Sesar 3000 forarmy applications was successfully completed.

2000 HIGHLIGHTS

52

Headquarters organization

Corporate
Secretary
Pierre-Henri Ricaud

Chief Executive
Officer

Chief Executive
Officer

Philippe Camus

Rainer Hertrich

Human
Resources
FranceHuman
Resources
Germany

Human
Resources
Spain

Jacques Massot

Reinhart Havers

Javier Matallanos

Communications
Christian Poppe

Purchasing

Legal Affairs

Hans-Erich Mundt

Eric Thomas

Executive
Management
Development
Birgit Quecke

Political Affairs
FrancePolitical Affairs
Germany

Political Affairs
Spain

Denis Verret

Wolf-Peter Denker

Carlos Grandal

Strategic
Coordination
Jean-Louis Gergorin

Strategy &Planning
Wolf-Dieter SiebertMarketingJean-Paul Gut

MergerIntegration
FranceMergerIntegration
Germany

MergerIntegration
Spain

Andreas Loewenstein

Bert Stegkemper

Carlos Navarro

Chief Financial
Officer
Axel Arendt

Controlling
Hans-Peter Ring

Mergers andAcquisitions

Finance
Treasury

Marwan Lahoud

Yolaine de Courson

Industrial
Research andTechnology

Investor
RelationsJean-Marc Thomas

Marc Paganini

Accounting/Tax
Joachim Feyel

Information
Technology
Andreas Groth

Executive Committee’s members.

JULY AMSTERDAM LAUNCHEVENT Eight hundred EADS employees

EUROPEAN WORKSCOUNCIL PROGRESS Comprising

EMPLOYEE SHARE OWNERSHIP
PLAN (ESOP) Our people demonstrated thatfrom three headquarters — those in Paris,
Munich and Madrid — came together
to celebrate Europe’s first cross-border
creation of a world-class player in the aerospace and defense industry. The event wasa model for more EADS team-building
across Europe.

16 members — all salaried personnel —hailing from four countries, the pioneering
European Works Council is an officialorganization within EADS meeting fourtimes a year, twice with top management.
Among the Council’s assignments:
keeping EADS salaried personnel at local
and national levels fully informedof EADS activity.

they “buy in” to the EADS promise, taking the same
per-spective as outside investors. With the launchof EADS shares in the stock market, more thana quarter of eligible employees across Europe becameshareholders. Nearly the entire block of 12 million
shares set aside for them was bought — 96 percent.

Human resources
Our people: building team spirit across the organization
53

Spurring mobility

Greater human resources
Keeping our commitment to our greatest
assets — our own people — has driven
the human resource effort at EADS
throughout our first year as part of a single organization. Years of team-building
as separate companies formed a platform
on which we could quickly add new features and services, with benefits delivered directly to our own people plus ourcustomers — and their customers, too.
We pioneered in our human resources
policies with the creation of a European
Works Council. This representative body(whose members are EADS employees
from four countries) safeguards the interests of all those who work for the company in Europe and elsewhere. The
Council facilitates cross-border exchange
between its representatives and theirbase, on the one hand, and corporate
management on the other.

All employees in France, Germany andSpain are buying in the team spirit ofbelonging to EADS. Jobs are open to
all personnel, irrespective of theirnationality. To spur mobility, specialtransfer conditions for headquarters
staff, for example, facilitate cross-border career moves. Employees who
accept an assignment off their homeground benefit from intercultural training that addresses their specific situation. Still other training — in communication skills — is available to employees at many locations following the decision by EADS to adopt English as thecorporate language.

Growing team spirit
Cross-border success in human resources
at EADS is based on dedication and commitment. Differing national characteristics and legislative frameworks haverequired enormous efforts to harmonize
core personnel policy principles andrelated procedures. These accommodations have been made not just for ourpeople who build and sell our products,
but also managers and executives whomarket our products, set strategy andhandle finance and accounting. The
breadth of this challenge for companywide human resources coordination has
been exciting. Key to the success has
been team spirit, and finding new ways
to grow that spirit.

HUMAN RESOURCES
Employees year-end 2000

EADS

88,879Airbus33,927

Military Transport Aircraft

3,548

Aeronautics

23,091

Space

9,400

Defence & Civil Systems

17,485

Headquarters and research center

1,428

Starting from roughly two dozen integration initiatives launched in 1999,
three major projects addressed generalmanagement, values and practices, andinternal communications. More than 80
people have tackled the issues of harmonizing human resources values andpractices, proposing innovative highperformance solutions.

Competitive flexibility
To keep EADS profitable, flexible
employment practices are being promoted with increasing success. The newhuman resource policies target solutions
to rising workloads with schemes thatallow employees to accumulate work
hours and save up extra hours for timeoff. On some sites, agreements on parttime work weeks affected several hundred employees and have boosted competitiveness on production lines.

RESEARCH & DEVELOPMENT
Millions of euros (pro forma)

2000

1999

Total revenues

24,208 22,553

Internally financed

1,339

1,324

Internally financed R&D 5.5%
to revenues ratio %5.9%

Total EADS R&D investment, including
the part financed by third parties, reached3.35 billion euros in 2000, representing
13.8 percent of revenues.

Research & Development
Leading edge
54

Technology benefits
Across the spectrum of EADS market
successes, one factor dominates:
our leading edge in technology —unique in our industry — that delivers
profitable benefits to our customers.
These range from sensors, dataprocessing and advanced materials to
optical and thermo-mechanical control
of systems — and still others. Alongsidethese technology breakthroughs there
have been teamwork advances throughdeployment of the EADS researchand technology network. Both technology
and teamwork are driving benefits
not just to EADS customers, but also
to our bottom line.

Research across Europe
The goals of research within EADS are
to reduce product development costs
and cycles, ensure respect for the environment, improve product performanceand competitiveness, and maintain our
technology lead while strengthening
our areas of excellence.
Because of our origins and ambitions,
EADS’s research and technology assets
are based across Europe. The Corporate
Research Center work in three locations: France, Germany and Spain. Stillother resources in additional countries
participate actively in maintaining thecompany’s leading edge in technology.
By coordinating and harmonizing
advances in research, engineering, manufacturing and quality throughout thecompany, R&D networks that cut acrossthe entire scope of EADS expertise havebeen brought to life.

From left to right: propulsion technology - simulator.

Additional value as expected

Looking ahead

When R&D operations join forces, synergies help grow the business. Expertise
combines and strengthens above andbeyond what the simple sum of the twoor three parts could be expected to provide. Advances achieved at one site
reinforce others made elsewhere.

Computer-aided design and product data
management are two key technologies
that have been shortlisted for review andvalue creation, benefiting from corporate
synergies. Our processes in these areas
can be harmonized so as to use the mostefficient technologies for new programs.
Composite and metallic-structure technologies are also an area for focus.

Closer cooperation is growing with adedicated manufacturing network toensure smooth transfer of breakthrough technologies to productionlines, resulting in greater customer satisfaction. Representatives from ourbusiness units meet with our technology team members to promote synergies still further and ensure cross-fertilization. Manufacturing technologies
are reviewed together to benchmark
best practices. This process has demonstrated a remarkable potential for creation of added value.
Lab infrastructure is among the industry’s latest. The main sciences andapplications addressed are: sensors anddata processing; microsystems and electronics; advanced materials, process
technologies and testing; structures
engineering and acoustics; electromagnetic, optical and thermo-mechanicalsystem control; and information technologies for engineering and advanced
computation.

Evaluation of electronics and information-technology requirements is being
studied as well. Electronics accounts for
30 percent of EADS products, making it
essential to decide on in-house supply or
recourse to reliable outsourcing.
By definition, those of us in research,development, technology and engineering are always looking ahead: to how
processes and products can be improved
to meet customer expectations more
efficiently. This goal remains at theheart of the EADS investment in thepeople and infrastructure who will
deliver the solutions — sometimes overthe horizon, sometimes a month or two
away — that make the critical difference.

2000 HIGHLIGHTSGERMAN SCIENCE PRIZE

INTERNAL NETWORKING

Innovative composite structuresdeveloped by EADS researchers won
a distinguished science award bestowed
by a leading German industry group.
The award recognizes advances madein adaptronics, a science that studies
how micro-electronics can be included
in materials to make them more
intelligent.

The foundations of more efficient
teamwork among the many scientists,
researchers, engineers and technicians
within EADS was laid during the year
2000. In 2001, this robust platformof market-driven expertise is opening
new contacts with outside partners atuniversities, research institutes andindustry at large.

The A380: packed
full of tested high-tech
Proven technologies that were developed and tested in EADS labs are being
applied throughout the Airbus family
member sometimes referred to “21stcentury jetliner”: the Airbus A380.
They mainly concern materials, processes and systems as well as the jet’s environmental friendliness.

Materials: An estimated 40 percentof the A380’s structure and components will be built using the latest-generation carbon composites, metallic
materials and laminates: carbon fiberin the wingbox, fin box, rudder, horizontal stabilizer and elevators as well as
floor beams and bulkheads; advanced
aluminum alloys in the wing covers;
and laminates in the fuselage.
Advantages include greater strength,
less weight, greater reliability, andmore efficient maintenance and repair.

Processes: Laser-beam welds are
replacing rivets, saving time and weight
while eliminating fasteners (a source ofcorrosion and fatigue cracks) and
improving maintainability with automated built-in inspection feature.

Systems: For the first time in civil
aviation, the hydraulic system’s pressure will be increased to 5,000 pounds
per square inch, facilitating flight control and reducing the A380’s weight.
The flight control system will benefit
from dual architecture, and a redesigned
air generation system enhances flexibility in ground and cruising environments.

Environmental friendliness: While
all the advances in the three other areas
contribute to reduced emissions throughlower structural weight per passenger,
the A380’s wing and undercarriage technology will enable it to fly more quietly
than today’s largest airliners. In fact, an
A380 passenger will generate half thenoise of a typical jumbo passenger.

Exceeding the initial2004 profitability target
The financial policy of EADS is driven
by the goals of creating value forshareholders and reducing risk exposure.
EADS also respects strict financial
criteria while pursuing our key rolein European consolidationof our industries and launching
new programs to ensure profitable
growth in the future.

At the time of our public offering July
10, 2000, EADS announced a goal ofachieving a return-on-sales margin(defined as earnings before interest andtaxes, or EBIT over revenues) of 8 percent by 2004, after absorption of the
Airbus A380 research and development
costs. This performance was based on
expected business and productivity
growth and estimated merger-related
value creation of 580 million euros per
year from 2004 onwards. With 100percent consolidation by EADS of
Airbus from 2001 onwards, the total
value creation target was then raised to
600 million euros.
Since then, the dedicated EADS merger
integration team has identified morethan 600 concrete, detailed projects that
go beyond the target of 600 million
euros. As early as 2001, EADS intends
to achieve 10 percent of this target,
which should be fully reached in 2004.

Financial policy
57

Around half of the expected value creation will result from the combinationof the huge purchasing power that
EADS can leverage vis-à-vis our suppliers along with the growth of purchasevolume triggered by the launch of suchprograms as the A380. Elimination of
duplicate R&D expenses, reducing marketing costs and resizing headquarters
together with greater business opportunities due to improved market accessand financial engineering will deliver
the remainder.
Due to the success of the ongoing merger
integration projects, substantial future
revenue growth driven by a backlog representing five years of revenues, andfavorable secured currency exchange
rates of the hedged portion of our exposure denominated in U.S. dollars, EADS
management has been able to raise the2004 profitability target from 8 to 10
percent return on sales. This new figure
is based on the same perimeter as before,
thereby absorbing the R&D expenses
for the A380 program.

Improved controlof currency variables
EADS generates more revenues denominated in U.S. dollars than it has expenses in that currency. The resulting net
exposure (in 2000, roughly $8 billion)
bears the brunt of exchange rate fluctuations between the euro and the dollar.

As a result, EADS established a hedging
strategy with clear rules and proceduresto protect our earnings against their
exposure to exchange-rate risks while atthe same time avoiding speculation. The
EADS policy is to hedge only part of the
future exposure triggered by firm commitments in our backlog. In 2000, we
seized the opportunities of a strong dollar to secure a great proportion of our
future exposure at favorable dollar rates(ranging from 1 euro = $0.95 to 1 euro
= $1.00), much above our initial conservative dollar assumptions at the time of
the July 2000 offering.
Moreover, following enforcement of the
new IAS 39 rule (effective January 1,2001), EADS’s management decided toindividually allocate nearly all hedges tounderlying commercial contracts. In
doing so, nearly all our hedging contracts will be recorded in EBIT at thehedged rate, and there will no longer be
the need for a mark-to-market provisionin our financial statements. The income
volatility that we suffered in our past
pro-forma accounts will therefore virtually disappear from 2001 onwards. The
new IAS rule application has been very
positively welcomed by the financial
community, since it allows a better reading of our financial statements andenhanced visibility of our expected
future earnings.

Value-creating M&A
As the premier European company inaerospace and defense, EADS is driving
the two industries’ ongoing consolidation process. Merger and acquisition(M&A) transactions have been, are andwill always be an important part of ourstrategy to ensure control of our operations and profitable growth.

To secure value-creating transactions andprojects, EADS has set up internal committees that combine strategic, technicaland financial competence. All M&A
projects are reviewed and evaluated bythis committee as are bids on contracts
above certain thresholds and/or carrying
unusually high financial risks.

Axel Arendt
EADS Chief Financial Officer,
EADS Board Member

New programs
EADS has anticipated market trends bylaunching new programs (such as theA380, Ariane 5, Meteor and others),
which will drive our growth throughthe early decades of the 21st century.
For these new programs, a team of marketing and finance experts works on
risk-avoidance structures using the bestcompany-wide practices and know-how.

Consolidated pro forma financial statements (unaudited)
Consolidated balance sheet
58

Millions of euros
Pro forma 2000

Pro forma 1999

FIXED ASSETS

20,894

19,952Intangible assets

116

134

Property, plant and equipment

8,120

7,693

Financial assets

4,609

3,930

Goodwill

8,049

8,195

CURRENT ASSETS

16,745

13,794Inventory (net)

2,081

1,218

Trade receivables

4,118

4,509

Other receivables & other assets

2,624

3,317

Securities

4,682

1,575

ASSETS

Cash

3,240

3,175

DEFERRED TAX ASSETS

3,151

2,821

654

651

41,444

37,218

PREPAID EXPENSES
Total assets

Consolidated balance sheet
59

Millions of euros
Pro forma 2000

Pro forma 1999

10,250

9,377

221

212

TOTAL ACCRUED LIABILITIES

8,684

7,432

Accruals for pensions

2,986

2,916

Accruals for taxes

88

77

Other accruals

5,610

4,439

TOTAL LIABILITIES

18,247

16,117

Financial liabilities

5,779

5,696

Trade liabilities

4,268

3,856

Other liabilities

8,200

6,565

DEFERRED TAX LIABILITIES

1,128

1,345

DEFERRED INCOME

2,914

2,735

Total liabilities and stockholders’ equity

41,444

37,218LIABILITIES AND STOCKHOLDERS’ EQUITYSTOCKHOLDERS’ EQUITYMINORITY INTEREST

Consolidated pro forma financial statements (unaudited)
Consolidated statement of income
60

Millions of euros

Pro forma 2000

Pro forma 1999

REVENUES

24,20822,553

Cost of sales(20,072)(18,298)

4,136

4,255

INCOME STATEMENTGROSS MARGIN
Selling, gen. adm. & other expenses(2,510)(2,213)

Research and development costs(1,339)(1,324)

Other operating income

342

475

Amortization of goodwill

(429)

(424)

200

769

Income from investments

111

83

Result on interests

10

(13)

Other financial result(1,436)(1,916)

Total financial result(1,315)(1,846)

INCOME (LOSS) BEFORE INCOME TAXES(1,115)(1,077)

220

33

RESULT BEFORE FINANCIAL INC.
AND INCOME TAX

Income taxes
Minority interest

(14)

(2)

NET INCOME (loss)*(909)(1,046)200

769

Goodwill amortization

429

424

Exceptional depreciation (fixed assets)

176

169

Exceptional depreciation (inventories)

483

0

Income from associates

111

83

1,399

1,445

*After restructuring charges, goodwill amortization and exceptional

RESULT BEFORE FINANCIAL INCOME AND INCOME TAXEXCEPTIONALS

EBIT PRE-GOODWILL AMORTIZATION AND EXCEPTIONALCash flow statement
61

Millions of euros

Pro forma 2000

Pro forma 1999

12/31/00

12/31/99(909)(1,046)

Income (loss) applicable to minority interest

14

2

Gain (loss) on disposal of non-current assets

(77)

(290)

Depreciation and amortization of fixed assets

1,540

1,272

NET INCOME (LOSS) BEFORE ABSORB AGREEMENT, INTEREST AND TAX

Valuation adjustment to inventories

483

0Change in accrued liabilities

1,259

838

Change in deferred taxes

(611)

(23)

CHANGE IN WORKING CAPITAL

1,460

785

CASH PROVIDED BY OPERATING ACTIVITIES

3,159

1,538

Investments (net) in intangible, fixed and financial assets(1,590)(1,456)

Change in consolidation concerning cash

(38)

116

CASH USED FOR INVESTING ACTIVITIES(1,628)(1,340)Transfer of profits/dividends to shareholders

0(1,305)

Dividends paid

(31)

0

Capital increase

1,540

69

83

1,012

Increase in financial liabilities
Other activities

43

(51)

1,635

(275)

Effect of foreign exchange rate changes on cash and cash equivalents

6

(27)

DECREASE/INCREASE IN CASH AND CASH EQUIVALENTS

3,172

(104)

CASH USED FOR FINANCING ACTIVITIESAddresses of main operational subsidiaries and foreign representation offices
As at December 31, 2000
62

EADS CASA(Military Transport Aircraft Division)
Avda. de Aragon 404 - 28022 MADRIDSPAINHead offices
EADS France
37,bd de Montmorency
75016 PARISFRANCEEADS Deutschland GmbH
81663 MUNICHGERMANYEADS CASA
Avda. de Aragon 404
28022 MADRIDSPAINHeadquarters
European Aeronautic Defence& Space Company EADS NV
Drentestraat 24
NL-1083 HK Amsterdam
The Netherlands

Main subsidiaries
AirbusEADS Airbus SAS
37, bd de Montmorency - 75016 PARISFRANCEEADS Airbus GmbH
Kreetslag 10 - 21129 HAMBURGGERMANYEADS CASA (Airbus Division)
Avda.Aragon 404 - 28022 MADRID
SPAIN
Airbus Industrie (GIE)
1, rond-point Maurice Bellonte
31700 BLAGNAC
FRANCE

Military Transport Aircraft
Airbus Military Company S.A.S.
17,avenue Didier Daurat
31700 BLAGNAC
FRANCE

Aeronautics
EADS ATR
316, route de Bayonne
31060 TOULOUSEFRANCE
Avions de Transport Régional (G.I.E - A.T.R.)
1, allée Pierre Nadot
31712 BLAGNAC CEDEXFRANCEEADS Deutschland GmbH
Military Aircraft
81663 MUNICHGERMANYEADS CASA (Military Aircraft Division)
Avda.Aragon 404 - 28022 MADRIDSPAINEurofighter Jagdflugzeug GmbHAm Soldnermoos, 1785399 HALLBERGMOOSGERMANYEurocopter
Aéroport International de MarseilleProvence - 13725 MARIGNANEFRANCE
EFW
Grenzstrasse 11109 DRESDEN-KLOTZSCHEGERMANYEADS SOGERMA
Aéroport International
BORDEAUX-MERIGNAC
33701 MERIGNAC - FRANCEEADS SOCATA
Ste de Construction d'Avions de Tourismeet d'Affaires
Aéroport de Paris-Le Bourget - Le Terminal
Bât. 413
93350 LE BOURGET - FRANCE

63

Space
EADS Launch Vehicles
37, bd de Montmorency
75016 PARIS - FRANCEEADS CASA (Space division)
Avda. de Aragon 404
28022 MADRID
SPAIN
Arianespace
Boulevard de l'Europe - BP 117
91006 EVRY CEDEXFRANCE
Starsem
Tour Maine Montparnasse
33, av. du Maine - B.P. 30
75755 PARIS CEDEX 15
FRANCE
Astrium GmbH
Ludwig-Bölkow Allee (Tor 2)
85521 OTTOBRUNNGERMANY
Astrium Ltd
Gunnels Wood Road-U.K - STEVENAGE
HUFFORDSHIRE SGI 2AS
UNITED KINGDOM
Astrium SAS
37, avenue Louis Bréguet
78146 VELIZY-VILLACOUBLAY
FRANCE

Defence and Civil Systems
Aerospatiale Matra Missiles
37, bd de Montmorency - 75016 PARISFRANCE
Bayern-Chemie
Liebigstrasse 15-17
84544 ASCHAU AM INNGERMANY
Dornier GmbHAn der Bundesstrasse 31
88090 IMMENSTAAD/BODENSEEGERMANYEADS Defence and Security Networks
Rue Jean-Pierre Timbaud
78180 MONTIGNY-LE-BRETONNEUXFRANCEEADS Deutschland GmbH
Defence Electronics
Wörthstrasse 85 - 89077 ULM
GERMANYEADS Matra Datavision SA4, rue de Presbourg - 75116 PARISFRANCEEADS Systèmes-Services-Telecom
37, bd de Montmorency
75781 PARIS Cedex 16
FRANCE
Euromissile
12, rue de la Redoute
92260 FONTENAY-AUX-ROSESFRANCE
Eurosam63, boulevard de la Liberté
92230 CHATILLON-SOUS-BAGNEUXFRANCE
LFK-Lenkflugkörpersysteme GmbH
Landshuter Strasse 26
85716 UNTERSCHLEISSHEIMGERMANY
Matra Bae Dynamics France
4, rue de Presbourg - 75116 PARISFRANCE

Strategic Coordination
EADS Belgium
75, avenue Cortenbergh1000 BRUSSELS - BELGIUM
EADS USA
1101, 15th Street N.Y., suite 800
WASHINGTON DC.20005
UNITED STATES OF AMERICA
Dassault Aviation
9, rond-point des Champs Elysées-Marcel
Dassault - 75008 PARIS - FRANCE

EADS
representation offices
North America & Cooperating
European Countries
EADS United Kingdom
The Economist Building - 25 St James’s Street
LONDON SW1A 1HA - UNITED KINGDOMEADS Italy
Via Panama n. 58 - Int. 2 - 00198 ROMAITALIAEADS Canada
275 Sparks Street Suite 902 - OTTAWAONTARIO K1R 7 X9 - CANADAEADS Spain
Avda. de Aragon, 404
28022 MADRID - SPAIN

Matra Bae Dynamics UK
Six Hills Way - PO Box 060
STEVENAGE HERT SG1A 2AD
UNITED KINGDOM

Latin America

Matra Nortel Communications
50, rue du Président Sadate29562 QUIMPER CEDEX 9
FRANCEEADS Mexico
S.A. de C.V. - Av. Prolongación Paseo de la
Reforma No. 1240, Piso 8 - Col. Sta. Fe
C.P. 05109, MÉXICO D.F.
DELEGACIÓN CUAJIMALPA
MEXICO

Nortel Dasa Network Systems GmbH & Co KG
An der Bundessir. 31 Geschäftsgebäude :Werk 2 BG
88090 IMMENSTAAD/BODENSEEGERMANYEADS Brazil
SCS, Q3, BI A, IJ 74/78 1 andara/c Banco Cidade
703000-500 BRASILIA - BRAZILO

64

EADS Hungary
Lövöház u. 30 - 1024 BUDAPESTHUNGARYEADS Bulgaria
Rebarska, 5 - 1510 SOFIA - BULGARIAEADS Russia
Representative Office Russia
BOLSHAJA ORDYNKA, 40/2
109017 MOSCOW - RUSSIA

EADS Chile
La Concepcion, 322 - Oficina 904
PROVIDENCIA - SANTIAGO DE CHILE
CHILE

Middle East/Maghreb

Western Europe

EADS U.A.E.
Three Sails Centre - Office No. 1605
Corniche Road - ABU DHABI - U.A.E.

EADS Portugal
Av. da Liberdade 245/4 G
1250-143 LISBOA - PORTUGALEADS Saudi Arabia
P O Box 50 602 - 11533 RYADHSAUDI ARABIAEADS Hellas SA
124, Kifissias Avenue
15th Floor - 11526 ATHENSGREECEEADS Egypt
5 Dar El Shifa Street - Garden CityCAIRO 11451 - EGYPTEADS Turkey
Turan Emeksiz Sokak A3
06700 G.O.P. - ANKARA - TURKEY

EADS Kuwait
Jabriya - Area 5 - Street 2 - Villa 59
KUWAIT CITY - KUWAITEADS Finland
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Copyrights:
Airbus Industrie - Arianespace - Astrium - ATR - EADS CASA - EADS Launch Vehicles - EADS LFKEADS Sogema - Eurocopter - Eurofighter - Matra Bae Dynamics - Socata.
Names of photographers for EADS: Jullien, Marquardt, Nojaroff. Illustration (page 25): ide
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Phénix Communication

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This document is also available at the following addresses:
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