EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

First Quarter 2005 Report

Unaudited Condensed IFRS Consolidated
Financial Information of EADS N.V.
for the first quarter of 2005

Unaudited Condensed IFRS Consolidated Income Statements ...………………………….….......…2
Unaudited Condensed IFRS Consolidated Balance Sheets….…..………….……………...……....…3
Unaudited Condensed IFRS Consolidated Cash Flow Statements……………....…...…………...…4
Unaudited Condensed IFRS Consolidated Statements of Changes in Equity………………………5
Explanations to the Unaudited Condensed IFRS Consolidated Financial Statements
as at March 31, 2005……...………………..…..……………...……………..……...………………….…..…5
1. The Company………………………………………………………………………………...….….…5
2. Changes in accounting policies…………………………………………………..……………..…5
3. Changes in the consolidation perimeter of EADS…………………………....…….….…….…6
4. Segment information………………………………..…………..……………………………………6
5. EBIT pre goodwill impairment and exceptional..…..……..…………………………..…………7
6. Significant profit and loss statement items……………………..………….………..……..……7
7. Significant balance sheet items…………………...…………………………………...…..………8
8. Significant cash flow items…………………………………………………………...…..………...99. Contingencies………………………………………………………………………………………..10
10. Number of shares…………………………………………………………...……………….………10
11. Earnings per share……………………………………..………………………...….…..……….…10
12. Related party transactions ………………..…………………...……………...……………..……11
13. Number of employees ……………………………….……………………………..……....………11

1

04.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

Unaudited Condensed IFRS Consolidated Income Statements
January 1 March 31, 2005
Revenues
Cost of sales
Gross margin
Selling, administrative & otherexpenses
Research and development
expenses
Other income

M€
7,005
-5,5291,476January 1 March 31, 2004

%
100
-79
21

M€
6,031
-4,881
1,150

-535

-8

-422

Deviation

%

M€

%

100
-81
19

974
-648
326

16
13
28

-562

-9

27

-5

-6

-535

-9

113

-21

38

1

65

1

-27

-42

Share of profit from associates andother income from investments
Profit before finance costs andincome taxes
Finance costs
Income taxes
Profit for the period

67

1

28

0

39

139

624
-2
-212
410

9
0
-3
6

146
-44
-42
60

2
-1
-1
1

478
42
-170
350

327
-95
405
583

Attributable to:Equity holders of the parent(Net income)Minority interest

328
82

5
1

49
11

1
0

279
71

569
645

Earnings per share
Basic and diluted

€

€

€

0.41

0.06

0.35

2

04.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

Unaudited Condensed IFRS Consolidated Balance Sheets
March 31, 2005
M€

December 31, 2004%

M€

Deviation

%

M€

%

Non-current assets
Intangible assets

10,061

17

10,0081753

1

Property, Plant and Equipment

13,29423

12,90522389

3Investment in associates

1,820

3

1,738

3

82

5

Other investments

2,384

4

2,110

4

274

13

Deferred tax assets

2,702

5

2,543

4

159

6

Non-current securities

567

1

466

1

101

22

Other non-current assets

5,828

10

6,973

12

-1,145-16

36,65663

36,74363-87

0Inventories, net of advancepayments received

3,437

6

3,075

5

362

12

Trade receivables

3,960

7

4,406

8

-446

-10

Cash and cash equivalents

9,189

16

8,718

15

471

5

Other current assets

4,923

8

5,325

9

-402

-8

21,50937

21,52437-15

058,165100

58,267

100

-102

0

Current assets

Total assets
EquityEquity attributable to equity
holders of the parent
Capital Stock

810

1

810

1

0

0

Reserves

10,59418

10,25418

340

3Accumulated other comprehensive
income

5,256

9

6,086

10

-830

-14

Treasury shares

-380

-1

-177

0

-203

115

16,28027

16,973

29

-693

-4

Minority interests

2,249

4

2,370

4

-121

-5

18,52931

19,343

33

-814

-4

Non-current provisions

6,125

11

6,045

10

80

1

Long-term financial liabilities

4,540

8

4,406

8

134

3

Deferred tax liabilities

3,637

6

4,134

7

-497

-12

Non-current liabilities

Other non-current liabilities

9,892

17

9,635

17

257

3

24,19442

24,220

42

-26

0

2,350

4

2,350

4

0

0

870

1

720

1

150

21

Current liabilities
Current provisions
Short-term financial liabilities
Trade liabilities

5,788

10

5,860

10

-72

-1

Current tax liabilities

398

1

178

0

220

124

Other current liabilities

6,036

11

5,596

10

440

8

15,44227

14,70425

738

558,165100

58,267

100

-102

0

Total equity and liabilities

304.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

Unaudited Condensed IFRS Consolidated Cash Flow Statements

Profit for the period attributable to equity holders of the parent
Profit attributable to minority interests
Adjustments to reconcile profit for the period to cash provided byoperating activities
Depreciation and amortization
Valuation adjustments and CTA
Deferred tax income
Results on disposals of non-current assets and results ofcompanies accounted for by the equity method
Change in current and non-current provisions
Change in other operating assets and liabilities
Cash provided by operating activities
Purchases of intangible assets and PPEProceeds from disposals of intangible assets and PPE
Acquisitions of subsidiaries (net of cash)
Proceeds from disposals of subsidiaries (net of cash)
Payments for investments in associates and other investments
and other long-term financial assets
Proceeds from disposals of associates and other investments andlong-term financial assets
Increase in equipment of leased assets
Proceeds from disposals of leased assets
Increase in finance lease receivables
Decrease in finance lease receivables
Change in securities
Change in cash from changes in consolidation
Cash used for investing activities
Change in long-term and short-term financial liabilities
Capital increase
Own shares purchased
OthersCash (used for) provided by financing activities
Effect of foreign exchange rate changes and other valuation
adjustments on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

January 1 - March 31, January 1 - March 31,
2005
2004
M€
M€
328
49
82
11

360
-34
-41

380
21
-11

-129
289
459
1,314
-557
10
0
54

-23
78
462
967
-501
21
-1
0

-128

-17

135
-29
19
-196
19
-101
11
-763
117
2
-203
0
-84

30
-27
0
0
14
213
0
-268
83
0
0
1
84

4
471

-2
781

8,718
9,189

7,404
8,185

In the first quarter 2005, cash flow from changes in securities included in investing activities shows
comprised purchases of securities by -101 M € (first quarter 2004: sales of securities of 213 M €).
As of March 31, 2005, EADS’ cash position (stated as cash and cash equivalents in the unaudited
consolidated cash flow statements) includes 798 M € (687 M € as of December 31, 2004) representing
the amount Airbus has deposited at BAe Systems. Additionally included are 485 M € (602 M € as ofDecember 31, 2004), which represent EADS’ share in MBDA’s cash and cash equivalents, depositedat BAe Systems and Finmeccanica. These funds are available for EADS upon demand.

4

04.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

Unaudited Condensed IFRS Consolidated Statements of Changes in Equity

in M €

Attributable to equity
holders of the parent

Balance at January 1, 2005

Minority interest

Total equity

16,973

2,370

19,343

Profit for the period

328

82

410

OCI

-830

-203

-1,033

Capital Increase

2

0

2

-203

0

-203

10

0

10

Balance at March 31, 2005

16,2802,249

18,529Balance at January 1, 2004

16,1492,179

18,328

49

11

60

-560

-139

-699

15,6382,051

17,689Purchases of treasury shares
OthersProfit for the period
OCI
Balance at March 31, 2004

Explanations to the Unaudited Condensed IFRS Consolidated Financial
Statements as at March 31, 2005
1. The Company
The accompanying Condensed Interim Consolidated Financial Statements (unaudited) present theoperations of European Aeronautic Defence and Space Company EADS N.V. and its subsidiaries(“EADS” or the “Group”), a Dutch public limited liability company (naamloze vennootschap) legallyseated in Amsterdam (Le Carré, Beechavenue 130-132, 1119 PR, Schiphol-Rijk, The
Netherlands), and are prepared and reported in Euros (“€”). EADS’ core business is the
manufacturing of commercial aircraft, civil helicopters, commercial space launch vehicles, missiles,
military aircraft, satellites, defence electronics and rendering of services related to these activities.
2. Change in accounting policies
These Condensed Interim Consolidated Financial Statements have been prepared in accordancewith IAS 34 Interim Financial Reporting. EADS’ Consolidated Financial Statements are prepared inaccordance with International Financial Reporting Standards (“IFRS”), adopted by the International
Accounting Standards Board (“IASB”). They comprise (i) IFRS, (ii) International AccountingStandards (“IAS”) and (iii) Interpretations originated by the International Financial Reporting
Interpretations Committee (IFRIC) or former Standing Interpretations Committee (“SIC”).
As of January 1, 2005, EADS adopted the following revisions and amendments to existingStandards and new Standards and Interpretations as required by the following announcements
released by the IASB in December 2003 and in 2004:
EADS applies thirteen revised International Accounting Standards (IASs) in conjunction with the
Improvements Project (IASs 1, 2, 8, 10, 16, 17, 21, 24, 27, 28, 31, 40), new IFRS 2 “Share Based
Payments”, IFRS 4 “Insurance Contracts” and IFRS 5 “Non-current Assets Held for Sale andDiscontinued Operations”, new IFRIC 1 “Changes in Existing Decommissioning, Restoration and504.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

Similar Liabilities”, IFRIC 2 “Members’ Shares in Co-operative Entities and Similar Instruments”
and IFRIC 4 “Determining whether an Arrangement contains a Lease” as well as amendments to
IAS 32 (March 2004), to IAS 39 (March 2004) and to SIC 12 “Consolidation – Special Purpose
Entities”.
Furthermore, end of March 2004, the IASB completed Phase I of its ongoing Business
Combinations Project and released new IFRS 3 “Business Combinations”, superseding IAS 22“Business Combinations”, as well as revised Standards IAS 36 “Impairment of Assets” and IAS 38“Intangible Assets”. EADS decided to early adopt IFRS 3, revised IAS 36 and IAS 38 and to apply
these standards as of January 1, 2004 mainly due to the abolishment of goodwill amortization.
Consequently, EADS changed its accounting policies regarding the accounting for impairment
testing, intangible assets and business combinations with an agreement date after December 31,
2003.
Besides consequential changes as mentioned above the accounting policies used in the
preparation of the interim consolidated financial statements are consistent with those used in theannual Consolidated Financial Statements for the year ended December 31, 2004, which aredisclosed as an integral part of the Group’s Annual Report 2004. The annual Consolidated
Financial Statements were authorised for issue by EADS’ Board of Directors on March 8, 2005.
Costs incurring unevenly during the financial year are anticipated or deferred in the interim period
only if it is appropriate to anticipate or defer that type of cost at the end of the financial year.
Income tax expense is recognized based on the best estimate of the weighted-average annual
income tax rate expected for the full year applied on pre-tax income. The estimated annual
average income tax rate for 2005 is about 34 % (projected in the first quarter 2004: 40 %).
These Condensed Interim Consolidated Financial Statements should be read in conjunction withthe annual IFRS Consolidated Financial Statements 2004.
3. Changes in the consolidation perimeter of EADSOn February 28, 2005, EADS sold its Enterprise Telephony Business, which comprises its civil
telecommunication activities, to Aastra Technologies Limited, Concord / Canada. In the firstquarter of 2004, Enterprise Telephony Business has generated revenues of 20 M € in Defence &Security division.
Apart from this transaction, other acquisitions or disposals by the Group are not material.
4. Segment information
The Group operates in 5 divisions (segments) which reflect the internal organizational andmanagement structure according to the nature of the products and services provided:• Airbus — Development, manufacturing, marketing and sale of commercial jet aircraft of morethan 100 seats and the development and manufacturing of aircraft for military use.
• Military Transport — Development, manufacturing, marketing and sale of military transport
aircraft and special mission aircraft.
• Aeronautics — Development, manufacturing, marketing and sale of civil and military helicopters,
regional turboprop aircraft and light commercial aircraft; and civil and military aircraft conversion
and maintenance services.
• Defence & Security Systems — Development, manufacturing, marketing and sale of missiles
systems; military combat and training aircraft; and provision of defence electronics, defence-

6

04.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

related telecommunications solutions; and logistics, training, testing, engineering and otherrelated services.
• Space — Development, manufacturing, marketing and sale of satellites, orbital infrastructuresand launchers; and provision of launch services.
The following table presents information with respect to the Group’s business segments.
Consolidation effects, the holding function of EADS headquarters and other activities not allocableto the divisions are disclosed in the column “HQ/ Conso.”.

in M €

AirbusMilitary
Transport

Aeronautics

Defence &Security
SystemsSpace

HQ/ Conso.

Consolidated

Three months ended March 31, 2005
Revenues

4,989

108

743

925

516

-276

7,005

Research and development
expenses

345

5

18

37

9

8

422

EBIT pre goodwill imp. andexceptionals (see definition
below)

628

-6

11

-35

-6

65

657

4,126

101

645

932

457

-230

6,031

Research and development
expenses

463

7

18

40

8

-1

535

EBIT pre goodwill imp. andexceptionals (see definition
below)

224

-8

10

-51

-11

34

198

Three months ended March 31, 2004
Revenues

5. EBIT pre goodwill impairment and exceptionals
EADS uses EBIT pre goodwill impairment and exceptionals as a key indicator of its economic
performance. The term “exceptionals” refers to such items as amortization expenses of fair value
adjustments relating to the EADS merger, the Airbus combination and the formation of MBDA, as
well as impairment charges thereon. EBIT pre goodwill impairment and exceptionals is treated bymanagement as a key indicator to measure the segments’ economic performances.
A reconciliation from Profit before finance costs and income taxes to EBIT pre goodwill
amortization and exceptionals is set forth in the following table (in M €):in M €
Profit before finance costs and income taxes
Fair value adjustment
EBIT pre goodwill impairment and exceptionals

7

January 1March 31, 2005

January 1March 31, 2004

624

146

33

52

657

198

04.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

6. Significant profit and loss statement items
EADS Group revenues in the first quarter 2005 reach 7,005 M €, which - compared with the firstquarter 2004 – is an increase of 974 M €. All divisions except Defence & Security Systems record
increasing revenues, mostly reflecting on one hand higher aircraft deliveries of Airbus and on theother hand stronger helicopter sales at the Aeronautics division.
Research and development expenses of 422 M € (first quarter 2004: 535 M €) show a decrease
which is mainly due to the A380-program. Capitalization of development costs for A 380 in firstquarter 2005 amounts to 52 M € (first quarter 2004: 0 M €).
Share of profit from associates and other income from investments of 67 M € (first quarter
2004: 28 M €) is mainly influenced by the result of Dassault Aviation of 60 M € (first quarter 2004:
23 M €). The increase is mainly due to positive 2004 IFRS-catch up adjustments accounted for in
2005.
The finance costs include a net interest charge of -57 M € (first quarter 2004: -59 M €) accrued
mainly for refundable government advances, partly offset by positive effects from foreign exchange
rate revaluations.
7. Significant balance sheet items
Intangible assets of 10,061 M € (prior year: 10,008 M €) include 9,463 M € (prior year: 9,460 M €)of Goodwill. EADS applied IFRS 3 “business combinations” as of January 1, 2004: Goodwill is nolonger regularly amortized, as previously requested under IAS 22, but instead is subject to annual
impairment tests. As of March 31, 2005 no impairment has to be accounted for.
Eliminating foreign exchange-rate effects of +163 M €, Property, plant and equipment increased
by 226 M € to 13,294 M € (prior year: 12,905 M €). Most of the increase is attributable to Airbus,
due to strong capital expenditures related to the A380 program and the Space division, mainly
caused by the Paradigm / Skynet 5 program. Property, plant and equipment comprises“Investment property” amounting to 157 M € (prior year: 159 M €).
Investment in associates of 1,820 M € (prior year: 1,738 M €) mainly increases due to a change
in the investment of Dassault Aviation, using the equity method.
Other investments of 2,384 M € (prior year: 2,110 M €) are attributable to Airbus in the amount of
1,751 M € (prior year: 1,553 M €), mainly concerning the non-current portion of aircraft financing
activities.
Deferred tax assets of 2,702 M € (prior year: 2,543 M €) are presented as non-current assets as
required by IAS 1.
Other non-current assets comprise “Non-current other assets” and “Non-current prepaid
expenses”. The decrease of -1,145 M € to 5,828 M € (prior year: 6,973 M €) is mainly caused by
the variation of the non-current portion of fair values of financial instruments (-1,120 M €), as aresult of the rising US dollar exchange rate (USD / € spot rate of 1.30 at March 31, 2005 vs. 1.36
at December 31, 2004).
Inventories, net of advance payments received, of 3,437 M € (prior year: 3,075 M €), net ofcustomer advances, increase by 362 M € due to a higher level of unfinished goods and services,
mainly by Airbus.
The decrease in trade receivables is mainly due to higher advance payments received forconstruction contracts at Military Transport Aircraft Division and to higher customer payments in
Defence and Security and in Airbus Divisions.
Cash and cash equivalents increase from 8,718 M € to 9,189 M €.

804.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

Other current assets include “Current portion of financial assets”, “Current other assets”,“Current income tax assets” and “Current prepaid expenses”. The decrease of -402 M € to 4,923
M € (prior year: 5,325 M €) is mainly caused by the variation of the current portion of fair values offinancial instruments (-487 M €), as a result of the rising US dollar exchange rate (USD / € spot
rate of 1.30 at March 31, 2005 vs. 1.36 at December 31, 2004).
Equity attributable to equity holders of the parent amounts to 16,280 M € (prior year: 16,973 M€), mainly resulting from a profit for the period (Net income) of 328 M €, a decrease of -830 M € of
OCI, primarily resulting from consumption as well as from changes in fair values of derivative
financial instruments and the purchases of treasury shares of -203 M €.
Minority interests of 2,249 M € (prior year: 2,370 M €) mainly represent shares of BAe Systems
in Airbus Group. The decrease in BAe Systems’ minority interest is mainly attributable to thedecrease in fair values of financial instruments that qualify for hedge accounting according to IAS
39 in Airbus, partly compensated by a positive result allocated to minority interests.
Non-current provisions include 3,801 M € for the non-current portion of the provision for
retirement plans and similar obligations (prior year: 3,749 M €), 92 M € of non-current provision for
financial instruments (prior year: 137 M €) and 2,232 M € of other non-current provisions (prioryear: 2,159 M €).
Long-term financial liabilities of 4,540 M € (prior year: 4,406 M €), excluding foreign exchangerate effects of +84 M €, increased by 50 M € due to the Skynet V program external financing of 44
M €.
The decrease in deferred tax liabilities of -497 M € to 3,637 M € (prior year: 4,134 M €) issignificantly influenced by the decrease in the fair value of financial instruments accounted for as“Other non-current assets” and “Other current assets”.
Other non-current liabilities comprise “Non-current other liabilities” and “Non-current deferredincome”. Without considering foreign exchange-rate effects of +51 M €, other non-current liabilities
increase by +206 M € to 9,892 M € (prior year: 9,635 M €). Other non-current liabilities mainly
include the non-current portion of European Government refundable advances amounting to 4,998
M € (prior year: 4,781 M €) and non-current customer advance payments received of 3,439 M €(prior year: 3,353 M €).
Current provisions include 198 M € for the current portion of the provision for retirement plans
and similar obligations (prior year: 198 M €), 92 M € of current provisions for financial instruments(prior year: 44 M €) and 2,060 M € of other current provisions (prior year: 2,108 M €).
Short-term financial liabilities of 870 M € (prior year: 720 M €), excluding foreign exchange-rate
effects of +20 M €, increased by 130 M €.
The increase of Current tax liabilities of 220 M € to 398 M € (prior year: 178 M €), mainly
concerns Airbus SAS (+215 M €).
Other current liabilities include “Current other liabilities” and “Current deferred income”. They
increase by +440 M € to 6,036 M € (prior year: 5,596 M €). Other current liabilities mainly include
current customer advance payments of 2,379 M € (prior year: 2,257 M €) and the current portion ofEuropean Government refundable advances amounting to 463 M € (prior year: 338 M €)..
8. Significant cash flow items
Cash provided by operating activities increases by 347 M € to 1,314 M € (first quarter 2004:
967 M €). This increase mainly reflects improvements in EADS operations. The positive working

904.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

capital (change in other operating assets and liabilities) of 459 M € (first quarter 2004: 462 M €)primarily results from ongoing customer payments.
Cash used for investing activities increases by -495 M € to -763 M € (first quarter 2004: -268 M€). The outflow is mainly caused by Airbus activities (A380) and the Skynet V program.
Cash (used for) provided by financing activities amounts to -84 M € (first quarter 2004: 84 M €)mainly contains the purchases of treasury shares, partly offset by draw-downs on financial
liabilities.
9. Contingencies
Since the last balance sheet date (December 31, 2004), there were no significant changes incontingent liabilities.
10. Number of shares
The total number of shares outstanding is 790,727,881 and 800,957,248 as of March 31, 2005 and2004, respectively. EADS’ shares are exclusively ordinary shares with a par value of 1.00 €.
During the first quarter 2005, EADS repurchased 8,950,275 of its ordinary shares (in the firstquarter 2004: no treasury shares purchased) in conjunction with the share-buyback program. The
General shareholders’ meeting on May 6, 2004 had renewed the authorization given to the Boardof Directors to repurchase shares of EADS.
127,862 new shares (first quarter 2004: 0 shares) were issued as a result of the exercise of stock
options in compliance with the implemented stock option plans
11. Earnings per share
Basic earnings per share are calculated by dividing profit for the period attributable to equity
holders of the parent (Net income) by the weighted average number of issued ordinary shares
during the period, excluding ordinary shares purchased by the Group and held as treasury shares:

Profit for the period attrib. to equity holders of the parent
Weighted average number of ordinary shares outstanding
Basic earnings per share

January 1 toMarch 31, 2005

January 1 toMarch 31, 2004

328 M €

49 M €

795,573,328

800,957,248

0.41 €

0.06 €For the calculation of the diluted earnings per share, the weighted average number of ordinary
shares is adjusted to assume conversion of all potential ordinary shares. The Group’s only
category of dilutive potential ordinary shares is stock options. Since the average price of EADS
shares during the first quarter of 2005 exceeded the exercise price of the stock options under the
1st, 2nd, 4th and 5th stock option plans initiated by the Group, the inclusion of the related potential
ordinary shares increases the weighted average number of shares. 4,627,286 stock options are
considered dilutive according to IAS 33:

1004.05.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the three months ending March 31, 2005

Profit for the period attrib. to equity holders of the parent
Weighted average number of ordinary shares outstanding(diluted)
Diluted earnings per share

January 1 toMarch 31, 2005

January 1 toMarch 31, 2004

328 M €

49 M €

800,200,614

802,320,274

0.41 €

0.06 €

12. Related party transactions
The Group has entered into various transactions with related companies in 2005 and 2004 thathave all been carried out in the normal course of business. As is the Group’s policy, all related
party transactions have to be carried out at arm’s length. Transactions with related parties include
the French State, DaimlerChrysler, Lagardère, and SEPI (Spanish State). Except for thetransactions with the French State the transactions are not considered material to the Group either
individually or in the aggregate. The transactions with the French State include mainly sales fromthe Aeronautics, Defence & Security Systems and Space divisions.
13. Number of employees
The number of employees at March 31, 2005 is 110,897 as compared to 110,662 at December 31,
2004.

11

04.05.2005