EADS H1 2002 results

Exceed targets in Cash and EBIT
Philippe Camus, CEO - Rainer Hertrich, CEOAxel Arendt, CFO

London - July, 25 2002
12

1.

H1 2002 key highlights

2.
3.

Division Highlights
Financials

4.

Enhanced outlook

Key events in H1 2002n Airbus: 107 new orders including 34 Wide Bodies, 160 deliveriesn Airbus review of order-book completed: 300 deliveries all backed byfirm orders for 2002 and 2003 without deterioration of mix and prices
n EADS major partner of Deepwater projectn Eurofighter, exclusive bidder for € 1.8 bn contract with Austrian Astrium, preferred bidder for £ 2 bn Paradigm contract and Galileo
project progressingn EADS within the Herkules consortium, selected as preferred bidder,to provide outsourced telecom and IT for the German Army

3Enhance growth potential in all businesses,
while at the same time….

…. Success in Preserving cashn Maintain positive net cash position, in H1 2002 at € 1.4 bn
n Customer financing activity significantly below budget; no increaseof gross exposure in H1 2002; active sell-down of existing exposuren Continue to receive customer advances on schedulen Success of cost saving plans, post -Sept 11th => maintain production
unit costs despite Airbus deliveries decrease4

H1 2002 Financial Highlights
H1 2002

H1 2001

FY2001

Revenues
EBITDAEBIT *
Free Cash Flow

€ 14.0 bn€ 1.5 bn
€ 775 m€ (57) m€ 14.0 bn€ 1.3 bn
€ 764 m
€ 526 m€ 30.8 bn€ 3.2 bn
€ 1.7 bn
€ 774 mNet cash position€ 1.4 bn

€ 1.3 bn

€ 1.5 bn

EPSEPS *€ 0.11€ 0.57€ 2.05€ 0.56€ 1.70€ 1.16

Order intake
Order book

€ 14.8 bn€ 173 bn

€ 42.8 bn€ 185 bn

€ 60.2 bn€ 183 bn

* pre-goodwill and exceptional
5Improving performance despite difficult environment

Internationalisation: EADS a global player
through its multidomestic strategy
North-America
10.4 bn€2001 Revenues by region• Airbus design centre inWichita• American Eurocopter n°1
in commercial market• US Coastguard ‘Deep Water’(Eurocopter, MTAD, DCS)

NorthAmerica
34%
RoW
21%

• Main partnerships with:• Northrop Grumman indefence systems e.g.
Global Hawk, AGS• Boeing: Meteor, Missile Defence
LM: MEADS, Missile Defence
6Europe45%Europe
13,8 bn€• EADS at home in 4 countries:
France, Germany, Spain, UK• Eurofighter Austria• 30% strategic stake in Patria,
NH90 Nordic• Cogent, Skynet 5

Rest of the World6,6 bn€• Australian aerospace, Tiger Australia• Collaboration with Japan (A380) andRussia (Airbus, Starsem, Eurockot)• Airbus South Africa

EADS well positioned to face thechallenges of the post 9.11 landscapeManage the civil
aviation market changes

StrongGrowthin Defence• Production rate close to 2001 level• Market vigour• Profitability protected• A 380 on track• 9bn€ revenues by 2004
• Continuous export success• Well positioned for upcoming programs• Strong emphasis – Teams in place

Exploiting crossbusiness synergies

7•••
•
•

Mission and Tanker A/C
Homeland (esp. Air Travel) security
Missile defence
Galileo and Navigation
UAVs

8

1.

H1 2002 key highlights

2.

Division Highlights

3.

Financials

4.

Enhanced outlook

Airbus€mDeliveries (in units)

H12002

H1
2001

160

162nnRevenues

9,870

9,982

R&D self-financed** 680
in % of revenues 6.9%

574
5.8%

EBIT*in % of revenues

797
8.0%

874
8.9%nnn

Order book
145,500
in units
1,519
in yrs of prod ***5.1

157,746
1,714
5.7

*
pre- goodwill and exceptional** excluding jigs&tool depreciation of € 85 m in H1 2001*** at expected 2002 & 2003 delivery level (300)9nOrder intake over expectations; especiallyfor A330-340; backlog remains strong but
number affected by $ weakening
A340 500-600 1st deliveries in 2002; A380
development within budget
Successfully manage decrease of
production: unit costs, working capital
Secure 300 deliveries in 02 and 03 andmaintain stable mix
EBIT & cash above expectations despite
continuing R&D & Capex for A380;
Aircelle disposal included for € 63 m inEBIT ; Synergies from integration
Manage Customer finance activity tocontrol exposure

Efficiently Manage the current slowdown

Military Transport Aircraft€mRevenues

H1
2002

H1
2001

234

195

nn

R&D self-financed
22
in % of revenues 9.4%
EBIT*

Order book

25
12.8%

(72)

(21)

n

1,283

830

n

* pre- goodwill and exceptional

5 deliveries of CN235/C295 and 3orders of CN 235
Impact of Fairchild-Dornierbankruptcy : 54 € m to write off ourassets involved
Deepwater program : potential of 35
CN235 to be delivered to the US CoastGuards
Still awaiting confirmation by OCCARof € 18 bn A400M contract signed on
Dec. 2001

Impact in first half of Fairchild-Dornier bankruptcy
10

Aeronautics
€m

H1
2002

H1
2001

Revenues

2,226

2,020

R&D self-financed
72
in % of revenues 3.2%

62
3.1%

EBIT*
in % of revenues

632.8%

85
4.2%

13,797

13,434

Order book* pre- goodwill and exceptional

11

Helicopters: 141 deliveries up from 130 inH12001; sustained market growthn Deepwater program: Eurocopter
selected for the retrofit of US Cost guards
fleet of 96 Dolphinn Eurofighter: exclusive negotiation withAustria for up to 24 units worth ~€ 1.8 bn
n Maintenance: US activity down; recentorders secure future earnings
n Aerostructure business hit by Sept 11
n Seasonal effect; Profitability improvement
expected in H2
nUpbeat future driven by military contracts

SpaceH12002

H1
2001

882

1,054

R&D self-financed
24in % of revenues 2.7%

232.2%

EBIT*in % of revenues

292.8%€m

Revenues

Order book(85)

3,492

4,469

* pre- goodwill and exceptional, but
including risk provisions and investment
depreciation in H1 2002

12• Astrium Reorganisation
implemented by new CEO;reorganisation in 5 BU and cost
cutting plannnn

Charges in H1 for risk provisions on
programs and depreciation of assets
Additional restructuring expected inH2 2002
Astrium preferred bidder for the £2 bn Skynet 5 project => long-term
stream of revenues

Continue plans to improve efficiency

Defence and Civil Systems€mH12002

H12001

Revenues1,245

1,358nR&D self-financed
78
in % of revenues 6.3%

85
6.3%

n

EBIT*(71)

(128)

9,484

9,435

Order book* pre- goodwill and exceptional

nn

EBIT breakeven in Q2 2002; seasonal
effect; target EBIT breakeven in 2002
Deepwater program: DCS selected toprovide radar to the US coast Guards
Missiles: Taurus € 491 m contract
approved by German Budgetary
Commission, signature expected soon;
still awaiting Meteor contract for € 763 m(EADS share)
Herkules: first large opportunity toprovide outsourced services to Armies

EBIT turnaround in 2002 and improve profitability beyond
13

14

1.

H1 2002 key highlights

2.
3.

Division Highlights
Financials

4.

Enhanced outlook

Profit & loss highlights
H1 2002
in % of€ million revenues

H1 2001€ million

in % ofrevenues

Revenues

13,974

14,043Self-financed R&D**
EBITDAEBIT *

876
1,501
775

6.3%
10.7%
5.5%

768
1,257
764

5.5%
9.0%
5.4%

Result before financial income
and income tax

333

2.4%

2,055

14.6%

Financial result

14Net income
Net income *

91462

(53)
0.7%
3.3%

1,65745611.8%
3.2%* pre-goodwill and exceptional** excluding jigs&tool depreciation of euro 85 m in H1 2001

15EBIT margin pre-R&D andnet income pre-goodwill & exceptional improvement

Development of net cash
€ million
H1 2002

H1 2001

Net cash position of Dec. 31 previous year
Change in debt due to Airbus 100% consolidation
Net cash position as of January 1st 2001

1,533

2,143(838)1,305Cash flow from operations excluding Working capital
Change in Working capital
Cash used for investing activities*

1,022(53)(1,026)

1,17050(694)Free cash flow(57)526Dividend payments
Others(404)
354(404)(118)

Net cash position as of June 30

1,426

1,309

* excluding investment in securities for € 290 m16

Strong positive net cash position

EADS Commercial aviation customer
financing
Outstanding customer financing gross
exposure at end of period
7
60,88

0,90

5
40,87
6,07

5,76

3

0,82

0,73

0,68

4,29

3,87

3,52

3,52

1999

2000

2001

H1 2002

2
1997

1998

100% Airbus ($ bn)

50% ATR ($ bn)

Customer financing exposure under control
17

Balance sheet€ million

18

June 2002

Dec. 2001

Fixed Assetsof which goodwill
Current Assetsof which cash & equivalents,securitiesof which positive hedge mark-to-market
Deferred Tax Assets
Pre-paid Expenses
Total Assets
Shareholders´ Equityof which OCI
Minority interest
Total provisionsof which pensionsof which negative hedge mark-to-market
of which other provisions
Deferred Tax Liabilities & Income
Liabilitiesof which financial debt
of which European governments refundable advances
Total Shareholders´ Equity & Liabilities

24,881
10,167
18,355
6,843
1,411
3,122
862
47,22012,0241,260
1,2019,177
3,288
985
4,904
4,051
20,7675,417
4,087
47,22025,364
10,442
18,318
8,033
54
4,288
745
48,715
9,877(1,278)559
11,918
3,176
3,673
5,069
3,764
22,5976,500
3,469
48,715

Net cash position

1,426

1,533

Protecting the future with competitive
Hedging portfolio
Total hedging portfolio: $ 39 bnof which remaining macro : $ 0.2 bn (€ hedge)of which £ hedge : $ 6.0 bn
Status as of July, 22 2002

2002

2003

2004

2005

2006-2009

6 months

19

Volume hedged in $ bn

5.6

10.7

8.2

5.6

10.0

average EBIT $ rate/€

0.97

0.96

0.94

0.94

0.94

average EBIT $ rate/£

1.54

1.53

1.53

1.45

1.45

Locked attractive dollar secures future earnings

20

1.

H1 2002 key highlights

2.
3.

Division Highlights
Financials

4.

Enhanced outlook

2002 improved guidancen

Revenues maintained at a level slightly below 2001 figure(reflecting the current lower value of the US$), despite unfavorable
environment

ne2002 EBIT*: guidance raised by 20% compared to initialexpectation of € 1.2 bnn

2002 value creation target raised from € 300 m to € 350 mn

Free Cash Flow positive before net additions to customer
financing; we target to maintain a positive net cash positionat year-end 2002

* pre-goodwill & exceptional
21

2002 Cash and EBIT target improved

EADS continuing to delivernAdvanced and efficient products continue to gain
market sharen

Keep strong net cash positionnPreserve revenues and profitability and increase
FY2002 guidance

The momentum continues
22Appendixes

23

Net Income pre-goodwill and exceptional
H1 2002€m

Net income (group share)

91

Goodwill amortisation

296

Exceptional :Extraordinary Gain on Airbus SAS
Fair value adjustment on fixed assets
Fair value adjustment on inventories

0109
8Tax impact on exceptional fair value(42)

Net result *462

EPS * (1)0.57

* pre-goodwill and exceptional(1) average number of shares outstanding : 807, 655, 628 in H1 2002 and 807,157,667 in H1 2001
24

EBIT pre-goodwill and exceptional€mH1 2002

H1 2001

Result before financial income
and income tax

333

2,055

Income from investments

2934

Goodwill amortization

29631701098(1,934)
127
165

775764

Exceptional :Gain Airbus UKFair value adjustment on fixed assets
Fair value adjustment on inventories

EBIT ** pre-goodwill and exceptionals

25Adjustments limited to Goodwill and Fair value,Restructuring and investment depreciation included in EBIT

H1 2002 Order intake and Backlog by division

Order Intake
H1 2002

Airbusfrom H1 01

Backlog
H1 2002

from Dec 01

10,334(73%)

145,500(7%)

214

+62%

1,283(3%)

2,295(2%)

13,797

1%

Space569(13%)

3,492(8%)

DCS

1,605

+27%

9,484

4%

HQ/Eliminations

(226)

MTA
Aeronautics

Total EADS

14,791(568)(65%)

172,988(6%)

Order intake higher than Revenues and Backlog remains strong26

H1 2002: Operating performance by divisionin € mAirbus
MTAAeronautics
SpaceDCS
HQ/Eliminations
Total EADSRevenues
H1 2002

from H1 01

9,870
234
2,226
882
1,245(483)
13,974

EBIT*H1 2002

H1 2001(1%)+20%+10%(16%)(8%)

874(72)63(85)(71)
66797(21)85
29(128)20%775764* including restructuring expenses, pre-goodwill amortisation and exceptional

27

Consolidate performancedespite increased R&D and charges at Space and MTAEADS GroupQuarterly breakup of revenues (cumulative)

Q1
2002 2001

Q2
2002
2001

Airbus

4,646

4,600

9,870

9,982

14,431

20,549

MTA

101

70

234

195

306

547

Aeronautics

936

883

2,226

2,020

3,161

5,065

Space

426

402

882

1,054

1,543

2,439

DCS

539

589

1,245

1,358

2,044

3,345

HQ/Elim.

(240)(268)(483)(566)(800)(1,147)

Total EADS

6,408

6,276

13,974

14,043

20,68530,798

in €m

28

Q3
2002

2001

Q4
2002 2001

Strong seasonal effects

EADS Group
Quarterly breakup of EBIT ( cumulative)in €m29Q1

Q2
2002
2001

Q3
2002
2001

Q4
2002 2001

2002

2001

Airbus

396

427

874

797

1,131

1,655

MTA

(12)

(12)

(72)

(21)

(12)

1

Aeronautics

16

1963

85

144

308

Space

(33)

2(85)

29(8)

(222)

DCS

(72)

(87)

(71)

(128)

(163)

(79)

HQ/Elim.

20(39)

66

2

2

31

Total EADS

315

310

775

764

1,094

1,694

Strong seasonal effects

Goodwill and exceptional forecast€ million

Value asof June
2002

2001

Extraordinary gain from Airbus creation 2,537
Extraordinary gain from MBDA creation
257
Goodwill- of which normal amortisation- of which DCS and Space
impairment tests

10,167

Impairment test on Nortel JV

00na(1,466)
(676)

(296)
(296)

(600)
(600)

20 yrs(790)

00(315)

Fair value on fixed assets

1,343

(260)

(109)

(220)

Fair value on inventories
Total goodwill& exceptional (pre-tax)

28(275)

(8)

(20)

478

(413)

(840)

* estimates
30

Annual amortisation chargeamortisation
H1 2002e2002*
period5-25 yrs