EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

First nine months 2004 Report

Unaudited Condensed Interim Consolidated
Financial Information of EADS N.V.
for the first nine months of 2004
Unaudited Condensed Consolidated Income Statements………………………………….......………2
Unaudited Condensed Consolidated Income Statements for the third quarter 2004
and 2003………………………………………………………..…………….………………….…..….………2
Unaudited Condensed Consolidated Balance Sheets….………………..…………………..……….…3
Unaudited Condensed Consolidated Cash Flow Statements…………………….…………….…...…4
Unaudited Condensed Consolidated Statements of Changes in Shareholders’ Equity………..…5
Notes to the Unaudited Condensed Interim Consolidated Financial Statements (according toIFRS) as at September 30, 2004…..………………………..……………...……………………….…….…5
1. The Company………………………………………………………………………………...….….…5
2. Accounting policies………………………………………………………………………………..…5
3. Changes in the consolidation perimeter and major events of EADS……..…….….…….…6
4. Segment information………………………………..…………..……………………………………6
5. EBIT pre goodwill amortization and exceptional..………..…………………………..…………7
6. Significant profit and loss statement items……………………..………….………..……..……8
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. Dividend policy………………..………………………………………………...……………………11
13. Related party transactions………………………….……………………………..…….....………11
14. Number of employees………………………………………...……………………………..………11

1

03.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

Unaudited Condensed Consolidated Income Statements

Revenues
Cost of sales
Gross margin
Selling, administrative & otherexpenses
thereof amortization of goodwill

January 1 September 30, 2004
M€%
21,459100-17,026
-79
4,433
21

January 1 September 30, 2003
M€%
18,536100-14,940
-81
3,596
19

Deviation
M€
2,923-2,086
837

%
16
14
23

-1,6370-80-2,126
-422

-11
-2

489
422

-1,612-8-1,561

-9

-51

3

114

1

145

1

-31

-21

Income from operating activities
Financial result
Income taxes

1,298
-126
-426

6
0
-2

54
17
-208

0
0
-1

1,244
-143
-218

2,304
-841
105

Profit (loss) from ordinary activities
Minority interests
Net income (loss)

746
-149
597

4
-1
3

-137
13
-124

-1
0
-1

883
-162
721

-645
-1,246-581

Research and development expenses
Other income

Earnings per share
Basic
Diluted

-23
-100

€

€

€

0.75
0.74

-0.15
-0.15

0.90
0.89

Unaudited Condensed Consolidated Income Statements for the third quarter2004 and 2003
July 1 September 30, 2004
Revenues
Cost of sales
Gross margin
Selling, administrative & otherexpenses
thereof amortization of goodwill
Research and development
expenses
Other income
Income (expenses) fromoperating activities
Financial result
Income taxes
Profit (loss) from ordinary
activities
Minority interests
Net income (loss)

Earnings per share
Basic and diluted

M€
6,892
-5,375
1,517

July 1 September 30, 2003

%
100
-78
22

M€
5,476
-4,527
949

-568
0

-8
0

-499
25

Deviation

%
100
-83
17

M€
1,416
-848
568

%

-614
-141

-11
-3

46
141

-7

-485

-9

-14

3

0

66

1

-41

-62

475
-121
-91

7
-2
-1

-84
71
-57

-2
1
0

559
-192
-34

-665
-270
60

263
-53
210

4
-1
3

-70
12
-58

-1
0
-1

333
-65
268

-476
-542
-462

26
19
60
-7
-100

€

€

€

0.26

-0.07

0.33

2

03.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

Unaudited Condensed Consolidated Balance Sheets
September 30, 2004
M€

December 31, 2003%

M€

Deviation

%

M€

%

Fixed assets
Intangible assets

9,821

18

9,694

17

127

Property, Plant and Equipment

11,88322

11,44821435

4Financial Assets

4,101

8

4,129

8

-28

-1

Non-fixed assets

25,80548

25,271

46

534

2

Inventories

3,409

6

3,279

6

130

4

Trade receivables

3,703

7

4,001

7

-298

-7

Other receivables and other assets

8,755

16

10,28019-1,525

-15

175

1

468

1

-293

-63

Securities
Cash and cash equivalents
Deferred taxes
Prepaid expenses
Total assets

1

7,756

15

7,404

14

352

5

23,79845

25,43247-1,634

-6

2,673

5

2,724

5

-51

-2

993

2

951

2

42

4

53,269100

54,378100-1,109-2

Shareholders' equity
Capital Stock

807

2

813

1

-6

-1

Reserves

9,782

18

9,589

18

193

2

Accumulated other comprehensive
income

5,011

9

5,934

10

-923

-16

Treasury shares

-95

0

-187

0

92

-49

15,50529

16,149

29

-644

-4

Minority interests

2,054

4

2,179

4

-125

-6

Provisions

8,706

16

8,726

16

-20

0

Financial liabilities

5,118

10

4,767

9

351

7

Trade liabilities

5,117

10

5,117

9

0

0

Liabilities

Other liabilities

11,55821

11,31821240

221,793

41

21,202

39

591

3

Deferred taxes

3,191

6

3,664

7

-473

-13

Deferred income

2,020

4

2,458

5

-438

-18

Total liabilities andshareholders' equity

53,269100

54,378100-1,109-2

3

03.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

Unaudited Condensed Consolidated Cash Flow Statements
January 1 September 30, 2004
M€

January 1 September 30, 2003
M€

Net income (loss)

597

-124

Income (loss) applicable to minority interest
Adjustments to reconcile net income (loss) to cash provided byoperating activities

149

-13

Depreciation and amortization of fixed assets

1,255

1,675

Valuation adjustments and CTA release

-335

102

Deferred tax expenses (income)Results on disposals of fixed assets / businesses and results ofassociates (equity method)

285

-3

-48

-176

Change in provisions

-174

-362

Change in other operating assets and liabilities
Cash provided by operating activities
Purchases of intangible and fixed assets

249

183

1,978

1,282

-1,652-1,328Proceeds from disposals of intangible and fixed assets

57

75

Acquisitions of subsidiaries (net of cash)

-10

-34

Proceeds from disposals of subsidiaries (net of cash)

0

12

Payments for investments in other financial assets

-493

-479

Proceeds from disposals of other financial assets

532

202

Dividends paid by companies valued at equity
Increase in equipment of leased assets

36

38

-295

-327

Proceeds from disposals of leased assets
Increase in finance lease receivables

35

16

-111

-235

Decrease in finance lease receivables

69

57

Change in securities

299

288

0

-158

Change in cash from changes in consolidation
Cash used for investing activities-1,533-1,873

Change in financial liabilities

283

1,284

Cash distribution paid to shareholders

-320

-240

Dividends paid to minorities

-65

-30

2

0

Cash (used for) provided by financing activities
Effect of foreign exchange rate changes and other valuation
adjustments on cash and cash equivalents

-100

1,014

7

-36

Net increase in cash and cash equivalents

352

387

Capital increase

Cash and cash equivalents at beginning of period

7,404

5,400

Cash and cash equivalents at end of period

7,756

5,787

During the first nine months of 2004, cash flow from changes in securities included in investing
activities increased due to comprised sales of securities by 299 M € (first nine months of 2003: salesof securities for 288 M €). These medium-term securities are included in Securities as stated in thebalance sheet.
As of September 30, 2004, 480 M € (December 31, 2003: 613 M €) are included in Cash and cash
equivalents, which represent EADS’ share in MBDA’s cash and cash equivalents, deposited at BAe

403.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

Systems and Finmeccanica. Additionally, Cash and cash equivalents include 507 M € (December 31,
2003: 273 M €) representing the amount Airbus has deposited at BAe Systems. These funds areavailable upon demand.

Unaudited Condensed Consolidated Statements of Changes in Shareholders’EquityM€
Equity as of January 1, 2004
Capital increase
Net income
Cash Distribution
OCI
Equity as of September 30, 2004
Equity as of January 1, 2003
Net loss
Cash Distribution
OCI
Equity as of September 30, 2003

16,149
2
597
-320
-923
15,505
12,765
-124
-240
2,135
14,536

Notes to the Unaudited Condensed Interim Consolidated Financial Statements(according to IFRS) as at September 30, 2004
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. Accounting policies
The Condensed Interim Consolidated Financial Statements for the period ended September 30,
2004 have been prepared in accordance with IAS 34 Interim Financial Reporting.
End of March 2004, the IASB completed Phase I of its ongoing Business Combinations Projectand published new IFRS 3 Business Combinations as well as revised Standards IAS 36
Impairment of Assets and IAS 38 Intangible Assets. All three Standards are applicable to any
business combination with an agreement date after March 31, 2004. However, EADS decided to
anticipate adoption of IFRS 3 and revised IAS 36 and IAS 38 and to apply these standards as ofJanuary 1, 2004. Consequently, from 2004 goodwill is no longer being amortized but tested for
impairment at least annually. Same rule applies to intangible assets with an indefinite useful life. In
the first nine months of 2003, EADS recognised goodwill amortization amounting to 422 M €.

5

03.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

With the exception of application of IFRS 3 and revised IAS 36 and IAS 38, the accounting policies
used in the preparation of this Interim Consolidated Financial Statements are consistent with thoseused in the annual Consolidated Financial Statements for the year ended December 31, 2003,
which are disclosed as an integral part of the Group’s annual report 2003.
The annual Consolidated Financial Statements were authorised for issue by EADS’ Board of
Directors on March 5, 2004. EADS is following International Financial Reporting Standards (IFRS)
principles.
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 2004 is about 36 % (projected rate for 2003 as at September 30,
2003: 42 %).
These Condensed Interim Consolidated Financial Statements should be read in conjunction withthe 2003 annual Consolidated Financial Statements.
3. Changes in the consolidation perimeter and major events of EADS
There were no material acquisitions or disposals of subsidiaries, business combinations, long-term
investments and discontinued operations during the first nine months of 2004.
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 aircraft; and provision of defence electronics, defence-related
telecommunications solutions; and logistics, training, testing, engineering and other related
services.
• Space Systems — Development, manufacturing, marketing and sale of satellites, orbital
infrastructures and 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.”.

6

03.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

in M €

AirbusMilitary
Transport

Aeronautics

Defence &Security
SystemsSpace
Systems

HQ/ Conso.

Consolidated

Nine months ended September 30, 2004
External revenues

14,415

539

2,516

3,204

1,646

-861

21,459Research and development
expenses-1,337

-18

-49

-145

-37

-26

-1,612

EBIT pre goodwill amort. andexceptionals (see definition
below)

1,382

5

116

-75

-5

77

1,500

Nine months ended September 30, 2003
External revenues

12,051

410

2,452

2,957

1,473

-807

18,536

Research and development
expenses-1,308

-15

-50

-149

-39

0

-1,561

EBIT pre goodwill amort. andexceptionals (see definition
below)

701

-7

112

-18

-184

180

784

5. EBIT pre goodwill amortization and exceptionals
EADS uses EBIT pre goodwill amortization and exceptionals as a key indicator to measure theeconomic performance of the Group and its Segments. The term “exceptionals” refers to income
or expenses of a non-recurring nature, such 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.
A reconciliation from Income from operating activities to EBIT pre goodwill amortization andexceptionals is set forth in the following table (in M €):in M €
Income from operating activities
Income from investments

January 1Sep. 30, 2004

January 1Sep. 30, 2003

1,298

54

57

137

1,355

191

0

422

145

171

1,500

784

Goodwill and exceptionals:
Goodwill amortization and related impairment charges
Fair value adjustment
EBIT pre goodwill amortization and exceptionals

In the context of the Project Airbus Conversion in Euro (PACE) and the relating Advance Pricing
Agreement signed in April 2004 with tax authorities (France, UK, Germany and Spain), the Airbus
GIE – a US-$ denominated entity - has been merged within Airbus SAS – a Euro denominatedentity - with retroactive effect as of January 1, 2004.
As a consequence, operations of former Airbus GIE are from January 1, 2004, considered as“foreign currency operations” and accounted for in accordance with accounting principles

7

03.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

consistently adopted by EADS and disclosed in the notes to consolidated financial statements.
Before the merger, Airbus GIE operations used to be recorded at the current exchange rate of theperiod except for those hedged with financial instruments. From January 1, 2004, former Airbus
GIE operations are recorded on the basis of historical exchange rates.
As a result, no additional Currency Translation Adjustment (CTA) is generated from former Airbus
GIE operations. The portion of outstanding CTA as at December 31, 2003, booked for balance
sheet items that relate to future transactions as from January 1, 2004, is gradually released
according to realization of such operations, namely aircraft deliveries.
6. Significant profit and loss statement items
EADS Group revenues in the first nine months of 2004 reached 21,459 M €, which - compared to
the first nine months of 2003 – is an increase of 2,923 M €. All divisions recorded increasing
revenues, mostly reflecting on the one hand higher aircraft deliveries of Airbus with a morefavourable model mix and on the other hand stronger revenues from defence customers, namely
in the Defence & Security Systems, Military Transport and Space Systems divisions.
Research and development expenses of 1,612 M € (first nine months of 2003: 1,561 M €)showed a slight increase because of the Airbus A 380 project continuation. The application of
accounting policy with respect to capitalization of development costs impacted the R&D costs
recognized as expenses through a capitalization of 93 M €.
EADS applied IFRS 3 “business combinations” as of January 1, 2004: Goodwill is no longer
regularly amortized, as previously requested under IAS 22, but instead is subject to annual
impairment tests. In the first nine months of 2004, there was no Goodwill impairment. In the firstnine months of 2003, Goodwill amortization reached 422 M €, which represented regularperiodic amortization.
The financial result includes net interest charge of -181 M € (first nine months of 2003: -138 M €),mainly comprising interest on financial liabilities and European Government refundable advances,
partly compensated by the income generated by cash and cash equivalents, securities andfinancial assets such as loans and finance leases.
Income from investments of 57 M € (first nine months of 2003: 137 M €) was mainly influenced by
the result of Dassault Aviation of 51 M € (first nine months of 2003: 137 M €). The decrease ismainly due to negative IFRS-catch up restatements related to the year 2003 accounted for in
2004, whereas in 2003 there were positive IFRS-catch up restatements related to the year 2002.
7. Significant balance sheet items
Intangible assets of 9,821 M € (prior year: 9,694 M €) include 9,373 M € (prior year: 9,372 M €) ofGoodwill. 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.
Property, plant and equipment increased by 435 M € to 11,883 M € (prior year: 11,448 M €).
Most of the increase is made by Airbus, due to strong capital expenditures related to the A380
project and Space division, mainly caused by the Paradigm / Skynet 5 program.
Financial Assets of 4,101 M € (prior year: 4,129 M €) consisted of 1,639 M € (prior year: 1,667 M€) of aircraft financing activities of Airbus and an equity-value of Dassault Aviation of 1,677 M €(prior year: 1,633 M €).

803.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

Inventories of 3,409 M € (prior year: 3,279 M €), net of customer advances, increased without
foreign exchange-rate effect of 42 M € by 88 M €. The increase in unfinished goods of 1,715 M €(mainly Airbus, Defence & Security Systems and Aeronautics divisions) is partly compensated bylower finished goods of -634 M €, coming mainly from Airbus, and higher advance payments
received mainly in Defence and Aeronautics (in total -1,032 M €).
The decrease in trade receivables by -298 M € to 3,703 M € (prior year: 4,001 M €) is mainly due
to high customer payments in Defence & Security Systems and Aeronautics divisions.
Other receivables and other assets decreased by -1,525 M € to 8,755 M € (prior year: 10,280 M€). The decrease is mainly caused by the reduction of the fair values of financial instruments of 1,304 M € to 6,660 M €, mainly as a result of the development of the US dollar exchange rate
(USD / € spot rate of 1.24 at September 30, 2004 vs. 1.26 at December 31, 2003) and matured
hedges.
Cash and cash equivalents increased from 7,404 M € to 7,756 M €. This is thanks to strong cash
flows provided by operations which more than offset cash used for investing activities and cashused for a cash distribution to shareholders of -320 M € and a dividend payment to minority
interests of -65 M €.
Stockholders‘ equity amounts to 15,505 M € (prior year: 16,149 M €), resulting from a Net
income of 597 M €, a cash distribution to shareholders of -320 M € and a decrease of -923 M € of
OCI.
Minority interests of 2,054 M € (prior year: 2,179 M €) mainly represent shares of BAe Systems
in Airbus Group. The decrease in BAe Systems’ minority interest is mainly attributable to change infair values of financial instruments that qualify for hedge accounting according to IAS 39 as well as
the dividend paid by Airbus.
Provisions include 3,908 M € for retirement plans and similar obligations (prior year: 3,772 M €),237 M € of provisions for financial instruments (prior year: 100 M €) and 4,561 M € of otherprovisions (prior year: 4,854 M €).
Financial liabilities of 5,118 M € (prior year: 4,767 M €), excluding foreign exchange-rate effectsof 62 M €, increased by the borrowing of a European Investment Bank loan and Skynet 5
activities, partly offset by repayments of Airbus.
Without considering foreign exchange-rate effects of 48 M €, other liabilities increased by 192 M€ to 11,558 M € (prior year: 11,318 M €). Other liabilities mainly include 5,118 M € (prior year:
4,851 M €) of European Government refundable advances and 4,225 M € (prior year: 3,807 M €)of customer advance payments.
The decrease in deferred tax liabilities of -473 M € to 3,191 M € (prior year: 3,664 M €) issignificantly influenced by the decrease in the fair value of financial instruments accounted for asother assets.
8. Significant cash flow items
Cash provided by operating activities increased by 696 M € to 1,978 M € (first nine months of
2003: 1,282 M €). This increase reflects the significant improvement in profits. Moreover, lastyear’s cash flow included negative effects from old “macro-hedges” that bore unfavourable rates.
Cash used for investing activities decreased by 340 M € to -1,533 M € (first nine months of
2003: -1,873 M €). These outflows were mainly caused by investments in fixed assets of -1,652 M€ (first nine months 2003: -1,328 M €), thereof -243 M € in Skynet 5 within Space division andinvestments of -1,063 M € in Airbus division, mainly for A 380. Such outflows were partly offset by

903.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

the sale of securities in the first nine months of 2004 by 299 M € (first nine months of 2003: 288 M€). Overall, cash used for investing activities was lower in 9 months 2004 than in the same periodof 2003 due to the lower use of customer financing.
Cash used for financing activities amounts to -100 M € (first nine months of 2003: 1,014 M €provided by financing activities) and was mainly affected by a cash distribution payment toshareholders of -320 M € and a dividend payment to minorities (-65 M €), partly offset by anincrease in financial liabilities of 283 M €.
9. Contingencies
Since the last balance sheet date (December 31, 2003), there were no significant changes incontingent liabilities.
10. Number of shares
The total number of shares outstanding is 801,072,938 and 800,957,248 as of September 30,
2004 and 2003, respectively. EADS’ shares are exclusively ordinary shares with a par value of
1.00 €. No shares were repurchased neither in the first nine months of 2004 nor in the first ninemonths of 2003. 5,686,682 of these treasury shares, repurchased and held by the Group, were deregistered and cancelled in July 2004.
11. Earnings per share
Basic earnings per share are calculated by dividing net income (loss) attributable toshareholders by the weighted average number of issued ordinary shares during the period,
excluding ordinary shares purchased by the Group and held as treasury shares:

January 1 to
September 30,
2004
Net income (loss) attributable to shareholders
Weighted average number of ordinary shares outstanding
Basic earnings per share

January 1 to
September 30,
2003

597 M €

-124 M €800,961,781

800,957,248

0.75 €-0.15 €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 exercise price of the stock
options under the 4th and 5th stock option plans initiated by the Group is below the average shareprice of EADS shares, the inclusion of these potential ordinary shares has a dilutive effect on theweighted average number of shares. According to IAS 33, 2,777,413 stock options would bedilutive:10

03.11.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the first nine months ended September 30, 2004

January 1 to
September 30,
2004
Net income (loss) attributable to shareholders
Weighted average number of ordinary shares outstanding(diluted)
Diluted earnings per share

January 1 to
September 30,
2003

597 M €

-124 M €803,739,194

800,957,248

0.74 €-0.15 €

12. Dividend policy
Following the annual shareholders’ meeting held on May 6, 2004, a cash distribution of 0.40 € per
ordinary share was paid in June 2004 for the business year 2003.
13. Related party transactions
The Group has entered into various transactions with related companies in 2004 and 2003 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, such transactions are not considered material to the Groupeither individually or in the aggregate. The transactions with the French State include mainly sales
from the Aeronautics, Defence & Security Systems and Space divisions.
14. Number of employees
The number of employees at September 30, 2004 is 109,765 as compared to 109,135 at
December 31, 2003.

11

03.11.2004