EUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V.
Financial Statements

WWW.EADS.COM

European Aeronautic Defence
and Space Company EADS N.V.
Mendelweg 302333 CS Leiden
The Netherlands
In France
37, boulevard de Montmorency
75781 Paris cedex 16 – France
In Germany
81663 Munich – Germany
In Spain
Avenida de Aragón 404
28022 Madrid – Spain

Financial Statements 20092009

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Financial Statements 2009

1 EADS N.V. Consolidated Financial
Statements (IFRS)

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2 Notes to the Consolidated
Financial Statements (IFRS)

13

3 Auditors’ reporton the Consolidated
Financial Statements (IFRS)

105

4 Company Financial Statements 109
5 Notes to the Company Financial
Statements

113

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EADS N.V.
Consolidated Financial
Statements (IFRS)EADS N.V. Consolidated Income
Statements (IFRS)

6EADS N.V. Consolidated
Statements of Comprehensive
Income (IFRS)

7EADS N.V. Consolidated
Statements of Financial Position(IFRS)

8

EADS N.V. Consolidated
Statements of Cash Flows (IFRS)

9EADS N.V. Consolidated
Statements of Changes
in Equity (IFRS)10EADS FIN ANCIAL S TATEMENTS 2009

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EADS N.V. Consolidated Income Statements (IFRS)
for the years ended 31 December 2009, 2008 and 2007(in €m)Note

Revenues

6, 7

42,82243,265

39,123

Cost of sales

8(38,383)(35,907)(34,802)

4,439

7,358

4,321

Gross margin
Selling expenses
Administrative expenses
Research and development expenses

9

Other income

10

2009

2008

2007

(924)

(933)

(864)

(1,272)(1,253)(1,314)(2,825)(2,669)(2,608)

170

189

233

(102)

(131)

(97)

115

188

210

Other expenses
Share of profit from associates accounted for under theequity method

11

Other income from investments

11

19

23

86

Profit (loss) before finance costs and income taxes

6

(380)

2,772

(33)

356

617

502

Interest expense

(503)

(581)

(701)

Other financial result

(445)

(508)

(538)

(592)

(472)

(737)

Interest income

Total finance costs

12

Income taxes

13

Profit (loss) for the period

220

(703)

333

(752)

1,597

(437)

(763)

1,572

(446)

11

25

9

Attributable to:Equity owners of the parent (Net income (loss))
Non-controlling interests
Earnings per share

€

€

€

Basic

39

(0.94)

1.95(0.56)

Diluted39(0.94)

1.95(0.55)

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

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EADS N.V. Consolidated Statements of Comprehensive Income (IFRS)
for the years ended 31 December 2009, 2008 and 2007(in €m)

2009

2008

2007

Profit (loss) for the period

(752)

1,597

(437)

Currency translation adjustments for foreign operations

(262)

417

(196)

Effective portion of changes in fair value of cash flow hedges

2,939(2,971)

2,124

Net change in fair value of cash flow hedges transferred to profit or loss

(1,456)(2,456)(1,884)

Net change in fair value of available-for-sale financial assets
Net change in fair value of available-for-sale financial assets transferred
to profit or loss

162

6

4

0

(6)

(54)

Actuarial gains (losses) on defined benefit plans

(595)

(346)

608

Tax on income and expense recognised directly in equity

(381)

1,722

(46)

Other comprehensive income, net of tax

407(3,634)556

Total comprehensive income of the period(345)(2,037)

119

(354)

(2,056)

78

9

19

41

Attributable to:Equity owners of the parent
Non-controlling interests

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

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EADS N.V. Consolidated Statements of Financial Position (IFRS)
at 31 December 2009 and 2008(in €m)AssetsNon-current assets
Intangible assets
Property, plant and equipment
Investment property
Investments in associates accounted for under the equity method
Other investments and other long-term financial assets
Non-current other financial assets
Non-current other assets
Deferred tax assets
Non-current securities
Current assets
Inventories
Trade receivables
Current portion of other long-term financial assets
Current other financial assets
Current other assets
Current tax assets
Current securities
Cash and cash equivalents
Non-current assets/disposal groups classified as held for sale

Note

2009

2008

14
15
16
17
17
20
21
13
22

11,06012,508
78
2,514
2,210
1,607
1,176
2,656
3,983
37,792

11,171
12,156
87
2,356
1,712
1,612
1,034
2,756
3,040
35,924

18
19
17
20
21

21,577
5,587
230
2,043
1,698
267
4,072
7,038
0
42,51280,304

19,452
5,267
177
2,495
1,466
452
3,912
6,745
263
40,22976,153

816
7,182
2,646
(109)
10,535106
10,641

815
8,558
1,758
(109)
11,022
104
11,126

26
27
28
29
13
31

8,137
2,867
6,175
9,091
751
266
27,287

7,479
3,046
7,499
8,907
953
418
28,302

26
27
30
28
29

5,883
2,429
8,217
1,200
23,547220880
042,376
69,66380,304

4,583
1,458
7,824
1,714
19,968201822
155
36,72565,02776,15322
32
23

Total assets
Equity and liabilities
Equity attributable to equity owners of the parent
Capital stockReserves
Accumulated other comprehensive income
Treasury shares
Non-controlling interests
Total equity
Non-current liabilities
Non-current provisions
Long-term financing liabilities
Non-current other financial liabilities
Non-current other liabilities
Deferred tax liabilities
Non-current deferred income
Current liabilities
Current provisions
Short-term financing liabilities
Trade liabilities
Current other financial liabilities
Current other liabilities
Current tax liabilities
Current deferred income
Liabilities directly associated with non-current assets classified as held for sale

24

31
23

Total liabilities
Total equity and liabilities

The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

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EADS N.V. Consolidated Statements of Cash Flows (IFRS)
for the years ended 31 December 2009, 2008 and 2007(in €m)Note

Profit (loss) for the period attributable to equity ownersof the parent (Net income (loss))
Profit for the period attributable to non-controlling interests
Adjustments to reconcile profit (loss) for the period to cash provided
by operating activities:
Interest income
Interest expense
Interest received
Interest paid
Income tax (income) expense
Income taxes received (paid)
Depreciation and amortisation
Valuation adjustments
Results on disposal of non-current assets
Results of companies accounted for by the equity method
Change in current and non-current provisions
Change in other operating assets and liabilities:> Inventories> Trade receivables> Trade liabilities> Advance payments received> Other assets and liabilities> Customer financing assets> Customer financing liabilities
Cash provided by operating activities
Investments:> Purchase of intangible assets, Property, plant and equipment> Proceeds from disposals of intangible assets, Property, plant and equipment> Acquisitions of subsidiaries, joint ventures, businesses
and non-controlling interests (net of cash)> Proceeds from disposals of subsidiaries (net of cash)> Payments for investments in associates, other investments
and other long-term financial assets> Proceeds from disposals of associates, other investments
and other long-term financial assets> Dividends paid by companies valued at equity
Disposals of non-current assets/disposal groups classified as held for sale and liabilities
directly associated with non-current assets classified as held for sale
Change of securities
Contribution to plan assets
Change in cash from changes in consolidation
Cash (used for) investing activities
Increase in financing liabilities
Repayment of financing liabilities
Cash distribution to EADS N.V. shareholders
Dividends paid to non-controlling interests
Capital increase and changes in non-controlling interests
Change in treasury shares
Cash provided by (used for) financing activities
Effect of foreign exchange rate changes and other valuation adjustments on cash
and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

32
32

2009

2008

2007

(763)
11

1,572
25

(446)
9

(356)
503
382
(331)
(220)
4
1,826
(254)
(31)
(115)
1,767
15
(1,961)
(478)
192
2,925
(257)
(306)
(100)
2,438

(617)
581
657
(471)
703
(252)
1,667
924
(31)
(188)
1
(172)
(1,210)
(845)
757
2,435
(982)
(208)
(119)
4,399

(502)
701
480
(370)
(333)
36
1,772
582
(125)
(210)
2,268
1,236
(2,998)
(148)
44
4,817
(540)
194
(133)
5,098

(1,957)75(1,837)35(2,028)
162

(21)
13

(265)
2

0
29

(136)

(122)

(132)

43
27

180
50

186
39

103
(821)
(173)
0
(2,847)
1,114
(208)
(162)
(4)
17
(5)
752

117
(2,676)(436)
0(4,952)
471
(628)
(97)
(10)
24
39
(201)

0
(2,641)(303)(249)(4,937)
206
(792)
(97)
(1)
46
0
(638)

(50)
293
6,745
7,038

(50)
(804)
7,549
6,745

(117)
(594)
8,143
7,549

For details, see Note 32, “Consolidated Statement of Cash Flows”.
The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).
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EADS N.V. Consolidated Statements of Changes in Equity (IFRS)
for the years ended 31 December 2009, 2008 and 2007

Equity attributable to equity owners of the parent(in €m)

Note

Balance at 31 December 2006

Capital
stock

Share
premium

Other
reserves

Accumulated
othercomprehensive
income

816

8,160

(567)

4,955

(43)

121

Total comprehensive income
Capital increase24

Share-based Payment (IFRS 2)
Cash distribution to EADS N.V.
shareholders/dividends paid to
non-controlling interests

36

3

Total

(349)

13,015

137

13,152

78

41

119

46

2

48

43
48

48

(97)

24

Balance at 31 December 2007

(5)

(138)

814

7,968

Total comprehensive income
Capital increase24

Share-based Payment (IFRS 2)
Cash distribution to EADS N.V.
shareholders/dividends paid to
non-controlling interests

36

2

(562)

5,076

1,262

(3,318)

(97)

(1)

(98)

0

(94)

(94)

0

(206)

13,09085

13,175(2,056)19(2,037)

24

1

25

22
22

24
24

Balance at 31 December 2008

(1)

(57)

815

7,836

Total comprehensive income
Capital increase24

Share-based Payment (IFRS 2)
Cash distribution to EADS N.V.
shareholders/dividends paid to
non-controlling interests

36

1

722

1,758

(1,242)

888

(97)

(10)

(107)

0

9

9

39

39

39

0

0

(109)

11,022

104

11,126

(354)

9

(345)

15

2

14
19

19

Cancellation of treasury shares

24

Balance at 31 December 2009

(4)

(166)

0

(5)

(5)

(5)
(5)
816

7,683

(501)

2,646

(5)

5

0

(109)

10,535The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).

10 EADS FIN ANCIAL S TATEMENTS 2009

17
19

(162)

Change in non-controlling interests
24

22

58

(162)

Change in treasury shares

022Change in non-controlling interests

Cancellation of treasury shares

48

143

(97)

Change in treasury shares

Total equity

TreasurysharesChange in treasury shares
Cancellation of treasury shares

Non-controllinginterests

(5)
0
106

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2.1

Basis of Presentation

15

2.2

Notes to the Consolidated
Income Statements (IFRS)

37

Notes to the Consolidated
Statements of Financial
Position (IFRS)

47

Notes to the Consolidated
Statements of Cash Flows(IFRS)

68

Other Notes to
the Consolidated Financial
Statements (IFRS)

70

Appendix “Information
on principal investments” –Consolidation Scope

97

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2
Notes
to the Consolidated
Financial Statements(IFRS)

2.3

2.4

2.5

2.6

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Contents
15

23. Non-current assets / disposal groups
classiﬁed as held for sale59

1. The Company

15

24. Total equity60

2. Summary of signiﬁcant accounting policies

15

25. Capital Management61

3. Accounting for the A400M programme

32

26. Provisions

61

4. Scope of consolidation

34

27. Financing liabilities

65

5. Acquisitions and disposals

34

28. Other ﬁnancial liabilities

67

29. Other liabilities

67

30. Trade liabilities

68

31. Deferred income

68

2.1 Basis of Presentation

2.2 Notes to the Consolidated Income
Statements (IFRS)
37
6. Segment Reporting37

7. Revenues

41

8. Functional costs

41

9. Research and development expenses

42

10. Other income

42

11. Share of proﬁt from associates accounted
for under the equity method and otherincome from investments

42

12. Total ﬁnance costs

43

13. Income taxes

43

2.3 Notes to the Consolidated
Statements of Financial Position(IFRS)

47

14. Intangible assets

47

15. Property, plant and equipment51

16. Investment property

54

17. Investments in associates accounted
for under the equity method,other investments and other long-term
ﬁnancial assets

54

18. Inventories

56

19. Trade receivables

57

20. Other ﬁnancial assets

58

21. Other assets

58

22. Securities

59

14 EADS FIN ANCIAL S TATEMENTS 2009

2.4 Notes to the Consolidated
Statements of Cash Flows (IFRS)

68

32. Consolidated Statement of Cash Flows

68

2.5 Other Notes to
the Consolidated Financial
Statements (IFRS)

70

33. Litigation and claims

70

34. Commitments and contingencies

72

35. Information about ﬁnancial instruments

75

36. Share-based Payment

85

37. Related party transactions

92

38. Interest in Joint Ventures95

39. Earnings per Share

95

40. Number of Employees

96

41. Events after the reporting date96

2.6 Appendix “Information
on principal investments” –Consolidation Scope

97

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.1 | Basis of Presentation

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2.1 Basis of Presentation
1.

The Company

The accompanying Consolidated Financial Statements present
the financial position and the result of the operations ofEuropean Aeronautic Defence and Space Company EADS
N.V. and its subsidiaries (“EADS” or the “Group”), a Dutch
public limited liability Company (Naamloze Vennootschap)
legally seated in Amsterdam (current registered office at
Mendelweg 30, 2333 CS Leiden, The Netherlands; previously:
Le Carré, Beechavenue 130-132, 1119 PR, Schiphol-Rijk, The
Netherlands). EADS’ core business is the manufacturing ofcommercial aircraft, civil and military helicopters, commercial

2.

space launch vehicles, missiles, military aircraft, satellites,
defence systems and defence electronics and rendering ofservices related to these activities. EADS has its listings at
the European Stock Exchanges in Paris, Frankfurt, Madrid,
Barcelona, Valencia and Bilbao. The Consolidated Financial
Statements were authorised for issue by EADS’ Board of
directors on 8 March 2010, are prepared and reported inEuro (“€”), and all values are rounded to the nearest million
appropriately, unless otherwise stated.

Summary of signiﬁcant accounting policies

Basis of preparation — EADS’ Consolidated Financial
Statements are prepared in accordance with International
Financial Reporting Standards (“IFRS”), issued by theInternational Accounting Standards Board (“IASB”) and asendorsed by the European Union (“EU”) and with Part 9 ofBook 2 of the Netherlands Civil Code. They comprise (i)IFRS, (ii) International Accounting Standards (“IAS”) and(iii) Interpretations originated by the International Financial
Reporting Interpretations Committee (“IFRIC”) or former
Standing Interpretations Committee (“SIC”). The Consolidated
Financial Statements have been prepared on a historical costbasis, except for the following items that have been measured
at fair value: (i) derivative financial instruments, (ii) availablefor-sale financial assets, (iii) accumulating Money Market
Funds, uncapped Structured Notes and foreign currency Funds
of Hedge Funds that have been designated as financial assets
at fair value through profit or loss (“Fair Value Option”, seeNote 35 “Information about financial instruments”) and (iv)assets and liabilities being hedged items in fair value hedges
that are otherwise carried at cost and whose carrying values areadjusted to changes in the fair values attributable to the risks
that are being hedged.
In accordance with Article 402 Book 2 of the Netherlands Civil
Code the Statement of Income of the EADS N.V. Company
Financial Statements is presented in abbreviated form.
The preparation of financial statements in conformity withIFRS requires the use of certain critical accounting estimates.

It also requires management to exercise its judgement in theprocess of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to theConsolidated Financial Statements are disclosed in the last
subsection “Use of Accounting Estimates” of this Note 2.

NEW STANDARDS, AMENDMENTS TO EXISTING
STANDARDS AND NEW INTERPRETATIONSThe IFRS accounting principles applied by EADS for preparing
its 2009 year end Consolidated Financial Statements are
the same as for the previous financial year except for thosefollowing the application of new or amended Standards orInterpretations respectively and changes in accounting policies
as detailed below.

a) New or Amended Standards
The application of the following amended standards is
mandatory for EADS for the fiscal year starting 1 January
2009. If not otherwise stated, the following new oramended Standards did not have a material impact on EADS’
Consolidated Financial Statements as well as its basic anddiluted earnings per share.
IFRS 8 “Operating Segments” (issued in November 2006
and endorsed in November 2007) replaced IAS 14 “Segment
Reporting” for accounting periods beginning on or after
1 January 2009. IFRS 8 will require the presentation and
EADS FIN ANCIAL S TATEMENTS 200915

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.1 | Basis of Presentation1

disclosure of segment information to be based on the internalmanagement reports regularly reviewed by EADS’ Chief
Operating Decision Maker in order to assess each segment’s
performance and to allocate resources to them. EADS’ segment
reporting takes into consideration these new requirements of
IFRS 8 as well as its changed management structure due to theintegration of the former Military Transport Aircraft Division(MTAD) into the Airbus organisation from 2009 onwards. See
Note 6 “Segment Reporting” for the relating changes to thepresentation of segment information.
The Amendment to IAS 23 “Borrowing Costs” removes
the option of recognising borrowing costs that are directly
attributable to the acquisition, construction or productionof a qualifying asset as an expense and therefore requires
capitalising such borrowing costs as part of the cost of the asset
prospectively. A qualifying asset is an asset that necessarily
takes a substantial period of time to get ready for its intended
use or sale. This amendment was released in April 2007, wasendorsed in December 2008 and became mandatory to EADS
as of 1 January 2009. The application of the amended IAS 23
will result in the mandatory capitalisation of borrowing costs
related to qualifying assets and will thus increase the amountof total costs capitalised and thus the basis of depreciations ofsuch qualifying assets.
The Amendment to IAS 1 “Presentation of Financial
Statements: A revised presentation” (issued in September 2007
and endorsed in December 2008) became effective for EADS asof 1 January 2009 and introduced the term total comprehensive
income, which represents changes in equity during a period
other than those changes resulting from transactions withowners in their capacity as owners. Total comprehensive
income may be presented either according to a single statement
approach (effectively combining both the consolidated income
statement and all non-owner changes in equity in a single
statement), or according to a two statement approach in aconsolidated income statement and a separate statement ofcomprehensive income. EADS provides such informationaccording to the two statement approach in an income
statement as well as in a statement of comprehensive income
for its Consolidated Financial Statements from 2009 onwards.
The Amendment to IFRS 4 and IFRS 7 “Improving
Disclosures about Financial Instruments” (issued in
March 2009 and endorsed in December 2009) requires
enhanced disclosures about fair value measurement andliquidity risk. In particular, the amendment requires
disclosure of fair value measurements by level of a fair value
measurement hierarchy.
EADS applied the amendments to IAS 32 and IAS 1“Puttable Financial Instruments” (issued in February 2008,
endorsed in January 2009), the amendments to IFRS 1

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Back to Contents“First-time Adoption of International Financial ReportingStandards” and to IAS 27 “Consolidated and Separate Financial
Statements” (issued in May 2008, endorsed in January 2009)
as well as the amendments to IFRS 2 “Share Based Payments- Vesting Conditions and Cancellations” (amended in
January 2008 and endorsed in December 2008).
Further, in May 2008 the IASB issued its first omnibusof amendments to its standards primarily with a view toremoving inconsistencies and clarifying wording in several
IFRS standards, which was endorsed in January 2009. There
are separate transition provisions for each amended standard.
Except for the amendments regarding IAS 16 and IAS 7(presentation of the sales proceeds from assets previously used
for renting activities), which were early adopted by EADS in its
2008’ Consolidated Financial Statements, the majority of theseamendments, being effective from 1 January 2009 onwards, did
not have any material impact on EADS’ Consolidated Financial
Statements.
Finally, EADS’ accounting policies were not affected by
the amendments “Reclassification of Financial Assets:
Amendments to IAS 39 “Financial Instruments: Recognition
and Measurement” and IFRS 7 “Financial Instruments:
Disclosures” (both Standards amended and endorsed in
October 2008) as well as their related later amendments
regarding the effective date and the transition rules (endorsed
in September 2009), as EADS did not reclassify any suchfinancial instruments. Furthermore, the related amendments“Embedded Derivatives: Amendments to IFRIC 9“Reassessment of Embedded Derivatives” and IAS 39“Financial Instruments: Recognition and Measurement” (bothamended in December 2008 and endorsed in November 2009)
also did not have any impact on EADS’ Consolidated Financial
Statements.

b) New Interpretations
The following Interpretation became effective as of 1 January
2009. If not otherwise stated, the following Interpretations did
not have a material impact on EADS’ Consolidated Financial
Statements as well as its basic and diluted earnings per share.
IFRIC 14 “IAS 19 — The Limit of a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction” (issuedin July 2007, endorsed in December 2008 resulting in an
effective date as of 1 January 2009) clarifies how the maximum
amount of net plan assets is calculated and which circumstances
require an additional pension liability to be recognised.
IFRIC 16 “Hedges of a Net Investment in a Foreign
Operation” (issued in July 2008, endorsed in June 2009)
provides additional guidance on the accounting for a hedge
of a net investment, mainly regarding the identification of

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.1 | Basis of Presentation1

the foreign currency risks that qualify for hedge accounting,where within the Group the hedging instruments can be held
and how an entity should determine the amount of foreign
currency gain or loss, relating to both the net investment andthe hedging instrument, to be recycled on disposal of the net
investment.
Further, EADS’ accounting policies were not affected by
IFRIC 13 “Customer Loyalty Programmes” (issued inJune 2007, endorsed in December 2008) and the sector-specificinterpretation IFRIC 15 “Agreements for the Constructionof Real Estate” (issued in July 2008, endorsed in July 2009),
as EADS does neither maintain such customer loyalty
programmes nor undertakes such construction activities.

NEW, REVISED OR AMENDED IFRS STANDARDSAND INTERPRETATIONS ISSUED BUT NOT YET APPLIED
A number of new or revised standards, amendments andimprovements to standards as well as interpretations are notyet effective for the year ended 31 December 2009, and havenot been applied in preparing these Consolidated Financial
Statements. The potential impacts from the application of those
newly issued standards, amendments and interpretations are
currently under investigation. In general and if not otherwise
stated, these new, revised or amended IFRS and theirinterpretations are not expected to have a material impact on
EADS’ Consolidated Financial Statements as well as its basic
and diluted earnings per share.
The amendment to IFRS 2 “Share-based Payments - Group
Cash-settled Share-based Payment Transactions” (issued inJune 2009, not yet endorsed) amends the definitions in IFRS 2
for transactions and arrangements, as well as the scope of theStandard. In addition, guidance is given for accounting forshare-based payment transactions amongst group entities. The
retrospective application of the amendment is mandatory forannual periods beginning on or after 1 January 2010.
IFRS 3R “Business Combinations” and IAS 27 (amend.)“Consolidated and Separate Financial Statements” (revised andissued in January 2008, endorsed in June 2009) will become
mandatory for EADS on 1 January 2010. IFRS 3R introduces a
number of changes in the accounting for business combinations
that are likely to be relevant to EADS’ operations: The
definition of a business has been broadened, which is likely
to result in more acquisitions being treated as businesscombinations. Contingent consideration will be measured
at fair value, with subsequent changes therein recognised in
profit or loss. Transaction costs, other than share and debt issue
costs, will be expensed as incurred. Any pre-existing interestin the acquiree will be measured at fair value with the gain orloss recognised in profit or loss. Any non-controlling interest
will be measured at either fair value, or at its proportionate

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Back to Contentsinterest in the identifiable assets and liabilities of the acquiree,
on a transaction-by-transaction basis. Further, IAS 27 (amend.)requires that a change in the ownership interest of a subsidiary
without gaining or losing control is accounted for as an equity
transaction. Therefore such transactions regarding changes in
non-controlling interest will no longer give rise to goodwill,
nor will it give rise to a gain/loss. The changes introduced by
IFRS 3R and IAS 27 (amend.) have to be applied prospectively
and will affect future acquisitions as well as transactions withshareholders holding a non-controlling interest in subsidiaries.
In November 2009, the IASB issued IFRS 9 “Financial
Instruments” (not endorsed yet) as the first step of its project
to replace IAS 39 “Financial Instruments: Recognition andMeasurement”. Amongst other changes to the accounting
for financial instruments, IFRS 9 replaces the multiple
classification and measurement models in IAS 39 with a single
model that is based on only two classification categories:
amortised cost and fair value. Further, the classification offinancial assets under IFRS 9 is driven by the entity’s businessmodel for managing its financial assets and the contractual
cash flow characteristics of these financial assets. IFRS 9 has
to be applied starting 1 January 2013, with early adoption
permitted, and offers various transition models. The IASB
intends to expand IFRS 9 during 2010 to add new requirements
for classifying and measuring financial liabilities, derecognitionof financial instruments, impairment, and hedge accounting.
By the end of 2010, IFRS 9 is expected to constitute a complete
replacement for IAS 39.
Also in November 2009, the IASB issued a revised versionof IAS 24 “Related Party Disclosures” (not yet endorsed)that simplifies the disclosure requirements for government
related entities and clarifies the definition of a related party.
The revised standard has to be applied prospectively by EADS
for annual periods beginning on 1 January 2011, with earlier
application permitted.
The amendment to IAS 32 “Classification of Rights Issues —Amendment to IAS 32 Financial Instruments: Presentation”(issued in October 2009, endorsed in December 2009)
addresses the accounting for rights issues (rights, options
or warrants) that are denominated in a currency other than
the functional currency of the issuer. In particular, when
the amendment is retrospectively applied, rights (and similar
derivatives) to acquire a fixed number of an entity’s own equity
instruments for a fixed price stated in a currency other thanthe entity’s functional currency, would be equity instruments,
provided the entity offers the rights pro rata to all of its
existing owners of the same class of its own non-derivative
equity instruments. The amendment has to be applied
retrospectively by EADS for annual periods beginning on
1 January 2011, with earlier application permitted.

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The objective of the Amendment “Eligible Hedged Items— Amendment to IAS 39 “Financial Instruments:
Recognition and Measurement”” (issued in July 2008, endorsed
in September 2009) is to propose rules-based amendments
to IAS 39 to simplify the hedge accounting requirements byclarifying the risks that may be designated as hedged risks andthe portion of cash flows of a financial instrument that may bedesignated as a hedged item. The amendment will be applied
retrospectively by EADS for annual periods beginning on
1 January 2010.
IFRIC 12 “Service Concession Arrangements” (issued in
November 2006, endorsed in March 2009 resulting in an
effective date as of 1 January 2010) clarifies how certain
aspects of existing IASB guidance are to be applied to service
concession arrangements in the financial statements of service
concession operators and will have to be applied retrospectively
from 1 January 2010 onwards.

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To correct an unintended consequence of IFRIC 14, the
IASB issued amendments to IFRIC 14 “Prepaymentsof a Minimum Funding Requirement (Amendments to
IFRIC 14)” in November 2009 (not endorsed yet). Without theamendments, in some circumstances entities are not permitted
to recognise as an asset some voluntary prepayments forminimum funding contributions. This was not intended when
IFRIC 14 was issued, and the amendments correct this issue.
The amendments are effective for annual periods of EADS
beginning 1 January 2011, with earlier application permitted.
The amendments must be applied retrospectively to the earliest
comparative period presented.
In April 2009, the IASB issued its second omnibus ofamendments to its standards containing 15 amendments to
10 IFRS Standards and 2 Interpretations (not endorsed yet).
The amendments refer to IFRS 2, IFRS 5, IFRS 8, IAS 1,
IAS 7, IAS 17, IAS 18, IAS 36, IAS 38, IAS 39, IFRIC 9 and
IFRIC 16. Most of the amendments are mandatory for annual
periods beginning on or after 1 January 2010 with separatetransition provisions for each amendment.

IFRIC 17 “Distribution of non-cash assets to owners” (issued
in November 2008, endorsed in November 2009) clarifies theaccounting for arrangements whereby an entity distributes noncash assets to shareholders either as a distribution of reserves
or as dividends. In this context, IFRS 5 has also been amended
to require that assets are classified as held for distribution
only when they are available for distribution in their present
condition and the distribution is highly probable. EADS will
apply IFRIC 17 from 1 January 2010.

SIGNIFICANT ACCOUNTING POLICIESIFRIC 18 “Transfers of Assets from Customers” (issued
in January 2009, endorsed in December 2009) clarifies the
IFRS requirements for the recognition and measurement ofagreements in which an entity receives from a customer either
an item of property, plant, and equipment or cash that theentity have to use either to connect the customer to a networkor to provide the customer with ongoing access to a supply of
goods or services (such as a supply of electricity, gas or water inthe utility sector). While IFRIC 18 is particularly relevant for
entities in the utility sector, its prospective application will bemandatory to annual periods of EADS beginning on 1 January
2010.

Consolidation — The Consolidated Financial Statements
include the subsidiaries of EADS. Subsidiaries are all entities
controlled by the Group, i.e. over which it has the power togovern financial and operating policies. An entity is presumed
to be controlled by EADS when EADS owns more than 50% of
the voting power of the entity which is generally accompaniedwith a respective shareholding. Potential voting rights currently
exercisable or convertible are also considered when assessing
control over an entity. Transactions with non-controllinginterests are accounted for by the “modified parent company
model”.

In November 2009, the IFRIC issued IFRIC 19 “Extinguishing
Financial Liabilities with Equity Instruments” (not yet
endorsed) that provides guidance on how to account for theextinguishment of a financial liability by the issue of equity
instruments (so called debt for equity swaps). IFRIC 19
clarifies the requirements for the application of the related
IFRS Standards when an entity renegotiates the terms of afinancial liability with its creditor and the creditor agrees to
accept the entity’s shares or other equity instruments to settle
the financial liability fully or partially. The interpretation
has to be applied retrospectively for annual periods of EADS
beginning on 1 January 2011 with earlier application permitted.

18 EADS FIN ANCIAL S TATEMENTS 2009

The principal accounting policies applied in the preparationof these Consolidated Financial Statements are set out below.
These policies have been consistently applied to all financial
years presented, unless otherwise stated.

Special purpose entities (“SPEs”) are consolidated as any
subsidiary, when the relationship between the Group andthe SPE indicates that the SPE is in substance controlled by
the Group. SPEs are entities which are created to accomplish
a narrow and well-defined objective. Subsidiaries are fully
consolidated from the date control has been transferred to
EADS and de-consolidated from the date control ceases.
Business combinations are accounted for under the purchasemethod of accounting; all identifiable assets acquired, liabilities
and contingent liabilities incurred or assumed are recorded
at fair value at the date control is transferred to EADS
(acquisition date), irrespective of the existence of any minority

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interest. The cost of a business combination is measured at
the fair value of assets given, equity instruments issued andliabilities incurred or assumed at the date of exchange, plus
costs directly attributable to the acquisition. Any excess ofthe cost of the business combination over the Group’s interestin the net fair value of the identifiable assets, liabilities andcontingent liabilities recognised is capitalised as goodwill andtested for impairment in the fourth quarter of each financial
year and whenever there is an indication for impairment.
After initial recognition goodwill is measured at cost lessaccumulated impairment losses. For impairment testing
purpose, goodwill is allocated to those Cash Generating Units(“CGUs”) or group of CGUs - within EADS in principle on
Business Unit (“BU”) level - that are expected to benefit fromthe synergies arising from the business combination. If the costof an acquisition is less than the fair value of the net assets ofthe subsidiary acquired, the identification and measurementof the identifiable assets, liabilities and contingent liabilities
is reassessed as well as the measurement of the cost of the
combination. Any remaining difference is immediately
recognised in the Consolidated Income Statement.
EADS subsidiaries prepare their financial statements at thesame reporting date as EADS Group Consolidated Financial
Statements and apply the same accounting policies for similartransactions.
For investments EADS jointly controls (“joint ventures”) with
one or more other parties (“venturers”), EADS recognises its
interest by using the proportionate method of consolidation.
Joint control is contractually established and requires
unanimous decisions regarding the financial and operating
strategy of an entity.
Investments in which EADS has significant influence(“investments in associates”) are accounted for using theequity method and are initially recognised at cost. Significant
influence in an entity is presumed to exist when EADS owns
20% to 50% of the entity’s voting rights. The investments inassociates include goodwill as recognised at the acquisition date
net of any accumulated impairment loss. EADS’ share of therecognised income and expenses of investments in associates
is included in the Consolidated Financial Statements fromthe date significant influence has been achieved until thedate it ceases to exist. The investments’ carrying amount isadjusted by the cumulative movements in recognised income
and expense. When EADS’ share in losses equals or exceeds
its interest in an associate, including any other unsecured
receivables, no further losses are recognised, unless the Grouphas incurred obligations or made payments on behalf of theassociate. The financial statements of EADS’ associates haveusually the same reporting period as for the parent company.
Where necessary, adjustments are made to bring the accounting
policies in line with those of the EADS Group.

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The effects of intercompany transactions are eliminated.
Acquisitions (disposals) of interest in entities that arecontrolled by EADS without gaining (ceasing) control,
irrespective of whether sole or joint control, are treated astransactions with parties external to the Group in accordancewith the Parent Company Approach. Consequently, gains
or losses on purchases from minority shareholders or otherventurers respectively are recorded in goodwill, whereas
disposals to minority shareholders or other venturers arerecorded within the Consolidated Income Statement.
The financial statements of EADS’ investments in associates
and joint ventures are generally prepared for the same reporting
date as for the parent company. Adjustments are made where
necessary to bring the accounting policies and accounting
periods in line with those of the Group.

Foreign Currency Translation — The Consolidated Financial
Statements are presented in Euro, EADS’ functional andpresentation currency. The assets and liabilities of foreign
entities, where the reporting currency is other than Euro,are translated using period-end exchange rates, whilst thestatements of income are translated using average exchange
rates during the period, approximating the foreign exchange
rate at the dates of the transactions. All resulting translationdifferences are included as a separate component of total equity(“Accumulated other comprehensive income” or “AOCI”).
Transactions in foreign currencies are translated into Euroat the foreign exchange rate prevailing at transaction date.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are translated into Euro at theexchange rate in effect at that date. These foreign exchange
gains and losses arising from translation are recognised in theConsolidated Income Statement except when deferred in equity
as qualifying cash flow hedges. Changes in the fair value of
securities denominated in a foreign currency that are classified
as available-for-sale financial assets are analyzed whether they
are due to (i) changes in the amortised cost of the security or
due to (ii) other changes in the security. Translation differences
related to changes in (i) amortised cost are recognised in theConsolidated Income Statement whilst (ii) other changes arerecognised in AOCI.
Non-monetary assets and liabilities denominated in foreign
currencies, which are stated at historical cost, are translated
into Euro at the foreign exchange rate in effect at the dateof the transaction. Translation differences on non-monetaryfinancial assets and liabilities are reported as part of the fairvalue gain or loss. Translation differences of non-monetaryfinancial assets such as equity securities classified as available
for sale are included in AOCI.

EADS FIN ANCIAL S TATEMENTS 2009

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Goodwill and fair value adjustments arising on the acquisitionof a foreign entity occurring after 31 December 2004 aretreated as assets and liabilities of the acquired company and aretranslated at the closing rate. Regarding transactions prior tothat date, goodwill, assets and liabilities acquired are treated as
those of the acquirer.
The accumulated amount of translation differences recognised
in AOCI is recognised in the Consolidated Income Statement
when the associated foreign currency entity is disposed of or
liquidated or the associated asset or liability is disposed ofrespectively.

Current and non-current assets and liabilities —The classification of an asset or liability as a current or
non-current asset or liability in general depends on whether
the item is related to serial production or subject to long-term
production. In case of serial production, an asset or liability isclassified as a non-current asset or liability when the item isrealised or settled respectively after twelve months after thereporting date, and as current asset or liability when the item
is realised or settled respectively within twelve months after
the reporting date. In case of construction contracts, an asset or
liability is classified as non-current when the item is realised
or settled respectively beyond EADS’ normal operating cycle;
and as a current asset or liability when the item is realised or
settled in EADS’ normal operating cycle. However, current
assets include assets - such as inventories, trade receivables andreceivables from PoC - that are sold, consumed and realised
as part of the normal operating cycle even when they are notexpected to be realised within 12 months after the balance
sheet. Trade payables are equally part of the normal operating
cycle and are therefore classified as current liabilities.
Revenue Recognition — Revenue is recognised to the extent
that it is probable that the economic benefit arising fromthe ordinary activities of the Group will flow to EADS, thatrevenue can be measured reliably and that recognition criteria
as stated below have been met. Revenue is measured at thefair value of the consideration received or receivable after
deducting any discounts, rebates, liquidated damages and value
added tax. For the preparation of the Consolidated Income
Statement intercompany sales are eliminated.
Revenues from the sale of goods are recognised upon thetransfer of risks and rewards of ownership to the buyer whichis generally on delivery of the goods.
Revenues from services rendered are recognised in proportion
to the stage of completion of the transaction at the reportingdate.

20 EADS FIN ANCIAL S TATEMENTS 2009

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For construction contracts, when the outcome can be estimatedreliably, revenues are recognised by reference to the percentage
of completion (“PoC”) of the contract activity by applying theestimate at completion method. The stage of completion of acontract may be determined by a variety of ways. Dependingon the nature of the contract, revenue is recognised ascontractually agreed technical milestones are reached, as units
are delivered or as the work progresses. Whenever the outcomeof a construction contract cannot be estimated reliably – forexample during the early stages of a contract or when thisoutcome can no longer be estimated reliably during the courseof a contract’s completion – all related contract costs that are
incurred are immediately expensed and revenues are recognised
only to the extent of those costs being recoverable (“earlystage method of accounting”). In such specific situations, assoon as the outcome can (again) be estimated reliably, revenue
is from that point in time onwards accounted for according
to the estimate at completion method, without restating therevenues previously recorded under the early stage methodof accounting. Changes in profit rates are reflected in current
earnings as identified. Contracts are reviewed regularly andin case of probable losses, loss-at-completion provisions arerecorded. These loss-at-completion provisions in connection
with construction contracts are not discounted.
Sales of aircraft that include asset value guarantee
commitments are accounted for as operating leases when thesecommitments are considered substantial compared to the fairvalue of the related aircraft. Revenues then comprise lease
income from such operating leases.
Interest income is recognised as interest accrues, using theeffective interest rate method.
Dividend income is recognised when the right to receive
payment is established.

Leasing — The determination of whether an arrangement is orcontains a lease is based on the substance of the arrangement
and requires an assessment of (i) whether the fulfillment of
the arrangement is dependent on the use of a specific asset or
assets, and (ii) the arrangement conveys a right to use the asset.
The Group is a lessor and a lessee of assets, primarily inconnection with commercial aircraft sales financing. Leasetransactions where substantially all risks and rewards incident
to ownership are transferred from the lessor to the lessee areaccounted for as finance leases. All other leases are accounted
for as operating leases.
Assets held for leasing out under operating leases are included
in property, plant and equipment at cost less accumulated
depreciation (see Note 15 “Property, plant and equipment”).

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Rental income from operating leases (e.g. aircraft) is recorded
as revenue on a straight-line basis over the term of the lease.
Assets leased out under finance leases cease to be recognisedin the Consolidated Statement of Financial Position after
the inception of the lease. Instead, a finance lease receivable
representing the discounted future lease payments to bereceived from the lessee plus any discounted unguaranteed
residual value is recorded as other long-term financial assets(see Note 17 “Investments in associates accounted for underthe equity method, other investments and other long-term
financial assets”). Unearned finance income is recorded overtime in “Interest result”. Revenues and the related cost of sales
are recognised at the inception of the finance lease.
Assets obtained under finance leases are included in property,
plant and equipment at cost less accumulated depreciationand impairment if any (see Note 15 “Property, plant andequipment”), unless such assets have been further leased
out to customers. In such a case, the respective asset is either
qualified as an operating lease or as finance lease with EADS
being the lessor (headlease-sublease-transactions) and is recorded
accordingly. For the relating liability from finance leases see
Note 27 “Financing liabilities”. When EADS is the lessee underan operating lease contract, rental payments are recognised
on a straight line basis over the leased term (see Note 34“Commitments and contingencies” for future operating leasecommitments). Such leases often form part of commercial aircraft
customer financing transactions with the related sublease being
an operating lease (headlease-sublease-transactions).
EADS considers headlease-sublease-transactions which are
set up for the predominant purpose of tax advantages andwhich are secured by bank deposits (defeased deposits) that
correspond with the contractual headlease liability to belinked and accounts for such arrangements as one transactionin accordance with SIC 27 “Evaluating the Substance ofTransactions Involving the Legal Form of a Lease”. To reflect
the substance of the transaction, the Group consequently
offsets (head) finance lease obligations with the matchingamount of defeased deposits.

Product-Related Expenses — Expenses for advertising, sales
promotion and other sales-related expenses are charged to
expense as incurred. Provisions for estimated warranty costs arerecorded at the time the related sale is recorded.
Research and development Expenses — Research anddevelopment activities can be (i) contracted or (ii) self-initiated.
i) Costs for contracted research and development activities,
carried out in the scope of externally financed researchand development contracts, are expensed when the related
revenues are recorded.

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Back to Contentsii) Costs for self-initiated research and development activities
are assessed whether they qualify for recognition asinternally generated intangible assets. Apart fromcomplying with the general requirements for and initial
measurement of an intangible asset, qualification criteria
are met only when technical as well as commercial
feasibility can be demonstrated and cost can be measured
reliably. It must also be probable that the intangible asset
will generate future economic benefits and that it is clearly
identifiable and allocable to a specific product.
Further to meeting these criteria, only such costs that relatesolely to the development phase of a self-initiated project arecapitalised. Any costs that are classified as part of the researchphase of a self-initiated project are expensed as incurred. If
the research phase cannot be clearly distinguished from thedevelopment phase, the respective project related costs aretreated as if they were incurred in the research phase only.
Capitalised development costs are generally amortised overthe estimated number of units produced. In case the numberof units produced cannot be estimated reliably capitalised
development cost are amortised over the estimated usefullife of the internally generated intangible asset. Amortisationof capitalised development costs is recognised in cost of
sales. Internally generated intangible assets are reviewed for
impairment annually when the asset is not yet in use andfurther on whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable.
Income tax credits granted for research and development
activities are deducted from corresponding expenses or from
capitalised amounts when earned.

Borrowing costs — Borrowing costs directly attributable tothe acquisition, construction or production of an asset thatnecessarily takes a substantial period of time to get ready for
its intended use or sale are capitalised as part of the cost of
the respective assets. All other borrowing costs are expensed
in the period they occur. Borrowing costs consist of interest
and other costs that EADS incurs in connection with theborrowing of funds. EADS capitalises borrowing costs for
qualifying assets where construction was commenced on orafter 1 January 2009. Further, EADS continues to expenseborrowing costs relating to construction projects thatcommenced prior to 1 January 2009.
Intangible Assets — Intangible assets comprise (i) internallygenerated intangible assets, i.e. internally developed softwareand other internally generated intangible assets (see above:“research and development expenses”), (ii) acquired intangible
assets, and (iii) goodwill (see above: “Consolidation”).

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Separately acquired intangible assets are initially recognised
at cost. Intangible assets acquired in a business combination
are recognised at their fair value at acquisition date. Acquired
intangible assets are generally amortised over their respective
estimated useful lives (3 to 10 years) on a straight line basis,less accumulated impairment if necessary. The amortisation
expense on intangible assets with finite lives is recognisedin the Consolidated Income Statement within the expense
category consistent with the function of the related intangible
asset. The amortisation method and the estimate of the useful
lives of the separately acquired intangible asset is reviewed atleast annually and changed if appropriate.
Intangible assets having an indefinite useful life are notamortised but tested for impairment at the end of eachfinancial year as well as whenever there is an indication thatthe carrying amount exceeds the recoverable amount of therespective asset (see below “Impairment of non-financial
assets”). For such intangible assets the assessment for theindefinite useful life is reviewed annually on whether it
remains supportable. A change from indefinite to finite life
assessment is accounted for as change in estimate.
Gains or losses arising from the derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and arerecognised in the Consolidated Income Statement when theasset is derecognised.

Property, Plant and Equipment — Property, plant andequipment is valued at acquisition or manufacturing costs
less any accumulated depreciation and any accumulated
impairment losses. Such costs include the estimated costof replacing, servicing and restoring part of such property,
plant and equipment. Items of property, plant and equipment
are generally depreciated on a straight-line basis. The costs
of internally produced equipment and facilities include
direct material and labor costs and applicable manufacturing
overheads, including depreciation charges. The following useful
lives are assumed: buildings 10 to 50 years; site improvements
6 to 20 years; technical equipment and machinery 3 to
20 years; and other equipment, factory and office equipment
2 to 10 years. The useful lives, depreciation methods andresidual values applying to property, plant and equipment are
reviewed at least annually and in case they change significantly,
depreciation charges for current and future periods are adjusted
accordingly. If the carrying amount of an asset exceeds
its recoverable amount an impairment loss is recognised
immediately in profit or loss. At each reporting date, it isassessed whether there is any indication that an item ofproperty, plant and equipment may be impaired (see also below“Impairment of non-financial assets”).

22 EADS FIN ANCIAL S TATEMENTS 2009

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When a major inspection is performed, its cost is recognisedin the carrying amount of the plant and/or equipment as
a replacement if the recognition criteria are satisfied. The
carrying amount of the replaced part is derecognised. All otherrepairs and maintenance are recognised as an expense in theConsolidated Income Statement of the period in which they
are incurred. Cost of an item of property, plant and equipment
initially recognised comprise the initial estimate of costs of
dismantling and removing the item and restoring the site on
which it is located at the end of the useful life of the item on apresent value basis. A provision presenting the asset retirement
obligation is recognised in the same amount at the same date inaccordance with IAS 37 “Provisions, Contingent Liabilities andContingent Assets”.
Property, plant and equipment also includes capitalised
development costs for tangible developments of specialised
tooling for production such as jigs and tools, design,
construction and testing of prototypes and models. In caserecognition criteria are met, these costs are capitalised andgenerally depreciated using the straight-line method over
5 years or, if more appropriate, using the number of production
or similar units expected to be obtained from the tools(sum-of-the-units method). Especially for aircraft production
programmes such as the Airbus A380 with an estimatednumber of aircraft to be produced using such tools, the sumof-the-units method effectively allocates the diminution ofvalue of specialised tools to the units produced. Property, plantand equipment is derecognised when it has been disposed ofor when the asset is permanently withdrawn from use. The
difference between the net disposal proceeds and the carrying
amount of such assets is recognised in the Consolidated Income
Statement in the period of derecognition.

Investment Property — Investment property is property,
i.e. land or buildings, held to earn rentals or for capital
appreciation or both. The Group accounts for investment
property using the cost model. Investment property is initiallyrecognised at cost and subsequently measured at cost less any
accumulated depreciation and any accumulated impairment
losses. Buildings held as investment property are depreciatedon a straight-line basis over their useful lives. The fair value ofinvestment property is reviewed annually by using cash-flow
models or by determinations from market prices.
Investment properties are derecognised when either they
have been disposed of or when the investment property ispermanently withdrawn from use and no future economic
benefit is expected from its disposal. The difference between
the net disposal proceeds and the carrying amount of theassets is recognised in the Consolidated Income Statement in
the period of derecognition. Transfers are made to or frominvestment properties only when there is a change in use.

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Inventories — Inventories are measured at the lower ofacquisition cost (generally the average cost) or manufacturing
cost and net realisable value. Manufacturing costs comprise
all costs that are directly attributable to the manufacturing
process, such as direct material and labor, and production
related overheads (based on normal operating capacity andnormal consumption of material, labor and other production
costs), including depreciation charges. Net realisable value
is the estimated selling price in the ordinary course of thebusiness less applicable variable selling expenses.
Impairment of non-financial assets — The Group assesses
at each reporting date whether there is an indication that a
non-financial asset may be impaired. In addition, intangible
assets with an indefinite useful life, intangible assets not yet
available for use and goodwill are tested for impairment in the
fourth quarter of each financial year irrespective of whether
there is any indication for impairment. An impairment loss isrecognised in the amount by which the asset’s carrying amountexceeds its recoverable amount.
The recoverable amount of an asset or a Cash Generating
Unit (“CGU”) is the higher of its fair value less costs to sellor its value in use. The recoverable amount is determined for
an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets
or group of assets. In such a case the recoverable amount isdetermined for the CGU the asset belongs to. Where therecoverable amount of a CGU to which goodwill has been
allocated is lower than the CGU’s carrying amount, firstly
the related goodwill is impaired. Any exceeding amount of
impairment is recognised on a pro rata basis of the carrying
amount of each asset in the respective CGU.
The value in use is assessed by the present value of the future
cash flows expected to be derived from an asset or a CGU.
Cash flows are projected based on a detailed forecast approvedby management over a period reflecting the operating cycle ofthe specific business. The discount rate used for determining
an asset’s value in use is the pre-tax rate reflecting current
market assessment of (i) the time value of money and (ii)the risk specific to the asset for which the future cash flow
estimates have not been adjusted.
An asset’s fair value less costs to sell reflects the amount
EADS could obtain at its reporting date from the asset’s
disposal in an arm’s length transaction between knowledgeable,
willing parties, after deducting the costs of disposal. If there
is no binding sales agreement or active market for the asset,
its fair value is assessed by the use of appropriate valuation
models dependent on the nature of the asset, such as by theuse of discounted cash flow models. These calculations arecorroborated by available fair value indicators such as quoted
market prices or sector-specific valuation multiples.

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Impairment losses of assets used in continuing operations arerecognised in the Consolidated Income Statement in those
expense categories consistent with the function of the impaired
asset.
Impairment losses recognised for goodwill are not reversed
in future periods. For any other non-financial assets anassessment is made at each reporting date as to whether there
is any indication that previously recognised impairment losses
may no longer exist or may have decreased. If such indication
exists, the Group estimates the asset’s or cash-generating unit’s
recoverable amount. A previously recognised impairment loss
is reversed only if there has been a change in the assumptions
used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The reversal is limited so thatthe carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would havebeen determined, net of depreciation, had no impairment loss
been recognised for the asset in prior years. Such a reversal isrecognised in the Consolidated Income Statement.

Financial Instruments — A financial instrument is any
contract that gives rise to a financial asset of one entity anda financial liability or equity instrument of another entity.
EADS’ financial assets comprise mainly cash and short-term
deposits, trade and loan receivables, finance lease receivables,
other quoted and unquoted financial instruments andderivatives with a positive fair value. The Group’s financial
liabilities mainly include obligations towards financial
institutions, bonds, loans, refundable advances, tradeliabilities, finance lease liabilities as well as derivatives witha negative fair value. EADS recognises a financial instrumenton its Consolidated Statement of Financial Position when it
becomes party to the contractual provision of the instrument.
All purchases and sales of financial assets are recognised
on settlement date according to market conventions. The
settlement date is the date an asset is delivered to or by
an entity. Financial instruments are initially recognised atfair value plus, in the case the financial instruments are
not measured at fair value through profit or loss, directly
attributable transaction costs. Financial instruments at fairvalue through profit or loss are initially recognised at fairvalue, transaction costs are recognised in the Consolidated
Income Statement. Finance lease receivables are recognised at
an amount equal to the net investment in the lease. Subsequent
measurement of financial instruments depends on theirclassification into the relevant category. The Group assesses at
each reporting date whether there is any objective evidence thata financial asset or a group of financial assets may be impaired.
EADS derecognises a financial asset only when the contractual
rights to the asset’s cash flows expire or the financial asset has
been transferred and the transfer qualifies for derecognition
under IAS 39. EADS derecognises a financial liability only

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when the obligation specified in the contract is discharged,
cancelled or expired.

Impairment of financial assets — EADS assesses at eachreporting date whether there is any objective evidence that afinancial asset or a group of financial assets is impaired.
After application of the at equity method to an equity
investment in an associate, the Group determines whether
it is necessary to recognise an impairment loss of the Group’s
investment in its associates. The Group determines at eachreporting date whether there is any objective evidence that theinvestment in associate is impaired. This objective evidence
for impairment includes information about significant
changes with an adverse effect that have taken place inthe technological, market economic or legal environment
in which the associate operates, and that indicate that thecarrying amount of EADS’ investment may not be recovered.
A significant or prolonged decline in the fair value of aninvestment in an equity instrument below its carrying
amount is also objective evidence of impairment. In case of
impairment EADS calculates the impairment amount as being
the difference between the fair value of the associate and thecarrying amount of the investment in EADS’ associates andrecognises the impairment amount in the Consolidated Income
Statement. Any reversal of the impairment loss is recognised
as an adjustment to the investment in the associate to theextent that the recoverable amount of the investment increases.
As such, the goodwill related to EADS’ associates is notindividually tested for impairment.
For financial assets carried at amortised cost, at cost andfor those classified as available-for-sale, a financial asset or agroup of financial assets is deemed to be impaired if, and only
if, there is objective evidence of impairment as a result of one
or more events that has occurred after the initial recognitionof the asset (an incurred ‘loss event’) and that loss event has
an impact on the estimated future cash flows of the financial
asset or the group of financial assets that can be reliably
estimated. Evidence of impairment may include indications
that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency ininterest or principal payments, the probability that they willenter bankruptcy or other financial reorganisation and whereobservable data indicate that there is a measurable decrease in
the estimated future cash flows, such as changes in arrears or
economic conditions that correlate with defaults.
Equity investments classified as available-for-sale areconsidered for impairment in addition to the indicatorsstated above in case of a significant or prolonged declineof their fair value below their cost. If any such evidence
exists for available-for-sale financial assets, the cumulativeloss – measured as the difference between the acquisition

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cost and the current fair value, less any impairment loss onthat financial asset previously recognised in the Consolidated
Income Statement – is removed from AOCI and recognisedin the Consolidated Income Statement. Impairment losses
recognised in the Consolidated Income Statement on equity
instruments are not reversed through the Consolidated Income
Statement; increases in their fair value are recognised directly
in AOCI.
In case of the impairment of debt instruments classified
as available-for-sale, interest continues to be accrued at
the original effective interest rate on the reduced carrying
amount of the asset and is recorded in financial result. If, in a
subsequent year, the fair value of a debt instrument increases
and the increase can be objectively related to an event occurring
after the impairment loss was recognised in the Consolidated
Income Statement, the impairment loss is reversed through theConsolidated Income Statement.
If there is objective evidence regarding loans and receivables
that EADS is not able to collect all amounts due according tothe original terms of the financial instrument, an impairment
charge has to be recognised. The amount of the impairment
loss is equal to the difference between the financial asset’s
carrying amount and the present value of estimated future
cash flows, discounted at the original effective interest rate,i.e. the rate that exactly discounts the expected stream of future
cash payments through maturity to the current net carrying
amount of the financial asset. The carrying amount of the tradereceivable is reduced through use of an allowance account. The
loss is recognised in the Consolidated Income Statement. If in
a subsequent period, the amount of impairment decreases andthe decrease is objectively related to an event occurring after
the impairment was recognised, the recognised impairment loss
is reversed through the Consolidated Income Statement.

Fair value of financial instruments — The fair valueof quoted investments is based on current market prices.
If the market for a financial asset is not active (and forunlisted securities), the Group establishes fair value by using
generally accepted valuation techniques on the basis of market
information available at the reporting date. Such techniques
may include using recent arm’s length market transactions;reference to the current fair value of another instrument that is
substantially the same; discounted cash flow analysis or othervaluation models. Available-for-sale equity investments that do
not have a quoted market price in an active market and whose
fair value cannot be reliably estimated by alternative valuation
methods, such as discounted cash flow model, are measured atcost, less any accumulated impairment losses.
Investments and other financial assets —EADS’ investments comprise investments in associates
accounted for under the equity method, other investments

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and other long-term financial assets as well as current andnon-current securities and cash equivalents. The Group
classifies its financial assets in the following three categories:(i) at fair value through profit or loss, (ii) loans and receivables
and (iii) available-for-sale financial assets. Their classification isdetermined by management when first recognised and depends
on the purpose for their acquisition.

Notes are designated “at fair value through profit or loss” inaccordance with criterion (i), foreign currency funds of a hedge
funds structure also comprising foreign currency derivatives aredesignated “at fair value through profit or loss” in accordancewith criterion (ii) and investments in accumulating Money
Market Funds are designated at “fair value through profit orloss” in accordance with above criterion (iii).

Within EADS, all investments in entities for which
consolidation criteria are not fulfilled are classified as noncurrent available-for-sale financial assets. They are included in
the line other investments and other long-term financial
assets in the Consolidated Statement of Financial Position.

Loans and receivables — Loans and receivables are nonderivative financial assets with fixed or determinable paymentsthat are not quoted in an active market. They arise when
the Group provides money, goods or services directly to a
debtor with no intention of trading the receivable. Loans
and receivables are classified as trade receivables and otherinvestments and other long-term financial assets. Afterinitial recognition loans and receivables are measured atamortised cost using the effective interest rate method less any
allowance for impairment. Gains and losses are recognised in
the Consolidated Income Statement at disposal of the loans andreceivables, through the amortisation process as well as in caseof any impairment.

The majority of the Group’s securities is debt securities andclassified as available-for-sale financial assets.

Available for sale financial assets — Financial assets
classified as available-for-sale are accounted for at fair value.
Changes in the fair value subsequent to the recognition ofavailable-for-sale financial assets - other than impairment
losses and foreign exchange gains and losses on monetary
items classified as available-for-sale - are recognised directly
within AOCI, a separate component of total equity, net of
applicable deferred income taxes. As soon as such financial
assets are sold or otherwise disposed of, or are determined to
be impaired, the cumulative gain or loss previously recognisedin equity is recorded as part of “other income (expense) frominvestments” in the Consolidated Income Statement for theperiod. Interest earned on the investment is presented asinterest income in the Consolidated Income Statement using
the effective interest method. Dividends earned on investment
are recognised as “Other income (expense) from investments”
in the Consolidated Income Statement when the right to thepayment has been established.
Financial assets at fair value through profit or loss —Financial assets at fair value through profit or loss include
financial assets held for trading and financial assets designatedat initial recognition at fair value through profit or loss.
Within EADS, only derivatives not designated as hedges are
categorised as held for trading. Further, financial assets may bedesignated at initial recognition at fair value through profit orloss if any of the following criteria is met: (i) the financial asset
contains one or more embedded derivatives that otherwise had
to be accounted for separately; or (ii) the designation eliminatedor significantly reduces a measurement or recognition
inconsistency that would otherwise arise from measuring
the assets or recognizing the gains and losses on them on adifferent basis (sometimes referred to as “natural hedge”); or(iii) the financial assets are part of a group of financial assetsthat is managed and its performance is evaluated on a fairvalue basis, in accordance with a documented risk management
or investment strategy. Within EADS, uncapped Structured

Trade receivables — Trade receivables include claims arisingfrom revenue recognition that are not yet settled by the debtor
as well as receivables relating to construction contracts. Trade
receivables are initially recognised at fair value and, provided
they are not expected to be realised within one year, aresubsequently measured at amortised cost using the effective
interest method less any allowance for impairment. Gains andlosses are recognised in the Consolidated Income Statement
when the receivables are derecognised or impaired as well as
through the amortisation process.
Current / non-current other financial assets —Current / non-current other financial assets mainly include
derivatives with positive fair values, receivables from
related companies, loans and are presented separately fromcurrent / non-current other assets.
Cash and cash equivalents — Cash and cash equivalents
consist of cash on hand, cash in bank, checks, fixed deposits
and securities having maturities of three months or less fromthe date of acquisition, that are readily convertible to known
amounts of cash and which are subject to an insignificant riskof changes in value.
Non-current assets / disposal groups classified as held
for sale — Non-current assets / disposal groups classified asassets held for sale and stated at the lower of carrying amountand fair value less costs to sell if their carrying amount isrecovered principally through a sale transaction rather than
through a continuing use. Whilst classified as held for saleor part of a disposal group, EADS does not depreciate oramortise a non-current asset. Liabilities directly associated

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with non–current assets held for sale in a disposal group arepresented separately on the face of the Consolidated Statementof Financial Position. Interest and other expenses attributable
to the liabilities of a disposal group classified as held for sale iscontinued to be recognised.
To be classified as held for sale the non-current assets (ordisposal group) must be available for immediate sale in its
present condition subject only to terms that are usual andcustomary for sales of such assets (or disposal group) and its
sale must be highly probable. For a sale to be highly probable –among other criteria that have to be fulfilled – the appropriate
level of EADS management must be committed to the plan tosell, an active programme to complete the plan must have been
initiated and actions required to complete the plan to sell theassets (or disposal group) should indicate that it is unlikely thatsignificant changes to the plan will be made or that the plan
will be withdrawn.
If a component of EADS has either been disposed of or isclassified as held for sale and (i) represents a separate majorline of business or geographical area of operations, (ii) is partof a single co-ordinated plan to dispose of a separate majorline of business or geographical area of operations or (iii) is
a subsidiary acquired exclusively with a view to resale thecomponent is a discontinued operation.

Derivative Financial Instruments — Within EADS
derivative financial instruments are (a) used for hedging
purposes in micro-hedging strategies to offset the Group’s
exposure to identifiable transactions and are (b) a component ofhybrid financial instruments that include both the derivativeand host contract (“Embedded Derivatives”).
In accordance with IAS 39 “Financial Instruments: Recognition
and Measurement”, derivative financial instruments arerecognised and subsequently measured at fair value. The
method of recognizing resulting gains or losses depends
on whether the derivative financial instrument has been
designated as hedging instrument, and if so, on the nature of
the item being hedged. While derivative financial instrumentswith positive fair values are recorded in “current / non-current
other financial assets”, such derivative financial instrumentswith negative fair values are recorded as “current / non-current
other financial liabilities”.
a) Hedging: The Group seeks to apply hedge accounting
to all its hedging activities. Hedge accounting recognises
symmetrically the offsetting effects on net profit or lossof changes in the fair values of the hedging instrument
and the related hedged item. The conditions for sucha hedging relationship to qualify for hedge accounting
include: The hedge transaction is expected to be highly
effective in achieving offsetting changes in fair value or

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cash flows attributable to the hedged risk, the effectivenessof the hedge can be reliably measured and there isformal designation and documentation of the hedging
relationships and EADS’ risk management objective andstrategy for undertaking the hedge at the inception of
the hedge. The Group further documents prospectively
at the inception of the hedge as well as at each closing
retrospectively and prospectively its assessment of whether
the derivatives used in hedging transactions are highly
effective in offsetting changes in fair values or cash flowsof hedged items with regard to the hedged risk.
Depending on the nature of the item being hedged,
EADS classifies hedging relationships that qualify forhedge accounting as either (i) hedges of the fair valueof recognised assets or liabilities or unrecognised firm
commitments (“Fair Value Hedges”), (ii) hedges of thevariability of cash flows attributable to recognised assets or
liabilities, highly probable forecast transactions (“Cash Flow
Hedges”) or (iii) hedges of a net investment in a foreign
entity.
i) Fair Value Hedge: Fair value hedge accounting is mainly
applied to certain interest rate swaps hedging the exposure
to changes in the fair value of recognised assets andliabilities. For derivative financial instruments designatedas fair value hedges, changes in the fair value of thehedging instrument and changes in the fair value of thehedged asset or liability attributable to the hedged risk
are simultaneously recognised in the Consolidated Income
Statement.
ii) Cash Flow Hedge: The Group applies cash flow hedge
accounting generally to foreign currency derivative
contracts on future sales as well as to certain interest rate
swaps hedging the variability of cash flows attributableto recognised assets and liabilities. Changes in fair valueof the hedging instruments related to the effective part of
the hedge are reported in AOCI, a separate component of
total equity, net of applicable income taxes and recognisedin the Consolidated Income Statement in conjunction withthe result of the underlying hedged transaction, whenrealised. The ineffective portion is immediately recorded
in “Profit for the period”. Amounts accumulated in equity
are recognised in the Consolidated Income Statementin the periods when the hedged transaction affects theConsolidated Income Statement, such as when the forecast
sale occurs or when the finance income or finance expense
is recognised in the Consolidated Income Statement.
If hedged transactions are cancelled, gains and losses on
the hedging instrument that were previously recorded inequity are generally recognised in “Profit for the period”.
Apart from derivative financial instruments, the GroupNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.1 | Basis of Presentation1

also uses financial liabilities denominated in a foreign
currency to hedge foreign currency risk inherent in forecast
transactions. If the hedging instrument expires or is sold,terminated or exercised, or if its designation as hedging
instrument is revoked, amounts previously recognised inequity remain in equity until the forecasted transaction or
firm commitment occurs.
iii) Net investment Hedge: Hedges of net investments inforeign entities are accounted for similarly to cash flow
hedges. Any gain or loss on the hedging instrument
relating to the effective portion of the hedge is recognised
in AOCI; the gain or loss relating to the ineffective portionis recognised immediately in the Consolidated Income
Statement. Gains and losses accumulated in AOCI are
included in the Consolidated Income Statement when theforeign entity is disposed of.
In case certain derivative transactions, while providing
effective economic hedges under the Group’s risk management
policies, do not qualify for hedge accounting under the specificrules of IAS 39 “Financial Instruments: Recognition andMeasurement”, changes in fair value of such derivative
financial instruments are recognised immediately as partof the financial result.
The fair values of various derivative financial instruments usedas hedging instruments are disclosed in Note 35 “Information
about financial instruments”. Periodical movements in
the AOCI, the separate component of total equity in which
the effective portion of cash flow hedges are recognised,
are also disclosed in Note 35 “Information about financial
instruments”.
b) Embedded derivatives: Derivative components embedded
in a non-derivative-host contract are separately recognised
and measured at fair value if they meet the definition of a
derivative and their economic risks and characteristics are
not clearly and closely related to those of the host contract.
Changes in the fair value of the derivative component ofthese instruments are recorded in “Other financial result”.
See Note 35 “Information about financial instruments”
for a description of the Group’s financial risk management
strategies, the fair values of the Group’s derivative financial
instruments as well as the methods used to determine such fairvalues.

Income Taxes — Tax expense (tax income) is the aggregate
amount included in the determination of net profit or loss forthe period in respect of (i) Current tax and (ii) Deferred tax.
i) Current tax is the amount of income taxes payable orrecoverable in a period. Current income taxes are calculated

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applying respective tax rates on the periodic taxable profit
or tax loss that is determined in accordance with rules
established by the competent taxation authorities. Current
tax liabilities are recognised for current tax to the extent
unpaid for current and prior periods. A current tax asset isrecognised in case the tax amount paid exceeds the amountdue to current and prior periods. The benefit of a tax
loss that can be carried back to recover current taxes of aprevious period is recognised as an asset provided that therelated benefit is probable and can be measured reliably.
ii) Deferred tax assets and liabilities reflect lower or higher
future tax consequences that result from temporary
valuation differences on certain assets and liabilities
between their financial statements’ carrying amounts andtheir respective tax bases, as well as from net operating
losses and tax credit carry forwards. Deferred tax assets andliabilities are measured using enacted tax rates to be applied
to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change
in tax rates is recognised in the period the new rates areenacted or substantially enacted. As deferred tax assets
anticipate potential future tax benefits, they are recorded in
the Consolidated Financial Statements of EADS only to theextent that it is probable that future taxable profits will beavailable against which deferred tax assets will be utilised.
The carrying amount of deferred tax assets is reviewed ateach financial year end.
Deferred income tax assets and deferred income tax
liabilities are offset, if a legally enforceable right exists
to set off current tax assets against current income tax
liabilities and the deferred income taxes relate to the same
taxable entity and the same taxation authority.

Share Capital — Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of newshares or options are shown directly in equity – as a deduction– net of any tax effects. Own equity instruments which
are reacquired are deducted from total equity and remain
recognised as treasury shares until they are either cancelled orreissued. Any gains or losses net of taxes which are associatedwith the purchase, sale, issue or cancellation of EADS own
shares are recognised within equity.
Provisions — Provisions are recognised when the Group has
a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation anda reliable estimate of the obligation’s amount can be made.
When the effect of the time value of money is material,
provisions are measured at the present value of the expenditure
expected to be required to settle the Group’s present obligation.

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As discount factor, a pre-tax rate is used that reflects current
market assessments of the time value of money and the risks
specific to the obligation. The provision’s increase in eachperiod reflecting the passage of time is recognised as financecost.
Provisions are reviewed at each closing and adjusted as
appropriate to reflect the respective current best estimate.
The change in the measurement of a provision for an
asset retirement obligation (see above “Property, plant andequipment”) is added or deducted from the cost of therespective asset that has to be dismantled and removed at
the end of its useful life and the site on which it is locatedrestored.
Provisions for guarantees corresponding to aircraft sales arerecorded to reflect the underlying risk to the Group in respectof guarantees given when it is probable that an outflow ofresources embodying economic benefits will be required tosettle the obligation and reliable estimates can be made of theamount of the obligation. The amount of these provisions
is calculated to cover the difference between the Group’s
exposure and the estimated value of the collateral.
Outstanding costs are provided for at the best estimate of
future cash outflows. Provision for other risks and charges
relate to identifiable risks representing amounts expected to berealised.
Provisions for contract losses are recorded when it becomesprobable that estimated contract costs based on a total cost
approach will exceed total contract revenues. Contractual
penalties are included in the contractual margin calculation.
Provisions for loss making contracts are recorded as writedowns of work-in-process for that portion of the work
which has already been completed, and as provisions for theremainder. Losses are determined on the basis of estimatedresults on completion of contracts and include foreign currency
effects. Provisions for loss making contracts are updated
regularly.
Provisions for (i) constructive obligations and liquidated
damages caused by delays in delivery and for (ii) terminating
existing customer orders are based on best estimates of
future cash outflows for anticipated payments to customers.
Provisions for litigation and claims are set in case legal
actions, governmental investigations, proceedings and otherclaims are pending or may be instituted or asserted in the
future against the Group which are a result of past events,
where it is probable that an outflow of resources embodying
economic benefits will be required for the settlement and a
reliable estimate of the obligation’s amount can be made.

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Restructuring provisions are only recognised when adetailed formal plan for the restructuring – including theconcerned business or part of the business, the principal
locations affected, details regarding the employees affected,
the restructuring’s timing and expenditures that will have to
be undertaken – has been developed and the restructuring haseither commenced or the plan’s main features have already been
publicly announced to those affected by it.

Employee Benefits — The valuation of pension andpost–retirement benefits classified as defined benefit plans isbased upon the projected unit credit method in accordance with
IAS 19 “Employee Benefits”.
EADS recognises periodical actuarial gains and losses infull for all its defined benefit plans immediately in retained
earnings and presents them in its Consolidated Statements ofComprehensive Income.
Past Service Costs are recognised as an expense in EADS
Consolidated Income Statements on a straight-line basis over
the average period until the benefits become vested. Past
service costs relating to benefits already vested are expensed
immediately.
When sufficient information is available to apply defined
benefit accounting in conjunction with a defined benefit
multi-employer plan, the Group proportionally accounts for theplan according to its share in the related defined benefit plan.
Contributions to defined contribution plans are recognised as
expenses in the Consolidated Income Statement when they are
due.
Several German Group companies provide life time working
account models, being employee benefit plans with a promised
return on contributions or notional contributions that qualify
as other long-term employee benefits under IAS 19. The
employees’ periodical contributions into their life time working
accounts result in corresponding personnel expense in that
period in the Consolidated Income Statement while plan assets
and corresponding provisions are offset in the Consolidated
Statement of Financial Position.
Termination benefits are payable whenever an employee’s
employment is terminated before the normal retirement dateor whenever an employee accepts voluntary redundancy inexchange for these benefits. The Group recognises termination
benefits when it is demonstrably committed to either terminate
the employment of current employees according to a detailed
formal plan without possibility of withdrawal or to provide
termination benefits as a result of an offer made to encourage
voluntary redundancy.

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Stock options are accounted for in accordance with IFRS 2“Share-based Payment” and qualify as equity settled
share-based payments. In 2007, EADS also introduced aperformance and restricted unit plan which qualifies as cash
settled share-based payment plan under IFRS 2. For bothtypes, associated services received are measured at fair value
and are calculated by multiplying the number of options(or units) expected to vest with the fair value of one option(or unit) as of grant date / reporting date. The fair value of theoption (or unit) is determined by applying the Black Scholes
Option Pricing Model.
The fair value of the services is recognised as personnel
expense. In case of equity settled share based payment plans
the personnel expense results in a corresponding increase inconsolidated retained earnings over the vesting period of therespective plan. For cash settled share based payment plansa corresponding liability is recognised. Until the liability
is settled its fair value is remeasured at each reporting datethrough the Consolidated Income Statement.
Part of the grant of both types of share-based payment plans isconditional upon the achievement of non-market performance
objectives and will only vest provided that the performance
conditions are met. If it becomes obvious during the vesting
period of an equity settled share-based payment plan that someof the performance objectives will not be met and, hence, thenumber of equity instruments expected to vest differs fromthat originally expected, the expense is adjusted accordingly.
EADS offers to its employees to buy under the employee
stock ownership plan (ESOP) EADS shares at a certain
discount. The difference between the exercise price and thecorresponding share price is recognised as personnel expense in
EADS’ Consolidated Income Statements at grant date.

Emission Rights and Provisions for in-excess-emission —Under the EU Emission Allowance Trading Scheme (EATS)
national authorities have issued on 1 January 2005 permits(emission rights), free of charge, that entitle participatingcompanies to emit a certain amount of greenhouse gas over thecompliance period.
The participating companies are permitted to trade thoseemission rights. To avoid a penalty a participant is required todeliver emission rights at the end of the compliance period
equal to its emission incurred.
EADS recognises a provision for emission in case it has caused
emissions in excess of emission rights granted. The provision
is measured at the fair value (market price) of emission rights
necessary to compensate for that shortfall at each reporting date.

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Emission rights held by EADS are generally accounted for as
intangible assets, whereby:i) Emission rights allocated for free by national authorities areaccounted for as a non-monetary government grant at its
nominal value of nil.
ii) Emission rights purchased from other participants areaccounted for at cost or the lower recoverable amount;
if they are dedicated to offset a provision for in excess
emission, they are deemed to be a reimbursement right andare accounted for at fair value.

Trade Liabilities — Trade liabilities are initially recorded atfair value. Trade liabilities having a maturity of more thantwelve months are subsequently measured at amortised costusing the effective interest rate method.
Financing liabilities — Financing liabilities comprise
obligations towards financial institutions, issued corporate
bonds, loans, loans to affiliated non-consolidated companies aswell as finance lease liabilities. Financing liabilities qualify as
financial liabilities and are recorded initially at the fair valueof the proceeds received, net of transaction costs incurred.
Subsequently, financing liabilities other than finance leaseliabilities are measured at amortised cost using the effective
interest rate method with any difference between proceeds (netof transaction costs) and redemption amount being recognised
in “Total finance income (cost)” over the period of thefinancing liability.
Current / non-current other financial liabilities —Current / non-current other financial liabilities mainly include
refundable advances and derivatives with a negative market
value. Refundable advances from European Governments areprovided to the Group to finance research and development
activities for certain projects on a risk-sharing basis, i.e. they
have to be repaid to the European Governments subject
to the success of the project. Current / non-current otherfinancial liabilities are presented separately on the face of theConsolidated Statement of Financial Position.
Further, EADS designates certain financial liabilities
representing payment obligations towards airlines denominatedin US Dollar as hedging instruments to hedge the foreign
currency risk inherent in future aircraft sales under a cash
flow hedge.

Current / non-current other liabilities —Current / non-current other liabilities mainly consist ofadvance payments received from customers.

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Liability for puttable instruments — Under certain
circumstances, EADS records a financial liability rather than anequity instrument for the exercise price of a written put option
on an entity’s equity.
Litigation and Claims — Various legal actions, governmental
investigations, proceedings and other claims are pending or
may be instituted or asserted in the future against the Group.
Litigation is subject to many uncertainties, and the outcomeof individual matters is not predictable with assurance. EADS
believes that it has made adequate provisions to cover current
or contemplated litigation risks. It is reasonably possible thatthe final resolution of some of these matters may require theGroup to make expenditures, in excess of established reserves,
over an extended period of time and in a range of amounts
that cannot be reasonably estimated. The term “reasonably
possible” is used herein to mean that the chance of a futuretransaction or event occurring is more than remote but lessthan likely. Although the final resolution of any such matters
could have an effect on the Group’s profit for the period forthe particular reporting period in which an adjustment of theestimated reserve would be recorded, the Group believes thatany such potential adjustment should not materially affect its
Consolidated Financial Statements. For further details pleaserefer to Note 33 “Litigation and claims”.

USE OF ACCOUNTING ESTIMATES
EADS’ Consolidated Financial Statements are prepared inaccordance with IFRS. EADS’ significant accounting policies,
as described in Note 2 are essential to understanding theGroup’s results of operations, financial positions and cash
flows. Certain of these accounting policies require criticalaccounting estimates that involve complex and subjective
judgments and the use of assumptions, some of which may
be for matters that are inherently uncertain and susceptible
to change. Such critical accounting estimates could change
from period to period and might have a material impact on
the Group’s results of operations, financial positions andcash flows. The assumptions and estimates used by EADS’management are based on parameters which are derived fromthe knowledge at the time of preparing the Consolidated
Financial Statements. In particular, the circumstances prevailingat this time and assumptions as to the expected future
development of the global and industry specific environment
were used to estimate the Company’s future businessperformance. Where these conditions develop differently thanassumed, and beyond the control of the company, the actual
figures may differ from those anticipated. In such cases, theassumptions, and if necessary, the carrying amounts of theassets and liabilities concerned, are adjusted accordingly.

30 EADS FIN ANCIAL S TATEMENTS 2009

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These estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognisedin the period in which the estimate is revised if the revisionaffects only that period, or in the period of the revision andfuture periods if the revision affects both current and future
periods.
Subjects that involve critical assumptions and estimates andthat have a significant influence on the amounts recognised in
EADS’ Consolidated Financial Statements are further describedor are disclosed in the respective Notes mentioned below.

Business combinations — In a business combination, allidentifiable assets, liabilities and contingent liabilities acquired
are recorded at the date of acquisition at their respective fairvalue. One of the most significant estimates relates to thedetermination of the fair value of these asset and liabilities.
Land, buildings and equipment are usually independently
appraised while marketable securities are valued at market
prices. If any intangible assets are identified, depending on thetype of intangible asset and the complexity of determining its
fair value, EADS either consults with an independent externalvaluation expert or develops the fair value internally, using
appropriate valuation techniques which are generally based ona forecast of the total expected future net cash flows. Theseevaluations are linked closely to the assumptions made bymanagement regarding the future performance of the assets
concerned and any changes in the discount rate applied.
Goodwill impairment test and recoverability of assets —EADS tests at least annually whether goodwill has suffered
any impairment, in accordance with its accounting policies.
The determination of the recoverable amount of a CGU towhich goodwill is allocated involves the use of estimatesby management. EADS generally uses discounted cash flow
based methods to determine these values. These discounted
cash flow calculations basically use five-year projections thatare based on the operative plans approved by management.
Cash flow projections take into account past experienceand represent management’s best estimate about future
developments. Cash flows after the planning period are
extrapolated using estimated growth rates. Key assumptions on
which management has based its determination of fair valueless costs to sell and value in use include estimated growth
rates, weighted average cost of capital, tax rates and foreignexchange rates. These estimates, including the methodology
used, can have a material impact on the respective values andultimately the amount of any goodwill impairment. Likewise,
whenever property, plant and equipment and other intangible
assets are tested for impairment, the determination of theassets’ recoverable amount involves the use of estimates bymanagement and can have a material impact on the respective
values and ultimately the amount of any impairment.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.1 | Basis of Presentation1

Revenue recognition on construction contracts —EADS conducts a significant portion of its business underconstruction contracts with customers, for example the A400M
programme. The Group generally accounts for construction
projects using the percentage-of-completion method,
recognizing revenue as performance on a contract progresses.
This method places considerable importance on accurate
estimates at completion as well as on the extent of progress
towards completion. For the determination of the progress ofthe construction contract significant estimates include total
contract costs, remaining costs to completion, total contract
revenues, contract risks and other judgments. Managementof the operating divisions continually review all estimates
involved in such construction contracts and adjusts them asnecessary.
Trade and other receivables — The allowance for doubtful
accounts involves significant management judgment andreview of individual receivables based on individual customer
creditworthiness, current economic trends and analysis ofhistorical bad debts.
EADS also selectively assists customers through arranging
financing from various third-party sources, including export
credit agencies, in order to be awarded supply contracts. In
addition, EADS provides direct vendor financing and grants
guarantees to banks in support of loans to EADS’ customers
when necessary and deemed appropriate.

Income taxes — EADS operates and earns income innumerous countries and is subject to changing tax laws in
multiple jurisdictions within these countries. Significant
judgments are necessary in determining the worldwide
income tax liabilities. Although management believes thatit has made reasonable estimates about the final outcome oftax uncertainties, no assurance can be given that the final
tax outcome of these matters will be consistent with what
is reflected in the historical income tax provisions. Such
differences could have an effect on the income tax liabilities
and deferred tax liabilities in the period in which suchdeterminations are made. At each reporting date, EADS
assesses whether the realisation of future tax benefits issufficiently probable to recognise deferred tax assets. This
assessment requires the exercise of judgment on the part ofmanagement with respect to, among other things, benefits
that could be realised from available tax strategies and futuretaxable income, as well as other positive and negative factors.

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The recorded amount of total deferred tax assets could be
reduced if estimates of projected future taxable income andbenefits from available tax strategies are lowered, or if changes
in current tax regulations are enacted that impose restrictions
on the timing or extent of the Group’s ability to utilise future
tax benefits.

Employee benefits — The Group accounts for pension andother postretirement benefits in accordance with actuarial
valuations. These valuations rely on statistical and other factors
in order to anticipate future events. These factors include key
actuarial assumptions including the discount rate, expected
return on plan assets, expected salary increases and mortality
rates. These actuarial assumptions may differ materially from
actual developments due to changing market and economic
conditions and therefore result in a significant change inpostretirement employee benefit obligations and the related
future expense.
Provisions — The determination of provisions, for example
for onerous contracts, warranty costs and legal proceedings isbased on best available estimates. EADS records a provision
for onerous sales contracts when current estimates of total cost
approach exceed expected contract revenue. Such estimates are
subject to change based on new information as projects progress
toward completion. Onerous sales contracts are identified
by monitoring the progress of the project and updating theestimate of contract costs which also requires significant
judgment relating to achieving certain performance standards aswell as estimates involving warranty costs.
Legal contingencies — EADS companies are parties tolitigations related to a number of matters as described in
Note 33 “Litigation and Claims”. The outcome of thesematters may have a material effect on the financial position,
results of operations or cash flows. Management regularly
analyses current information about these matters and provides
provisions for probable contingent losses including the estimateof legal expense to resolve the matters. Internal and externallawyers are used for these assessments. In making the decision
regarding the need for provisions, management considers thedegree of probability of an unfavourable outcome and theability to make a sufficiently reliable estimate of the amountof loss. The filing of a suit or formal assertion of a claim
against EADS companies or the disclosure of any such suit orassertions, does not automatically indicate that a provision may
be appropriate.

EADS FIN ANCIAL S TATEMENTS 200931

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Accounting for the A400M programme

In September 2008, the Airbus A400M airlifter programme
was affected by an undefined delay of the first flight of the
A400M, mainly due to the unavailability of the propulsion
system and beyond that – but not first flight critical – dueto the fact that other major suppliers of mission criticalsystems and of system integration were severely struggling
with the challenging technical requirements of this aircraft.
Consequently, from September 2008 onwards EADS could
neither finally agree with OCCAR an updated contract scheme
for the A400M programme nor reliably assess the related
financial implications of this delay and applied the early-stage
method of accounting until the end of December 2009 (seethe corresponding notes disclosures in Note 3 “Accounting
for the A400M programme” in EADS’ Consolidated Financial
Statements 2008 and the unaudited Quarterly Condensed
Consolidated Financial Information 2009 for further detailsof the A400M programme and its related accounting issues).
Under the early stage method of accounting applied until theend of December 2009, all A400M related work-in-progress,
which would have been expensed upon the completion oftechnical milestones according to the common percentage atcompletion method of accounting only, have been expensed
as incurred, with related revenues recognised up to therecoverable part of these costs as per the initial A400M LaunchContract.
During its ongoing discussions in 2009 with OCCAR and theLaunch Nations, EADS successfully reinforced the Nations’confidence in the A400M programme and prepared a common
basis for all parties involved to realign and rebase the A400M
programme on future realistic general and specific conditions
acceptable to all parties. These discussions addressed various
aspects of the future progress of the programme such as the date
for the first flight, certification procedures and the expected firstentry into service as well as technical details of the aircraft andcommercial issues of an updated contract scheme.
Even though these ongoing discussions did not lead to an
updated A400M contract scheme until the date of issuance of
these IFRS Consolidated Financial Statements, the increasinglevel of details agreed between EADS, OCCAR and theLaunch Nations in their constructive negotiations during
the 4th quarter 2009 and the first weeks of 2010 provides areasonable basis for reassessing contract revenues from an
EADS perspective. An important step on the commercial
side was achieved with the signing of the joint principle
agreement “Understanding on the Continuation of the A400M
Programme” reached between the seven Launch Nations
and EADS/Airbus/AMSL on 5 March 2010. This step was

32 EADS FIN ANCIAL S TATEMENTS 2009

accompanied by a further technical progress of the programme- mainly reflected in the successful first flight of the A400M
on 11 December 2009 - and a considerable reduction ofsources of uncertainty regarding the total expected costs. All
three items, the ongoing progress on the commercial side
including the level of details agreed between EADS and theLaunch Nations since the fourth quarter 2009, the successful
first flight of the A400M (and its implications for linked
programme milestones such as the delivery of the first aircraft)
together with a significant higher visibility on total expected
costs enabled EADS to leave the early-stage accounting of
the A400M programme at the end of December 2009 and toreassess the A400M loss provision within the A400M related
year end closing procedures.
This reassessment also considered as an adjusting eventfor the EADS’ 2009 Consolidated Financial Statements
the details agreed upon with the Launch Nations during
February and March 2010. In particular, the assessmentof the need and amount of additional provisions for thecontinuation and completion of the A400M programme isbased on the “Understanding on the Continuation of the
A400M Programme” reached between the seven Launch
Nations (“Nations”) and EADS/Airbus/AMSL jointly signedby them (together the “Parties”) on 5 March 2010 (“A400M
Understanding”). This A400M Understanding has been reached“without prejudice and subject to contract”. It is based on an
exchange of letters from the State Secretary of the German
Ministry of Defence, Rüdiger Wolf, on behalf of the seven
Launch Nations and from the EADS CEO, Louis Gallois,
during February 2010. The A400M Understanding - referringto the latest draft no. 14 of the Heads of Terms exchanged
between the Parties until 5 March 2010 (“Heads of Terms”)- and these letters are the result of negotiations over several
months and constitute the basis on which management expects
that a final agreement between the Parties on an amendment of
the contract between AMSL and OCCAR (“Contract”) will bereached as soon as practically possible.
The A400M Understanding, the Heads of Terms and theexchanged letters summarise the status of the negotiations andpropose a number of changes to the initial contract which will
only become binding upon Contract amendment and further
requiring the implementation of an Export Levy Scheme orsimilar schemes. Assuming that the Nations will not derogate
from what is agreed in the A400M Understanding and wasoffered in Mr Wolf’s letters previously, management has madefurther assumptions.

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Whilst management has made these assumptions in good faithand believing them to be probable, there is no certainty that a
final Contract amendment can be achieved. In particular, it iscritical to the management’s assessment that the agreed Export
Levy Scheme or a similar scheme providing for € 1.5 billion
will finally be concluded in a way which allows EADS/Airbus
a revenue recognition as agreed in the A400M Understandingor can be included otherwise in the loss making contract(“LMC”) computation. This will require a specific agreementwith the Nations on an Export Levy Scheme or on a similar
scheme mechanism and will be subject to national approval
processes and the availability of funds (for this specificscheme).
The following elements of the ongoing negotiations between
EADS, OCCAR and the Launch Nations - as currently
expressed in the A400M Understanding, the Heads of Terms
and the exchanged letters - were inter alia considered within
the reassessment of A400M loss provision as of 31 December
2009:> a price increase of € 2 billion at economic conditions as ofJanuary 2009,

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A400M delivery scheme being realigned to the newdelivery plan proposed to the Launch Nations,> the envisaged Export Levy Scheme providing for€ 1.5 billion and> accelerated pre-delivery payments in the period of 2010 to2014 according to the new delivery plan.
The main characteristics of the Export Levy Scheme ascurrently negotiated is that a fixed pre-defined levy would be
paid by EADS for each new export aircraft delivered without
further guarantees by EADS.
The reassessment of the A400M loss provision consideredalso the updated expected total costs as of December 2009in accordance with the current status of the negotiations. In
addition, the impacts arisen from the cancellation of the South
African A400M order in November 2009 were taken into
account as well. Finally, EADS’ management best estimate
comprised an assessment of the fiscal consequences of the
update of the A400M loss provision.

The following tables summarise the major accounting balances specifically related to the A400M programme as at 31 December
2009 and as at 31 December 2008:(in €m)31 December 200931 December 2008

Accumulated revenues

5,042

4,543

Accumulated cost of sales(9,056)(6,739)

Accumulated EBIT*-impact(4,014)(2,196)31 December 200931 December 2008(in €m)Accumulated revenues

5,042

4,543

Accumulated advance payments received(7,049)(5,712)

Net advance payments received (shown in liabilities)(2,007)(1,169)Total EBIT* impact of the A400M programme
1 January - 31 December
2009

1 January - 31 December
2008

Revenues

499

1,526

Expenses(1,218)(1,938)Subtotal

(719)

(412)

719

404

(in €m)Consumption of provision
Additional costs (including increase in provision)(1,818)(696)

Total EBIT* impact(1,818)(704)* EBIT: earnings before interest and taxes, pre-goodwill impairment and exceptionals.

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31 December 200931 December 2008

Property, plant and equipment (mainly buildings and jigs and tools)

755

722

Current assets (mainly advance payments made)

1,115

953

Net advance payments received (shown in liabilities)(2,007)(1,169)

A400M loss provision(2,464)(1,349)The A400M loss provision as at 31 December 2009 (amounting
to € 2,464 million (€ 1,349 million as at 31 December 2008))
has been determined based on the best estimate of EADS’management, reflecting in particular the status of the elementsof the ongoing negotiations between EADS and the Launch
Nations as of 31 December 2009, and adjusted to actual values
as explained above as well as the expected total costs of the
A400M programme updated in December 2009. Due to thefact that the envisaged contract amendments agreed uponin the A400M Understanding and the Heads of Terms havenot been concluded yet, the financial consequences of theupcoming contractual amendments of the A400M contractscheme on EADS’ Consolidated Financial Statements havebeen assessed on a best estimate basis and may be subject
to changes depending on final contracts to be implemented.
There is no certainty that such contractual amendments will be

4.

> 2009: 189 (2008: 185) companies which are fully
consolidated;> 2009: 39 (2008: 36) companies which are proportionately
consolidated;A)

The assessment of the statutory and fiscal consequences of theflow down of the above mentioned ongoing negotiations to the
local and national entities of EADS is in process.
EADS will continue to apply the common percentage atcompletion method for the A400M programme in 2010.

Scope of consolidation

Perimeter of consolidation (31 December 2009) – The
Consolidated Financial Statements include, in addition to
EADS N.V.:

5.

accomplished including any necessary parliamentary approval
processes and availability of funds of the Launch Nations.
Consequently and in particular with regard to the export levy
scheme, there might arise a need that EADS’ management has
to reassess its assumptions regarding the consideration of theelements described above in the computation of the A400M
loss provision as soon as the negotiations are finished. In caseof such a reassessment EADS future financial performance
could be significantly impacted.

> 2009: 19 (2008: 14) investments in associates accounted forusing the equity method.
The number of investments in associates only comprises therespective parent company. The prior year’s figure was adjusted
accordingly.
Significant subsidiaries, associates and joint ventures arelisted in the appendix entitled “Information on principal
investments”.

Acquisitions and disposals
ACQUISITIONS

On 1 October 2009, ATLAS Elektronik GmbH, a joint ventureof EADS and ThyssenKrupp acquired via its subsidiary
ATLAS Elektronik UK the underwater systems business of
QinetiQ Ltd. based at Winfrith, Dorset (UK), following theapproval by the UK Department of Business, Innovationand Skills. The acquired business operates in the areas ofhydro-acoustics, sonar, combat management systems, acoustic

34 EADS FIN ANCIAL S TATEMENTS 2009

counter measures, submarine signatures, maritime security
and control of unmanned maritime vehicles. The acquired
business “Synge” will primarily serve as a contributor inadvancing ATLAS Elektronik’s market position for sonarand hydro-acoustic solutions. The goodwill represents thevalue of expected synergies arising from the acquisition.
Considering EADS’ share of 49% in ATLAS Elektronik GmbH,NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.1 | Basis of Presentation1

the acquired business contributed revenues of € 2 million anda net loss of € -0.3 million to the Group for the period from
1 October 2009 to 31 December 2009. If the acquisition had

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occurred on 1 January 2009, Group revenues would havebeen € 8 million higher and the loss for the period would havebeen increased by € -1 million.

Considering EADS’ share of 49% in ATLAS Elektronik GmbH, the details of net assets acquired and goodwill (not yet finallydetermined) are as follows:(in €m)Fair value recognised on acquisition

Carrying value

Inventories

1

1

Trade receivables and other assets

4

4Provisions

(3)

(3)

Trade liabilities

(1)

(1)

Net assets

1

1

Goodwill arising on acquisition (see Note 14 “Intangible Assets”)

13

Total consideration

14

During 2009, EADS increased its share in Spot Image basedin Toulouse (France), a world leader in the provision of satellite
imagery and geo-information value-added services, from 81%
to 90% by acquiring further shares from non-controllingshareholders. These transactions, resulting in a cash outflow
of € 7 million were accounted for by using the modified parent
company model and increased the goodwill by € 1 million.
During 2009, EADS finalised the purchase price allocations of
the following acquisitions of the prior year:

response solutions, which is fully consolidated from thatdate in the Defence & Security Division. The difference
between the purchase price and the acquired net assets led
to the recognition of a final goodwill of US$ 278 million.
The goodwill represents the value of expected synergies
arising from the acquisition. PlantCML primarily serves as astrong contributor in advancing EADS’ professional mobile
radio (PMR) solutions into the rapidly expanding U.S. market,
while using EADS’ strong international operations allows
PlantCML to accelerate its development in Europe and the restof the world.

On 22 April 2008, EADS acquired PlantCML basedin California (USA), a leading provider of emergency
The final fair values of the identifiable assets and liabilities of PlantCML as at the date of acquisition and the corresponding
carrying amounts immediately before the acquisition were:(in €m)Final fair value recognised on acquisition

Carrying value

Intangible assets

71

46

Property, plant and equipment

54Inventories

6

6

Trade receivables and other assets

28

29

Cash and cash equivalents

17

15

127

100

Provisions

(2)

(2)

Trade liabilities

(6)

(6)

Other liabilities

(50)

(50)

(58)

(58)

69

42

Net assets
Final goodwill arising on acquisition (see Note 14 “Intangible Assets”)

179

Total consideration

248

EADS FIN ANCIAL S TATEMENTS 2009

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.1 | Basis of Presentation

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On 28 July 2008, EADS acquired an additional 41% of Spot
Image based in Toulouse (France), a world leader in theprovision of satellite imagery and geo-information value-added
services. EADS hereby increased its stake in Spot Image to 81%
but had been consolidating it fully in the Astrium Division
since 1 January 2008 based on effective control since that date.
This additional purchase led to the recognition of an additional
goodwill of € 4 million.

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On 7 April 2008, EADS acquired Surrey Satellite Technology
Limited (SSTL) based in the U.K., which is specialised in thedesign and manufacture of small and micro satellites. The
acquisition was approved by the European Commission in
December 2008 leading to consolidation of the SSTL balance
sheet as at 31 December 2008 in the Astrium Division.
This purchase led to the recognition of a final goodwillof GBP 38 million.

The following table summarises the major accounting data regarding these two acquisitions in the Astrium Division:(in €m)Fair value recognised on acquisition

Carrying value

17

9

Intangible assets
Property, plant and equipment

16

16

Inventories

10

10

Trade receivables and other assets

37

37

Cash and cash equivalents

57

57

137

129

Provisions

(5)

(2)

Trade liabilities

(35)

(35)

Financing liabilities

(7)

(7)

Other liabilities

(35)

(32)

(82)

(76)

Net assets

55

53

Final goodwill arising on acquisition (see Note 14 “Intangible Assets”)

46

Total consideration

101

Apart from those mentioned, other acquisitions by the Group were not significant.
B)

DISPOSALS

The assets and liabilities of the Filton site, classified as a disposal group held for sale in EADS’ Consolidated Financial Statements
as of 31 December 2008, were sold with transfer of titles on 5 January 2009 to GKN. The cash flows of the disposed assets andliabilities of Filton as well as the capital gain on sale were as follows:(in €m)2009

Consideration received in cash and cash equivalents

103

Total selling price including contingent consideration

126

Net assets disposed of(93)

Capital gain

33

Furthermore, on 3 November 2008, EADS and DAHER announced the conclusion of the agreement for DAHER to acquire a
70% majority share in Socata and Socata Aircraft (USA) which was sold on 7 January 2009. The assets and liabilities were thus
presented as held for sale as of 31 December 2008.

36 EADS FIN ANCIAL S TATEMENTS 2009

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Cumulative gain/loss on disposal of subsidiary:(in €m)2009

Consideration received in cash and cash equivalents

15

Net assets disposed of(15)

Cumulative gain/loss from loss of control of the subsidiary0

Apart from those mentioned, other disposals by the Group were not significant.
C)

NON-CURRENT ASSETS / DISPOSAL GROUPS
CLASSIFIED AS HELD FOR SALE

In 2008, this position reflected the progress of the negotiations
between Airbus and GKN with respect to the plan to sell the
Airbus site in Filton (U.K.), the respective assets and liabilities
had been classified as disposal group held for sale in EADS’

Consolidated Financial Statements of 2008. For further details
please refer to Note 23 “Non-current assets / disposal groups
classified as held for sale”.

2.2 Notes to the Consolidated Income Statements(IFRS)
6.

Segment Reporting

Through the end of 2009, the Group operated in fivereportable segments which reflect the internal organisationaland management structure according to the nature of the
products and services provided.
> Airbus Commercial — Development, manufacturing,marketing and sale of commercial jet aircraft of more than
100 seats; aircraft conversion.
> Airbus Military — Development, manufacturing,marketing and sale of military transport aircraft and special
mission aircraft.
As per decision of the Board of directors the former
Military Transport Aircraft Division (MTAD) has
been integrated into the Airbus organisation since
1 January 2009. Airbus Military integrates the former
MTAD business and all Airbus A400M operations.
The above mentioned reportable segments Airbus
Commercial and Airbus Military form the Airbus Division.

> Eurocopter — Development, manufacturing, marketingand sale of civil and military helicopters; provision ofmaintenance services.
> Defence & Security — Development, manufacturing,marketing and sale of missiles systems, military combat
aircraft and training aircraft; provision of defence electronics
and defence-related telecommunications solutions andlogistics; training, testing, engineering and other related
services.
> Astrium — Development, manufacturing, marketing andsale of satellites, orbital infrastructures and launchers;
provision of space services.
In the context of the full integration of the former MilitaryTransport Aircraft Division (MTAD) into Airbus being Airbus
Military and the consolidation of EADS EFW (previously
included in Other Businesses) within Airbus Commercial from2009 onwards, the 2008 figures have been restated accordingly.
Additionally, completing the reorganisation of aerostructures
activities within EADS, the site in Augsburg (previously
EADS FIN ANCIAL S TATEMENTS 2009

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The following tables present information with respect to
the Group’s business segments. “Other Businesses” mainlycomprises the development, manufacturing, marketing and saleof regional turboprop aircraft, light commercial aircraft andaircraft components.

included in Defence & Security) was transferred to Airbus
Commercial in 2009. The respective previous year’s figures are
not restated, but impacts are explained where considered to bematerial.
In the second quarter of 2009, the carrying amounts ofoperative real estate, owned by Headquarters, were transferredto the respective segments as at 1 January 2009. Since theoperative segments as tenants are treated as if they were
the owners, rental income and depreciations are allocatedaccordingly.
A)

2

Consolidation effects, the holding function of EADSHeadquarters and other activities not allocable to the reportablesegments are disclosed in the column “HQ/Conso.”.

BUSINESS SEGMENT INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2009(in €m)Total revenues
Internal revenues
Revenues
Segment result
Thereof impairment charge
for intangible assets and property,
plant and equipment
Thereof additions to otherprovisions (see Note 26c)
Share of profit from associates
accounted for under the equity
methodProfit (loss) before finance costs
and income taxes
Exceptional depreciation/disposal
EBIT pre-goodwill impairment
and exceptionals(see definition in Note 6c)

AirbusCommercial

AirbusMilitary

Eurocopter

Defence &Security

Astrium

Other
Businesses

Total
Segments

HQ/
Conso.

Consolidated

26,370

2,235

4,570

5,363

4,799

1,096

44,43328

44,461

(585)

(227)

(339)

(335)

(13)

(140)

(1,639)0(1,639)25,785

2,008

4,231

5,028

4,786

956

42,79428

42,822382(1,757)

262

424

257

21

(411)

(84)

(495)

(45)

0

0

(8)

0

0

(53)

(10)

(63)

(122)

(2,016)

(505)

(663)

(245)

(43)

(3,594)(117)(3,711)

(19)

1

0

13

0

0

(5)

120

115

363

(1,756)

262

437

257

21

(416)

36

(380)

23

2

1

12

4

0

42

16

58

386

(1,754)

263

449

261

21

(374)

52

(322)

Total finance costs(592)

Income tax benefit

220

Loss for the period
Attributable to:Equity owners of the parent (Net loss)

(752)
(763)

Non-controlling interests
OTHER INFORMATION
Identifiable segment assets(incl. goodwill) (1)Thereof goodwill
Investments in associates

1132,724

2,725

6,441

9,716

7,050

1,064

59,72054

59,774

6,425

12

111

2,503

604

60

9,715

26

9,741

20

0

0

108

3

3

134

2,380

2,514

Segment liabilities (2)27,344

6,138

5,516

10,7537,440

831

58,022393

58,415

Thereof provisions (see Note 26)
Capital expenditures(incl. leased assets)

5,384

2,361

1,469

2,820

795

158

12,9871,033

14,020

1,254

80

149

157

272

29

1,941

16

1,957

Depreciation, amortisation

996

174

86

150

228

31

1,665

161

1,826

Research and development expenses

2,293

13

164

216

74

6

2,766

59

2,825

(1) Segment assets exclude investments in associates, current and deferred tax assets as well as cash and cash equivalents and securities as segment result does not include
share of profit from associates, total finance costs and income taxes.
(2) Segment liabilities exclude current and deferred tax liabilities and interest bearing liabilities.

38 EADS FIN ANCIAL S TATEMENTS 2009

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BUSINESS SEGMENT INFORMATION FOR THE YEAR ENDED 31 DECEMBER 2008
AirbusCommercial (3)AirbusMilitary (3)Eurocopter

Total revenues

26,524

2,759

4,486

Internal revenues

(394)

(205)

Revenues

26,130

Segment result
Thereof impairment charge
for intangible assets and property,
plant and equipment
Thereof additions to otherprovisions (see Note 26c)
Share of profit from associates
accounted for under the equity
methodProfit (loss) before finance costs
and income taxes

2,279(in €m)Exceptional depreciation/disposal
EBIT pre-goodwill impairment
and exceptionals(see definition in Note 6c)

Defence &Security

Astrium

Other
Businesses

Total
Segments

HQ/
Conso.

Consolidated

5,668 (4)

4,289

1,338

45,06422

45,086

(287)

(638)

(14)

(283)

(1,821)0(1,821)

2,554

4,199

5,030

4,275

1,055

43,24322

43,265

(504)

292

389

230

43

2,729

(145)

2,584

(17)

0

0

0

0

0

(17)

0

(17)

(438)

(412)

(426)

(657)

(152)

(34)

(2,119)(162)(2,281)

0

9

0

10

1

0

20

168

188

2,279

(495)

292

399

231

43

2,749

23

2,772

27

2

1

9

3

0

42

16

58

2,306

(493)

293

408

234

43

2,791

39

2,830

Total finance costs(472)

Income tax expense(703)

Profit for the period
Attributable to:Equity owners of the parent(Net income)

1,597

1,572

Non-controlling interests
OTHER INFORMATION
Identifiable segment assets(incl. goodwill) (1)2530,404

2,815

5,964

9,675

6,278

1,231

56,367

6,374

12

111

2,559

619

59

9,734

26

9,760

0

9

3

98

3

0

113

2,243

2,356

Segment liabilities (2)28,061

3,843

5,098

10,291

6,129

1,137

54,559225

54,784

Thereof provisions (see Note 26)
Capital expenditures(incl. leased assets)

4,900

1,250

1,339

2,782

696

160

11,127935

12,062

887

170

190

188

244

41

1,720

117

1,837

Depreciation, amortisation

1,042

71

85

149

188

43

1,578

89

1,667

Research and development expenses

2,210

9

134

174

69

9

2,605

64

2,669

Thereof goodwill
Investments in associates

525

56,892(1) Segment assets exclude investments in associates, current and deferred tax assets as well as cash and cash equivalents and securities as segment result does not include
share of profit from associates, total finance costs and income taxes.
(2) Segment liabilities exclude current and deferred tax liabilities and interest bearing liabilities.
(3) Due to the integration of the former MTAD business within Airbus and the creation of a separate Airbus Military segment, prior year figures are adjusted accordingly.
(4) Thereof revenues of € 438 million related to the site in Augsburg.

As a rule, inter-segment transfers are carried out on an arm’s
length basis. Inter-segment sales predominantly take place
between Airbus Military and Airbus Commercial and between
Airbus Division and Eurocopter as well as Defence & Security
as the latter are suppliers for Airbus aircraft.

Capital expenditures represent the additions to property, plantand equipment and to intangible assets (excluding additions togoodwill of € 16 million in 2009 and € 269 million in 2008; forfurther details see Note 6E) “Capital expenditures”).

EADS FIN ANCIAL S TATEMENTS 2009

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EBIT PRE-GOODWILL IMPAIRMENT AND EXCEPTIONALSEADS uses EBIT pre-goodwill impairment and exceptionals as a key indicator of its economic performance. The term
“exceptionals” refers to such items as depreciation 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 by management as a key indicator to measure the segments’ economic performances.
(in €m)

2009

2008

2007

Profit (loss) before finance costs and income taxes

(380)

2,772

(33)

Disposal of goodwill/subsequent adjustment to goodwill

0

0

12

Exceptional depreciation/disposal

58

58

73

(322)

2,830

52

2009

2008

2007

Germany

5,018

5,330

4,332

France

3,807

3,697

3,450
1,991

EBIT pre-goodwill impairment and exceptionals

D)

REVENUES BY DESTINATION(in €m)United Kingdom

2,983

2,654

Spain

1,322

1,456

1,173

Other European Countries

8,310

5,741

6,436

Asia/Pacific

8,618

10,747

8,826

North America

6,138

7,799

7,923

Middle East

3,857

2,497

2,507

Latin America

1,893

2,708

2,054

Other Countries

876

636

431

Consolidated

42,82243,265

39,123

2007

Revenues are allocated to geographical areas based on the location of the customer.
E)

CAPITAL EXPENDITURES(in €m)

2009

2008

France

1,001

792

819

Germany

509

566

477

United Kingdom

228

279

512

Spain

133

165

161

Other Countries

86

35

59

1,957

1,837

2,028

9

0

30

1,966

1,837

2,058

Capital expenditures excluding leased assets
Leased assets
Capital expenditures

40 EADS FIN ANCIAL S TATEMENTS 2009

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PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHICAL AREA

(in €m)

2009

2008

2007

France

4,448

4,154

3,908

Germany

3,635

3,576

3,715

United Kingdom

2,376

2,198

3,028

Spain

1,071

1,012

976

Other Countries
Property, plant and equipment by geographical area

275

338

447

11,805

11,27812,074

Property, plant and equipment split by geographical area excludes leased assets (2009: € 703 million, 2008: € 878 million
and 2007: € 1,319 million).

7.

Revenues

Revenues in 2009 reached € 42,822 million compared to€ 43,265 million in 2008 and € 39,123 million in 2007.
Revenues are mainly comprised of sales of goods and services,
as well as of revenues associated with construction contracts
accounted for under the percentage-of-completion method,
contracted research and development and customer financing

revenues. In 2009, the revenues from the delivery of goods &services comprise revenues from services including the sale ofspare parts of € 5,106 million compared to € 4,234 million in2008.
For a breakdown of revenues by business segment andgeographical area, refer to Note 6 “Segment Reporting”.

Detail of Revenues:(in €m)Total revenues

2009

2008

2007

42,82243,265

39,123

Thereof revenues from the delivery of goods & services

34,181

33,951

31,813

Thereof revenues from construction contracts

8,377

8,852

6,241

Revenues of € 42,822 million (2008: € 43,265 million)
decrease by -1% due to an unfavorable US Dollar impact,deconsolidation of Socata of which 70% was sold in 2009 andthe remaining 30% are now accounted for “at equity”, despiteof higher activities at Astrium (partly driven by a catch-up forin-orbit incentive schemes on commercial telecommunication

8.

satellites). Additionally, Airbus Commercial delivered moreaircraft (498 versus 483 in the previous year) and Eurocopter
contributed positively. The revenues also include € 499 million(2008: € 1,107 million), resulting from the application of
the early stage accounting method for the A400M contract(see Note 3 “Accounting for the A400M programme”).

Functional costs

Inventories recognised as an expense during the periodamount to € 30,274 million (2008: € 30,267 million;
2007: € 25,259 million).
Thereof € 1,218 million of contract costs (in 2008:€ 1,449 million) are expensed as cost of sales according to
the early stage method of accounting (see Note 3 “Accounting
for the A400M programme”).

Further included in cost of sales are amortisation expenses offair value adjustments of non-current assets in the amount of€ 56 million (2008: € 52 million; 2007: € 49 million); these are
related to the EADS merger, the Airbus Combination and theformation of MBDA.

EADS FIN ANCIAL S TATEMENTS 2009

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Personnel expenses are:(in €m)

2009

2008

2007

Wages, salaries and social contributions

9,094

9,030

8,696

Net periodic pension cost (see Note 26B)
Total

The Gross Margin decreases by € -2,919 million to€ 4,439 million compared to € 7,358 million in 2008. This
deterioration is mainly related to higher expenses for the
A400M at Airbus Military. Additionally, the gross marginof Airbus Commercial is in 2009 in particular burdened byforeign exchange rate effects and lower realised prices for

9.

366

385

9,396

9,081

delivered aircraft, partly compensated by lower A380 onerous
contract charges. Strong operational performance with delivery
ramp-up, Power8 savings and improvements in Defence &Security and Astrium positively contribute to the developmentof the gross margin.

Research and development expenses

Research and development expenses in 2009 amount to€ 2,825 million compared to € 2,669 million in 2008 and€ 2,608 million in 2007, primarily reflecting R&D activities
at Airbus Commercial. Most of the increase was attributable
to higher expenses at Airbus Commercial, Defence & Security

10.

424
9,518

and Eurocopter, due to development on the A350 XWB
programme, various helicopter programmes and security andcommunication solutions, partly compensated by a decrease for
the A380 programme.

Other income(in €m)

2009

2008

2007

Other income

170

189

233

Thereof rental income

22

26

37

Thereof income from sale of fixed assets

42

21

92

Thereof release of allowances

3

13

11

11.

Share of proﬁt from associates accounted for under the equity method
and other income from investments(in €m)

2009

2008

2007

Share of profit from associates

115

188

210

Other income from investments

19

23

86

Total

134

211

296

42 EADS FIN ANCIAL S TATEMENTS 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.2 | Notes to the Consolidated Income Statements (IFRS)

1

The share of profit from associates accounted for underthe equity method in 2009 is mainly derived from the resultof the equity investment in Dassault Aviation of € 120 million(2008: € 169 million; 2007: € 194 million). Since for the second
half-year 2009 no published financial information was available
yet from Dassault Aviation at the date of authorisation for
issue of 2009 Consolidated Financial Statements, EADS
uses a best estimate for the net income of Dassault Aviation.
Furthermore, the income of the equity investment from
Dassault Aviation includes an IFRS catch-up adjustment aswell as restatements for different treatments of actuarial gains
and losses of pensions.

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Since also for the second half-year 2008 no financial
information was available from Dassault Aviation at the dateof authorisation for issue of 2008 financial statements, the net
income of the second half year 2007 of Dassault Aviation had
been used as the second half year’s net income for 2008 in theamount of € 92 million. For the first semester 2008, Dassault
Aviation published a net income of € 167 million which had
been recognised by EADS with its share of 46.3% amounting
to € 77 million.
Other income from investments comprises in 2009 thedividend payment from the Eurofighter Jagdflugzeug GmbHof € 14 million (2008: € 12 million; 2007: € 13 million).

For the first semester 2009, Dassault Aviation published a net
income of € 118 million which has been recognised by EADS
in its half year financial statements 2009 with its share of
46.32% amounting to € 55 million.

12.

Total ﬁnance costs

Interest result in 2009 comprises interest income of€ 356 million (2008: € 617 million; 2007: € 502 million) andinterest expense of € -503 million (2008: € -581 million;
2007: € -701 million). Included in interest income is the returnon cash and cash equivalents, securities and financial assets
such as loans and finance leases. Interest expense includes
interests on European Government refundable advances of€ -235 million (2008: € -255 million; 2007: € -289 million) andon financing liabilities.

Other financial result in 2009 amounts to € -445 million(in 2008: € -508 million and in 2007: € -538 million)
and includes among others charges from the unwindingof discounted provisions amounting to € -307 million(2008: € -230 million; 2007: € -202 million) and the revaluationof some monetary items and financial instruments. Included
in 2008 were the negative impact of the reassessment ofcounterparty risk in the amount of € -49 million and negative
foreign exchange rate effects of Airbus in the amount of€ -28 million (in 2007: € -274 million).

In 2009 borrowing costs of € 5 million have been capitalised
regarding IAS 23R “Borrowing Cost”. In addition to specificborrowings, a general borrowing rate of 3.25% was applied todetermine the amount of borrowing costs to be capitalised.

13.

Income taxes

The benefit from (expense for) income taxes is comprised of the following:(in €m)

2009

2008

2007

Current tax expense

(208)

(354)

(64)

Deferred tax benefit/(expense)

428

(349)

397

Total

220

(703)

333

EADS FIN ANCIAL S TATEMENTS 2009

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The Group’s parent company, EADS N.V., legally seated in
Amsterdam, The Netherlands, applies Dutch tax law using
an income tax rate of 25.5% for 31 December 2009, 2008 and2007.

With respect to the Spanish subsidiaries, the corporate income
tax rate amounts to 30% in 2009 and 2008 (2007: 32.5%).
Accordingly, deferred tax assets and liabilities of the Group’s
Spanish entities were calculated using the enacted tax rate.

Deferred tax assets and liabilities for the Group’s French
subsidiaries were calculated at 31 December 2009, 2008 and2007 using the enacted tax rate of 34.43% for temporary
differences. The French corporate tax rate in effect was 33 1/3%
plus a surcharge of 3.3% (“contribution sociale”).

All other foreign subsidiaries apply their national tax rates,
among others United Kingdom with 28%.

Regarding German subsidiaries, the German federal corporate
tax rate amounts to 15%. In addition there is a surcharge(“Solidaritätszuschlag”) of 5.5% on the amount of federal
corporate taxes. In addition to corporate taxation, the tradetaxes amounts to 14.2%. In aggregate, the enacted tax rate
which has been applied to German deferred taxes amounts to
30%.

The following table shows a reconciliation from the theoreticalincome tax benefit (expense) – using the Dutch corporate
tax rate of 25.5% to the reported tax benefit (expense). The
reconciling items represent, besides the impact of tax rate
differentials and tax rate changes, non-taxable benefits or
non-deductible expenses arising from permanent differences
between the local tax base and the reported Consolidated
Financial Statements according to IFRS rules.

(in €m)

2009

2008

2007

(Loss) profit before income taxes

(972)

2,300

(770)

* Corporate income tax rate

25.5%

25.5%

25.5%

Expected benefit (expense) for income taxes

248

(587)

196

Effects from tax rate differentials

122

(125)

133

Income from investments/associates

48

81

109

Tax credit for R&D expenses

54

51

20

Change of tax rate

0

0

(106)

Change in valuation allowances

(236)

(113)

(3)

Non-deductible expenses and tax-free income

(12)

(14)

(19)

Other

(4)

4

3

Reported tax benefit (expense)

220

(703)

333

The change in valuation allowances reflects the updated
assessment regarding the recoverability of the deferred tax
assets for a tax paying entity in the foreseeable future. In 2009,
the change in valuation allowance is mainly due to unexpected
write-downs of non recoverable tax assets in the Airbus
Division.

44 EADS FIN ANCIAL S TATEMENTS 2009

Deferred income taxes are the result of temporary differences
between the carrying amounts of certain assets and liabilities in
the financial statements and their tax bases. Future tax impacts
from net operating losses and tax credit carry forwards are also
considered in the deferred income tax calculation.

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Deferred income taxes as of 31 December 2009 are related to the following assets and liabilities:
Movement
through equity

31 December 2008(in €m)Tax assets Tax liabilities

Movement throughincome statement

31 December 2009OCI/
IAS 19Others (1)R&D
tax credits

Deferredtax benefit(expense)

Tax assets

Tax liabilities

(5)

16

(207)
(982)

Intangible assets

14

(200)

0

0

0

Property, plant and equipment

137

(983)

0

(9)

0

93

220

Investments and other long-term financial assets

274

(8)

0

0

0

(66)

237

(37)

Inventories

830

(98)

0

(4)

0

13

912

(171)

Receivables and other assets

171(1,253)

(82)

0

0

(221)

116

(1,501)

1

(15)

0

0

0

26

15

(3)

Provision for retirement plans

453

0

112

0

0

88

653

0

Other provisions

1,409

(131)

0

11

0

406

1,801

(106)

Liabilities

1,037

(764)

(411)

8

0

45

648

(733)

Deferred income

341

(24)

0

4

0

(2)

319

(0)

Net operating loss and tax credit carry forwards
Deferred tax assets/(liabilities)
before offsetting

1,174

0

0

50

10

287

1,521

0

5,841

(3,476)

(381)

60

10

664

6,458

(3,740)

Valuation allowances on deferred tax assets

(562)

0

0

(15)

0

(236)

(813)

0

(381)

45

10

428

Prepaid expenses

Set-off(2,523)

2,523

Net Deferred tax assets/(liabilities)

2,756

(953)

(2,989)

2,989

2,656

(751)

(1) “Others” mainly comprises foreign exchange rate effects.

Deferred income taxes as of 31 December 2008 are related to the following assets and liabilities:
Movement
through equity

31 December 2007(in €m)Tax assets Tax liabilities

Intangible assets

22

(193)

Movement throughincome statement

31 December 2008

OCI/
IAS 19Others (1)R&D
tax credits

Deferredtax benefit(expense)

Tax assets

Tax liabilities

0

(44)

0

29

14

(200)
(983)

Property, plant and equipment

152(1,147)

0

28

0

121

137

Investments and other long-term financial assets

131

(36)

(3)

0

0

174

274

(8)

Inventories

895

(430)

0

(1)

0

268

830

(98)

Receivables and other assets

84(2,230)

1,318

(8)

0

(246)

171

(1,253)

Prepaid expenses

1

(16)

0

0

0

1

1

(15)

Provision for retirement plans

642

0

33

(8)

0

(214)

453

0

Other provisions

1,752

(160)

0

(42)

0

(272)

1,409

(131)

Liabilities

690

(654)

374

(26)

0

(111)

1,037

(764)

Deferred income

486

(24)

0

(19)

0

(126)

341

(24)

Net operating loss and tax credit carry forwards
Deferred tax assets/(liabilities)
before offsetting

1,148

0

0

(159)

45

140

1,174

0

6,003

(4,890)

1,722

(279)

45

(236)

5,841

(3,476)

Valuation allowances on deferred tax assets

(596)

0

0

147

0

(113)

(562)

0

Set-off(2,702)

2,702

0

0

0

0

(2,523)

2,523

Net Deferred tax assets/(liabilities)

2,705(2,188)

1,722

(132)

45

(349)

2,756

(953)

(1) “Others” mainly comprises foreign exchange rate effects and changes in consolidation.

EADS FIN ANCIAL S TATEMENTS 200945

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1

The amount of the Group’s deferred tax assets’ allowances isbased upon management’s estimate of the level of deferred
tax assets that will be realised in the foreseeable future. In
future periods, depending upon the Group’s financial results,
management’s estimate of the amount of the deferred tax assets
considered realisable may change, and hence the write-downof deferred tax assets may increase or decrease. The Grouphas various unresolved issues concerning open income tax
years with the tax authorities in a number of jurisdictions.
EADS believes that it has recorded adequate provisions for

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future income taxes that may be owed for all open tax years.
Companies in deficit situations in two or more subsequent
years recorded a total deferred tax asset balance of € 692 million(in 2008: € 50 million). Assessments show that these deferred
tax assets will be recovered in future through either (i) own
projected profits, or (ii) profits of other companies integrated
in the same fiscal group (“regime integration fiscal” in France,“steuerliche Organschaft” in Germany) or (iii) via the “losssurrender-agreement” in Great Britain.

Deferred taxes on Net Operating Losses and Tax Credit carry forwards:(in €m)FranceGermany

Spain

UK

Netherlands

Othercountries

31 December
2009

31 December
2008

Net Operating Losses (NOL)

1,247

1,072

56

1,488

63

29

3,955

2,965

Trade tax loss carry forwards

0

1,093

0

0

0

0

1,093

560

Tax credit carry forwards

0

0

304

0

2

0

306

316

Tax effect

429

325

321

417

18

11

1,521

1,174

Valuation allowances
Deferred tax assets on NOL’s
and tax credit carry forwards

(10)

(48)

(76)

(374)

(0)

(0)

(508)

(508)

419

277

245

43

18

11

1,013

666

NOLs, capital losses and trade tax loss carry forwards are indefinitely usable in France, Germany and in Great Britain. In Spain,
NOLs and tax credit carry forwards expire after 15 years. The first tranche of tax credit carry forwards (€ 8 million) will expire in2015. In the Netherlands, NOLs and tax credit carry forwards expire after 9 years.
Roll forward of deferred taxes:(in €m)2009

Net deferred tax asset beginning of the year

1,803

517

Deferred tax benefit (expense) in income statement

428

(349)

Deferred tax recognised directly in AOCI (IAS 39)

(493)

1,689

Variation of Defined benefit plan actuarial gains

112

33

Others

55

(87)

1,905

1,803

(in €m)

2009

2008

Available-for-sale investments

(27)

(5)

Cash flow hedges

(361)

110

Defined benefit plan actuarial losses

371

259

Total

(17)

364

Net deferred tax asset at year end

2008

Details of deferred taxes recognised in equity are as follows:

46 EADS FIN ANCIAL S TATEMENTS 2009

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2.3 Notes to the Consolidated Statementsof Financial Position (IFRS)
14.

Intangible assets

A schedule detailing gross values, accumulated depreciation and net values of intangible assets as of 31 December 2009 is asfollows:

Cost(in €m)Balance at
1 January
2009

Goodwill

10,863

4

16

0

988

11

53

0

Capitalised development costs
Other intangible assets

Exchangedifferences

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2009

(24)

0

10,859

1

(1)

1,052

1,522

(1)

195

0

24

(46)

1,694

13,373

14

264

0

1

(47)

13,605(in €m)Balance at
1 January
2009

Exchangedifferences

Amortisation
chargeChanges in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2009

Goodwill(1,103)

(15)

0

0

0

0

(1,118)

Capitalised development costs

(107)

(1)

(146)

0

(1)

0

(255)

Other intangible assets

(992)

(2)

(217)

0

(4)

43

(1,172)(2,202)

(18)

(363)

0

(5)

43

(2,545)

Total

Amortisation

Total

Net book value
Balance at
1 January
2009

Balance at
31 December
2009

Goodwill

9,760

9,741

Capitalised development costs

881

797

(in €m)Other intangible assets
Total

530

522

11,171

11,060EADS FIN ANCIAL S TATEMENTS 2009

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A schedule detailing gross values, accumulated depreciation and net values of intangible assets as of 31 December 2008 is asfollows:

Cost(in €m)Balance at
1 January
2008

Goodwill

Exchangedifferences

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2008

10,863

10,649

(55)

10

259

0

0

Capitalised development costs

958

(46)

87

0

(11)

0

988

Other intangible assets

1,303

(9)

233

79

(6)

(78)

1,522

12,910

(110)

330

338

(17)

(78)

13,373

Balance at
1 January
2008

Exchangedifferences

Amortisation
chargeChanges in
consolidation
scope

Disposals

Balance at
31 December
2008(1,130)

27

0

0

0

0

(1,103)

(58)

3

(56)

0

4

0

(107)

Total

Amortisation(in €m)Goodwill
Capitalised development costs
Other intangible assets
Total

Reclassification

(890)

9

(180)

0

6

63

(992)

(2,078)

39

(236)

0

10

63

(2,202)Net book value
Balance at
1 January
2008

Balance at
31 December
2008

Goodwill

9,519

9,760

Capitalised development costs

900

881

Other intangible assets

413

530

10,832

11,171(in €m)Total

GOODWILL IMPAIRMENT TESTSEADS performed goodwill impairment tests in the fourth quarter of the financial year on Cash Generating Unit (CGU) level
where goodwill is allocated to.
As of 31 December 2009 and 2008, goodwill was allocated to CGUs, which is summarised in the following schedule on segmentlevel:(in €m)AirbusCommercial

AirbusMilitary

Eurocopter

Defence &Security

Astrium

Other
Businesses

HQ/Conso.

Consolidated

Goodwill as of 31 December 2009

6,425

12

111

2,503

604

60

26

9,741

Goodwill as of 31 December 2008

6,374

12

111

2,559

619

59

26

9,760

48 EADS FIN ANCIAL S TATEMENTS 2009

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.3 | Notes to the Consolidated Statements of Financial Position (IFRS)

1GENERAL ASSUMPTIONS APPLIED
IN THE PLANNING PROCESSThe discounted cash flow method has been applied as a
primary valuation approach to determine the value in use of
the CGUs. Generally, cash flow projections used for EADS
impairment testing are based on operative planning.
The operative planning which was presented to the Board of
directors takes into account general economic data derived
from external macroeconomic and financial studies. The
operative planning assumptions reflect for the periods underreview specific inflation rates and future labour expenses inthe European countries where the major production facilities
are located. Regarding the expected future labour expenses,
an increase of 1 to 2% was implied. In addition, future interest
rates are also projected per geographical market, for theEuropean Monetary Union, Great Britain and the USA. With
regard to the A400M programme no other specific assumptions
have been taken different from those used for the preparationof these Consolidated Financial Statements (see Note 3“Accounting for the A400M programme”).
EADS follows an active policy of foreign exchange risk
hedging. As of 31 December 2009, the total hedge portfoliowith maturities up to 2016 amounts to US$ 61 billion andcovers a major portion of the foreign exchange exposure
expected over the period of the operative planning(2010 to 2014). The average US$/€ hedge rate of the US$/€hedge portfolio until 2016 amounts to 1.39 US$/€ andfor the US$/GBP hedge portfolio until 2015 amounts to
1.73 US$/GBP. For the determination of the operative planningin the CGUs management assumed future exchange rates of
1.45 US$/€ for 2010 onwards to convert in € the portion of
future US$ which are not hedged. Foreign exchange exposure
arises mostly from Airbus and to a lesser extent from the other
EADS Divisions.
The assumption for the perpetuity growth rate used to
calculate the terminal values as of 31 December 2009 has been
determined with 1% (previous years: 1%). This assumption islower than experienced in past economic cycles in order toreflect current uncertainty regarding market developments inthe long-term.
The main assumptions and the total of the recoverable amounts
obtained have been compared for reasonableness to market data.
Key assumptions on which management has based its
determination of value in use include amongst others,
weighted average cost of capital and estimated growth rates aswell as the underlying foreign exchange rates. These estimates,
including the methodology used, can have a material impact on
the respective values and hence are subject to uncertainties.

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AIRBUS COMMERCIAL
The goodwill allocated to Airbus Commercial relates tothe contributions of Airbus Operations Ltd. (U.K.), Airbus
Operations GmbH (Germany) and Airbus Operation SL(Spain). It has been increased in 2009 by the allocation of the
goodwill from the Defence & Security Division attached to
the Augsburg plant in the frame of the creation of Premium
AEROTEC GmbH (Germany).
The assessment was based on the following key specificassumptions, which represent management’s current best
assessment as of the date of these Consolidated Financial
Statements:> Projected cash flows for the next five years were presented
to EADS Board of directors in the frame of the operativeplan. This planning scenario takes into account the pause
in production ramp-up as publicly disclosed on 15 October
2008 and a restart of production ramp-up in 2011. In theabsence of long-term financial reference, expected cash
flows generated beyond the planning horizon are consideredthrough a Terminal Value. The Terminal Value reflects
management’s assessment of a normative operating year
based on an outlook of a full aeronautic cycle over the next
decade.
> Long-term commercial assumptions are based on General
Market Forecast updated in 2009. The development ofmarket share per segment considers enlargement of thecompetition as per current best assessment. Current market
uncertainties are considered through sensitivities. Cashflow projections include all of the estimated cost savings of
the Power8 programme as well as expected benefits frominitiatives already launched in the frame of Future EADS.
> Cash flows are discounted using a Euro weighted average
cost of capital pre-tax (WACC) of 12.8% (in 2008: 13%).
> Carrying values as well as planned cash flows include
impacts from the existing hedge portfolio as per end
December 2009.
With regard to the assessment of the value in use for the CGU
Airbus Commercial, management believes that the likelihoodof a change in the above key assumptions to an extent thatwould cause the recoverable amount to fall below the carrying
value is remote.
The recoverable amount is particularly sensitive to thefollowing areas:> A change of the Euro against the US$ by 5 cents would
lead to a change of the recoverable amount by € +3.1 billion(if 5 cents in decrease), € -3.2 billion (if 5 cents in addition).
EADS FIN ANCIAL S TATEMENTS 2009

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1> Stable production rate at 2010 level over the next five
years for Long Range and Single Aisle programmes would
deteriorate the recoverable amount by € -2.1 billion.
> An increase of 50 basis points in the WACC would change
the recoverable amount by € -1 billion, a decrease of 50 basis
points in the WACC by € +1.1 billion.
The current positive difference between the recoverable
value and the carrying value of Airbus’ net assets indicatesthat individually each of the assessed (negative) impacts ofsensitivities would not imply an impairment charge in the
EADS accounts.

AIRBUS MILITARY
For impairment testing purposes, the cash flows have been
discounted using a weighted average cost of capital pre-tax(WACC) of 10.2% (in 2008: 11.8% for MTAD).
A400M launch order from OCCAR is included as per
assumptions used for the preparation of these Consolidated
Financial Statements (see Note 3 “Accounting for the A400M
programme”). Operative planning presented to the Board of
directors has been adjusted according to assessed outcome ofthe on-going negotiations with the Nations as A400M launchcustomers. This adjusted plan is the reference for projected cash
flows for the next five years. Expected cash flows generated
beyond the planning horizon are considered through a Terminal
Value. The Terminal Value reflects management’s assessmentof a normative operating year.

OTHER SEGMENTS
In order to reflect the different underlying business risks,a segment specific WACC factor has been applied. For
Eurocopter the cash flows were discounted using a weighted
average cost of capital pre-tax (WACC) of 10.2% (in 2008:
11.8%), while the calculation for the more defence related
CGUs like Defence & Security and Astrium applied a pretax WACC of 9.7% (in 2008: 11.2%). Cash flow projections
are based on operative planning covering a five-year planning
period.

50 EADS FIN ANCIAL S TATEMENTS 2009

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For the Defence & Security Division, a sustainable growth inrevenues is assumed in the operative planning. This is driven
by a strong order backlog and further key orders expected in
the next years, as for example Eurofighter contracts, ramp-up in
Unmanned Aerial Vehicles (“UAV”), Missile export orders andfor Security and Communication Solutions, Electronic Warfare
and Radar business. The operating margin of the division is
expected to increase over the operative planning period thanks
to the constant volume growth and benefiting from initiatedcost saving programmes.
The order book of the Astrium Division as of 31 December
2009 (including satellites, launchers, ballistic missiles andmilitary telecom services) supports the strong revenue
increase which is assumed for this division over the operativeplanning period. Based on key achievements in 2009, likethe successful launch of ComsatBW 1, Hotbird 10 andAmazonas 2 as well as 7 successful Ariane 5 launches and theSkynet 5 Full Operational Service milestone acceptance, theplanning period is also characterised by business development
in telecom and earth observation services and further orderintake in established key areas (e.g. M51, telecom satellites).
The operating margin and the Free Cash Flow are planned
to increase continuously supported by existing improvement
programmes.
The recoverable amounts of all CGUs have exceeded theircarrying amounts, indicating no goodwill impairment for 2009
and 2008.

DEVELOPMENT COSTSEADS has capitalised development costs in the amount of€ 797 million as of 31 December 2009 (€ 881 million as of
31 December 2008) as internally generated intangible assets
mainly for the Airbus A380 programme. The amortisation for
the A380 programme development costs has started when theaircraft entered the final assembly line, on a unit of production
basis.

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Property, plant and equipment

Schedules detailing gross values, accumulated depreciation and net values of property, plant and equipment show the following asof 31 December 2009:

Cost
Balance at
1 January
2009

Exchangedifferences

Additions

Reclassification

Disposals

Balance at
31 December
2009

Land, leasehold improvements and buildings
including buildings on land owned by others

6,626

27

72

209

(96)

6,838

Technical equipment and machinery

10,784

216

252

769

(153)

11,868Other equipment, factory and office equipment

3,348

8

194

125

(154)

3,521

(in €m)Construction in progress

1,729

43

1,193

(1,065)

(23)

1,877

22,487

294

1,711

38

(426)

24,104

Balance at
1 January
2009

Exchangedifferences

Additions

Reclassification

Disposals

Balance at
31 December
2009

Land, leasehold improvements and buildings
including buildings on land owned by others(2,620)

(4)

(308)

15

82

(2,835)

Technical equipment and machinery(5,867)

(114)

(828)

27

114

(6,668)Other equipment, factory and office equipment(1,805)

(14)

(244)

(32)

46

(2,049)

Total

Depreciation(in €m)Construction in progress
Total

(39)

0

(7)

2

0

(44)

(10,331)(132)(1,387)

12

242(11,596)

Net book value
Balance at
1 January
2009

Balance at
31 December
2009

4,006

4,003

Technical equipment and machinery

4,917

5,200

Other equipment, factory and office equipment

1,543

1,472

Construction in progress

1,690

1,833

12,156

12,508(in €m)Land, leasehold improvements and buildings
including buildings on land owned by others

Total

EADS FIN ANCIAL S TATEMENTS 2009

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Schedules detailing gross values, accumulated depreciation and net values of property, plant and equipment show the following asof 31 December 2008:

Cost(in €m)Land, leasehold improvements
and buildings including
buildings on land owned byothersTechnical equipment andmachinery
Other equipment, factory andoffice equipment
Construction in progress
Total

Balance at
1 January
2008

Exchangedifferences

6,472
11,134

Additions

Change inconsolidation
scope

Reclassification

Disposals

Balance at
31 December
2008

(108)

148

(17)

150

(19)

6,626

(857)

283

(18)

430

(188)

10,784
3,348

3,856

(4)

146

10

(16)

(644)

2,474

(222)

940

0

(1,450)

(13)

1,729

23,936(1,191)

1,517

(25)

(886)

(864)

22,487

Balance at
1 January
2008

Exchangedifferences

Additions

Change inconsolidation
scope

Reclassification

Disposals

Balance at
31 December
2008(2,424)

21

(265)

13

35

0

(2,620)(6,192)

462

(832)

15

492

188

(5,867)(1,882)

4

(242)

0

16

299

(1,805)

(45)

0

0

0

6

0

(39)

(10,543)487(1,339)

28

549

487

(10,331)

Depreciation(in €m)Land, leasehold improvements
and buildings including
buildings on land owned byothersTechnical equipment andmachinery
Other equipment, factory andoffice equipment
Construction in progress
Total

Net book value(in €m)Land, leasehold improvements
and buildings including
buildings on land owned byothersTechnical equipment andmachinery
Other equipment, factory andoffice equipment
Construction in progress
Total

52 EADS FIN ANCIAL S TATEMENTS 2009

Balance at
1 January
2008

Balance at
31 December
2008

4,048

4,006

4,942

4,917

1,974

1,543

2,429

1,690

13,393

12,156

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.3 | Notes to the Consolidated Statements of Financial Position (IFRS)

1

Property, plant and equipment include at 31 December 2009
and 2008, buildings, technical equipment and other equipment
accounted for in fixed assets under finance lease agreements
for net amounts of € 124 million and € 131 million, net ofaccumulated depreciation of € 37 million and € 105 million.
The related depreciation expense for 2009 was € 8 million(2008: € 10 million; 2007: € 12 million). Property, plant andequipment used for the A400M programme amounts to€ 755 million (2008: € 722 million), see Note 3 “Accounting
for the A400M programme”.
Other equipment, factory and office equipment include
the net book value of “aircraft under operating lease” for€ 703 million and € 878 million as of 31 December 2009

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and 2008, respectively; related accumulated depreciationis € 733 million and € 733 million. Depreciation expensefor 2009 amounts to € 49 million (2008: € 71 million;
2007: € 105 million).
The “aircraft under operating lease” include:i) Group’s sales finance activity in the form of aircraft whichhave been leased out to customers and are classified as
operating leases: They are reported net of the accumulated
impairments. These sales financing transactions are
generally secured by the underlying aircraft used ascollateral (see Note 34 “Commitments and contingencies”
for details on sales financing transactions).

The corresponding non-cancellable future operating lease payments (not discounted) due from customers to be included inrevenues, at 31 December 2009 are as follows:(in €m)Not later than 201038

Later than 2010 and not later than 201484

Later than 2014
Total

18
140

ii) Aircraft which have been accounted as “operating lease”
because they were sold under terms that include asset
value guarantee commitments with the present value ofthe guarantee being more than 10% of the aircraft’s sales
price (assumed to be the fair value). Upon the initial saleof these aircraft to the customer, their total cost previously

recognised in inventory is transferred to “Other equipment,
factory and office equipment” and depreciated over its
estimated useful economic life, with the proceeds received
from the customer being recorded as deferred income(see Note 31 “Deferred income”).

The total net book values of aircraft under operating lease are as follows:(in €m)31 December 200931 December 2008

341

433

Accumulated impairment

(70)

(52)

Net book value of aircraft under operating lease

271

381

(ii) Aircraft under operating lease with the present value of the guarantee being more than 10%

432

497

Total Net Book value of aircraft under operating lease

703

878

(i) Net book value of aircraft under operating lease before impairment charge

For details please refer to Note 34 “Commitment and contingencies”.

EADS FIN ANCIAL S TATEMENTS 200953

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Investment property

The Group owns investment property that is leased to third parties. Buildings held as investment property are depreciated on alinear basis over their useful life up to 20 years. The values assigned to investment property are as follows:(in €m)Historical cost

Accumulated
depreciation
31 December
2008Book value
31 December
2008

Reclass andDisposals
Historical cost

212

(125)

87

1

Book value of Investment
Property

As of 31 December 2009, the fair value of theGroup’s investment property amounts to € 86 million(in 2008: € 88 million). For the purposes of IAS 40“Investment property”, the fair values have been determinedby using external appraisal reports or using discounted cash

17.

Depreciation
Amortisation

Accumulated
depreciation
31 December
2009Book value
31 December
2009

(10)

(135)

78

flow projections for estimated rental income less rental
expenses. Related rental income in 2009 is € 10 million(in 2008: € 8 million) with direct operating expenses amounting
to € 2 million (in 2008: € 3 million).

Investments in associates accounted for under the equity method,other investments and other long-term ﬁnancial assets

The following table sets forth the composition of investments in associates accounted for under the equity method, otherinvestments and other long-term financial assets:(in €m)Investments in associates accounted for under the equity method

31 December 200931 December 2008

2,514

2,356

380

320

Non-current other investments and other long-term financial assets
Other investments
Other long-term financial assets

1,830

1,392

Total

2,210

1,712

230

177

Current portion of other long-term financial assets

Investments in associates accounted for under the equity
method as of 31 December 2009 and 2008, mainly comprise
EADS’ interest in Dassault Aviation (46.32% at 31 December
2009 and 2008) of € 2,380 million and € 2,243 million.
Since for the second half-year 2009 no financial information
is available yet from Dassault Aviation at the date of
authorisation for issue of 2009 financial statements, EADS
used a best estimate for the net income of the second halfyear 2009 of Dassault Aviation. Furthermore, the equity
investment income from Dassault Aviation includes an IFRS
catch-up adjustment as well as direct recognitions in equity(AOCI) with regard to restatements for different treatments of

54 EADS FIN ANCIAL S TATEMENTS 2009

actuarial gains and losses of pensions. The 30 June 2009 equity
components have been used to estimate the 2009 year-end
consolidated equity position of Dassault Aviation.
Since also for the second half-year 2008 no financial
information was available from Dassault Aviation at the dateof authorisation for issue of 2008 financial statements, the net
income of the second half year 2007 of Dassault Aviation had
been used as the second half year’s net income for 2008 andthe 30 June 2008 equity components had been used to estimate
the 2008 year-end consolidated equity position of Dassault
Aviation. For the first semester 2008 Dassault Aviation

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.3 | Notes to the Consolidated Statements of Financial Position (IFRS)

1published a net income of € 167 million which had beenrecognised by EADS in accordance with its share of 46.32%,
amounting to € 77 million.

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EADS’ 46.32% interest in Dassault Aviation’s market
capitalisation, derived from an observable free float of 3.5%,
amounts to € 2,462 million as of 31 December 2009.

The following table illustrates summarised financial information of the EADS investment of 46.32% in Dassault Aviation:(in €m)30 June 200931 December 2008

Non-current assets

2,636

2,098

Current assets

2,522

2,429

200

103

Share of the associate’s balance sheet:

Non-current liabilities
Current liabilities

3,023

2,550

Total equity

1,935

1,874

6 months

12 months

Net Sales

641

1,736

Net Income

55

173

31 December 200931 December 2008

2,380

2,243

Share of the associate’s revenues and profit:

Carrying amount of the investment at 31 December

In 2009, the participation in OnAir B.V. is accounted forunder the equity method amounting to € 12 million (in 2008
presented in other investments € 24 million). Subsequent thesale of 70% in Socata and Socata Aircraft (USA) as of 7 January
2009, the participation is accounted for under the equity
method with book value of € 3 million.
A list of major investments in associates and the proportion ofownership is included in Appendix “Information on principal
investments”.
Other investments comprise EADS’ investments in various
non-consolidated entities, the most significant being at
31 December 2009, the participations in AviChina amounting

to € 67 million (2008: € 23 million) and in Hua-Ou Aviation
Support Center and Hua-Ou Aviation Training Centeramounting to € 21 million (2008: € 20 million).
Other long-term financial assets of € 1,830 million(2008: € 1,392 million) and the current portion of otherlong-term financial assets of € 230 million (in 2008:€ 177 million) encompass mainly the Group’s sales financeactivities in the form of finance lease receivables and loans
from aircraft financing. They are reported net of accumulated
impairments. These sales financing transactions are generally
secured by the underlying aircraft used as collateral (seeNote 34 “Commitments and contingencies” for details on sales
financing transactions).

Loans from aircraft financing are provided to customers to finance the sale of aircraft. These loans are long-term and normally havea maturity which is linked to the use of the aircraft by the customer. The calculation of the net book value is:(in €m)31 December 200931 December 2008

Outstanding gross amount of loans to customers

757

504

Accumulated impairment

(67)

(98)

Total net book value of loans

690

406

EADS FIN ANCIAL S TATEMENTS 200955

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Finance lease receivables from aircraft financing are as follows:(in €m)31 December 200931 December 2008

Minimum lease payments receivables

932

863

Unearned finance income

(87)

(15)

Accumulated impairment

(91)

(146)

Total net book value of finance lease receivables

754

702

Future minimum lease payments from investments in finance leases to be received are as follows (not discounted):(in €m)Not later than 2010

165

Later than 2010 and not later than 2014

535

Later than 2014
Total

232
932

Additionally included are € 616 million and € 461 million of other loans as of 31 December 2009 and 2008, e.g. loans to employees.
Defeased bank deposits of € 306 million and € 373 million as of 31 December 2009 and 2008, respectively have been offset against
financing liabilities.

18.

Inventories

Inventories at 31 December 2009 and 2008 consist of the following:(in €m)31 December 200931 December 2008

Raw materials and manufacturing supplies

1,736

1,706
12,253Work in progress

13,899Finished goods and parts accounted for at lower of cost and net realisable value

1,804

1,829

Advance payments to suppliers

4,138

3,664

21,577

19,452Total

The increase in work in progress of € 1,646 million is mainly
driven by Airbus Commercial programmes, governmental andcommercial programmes at Eurocopter and higher unfinishedgoods at Defence & Security. The increase of advance payments
provided to suppliers mainly reflects activities at Astrium’s
launcher business.
The finished goods and parts for resale before writedown to net realisable value amount to € 2,215 million in2009 (2008: € 2,181 million) and work in progress before

56 EADS FIN ANCIAL S TATEMENTS 2009

write-down to net realisable value amounts to € 15,136 million(2008: € 13,656 million). Write downs for finished goods
and services are recorded when it becomes probable that total
estimated contract costs will exceed total contract revenues.
In 2009, write downs of inventories in the amount of€ -593 million are recognised in Cost of Sales, whereas reversalof write downs amounts to € 19 million. The impairment
charges in 2009 and 2008 for work in progress mainly relate to
the A380 programme.

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Trade receivables

Trade receivables at 31 December 2009 and 2008 consist of the following:(in €m)31 December 200931 December 2008

Receivables from sales of goods and services

5,951

5,624

Allowance for doubtful accounts

(364)

(357)

Total

5,587

5,267

Trade receivables are classified as current assets. As of
31 December 2009 and 2008, respectively, € 270 millionand € 108 million of trade receivables are not expected to becollected within one year.
In application of the percentage of completion (PoC)
method, as of 31 December 2009 an amount of € 2,348 million(in 2008: € 1,731 million) for construction contracts is includedin the trade receivables net of related advance payments received.
The aggregate amount of costs incurred and recognised
profits (less recognised losses) to date amounts to€ 35,446 million comparable to € 28,366 million at year-end
2008.

The gross amount due from customers for construction
work amounts to € 4,185 million (in 2008: € 3,832 million) andrelates to construction contracts where incurred contract costs
plus recognised profits less the sum of recognised losses exceed
progress billings.
The gross amount due to customer amounts to€ 2,565 million (in 2008: € 1,451 million) and corresponds tothe construction contracts whose total of incurred contract
costs plus recognised profits less the sum of recognised losses
and progress billings is negative.

The respective movement in the allowance for doubtful accounts in respect of trade receivables during the year was as follows:(in €m)

2009

2008

Allowance balance at 1 January

(357)

(387)

Utilisations/disposals

1331

Additions/release

(13)

(2)

Foreign exchange rate differences

(7)

1

(364)

(357)

31 December

Based on historic default rates, the Group believes that no allowance for doubtful accounts is necessary in respect of tradereceivables not past due in the amount of € 4,391 million (in 2008: € 4,098 million).

EADS FIN ANCIAL S TATEMENTS 200957

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.3 | Notes to the Consolidated Statements of Financial Position (IFRS)

1

20.

2

3

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Other ﬁnancial assets

Other financial assets at 31 December 2009 and 2008 consist of the following:(in €m)31 December 200931 December 2008

1,307

1,101

Option premiums

32

323

Others

268

188

Total

1,607

1,612

Positive fair values of derivative financial instruments

937

1,482

Receivables from related companies

722

533

Non-current other financial assets
Positive fair values of derivative financial instruments

Current other financial assets

Loans

41

70

Others

343

410

Total

2,043

2,495

31 December 200931 December 2008

Prepaid expenses

894

849
133

21.

Other assets

Other assets at 31 December 2009 and 2008 consist of the following:(in €m)Non-current other assets
Capitalised settlement payments to German Government

103

Others

179

52

Total

1,176

1,034

Value Added Tax claims

810

695

Prepaid expenses

507

463

Current other assets

Others

381

308

Total

1,698

1,466

The capitalised settlement payments to the German Government are related to refundable advances which are amortised throughthe income statement (in cost of sales) at the delivery pace of the corresponding aircraft.

58 EADS FIN ANCIAL S TATEMENTS 2009

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Securities

The Group’s security portfolio amounts to € 8,055 million and€ 6,952 million as of 31 December 2009 and 2008, respectively.
The security portfolio contains a non-current portionof available-for-sale-securities of € 3,702 million (in 2008:€ 2,759 million) and securities designated at fair value throughprofit and loss of € 281 million (in 2008: € 281 million) as
well as a current portion of available-for-sale-securitiesof € 3,749 million (in 2008: € 3,461 million) and securities
designated at fair value through profit and loss of € 323 million(in 2008: € 451 million).

23.

2

2

Included in the securities portfolio as of 31 December 2009
and 2008, respectively are corporate bonds bearing either fixed
rate coupons (€ 6,031 million nominal value; comparably in
2008: € 3,941 million) or floating rate coupons (€ 1,093 million
nominal value; comparably in 2008: € 1,994 million) as wellas Structured Rate Notes (€ 265 million nominal value;
2008: € 365 million), Money Market Funds (€ 323 million
nominal value, 2008: € 451 million) and Notes of Hedgefunds(€ 275 million nominal value; 2008: € 275 million).

Non-current assets / disposal groups classiﬁed as held for saleAt 31 December 2009 EADS Group does not account for any
non-current assets / disposal groups classified as held forsale (2008: € 263 million). The disposal group in 2008 included
liabilities directly associated with non-current assets
classified as held for sale amounting to € 155 million.
On 3 November 2008, EADS and DAHER announced theconclusion of the agreement for DAHER to acquire a 70%
majority share in EADS Socata and Socata Aircraft (USA)which were sold on 7 January 2009. The assets and liabilitiesof these companies were thus presented as held for sale as of
31 December 2008 and presented in “Other Businesses”.
In 2008, EADS had continuing negotiations with GKN todivest its Airbus site in Filton (UK). The closing of the saleis effective since 5 January 2009. The respective assets andliabilities of Filton factory were therefore shown as held forsale as of 31 December 2008.

The non-current assets / disposal groups classified as held forsale comprised as of 31 December 2008 intangible assets of€ 7 million, property, plant and equipment of € 42 million,
other non-current assets of € 11 million, other current assetsof € 107 million and cash and securities in the amount of€ 2 million for the Socata business. Included were also Airbus
assets relating to Filton site of € 94 million concerning
property, plant and equipment of € 57 million and inventoriesof € 37 million.
As of 31 December 2008, the corresponding liabilities for
the Socata business accounted for as Liabilities directly
associated with non-current assets classified as held
for sale amounted to € 154 million and comprised noncurrent provisions (€ 27 million), non-current other liabilities(€ 16 million), current provisions (€ 3 million) and current
other liabilities (€ 108 million). Additionally included werenon-current other liabilities (€ 1 million) for the Airbus site in
Filton.

EADS FIN ANCIAL S TATEMENTS 200959

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Total equity

The following table shows the development of the number of shares outstanding:Number of shares

Issued as at 1 January
Issued for ESOP
Issued for exercised options
Cancelled
Issued as at 31 December

2009

2008

814,769,112

814,014,473

1,358,936

2,031,820

014,200(22,987)(1,291,381)

816,105,061

814,769,112

Treasury shares as at 31 December(5,196,450)(5,259,965)

Outstanding as at 31 December

810,908,611

809,509,147

EADS’ shares are exclusively ordinary shares with a parvalue of € 1.00. The authorised share capital consists of
3,000,000,000 shares.
On 27 May 2009, the Shareholders’ General Meeting of EADS
renewed the authorisation given to the Board of directors to
issue shares and to grant rights to subscribe for shares which
are part of the Company’s authorised share capital, provided
that such powers will be limited to 1% of the Company’s
authorised capital from time to time and to limit or exclude
preferential subscription rights, in both cases for a period
expiring at the Shareholders’ General Meeting to be heldin 2011. The mentioned powers include without limitation
the approval of share-related long-term incentive plans (suchas stock option, performance and restricted share plans) andemployee share ownership plans. They may also include
the granting of rights to subscribe for shares which can be
exercised at a time that may be specified in or pursuant tosuch plans and the issue of shares to be paid up from freely
distributable reserves.
The Shareholders’ General Meeting on 27 May 2009, renewed
the authorisation given to the Board of directors for a new
period of 18 months from the date of the Annual General
Meeting to repurchase shares of the Company, by any means,including derivative products, on any stock exchange orotherwise, as long as, upon such repurchase, the Company will
not hold more than 10% of the Company’s issued share capitaland at a price not less than the nominal value and not morethan the higher of the price of the last independent trade andthe highest current independent bid on the trading venues of
the regulated market of the country in which the purchaseis carried out. This authorisation supersedes and replaces
the authorisation given by the Annual General Meeting of
26 May 2008.

60 EADS FIN ANCIAL S TATEMENTS 2009

Furthermore, the Shareholders’ General Meeting authorised
both the Board of directors and the Chief Executive Officer,
with powers of substitution, to cancel up to a maximum of
22,987 shares. As per decision of the Chief Executive Officer,
on 31 July 2009, 22,987 treasury shares have been cancelled.
On 27 May 2009, the Shareholders’ General Meeting alsodecided to distribute a gross amount of € 0.20 per share, which
was paid on 8 June 2009. Exceptionally, due to the significant
loss in the fiscal year 2009, the EADS Board of directors
recommends no cash distribution payment for 2009.
Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options (in 2009: € 0, in 2008:€ 14,200) in compliance with the implemented stock option
plans and by employees (in 2009: € 1,358,936, in 2008:€ 2,031,820) under the Employee Stock Ownership Plans.
Share premium mainly results from contributions in kind in
the course of the creation of EADS, cash contributions fromthe Initial Public Offering, capital increases and reductions
due to the issuance and cancellation of shares as well as cash
distributions to EADS N.V. shareholders. Other reserves
include among others retained earnings, reduced by therecognition of actuarial gains and losses of pension obligations,net of deferred taxes. Accumulated other comprehensive
income consists of all amounts recognised directly in equity
resulting from changes in fair value of financial instrumentsthat are classified as available-for-sale (€ 561 million) or thatform part of hedging relationships in effective cash-flow
hedges (€ 828 million) as well as from currency translation
adjustments of foreign operations (€ 1,257 million). In 2009,€ 108 million are reclassified from currency translation
adjustments to profit and loss (thereof € 33 million related
to the sale of the Filton site). Treasury shares represent theamount paid for own shares held in treasury.

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Capital Management

EADS seeks to maintain a strong financial profile to safeguard
its going concern, financial flexibility as well as shareholders’and other stakeholders’ confidence in the Group.
As part of its capital management, it is one of EADS’
objectives to maintain a strong credit rating by institutional
rating agencies. This enables EADS to contain the Group’s costof capital which positively impacts its stakeholder value (entity
value). Next to other also non-financial parameters, the credit
rating is based on factors such as capital ratios, profitability andliquidity ratios. EADS focuses on keeping them in a preferable
range.
EADS’ long-term rating was reconfirmed on 6 June 2009 fromStandard & Poor’s with BBB+ (Outlook: stable) and Moody’s
Investors Service also reconfirmed on 10 July 2009 its ratingwith A1 (Outlook: stable) respectively. In accordance with
its conservative financial policy it is essential for EADS to
maintain an investment grade rating.

26.

2

EADS’ management uses Economic Profit as a primaryperformance measure for capital management. Economic Profit
is defined as ”Net operating profit after taxes” less the costof capital, i.e. the weighted average cost of capital (WACC)
multiplied by the capital employed in the business.
The Group also monitors the level of dividends paid to its
shareholders.
EADS satisfies its obligations arising from share-based
payment plans by issuing new shares. In order to avoid any
dilution of its current shareholders out of these share-based
payment plans, EADS has accordingly decided to buy back andcancel its own shares following the decisions of the Board of
directors and approval of the Annual General Meeting (AGM).
Apart from this purpose, EADS generally does not trade withtreasury shares.
EADS complies with the capital requirements under applicablelaw and its articles of association.

Provisions

Provisions are comprised of the following:(in €m)31 December 200931 December 2008

5,090

4,387

216

159

Retirement plans and similar obligations

5,306

4,546

Other provisions (see Note 26C)

8,714

7,516

14,02012,062

Provision for retirement plans (see Note 26B)
Provision for deferred compensation (see Note 26A)

Total
Thereof non-current portion

8,137

7,479

Thereof current portion

5,883

4,583

As of 31 December 2009 and 2008, respectively,€ 5,080 million and € 4,335 million of retirement plans andsimilar obligations and € 3,057 million and € 3,144 million ofother provisions mature after more than one year.

A)

PROVISIONS FOR DEFERRED COMPENSATIONThis amount represents obligations that arise if employees
elect to convert part of their remuneration or bonus into an
equivalent commitment for deferred compensation which istreated as a defined benefit post-employment plan.

EADS FIN ANCIAL S TATEMENTS 2009

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1B)

PROVISIONS FOR RETIREMENT PLANS

When Group employees retire, they receive indemnities
as stipulated in retirement agreements, in accordance withregulations and practices of the countries in which the Group
operates.
French law stipulates that employees are paid retirement
indemnities on the basis of the length of service.
In Germany, EADS has a pension plan (P3) for executive
and non-executive employees in place. Under this plan, theemployer makes contributions during the service period, which
are dependent on salary in the years of contribution and yearsof service. These contributions are converted into components
which become part of the accrued pension liability at the endof the year. Total benefits are calculated as a career average overthe entire period of service.
Certain employees that are not covered by the new plan receive
retirement indemnities based on salary earned in the lastyear or on an average of the last three years of employment.
For some executive employees, benefits are depending on
final salary at the date of retirement and the time period as
executive. In Q4 2007, EADS implemented a Contractual Trust
Arrangement (CTA) for EADS’ pension obligation. The CTA
structure is that of a bilateral trust arrangement. Assets that aretransferred to the CTA qualify as plan assets under IAS 19.
In the UK, EADS participates in several funded trusteeadministered pension plans for both executive and nonexecutive employees with BAE Systems being the principal
employer. These plans qualify as multi-employer defined
benefit plans under IAS 19 “Employee Benefits”. EADS’ mostsignificant investments in terms of employees participatingin these BAE Systems UK pension plans are Airbus UK and
MBDA UK. For Airbus, this remains the case even subsequent
to the acquisition of BAE Systems’ 20% minority interests on
13 October 2006. Participating Airbus UK employees havecontinued to remain members in the BAE Systems UK pension
plans due to the UK pension agreement between EADS andBAE Systems and a change in UK pensions legislation enacted
in April 2006.
Generally, based on the funding situation of the respective
pension schemes, the pension plan trustees determine thecontribution rates to be paid by the participating employers
to adequately fund the schemes. The different UK pension
plans in which EADS investments participate are currently
underfunded. BAE Systems has agreed with the trustees
various measures designed to make good the underfunding.

62 EADS FIN ANCIAL S TATEMENTS 2009

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These include i) regular contribution payments for active
employees well above such which would prevail for fundedplans and ii) extra employers’ contributions.
Due to the contractual arrangements between EADS and BAE
Systems, EADS’ contributions in respect of its investments
for the most significant pension scheme (Main Scheme)
are capped for a defined period of time (until July 2011
for Airbus UK and until December 2007 for MBDA UK).
Contributions exceeding the respective capped amounts arepaid by BAE Systems. EADS is therefore neither exposed toincreased regular contribution payments resulting from thepension plans’ underfunding nor to a participation in extra
contribution payments during the period of the contribution
caps. Even after the expiry of the contribution caps the uniquefunding arrangements between BAE Systems and EADS
create a situation for EADS different from common UK
multi-employer plans with special regulations limiting regularcontributions that have to be paid by Airbus UK and MBDA
UK to rates applicable to all participating employers.
Based on detailed information about the different multiemployer pension schemes which BAE Systems has started toshare since 31 December 2006, EADS is able to appropriately
and reliably estimate the share of its participation in theschemes, i.e. its share in plan assets, defined benefit obligations(DBO) and pension costs. The information enables EADS
to derive keys per plan to allocate for accounting purposes
an appropriate proportion in plan assets, defined benefit
obligations and pension costs to its UK investments as of
31 December 2009 and 2008, taking into account the impact of
the capped contributions as well as future extra contributions
agreed by BAE Systems with the Trustees. Therefore, EADS
accounts for its participation in BAE Systems’ UK defined
benefit schemes under the defined benefit accounting approachin accordance with IAS 19.
In 2009, the share of Airbus in BAE Systems’ main schemesamounts to 17.41% (in 2008: 19.63%). The impact of this change
is mainly reflected in actuarial gains and losses of the period.
Actuarial assessments are regularly made to determine theamount of the Group’s commitments with regard to retirement
indemnities. These assessments include an assumption
concerning changes in salaries, retirement ages and long-term
interest rates. It comprises all the expenses the Group will be
required to pay to meet these commitments.

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The weighted-average assumptions used in calculating the actuarial values of the retirement plans are as follows:

Assumptions in %Euro-countries (1)

EADS UK

BAE Systems UK

31 December

31 December

31 December

2009

2008

2007

2009

2008

2007

2009

2008

2007

Discount rate

5.25-5.3

5.6-5.85

5.25-5.35

5.7

6.5

5.8

5.7

6.3

5.8

Rate of compensation increase

2.75-3.5

3.0-3.5

3.0

4.1

4.1

4.2

4.5

3.9

4.3

Inflation rate

1.75-2.0

1.8-2.25

1.9-2.0

3.5

3.0

3.1

3.5

2.9

3.3

6.5

6.5

7.0

5.8

5.8

5.8

7.1

7.1

7.0

Expected return on plan assets(1) Euro-countries comprise Germany and France respectively.

The amount recorded as provision on the balance sheet can be derived as follows:
Change in defined benefit obligations(in €m)

2009

2008

2007

Defined benefit obligations at beginning of year

7,777

8,573

9,584

Service cost

189

191

213

Interest cost

450

449

429

Plan amendments

0

0

22

Actuarial (gains) and losses

634

(390)

(729)

Acquisitions, curtailments and other

(21)

26

(42)

Benefits paid

(352)

(352)

(383)

Foreign currency translation adjustment

168

(720)

(298)

0

0

(223)

8,845

7,777

8,573

Change in consolidation (1)Defined benefit obligations at end of year

(1) Reflects the change in the percentage of the proportional consolidation of MBDA from 50% in 2006 to 37.5% in 2007.

Actuarial losses which are related to the BAE Systems UK pension plans amount to € 269 million (2008: actuarial gains of€ -188 million) and foreign currency translation adjustment amounts to € 159 million (2008: € -656 million).
Change in plan assets(in €m)

2009

2008

2007

Fair value of plan assets at beginning of year

3,335

4,031

3,833

Actual return on plan assets

270

(457)

119

Contributions

173

436

683

Acquisitions and otherBenefits paid
Foreign currency translation adjustments
Change in consolidation(1)

Fair value of plan assets at end of year

0

80

18

(202)

(200)

(223)

130

(555)

(242)

0

0

(157)

3,706

3,335

4,031

(1) Reflects the change in the percentage of the proportional consolidation of MBDA from 50% in 2006 to 37.5% in 2007.

The actual return on plan assets includes among others, also
€ 153 million (2008: € -280 million) relating to the BAE
Systems’ UK pension plans. Furthermore, € 116 million(2008: € -504 million) of foreign currency translation
adjustments and € -102 million (2008: € -106 million) of
benefits paid result from BAE Systems’ UK pension plans.

EADS FIN ANCIAL S TATEMENTS 2009

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1

In 2007, EADS implemented a Contractual Trust Arrangement(CTA) for allocating and generating plan assets in accordancewith IAS 19. On 28 October 2007, some EADS companies
contributed in total € 500 million in cash and securities as
an initial funding of the CTA. In 2009, EADS companies

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did not contribute to the CTA (2008: in total € 300 million
in cash). In 2010, further contributions are intended. Main
contributions were made into the relief fund in Germany with€ 70 million (2008: € 57 million) and the BAE Systems UK
pension plans with € 66 million (2008: € 61 million).

Based on past experience, EADS expects a rate of return for plan assets of 6.5% for Euro-countries. In 2009, about 47% (in 2008: about41%) of plan assets are invested in equity securities. The remaining plan assets are invested mainly in debt instruments and cash.
Recognised Provision(in €m)

2009

2008

2007

2006

2005

(1)

5,139

4,442

4,542

5,751

5,128

Unrecognised past service cost

(49)

(55)

(25)

(4)

(4)

5,090

4,387

4,517

5,747

5,124

Funded status

Provision recognised in Balance Sheet(1) Difference between the defined benefit obligations and the fair value of plan assets at the end of the year.

The defined benefit obligation at the end of the year is thepresent value, without deducting any plan assets, of expected
future payments required to settle the obligation resulting

from employee service in the current and prior periods. The
provision contains the funded status less any unrecognised past
service cost.

The components of the net periodic pension cost, included in “Profit (loss) before finance costs and income taxes”, are as follows:(in €m)

2009

2008

2007

Service cost

189

191

213

Interest cost

450

449

429

Expected return on plan assets

(221)

(278)

(260)

6

4

3

424

366

385

Past service cost
Net periodic pension cost

The expected return on plan assets for BAE Systems’ UK pension plans amounts to € -111 million (in 2008: € -161 million).
Actuarial gains and losses are recognised net of deferred taxes in total equity and develop as follows:
Actuarial gains and losses recognised directly in total equity(in €m)

2009

2008

2007

Cumulative amount at 1 January(1,546)(1,200)(1,808)

Recognised during the period (1)

(585)

(346)

608

(2,131)(1,546)(1,200)

368

259

226

(1,763)(1,287)(974)

Cumulative value at 31 December
Deferred Tax Asset at 31 December
Actuarial gains and losses recognised directly in equity, net(1) Included in 2007 is the change in the percentage of the proportional consolidation of MBDA from 50% in 2006 to 37.5% (€ 37 million).

Contribution to state and private pension plans, mainly in Germany and France, are to be considered as defined contribution plans.
Contributions in 2009 amount to € 605 million.

64 EADS FIN ANCIAL S TATEMENTS 2009

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OTHER PROVISIONS

Movements in provisions during the year were as follows:

Exchangedifferences

Increasefrompassageof time

Additions

2,198

2

106

1,573

5

0

(26)

45

619

2

17

430

0

0

372

0

21

191

0

0

126

0

0

Balance at
1 January
2009

Contract losses
Outstanding costs
Aircraft financing risks
Restructuring measures/pre-retirement
part-time work

905

Personnel charges
Obligation from services andmaintenance agreements
Warranties
Litigation and claims(in €m)Asset retirement

Reclassification/
Change inconsolidated
group

Used

1,966

75

713

(59)

37

Released

Balance at
31 December
2009

(804)

(64)

3,479

(531)

(108)

1,593

12

(21)

0

952

90

0

(138)

(162)

428

233

(1)

(212)

(16)

434

113

(1)

(94)

0

411

97

6

(67)

(22)

205

71

6

(11)

(5)

187

95

0

0

3

0

0

0

98

Other risks and charges

1,007

2

10

388

(69)

(231)

(180)

927

Total

7,516

(15)

199

3,711

(31)

(2,109)

(557)

8,714

The provision for contract losses mainly relates to Airbus
Military in conjunction with the A400M (see Note 3“Accounting for the A400M programme”) and to the A350
programme in Airbus Commercial.
The addition to provisions for outstanding costs mainly relates
to Defence & Security and Eurocopter and mainly corresponds
to tasks to complete on construction contracts.
The provision for aircraft financing risks fully covers, inline with the Group’s policy for sales financing risk, the net
exposure to aircraft financing of € 295 million (€ 301 million
at 31 December 2008) and asset value risks of € 657 million(€ 604 million at 31 December 2008) related to Airbus,

27.

Eurocopter and ATR (see Note 34 “Commitments andcontingencies”).
The provision for restructuring measures mainly relates toAirbus’ Power8 programme for the reduction of overhead costs.
For the provisions for other risks and charges, parts of theprovisions for settlement charges in conjunction with the A350
programme were reclassified to liabilities.
In general, as the contractual and technical parameters to beconsidered for provisions in the aerospace sector are rather
complex, uncertainty exists with regard to the timing andamounts of expenses to be taken into account.

Financing liabilities

In 2004, the EIB (European Investment Bank) granted a longterm loan to EADS in the amount of US$ 421 million, bearing
a fixed interest rate of 5.1% (effective interest rate 5.1%). EADS
issued under its EMTN Programme (Euro Medium Term Note
Programme) three Euro denominated bonds. The first issueof € 1 billion with expected final maturity in 2010 carriesa coupon of 4.625% (effective interest rate 4.7%) which was
swapped into variable rate of 3M-Euribor +1.02%. The second
issue of € 0.5 billion maturing in 2018 carries a coupon of
5.5% (effective interest rate 5.6%) which was swapped during
2005 into variable rate of 3M-Euribor +1.72%. The third
issue of € 1 billion in 2009 maturing 2016 carries a couponof 4.625% (effective interest rate 4.6%) which was swapped

into variable rate of 3M-Euribor +1.57%. Furthermore, Airbus
received in 1999 a Reinvestment Note from Deutsche Bank
AG in the amount of US$ 800 million, bearing a fixed interest
rate of 9.88% with an outstanding debt of € 305 million(2008: € 372 million).
EADS can issue commercial paper under the so called “billet
de trésorerie” programme at floating or fixed interest rates
corresponding to the individual maturities ranging from1 day to 12 months. The issued volume at 31 December 2009amounted to € 0 million (2008: € 0 million). The programme
has been set up in 2003 with a maximum volume of € 2 billion.

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Financing liabilities include liabilities connected with sales financing transactions amounting to € 733 million(2008: € 836 million), mainly at variable interest rates.
Non recourse Airbus financing liabilities (risk is supported by external parties) amount to € 652 million (2008: € 737 million).
Defeased bank deposits for aircraft financing of € 306 million and € 373 million as of 31 December 2009 and 2008 respectively
have been offset against financing liabilities.
(in €m)31 December 200931 December 2008

Bonds

1,500

1,527

811

895

391

481

165

143

2,867

3,046

thereof due in more than five years: 1,500 (31 December 2008: 498)
Liabilities to financial institutions
thereof due in more than five years: 182 (31 December 2008: 591)
Loans
thereof due in more than five years: 154 (31 December 2008: 312)
Liabilities from finance leases
thereof due in more than five years: 116 (31 December 2008: 97)
Long-term financing liabilities
Bonds

974

0

Liabilities to financial institutions

90

103

Loans

205

197

Liabilities from finance leases

17

19

Others

1,143

1,139

Short-term financing liabilities (due within one year)

2,429

1,458

Total

5,296

4,504

Included in “Others” are financing liabilities to joint ventures.
The aggregate amounts of financing liabilities maturing during the next five years and thereafter are as of 31 December 2009 as follows:(in €m)Financing liabilities

2010

2,429

2011

189

2012

160

2013

134

2014

432

Thereafter

1,952

Total

5,296

The aggregate amounts of financing liabilities maturing during the next five years and thereafter are as of 31 December 2008 as follows:(in €m)Financing liabilities

2009

1,458

2010

1,169

2011

150

2012

119

2013

110

Thereafter

1,498

Total

4,504

66 EADS FIN ANCIAL S TATEMENTS 2009

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Other ﬁnancial liabilities(in €m)31 December 200931 December 2008

Thereof European Governments refundable advances

4,882

4,563

Thereof liabilities for derivative financial instruments

732

2,208

Others

561

728

6,175

7,499

412

357

Non-current other financial liabilities

Total
Current other financial liabilities
Thereof European Governments refundable advances
Thereof liabilities to related companies

23

37

Thereof liabilities for derivative financial instruments

220

657

Others

545

663

1,200

1,714

Total

The increase of European Governments refundable advances(incl. bridge financing) relates mostly to expenses for accrued
interests and to advances received. This was partly compensatedby reimbursements paid. Regarding the interest expenses on
European Governments refundable advances see Note 12 “Total
finance costs”. Due to their specific nature, namely their risksharing features and the fact that such advances are generally
granted to EADS on the basis of significant development

29.

projects, European Governments refundable advances areaccounted for by EADS within “Non-current / current otherfinancial liabilities” on the balance sheet including accrued
interests.
Included in “Other financial liabilities” are € 1,192 million(2008: € 1,614 million) due within one year and € 3,957 million(2008: € 3,824 million) maturing after more than five years.

Other liabilities(in €m)31 December 200931 December 2008

8,579

8,843

Non-current other liabilities
Thereof customer advance payments
Others
Total

512

64

9,091

8,907

21,271

17,802Current other liabilities
Thereof customer advance payments
Thereof tax liabilities (excluding income tax)

582

585

Others

1,694

1,581

23,547

19,968

Total

Included in “Other liabilities” are € 18,619 million(2008: € 16,255 million) due within one year and€ 3,009 million (2008: € 2,983 million) maturing after
more than five years.

Advance payments received relating to construction contracts
amount to € 8,167 million (2008: € 5,230 million) mainly
resulting from Astrium (€ 3,038 million), Airbus Military(€ 2,626 million) and Defence & Security (€ 2,209 million).

EADS FIN ANCIAL S TATEMENTS 2009

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Trade liabilities

As of 31 December 2009, trade liabilities amounting to € 77 million (€ 29 million as of 31 December 2008) mature after more than
one year.

31.

Deferred income(in €m)31 December 200931 December 2008

Non-current deferred income

266

418

Current deferred income

880

822

1,146

1,240

Total

The main part of deferred income is related to sales of Airbus and ATR aircraft that include asset value guarantee commitments
and that are accounted for as operating leases (€ 400 million and € 544 million as of 31 December 2009 and 2008, respectively).

2.4 Notes to the Consolidated Statementsof Cash Flows (IFRS)
32.

Consolidated Statement of Cash Flows

As of 31 December 2009, EADS’ cash position (stated as cash
and cash equivalents in the Consolidated Statements of Cash
Flows) includes € 751 million (€ 666 million and € 602 million
as of 31 December 2008 and 2007, respectively) which

represent EADS’ share in MBDA’s cash and cash equivalents,
deposited at BAE Systems and Finmeccanica and which areavailable upon demand.

The following charts provide details on acquisitions (resulting in additional assets and liabilities acquired) of subsidiaries, joint
ventures and businesses:(in €m)31 December 200931 December 2008

31 December 2007

Total purchase price

(21)

(335)

(12)

thereof paid in cash and cash equivalents
Cash and cash equivalents included in the acquired subsidiaries, joint venturesand businesses

(21)

(335)

(12)

0

70

12

Cash Flow for acquisitions, net of cash

(21)

(265)

0

68 EADS FIN ANCIAL S TATEMENTS 2009

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In 2009, the aggregate cash flow for acquisitions, net of cash of € -21 million includes the acquisition of the underwater systems
business of QinetiQ, UK of € -14 million and additional non controlling interests in Spot Image € -7 million.
In 2008, the aggregate cash flow for acquisitions, net of cash of € -265 million includes mainly the acquisition of PlantCMLof € -233 million, Surrey Satellite Technology Limited (SSTL) of € -55 million and additional 41% of Spot Image amounting to€ +35 million.
In 2007, the aggregate cash flow for acquisitions, net of cash of € 0 million includes the acquisition of GPT Special ProjectManagement Ltd. (GPT).
(in €m)31 December 200931 December 2008

31 December 2007

Intangible assets; property, plant and equipment

0

90

0

Financial assets

0

1

0

Inventories

1

16

0

Trade receivables

4

44

3

Other assets

0

22

1

Cash and cash equivalents

0

70

12

Assets5243

16Provisions

(3)

(7)

(8)

Trade liabilities

(1)

(34)

(1)

Financing liabilities

0

(7)

0

Other liabilities

0

(92)

(4)

Liabilities

(4)

(140)

(13)

Fair value of net assets

1

103

3

Goodwill (preliminary) arising on acquisitions

14

259

9

Non-controlling interests/Consolidation of investments held prior to the acquisition
Less own cash and cash equivalents of acquired subsidiaries, joint venturesand businesses

6

(27)

0

0

(70)

(12)

Cash Flow for acquisitions, net of cash

21

265

0

The following charts provide details on disposals (resulting in assets and liabilities disposed) of subsidiaries:(in €m)Total selling price

31 December 200931 December 2008

31 December 2007

15

9

28

15

9

28

Cash and cash equivalents included in the (disposed) subsidiaries

(2)

(7)

1

Cash Flow from disposals, net of cash

13

2

29

thereof received by cash and cash equivalents

The aggregate cash flow from disposals, net of cash, in 2009 of € 13 million results from the sale of 70% of the interest in Socata.
The aggregate cash flow from disposals, net of cash, in 2008 of € 2 million results from the sale of Protac.

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The aggregate cash flow from disposals, net of cash, in 2007 of€ 29 million mainly includes the contribution in kind of NavalBusiness (Hagenuk, businesses in Germany and in UK) to
Atlas for a cash consideration of € 28 million, whereas EADS
increased its share in Atlas Elektronik from 40% to 49% in(in €m)

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return. Additions and disposals of assets and liabilities relating
to that transaction are included net in the following table.
Further included in the cash flow from disposals, net of cash,
are the sale of Alkan amounting to € 10 million and Barfieldfor € -9 million.
31 December 200931 December 2008

(50)

(8)

17

0

0

(3)

Inventories

(78)

(1)

(5)

Trade receivables

(26)

(3)

(19)

Other assets

(37)

0

(2)

Cash and cash equivalents

(2)

(7)

1
(11)

Intangible assets; property, plant and equipment
Financial assets

31 December 2007

Assets

(193)

(19)

Provisions

26

4

(7)

Trade liabilities

83

2

(5)

Financing liabilities

26

0

8

Other liabilities

43

4

9

Liabilities

178

10

5

Book value of net assets

(15)

(9)

(6)

Goodwill arising from disposals

0

0

(12)

Result from disposal of subsidiaries

0

0

(10)

Less own cash and cash equivalents of disposed subsidiaries
Cash Flow from disposals, net of cash

2

7

(1)

(13)

(2)

(29)

The cash flow from the disposal of the Airbus site of Laupheim in 2008 amounts to € +117 million resulting in a gain of€ 1 million.

2.5 Other Notes to the Consolidated Financial
Statements (IFRS)
33.

Litigation and claims

EADS is involved from time to time in various legal andarbitration proceedings in the ordinary course of its business,the most significant of which are described below. Other thanas described below, EADS is not aware of any governmental,
legal or arbitration proceedings (including any such proceedings
which are pending or threatened), during a period covering atleast the previous twelve months which may have, or have had

70 EADS FIN ANCIAL S TATEMENTS 2009

in the recent past significant effects on EADS’ or the Group’s
financial position or profitability.
In 2005, a liquidator representing the special purpose vehicle
GFAC (a joint venture between Swissair and GATX) sued
Airbus before a New York court to recover US$ 227 million in
pre-delivery payments, together with interest and costs. The

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.5 | Other Notes to the Consolidated Financial Statements (IFRS)

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lawsuit followed Airbus’ termination of a purchase agreementwith GFAC in October 2001 for 38 single-aisle and long-range
aircraft, in the context of Swissair’s bankruptcy. On 6 February
2009, a judge decided in favour of GFAC. In March 2009,
GFAC submitted arguments on the amount of its allegeddamages and requested entry of judgment. In parallel, Airbus
has filed an appeal of the February 2009 decision, which washeard by the appellate court on 17 September 2009. Bothplaintiff’s request and defendant’s appeal are currently pending,with the risk that Airbus may ultimately be required to pay anamount equal to the pre-delivery payments plus legal interestas damages.
In 2006, a liquidator representing the special purpose vehicle
Flightlease No. 7 (a wholly-owned subsidiary of the bankrupt
Swissair Group) sued Airbus before a Paris court to recover
US$ 319 million in pre-delivery payments, together withinterest and costs. The lawsuit followed Airbus’ termination ofa purchase agreement with Flightlease No. 7 in October 2001,
in the context of Swissair’s bankruptcy. On 23 December 2009
Airbus SAS filed a counterclaim against Flightlease No. 7 andnotified its parent company Flightlease Holdings to be joinedin the proceedings as guarantor of Flightlease No. 7.
Although EADS is not a party, EADS is supporting theEuropean Commission in litigation before the WTO. Following
its unilateral withdrawal from the 1992 EU-US Agreement
on Trade in Large Civil Aircraft, the US lodged a request on
6 October 2004 to initiate proceedings before the WTO. On
the same day, the EU launched a parallel WTO case against
the US in relation to its subsidies to Boeing. On 31 May 2005,
the US and the EU each requested the establishment of apanel. At its meeting on 20 July 2005, the Dispute Settlement
Body established the panels. Between November 2005 and thepresent, the parties filed numerous written submissions andattended several oral hearings in both cases. On 4 September
2009, a non-binding confidential draft report was issued in thecase brought by the US. The parties are currently providing
comments on the draft, and a first instance decision could
occur in the second quarter of 2010. A draft decision in thecase brought by the EU concerning subsidies to Boeing is
expected in June 2010. Exact timing of further steps in the
WTO litigation process is subject to ruling of the panels and tonegotiations between the US and the EU. Unless a settlement,
which is currently not under discussion, is reached between
the parties, the litigation is expected to continue for several
years.
The French Autorité des marchés financiers (the “AMF”)
began investigations in 2006 for alleged breaches of market
regulations and insider trading rules with respect to, among
other things, the A380 delays announced in 2006. On 1 April
2008, the AMF announced the notification of charges against
EADS and certain of its current and former executives

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for breach of such market regulations and insider trading
rules, respectively. On 22 July 2009, the Rapporteur of theSanction Commission of the AMF issued a report regarding
the charges notified by the AMF, which contained various
recommendations to the Sanction Commission on the meritsof the charges. Following oral hearings before the Sanction
Commission which took place from 23-27 November 2009,
the Sanction Commission decided, in a decision publishedon 17 December 2009, to dismiss all charges against EADS
and the other notified persons. The Sanctions Commission
held that EADS had complied with all applicable market
information duties, in particular in respect of risk of delays
affecting the A380 programme and its development, and that
there had been no breach of insider trading rules. Following
criminal complaints filed by a shareholders’ association andby an individual shareholder (including a civil claim fordamages), a French investigating judge is still carrying out an
investigation on the same facts.
In Germany, criminal proceedings regarding suspected insider
trading offences have not established any wrongdoing andare meanwhile mostly terminated. Furthermore, in Germany,
several shareholders have filed civil actions against EADS since2006 to recover their alleged losses in connection with thedisclosure of A380 programme delays. Several plaintiffs have
filed motions for “model proceedings”, which would allow
common issues of fact or law in multiple individual securities
actions to be decided together with binding effect in all suchactions. The proceedings are in their preliminary stage and theamounts claimed are relatively small.
On 12 June 2008, two actions were initiated in the UnitedStates District Court for the Southern District of New York,
one of which has since been voluntarily withdrawn. The
remaining action purports to be a class action brought onbehalf of all persons and entities residing in the United States
who purchased or otherwise acquired EADS’ common stockduring the period from 27 July 2005 through 9 March 2007.
Named as defendants are EADS and four current or former
executives of EADS and Airbus. The action seeks damages
in an unspecified amount, with interest and attorneys’ fees,
for alleged violations of the US securities laws in connection
with financial disclosures issued by EADS in 2005, 2006
and 2007 and public statements made during that same timeframe relating to A380 programme delays. On 2 January
2009, defendants filed motions to dismiss the complaint in
the action. On 17 March 2009, plaintiff filed its opposition
to the motions to dismiss; on 23 April 2009, defendants filed
replies; and on 30 April 2009, plaintiff requested leave to file asur-reply. On 16 November 2009, plaintiff and defendants filed
supplemental memorandums in support of their positions,which were followed by oral arguments on the motions to
dismiss on 11 December 2009. The defendants’ motions to
dismiss are pending.

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On 9 September 2009 and 4 December 2009, respectively, twoseparate requests were filed by institutional shareholders with
the Enterprise Chamber (Ondernemingskamer) of the Court ofAppeal in Amsterdam to open an inquiry into the management
and affairs of EADS. The applicants allege in their requests
that there are serious reasons to doubt proper management by
EADS, primarily with respect to the A380 programme delays
announced in 2006 and the related disclosures to the market.
A hearing on the requests was held on 28 January 2010 before
the Enterprise Court, with a decision currently pending.
Following an investigation conducted by the Italian Guardia
di Finanza, Italian tax authorities are currently evaluating
whether Astrium owes any overdue tax in Italy related to its
past contractual relationships. In parallel, the Italian Public
Prosecutor decided at the end of December 2009 to initiate
proceedings against Astrium’s legal representatives for failure
to file a tax declaration and attempted fraud.
On 10 November 2009, Airbus Military SL (AMSL) notified
Europrop International GmbH (EPI), the engine manufacturer
under the A400M aircraft programme, that it had a number ofcontractual claims against it for breach of Milestones 7, 8 and 9
under the engine agreement, in an amount currently totalling
approximately € 500 million. On 17 December 2009, the

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parties entered into a standstill agreement, pursuant to which
AMSL agreed not to pursue its claims until a later date. On
8 February 2010, EPI notified AMSL of its own claims underthe engine agreement, in an amount totalling approximately€ 425 million, and requested that AMSL enter into a standstillagreement in respect of such claims. AMSL refused thisrequest. On 23 February 2010, EPI sent notice of its intent toseek arbitration, and of its sending of a request for arbitration
to the International Chamber of Commerce (ICC) on the sameday. AMSL has sent notice of termination of the standstillagreement dated 17 December 2009.
Regarding EADS’ provisions policy, EADS recognises
provisions for litigation and claims when (i) it has a present
obligation from legal actions, governmental investigations,proceedings and other claims resulting from past events that are
pending or may be instituted or asserted in the future against
the Group, (ii) it is probable that an outflow of resources
embodying economic benefits will be required to settle suchobligation and (iii) a reliable estimate of the amount of suchobligation can be made. EADS believes that it has madeadequate provisions to cover current or contemplated generaland specific litigation risks. For the amount of provisions forlitigation and claims, see “Notes to Consolidated Financial
Statements (IFRS) — Note 26C. Other provisions”.

Commitments and contingencies

COMMITMENTS AND CONTINGENT LIABILITIESSales financing – In relation to its Airbus, Eurocopter and
ATR activities, EADS is committing itself in sales financing
transactions with selected customers. Sales financing
transactions are generally collateralised by the underlying
aircraft. Additionally, Airbus, Eurocopter and ATR benefit
from protective covenants and from security packages tailoredaccording to the perceived risk and the legal environment. EADS
believes that the estimated fair value of the aircraft securing
such commitments will substantially offset any potential losses
from the commitments. Any remaining difference between theamount of financing commitments given and the collateral valueof the aircraft financed is provided for as an impairment to therelating asset, if assignable, or as a provision for aircraft financing
risk. The basis for this write-down is a risk-pricing-model, which
is applied at every closing to closely monitor the remaining valueof the aircraft.
Depending on which party assumes the risks and rewards ofownership of a financed aircraft, the assets relating to sales

72 EADS FIN ANCIAL S TATEMENTS 2009

financing are accounted for on the balance sheet either
as (i) an operating lease (see Note 15 “Property, plant andequipment”) or (ii) a loan from aircraft financing or (iii) a
finance lease receivable (see Note 17 “Investments in associates
accounted for under the equity method, other investments andother long-term financial assets”). As of 31 December 2009,
related accumulated impairment amounts to € 70 million (2008:€ 52 million) for operating lease and to € 158 million (2008:€ 244 million) for loans and finance lease receivables. As partof provisions for aircraft financing risks € 35 million (2008:€ 21 million) are recorded (see Note 26C.) “Other provisions”).
Certain sales financing transactions include the sale and leaseback of the aircraft with a third party lessor under operatinglease. Unless the Group has sold down the relating operatinglease commitments to third parties, which assume liability forthe payments, it is exposed to future lease payments.

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Future nominal operating lease payments that result from aircraft sales financing transactions are recorded off balance sheet
and are scheduled to be paid as of 31 December 2009 as follows:(in €m)Not later than 2010

159

Later than 2010 and not later than 2014

476

Later than 2014

249

Total

884

Of which commitments where the transaction has been sold to third parties(468)

Total aircraft lease commitments where EADS bears the risk (not discounted)

416

Future nominal operating lease payments that result from aircraft sales financing transactions are recorded off balance sheet
and are scheduled to be paid as of 31 December 2008 as follows:(in €m)Not later than 2009170

Later than 2009 and not later than 2013

532

Later than 2013

383

Total

1,085

Of which commitments where the transaction has been sold to third parties(610)

Total aircraft lease commitments where EADS bears the risk (not discounted)

475

Total aircraft lease commitments of € 884 million as of
31 December 2009 (2008: € 1,085 million), arise from aircraft
head-leases and are typically backed by corresponding sublease
income from customers with an amount of € 616 million(2008: € 767 million). A large part of these lease commitments(€ 468 million and € 610 million as of 31 December 2009
and 2008) arises from transactions that were sold down tothird parties, which assume liability for the payments. EADS

determines its gross exposure to such operating leases as thepresent value of the related payment streams. The difference
between gross exposure and the estimated value of underlying
aircraft used as collateral, the net exposure, is provided for infull with an amount of € 260 million as of 31 December 2009(2008: € 280 million), as part of the provision for aircraft
financing risk (see Note 26C.) “Other provisions”).

As of 31 December 2009 and 2008, the total consolidated – on and off balance sheet – Commercial Aviation Sales Financing
Exposure is as follows (Airbus, Eurocopter and 50% for ATR):(in €m)31 December 200931 December 2008

Total gross exposure

1,495

1,276

Estimated fair value of collateral (aircraft)

(972)

(679)

Net exposure (fully provided for)

523

597

31 December 200931 December 2008

Details of provisions / accumulated impairments are as follows:(in €m)Accumulated impairment on operating leases (see Note 15 “Property, plant and equipment”)
Accumulated impairment on loans from aircraft financing and finance leases(see Note 17 “Investments in associates accounted for under the equity method, other investments
and other long-term financial assets”)

70

52

158

244

Provisions for aircraft financing risk (on balance sheet) (see Note 26C.) “Other provisions”)

35

21

Provisions for aircraft financing risk (commitment off balance sheet) (see Note 26C.) “Other provisions”)

260

280

Total provisions/accumulated impairments for sales financing exposure

523

597

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1Asset value guarantees – Certain sales contracts may
include the obligation of an asset value guarantee whereby
Airbus, Eurocopter or ATR guarantee a portion of thevalue of an aircraft at a specific date after its delivery.
Management considers the financial risks associated withsuch guarantees to be manageable. Three factors contributeto this assessment: (i) the guarantee only covers a trancheof the estimated future value of the aircraft, and its level isconsidered prudent in comparison to the estimated future
value of each aircraft; (ii) the asset value guarantee related
exposure is diversified over a large number of aircraft andcustomers; and (iii) the exercise dates of outstanding asset
value guarantees are distributed through 2021. If the present
value of the guarantee given exceeds 10% of the sales price of
the aircraft, the sale of the underlying aircraft is accounted
for as an operating lease (see Note 15 “Property, plant andequipment” and Note 31 “Deferred income”). In addition,
EADS is contingently liable in case asset value guarantees
with less than 10% are provided to customers as part of aircraft
sales. Counter guarantees are negotiated with third parties
and reduce the risk to which the Group is exposed. As of
31 December 2009, the nominal value of asset value guarantees
provided to airlines, that do not exceed the 10% criteria,
amounts to € 1,015 million (2008: € 946 million), excluding€ 430 million (2008: € 476 million) where the risk is considered
to be remote. In many cases the risk is limited to a specificportion of the residual value of the aircraft. The present
value of the risk inherent to the given asset value guarantees
where a settlement is being considered as probable is fully
provided for and included in the total amount of provisions
for asset value risks of € 657 million (2008: € 604 million)(see Note 26 C.) “Other provisions”). This provision covers apotential expected shortfall between the estimated value of theaircraft of the date upon which the guarantee can be exercised

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and the value guaranteed on a transaction basis taking counter
guarantees into account.
With respect to ATR, EADS and Finmeccanica are jointly andseverally liable to third parties without limitation. Amongst
the shareholders, the liability is limited to each partner’s
proportionate share.
While backstop commitments to provide financing related
to orders on Airbus’ and ATR’s backlog are also given, suchcommitments are not considered to be part of gross exposure
until the financing is in place, which occurs when the aircraft
is delivered. This is due to the fact that (i) past experiencesuggests it is unlikely that all such proposed financings actually
will be implemented (although it is possible that customers notbenefiting from such commitments may nevertheless request
financing assistance ahead of aircraft delivery), (ii) until theaircraft is delivered, Airbus or ATR retain the asset and do notincur an unusual risk in relation thereto, and (iii) third parties
may participate in the financing. In order to mitigate Airbus
and ATR credit risks, such commitments typically containfinancial conditions which guaranteed parties must satisfy inorder to benefit therefrom.

Other commitments – Other commitments comprisecontractual guarantees and performance bonds to certain
customers as well as commitments for future capital
expenditures.
Future nominal operating lease payments (for EADS as alessee) for rental and lease agreements (not relating to aircraft
sales financing) amount to € 954 million (2008: € 843 million)
as of 31 December 2009, and relate mainly to procurement
operations (e.g. facility leases, car rentals).

Maturities are as follows:(in €m)Not later than 2010

130

Later than 2010 and not later than 2014

335

Later than 2014

489

Total

954

The respective maturities as of 31 December 2008 are as follows:(in €m)Not later than 2009103

Later than 2009 and not later than 2013

316

Later than 2013

424

Total

843

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Information about ﬁnancial instruments

A) FINANCIAL RISK MANAGEMENT
By the nature of the activities carried out, EADS is exposed toa variety of financial risks, as explained below: i) market risks,
especially foreign currency exchange rate risks and interest
rate risks, ii) liquidity risk and iii) credit risk. EADS’ overall
financial risk management programme focuses on mitigating
unpredictable financial market risks and their potential adverse
effects on the Group’s operational and financial performance.
The Group uses derivative financial instruments and to a minor
extent non-derivative financial liabilities to hedge certain risk
exposures.
The financial risk management of EADS is generally carriedout by the central treasury department at EADS Headquarters
under policies approved by the Board of directors or by the
Chief Financial Officer. The identification, evaluation andhedging of the financial risks is in the responsibility of
established treasury committees with the Group’s Divisions
and Business Units.

Market risk
Currency risk — Foreign exchange risk arises when futurecommercial transactions or firm commitments, recognised
assets and liabilities and net investments in foreign operations
are denominated in a currency that is not the entity’sfunctional currency.
EADS manages a long-term hedge portfolio with a maturityof several years covering its net exposure to US Dollar
sales, mainly from the activities of Airbus. This hedge
portfolio covers to a large extent the Group’s highly probabletransactions.
Significant parts of EADS’ revenues are denominatedin US Dollars, whereas a major portion of its costs is incurredin Euros and to a smaller extent in GBP. Consequently, tothe extent that EADS does not use financial instruments tocover its current and future foreign currency exchange rate
exposure, its profits are affected by changes in the Euro-US
Dollar exchange rate. As the Group intends to generate profits
only from its operations and not through speculation on
foreign currency exchange rate movements, EADS uses hedging
strategies to manage and minimise the impact of exchange rate
fluctuations on these profits.
For financial reporting purposes, EADS mostly designates
a portion of the total firm future cash flows as the hedged
position to cover its expected foreign currency exposure.
Therefore, as long as the actual gross foreign currency cash
inflows (per month) exceed the portion designated as being

hedged, a postponement or cancellation of sales transactions
and corresponding cash inflows have no impact on the hedging
relationship. As hedging instruments, EADS primarily uses
foreign currency forwards, foreign currency options, somesynthetic forwards and at Airbus to a minor extent nonderivative financial liabilities.
EADS endeavors to hedge the majority of its exposure basedon firm commitments and forecasted transactions. For products
such as aircraft, EADS typically hedges forecasted sales in US
Dollar. The hedged items are defined as first forecasted highly
probable future cash inflows for a given month based upon
final payments at delivery. The amount of the expected flows
to be hedged can cover up to 100% of the equivalent of the
net US Dollar exposure at inception. For EADS, a forecasted
transaction is regarded as highly probable if the future delivery
is included in the internally audited order book or is very
likely to materialise in view of contractual evidence. The
coverage ratio is adjusted to take into account macroeconomic
movements affecting the spot rates and interest rates as wellas the robustness of the commercial cycle. For the non-aircraftbusiness EADS hedges in- and outflows in foreign currencies
from sales and purchase contracts following the same logic
which are typically contracted in lower volumes.
The Company also has foreign currency derivative instruments
which are embedded in certain purchase and lease contracts
denominated in a currency other than the functional currencyof the significant parties to the contract, principally US Dollar
and GBP. Gains or losses relating to such embedded foreign
currency derivatives are reported in other financial result. In
addition EADS hedges currency risk arising from financialtransactions in other currencies than Euro, such as fundingtransactions or securities.

Interest rate risk — The Group uses an asset-liability
management approach with the objective to limit its interest
rate risk. The Group undertakes to match the risk profile of its
assets with a corresponding liability structure. The remaining
net interest rate exposure is managed through several types ofinterest rate derivatives in order to minimise risks and financial
impacts. Hedging instruments that are specifically designatedto debt instruments have at the maximum the same nominal
amounts as well as the same maturity dates compared to thehedged item.
The cash and cash equivalents and securities portfolio of
the Group is invested mainly in non-speculative financial
instruments, mostly highly liquid, such as certificates ofdeposits, overnight deposits, commercial papers, other money

EADS FIN ANCIAL S TATEMENTS 200975

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market instruments and bonds. For this portfolio, EADS holds
on a regular basis an asset management committee which aims
at limiting the interest rate risk on a fair value basis through avalue-at-risk approach. EADS is mainly investing in short-term
instruments in order to further minimise any interest risk in thisportfolio. The remaining portion of securities is invested in short
to mid term bonds. Any related interest rate hedge qualifies forhedge accounting as either a fair value hedge or a cashflow hedge.

Price risk — EADS is to a small extent invested in equity
securities mainly for operational reasons. Therefore, the Groupassesses its exposure towards equity price risk as limited.
Sensitivities of Market Risks – The approach used tomeasure and control market risk exposure within EADS’
financial instrument portfolio is amongst other key indicators
the value-at-risk (“VaR”). The VaR of a portfolio is theestimated potential loss that will not be exceeded on theportfolio over a specified period of time (holding period) froman adverse market movement with a specified confidence level.
The VaR used by EADS is based upon a 95% confidence level
and assumes a 5-day holding period. The VaR model used
is mainly based on the so called “Monte-Carlo-Simulation”
method. Deriving the statistical behavior of the markets
relevant for the portfolio out of market data from the previous
two years and observed interdependencies between different
markets and prices, the model generates a wide range ofpotential future scenarios for market price movements.
EADS VaR computation includes the Group’s financial debt,
short-term and long-term investments, foreign currency
forwards, swaps and options, finance lease receivables andliabilities, foreign currency trade payables and receivables,

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including intra-group payables and receivables affecting Group
profit and loss.
Although VaR is an important tool for measuring market risk,
the assumptions on which the model is based give rise to some
limitations, including the following:> a 5-day holding period assumes that it is possible tohedge or dispose of positions within that period. This isconsidered to be a realistic assumption in almost all cases
but may not be the case in situations in which there issevere market illiquidity for a prolonged period;> a 95% confidence level does not reflect losses that may
occur beyond this level. Even within the model used there
is a 5% statistical probability that losses could exceed thecalculated VaR;
> the use of historical data as a basis for estimating thestatistical behavior of the relevant markets and finallydetermining the possible range of future outcomes out of
this statistical behavior may not always cover all possible
scenarios, especially those of an exceptional nature.
The Group uses VaR amongst other key figures in order todetermine the riskiness of its financial instrument portfolio
and in order to optimise the risk-return ratio of its financial
asset portfolio. Further, the Group’s investment policy definesfor P&L and OCI certain limits on total risk for the portfolioof cash, cash equivalents and securities. The total VaR as wellas the different risk-factor specific VaR figures of this portfolio
are measured and serve amongst other measures as a basis forthe decisions of the asset management committee.

A summary of the VaR position of EADS’ financial instruments portfolio at 31 December 2009 and 31 December 2008 is as follows:(in €m)Total VaR

Equity price VaR

Currency VaRInterest rate VaR

FX hedges for forecast transactions or firm commitments
Financing liabilities, cash, cash equivalents, securities andrelated hedges
Finance lease receivables and liabilities, foreign currency
trade payables and receivables

908

–

908

115

84

45

49

26

35

–

9

34

Correlation effect

(101)

–

(93)

(14)

All financial instruments

926

45

873

161

FX hedges for forecast transactions or firm commitments
Financing liabilities, cash, cash equivalents, securities andrelated hedges
Finance lease receivables and liabilities, foreign currency
trade payables and receivables

1,888

–

1,829

279

109

32

113

42

79

–

23

69

Correlation effect

(166)

–

(41)

(89)

All financial instruments

1,910

32

1,924

301

31 December 200931 December 2008

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The decrease of total VaR compared to 31 December 2008
is mainly attributed to a decrease of volatilities in financial
markets after crisis peak end of 2008. EADS uses its
derivative instruments almost entirely as well as some of its
non-derivative financial liabilities for hedging purposes. As
such, the respective market risks of these hedging instruments
are - depending on the hedges’ actual effectiveness - offset bycorresponding opposite market risks of the underlying forecast
transactions, assets or liabilities. Under IFRS 7 the underlying
forecast transactions do not qualify as financial instruments andare therefore not included in the tables shown above. The VaRof the FX hedging portfolio in the amount of € 908 million(2008: € 1,888 million) cannot be considered as a risk indicator
for the Group in the economic sense.
Further, EADS also measures VaR of the Group-internaltransaction risk arising on Group entities contracting in acurrency different from its functional currency affecting Group
profit and loss. However, these currency risks arise purely
EADS internally and are in economic terms 100% compensatedby the corresponding currency fluctuations recognised in a
separate component of equity when translating the foreign
entity into EADS functional currency. At 31 December
2009, the related total VaR amounted to € 113 million (2008:€ 263 million).

(in €m)

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Liquidity risk
The Group’s policy is to maintain sufficient cash and cash
equivalents at any time to meet its present and futurecommitments as they fall due. EADS manages its liquidity
by holding adequate volumes of liquid assets and maintains
a committed credit facility (€ 3.0 billion and € 3.0 billion asof 31 December 2009 and 2008, respectively) in addition
to the cash inflow generated by its operating business.
The liquid assets typically consist of cash and cash equivalents.
In addition, the Group maintains a set of other funding
sources. Depending on its cash needs and market conditions,
EADS may issue bonds, notes and commercial papers. In
context of the ongoing financial crisis, EADS continues tokeep within the asset portfolio the focus on low counterparty
risk. Adverse changes in the capital markets due to the global
financial crisis could increase the Group’s funding costs andlimit its financial flexibility.
Further, the management of the vast majority of the Group’s
liquidity exposure is centralised by a daily cash concentration
process. This process enables EADS to manage its liquidity
surplus as well as its liquidity requirements according to theactual needs of its subsidiaries. In addition, Managementmonitors the Group’s liquidity reserve as well as the expectedcash flows from its operations based on a quarterly rolling cash
forecast.

Carrying
amountContractual
cash flows< 1 year

1 year –2 years

2 years –3 years

3 years –4 years

4 years –5 years

More than
5 years(14,642)(15,624)(11,137)

(382)

(329)

(365)

(725)

(2,686)31 December 2009
Non-derivative financial liabilities
Derivative financial liabilities

(952)

(894)

(216)

(275)

(213)

(85)

(59)

(46)

(15,594)(16,518)(11,353)

(657)

(542)

(450)

(784)

(2,732)Non-derivative financial liabilities(13,756)(14,898)(9,954)(1,477)

(315)

(270)

(226)

(2,656)

Derivative financial liabilities(2,865)(2,333)

(517)

(355)

(499)

(438)

(173)

(351)

(16,621)(17,231)(10,471)(1,832)

(814)

(708)

(399)

(3,007)Total
31 December 2008

Total

The above table analyses EADS financial liabilities by relevant
maturity groups based on the period they are remaining on
EADS balance sheet to the contractual maturity date.
The amounts disclosed are the contractual undiscounted cash
flows, comprising all outflows of a liability such as repayments
and eventual interest payments.
Non-derivative financial liabilities comprise financing liabilities
at amortised cost and finance lease liabilities as presented in
the tables of Note 35B). Due to their specific nature, namely
their risk-sharing features and uncertainty about the repayment
dates, the European Governments refundable advances are
not included in the above mentioned table with an amount of€ 5,294 million (2008: € 4,920 million).

Credit risk
EADS is exposed to credit risk to the extent of nonperformance by either its customers (e.g. airlines) or its
counterparts with regard to financial instruments. However,the Group has policies in place to avoid concentrations of credit
risk and to ensure that credit risk is limited.
As far as central treasury activities are concerned, credit risk
resulting from financial instruments is managed on Grouplevel. Counterparts for transactions on cash, cash equivalents
and securities as well as for derivative transactions are limited
to high credit quality financial institutions, corporates orsovereigns. For such financial transactions EADS has set up
a credit limit system to actively manage and limit its credit
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risk exposure. This limit system assigns maximum exposurelines to counterparts of financial transactions, taking into
account the lowest of their credit ratings as published byStandard & Poors, Moody’s and Fitch IBCA. Besides thecredit rating, the limit system takes into consideration
fundamental counterparty data, as well as sectoral and maturity
allocations and further qualitative and quantitative criteriasuch as credit risk indicators. The credit exposure of EADS
is reviewed on a regular basis and the respective limits are
regularly monitored and updated. Further, EADS constantly
aims for maintaining a certain level of diversification in its
portfolio between individual counterparts as well as between
financial institutions, corporates and sovereigns in order toavoid an increased concentration of credit risk on only a few
counterparts.
The Group is monitoring the performance of the individual
financial instruments and the impact of the credit markets on
their performance. EADS has procedures in place that allow tohedge, to divest from or to restructure financial instruments
having undergone a downgrade of the counterparts’ credit
rating or showing an unsatisfactory performance. These

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measures aim to protect EADS to a certain extent against credit
risks from individual counterparts. Nevertheless, a potential
negative impact resulting from a market-driven increase of
systematic credit risks cannot be excluded.
Sales of products and services are made to customers after
having conducted appropriate internal credit risk assessment.
In order to support sales, primarily at Airbus Commercialand ATR, EADS may agree to participate in the financingof customers, on a case-by-case basis, directly or throughguarantees provided to third parties. In determining theamount and terms of the financing transaction, Airbus
Commercial and ATR take into account the airline’s credit
rating and economic factors reflecting the relevant financial
market conditions, together with appropriate assumptions as tothe anticipated future value of the financed asset.
The carrying amount of financial assets represents the
maximum credit exposure. The credit quality of financial
assets that are neither past due nor impaired can be assessedby reference to external credit rating (if available) or internal
assessment of customers’ (e.g. airlines’) creditworthiness.

The maximum exposure of the current portion of other long-term financial assets, trade receivables, receivables from relatedcompanies, loans and others included in current other financial assets to credit risk at reporting date is the following:(in €m)

2009

2008

Receivables, neither past due nor impaired

5,253

5,002
31

Not past due due to negotiations and not impaired

18

Receivables impaired individually

17

13

Receivables not impaired and past due ≤ 3 months

767

795

Receivables not impaired and past due >3 and ≤ 6 months

129

173

Receivables not impaired and past due >6 and ≤ 9 months

156

118

Receivables not impaired and past due >9 and ≤ 12 months

255

48

Receivables not impaired and past due > 12 months
TotalB) CARRYING AMOUNTS AND FAIR VALUESOF FINANCIAL INSTRUMENTS
The fair value of a financial instrument is the price atwhich one party would assume the rights and/or duties ofanother party. Fair values of financial instruments have been
determined with reference to available market information at

78 EADS FIN ANCIAL S TATEMENTS 2009

328

277

6,923

6,457

the reporting date and the valuation methodologies discussed
below. Considering the variability of their value-determining
factors and the volume of financial instruments, the fair values
presented herein may not be indicative of the amounts that theGroup could realise in a current market environment.

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The following tables present the carrying amounts and fair values of financial instruments according to IAS 39 measurement
categories as of 31 December 2009 and 2008 respectively:
Financial
instruments
Total

31 December 2009(in €m)Fair value throughprofit or loss

Fair value
for hedge
relations

Available for sale

Loans and receivables
and Financial liabilities
at amortised cost

AssetsHeld fortrading DesignatedFair value

Book
value

Fair
value

Amortised
cost

Fair value

-

-

-

1,078

1,078

620

1,698

1,698

-

-

-

313

(1)

Other investments and otherlong-term financial assets> thereof at amortised
cost> thereof at cost
> thereof Fair value via
OCI
Current portion of otherlong-term financial assets
Non-current and current
other financial assets--

Other (3)Bookvalue Fair value

-

-

-

313

(1)

-

-

-

199

199

-

-

-

199

199

-

-

-

-

-

96

96

134

230

230

175

-

2,105

-

-

1,370

1,370

-

3,650

3,650

-

-

-

-

-

5,587

5,587

-

5,587

5,587
8,055

Trade receivables
Non-current and current
securities

-

604

-

7,451

7,451

-

-

-

8,055

Cash and cash equivalents

-

1,774

-

3,379

3,379

1,885

1,885

-

7,038

7,038

175

2,378

2,105

11,342

11,02910,016

10,016754

26,77026,457

Held fortrading DesignatedFair value

FV viaOCI

At costAmortised
cost

Fair value

Total

Liabilities

Long-term and short-term
financing liabilities
Non-current and current
other financial liabilities
Trade liabilities
Total

Book
value Fair value

-

-

-

-

-

(5,114)(5,277)(182)(5,296)(5,459)(31)-(1,049)--(6,295)(6,295) (2)-(7,375)(7,375)

-

-

-

-

-

(8,217)(8,217)-(8,217)(8,217)(31)-(1,049)--(19,626)(19,789)(182)(20,888) (21,051)(1) Fair value is not reliably measurable.
(2) The European Governments refundable advances of € 5,294 million are measured at amortised cost; a fair value can not be measured reliably due to their risk sharing
nature and uncertainty about the repayment dates.
(3) This includes finance lease receivables and finance lease liabilities, which are not assigned to a measurement category according to IAS 39. The carrying amountsof these receivables/payables approximate their fair values.

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31 December 2008(in €m)Fair value throughprofit or loss

AssetsHeld fortrading Designated

Other investments and otherlong-term financial assets> thereof at amortised
cost> thereof at cost
> thereof Fair value
via OCI
Current portion of otherlong-term financial assets
Non-current and current
other financial assets

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Fair value
for hedge
relations

Available for sale

Loans and receivables
and Financial liabilities atamortised cost

Fair value

Book
value

Fair
value

Amortised
cost

Fair value

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Other

Financial
instruments
Total

(3)

Book
value

Fair
value

-

-

-

-

-

646

646

634

1,280

1,280

-

-

-

296

(1)

-

-

-

296

(1)

-

-

-

136

136

-

-

-

136

136

-

-

-

-

-

109

109

68

177

177

649

-

2,257

-

-

1,201

1,201

-

4,107

4,107

5,267

5,267

-

5,267

5,267

Trade receivables
Non-current and current
securities

-

-

-

-

-

-

729

-

6,223

6,223

-

-

-

6,952

6,952

Cash and cash equivalents

-

625

-

3,913

3,913

2,207

2,207

-

6,745

6,745

649

1,354

2,257

10,568

10,272

9,430

9,430

702

24,96024,664

Held fortrading DesignatedFair value

FV viaOCI

At costAmortised
cost

Fair value

Book
value

Fair
value

(162)

(4,504)(4,659)-(9,213)(9,213)(7,824)(7,824)

Total

Liabilities

Long-term and short-term
financing liabilities
Non-current and current
other financial liabilities

-

-

-

-

-

(4,342)(4,497)(322)-(2,857)--(6,034)(6,034) (2)Trade liabilities
Total

-

-

-

-

-

(7,824)(7,824)

-

(322)

-

(2,857)--(18,200)(18,355)(162)(21,541) (21,696)(1) Fair value is not reliably measurable.
(2) The European Governments refundable advances of € 4,920 million are measured at amortised cost; a fair value can not be measured reliably due to their risk sharing
nature and uncertainty about the repayment dates.
(3) This includes finance lease receivables and finance lease liabilities, which are not assigned to a measurement category according to IAS 39. The carrying amounts ofthese receivables/payables approximate their fair values.

The following table allocates the financial assets and liabilities measured at fair value to the three levels of the fair value hierarchy:
31 December 2009(in €m)Level 1

Level 2

Level 3

Total

2,097

456

-

2,553

Financial assets measured at fair value
Financial assets measured at fair value through profit or loss
Derivative financial instruments for hedge relations
Available for Sale financial assets
Total
Financial liabilities measured at fair value
Financial liabilities measured at fair value throughprofit or loss
Derivative financial instruments for hedge relations
Total

-

2,105

-

2,105

7,401

3,628

-

11,029

9,498

6,189

-

15,687

-

(31)

-

(31)

-

(921)

(128)

(1,049)

-

(952)

(128)

(1,080)The fair value hierarchy consists of the following levels:
Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2: inputs other than quoted prices that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); andLevel 3: inputs for the asset or liability that are not based on observable market data.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)>2.5 | Other Notes to the Consolidated Financial Statements (IFRS)

1Financial Assets and Liabilities – Generally, fair values
are determined by observable market quotations or valuation
techniques supported by observable market quotations.
By applying a valuation technique, such as present valueof future cash flows, fair values are based on estimates.
However, methods and assumptions followed to disclose data
presented herein are inherently judgmental and involve various
limitations like estimates as of 31 December 2009 and 2008,
which are not necessarily indicative of the amounts that theCompany would record upon further disposal/termination of
the financial instruments. Unquoted other investments aremeasured at cost as their fair value is not reliably determinable.

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Securities – The fair value of securities included inavailable-for-sale investments is determined by reference totheir quoted market price at the reporting date. If a quoted
market price is not available, fair value is determined on thebasis of generally accepted valuation methods on the basis ofmarket information available at the reporting date.

The methodologies used are as follows:

Currency and Interest Rate Contracts – The fair value ofthese instruments is the estimated amount that the Company
would receive or pay to settle the related agreements as of
31 December 2009 and 2008. EADS used standard valuation
methods using standard software. The valuation is basedon freely available market data from different sources using
standard cash flow discounting. For options the Black-Scholes
formula has been applied.

Short-term investments, cash, short-term loans, suppliers– The carrying amounts reflected in the annual accounts arereasonable estimates of fair value because of the relatively shortperiod of time between the origination of the instruments andits expected realisation.

The fair value of financing liabilities as of
31 December 2009 has been estimated including all futureinterest payments. It also reflects the interest rate as stated in
the tables above. The fair value of the EMTN bonds has beenassessed using public price quotations.

The following types of financial assets held at 31 December 2009 and 2008 respectively are recognised at fair value throughprofit or loss:(in €m)Nominal amount
Fair value as
at initial recognition asof 31 December 2009 of 31 December 2009

Nominal amount
Fair value as
at initial recognition asof 31 December 2008 of 31 December 2008

Designated at fair value through profit or loss at recognition:> Money Market Funds (accumulating)

2,097

2,096

1,074

1,076

> Foreign currency Funds of Hedge Funds

275

232

275

230

> Uncapped Structured Interest Rate Notes

50

49

50

48

2,422

2,378

1,399

1,354

Total

The accumulating Money Market Funds have been designatedat fair value through profit or loss as their portfolio is managed
and their performance is measured on a fair value basis.
In addition EADS invests in Money Market Funds paying
interest on a monthly basis. The fair value of those funds
corresponds to their nominal amount at initial recognition dateamounting to € 2,445 million (2008: € 1,787 million).

Investments in foreign currency Funds of Hedge Funds havebeen designated at fair value through profit or loss.
EADS also invests in uncapped Structured Interest Rate Notes– hybrid instruments combining a zero coupon bond and anembedded interest derivative. As the latter had to be separated
from the host contract EADS opted to designate the entire
hybrid instrument at fair value through profit or loss.

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Back to ContentsC) NOTIONAL AMOUNTS OF DERIVATIVE FINANCIAL INSTRUMENTS
The contract or notional amounts of derivative financial instruments shown below do not necessarily represent amounts exchangedby the parties and, thus, are not necessarily a measure for the exposure of the Group through its use of derivatives.
The notional amounts of foreign exchange derivative financial instruments are as follows, specified by year of expected maturity:
Year ended 31 December 2009(in €m)Remaining period
2010

2011

2012

2013

2014

2015

2016

2017

Total

Net forward sales contracts

10,581

8,796

7,488

6,095

3,282

2,251

Purchased USD put options

795

708

0

0

0

0

38

0

38,531

0

0

1,503

> Purchased USD call options

893

1,412

1,370

0

0

> Purchased USD put options

893

1,412

1,370

0

0

0

0

0

3,675

0

0

0

> Written USD call options

893

1,412

1,370

0

3,675

0

0

0

0

3,675

FX swap contracts

3,809

24

35

130

225

0

0

0

4,223

Year ended 31 December 2008(in €m)

2009

2010

2011

2012

2013

2014

2015

2016

Total

Foreign Exchange Contracts:
Net forward sales (purchase)contracts

9,695

9,869

6,275

4,774

3,212

1,546

1,044

(44)

36,371

1

2,515

3,162

790

0

0

0

0

6,468

> Purchased USD call options

1,504

924

1,462

1,418

0

0

0

0

5,308

> Purchased USD put options

1,504

924

1,462

1,418

0

0

0

0

5,308

> Written USD call options

1,504

924

1,462

1,418

0

0

0

0

5,308

4,793

0

25

35

130

225

0

0

5,208

Foreign Exchange Contracts:

Structured USD forwards:

Remaining period

Purchased USD put options
Structured USD forwards:

FX swap contracts

The notional amounts of interest rate contracts are as follows, specified by year of expected maturity:
Remaining period

Year ended 31 December 2009(in €m)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Total

Interest Rate Contracts

1,447

400

130

437

372

34

1,000

0

1,288

1,289

6,397

Remaining period

Year ended 31 December 2008(in €m)

2009

2010

2011

2012

2013-2017

2018

2019

Total

Interest Rate Contracts

753

1,792

277

170

0

1,235

1,224

5,451

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Back to ContentsD) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING DISCLOSURE
The following interest rate curves are used in the determination of the fair value in respect of the derivative financial instruments
as of 31 December 2009 and 2008:
31 December 2009
Interest rate in %

EUR

USD

GBP

6 months

0.93

0.63

0.95

1 year

1.21

0.98

1.59

5 years

2.81

2.96

3.42

10 years

3.60

3.95

4.13

31 December 2008
Interest rate in %

EUR

USD

GBP

6 months

2.98

1.88

2.75

1 year

3.05

2.22

2.86

5 years

3.23

2.07

3.17

10 years

3.74

2.50

3.48

The development of the foreign exchange rate hedging instruments recognised in AOCI as of 31 December 2009 and 2008 is
as follows:
Equity attributable
to equity ownersof the parent(in €m)

1 January 2008
Unrealised gains and losses from valuations, net of tax
Transferred to profit or loss for the period, net of tax

Non-controllinginterests

Total

3,551

2

3,553

(2,050)(1)(2,051)(1,684)0(1,684)

Changes in fair values of hedging instruments recorded in AOCI, net of tax(3,734)(1)(3,735)31 December 2008/1 January 2009

(183)

1

(182)

Unrealised gains and losses from valuations, net of tax

2,015

0

2,015

Transferred to profit or loss for the period, net of tax(1,003)0(1,003)

Changes in fair values of hedging instruments recorded in AOCI, net of tax

1,012

0

1,012

31 December 2009

829

1

830

In the year 2009 an amount of € 1,456 million was reclassified from equity mainly to revenues resulting from matured cash flow
hedges.
Corresponding with its carrying amounts, the fair values of each type of derivative financial instruments are as follows:
31 December 200931 December 2008(in €m)AssetsLiabilities

AssetsLiabilities

Foreign currency contracts – Cash Flow Hedges
Foreign currency contracts – not designated in a hedge
relationship

2,016

(811)

2,256

(2,469)

130

(28)

323

(230)

Interest rate contracts – Fair Value Hedges
Interest rate contracts – not designated in a hedging
relationship

89

(110)

1

(74)

0

0

0

(3)

Embedded foreign currency derivatives

9

(3)

3

(89)

2,244

(952)

2,583

(2,865)Total

At 31 December 2009, the Group has interest swap agreements
in place with notional amounts totaling € 2,500 million (as at
31 December 2008: € 1,500 million). The swaps are used tohedge the exposure to changes in the fair value of its EMTN
bonds (see Note 27 “Financing liabilities”). The fair value profit
on the interest rate swaps of € 15 million (2008: € 68 million)
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has been recognised in financial result and offset against an
equal reduction on its EMTN bonds.
Derivatives which are not designated for hedge accounting
are classified as a current asset or liability. The full fair valueof a hedging derivative is classified as a non-current asset
or liability if the remaining maturity of the hedged item ismore than 12 months and, as a current asset or liability, if thematurity of the hedged item is less than 12 months in case of

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serial production. In case of long-term production, a hedging
derivative is classified as non-current when the hedged items’remaining maturity is beyond EADS’ normal operating cycle;
and as a current asset or liability when the remaining maturityof the hedged item is in EADS’ normal operating cycle.
No material ineffectiveness arising from hedging relationshiphas been determined.

NET GAINS OR LOSSESEADS net gains or (losses) recognised in profit or loss in 2009 and 2008 respectively are as follows:(in €m)

2009

2008

(100)

(149)

12

64

0

6

(179)

(160)

83

79

Financial assets or financial liabilities at fair value through profit or loss:> Held for trading> Designated on initial recognition
Available-for-sale-financial assets:> Result before taxes removed from OCI and recognised in profit or loss
Loans and receivables
Financial liabilities measured at amortised cost

Interest income from financial assets or financial liabilities through profit or loss is included in net gains and losses.
Net gains and losses of loans and receivables contain among others results from currency adjustments from foreign operations andimpairment losses.
The following net gains and (losses) are recognised directly in equity in 2009 and 2008:(in €m)

2009

2008

162

6

Available-for-sale-financial assets:> Unrealised net gains and (losses) recognised directly in OCIF)

TOTAL INTEREST INCOME AND TOTAL INTEREST EXPENSES

In 2009, the total interest income amounts to € 344 million for financial assets which are not measured at fair value through profit
or loss. For financial liabilities which are not measured at fair value through profit or loss € -503 million are recognised as totalinterest expenses. Both amounts are calculated by using the effective interest method.

G) IMPAIRMENT LOSSES
The following impairment losses on financial assets are recognised in profit or loss in 2009 and 2008 respectively:(in €m)

2009

2008

Available-for-sale financial assets

(12)

(23)

Loans and receivables

(76)

(114)

Other (1)

(3)

(36)

Total

(91)

(173)

(1) Concerns finance lease receivables.

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Share-based Payment

A) STOCK OPTION PLANS (SOP) AND LONG-TERM INCENTIVE PLANS (LTIP)
Based on the authorisation given to it by the shareholders’meetings (see dates below), the Group’s Board of directors
approved (see dates below) stock option plans in 2006, 2005,
2004, 2003, 2002, 2001 and 2000. These plans provide to themembers of the Executive Committee as well as to the Group’s
senior management the grant of options for the purchase of
EADS shares.
For all of EADS’ Stock Option Plans, the granted exercise price
was exceeding the share price at grant date.

At its 13 November 2009 and 2008 meetings, the Board of
directors of the Company approved the granting of performance
units and restricted units in the Company. The grant of so called“units” will not physically be settled in shares but represents acash settled plan in accordance with IFRS 2.
In 2009 compensation expense for Stock Option and Long-term
Incentive Plans was recognised for an amount of € 35 million(in 2008: € 22 million).

The fair value of units granted per vesting date is as follows (LTIP plan 2009):
In € (per unit granted)

FV of restricted and performance units to be settled in cash

May 2013

13.68

November 2013

13.62

May 2014

13.56

November 2014

13.51

As of 31 December 2009 provisions of € 27 million relating to LTIP have been recognised.
The lifetime of the performance and restricted units (2009) is contractually fixed (see within the description of the “eleventh
tranche”). The measurement is based on the share price as of the reporting date (€ 14.09 as of 31 December 2009) and also takes
into account the present value of the expected dividend payments.
The following major input parameters were used in order to calculate the fair value of the stock options granted:

Input parameters for the Black Scholes Option Pricing Model
SOP 2006

Share price (€)

25.34

Exercise price (€)

25.65 (1)Risk-free interest rate (%) (2)4.13

Expected volatility (%)

30.7

Estimated Life (years)

5.51) The exercise price for the performance and restricted shares is € 0.
2) The risk-free interest rate is based on a zero coupon yield curve that reflects the respective life (years) of the options.

EADS uses the historical volatilities of its share price as
an indicator to estimate the volatility of its stock options
granted. To test whether those historical volatilities
sufficiently approximate expected future volatilities, they
are compared to the implied volatilities of EADS options,which are traded at the market as of grant date. Such options
typically have a shorter life of up to two years. In case of only
minor differences between the historical volatilities and theimplied volatilities, EADS uses historical volatilities as input

parameters to the Black Scholes Option Pricing Model (pleaserefer to Note 2 “Summary of significant accounting policies”).
For measurement purposes performance criteria are considered
to be met.
The estimated option life of 5.5 years (in 2006 and 2005) was
based on historical experience and incorporated the effect of
expected early exercises.

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The principal characteristics of the options, performance and restricted shares as well as performance and restricted units as
at 31 December 2009 are summarised in the various tables below:
First tranche

Second tranche

Date of shareholders’ Meeting

24 May 2000

24 May 2000

Date of Board of directors Meeting (grant date)

26 May 2000

20 October 2000

Number of options granted

5,324,884

240,000

Number of options outstanding

1,451,720

30,000Total number of eligible employees
Exercise date

Expiry dateConversion right
VestedExercise price850
34
50% of options may be exercised after a period of two years and four weeks from the dateof grant of the options; 50% of options may be exercised as of the third anniversaryof the date of grant of the options (subject to specific provisions contained in the Insider
Trading Rules — see “Part 2/3.1.3 Governing Law – Dutch Regulations”).
8 July 2010

8 July 2010

One option for one share

One option for one share

100%

100%

€ 20.90€ 20.90

Exercise price conditions

110% of fair market value of the shares at the date of grant

Number of exercised options

2,892,020

188,000

Third tranche

Fourth tranche

Date of shareholders’ Meeting

10 May 2001

10 May 2001

Date of Board of directors Meeting (grant date)

12 July 2001

9 August 2002

Number of options granted

8,524,250

7,276,700

Number of options outstanding

3,299,659

2,459,276

Total number of eligible employees
Exercise date

Expiry date

1,650
1,562
50% of options may be exercised after a period of two years and four weeks from the dateof grant of the options; 50% of options may be exercised as of the third anniversaryof the date of grant of the options (subject to specific provisions contained in the Insider
Trading Rules — see “Part 2/3.1.3 Governing Law – Dutch Regulations”).
12 July 2011

Conversion right

8 August 2012
One option for one share

Vested100%

100%

Exercise price€ 24.66€ 16.96

Exercise price conditions

110% of fair market value of the shares at the date of grant

Number of exercised options

3,492,831

86 EADS FIN ANCIAL S TATEMENTS 2009

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Fifth tranche

Date of shareholders’ Meeting

Sixth tranche

6 May 2003

6 May 2003

10 October 2003

8 October 2004

Number of options granted

7,563,980

7,777,280

Number of options outstanding

4,615,853

6,016,706

Date of Board of directors Meeting (grant date)

Total number of eligible employees
Exercise date

Expiry date

1,491
1,495
50% of options may be exercised after a period of two years and four weeks from the dateof grant of the options; 50% of options may be exercised as of the third anniversaryof the date of grant of the options (subject to specific provisions contained in the Insider
Trading Rules — see “Part 2/3.1.3 Governing Law – Dutch Regulations”).
9 October 2013

Conversion right
VestedExercise price

7 October 2014
One option for one share

100%

100% (1)€ 15.65€ 24.32

Exercise price conditions

110% of fair market value of the shares at the date of grant

Number of exercised options

2,517,623

2,400(1) As regards to the sixth tranche, vesting of part of the options granted to EADS top Executives was subject to performance conditions. As a result, part of these
conditional options have not vested and were therefore forfeited during the year 2007.

Seventh tranche

Date of shareholders’ Meeting
Date of Board of directors Meeting (grant date)

11 May 2005
9 December 2005

Number of options granted

7,981,760

Number of options outstanding

6,245,431

Total number of eligible beneficiaries

Exercise date

Expiry dateConversion right

1,608
50% of options may be exercised after a period of two years from the date of grantof the options; 50% of options may be exercised as of the third anniversary of the dateof grant of the options (subject to specific provisions contained in the Insider
Trading Rules — see “Part 2/3.1.3 Governing Law — Dutch Regulations”).
As regards to the seventh tranche, part of the options granted to the top
EADS Executives are performance related.
8 December 2015
One option for one share
100% (1)VestedExercise price
Exercise price conditions€ 33.91
110% of fair market value of the shares at the date of grant

Number of exercised options

0(1) As regards to the seventh tranche, vesting of part of the options granted to EADS top Executives was subject to performance conditions. As a result, part of these
conditional options have not vested and were therefore forfeited during the year 2008.

EADS FIN ANCIAL S TATEMENTS 2009

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Eighth tranche

Date of shareholders’ Meeting

4 May 2006

Date of Board of directors Meeting (grant date)18 December 2006
Stock option plan

Number of options granted

1,747,500

Number of options outstanding

1,667,000

Total number of eligible beneficiaries

Date from which the options may be exercised

221
50% of options may be exercised after a period of two years from the date of grantof the options; 50% of options may be exercised as of the third anniversary of the dateof grant of the options (subject to specific provisions contained in the Insider
Trading Rules — see “Part 2/3.1.3 Governing Law – Dutch Regulations”).

Date of expiration

16 December 2016

Conversion right

One option for one share

Vested100%

Exercise price
Exercise price conditions€ 25.65
110% of fair market value of the shares at the date of grant

Number of exercised options

0
Performance and restricted shares plan
Performance shares

Restricted shares

Number of shares granted

1,344,625

391,300

Number of shares outstanding

1,283,000

376,850

Total number of eligible beneficiaries
Vesting date

Number of vested shares

1,637
The performance and restricted shares will vest if the participant is still employed by an EADS
company and, in the case of performance shares, upon achievement of mid-term businessperformance. The vesting period will end at the date of publication of the 2009 annual
results, expected in March 2010.
3,500

175

Ninth tranche

Date of Board of directors Meeting (grant date)

7 December 2007
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted

1,693,940

506,060

Number of units outstanding

1,634,100

493,320

Total number of eligible beneficiaries

Vesting dates

Number of vested units

88 EADS FIN ANCIAL S TATEMENTS 2009

1,617
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and, in the case of performance units,
upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:> 25% expected in May 2011;> 25% expected in November 2011;> 25% expected in May 2012;> 25% expected in November 2012.
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Tenth tranche

Date of Board of directors Meeting (grant date)

13 November 2008
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted

2,192,740

801,860

Number of units outstanding

2,170,340

795,380

Total number of eligible beneficiaries

Vesting dates

1,684
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and, in the case of performance units,
upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:> 25% expected in May 2012;> 25% expected in November 2012;> 25% expected in May 2013;> 25% expected in November 2013.

Number of vested units

1,120

0

Eleventh tranche

Date of Board of directors Meeting (grant date)

13 November 2009
Performance and restricted unit plan

Number of units granted
Total number of eligible beneficiaries

Vesting dates

Performance units

Restricted units

2,697,740

928,660

1,749
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and, in the case of performance units,
upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:> 25% expected in May 2013;> 25% expected in November 2013;> 25% expected in May 2014;> 25% expected in November 2014.

The following table summarises the development of the number of stock options, shares as well as units:
Number of Options
Options granted

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

2000

5,564,884--(189,484)

5,375,400
5,375,400

First & Second Tranche

2001

-

5,375,400

-

-

2002

-

5,375,400--

5,375,400

2003-

5,375,400-(75,000)

5,300,400

2004-

5,300,400(90,500)(336,000)

4,873,900

2005-

4,873,900(2,208,169)(121,000)

2,544,731

2006-

2,544,731(746,242)(23,000)

1,775,489
1,703,380

2007-

1,775,489(35,109)(37,000)

2008-

1,703,380-(116,160)

1,587,220

2009-

1,587,220-(105,500)

1,481,720

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Number of Options
Third Tranche

Options granted

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

2001

8,524,250--(597,825)

7,926,425

2002-

7,926,425--

7,926,425

2003-

7,926,425-(107,700)

7,818,725

2004-

7,818,725-(328,500)

7,490,225

2005-

7,490,225(2,069,027)(132,475)

5,288,723

2006-

5,288,723(1,421,804)(10,400)

3,856,519

2007-

3,856,519(2,000)(81,350)

3,773,169

2008-

3,773,169-(273,250)

3,499,919

2009-

3,499,919-(200,260)

3,299,659

Options granted

Balance at
1 January

Forfeited

Balance at
31 December

Number of Options
Fourth Tranche

Exercised

2002

7,276,700

-

-

(600)

7,276,100

2003-

7,276,100-(70,125)

7,205,975

2004-

7,205,975(262,647)(165,500)

6,777,828
4,359,1892005-

6,777,828(2,409,389)(9,250)2006-

4,359,189(1,443,498)(3,775)2,911,916

2007-

2,911,916(189,532)(15,950)

2,706,434

2008-

2,706,434-(159,313)

2,547,121

2009-

2,547,121-(87,845)2,459,276

Options granted

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

2003

7,563,980---

7,563,980

2004-

7,563,980(9,600)(97,940)

7,456,440

2005-

7,456,440(875,525)(87,910)

6,493,005

2006-

6,493,005(1,231,420)(31,620)

5,229,965

Number of Options
Fifth Tranche

2007

-

5,229,965(386,878)(24,214)

4,818,873

2008-

4,818,873(14,200)(75,080)

4,729,593

2009-

4,729,593-(113,740)

4,615,853

Options granted

Balance at
1 January

Forfeited

Balance at
31 December

Number of Options
Sixth Tranche

Exercised

2004

7,777,280---

7,777,280

2005-

7,777,280-(78,220)

7,699,060

7,699,060(2,400)(96,960)

7,599,700

2007-

7,599,700-(1,358,714)

6,240,986

2008-

6,240,986-(183,220)6,057,766

2009-

6,057,766-(41,060)

6,016,706

2006

90 EADS FIN ANCIAL S TATEMENTS 2009

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Number of Options
Seventh Tranche

Options granted

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

7,981,760

2005

7,981,760

-

-

-

2006

-

7,981,760-(74,160)

7,907,600

2007-

7,907,600-(142,660)

7,764,940

2008-

7,764,940-(1,469,989)

6,294,951

2009-

6,294,951-(49,520)

6,245,431

Options granted

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

2006

1,747,500---

1,747,500

Number of Options
Eighth Tranche

2007

-

1,747,500-(5,500)1,742,000

2008-

1,742,000-(64,000)

1,678,000

2009-

1,678,000-(11,000)

1,667,000

46,436,354-(13,397,940)(7,252,769)

25,785,645

Shares granted

Balance at
1 January

Forfeited

Balance at
31 December

Total options for all Tranches

Number of Shares
Performance/restricted shares plan 2006

VestedPerformance shares in 2006

1,344,625---

1,344,625

Performance shares in 2007-

1,344,625(875)(15,375)

1,328,375

Performance shares in 2008-

1,328,375(875)(36,125)

1,291,375

Performance shares in 2009-

1,291,375(1,750)(6,625)

1,283,000

Restricted shares in 2006

391,300---

391,300

Restricted shares in 2007-

391,300-(4,550)386,750

Restricted shares in 2008-

386,750-(8,275)

378,475

Restricted shares in 2009-

378,475(175)(1,450)376,850

1,735,925

1,669,850(3,675)(72,400)

1,659,850

Units granted

Balance at
1 January

VestedForfeited

Balance at
31 December

Performance units in 2007

1,693,940---

1,693,940

Performance units in 2008-

1,693,940(1,680)(38,760)

1,653,500

Performance units in 2009-

1,653,500(840)(18,560)

1,634,100

506,060---

506,060

Total shares

Number of Units
Ninth Tranche

Restricted units in 2007
Restricted units in 2008-

506,060-(9,800)496,260

Restricted units in 2009-496,260-(2,940)493,320

2,200,000

2,149,760(2,520)(70,060)

2,127,420

Total units

EADS FIN ANCIAL S TATEMENTS 200991

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Number of Units
Tenth Tranche

Units granted

Balance at
1 January

VestedForfeited

Balance at
31 December

Performance units in 2008

2,192,740---

2,192,740

Performance units in 2009-

2,192,740(1,120)(21,280)

2,170,340

801,860---

801,860

Restricted units in 2008
Restricted units in 2009
Total units-

801,860-(6,480)795,380

2,994,600

2,994,600(1,120)(27,760)

2,965,720

Units granted

Balance at
1 January

VestedForfeited

Balance at
31 December

2,697,740---

2,697,740

Number of Units
Eleventh Tranche

Performance units in 2009
Restricted units in 2009
Total units

928,660---

928,660

3,626,400---

3,626,400

B) EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)In 2009, the Board of directors approved an additional ESOP
following eight ESOPs established in 2008, 2007, 2005, 2004,
2003, 2002, 2001 and in 2000. For the 2009 ESOP, eligible
employees were able to purchase a maximum of 500 shares per
employee of previously unissued shares. The offer was broken
down into two tranches which were available for all employees
to choose. The subscription price for tranche A was € 10.76.
The subscription price for tranche B was the highest of thesubscription price for tranche A or 80% of the average opening
market prices for EADS shares on the Paris stock exchange

37.

over the twenty trading days preceding 19 November 2009,
resulting in a subscription price of € 10.76.
During a lockup period of at least one year under tranche Aor five years under tranche B, employees are restricted fromselling the shares, but have the right to receive all dividends
paid. Employees who subscribed to tranche A have in addition
the ability to vote at the annual shareholder meetings. EADS
issued and sold 1,358,936 ordinary shares with a nominal
value of € 1.00 under both tranches. Compensation expense of€ 4 million (in 2008: € 6 million) was recognised in connection
with the ESOP 2009.

Related party transactions

Related parties — The Group has entered into varioustransactions with related companies in 2009 and 2008 that haveall been carried out in the normal course of business. As is theGroup’s policy, related party transactions have to be carriedout at arm’s length. Transactions with related parties include
the French State, Daimler AG, Lagardère and SEPI (Spanish
State). Except for the transactions with the French State and
SEPI, the transactions are not considered material to the Groupeither individually or in the aggregate. The transactions with
the French State include mainly sales from the Eurocopter,

92 EADS FIN ANCIAL S TATEMENTS 2009

Astrium and Defence & Security Divisions for programmes
like Tiger, M51/M45 ballistic missiles and SCALP naval cruise
missiles. The transactions with the Spanish State include
mainly sales from the Airbus Military and Defence & Security
for military programmes. With regard to the French andSpanish States as customers of the A400M programme pleaserefer to Note 3 “Accounting for the A400M programme”.
The transactions with the joint ventures mainly concern theEurofighter programme.

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The following table discloses the related party transactions on a full EADS’ share as of 31 December 2009:(in €m)French State

Sales of goods
and services andother income in2009

Purchasesof goods andservices andother expense in2009

Receivables
due as of
31 December
2009

Payablesdue as of
31 December
2009

Other
Liabilities/Loans
received as of
31 December
2009 (1)

1,173

1

1,342

3

2,329

Spanish State (SEPI)

94

0

107

0

764

Daimler AG

6

14

1

1

0

0

0

0

0

15

Total transactions with shareholder

Lagardère group

1,273

15

1,450

4

3,108

Total transactions with joint ventures

1,858

24

745

0

1,431

Total transactions with associates

1,171

1

327

9

0

(1) Including European Governments refundable advances from the French and Spanish State.

As of 31 December 2009, EADS granted guarantees to the Spanish State in the amount of € 250 million mainly relating to advancepayments received and performance bonds and in the amount of € 328 million to Air Tanker group in the UK.
The following table discloses the related party transactions on a full EADS’ share as of 31 December 2008:
Purchasesof goods andservices andother expense in2008

Receivables
due as of
31 December
2008

1,085

2

198

0

Daimler AG

7

19

1

0

0

Lagardère group

0

0

0

2

15

Total transactions with shareholder

1,290

21

1,245

5

2,921

Total transactions with joint ventures

1,566

24

629

27

1,399

987

8

388

2

0

(in €m)French State

Sales of goods
and services andother income in2008

Spanish State (SEPI)

Total transactions with associates

Payablesdue as of
31 December
2008

Other
Liabilities/Loans
received as of
31 December
2008 (1)

1,195

3

2,094

49

0

812

(1) Including European Governments refundable advances from the French and Spanish State.

As of 31 December 2008, EADS granted guarantees to the
Spanish State in the amount of € 331 million mainly relating
to advance payments received and performance bonds and in
the amount of € 291 million to Air Tanker group in the UK.

In 2007, Lagardère and the French State repaid to EADS thedividends they received related to 2006 for an amount of€ 29 million as an interest free loan.

EADS FIN ANCIAL S TATEMENTS 200993

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Remuneration — The annual remuneration and related compensation costs of all of key management personnel, i.e. Non
Executive Board members, Executive Board members and members of the Executive Committee, can be summarised as follows:2009

Compensation expense

Defined benefit obligation (1)Pension expense (2)

-

-

2.0

1.8

0.7

12.8

23.3

2.9

(in €m)Non Executive Board members (3)Executive Board member

Pension

1.4(4)

Other Executive Committee members (5)(1) Amount of the net pension defined benefit obligation(2) Aggregated amount of current service and interest costs related to the defined benefit obligation accounted for during fiscal year 2009(3) Non Executive Board member s in office as at 31 December 2009(4) The Chief Executive Officer was the sole Executive Board member in office as at 31 December 2009(5) Executive Board member s in office as at 31 December 2009, including specific exceptional bonus if any and EADS N.V. compensation.

2008

Compensation expense

Defined benefit obligation (1)Pension expense (2)

-

-

0.9

1.4

0.6

15.4

23.1

1.9

(in €m)Non Executive Board members (3) (6)
Executive Board member(4)

Other Executive Committee members (5)Pension

1.5(1) Amount of the net pension defined benefit obligation(2) Aggregated amount of current service and interest costs related to the defined benefit obligation accounted for during fiscal year 2008
(3) Non Executive Board member s in office as at 31 December 2008
(4) The Chief Executive Officer was the sole Executive Board member in office as at 31 December 2008. At the Chief Executive Officer’s request the variable payment
was waived.
(5) Executive Board member s in office as at 31 December 2008, including specific exceptional bonus if any and EADS N.V. compensation.
(6) In the 2008 Consolidated Financial Statements, the compensation expense for the Non Executive Board member s reflects the amount paid in 2008 for the reporting
period 2007.

Additionally, performance units granted in 2009 to the Chief
Executive Officer and to the other Executive Committee
members represented 393,000 units.

The Board has decided to reduce the maximum terminationindemnity from 24 months to 18 months of annual total target
salary.

The amounts detailed above do neither comprise thetermination package nor the estimated cost of Long-term
Incentives granted to Executive Committee members.

This new rule is applicable to the Executive Committee
members from the renewal of their employment contracts.

For more information in respect of remuneration of directors,
see “Notes to the Company Financial Statements – Note 11:
Remuneration”.
EADS has not provided any loans to/advances to/guarantees onbehalf of directors, former directors or Executive Committee
members.
The Executive Committee members are furthermore entitled toa termination package when the parting results from a decisionby the Company. The employment contracts for the Executive
Committee members are concluded for an indefinite term withan indemnity of up to a maximum of 24 months of their target
income.

94 EADS FIN ANCIAL S TATEMENTS 2009

The indemnity could be reduced pro rata or would even not beapplicable depending on age and date of retirement.
Under the LTIP 2009, the Chief Executive Officer, as well
as all Executive Committee members will have to own EADS
shares equal to a minimum of 20% of the number of vested
units until the end of their mandate.
Executive Committee members are also entitled to a company
car.

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Interest in Joint Ventures

The Group’s principal investments in joint ventures and the proportion of ownership are included in Appendix “Information on
principal investments”. Joint ventures are consolidated using the proportionate method.
The following amounts represent the Group’s proportional share of the assets, liabilities, income and expenses of the significant
joint ventures (MBDA, Atlas and ATR) in aggregate:(in €m)

2009

2008

Non-current assets

588

667

Current assets

3,013

3,051

Non-current liabilities

473

446

Current liabilities

2,628

2,702

Revenues

1,645

1,652

95

145

Profit for the period

39.

Earnings per Share

Basic earnings per share — Basic earnings per share arecalculated by dividing profit (loss) for the period attributable
to equity owners of the parent (Net income (loss)) by theweighted average number of issued ordinary shares during theyear, excluding ordinary shares purchased by the Group andheld as treasury shares.
2009

2008

2007

Profit (loss) for the period attributable to equity owners of the parent(Net income (loss))€ (763) million€ 1,572 million€ (446) million

Weighted average number of ordinary shares809,698,631

806,978,801

803,128,221€ (0.94)€ 1.95€ (0.56)

Basic earnings (losses) per share

Diluted earnings per share — For the calculation of thediluted earnings per share, the weighted average number ofordinary shares is adjusted to assume conversion of all potential
ordinary shares. The Group’s categories of dilutive potential
ordinary shares are stock options as well as performanceand restricted shares granted under the 8th tranche. In
2009 and 2008, the average share price of EADS did notexceed the exercise price of stock options under any stock

Profit (loss) for the period attributable to equity owners of the parent(Net income (loss))
Weighted average number of ordinary shares (diluted)
Diluted earnings (losses) per shareoption plan (in 2007: 1st, 2nd, 4th and 5th stock option plan).
Hence, no shares related to stock options (2008: no shares;
2007: 2,420,180 shares) were considered in the calculation ofdiluted earnings per share. Since the average price of EADS
shares during 2009 exceeded the price for performance andrestricted shares, 1,491,482 shares related to performance andrestricted shares (in 2008: 618,141 shares; in 2007: no shares)
were considered in the calculation.
2009

2008

2007

€ (763) million€ 1,572 million€ (446) million

811,190,113

807,596,942

805,548,401€ (0.94)€ 1.95€ (0.55)

EADS FIN ANCIAL S TATEMENTS 2009

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Number of Employees

The number of employees at 31 December 2009 is 119,506 as compared to 118,349 at 31 December 2008.

41.

Events after the reporting date

In February 2010, EADS entered into negotiations to increase
Airbus’ stake in DASELL Cabin Interior GmbH / Germany,a medium-sized manufacturer of cabin interior components
and sanitary facilities, to 100% and to sell this Aerospace
OEM supplier afterwards to an industrial investor. These
interrelated negotiations were not finalised until the date these
Consolidated Financial Statements were authorised for issue by
EADS’ Board of directors.

in the coming weeks. Please refer to Note 3. “Accounting for
the A400M programme” for further details.

On 5 March 2010, the Launch Nations and EADS have cometo a principle agreement regarding the A400M military airlifterwith the intention to amend the original contract accordingly

These Consolidated Financial Statements have been authorisedfor issuance by the Board of directors on 8 March 2010.

96 EADS FIN ANCIAL S TATEMENTS 2009

Upon evaluation of the request for proposal for the US Air
Force Tanker replacement, Northrop Grumman has decided
not to submit a bid to the US Department of Defence for the
KC-X programme in March 2010. EADS as partner to Northrop
Grumman accepts this decision.

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2.6 Appendix “Information on principal investments”– Consolidation Scope
2009

%

2008

%

Company

Head officeF

100.00F

100.00AD Grundstücksgesellschaft GmbH

Pöcking (Germany)F

100.00F

100.00FF

100.00FF

100.00FF

100.00F

100.00F

100.00F

100.00Airbus (TIANJIN) Delivery Center Ltd.

Tianjin (China)

F

51.00

P

51.00

Airbus (TIANJIN) Final Assembly Company Ltd.

Tianjin (China)

F

51.00

P

51.00

Airbus (TIANJIN) Jigs & Tools Company Ltd.

Tianjin (China)F100.00F

100.00Airbus Americas Inc.

USA

F

100.00F

100.00Airbus China Ltd.

Hong Kong (China)F100.00Airbus Corporate Jet Centre SAS (ACJC)

Toulouse (France)F

100.00F

100.00Airbus Finance Company Ltd.

Dublin (Ireland)

F

100.00F

100.00Airbus Financial Service Unlimited

IrelandE

50.00

Airbus Freighter Conversion GmbH

Dresden (Germany)F

100.00Airbus Holding S.A.

FranceF100.00F

100.00Airbus Invest

Toulouse (France)F

100.00F

100.00Airbus North America Customer Services Inc.

USA

F

100.00F

100.00Airbus North America Engineering Inc.

USA

F

100.00F

100.00Airbus Operations GmbH (ex Airbus Deutschland GmbH)

Hamburg (Germany)F

100.00F

100.00Airbus Operations Ltd. (Airbus UK Ltd.)

United Kingdom

F

100.00F

100.00Airbus Operations SAS (ex Airbus France S.A.S.)

Toulouse (France)F

100.00F

100.00Airbus Operations SL (ex Airbus Espana SL)

Madrid (Spain)F

100.00Airbus Real Estate Premium AEROTEC Nord GmbH & Co. KG

Pöcking (Germany)F

100.00F

100.00Airbus S.A.S.

Toulouse (France)F

100.00F

100.00Airbus Sales Inc.

USA

F

100.00F

100.00Airbus Transport International S.N.C. (ATI)

Blagnac (France)F

100.00F

100.00Avaio Ltd.

Isle Of Man

F

100.00F

100.00Aviateur Aerospace Ltd.

Ireland

E

20.00

E

20.00

Aviateur Capital Ltd. (In 2006: Avion Capital Ltd.)

IrelandF

100.00F

100.00Aviateur Eastern Ltd.

IrelandF

100.00F

100.00Aviateur Finance Ltd.

IrelandF

100.00F

100.00Aviateur International Ltd.

IrelandF

100.00F

100.00Aviateur Leasing Ltd.

IrelandF

100.00CIMPA GmbHGermanyF

100.00CIMPA Ltd.

United Kingdom

F

100.00F

100.00Airbus Commercial

F

Aerolia SAS

FranceAFS Cayman 11 Ltd.

Cayman Islands

100.00

AIFS (Cayman) Ltd.

Cayman Islands

100.00

AIFS Cayman Liquidity Ltd.

Cayman Islands

AIFS Leasing Company Ltd.

Ireland100.00100.00CIMPA SAS

FranceCTC GmbH

Stade (Germany)

F: Fully consolidated.
P: Proportionate consolidated.
E: At equity consolidated.
The stated percentage of ownership is related to the parent company.
Note *: Regarding associated investments, only the parent company is stated in this list.
EADS FIN ANCIAL S TATEMENTS 2009

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%

2008

%

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3

4

5



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Company

Head office

Augsburg (Germany)F

100.00EADS Real Estate Premium AEROTEC Augsburg GmbH& Co. KG

F

100.00Elbe Flugzeugwerke GmbH

Dresden (Germany)

E

30.00

OnAIR BV

Netherlands

F

100.00Premium AEROTEC GmbH

Augsburg (Germany)F

100.00F

100.00Star Real Estate S.A.S.

Boulogne (France)F

100.00F

100.00Total Airline Service Company

United Arab Emirates

90.00

Airbus Military S.L.

Madrid (Spain)

Additionally consolidated are 26 SPEs.
Airbus Military
F

90.00

F

E

40.00

E

40.00

AirTanker Holdings Ltd.*

London (UK)F

100.00F

100.00Chantilly/Virginia (USA)F

100.00F

100.00EADS CASA North America Inc
EADS CASA S.A.
(Unit: EADS CASA Military Transport Aircraft)

F

77.21

F

77.21

EADS PZL «WARSZAWA-OKECIE» S.A.

Warsaw (Poland)

F

100.00F

100.00AA Military Maintenance Pty. Ltd.

Brisbane (Australia)

F

100.00F

100.00AA New Zealand Pty. Ltd.

Bankstown (Australia)

F

100.00F

100.00American Eurocopter Corp.

Dallas, Texas (USA)

F

60.00

F

60.00

American Eurocopter LLC

Dallas, Texas (USA)F

100.00F

100.00Australian Aerospace Ltd.

Bankstown (Australia)

F

100.00F

100.00EIP Holding Pty. Ltd.

Bankstown (Australia)

F

75.00

F

75.00

Eurocopter South East Asia Pte. Ltd.

Singapore (Singapore)F

100.00F

100.00Eurocopter Canada Ltd.

Ontario (Canada)F

100.00F

100.00Eurocopter Deutschland GmbH

Donauwörth (Germany)F

100.00Eurocopter di Mexico S.A.

Mexico D.F. (Mexico)F

100.00F

100.00Eurocopter España S.A.

Madrid (Spain)F

100.00F

100.00Eurocopter Holding S.A.

Paris (France)F

100.00F

100.00Eurocopter S.A.S.

Marignane (France)F

100.00F

100.00Eurocopter Training Services S.A.S

Marignane (France)

F

85.66

F

85.66

Helibras - Helicopteros do Brasil S.A.

Itajuba (Brazil)

E

25.00

E

25.00

HFTS Helicopter Flight Training Services GmbH

Hallbergmoos (Germany)F

100.00F

100.00

Korean Helicopter Development Support

Sacheon-si (South Korea)

F

100.00Aircraft Services Lemwerder GmbH

Lemwerder (Germany)

Madrid (Spain)

Eurocopter

Defence & Security
F

100.00F

100.00F

100.00

Apsys

Suresnes (France)

E

16.20

E

16.20

Arbeitsgemeinschaft Marinelogistik

Bremen (Germany)

E

14.70

E

14.70

Atlas Defence Technology SDN.BHD

Kuala Lumpur (Malaysia)

P

49.00

Atlas Elektronik Finland Oy

Helsinki (Finland)

P

49.00

P

49.00

Atlas Elektronik GmbH

Bremen (Germany)

P

49.00

P

49.00

Atlas Elektronik Pty Ltd.

St. Leonards (Australia)

P

49.00

P

49.00

Atlas Elektronik UK (Holdings) Ltd.

Newport, Wales (UK)

P

49.00

P

49.00

Atlas Elektronik UK Ltd.

Newport, Wales (UK)

P

49.00

P

49.00

Atlas Hydrographic Holdings Pty Ltd.

St. Leonards (Australia)

P

49.00

P

49.00

Atlas Hydrographics GmbH

Bremen (Germany)

P

49.00

P

49.00

Atlas Maridan ApS

Horsholm (Denmark)

F: Fully consolidated.
P: Proportionate consolidated.
E: At equity consolidated.
The stated percentage of ownership is related to the parent company.
Note *: Regarding associated investments, only the parent company is stated in this list.

98 EADS FIN ANCIAL S TATEMENTS 2009

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2009

%

P

49.00

Atlas Maritime Security GmbH

Bremen (Germany)

P

49.00

Atlas Naval Engineering Company

Kyungnam (South Korea)

P

49.00

Atlas Naval Systems Malaysia SDN.BHD.

Kuala Lumpur (Malaysia)

P

49.00

Company2

Head office

F

55.00

F

55.00

Aviation Defense Service S.A.

Saint-Gilles (France)

P

37.50

P

37.50

Bayern-Chemie Gesellschaft für flugchemische Antriebe mbH

Aschau/Inn (Germany)

E

19.60

E

19.60

CybiCOM Atlas Defence (Pty) Ltd.
Defence & Security Real Estate Ulm/
Unterschleißheim GmbH & Co. KG

Umhlanga Rocks (South Africa)

F

100.00F

100.00F

100.00Dornier Consulting GmbHFriedrichshafen (Germany)

Pöcking (Germany)F

100.00F

100.00Dornier Flugzeugwerft GmbHFriedrichshafen (Germany)F

100.00F

100.00EADS CASA S.A. (Unit: Military Aircraft)

Madrid (Spain)F

100.00F

100.00EADS Cognac Aviation Training Services

Paris (France)F

100.00F

100.00EADS Defence & Security Solutions Espana S.A.U.

Madrid (Spain)F

100.00F

100.00EADS Defence & Security Systems Limited - Holding

Newport, Wales (UK)F

100.00F

100.00EADS Defence & Security Systems Ltd.

Newport, Wales (UK)F

100.00F

100.00EADS Defence & Security Systems S.A.

Elancourt (France)F

100.00F

100.00EADS Defence and Security Saudi Ltd

Riyadh Olaya District (Saudi Arabia)

F

100.00F

100.00EADS Deutschland GmbH – Defence Headquarter

Unterschleißheim (Germany)F

100.00F

100.00EADS Deutschland GmbH - Military Aircraft TB 51

Munich (Germany)F

100.00F

100.00EADS Deutschland GmbH – Verteidigung und Zivile Systeme

Ulm (Germany)F

100.00F

100.00EADS Operations & Services UK

Newport, Wales (UK)F

100.00F

100.00EADS Secure Networks Deutschland GmbHUlm (Germany)F

100.00F

100.00EADS Secure Networks Oy

Helsinki (Finland)

F

100.00F

100.00EADS Secure Networks S.A.S.

Elancourt (France)F

100.00F

100.00EADS System & Defence Electronics Belgium

Oostkamp (Belgium)
Mexico DF (Mexico)F

100.00F

100.00EADS Telecom Mexico SA de CV

E

30.00

E

30.00

ESG Elektroniksystem- und Logistikgesellschaft

Munich (Germany)

E

24.50

E

24.50

ET Marinesysteme GmbH

Wilhelmshaven (Germany)F

100.00F

100.00Fairchild Controls Corporation

Frederick Maryland (USA)F

100.00F

100.00FmElo Elektronik- und Luftfahrtgeräte GmbHUlm (Germany)F

100.00F

100.00Gesellschaft für Flugzieldarstellung mbH

Hohn (Germany)F

100.00F

100.00Get Electronique S.A.

Castres (France)

E

45.00

E

45.00

Grintek Ewation (Pty) Ltd.

Pretoria (South Africa)

P

49.00

P

49.00

Hagenuk Marinekommunikation GmbH

Flintbek (Germany)F

100.00F

100.00IFR France S.A.

Blagnac (France)

P

37.50

P

37.50

LFK – Lenkflugkörpersysteme GmbH

Schrobenhausen (Germany)F

100.00F

100.00

M.P. 13

Paris (France)

P

50.00

P

50.00

Maîtrise d’Oeuvre Système

Issy les Moulineaux (France)F

100.00

Matra Défense

Velizy (France)

P

37.50

Matra Electronique

La Croix Saint-Ouen (France)F

100.00

Matra Holding GmbH

Frankfurt (Germany)

Matrium GmbH

Munich (Germany)

37.50

MBDA France

Velizy (France)

P

37.50

E

49.00

P

37.50

P

P

37.50

P

37.50

MBDA Holding

Velizy (France)

P

37.50

P

37.50

MBDA Inc.

Westlack, CA (USA)

P

37.50

MBDA International

Stevenage (UK)

F: Fully consolidated.
P: Proportionate consolidated.
E: At equity consolidated.
The stated percentage of ownership is related to the parent company.
Note *: Regarding associated investments, only the parent company is stated in this list.
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2009

%

2008

%

Company

Head office

P

37.50

P

37.50

MBDA Italy SpA

Rome (Italy)

P

37.50

P

37.50

MBDA M S.A.

Chatillon sur Bagneux (France)

P

37.50

MBDA Reinsurance Ltd.

Dublin (Ireland)

P

37.50

P

37.50

MBDA S.A.S.

Velizy (France)

P

37.50

P

37.50

MBDA Services

Velizy (France)

P

37.50

P

37.50

MBDA Treasury

Jersey

P

37.50

P

37.50

MBDA UK Ltd.

Stevenage (UK)

E

26.80

E

26.80

Patria Oyj

Helsinki (Finland)

F

80.00

F

80.00

Pentastar Holding

Paris (France)F

100.00F

100.00

PlantCML

Temecula, CA (USA)F

100.00F

100.00

Proj2

Paris (France)F

100.00F

100.00

Racal Instruments Group Ltd. UK

Wimborne, Dorset (UK)

E

18.75

E

18.75

Roxel

Saint-Médard-en-Jalles (France)F

100.00F

100.00

Sofrelog S.A.

Bozons (France)

P

49.00

P

49.00

Sonartech Atlas Pty Ltd.

St. Leonards (Australia)

P

25.13

P

25.13

TAURUS Systems GmbH

Schrobenhausen (Germany)

P

37.50

P

37.50

TDW- Ges. für verteidigungstechnische Wirksysteme GmbH

Schrobenhausen (Germany)F

100.00F

100.00

Test & Services France

Velizy (France)F

100.00TYX Corp.

Reston, VA (USA)

E

50.00

E

50.00

United Monolithic Semiconductors Holding*Orsay (France)

F

90.00

F

90.00

UTE CASA A.I.S.A.

Madrid (Spain)F

100.00F

100.00Astrium GmbH - Satellites

Munich (Germany)F

100.00F

100.00Astrium GmbH - Space Transportation

Munich (Germany)F

100.00F

100.00Astrium Holding S.A.S.

Paris (France)F

100.00F

100.00Astrium Ltd. - Satellites

Stevenage (UK)F

100.00F

100.00Astrium Ltd. - Services

Stevenage (UK)F

100.00F

100.00Astrium SAS - Satellites

Toulouse (France)F

100.00F

100.00Astrium SAS - Services

Paris (France)F

100.00F

100.00Astrium SAS - Space Transportation

Les Mureaux (France)F

100.00F

100.00Astrium Services GmbH

Ottobrunn (Germany)F

100.00F

100.00Astrium Services S.A.S.

Paris (France)F

100.00F

100.00Astrium Services UK Ltd.

Stevenage (UK)

F

70.00

F

70.00

Axio-Net GmbHHannover (Germany)

F

53.00

F

44.57

Beijing Spot Image Co Ltd.

Beijing (China)F100.00F

100.00Computadoras, Redes e Ingenieria SA (CRISA)

Madrid (Spain)

AstriumF

99.99

DMC International Imaging Ltd.

Surrey (UK)F

100.00F

100.00Dutch Space B.V.

Leiden (Netherlands)

F

100.00F

100.00EADS Astrium N.V.

The Hague (Netherlands)

F

100.00F

100.00EADS Astrium S.L.

Madrid (Spain)F

100.00F

100.00EADS CASA Espacio S.L.

Madrid (Spain)F

100.00F

100.00EADS Deutschland GmbH – Space Services

Munich (Germany)F

100.00F

100.00GPT Special Project Management Ltd.

Riyadh (Saudi Arabia)

E

25.58

E

20.73

I-Cubed (I3C)

Fort Collins (USA)F

100.00Imass Holding Limited Group

Newcastle (UK)

F: Fully consolidated.
P: Proportionate consolidated.
E: At equity consolidated.
The stated percentage of ownership is related to the parent company.
Note *: Regarding associated investments, only the parent company is stated in this list.

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Company

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2009

%

2008

F

100.00F

100.00Imass Ltd

Newcastle (UK)F

100.00F

100.00

Infoterra GmbHFriedrichshafen (Germany)F

100.00F

100.00

Infoterra Ltd.

Southwood (UK)F

100.00F

100.00

Infoterra S.A.S.

Toulouse (France)F

100.00F

100.00

Matra Marconi Space UK Ltd.

Stevenage (UK)

F

74.90

F

74.90

MilSat Services GmbH

Bremen (Germany)

E

47.40

E

47.40

Nahuelsat S.A.

Buenos Aires (Argentina)

F

100.00F

100.00

Paradigm Secure Communications Ltd

Stevenage (UK)F

100.00F

100.00

Paradigm Services Ltd

Stevenage (UK)

F

89.98

F

89.98

Sodern S.A.

Limeil Brevannes (France)F

100.00F

100.00Space Management & Services S.A.S.

Paris (France)

F

67.44

F

56.72

Spot Asia Pte Ltd

Singapore (Singapore)

F

96.34

Spot Image Brasil Servicios en Image

Sao Paulo (Brazil)

F

96.34

F

81.03

Spot Image Corporation Inc.

Chantilly, VA (USA)

F

96.34

F

81.03

Spot Image S.A.S.

Toulouse (France)

F

96.34

F

81.03

Spot Imaging Services Pty Ltd.

Weston Creek (Australia)

F

99.99

Surrey Satellite Investments Ltd.

Surrey (UK)

F

99.99

Surrey Satellite Services Ltd.

Surrey (UK)

F

99.99

Surrey Satellite Technology Holdings Inc.

Delaware (USA)

F

99.99

F

99.99

F

100.00FF

100.00

F

F

49.13

F

%

2

2

78.38

Head office

Surrey Satellite Technology Ltd.

Surrey (UK)

Surrey Satellite Technology US LLC

Delaware (USA)100.00TESAT-Spacecom Geschäftsführung GmbH

Backnang (Germany)

100.00TESAT-Spacecom GmbH & Co. KG

Backnang (Germany)

F

40.95

Tokyo Spot ImageTokyo (Japan)

Other Businesses
P

50.00

Airbus Freighter Conversion GmbH

Dresden (Germany)

P

50.00

P

50.00

ATR Eastern Support

Singapore (Singapore)

P

50.00

P

50.00

ATR GIE

Toulouse (France)

P

50.00

P

50.00

ATR India Customer Support

Bangalore (India)

P

50.00

P

50.00

ATR International SARL

Toulouse (France)

P

50.00

P

50.00

ATR North America Inc.

Washington, D.C. (USA)

P

50.00

P

50.00

ATR Training Center SARL

Toulouse (France)

P

50.00

P

50.00

ATRiam Capital Ltd.

Dublin (Ireland)

F

50.10

F

50.10

Composites Aquitaine S.A.

Salaunes (France)

F

50.00

F

50.00

Composites Atlantic Ltd.

Halifax (Canada)F

100.00F

100.00EADS ATR S.A.

Toulouse (France)
San Antonio, Texas (USA)F

100.00F

100.00EADS North America Defense Security Systems Solutions, Inc.

F

100.00F

100.00EADS North America Defense Test and Services, Inc.

Irvine, California (USA)F

100.00F

100.00EADS North America Tankers, LLC

Arlington, Virginia (USA)F

100.00F

100.00EADS North America, Inc.

Arlington, Virginia (USA)F

100.00F

100.00EADS Seca S.A.

Le Bourget (France)F

100.00F

100.00EADS Sogerma S.A.

Mérignac (France)F

100.00Elbe Flugzeugwerke GmbH

Dresden (Germany)F

100.00F

100.00

Maroc Aviation S.A.

Casablanca (Morocco)F

100.00F

100.00Noise Reduction Engineering B.C.

Washington, D.C. (USA)

E

30.00

F

100.00

Socata S.A.S.*

Louey (France)

F: Fully consolidated.
P: Proportionate consolidated.
E: At equity consolidated.
The stated percentage of ownership is related to the parent company.
Note *: Regarding associated investments, only the parent company is stated in this list.
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1

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%

F

100.00

2008

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Company

Head office

TYX Corp.

Reston, VA (USA)

Additionally consolidated are 4 SPEs.
Headquarters
F

100.00F

100.00

AL Objekt Taufkirchen GrundstücksVerwaltungsgesellschaft mbH & Co. KG

Grünwald (Germany)

F

75.00

F

75.00

DADC Luft- und Raumfahrt Beteiligungs AG

Munich (Germany)

E

46.32

E

46.32

Dassault Aviation*

Paris (France)

F

99.12

F

99.12

Dornier GmbH – Zentrale

Friedrichshafen (Germany)F

100.00EADS Airbus Holding S.A.S.

Paris (France)F

100.00EADS CASA France

Paris (France)F

100.00F

100.00EADS CASA S.A. Shared Service Center, Spain

Madrid (Spain)F

100.00F

100.00EADS CASA S.A. (Headquarters)

Madrid (Spain)F

100.00F

100.00EADS Deutschland GmbH – Zentrale

Munich (Germany)F

100.00EADS Deutschland GmbH, Shared Service Center, Germany

Munich (Germany)F

100.00F

100.00EADS Deutschland GmbH, Innovation Works

Munich (Germany)F

100.00EADS Deutschland GmbH, LO - Liegenschaften OTN

Munich (Germany)F

100.00F

100.00EADS Finance B.V.

Amsterdam (Netherlands)

F

100.00F

100.00Paris (France)F

100.00F

100.00EADS France HQ
EADS France Innovation Works(integrated in EADS HQ France)

Suresnes (France)F

100.00F

100.00EADS Management Service GmbH

Munich (Germany)F

100.00F

100.00EADS North America Holdings Inc.

Arlington (USA)

F

99.12

F

99.12

EADS Real Estate Dornier Grundstücke GmbH & Co. KG

Taufkirchen (Germany)F

100.00EADS Real Estate Objekt Nabern GmbH & Co. KG

Taufkirchen (Germany)F

100.00EADS Real Estate Taufkirchen GmbH & Co. KG

Pullach (Germany)F

100.00EADS U.K. Ltd.

London (UK)F

100.00F

100.00Manhattan Beach Holding Company

Frederick, Maryland (USA)F

100.00F

100.00

Matra Aerospace Inc.

Arlington (USA)F

100.00

Matra Défense

Velizy (France)F

100.00

Matra Holding GmbH

Frankfurt (Germany)F

100.00F

100.00OBRA Grundstücks-Verwaltungsgesellschaft mbH

Grünwald (Germany)F

100.00F

100.00OOO “EADS”

Moscow (Russia)

F: Fully consolidated.
P: Proportionate consolidated.
E: At equity consolidated.
The stated percentage of ownership is related to the parent company.
Note *: Regarding associated investments, only the parent company is stated in this list.

102 EADS FIN ANCIAL S TATEMENTS 2009

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Auditors’ reporton the Consolidated
Financial Statements(IFRS)EADS FIN ANCIAL S TATEMENTS 2009

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To: The EADS N.V. shareholders:

Report on the Consolidated Financial Statements
We have audited the accompanying Consolidated Financial Statements 2009 which are part of the financial statements of European
Aeronautic Defence and Space Company EADS N.V., Amsterdam, which comprise the consolidated statement of financial position
as at 31 December 2009, the consolidated income statement, statement of comprehensive income, statement of cash flows andstatement of changes in equity for the year then ended and a summary of significant accounting policies and other explanatory
notes.

MANAGEMENT’S RESPONSIBILITYManagement is responsible for the preparation and fair presentation of the Consolidated Financial Statements in accordance with
International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of the Netherlands Civil
Code, and for the preparation of the report of the Board of directors in accordance with Part 9 of Book 2 of the Netherlands Civil
Code. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fairpresentation of the Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITY
Our responsibility is to express an opinion on the Consolidated Financial Statements based on our audit. We conducted our audit
in accordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance whether the Consolidated Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated
Financial Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks ofmaterial misstatement of the Consolidated Financial Statements, whether due to fraud or error. In making those risk assessments,
the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Consolidated Financial
Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of
the Consolidated Financial Statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION
In our opinion, the Consolidated Financial Statements give a true and fair view of the financial position of European Aeronautic
Defence and Space Company EADS N.V. as at 31 December 2009, and of its result and its cash flows for the year then ended inaccordance with International Financial Reporting Standards as adopted by the European Union and with Part 9 of Book 2 of theNetherlands Civil Code.

EMPHASIS OF MATTER
Without qualifying our opinion above, we draw attention to all of the specific disclosures made by the Company in its notes
to the Consolidated Financial Statements under Note 3 “Accounting for the A400M Programme” in relation with the risks anduncertainties attached to the A400M programme.

106 EADS FIN ANCIAL S TATEMENTS 2009

AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

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Report on other legal and regulatory requirements
Pursuant to the legal requirement under 2:393 sub 5 part f of the Netherlands Civil Code, we report, to the extent of ourcompetence, that the management board report is consistent with the Consolidated Financial Statements as required by 2:391 sub 4of the Netherlands Civil Code.
Rotterdam, 8 March 2010

Amsterdam, 8 March 2010

KPMG Accountants N.V.

Ernst & Young Accountants LLP

L.A. Blok

F.A.L. van der Bruggen

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4Company
Financial Statements

Balance Sheetof the Company Financial
Statements

110

Income Statementof the Company Financial
Statements

111

EADS FIN ANCIAL S TATEMENTS 2009

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Balance Sheet of the Company Financial Statements(in €m)AssetsNote

At 31 December 2009

At 31 December 2008

2

4,354

4,354

Fixed assets
Goodwill
Financial fixed assets

2

9,578

9,575

Non-current securities

4

3,809

3,035

17,741

16,964Non-fixed assets
Receivables and other assets

3

4,383

5,398

Securities

4

4,045

3,909

Cash and cash equivalents

4

5,377

5,321

13,805

14,62831,546

31,592

Total assets
Liabilities and stockholders’ equity
Stockholders’ equity (1)5Issued and paid up capital

816

815

Share premium

7,683

7,836

Revaluation reserves

1,389

237

Legal reserves

3,116

3,379

Treasury shares

(109)

(109)

Retained earnings(1,597)(2,708)Result of the year

(763)

1,572

10,535

11,022

Non-current liabilities
Financing liabilities

6

322

332

Other non-current liabilities

6

1,619

1,501

1,941

1,833

19,07018,737

Current liabilities
Other current liabilities
Total liabilities and stockholders’ equity(1) The balance sheet is prepared before appropriation of the net result.

110 EADS FIN ANCIAL S TATEMENTS 2009

7

19,07018,73731,546

31,592

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Income Statement of the Company Financial Statements(in €m)Note

Income from investments
Other results
Net result

8

2009

2008

(953)

1,763

190

(191)

(763)

1,572

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Notes to the Company
Financial Statements

EADS FIN ANCIAL S TATEMENTS 2009

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Contents
1. Basis of presentation
2. Fixed assets
3. Receivables and other assets
4. Securities, Cash and cash equivalents
5. Stockholders’ equity
6. Non-current liabilities
7. Other current liabilities
8. Net result
9. Financial instruments
10. Commitments and contingent liabilities
11. Remuneration
12. Employees
13. Related party transactions
14. Auditor Fees

114 EADS FIN ANCIAL S TATEMENTS 2009

115
115
116
116
117
118
118
118
118
118
119
122
122
123

Supplementary Information
Auditors’ report on
the Company Financial Statements

Other Supplementary Information
1. Appropriation of result
2. Subsequent events

124
124

125
125
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Basis of presentation
the principles for the recognition and measurement of assets
and liabilities and determination of the result (hereinafterreferred to as principles for recognition and measurement)of the Company Financial Statements of EADS N.V. are thesame as those applied for the consolidated EU-IFRS financial
statements. These consolidated EU-IFRS financial statements
are prepared according to the standards laid down by theInternational Accounting Standards Board and adopted by
the European Union (hereinafter referred to as EU-IFRS).
Please see Note 2 of the Consolidated Financial Statements
for a description of these principles.

1.1. GENERALEADS N.V., having its legal seat in Amsterdam, theNetherlands, is engaged in the holding, coordinating andmanaging of participations or other interests in and to financeand assume liabilities, provide for security and/or guarantee
debts of legal entities, partnerships, business associations
and undertakings that are involved in the aeronautic, defence,
space and/or communication industry or activities that arecomplementary, supportive or ancillary thereto.
The Company Financial Statements are part of the 2009
financial statements of EADS N.V.

Participating interests including subsidiaries, over whichsignificant influence is exercised, are stated on the basis of
the Net Asset Value.

The description of the Company’s activities and the Groupstructure, as included in the notes to the Consolidated
Financial Statements, also apply to the Company Financial
Statements. In accordance with Article 402 Book 2 of the
Dutch Civil Code the income statement is presented inabbreviated form.

The share in the result of participating interests consists ofthe share of EADS N.V. in the result of these participatinginterests. Results on transactions, where the transfer of assets
and liabilities between EADS N.V. and its participatinginterests and mutually between participating interests
themselves, are not incorporated insofar as they can be deemed
to be unrealised.

1.2. PRINCIPLES FOR THE MEASUREMENT OF ASSETS AND
LIABILITIES AND THE DETERMINATION OF THE RESULT
For setting the principles for the recognition and measurementof assets and liabilities and determination of the result for its
Company Financial Statements, EADS N.V. makes use of theoption provided in section 2:362 (8) of the Netherlands Civil
Code. As from 2005, the Netherlands Civil Code allows that

2.

2

Undistributed results from investments are included in theother legal reserves to the extent the Company cannot enforce
dividend distribution.

Fixed assets

At the end of 2009, goodwill acquisition cost amounts to € 5,676 million (2008: € 5,676 million) and the cumulative amortisationand impairments to € 1,322 million (2008: € 1,322 million).
The movements in financial fixed assets are detailed as follows:(in €m)Balance at 31 December 2008
Additions

Subsidiaries

Participations

Loans

Total

8,238

79

1,258

9,575

471

991

(83)

(83)

520

Redemptions
SOP/ESOP

19

Net income from investments

(957)

19
4

(953)

Actuarial gains/losses IAS 19

(480)

(480)

Dividends received

(289)

(289)

Translation differences/other changes

754

44

7,805

127

Balance at 31 December 2009

798
1,646

9,578

EADS FIN ANCIAL S TATEMENTS 2009

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NOTES TO THE COMPANY FINANCIAL STATEMENTS

1

The investments in subsidiaries are included in the balance
sheet based on their net asset value in accordance with theaforementioned accounting principles of the Consolidated
Financial Statements. The participations include available-for-salesecurities measured at fair value and investments in associatedcompanies accounted for using the equity method.
The translation differences/other changes reflect mainly the
impact in the other comprehensive income related to theapplication of IAS 39.

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Significant subsidiaries, associates and joint ventures are listed
in the appendix “Information on principal investments” to theConsolidated Financial Statements.
An amount of € 16 million of the loans has a maturity between
five and ten years and an amount of € 306 million matures after
ten years. The item redemptions mainly reflects the redemptionof a loan provided to MilSat Services GmbH. On average, theinterest rate of the loans is 4.9%. Loans provided to subsidiaries
amount to € 1,488 million (2008: € 1,252 million).

Receivables and other assets(in €m)

2009

2008

Receivables from subsidiaries

4,126

4,963

Other assets
Total receivables and other assets

257

435

4,383

5,398

The receivables from subsidiaries include mainly receivables in connection with the cash pooling in EADS N.V.
The receivables and other assets are due within one year. In 2008 the receivables and other assets were due within one year.

4.

Securities, Cash and cash equivalents

The securities comprise mainly available-for-sale securities.
The available-for-sale security portfolio contains a non-current
portion of € 3,809 million (2008: € 3,035 million). For further
information please see Note 22 of the Consolidated Financial
Statements.

116 EADS FIN ANCIAL S TATEMENTS 2009

EADS limits its cash equivalents to such investments having amaturity of three months or less from acquisition date.

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Stockholders’ equity(in €m)Balance at 31 December 2007
Capital increase

Capital
stock

Share
premiums

Revaluation
reserves

Legal
reserves

TreasurysharesRetainedearnings

Result of
the yearTotal
equity

814

7,968

3,973

2,844

(206)

(1,857)(446)

13,0902

22

24

Net income

1,572

ESOP/SOP IFRS 2

22

Cash distribution

(97)
117

Sale of treasury shares

(117)
39

(1)

(57)

Others(3,736)

Capital increase

815

7,836

1

14

39

58
418

(310)

Appropriation of result
Balance at 31 December 2008

237

3,379

(109)

(3,628)

(446)

446

(2,708)

1,572

11,022

(763)

(763)

15

Net income
ESOP/SOP IFRS 2

19

Cash distribution

19

(162)

(162)

Transfer to legal reserves

1

Purchase of treasury shares

(1)
(5)

Cancellation of shares(5)

Others
816

7,683

(5)

5
1,152

(264)

(479)

Appropriation of result
Balance at 31 December 2009

22

(97)

Transfer to legal reserves
Cancellation of shares

1,572

1,389

3,116

(109)

409

1,572

(1,572)(1,597)(763)

10,535For further information to the Stockholders’ equity, please see
Note 24 of the Consolidated Financial Statements.

and allocated to other legal reserves in accordance with
Article 2:389 paragraph 6 of the Dutch Civil Code.

As of 31 December 2009, the item ‘Revaluation reserves’
relates to € 561 million (2008: € 420 million) resulting fromunrealised fair values of securities classified as available forsale and fair values of cash flow hedges, recognised directly inequity with an amount of € 828 million (2008: € 183 million
negative fair values). The cash flow hedges are included in“Subsidiaries”.

The retained earnings include actuarial losses arising fromdefined benefit plans, recognised in equity, with an amount of€ 1,750 million (2008: € 1,270 million).

The legal reserves are related to EADS’ share in theundistributed results from investments for € 1,062 million(2008: € 977 million), internally generated capitalised
development costs of € 797 million (2008: € 881 million) and€ 1,257 million (2008: € 1,521 million) resulting from currencytranslation effects of affiliated companies.

Pursuant to Dutch law, limitations exist relating to the
distribution of stockholders’ equity with an amount of€ 5,321 million (2008: € 4,614 million). The limitations relate
to capital stock of € 816 million (2008: € 815 million), torevaluation reserves of € 1,389 million (2008: € 420 million)
and to legal reserves of € 3,116 million (2008: € 3,379 million).
In general, gains related to available for sale securities, fairvalues of cash flow hedges, currency translation effects ofaffiliated companies and capitalised development costs reducethe distributable stockholders’ equity.

The internally generated development costs reflect
capitalised development costs in the consolidated subsidiaries

EADS FIN ANCIAL S TATEMENTS 2009

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Non-current liabilities

The financing liabilities include a long-term loan, granted by
the European Investment Bank to EADS with an amount of
US$ 421 million and a shareholder loan granted by SOGEADE
with an amount of € 29 million. For further details, please see
Note 27 of the Consolidated Financial Statements.

7.

2

The other non-current liabilities include mainly liabilities tosubsidiaries in connection with the cash pooling in EADS N.V.

Other current liabilities(in €m)

2009

2008

Liabilities to subsidiaries

17,497

17,003Liabilities to associated companies

1,472

1,404

Other liabilities
Total

101

330

19,07018,737The liabilities to subsidiaries comprise mainly liabilities in connection with the cash pooling in EADS N.V.

8.

Net result

The net loss in 2009 amounts to € 763 million (2008: net income of € 1,572 million).

9.

Financial instruments

By the nature of the activities carried out, EADS is exposed toa variety of financial risks, especially foreign currency exchange
rate risks and interest risks. EADS uses financial instruments
in order to limit these financial risks. Information to the terms

10.

and conditions of the financial instruments and the respective
fair values is provided in Note 35 of the Consolidated Financial
Statements.

Commitments and contingent liabilities

EADS N.V. issues guarantees on behalf of consolidated
companies with an amount of € 557 million. The commitmentsof these companies to third parties mainly relate to theiroperating business as described in Note 34 and Note 37 to the

118 EADS FIN ANCIAL S TATEMENTS 2009

Consolidated Financial Statements. The Company is headinga fiscal unity, which also includes EADS Finance B.V. andtherefore the Company is several and jointly liable for income
tax liabilities of the fiscal unity as a whole.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

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Remuneration

The total remuneration of the Non Executive and the Executive members of the Board of directors and former directors related to
the reporting periods 2009 and 2008 can be summarised as follows:

Non Executive members of the Board(in €)

2009

2008

Fixum

1,075,000

1,090,000

Fees

455,000

360,000

2009

2008

Executive members of the Board(in €)

Fixum

900,000

900,000

Bonus

1,141,250

waived at CEO’s request

The remuneration of the Non Executive members of the Board of directors was as follows:

Summary table of the remuneration of the Non Executive directors
Directors’ remuneration related to 2009***

Directors’ remuneration related to 2008***

Fixum

Attendance Fees*

Fixum(in €)(in €)(in €)(in €)

Bodo Uebber

183,750

90,000120,000

40,000Rolf Bartke

100,000

55,000100,000

45,000Dominique D’Hinnin

120,000

50,000120,000

40,000Juan Manuel Eguiagaray Ucelay

80,00055,00080,00045,000Arnaud Lagardère

100,000

10,000100,000

10,000Hermann-Josef Lamberti

130,000

35,000130,000

40,000Current Non Executive Board members*

Lakshmi N. Mittal**

Attendance Fees

-

-

-

-

Sir John Parker

130,000

45,000130,000

25,000Michel Pébereau

100,000

50,000100,000

25,000Wilfried Porth****70,00025,00061,25040,000210,000

90,0001,075,000

455,000

1,090,000

360,000

Former Non Executive Board members****Rüdiger GrubeTOTAL*
Fees for 2 nd half year 2009 included, but paid in January 2010.
** Remuneration waived at the director ’s request.
*** Starting 1 January 2008, non Executive Board members are no longer entitled to receive variable compensation (bonus).
The Fixum related to 2008 was paid in 2009; the Fixum related to 2009 will be paid in 2010. In the 2008 financial statements, the Fixum and Bonuses
for the Non Executive Board members reflected the amount paid in 2008 for the reporting period 2007.
**** Pro rata in accordance with their periods of membership with the Board of director s.

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The remuneration of the Executive member of the Board of directors was as follows:
Summary table of the remuneration of the current and former Executive directors

Executive Board members

Louis Gallois

Directors’ remuneration in respect of 2009

Directors’ remuneration in respect of 2008

Fixum

Variablecompensation(Bonus)Fixum

Variablecompensation(Bonus)(in €)(in €)(in €)(in €)

900,000

Waived atCEO’s request

900,000

1,141,250

The bonus conditions are disclosed in the Board report, chapter 4.5.1.2.
The table below gives an overview of the interests of the current Executive Board directors under the various long-term
incentive plans of EADS:Stock option plans
Number of options

Year of plan

Initially
granted

As at
1 January 2009

Granted in2009

Exercisedduring 2009

As at
31 December
2009

Exercise
pricein euroExpirydate

67,50067,500--67,50025.65

16 Dec. 2016

Initially
granted

As at
1 January 2009

Granted in
2009

Vestedduring 2009

As at
31 December
2009

16,875

16,875--

16,875

Louis Gallois
2006

Performance shares plan
Number of performance shares*

Year of plan

VestingdateLouis Gallois
2006*

Vesting of all performance shares granted to the Chief Executive Officer is subject to performance conditions.

120 EADS FIN ANCIAL S TATEMENTS 2009

Publication of the 2009 annual
results, expected in March 2010

NOTES TO THE COMPANY FINANCIAL STATEMENTS

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Performance units plan
Number of performance units**

Granted in 2007

Vesting date

33,700

Vesting schedule is made up of 4 payments over 2 years:> 25% expected in May 2011;> 25% expected in November 2011;> 25% expected in May 2012;> 25% expected in November 2012.

Granted in 2008

Vesting date

40,000

Vesting schedule is made up of 4 payments over 2 years:> 25% expected in May 2012;> 25% expected in November 2012;> 25% expected in May 2013;> 25% expected in November 2013.

Louis Gallois

Louis Gallois

Granted in 2009

Vesting date

46,000

Vesting schedule is made up of 4 payments over 2 years:> 25% expected in May 2013;> 25% expected in November 2013;> 25% expected in May 2014;> 25% expected in November 2014.

Louis Gallois**

Vesting of all performance units granted to the Chief Executive Officer is subject to performance conditions.

STOCK OPTION PLANS
To the other current members of the Executive Committee and to the Group’s senior management, the number of outstanding
stock options amounted to 25,785,645 at 31 December 2009.
During the year 2009, none of the Executive Committee members, including former Executive Board directors, have exercised
options granted under the various EADS stock option plans. Exercises of options by the EADS Executive Committee members aredisclosed on the EADS internet website in accordance with the applicable regulations.

PERFORMANCE AND RESTRICTED SHARE PLANS
To the current members of the Executive Committee and to the Group’s senior management, the number of outstanding
performance and restricted shares amounted to 1,659,850 at 31 December 2009.

PERFORMANCE AND RESTRICTED UNIT PLANS
To the current members of the Executive Committee and to
the Group’s senior management, the number of outstanding
performance and restricted units amounted to 8,719,540 at
31 December 2009.
The expense accounted for in 2009 for stock options,performance shares and performance units granted to the Chief
Executive Officer was € 0.6 million (2008: € 0.5 million).

The pension benefit obligation for the Executive Committee
members is as follows:
The members of the Executive Committee have pension
promises as part of their employment agreements. The generalpolicy is to give them annual pensions of 50% of their annual
base salary upon reaching 5 years of service in the Executive
Committee of EADS at the age of 60 or 65.

For further information on these various plans, please see
Note 36 of the consolidated IFRS financial statements.
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These rights can gradually increase to 60% after a second
term, usually after ten years of service in the EADS Executive
Committee.
These pension schemes have been implemented throughcollective executive pension plans in France and Germany.
These pension promises have also separate rules e.g. forminimum length of service and other conditions to comply
with national regulations.

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For the Chief Executive Officer, the amount of the pension
defined benefit obligation amounted to € 1.8 million as of
31 December 2009, while the amount of current service andinterest cost related to his pension promise accounted for
during fiscal year 2009 represented an expense of € 0.7 million.
This obligation has been accrued for in the financial
statements.

OTHER BENEFITS
All amounts reported above for the Executive Board directors(current and former) are free of benefits in kind, as explained
below, they are entitled to, as well as all national social andincome tax impacts.

EADS has not provided any loans to / advances to / guarantees
on behalf of directors.
For further information on the remuneration, please see
Note 37 of the Consolidated Financial Statements.

The Chief Executive Officer is entitled to a company car. The
value of his company car is € 24,120.

12.

Employees

The number of persons employed by the Company at year end 2009 was 2 (2008: 2).

13.

Related party transactions

In 2007, Lagardère and the French State granted to EADS their received dividend for 2006 in the amount of € 29 million as aninterest free loan.

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NOTES TO THE COMPANY FINANCIAL STATEMENTS

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Auditor Fees

Services of Statutory Auditors and members of their Network rendered to the Group for the financial years 2009 and 2008:
KPMG Accountants N.V.
2009

Ernst & Young Accountants LLP
2008

2009
%

Amount
in €k

4,872

67.5

821

11.4

89.7

5,693

354

4.9

200

2.7

2008

%

Amount
in €k

5,238

72.3

1,258

17.4

6,496

Legal, tax, employment
Information Technology
Other (to be specified if >10% of the fees
for the audit)

194

2.7

82

1.1

0

0

138

2.5

Sub-total

748

10.3

1,524

21.1

137

2.5

298

5.4

7,244

100.0

7,217

100.0

5,495

100.0

5,530

100.0

Amountin €kAudit
Audit process, certification, examinationof individual and consolidated accounts
Additional tasks
Sub-total%

Amount
in €k

%

4,389

79.9

4,684

84.7

969

17.6

548

9.9

78.9

5,358

97.5

5,232

94.6

1,191

16.5

137

2.5

160

2.9

251

3.5

0

0

0

0.0

Other services as relevant

Total

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Supplementary Information
Auditors’ report on the Company Financial Statements
To: The EADS N.V. shareholders:

REPORT ON THE COMPANY FINANCIAL STATEMENTS
We have audited the accompanying Company Financial Statements 2009 which are part of the financial statements of European
Aeronautic Defence and Space Company EADS N.V., Amsterdam, which comprise the balance sheet as at 31 December 2009, theprofit and loss account for the year then ended and the notes.

Management’s responsibility
Management is responsible for the preparation and fair presentation of the Company Financial Statements and for the preparationof the management board report, both in accordance with Part 9 of Book 2 of the Netherlands Civil Code. This responsibility
includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of theCompany Financial Statements that are free from material misstatement, whether due to fraud or error; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility
Our responsibility is to express an opinion on the Company Financial Statements based on our audit. We conducted our audit inaccordance with Dutch law. This law requires that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance whether the Company Financial Statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Company Financial
Statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the Company Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the Company Financial Statements in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used andthe reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the Company
Financial Statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the Company Financial Statements give a true and fair view of the financial position of European Aeronautic
Defence and Space Company EADS N.V. as at 31 December 2009, and of its result for the year then ended in accordance withPart 9 of Book 2 of the Netherlands Civil Code.

Emphasis of Matter
Without qualifying our opinion above, we draw attention to all of the specific disclosures made by the Company in its notes
to the Consolidated Financial Statements under Note 3 “Accounting for the A400M Programme” in relation with the risks anduncertainties attached to the A400M programme.

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REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Pursuant to the legal requirement under 2:393 sub 5 part f of the Netherlands Civil Code, we report, to the extent of ourcompetence, that the management board report is consistent with the Company Financial Statements as required by 2:391 sub 4 of
the Netherlands Civil Code.
Rotterdam, 8 March 2010

Amsterdam, 8 March 2010

KPMG Accountants N.V.

Ernst & Young Accountants LLP

L.A. Blok

F.A.L. van der Bruggen

Other Supplementary Information
1.

Appropriation of result

Articles 30 and 31 of the Articles of Association provide thatthe Board of directors shall determine which part of the result
shall be attributed to the reserves. The general meeting ofshareholders may dispose of a reserve only upon a proposal of
the Board of directors and to the extent it is permitted by law
and the Articles of Association. Dividends may only be paid
after adoption of the annual accounts from which it appears
that the shareholders’ equity of the Company is more than theamount of the issued and paid-in part of the capital increasedby the reserves that must be maintained by law.

2.

It will be proposed at the Annual General Meeting of
Shareholders that the net loss of € 763 million as shown in
the income statements for the financial year 2009 is to be
deducted from retained earnings. The Board decided not topropose any dividend payment at the Annual General Meetingof Shareholders.

Subsequent events

For further information please see Note 41 of the Consolidated Financial Statements.

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EUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V.
Financial Statements

WWW.EADS.COM

European Aeronautic Defence
and Space Company EADS N.V.
Mendelweg 302333 CS Leiden
The Netherlands
In France
37, boulevard de Montmorency
75781 Paris cedex 16 – France
In Germany
81663 Munich – Germany
In Spain
Avenida de Aragón 404
28022 Madrid – Spain2009