EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

First Half-year 2004 Report

Unaudited Condensed Interim Consolidated
Financial Information of EADS N.V.
for the first half-year of 2004

Unaudited Condensed Consolidated Income Statements .......................................... 2
Unaudited Condensed Consolidated Income Statements for the second quarter 2004 and2003………………………………………………………………………………..2
Unaudited Condensed Consolidated Balance Sheets ................................................ 3
Unaudited Condensed Consolidated Cash Flow Statements ..................................... 4
Unaudited Condensed Consol. Statements of Changes in Shareholders’ Equity....... 5
Notes to the Unaudited Condensed Interim Consolidated Financial Statements(according to IFRS) as at June 30, 2004 .................................................................... 5
1. The Company.................................................................................................... 5
2. Accounting policies............................................................................................ 5
3. Changes in the consolidation perimeter and major events of EADS ................. 6
4. Segment information ......................................................................................... 6
5. EBIT pre goodwill amortization and exceptionals.............................................. 7
6. Significant profit and loss statement items ........................................................ 8
7. Significant balance sheet items......................................................................... 8
8. Significant cash flow items ................................................................................ 9
9. Contingencies ................................................................................................. 10
10. Number of shares ........................................................................................... 10
11. Earnings per share.......................................................................................... 10
12. Related party transactions .............................................................................. 11
13. Number of employees…………………………………………………………. 11

1

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

Unaudited Condensed Consolidated Income Statements
January 1 June 30, 2004
Revenues
Cost of sales
Gross margin
Selling, administrative & otherexpenses
thereof amortization of goodwill
and related impairment losses
Research and development
expenses
Other income
Income from operating activities
Financial result
Income taxes
Profit (loss) from ordinary
activities
Minority interests
Net income (loss)

Earnings per share
Basic and diluted

M€
14.567-11.651
2.916

January 1 June 30, 2003

%
100
-80
20

M€
13.060-10.4132.647-1.069-70Deviation

%
100
-80
20

M€
1.507
-1.238269%-1.512

-12

443

-29

0

-281

-2

281

-100

-1.113-8-1.076

-8

-37

3

89

1

79

1

10

13

823
-5
-335

6
0
-3

138
-54
-151

1
-1
-1

685
49
-184

496
-91
122

483
-96
387

3
0
3

-67
1
-66

-1
0
-1

550
-97
453

-821
-9.700
-686

12
12
10

€

€

€

0,48

-0,08

0,56

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

Earnings per share
Basic and diluted

M€
8.536
-6.7701.766

April 1 June 30, 2003

%
100
-79
21

M€
7.540
-5.959
1.581

-507

-6

0

Deviation

%
100
-79
21

M€
996
-811
185

%

-823

-11

316

-38

0

-141

-2

141

-100

-578

-7

-548

-7

-30

5

24

0

24

0

0

0

705
11
-293
423
-85
338

8
0
-3
5
-1
4

234
-40
-152
42
-15
27

3
-1
-2
0
0
0

471
51
-141
381
-70
311

201
-128
93
907
467
1.152

13
14
12

€

€

€

0,42

0,03

0,39

2

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

Unaudited Condensed Consolidated Balance Sheets
June 30, 2004
M€

December 31, 2003%

M€

Deviation

%

M€

%

Fixed assets
Intangible assets

9.748

18

9.694

17

54

1

Property, Plant and Equipment

12.01022

11.44821562

5Financial Assets

4.300

8

4.129

8

171

4

Non-fixed assets

26.05848

25.271

46

787

3Inventories

3.482

7

3.279

6

203

6

Trade receivables

3.825

7

4.001

7

-176

-4

Other receivables and other assets

8.849

16

10.28019-1.431-14

Securities

259

1

468

1

-209

-45

7.643

14

7.404

14

239

3

24.05845

25.43247-1.374-5

Deferred taxes

2.777

5

2.724

5

53

2

Prepaid expenses

1.028

2

951

2

77

8

Total assets

53.921100

54.378

100

-457

-1

813

2

813

1

0

0

Reserves

9.656

18

9.589

18

67

1

Accumulated other comprehensive
income

5.041

9

5.934

10

-893

-15

Treasury shares

-187

0

-187

0

0

0

Cash and cash equivalents

Shareholders' equity
Capital Stock15.32329

16.149

29

-826

-5

Minority interests

2.028

4

2.179

4

-151

-7

Provisions

8.895

16

8.726

16

169

2

5.019

9

4.767

9

252

5

Trade liabilities

5.384

10

5.117

9

267

5

Other liabilities

11.74622

11.31821428

422.14941

21.202

39

947

4Liabilities
Financial liabilities

Deferred taxes

3.153

6

3.664

7

-511

-14

Deferred income

2.373

4

2.458

5

-85

-3

Total liabilities andshareholders' equity

53.921100

54.378

100

-457

-1

3

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

Unaudited Condensed Consolidated Cash Flow Statements

Net income (loss)
Income (loss) applicable to minority interest
Adjustments to reconcile net income(loss) to cash provided byoperating activities
Depreciation and amortization of fixed assets
Valuation adjustments and CTA release
Change in deferred taxes
Results on disposals of fixed assets/businesses and results ofassociates (equity method)
Change in provisions
Change in other operating assets and liabilities
Cash provided by operating activities- Purchases in fixed assets- Proceeds from disposal of fixed assets and decrease inequipment of leased assets- Payments for investments in financial assets and acquisitions ofsubsidiaries- Proceeds from disposal of financial assets and subsidiaries- Dividends paid by companies valued at equity- Increase in equipment of leased assets- Change in finance lease receivables
Change in securities
Change in cash from changes in consolidation
Cash used for investing activities
Change in financial liabilities
Dividends paid to shareholders
Dividends paid to minorities
OthersCash (used for) provided by financing activities
Effect of foreign exchange rate changes and other valuation
adjustments on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

January 1 - June 30, January 1 - June 30,
2004
2003
M€
M€
387
-66
96
-1

899
-248
178

1.089
54
-22

-45
-70
351
1.548
-1.096

-76
-130
425
1.273
-823

33

51

-271
207
36
-202
-73
217
0
-1.149
156
-298
-28
0
-170

-271
56
38
-248
-115
71
-158
-1.399
857
-240
-5
1
613

10
239

-20
467

7.404
7.643

5.401
5.868

In the first half-year 2004, cash flow from changes in securities included in investing activities
increased due to comprised sales of securities by 217 M € (first half-year 2003: sale of securities for
71 M €). These medium-term securities are included in Securities as stated in the balance sheet.

As of June 30, 2004, 540 M € (December 31, 2003: 613 M €) are included in Cash and cash
equivalents, which represent EADS’ share in MBDA’s cash and cash equivalents, deposited at BAe
Systems and Finmeccanica. Additionally, Cash and cash equivalents include 429 M € (December 31,
2003: 273 M €) representing the amount Airbus has deposited at BAe Systems. These funds areavailable upon demand.

4

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

Unaudited Condensed Consolidated Statements of Changes in Shareholders’EquityM€
Equity as of January 1, 2004
Net income
Dividends
OCI
Equity as of June 30, 2004
Equity as of January 1, 2003
Net loss
Dividends
OCI
Equity as of June 30, 2003

16.149
387
-320
-893
15.32312.765
-66
-240
1.704
14.163

Notes to the Unaudited Condensed Interim Consolidated Financial Statements(according to IFRS) as at June 30, 2004
1. The Company
The accompanying Condensed Interim Consolidated Financial Statements (unaudited) present theoperations of European Aeronautic Defence and Space Company EADS N.V. and its subsidiaries(“EADS” or the “Group”), a Dutch public limited liability company (naamloze vennootschap) legallyseated in Amsterdam (Le Carré, Beechavenue 130-132, 1119 PR, Schiphol-Rijk, The
Netherlands), and are prepared and reported in Euros (“€”). EADS’ core business is the
manufacturing of commercial aircraft, civil helicopters, commercial space launch vehicles, missiles,
military aircraft, satellites, defence electronics and rendering of services related to these activities.
2. Accounting policies
The Condensed Interim Consolidated Financial Statements for the period ended June 30, 2004 have been
prepared in accordance with IAS 34 Interim Financial Reporting.
End of March 2004, the IASB completed Phase I of its ongoing Business Combinations Project andpublished new IFRS 3 Business Combinations as well as revised Standards IAS 36 Impairment of Assets and
IAS 38 Intangible Assets. All three Standards are applicable to any business combination with an agreement
date after March 31, 2004. However, EADS decided to anticipate adoption of IFRS 3 and revised IAS 36 andIAS 38 and to apply these standards as of January 1st, 2004. Consequently, from 2004 goodwill is no longer
being amortised but tested for impairment at least annually. Same rule applies to intangible assets with anindefinite useful life. In the first half-year 2003, EADS recognised goodwill amortization amounting to 281 M€.
With the exception of application of IFRS 3 and revised IAS 36 and IAS 38, the accounting policies used in
the preparation of this Interim Consolidated Financial Statements are consistent with those used in theannual Consolidated Financial Statements for the year ended December 31, 2003, which are disclosed as
an integral part of the Group’s annual report 2003.
The annual Consolidated Financial Statements were authorised for issue by EADS’ Board of Directors on
March 5, 2004. EADS is following International Financial Reporting Standards (IFRS) principles.

5

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

Costs incurring unevenly during the financial year are anticipated or deferred in the interim period
only if it is appropriate to anticipate or defer that type of cost at the end of the financial year.
Income tax expense is recognized based on the best estimate of the weighted-average annual
income tax rate expected for the full year applied on pre-tax income. The estimated annual
average income tax rate for 2004 is about 41 % (projected in the first half-year 2003: 41 %).
These Condensed Interim Consolidated Financial Statements should be read in conjunction withthe 2003 annual Consolidated Financial Statements.
3. Changes in the consolidation perimeter and major events of EADS
There were no material acquisitions or disposals of subsidiaries, business combinations, long-term
investments and discontinued operations during the first half of 2004.
4. Segment information
The Group operates in 5 divisions (segments) which reflect the internal organizational andmanagement structure according to the nature of the products and services provided:• Airbus — Development, manufacturing, marketing and sale of commercial jet aircraft of morethan 100 seats and the development and manufacturing of aircraft for military use.
• Military Transport — Development, manufacturing, marketing and sale of military transport
aircraft and special mission aircraft.
• Aeronautics — Development, manufacturing, marketing and sale of civil and military helicopters,
regional turboprop aircraft and light commercial aircraft; and civil and military aircraft conversion
and maintenance services.
• Defence & Security Systems — Development, manufacturing, marketing and sale of missiles
systems; military combat aircraft; and provision of defence electronics, defence-related
telecommunications solutions; and logistics, training, testing, engineering and other related
services.
• Space — Development, manufacturing, marketing and sale of satellites, orbital infrastructuresand launchers; and provision of launch services.
The following table presents information with respect to the Group’s business segments.
Consolidation effects, the holding function of EADS headquarters and other activities not allocableto the divisions are disclosed in the column “HQ/ Conso.”.

6

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

in M €

AirbusMilitary
Transport

Aeronautics

Defence &Security
SystemsSpace

HQ/ Conso.

Consolidated

Six months ended June 30, 2004
External revenues

10.024

234

1.631

2.119

1.090

-531

14.567

Research and development
expenses

-936

-13

-34

-89

-24

-17

-1.113

EBIT pre goodwill amort. andexceptionals (see definition
below)

982

-10

56

-82

-11

50

985

External revenues

8.773

268

1.613

1.902

1.008

-504

13.060Research and development
expenses

-901

-11

-34

-103

-27

EBIT pre goodwill amort. andexceptionals (see definition
below)

621

-8

59

-28

-131

Six months ended June 30, 2003

-1.07679592

5. EBIT pre goodwill amortization and exceptionals
EADS uses EBIT pre goodwill amortization and exceptionals as a key indicator to measure theeconomic performance of the Group and its Segments. The term “exceptionals” refers to income
or expenses of a non-recurring nature, such as amortization expenses of fair value adjustments
relating to the EADS merger, the Airbus combination and the formation of MBDA, as well as
impairment charges.
A reconciliation from Income from operating activities to EBIT pre goodwill amortization andexceptionals is set forth in the following table (in M €):January 1June 30, 2004

January 1June 30, 2003

Income from operating activities

823

138

Income from investments

56

55

879

193

0

281

106

118

985

592

in M €

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

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

7

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

consistently adopted by EADS and disclosed in the notes to consolidated financial statements.
Before the merger, Airbus GIE operations used to be recorded at the current exchange rate of theperiod except for those hedged with financial instruments. From January 1st, 2004, former Airbus
GIE operations are recorded on the basis of historical exchange rates.
As a result, no additional Currency Translation Adjustment (CTA) is generated from former Airbus
GIE operations. The portion of outstanding CTA as at December 31st, 2003, booked for balance
sheet items that relate to future transactions as from January 1st, 2004, is gradually released
according to realization of such operations, namely aircraft deliveries.
For the period ended June 30th, 2004, EBIT has thus been increased by 59 M €, representing thenet impact from applying to revenues and cost of sales the historical exchange rates instead of theexchange rate prevailing on December 31st, 2003.
6. Significant profit and loss statement items
EADS Group revenues in the first half-year 2004 reached 14.567 M €, which - compared to thefirst half-year 2003 – is an increase of 1.507 M €. All divisions except Military Transport recorded
increasing revenues, mostly reflecting on the one hand higher aircraft deliveries of Airbus with amore favourable model mix and on the other hand stronger revenues from defence customers,
namely in the Space and Defence & Security Systems divisions.
Research and development expenses of 1.113 M € (first half-year 2003: 1.076 M €) remained
about stable mainly because of the Airbus A 380 project continuation. The application of
accounting policy with respect to capitalization of development costs did not significantly impact
the R&D costs recognized as expenses as compared to the same period in 2003.
EADS applied IFRS 3 “business combinations” as of January 1, 2004: Goodwill is no longer
regularly amortized, as previously requested under IAS 22, but instead is subject to annual
impairment tests. In the first half-year 2004, there was no Goodwill impairment. In the first halfyear 2003, Goodwill amortization reached 281 M €, which represented regular periodic
amortization.
The financial result includes net interest charge of -102 M € (first half-year 2003: -101 M €),mainly comprising interest on financial liabilities and European Government refundable advances,
partly compensated by the return on cash and cash equivalents, securities and financial assets
such as loans and finance leases.
Income from investments of 56 M € (first half-year 2003: 55 M €) was mainly influenced by the
result of Dassault Aviation of 45 M € (first half-year 2003: 55 M €). The decrease is mainly due tonegative IFRS-catch up restatements for the second half-year 2003 in 2004.
7. Significant balance sheet items
Intangible assets of 9.748 M € (prior year 9.694 M €) include 9.376 M € (prior year: 9.372 M €) ofGoodwill. EADS applied IFRS 3 “business combinations” as of January 1, 2004: Goodwill is nolonger regularly amortized, as previously requested under IAS 22, but instead is subject to annual
impairment tests.
Eliminating foreign exchange-rate effects of +104 M €, Property, plant and equipment increasedby 458 M € to 12.010 M € (prior year: 11.448 M €). Most of the increase is made by Airbus, due tostrong capital expenditures related to the A380 project and Space division, mainly caused by the
Paradigm / Skynet 5 program.

8

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

Financial Assets of 4.300 M € (prior year: 4.129 M €) increased in total – excluding foreignexchange-rate effect of 54 M € – by 117 M €, coming mainly from aircraft financing activities ofAirbus and a change in equity-value of Dassault Aviation.
Inventories of 3.482 M € (prior year: 3.279 M €), net of customer advances, increased without
foreign exchange-rate effect of 55 M € by 148 M €. The increase in unfinished goods of 1.224 M €(mainly Airbus, Defence & Security and Aeronautics division) is partly compensated by finishedgoods of -576 M €, coming mainly from Airbus, and higher advance payments received mainly in
Defence (in total - 420 M €).
The decrease in trade receivables by -176 M € to 3.825 M € (prior year: 4.001 M €) is mainly due
to high customer payments in Airbus, Defence & Security and Aeronautics Divisions.
Other receivables and other assets decreased by -1.431 M € to 8.849 M € (prior year: 10.280 M€). The decrease is mainly caused by the variation of the fair values of financial instruments (1.350 M €), mainly as a result of the development of the US dollar exchange rate (USD / € spot
rate of 1.22 at June 30, 2004 vs. 1.26 at December 31, 2003) and matured hedges.
Cash and cash equivalents increased from 7.404 M € to 7.643 M €. This is thanks to strong cash
flows provided by operations which more than offset cash used for investing activities and cashused for dividend payments to shareholders and minority interests of -326 M €.
Stockholders‘ equity amounts to 15.323 M € (prior year: 16.149 M €), resulting from a Net
income of 387 M €, a dividend to shareholders of -320 M € (including withholding taxes) and adecrease of -893 M € of OCI.
Minority interests of 2.028 M € (prior year: 2.179 M €) mainly represent shares of BAe Systems
in Airbus Group. The decrease in BAe Systems’ minority interest is mainly attributable to change infair values of financial instruments that qualify for hedge accounting according to IAS 39 as well as
the dividend paid by Airbus.
Provisions include 3.869 M € for retirement plans and similar obligations (prior year: 3.772 M €),289 M € of provisions for financial instruments (prior year: 100 M €) and 4.737 M € of otherprovisions (prior year: 4.854 M €).
Financial liabilities of 5.019 M € (prior year: 4.767 M €), excluding foreign exchange-rate effectsof 98 M €, increased by Skynet 5 activities.
Without considering foreign exchange-rate effects of 91 M €, other liabilities increased by 337 M€ to 11.746 M € (prior year: 11.318 M €). Other liabilities mainly include 5.168 M € (prior year:
4.851 M €) of European Government refundable advances and 4.285 M € (prior year: 3.807 M €)of customer advance payments.
The decrease in deferred tax liabilities of -511 M € to 3.153 M € (prior year: 3.664 M €) issignificantly influenced by the decrease in the fair value of financial instruments accounted for asother assets.
8. Significant cash flow items
Cash provided by operating activities increased by 275 M € to 1.548 M € (first half-year 2004:
1.273 M €). This increase reflects the significant improvement in profits. Moreover, last year’s cash
flow included negative effects from old “macro-hedges” that bore unfavourable rates.
Cash used for investing activities decreased by 250 M € to -1.149 M € (first half-year 2003: 1.399 M €). This outflow is mainly caused by investments in fixed assets of -1.096 M € (first halfyear 2003: -823 M €), thereof -215 M € in Skynet 5 within Space division and investments of -676

928.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

M € in Airbus division, mainly for A 380. These outflows were partly offset by the sale of securities
in the first half-year 2004 by 217 M € (first half-year 2003: 71 M €).
Cash used for financing activities amounts to -170 M € (first half-year 2003: 613 M €) and was
mainly affected by dividend payments to shareholder of -298 M € (excluding withholding taxes)
and to minorities (-28 M €).
9. Contingencies
Since the last balance sheet date (December 31, 2003), there were no significant changes incontingent liabilities.
10. Number of shares
The total number of shares outstanding is 800.957.248 and 800.957.248 as of June 30, 2004 and2003, respectively. EADS’ shares are exclusively ordinary shares with a par value of 1,00 €. No
shares were repurchased neither in the first half-year of 2004 nor in the first half-year of 2003.
11. Earnings per share
Basic earnings per share are calculated by dividing net income (loss) attributable toshareholders by the weighted average number of issued ordinary shares during the period,
excluding ordinary shares purchased by the Group and held as treasury shares:

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

January 1 toJune 30, 2003

387 M €

-66 M €

800.957.248

800.957.248

0,48 €-0,08 €For the calculation of the diluted earnings per share, the weighted average number of ordinary
shares is adjusted to assume conversion of all potential ordinary shares. The Group’s only
category of dilutive potential ordinary shares is stock options. Since the exercise price of the stock
options under the 4th and 5th stock option plans initiated by the Group is exceeding the share priceof EADS shares, the inclusion of these potential ordinary shares has a dilutive effect on theweighted average number of shares. According to IAS 33, 2.208.020 stock options are dilutive:

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

10

January 1 toJune 30, 2003

387 M €

-66 M €

803.165.268

800.957.248

0,48 €-0,08 €

28.07.2004

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six months ending June 30, 2004

12. Related party transactions
The Group has entered into various transactions with related companies in 2004 and 2003 thathave all been carried out in the normal course of business. As is the Group’s policy, all related
party transactions have to be carried out at arm’s length. Transactions with related parties include
the French State, DaimlerChrysler, Lagardère, and SEPI (Spanish State). Except for thetransactions with the French State, such transactions are not considered material to the Groupeither individually or in the aggregate. The transactions with the French State include mainly sales
from the Aeronautics, Defence & Security Systems and Space divisions.
13. Number of employees
The number of employees at June 30, 2004 is 109.413 as compared to 109.135 at December 31,
2003.

11

28.07.2004