9 mm

EUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V.

FINANCIALSTATEMENTS 2011www.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

Financial Statements

In Spain
Avenida de Aragón 404
28022 Madrid – Spain

2011

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9 mm

Photographs © by EADS: Airbus/Fixion - Astrium - Eurocopter/Deulin - Eurofighter/G.Lee
All rights reserved

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financial
statements 2011

2 I EADS FINANCIAL
REGISTRATIONSTATEMENTS
DOCUMENT
2011
2011

EADS

FINANCIAL STATEMENTS 2011
3

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

5

2 Notes to the Consolidated
Financial Statements (IFRS)

13

3 Auditors’ reporton the Consolidated
Financial Statements (IFRS)

103

4 Company Financial Statements

107

5 Notes to the Company
Financial Statements

111

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1
EADS N.V. — Consolidated
Financial Statements (IFRS)EADS N.V. — Consolidated Income Statements (IFRS)
for the years ended 31 December 2011, 2010 and 2009

6

EADS N.V. — Consolidated Statementsof Comprehensive Income (IFRS) for the years ended
31 December 2011, 2010 and 20097

EADS N.V. — Consolidated Statements of Financial
Position (IFRS) at 31 December 2011 and 2010

8

EADS N.V. — Consolidated Statements of Cash Flows (IFRS)
for the years ended 31 December 2011, 2010 and 2009

9

EADS N.V. — Consolidated Statements of Changes
in Equity (IFRS) for the years ended 31 December 2011,2010 and 200910

EADS FINANCIAL STATEMENTS 2011 I 5

EADS N.V. — CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

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EADS N.V. — Consolidated Income Statements (IFRS)
for the years ended 31 December 2011, 2010 and 2009(In € million)

Note

2011

2010

2009

Revenues

5, 6

49,12845,752

42,822

Cost of sales

7(42,285)(39,528)(38,383)

Gross margin

6,843

6,224

4,439

Selling expenses(981)(1,024)(924)

Administrative expenses
Research and development expenses

8(1,427)(1,288)(1,272)(3,152)(2,939)(2,825)

Other income

9

359

171

170

Other expenses

10

(221)

(102)

(102)

Share of profit from associates accounted for underthe equity method

11

164

127

115

Other income from investments

11

28

18

19

Profit (loss) before finance costs and income taxes

5

1,613

1,187

(380)

Interest income

377

316

356

Interest expense

(364)

(415)

(503)

Other financial result
Total finance costs

12

Income taxes

13

Profit (loss) for the period

(233)

(272)

(445)

(220)

(371)

(592)

(356)

(244)

220

1,037

572

(752)

1,033

553

(763)

4

19

11

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

Earnings per share

€

€

€

Basic

38

1.27

0.68

(0.94)

Diluted

38

1.27

0.68

(0.94)

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 2011, 2010 and 2009(In € million)

2011

2010

2009

Profit (loss) for the period

1,037

572

(752)

Currency translation adjustments for foreign operations

(25)

119

(279)

Effective portion of changes in fair value of cash flow hedges(365)(2,983)

2,948

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

(171)

(201)

(1,456)

Net change in fair value of available-for-sale financial assets

(20)

12

136

Actuarial gains (losses) on defined benefit plans

(747)

(127)

(594)

Unrealized gains (losses) from investments accounted for using
the equity method

129

(161)

33

Tax on income and expense recognized directly in equity

331

1,096

(381)

Other comprehensive income, net of tax(868)(2,245)407

Total comprehensive income of the period

169(1,673)(345)

Equity owners of the parent

163(1,679)(354)

Non-controlling interests

6

6

9

Attributable to:

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 2011 and 2010(In € million)

Assets

Note

2011

2010

14
15
16
17
17
20
21
13
22

12,745
14,159
74
2,677
2,378
631
1,253
4,309
7,229
45,455

11,29913,427
77
2,451
2,386
871
1,104
4,250
5,332
41,197

18
19
17
20
21

22,563
6,399
172
1,739
2,253
339
4,272
5,284
43,021
88,476

20,862
6,632
111
1,575
1,712
234
5,834
5,030
41,99083,187

820
7,519
471
153
(113)
8,850
20
8,870

816
7,645
46
446
(112)
8,841
95
8,936

25
26
27
28
13
30

9,125
3,628
8,193
9,814
1,050
290
32,100

8,213
2,870
8,624
9,264
1,195
315
30,481

25
26
29
27
28

Total liabilities

5,860
1,476
9,630
1,687
27,670308
875
47,506
79,606

5,766
1,408
8,546
1,234
25,772254
790
43,77074,251

Total equity and liabilities

88,476

83,187

Non-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

22
31

Total assets
Equity and liabilities
Equity attributable to equity owners of the parent
Capital stock
Share premium
Retained earnings
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

2330

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

8 I EADS FINANCIAL STATEMENTS 2011

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EADS N.V. — Consolidated Statements of Cash Flows (IFRS)
for the years ended 31 December 2011, 2010 and 2009
2011

2010

2009

1,033
4

553
19

(763)
11

(377)
364
417
(307)
356
(100)
1,884
(408)
(29)
(164)
230
1,386
(1,640)
447
806
1,965
(327)
246
(111)
4,289

(316)
415
332
(278)
244
(140)
1,582
(366)
(75)
(127)
(219)
2,819
705
(345)
(40)
1,698
738
169
(106)
4,443

(356)
503
382
(331)
(220)
4
1,826
(254)
(31)
(115)
1,594
15
(1,961)
(478)
192
2,925
(257)
(306)
(100)
2,265

(2,197)(2,250)(1,957)

79

45

75

(1,535)
18

(38)
12

(21)
13

(312)

(190)

(136)

77
50

91
41

43
27

0
(378)
(4,198)0(3,147)(5,436)103(821)(2,674)

Increase in financing liabilities
Repayment of financing liabilities
Cash distribution to EADS N.V. shareholders
Dividends paid to non-controlling interests
Changes in capital and 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

813
(399)
(178)
(5)
(65)
(1)
165

99
(1,160)
0
(7)
(48)
(3)
(1,119)

1,114
(208)
(162)
(4)
17
(5)
752

(2)
254

104
(2,008)(50)
293

Cash and cash equivalents at beginning of period

5,030

7,038

6,745

Cash and cash equivalents at end of period

5,284

5,030

7,038

(In € million)

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 expense (income)
Income taxes (paid) received
Depreciation and amortization
Valuation adjustments
Results on disposals of non-current assets
Results of companies accounted for by the equity method
Change in current and non-current provisions (1)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:• Purchases 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

31
31

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 in securities
Cash (used for) investing activities

22(1) In 2011, “contribution to plan assets for pensions” is shown in “change in current and non-current provisions” within cash provided by operating activities. Previously, “contribution
to plan assets for pensions” was disclosed in cash used for investing activities. It amounts in 2011 to € (489) million (2010: € (553) million and 2009: € (173) million).

For details, see Note 22 “Securities” and Note 31 “Consolidated Statement of Cash Flows”.
The accompanying notes are an integral part of these Consolidated Financial Statements (IFRS).
EADS FINANCIAL STATEMENTS 2011 I 9

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EADS N.V. — Consolidated Statements of Changes in Equity (IFRS)
for the years ended 31 December 2011, 2010 and 2009
Noncontrolling Total
interests equity

Equity attributable to equity owners of the parent
CapitalSharestock premium Retained earnings(In € million)

Treasuryshares815

7,836

Profit (loss) for the period

1,992(1,270)

421

(184)

1,521

(109) 11,022(763)

Other comprehensive income(479)

Capital increase

23

Share-based Payment (IFRS 2)

35

1

140

1,012

(264)

14
19

Cash distribution to EADS N.V.
Shareholders / dividends paid to
non-controlling interests

(162)

23

Cancellation of treasury shares

23

Balance at 31 December 2009

(5)
816

7,683

Profit for the period

1,248

(763)

11

(752)

409

(2)

407

15

2

17

(1,749)

561

(162)

(4)

(166)

0

(5)

(5)

(5)

(5)

5

0

0
106 10,641

828

1,257

(109) 10,535(177) (2,201)

178(2,232)553(32)

Capital increase

23

5

5

Capital decrease

23

(43)

(43)

Share-based Payment (IFRS 2)

35

23

3

Change in non-controllinginterests
Change in treasury shares

23

Balance at 31 December 2010

(3)
816

7,645

Profit for the period

1,827(1,781)384 (1,373)

1,435

(579)

Capital increase

23

Share-based Payment (IFRS 2)

35

4

182

(399)

(28)

(74)

(1)

Change in non-controllinginterests
Change in treasury shares

23

Cancellation of treasury shares

23

Balance at 31 December 2011

(7)
820

7,519

2,858

(2,388)566 (1,773)

1,361

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

10 I EADS FINANCIAL STATEMENTS 2011

23

0

(7)

(7)

3

(7)

(4)

0

3

3

95 8,936

(178)
(17)

(49)

(112) 8,841

59Equity transaction (IAS 27)

5
(6)

(3)

15

Cash distribution to EADS N.V.
Shareholders / dividends paid to
non-controlling interests

572

(3)

1,033

Other comprehensive income

19(13) (2,245)

23

Dividends paid to noncontrolling interests
Equity transaction (IAS 27)

19

(5)

553

Other comprehensive income

104 11,126

19

Change in non-controllinginterests
Change in treasury shares

Total

AvailableForeign
Other Actuarial
for-saleCashcurrency
retained gains or financial
flow translation
earnings
lossesassets hedges adjustments

Note

Balance at 31 December 2008

Accumulated othercomprehensive income

1,033

4

1,037

(870)

2

(868)

63

63

15

15

(178)

(5)

(183)

(46)

(79)

(125)

0

3

3

(8)

(8)

(8)

7

0

0

(113) 8,850

20 8,870

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EADS FINANCIAL STATEMENTS 2011 I 11

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Notes to the Consolidated
Financial Statements (IFRS)

2

2.1 Basis of Presentation

15

2.2 Notes to the Consolidated Income Statements (IFRS)

36

2.3 Notes to the Consolidated Statementsof Financial Position (IFRS)

46

2.4 Notes to the Consolidated Statements of Cash Flows (IFRS) 67
2.5 Other Notes to the Consolidated Financial Statements (IFRS) 69
2.6 Appendix “Information on Principal Investments” —Consolidation Scope95

EADS FINANCIAL STATEMENTS 2011 I 13

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Contents

2.1 Basis of Presentation

15

1.

The Company

152.

Summary of Signiﬁcant Accounting Policies

15

3.

Scope of Consolidation

31

4.

Acquisitions and Disposals

32

2.2 Notes to the Consolidated Income
Statements (IFRS)

36

5.

Segment Reporting

36

6.

Revenues

40

7.

Functional Costs

40

8.

Research and Development Expenses

41

9.

Other Income

41

10. Other Expenses

41

11. Share of Proﬁt from Associates Accounted
for under the Equity Method and Other Income
from Investments

42

12. Total Finance Costs

42

13. Income Taxes

43

2.3 Notes to the Consolidated Statementsof Financial Position (IFRS)
46

21. Other Assets

57

22. Securities

58

23. Total Equity

58

24. Capital Management59

25. Provisions

60

26. Financing Liabilities

64

27. Other Financial Liabilities

65

28. Other Liabilities

66

29. Trade Liabilities

66

30. Deferred Income

66

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

67

31. Consolidated Statement of Cash Flows67

2.5 Other Notes to the Consolidated
Financial Statements (IFRS)

69

32. Litigation and Claims

69

33. Commitments and Contingencies

70

34. Information about Financial Instruments

72

35. Share-Based Payment

83

36. Related Party Transactions

91

14. Intangible Assets

46

37. Interest in Joint Ventures

93

15. Property, Plant and Equipment

50

38. Earnings per Share93

16. Investment Property

53

39. Number of Employees

94

40. Events after the Reporting Date94

2.6 Appendix “Information on Principal
Investments” — Consolidation Scope

95

17.

Investments in Associates Accounted
for Under the Equity Method, Other Investments
and Other Long-Term Financial Assets

53

18. Inventories

55

19. Trade Receivables

56

20. Other Financial Assets

57

14 I EADS FINANCIAL STATEMENTS 2011

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 operationsof European 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). EADS’ corebusiness is the manufacturing of commercial aircraft, civil andmilitary helicopters, commercial space launch vehicles, missiles,

military aircraft, satellites, defence systems and defence
electronics and rendering of services related to these activities.
EADS has its listings at the European Stock Exchanges in Paris,Frankfurt am Main, Madrid, Barcelona, Valencia and Bilbao. The
Consolidated Financial Statements were authorised for issue
by EADS’ Board of Directors on 7 March 2012, are preparedand reported in euro (“€”), and all values are rounded to thenearest million appropriately.

2

2. 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 9of Book 2 of the Netherlands Civil Code. They comprise(i) IFRS, (ii) International Accounting Standards (“IAS”) and(iii) Interpretations originated by the IFRS Interpretations
Committee (“IFRIC”) or former Standing Interpretations
Committee (“SIC”). The Consolidated Financial Statements havebeen prepared on a historical cost basis, except for certain
items such as:(i) derivative financial instruments, which are measured at fairvalue;(ii) available-for-sale financial assets, which are measured atfair value;(iii) accumulating Money Market Funds, uncapped Structured
Notes and foreign currency Funds of Hedge Funds thathave been designated as financial assets at fair value
through profit or loss, and are hence measured at fairvalue (“Fair Value Option”, see Note 34 “Information about
financial instruments”);(iv) assets and liabilities designated as hedged items in fairvalue hedges, which are either measured at fair value
or at amortised cost adjusted for changes in fair value
attributable to the risks that are being hedged;(vi) defined benefit obligations (or assets), which are measured
according to IAS 19, and related plan assets, which aremeasured at fair value.
The measurement models used when historical cost does not
apply are more fully described below.
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 with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the processof applying the Group’s accounting policies. The areas involving
a higher degree of judgement or complexity, or areas whereassumptions and estimates are signiﬁcant to the Consolidated
Financial Statements are disclosed in the last subsection “Useof Accounting Estimates” of this Note 2.

New, revised or amended IFRS Standards
and new Interpretations
The IFRS accounting principles applied by EADS for preparing
its 2011 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.

(v) share based payment arrangements, which are measured
using the fair-value based measure of IFRS 2; andEADS FINANCIAL STATEMENTS 2011 I 15

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1a) New, Revised or Amended Standards
The application of the following new, revised or amended
standards is mandatory for EADS for the ﬁscal year starting
1 January 2011. If not otherwise stated, the following new,revised or amended Standards did not have a material impact
on EADS’ Consolidated Financial Statements as well as its
basic and diluted earnings per share.
In November 2009, the IASB issued a revised version of IAS 24“Related Party Disclosures”, which was endorsed in July 2010.
The revised standard simpliﬁes the disclosure requirements
for government related entities and clariﬁes the deﬁnition of a
related party.
The amendment to IAS 32 “Classiﬁcation of Rights Issues– Amendment to IAS 32 Financial Instruments: Presentation”(endorsed in December 2009) addresses the accounting forrights issues (rights, options or warrants) that are denominatedin a currency other than the functional currency of the issuer.
Speciﬁcally, the amendment states that, rights, warrants or
options 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 existingowners of the same class of its own non derivative equity
instruments.
The third omnibus of amendments to IFRS Standards (2010)
which were endorsed in February 2011 includes amendments to
9 IFRS Standards and 1 Interpretation. The amendments refer
to IFRS 1, IFRS 3, IFRS 7, IAS 1, IAS 21, IAS 27, IAS 28, IAS 31,
IAS 34 and IFRIC 13. Most of the amendments are mandatory
for annual periods beginning on or after 1 January 2011 withseparate transition provisions for each amendment.

b) New or Amended Interpretations
The following Interpretations became effective for EADS
as of 1 January 2011. If not otherwise stated, the following
Interpretations did not have a material impact on EADS’
Consolidated Financial Statements as well as its basic anddiluted earnings per share.
To correct an unintended consequence of IFRIC 14, the
IASB issued in November 2009 amendments to IFRIC 14“Prepayments of a Minimum Funding Requirement(Amendments to IFRIC 14)”. Without these amendments insome circumstances entities are not permitted to recognise
some voluntary prepayments for minimum funding contributions
as an asset. This was not intended when IFRIC 14 was issued,
and the amendments correct this issue. The amendments wereendorsed in July 2010 and had to be applied retrospectively.

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IFRIC 19 “Extinguishing Financial Liabilities with Equity
Instruments” (issued in November 2009, endorsed in July 2010)provides guidance on how an entity shall account for atransaction when a creditor agrees to accept an entity’s sharesor other equity instruments to settle the ﬁnancial liability fully or
partially (“debt for equity swaps”). The Interpretation had to be
applied retrospectively.

New, revised or amended IFRS Standards
and 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 2011 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.
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 forﬁnancial instruments, IFRS 9 replaces the multiple classiﬁcationand measurement models for ﬁnancial assets and liabilities
in IAS 39 with a simpliﬁed model that is based on only twoclassiﬁcation categories: amortised cost and fair value. Further,
the classiﬁcation of ﬁnancial assets under IFRS 9 is driven by
the entity’s business model for managing its ﬁnancial assets
and the contractual cash ﬂow characteristics of these ﬁnancial
assets. In the next phases of the IAS 39 replacement project,
the IASB will cover the current impairment methodology and therequirements for hedge accounting. IFRS 9 has to be applied
starting 1 January 2015, with early adoption permitted, andoffers various transition models. EADS is currently assessing
the potential impacts from the expected application of IFRS 9.
In October 2010, the IASB issued amendments to
IFRS 7 “Financial Instruments: Disclosures” (endorsed in
November 2011) as part of its comprehensive review of offbalance sheet activities relating to transfers of ﬁnancial assets.
The objective of the amendments is to help users of ﬁnancial
statements evaluate the risk exposures relating to suchtransfers and the effect of those risks on an entity’s ﬁnancial
position. The amendments also require additional disclosures
if a disproportionate amount of transfer transactions areundertaken around the end of a reporting period. For EADS,
this amendment has to be applied prospectively for annual
periods beginning on or after 1 January 2012, with earlier
application permitted.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1In December 2010, the IASB issued amendments to IAS 12“Income Taxes” (not yet endorsed) providing practical guidance
for the measurement for deferred tax relating to an asset byintroducing the presumption that recovery of the carrying
amount of an asset will normally be through sale. Respective
amendments supersede SIC 21 “Income Taxes – Recovery
of Revalued Non Depreciable Assets”. EADS will apply thoseamendments for annual periods beginning on 1 January 2012.
In May 2011, the IASB published its improvements to theaccounting and disclosure requirements for consolidation,
off balance sheet activities and joint arrangements by issuing
IFRS 10 “Consolidated Financial Statements”, IFRS 11“Joint Arrangements”, IFRS 12 “Disclosure of Interests in
Other Entities” and consequential amendments to IAS 27“Separate Financial Statements” and IAS 28 “Investments
in Associates and Joint Ventures”. IFRS 10 supersedes therequirements related to Consolidated Financial Statementsin IAS 27 “Consolidated and Separate Financial Statements”(amended 2008) as well as SIC 12 “Consolidation – Special
Purpose Entities”. IFRS 11 supersedes IAS 31 “Interests in
Joint Ventures” (amended 2008) and SIC 13 “Jointly Controlled
Entities – Non-Monetary Contributions by Venturers”. IFRS 12
replaces disclosure requirements in IAS 27, IAS 28 and IAS 31.
None of the new or amended standards has yet been endorsed.
IFRS 10 is based on existing principles and re-conﬁrms control
as the single determining factor in whether an entity should
be in the scope of the Consolidated Financial Statements:
An investor controls an investee when it is exposed, or has
rights, to variable returns from its involvement with the investee
and has the ability to affect those returns through its powerover the investee. The standard provides additional guidance
to determine control in cases difﬁcult to assess such as insituations where an investor holds less than a majority of voting
rights, but has the practical ability to direct the relevant activitiesof the investee unilaterally by other means as well as in cases ofagency relationships which were neither addressed by IAS 27
nor by SIC 12.
IFRS 11 provides guidance for the accounting of joint
arrangements by focusing on the rights and obligations arisingfrom the arrangement. The standard distinguishes between two
types of joint arrangements: joint operations and joint ventures.
A joint operation is a joint arrangement whereby the parties thathave joint control of the arrangement (i.e. joint operators) haverights to the assets, and obligations for the liabilities, relating to
the arrangement. A joint venture is a joint arrangement whereby
the parties that have joint control of the arrangement (i.e. joint
venturers) have rights to the net assets of the arrangement.
IFRS 11 requires a joint operator to recognize and measure theassets and liabilities (and recognize the related revenues andexpenses) in relation to its interest in the arrangement applicableto the particular assets, liabilities, revenues and expenses.

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A joint venturer is required to recognize an investment andto account for that investment using the equity method. The
proportionate consolidation method may no longer be used forjoint ventures.
IFRS 12 provides disclosure requirements for all forms
of interests in other entities, including subsidiaries, joint
arrangements, associates, structured entities (formerly referred
to as “special purpose entities”) and off balance sheet vehicles
in one single standard. The standard requires an entity todisclose information that enables users of ﬁnancial statements
to evaluate the nature of, and risks associated with, its interests
in other entities and the effects of those interests on its ﬁnancial
position, ﬁnancial performance and cash ﬂows.
IFRS 10 to 12 and amendments to IAS 27 and IAS 28 areapplicable to annual periods beginning on or after 1 January
2013 with early application allowed. The abandonment of thepartial consolidation method for joint ventures might have asigniﬁcant impact on EADS Consolidated Financial Statements
as EADS has opted to apply this method for the consolidationof its joint ventures. The impact from the application of IFRS 10,
especially for the consolidation of structured entities, is currently
under assessment.
In May 2011, the IASB issued IFRS 13 “Fair Value
Measurement”. IFRS 13 (not yet endorsed) deﬁnes fair value,
sets out in a single IFRS a framework for measuring fair value
and requires disclosures about fair value measurements.
IFRS 13 does not determine when an asset, a liability or anentity’s own equity instrument is measured at fair value. Rather,
the measurement and disclosure requirements of IFRS 13 apply
when another IFRS requires or permits the item to be measured
at fair value (with limited exceptions).
With the issuance of IFRS 13 the requirements for measuring
fair value and for disclosing information about fair values arecomprehensively summarised in a single standard insteadof having it spread over several standards not articulating aclear measurement or disclosure objective. IFRS 13 seeks to
reduce complexity and improve consistency in the applicationof fair value measurement principles by having a single set of
requirements for all fair value measurements; to communicate
the measurement objective more clearly by clarifying thedeﬁnition of fair value; and to improve transparency byenhancing disclosures about fair value measurements. The newstandard deﬁnes fair value as an exit price, i.e. as the price thatwould be received to sell an asset or paid to transfer a liability
in an orderly transactions between market participants at
measurement date. It further introduces a three level fair value
hierarchy regarding the inputs used for fair value determination.
IFRS 13 is to be applied prospectively and is mandatory from
1 January 2013, early application is allowed.

EADS FINANCIAL STATEMENTS 2011 I 17

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1In June 2011, the IASB issued an amended version of IAS 19“Employee Beneﬁts” (not yet endorsed). In the amendment theoption of a deferred recognition of actuarial gains and losses(known as the “corridor method”) has been eliminated aswell as the immediate recognition in proﬁt or loss, to improvecomparability of ﬁnancial statements. EADS does not apply the
corridor approach and recognizes changes in actuarial gains
and losses within retained earnings. The amended IAS 19,
in addition, replaces the expected return on plan assets andinterest costs on the deﬁned beneﬁt obligation with a single netinterest component and past service costs will be recognized
fully in the period of the related plan amendment. The amended
standard also changes the requirements for termination
beneﬁts and includes enhanced presentation and disclosure
requirements. For EADS, the standard becomes applicablefor annual periods beginning on 1 January 2013 with early
application being permitted. The introduction of a single netinterest component, i.e. the interest income (expense) resulting
from multiplying the net deﬁned beneﬁt asset (liability) by thediscount rate used to determine the deﬁned beneﬁt obligation(“DBO”), will impact EADS Consolidated Financial Statements
as there will be no longer different rates applicable for plan
assets and DBOs.
In June 2011, the IASB also issued amendments to IAS 1“Presentation of Financial Statements” (not yet endorsed). The
amendments will improve and align the presentation of othercomprehensive income (“OCI”) by requiring to group together
items within OCI that might be reclassiﬁed to the income
statement. The amended standard becomes effective forﬁnancial periods beginning on or after 1 July 2012.
In December 2011, the IASB issued amendments to IAS 32“Financial Instruments: Presentation” clarifying the IASB’s
requirements for offsetting ﬁnancial instruments. As part ofthe same offsetting project the IASB also issued respective
amendments to IFRS 7 “Financial Instruments: Disclosures”.
Both amendments are not yet endorsed and will have tobe applied retrospectively for annual periods beginning on
1 January 2014 respectively on 1 January 2013.
Further, EADS’ accounting policies are not expected to beaffected by various other pronouncements issued by the IASB
during the last months.

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

18 I EADS FINANCIAL STATEMENTS 2011

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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.
Special purpose entities (“SPEs”) are consolidated as any
subsidiary, when the relationship between the Group and the
SPE indicates that the SPE is in substance controlled by theGroup. 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.
In general, business combinations are accounted for under theacquisition method of accounting as at the acquisition date,
which is the date on which control is transferred to EADS.
Goodwill is measured at the acquisition date as:
O the fair value of the consideration transferred; plus
O the recognised amount of any non-controlling interests in theacquiree; plus
O if the business combination is achieved in stages, the fairvalue of the existing equity interest in the acquiree; lessO the net recognised amount (generally fair value) of theidentifiable assets acquired and liabilities assumed.
Before recognising a gain on a bargain purchase in theConsolidated Income Statement, the identiﬁcation andmeasurement of the identiﬁable assets and liabilities isreassessed including also the non-controlling interest, if any,
the consideration transferred as well as EADS’ previously held
equity interest in the acquiree in case of a business combinationachieved in stages.
Any non-controlling interest will be measured at either fair value,
or at its proportionate interest in the identiﬁable assets andliabilities of the acquiree, on a transaction-by-transaction basis.
The consideration transferred does not include amounts
related to the settlement of pre-existing relationships. Suchamounts are generally recognised separately in proﬁt or loss.
Costs related to the acquisition, other than those associatedwith the issue of debt or equity securities, that EADS incurs
in connection with a business combination are expensed as
incurred.
Any contingent consideration payable is recognised at fairvalue at the acquisition date. If the contingent consideration
is classiﬁed as equity, it is not remeasured and settlement isaccounted for within equity. Otherwise, subsequent changes tothe fair value of the contingent consideration are recognised in
proﬁt or loss.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1When share-based payment awards (replacement awards) are
required to be exchanged for awards held by the acquiree’s
employees (acquiree’s awards) and relate to past services, thenall or a portion of the amount of the acquirer’s replacement
awards is included in measuring the consideration transferredin the business combination. This determination is based on themarket based value of the replacement awards compared withthe market-based value of the acquiree’s awards and the extent
to which the replacement awards relate to past and/or futureservice.
Acquisitions and disposals of non-controlling interests areaccounted for as transactions with owners in their capacity as
equity owners of EADS and therefore no goodwill or gain/loss isrecognised as a result of such transactions. The adjustments tonon-controlling interests are based on a proportionate amountof the net assets of the subsidiary.
Goodwill is tested 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 costless accumulated impairment losses. For impairment testing
purpose, goodwill is allocated to those Cash Generating Units(“CGUs”) or group of CGUs – at EADS on segment level or one
level below – that are expected to beneﬁt from the synergies
arising from the business combination.
EADS subsidiaries prepare their ﬁnancial statements atthe same reporting date as EADS 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 interestby using the proportionate method of consolidation. Joint
control is contractually established and requires unanimousdecisions regarding the ﬁnancial and operating strategy of anentity.
Investments in which EADS has signiﬁcant inﬂuence(“investments in associates”) are accounted for using the equity
method and are initially recognised at cost. Signiﬁcant inﬂuencein an entity is presumed to exist when EADS owns 20% to
50% of the entity’s voting rights. The investments in associates
include goodwill as recognised at the acquisition date net of any
accumulated impairment loss. EADS’ share of the recognised
income and expenses of investments in associates is includedin the Consolidated Financial Statements from the datesigniﬁcant inﬂuence has been achieved until the date it ceases
to exist. The investments’ carrying amount is adjusted 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, nofurther losses are recognised, unless the Group has incurred
obligations or made payments on behalf of the associate.

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Total comprehensive income is attributed to the owners of theparent and to the non-controlling interest, even if this results inthe non-controlling interests having a deﬁcit balance.
The ﬁnancial statements of EADS’ investments in associates
and joint ventures are generally prepared for the same reporting
period 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”).
If a foreign entity is a non-wholly-owned subsidiary, then therelevant proportionate share of the translation difference isallocated to the non-controlling interests.
Transactions in foreign currencies are translated into euro at theforeign exchange rate prevailing at transaction date. Monetary
assets and liabilities denominated in foreign currencies atthe end of the reporting period 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 date of thetransaction. Translation differences on non-monetary ﬁnancial
assets and liabilities that are measured at fair value are reported
as part of the fair value gain or loss. In addition, translationdifferences of non-monetary ﬁnancial assets measured at fairvalue and classiﬁed as available for sale are included in AOCI.
Goodwill and fair value adjustments arising on the acquisition of
a foreign entity occurring after 31 December 2004 are treatedas 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 effects of intercompany transactions are eliminated.

EADS FINANCIAL STATEMENTS 2011 I 19

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1When a foreign operation is disposed of such that control,
signiﬁcant inﬂuence or joint control is lost, the cumulative
amount in the translation reserve related to that foreign
operation is reclassiﬁed to proﬁt or loss as part of the gainor loss on disposal. When EADS disposes of only part of its
interest in a subsidiary that includes a foreign operation while
retaining control, the relevant proportion of the cumulativetranslation reserve is allocated to non-controlling interests.
When EADS disposes of only part of its investment in an
associate or joint venture that includes a foreign operation
while retaining signiﬁcant inﬂuence or joint control, the relevant
proportion of the cumulative translation reserve is reclassiﬁed to
proﬁt or loss.
Current and non-current assets and liabilities —The classiﬁcation of an asset or liability as a current or noncurrent asset or liability in general depends on whether theitem is related to serial production or subject to long-term
production. In case of serial production, an asset or liability
is classiﬁed as a non-current asset or liability when the item
is realised or settled respectively after 12 months after thereporting period, and as current asset or liability when the item
is realised or settled respectively within 12 months after thereporting period. 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; andas 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 reporting
period. 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 from theordinary activities of the Group will ﬂow to EADS, that revenue
can be measured reliably and that recognition criteria as statedbelow have been met. Revenue is measured at the fair valueof 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 revenues is eliminated.
Revenues from the sale of goods are recognised upon thetransfer of risks and rewards of ownership to the buyer which is
generally on delivery of the goods.
Revenues from services rendered are recognised in proportion
to the stage of completion of the transaction at the end of thereporting period.
For construction contracts, when the outcome can be
estimated reliably, revenues are recognised by reference tothe percentage of completion (“PoC”) of the contract activity
by applying the estimate at completion method. The stage

20 I EADS FINANCIAL STATEMENTS 2011

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of ways. Depending on the nature of the contract, revenue isrecognised as contractually agreed technical milestones arereached, as units are delivered or as the work progresses.
Whenever the outcome of a construction contract cannot be
estimated reliably – for example during the early stages of acontract or when this outcome can no longer be estimatedreliably during the course of 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 (“early stage method of accounting”). In
such speciﬁc situations, as soon 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 the revenues previously recorded under the
early stage method of accounting. Changes in proﬁt rates
are reﬂected in current earnings as identiﬁed. Contracts arereviewed regularly and in case of probable losses, loss-atcompletion provisions are recorded. These loss-at-completion
provisions in connection with construction contracts are notdiscounted.
Sales of aircraft that include asset value guarantee
commitments are accounted for as operating leases whenthese commitments are considered substantial compared to thefair value of the related aircraft. Revenues then comprise lease
income from such operating leases.
Revenue related to construction or upgrade services undera service concession arrangement is recognised based on
the stage of completion of the work performed, consistent
with EADS’ Group accounting policy on recognising revenue
on construction contracts. Operation or service revenue isrecognised in the period in which the services are provided by
EADS Group entities. When the Group entities provide morethan one service in a service concession arrangement, theconsideration received is allocated by reference to the relative
fair values of the services delivered when the amounts are
separately identiﬁable. Further, EADS recognises a ﬁnancial
asset arising from a service concession arrangement when
it has an unconditional contractual right to receive cash or
another ﬁnancial asset from or at the direction of the grantor forthe construction or upgrade services provided. Such ﬁnancial
assets are measured at fair value upon initial recognition.
Subsequent to initial recognition, the ﬁnancial assets aremeasured at amortised cost. EADS recognises an intangible
asset arising from a service concession arrangement when it
has a right to charge for usage of the concession infrastructure.
An intangible asset received as consideration for providing
construction or upgrade services in a service concession
arrangement is measured at fair value upon initial recognition.
Subsequent to initial recognition, the intangible asset ismeasured at cost, which includes capitalised borrowing costs,
less accumulated amortisation and accumulated impairment
losses. If the Group is paid for the construction services partly
by a ﬁnancial asset and partly by an intangible asset, then each

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
component of the consideration is accounted for separately andis recognised initially at the fair value of the consideration.
Interest income is recognised as interest accrues, using theeffective interest rate method.
Dividend income / distributions — Dividend income as well as
the obligation to distribute dividends to EADS’ shareholders is
recognised when the shareholder’s right to receive payment isestablished.
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 fulﬁlment of
the arrangement is dependent on the use of a speciﬁc asset
or assets, and (ii) the arrangement conveys a right to use theasset.
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”).
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 isrecorded accordingly. For the relating liability from ﬁnanceleases see Note 26 “Financing liabilities”. When EADS is thelessee under an operating lease contract, rental payments
are recognised on a straight line basis over the leased term(see Note 33 “Commitments and contingencies” for future
operating lease commitments). Such leases often form part ofcommercial aircraft customer ﬁnancing transactions with therelated sublease being an operating lease (headlease-subleasetransactions).

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Product-related expenses — Expenses for advertising, sales
promotion and other sales-related expenses are charged to
expense as incurred. Provisions for estimated warranty costs
are recorded 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 research anddevelopment contracts, are expensed when the related
revenues are recorded.

ii) Costs for self-initiated research and development activities
are assessed whether they qualify for recognition asinternally generated intangible assets. Apart from complying
with the general requirements for and initial measurementof an intangible asset, qualification criteria are met only
when technical as well as commercial feasibility can bedemonstrated and cost can be measured reliably. It mustalso 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 and further
on whenever events or changes in circumstances indicate thatthe 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 therespective assets. All other borrowing costs are expensed in
the period they occur. Borrowing costs consist of interest andother costs that EADS incurs in connection with the borrowingof funds. EADS capitalises borrowing costs for qualifying assets
where construction was commenced on or after 1 January
2009. Further, EADS continues to expense borrowing costs
relating to construction projects that commenced prior to
1 January 2009.

EADS FINANCIAL STATEMENTS 2011 I 21

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1Intangible 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”).
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 recognised in theConsolidated Income Statement within the expense category
consistent with the function of the related intangible asset.
The amortisation method and the estimate of the useful livesof the separately acquired intangible asset is reviewed at least
annually and changed if appropriate.
Intangible assets having an indeﬁnite useful life are notamortised but tested for impairment at the end of each ﬁnancial
year as well as whenever there is an indication that the carrying
amount exceeds the recoverable amount of the respective
asset (see below “Impairment of non-ﬁnancial assets”). For suchintangible assets the assessment for the indeﬁnite useful life isreviewed annually on whether it remains supportable. A change
from indeﬁnite to ﬁnite life assessment is accounted for aschange 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 directmaterial 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 end of the reporting
period, it is assessed whether there is any indication that an
item of property, plant and equipment may be impaired (seealso below “Impairment of non-ﬁnancial assets”).

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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 ﬁve
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 of valueof specialised tools to the units produced. Property, plantand equipment is derecognised when it has been disposedof or 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 initially recognised atcost and subsequently measured at cost less any accumulated
depreciation and any accumulated impairment losses. Buildings
held as investment property are depreciated on a straightline basis over their useful lives. The fair value of investment
property is reviewed annually by using cash-ﬂow models or bydeterminations 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 Statementin the period of derecognition. Transfers are made to or frominvestment properties only when there is a change in use.
Inventories — Inventories are measured at the lower ofacquisition cost (generally the average cost) or manufacturing
cost and net realisable value. Manufacturing costs comprise allcosts that are directly attributable to the manufacturing process,NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1such as direct material and labor, and production related
overheads (based on normal operating capacity and normal
consumption of material, labor and other production costs),
including depreciation charges. Net realisable value is theestimated selling price in the ordinary course of the businessless applicable variable selling expenses.
Impairment of non-ﬁnancial assets — The Group assesses at
each end of the reporting period whether there is an indicationthat 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 ofwhether there is any indication for impairment. An impairment
loss is recognised in the amount by which the asset’s carrying
amount exceeds 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 sell or its value
in use. The recoverable amount is determined for an individual
asset, unless the asset does not generate cash inﬂows thatare largely independent of those from other assets or group ofassets. In such a case the recoverable amount is determined for
the CGU the asset belongs to. Where the recoverable amountof 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 estimateshave not been adjusted.
An asset’s fair value less costs to sell reﬂects the amount EADS
could obtain at its end of the reporting period 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.
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 end of the reporting period as

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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 orcash-generating unit’s recoverable amount. A previously
recognised impairment loss is reversed only if there has beena change in the assumptions used to determine the asset’s
recoverable amount since the last impairment loss wasrecognised. The reversal is limited so that the carrying amountof the asset does not exceed its recoverable amount, nor
exceed the carrying amount that would have been determined,
net of depreciation, had no impairment loss been recognised
for the asset in prior years. Such a reversal is recognised in theConsolidated Income Statement.
Financial instruments — A ﬁnancial instrument is any
contract that gives rise to a ﬁnancial asset of one entity and aﬁnancial liability or equity instrument of another entity. EADS’
ﬁnancial assets comprise mainly cash and short to mediumterm deposits, trade and loan receivables, ﬁnance leasereceivables, other quoted and unquoted ﬁnancial instruments
and derivatives with a positive fair value. The Group’s ﬁnancial
liabilities mainly include obligations towards ﬁnancial institutions,bonds, loans, refundable advances, trade liabilities, ﬁnancelease liabilities as well as derivatives with a negative fair value.
EADS recognises a ﬁnancial instrument on its Consolidated
Statement of Financial Position when it becomes party to thecontractual provision of the instrument. All purchases and salesof 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 at fair 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 fair value 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 end of the reporting period whether there is any objective
evidence that a 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 when the obligation speciﬁed in thecontract is discharged, cancelled or expired. When an existing
ﬁnancial liability is replaced by another from the same lender onsubstantially different terms, or the terms of an existing liability
are substantially modiﬁed, such an exchange or modiﬁcationis treated as a derecognition of the original liability and therecognition of a new liability, and the difference in the respective
carrying amounts is recognised in the income statement.
Fair value of ﬁnancial instruments — The fair value of quoted
investments is based on current market prices. If the market
for ﬁnancial assets is not active or in the case of unlisted

EADS FINANCIAL STATEMENTS 2011 I 23

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
ﬁnancial instruments, EADS determines fair values by using
generally accepted valuation techniques on the basis of market
information available at the end of the reporting period. Suchtechniques 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 other valuation 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 byalternative valuation methods, such as discounted cash ﬂow
model, are measured at cost, less any accumulated impairment
losses.
Investments and other ﬁnancial assets — EADS’ investments
comprise investments in associates accounted for under theequity method, other investments and other long-term ﬁnancial
assets as well as current and non-current securities and cash
equivalents. The Group classiﬁes its ﬁnancial assets in thefollowing three categories: i) at fair value through proﬁt or loss,ii) loans and receivables and iii) available-for-sale ﬁnancial assets.
Their classiﬁcation is determined by management when ﬁrst
recognised and depends on the purpose for their acquisition.
Within EADS, all investments in entities for which consolidation
criteria are not fulﬁlled are classiﬁed as non-current availablefor-sale ﬁnancial assets. They are included in the line otherinvestments and other long-term ﬁnancial assets in theConsolidated Statement of Financial Position.
The majority of the Group’s securities consists of debt
securities and is classiﬁed 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 theeffective interest method. Dividends earned on investment arerecognised as “Other income (expense) from investments” in theConsolidated Income Statement when the right to the payment
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
categorized as held for trading. Further, ﬁnancial assets may
be designated at initial recognition at fair value through proﬁt or

24 I EADS FINANCIAL STATEMENTS 2011

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loss 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 recognising 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 fair value
basis, in accordance with a documented risk management
or investment strategy. Within EADS, uncapped Structured
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 or loss” inaccordance with above criterion (iii).
Loans and receivables — Loans and receivables are
non-derivative ﬁnancial assets with ﬁxed or determinable
payments that are not quoted in an active market. They arise
when the Group provides money, goods or services directly toa debtor with no intention of trading the receivable and include
also service concession receivables. Loans and receivables
are classiﬁed as trade receivables and other investments
and other long-term ﬁnancial assets. After initial recognitionloans and receivables are measured at amortised cost using theeffective interest rate method less any allowance for impairment.
Gains and losses are recognised in the Consolidated Income
Statement at disposal of the loans and receivables, through theamortisation process as well as in case of any impairment.
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 relatedcompanies, 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 risk ofchanges in value.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1Impairment of ﬁnancial assets — EADS assesses at eachend of the reporting period whether there is any objective
evidence that a ﬁnancial 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 eachend of the reporting period whether there is any objective
evidence that the investment in associate is impaired. Thisobjective evidence for impairment includes information aboutsigniﬁcant changes with an adverse effect that have taken placein the 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 an investment
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 the carrying amountof the investment in EADS’ associates and recognises theimpairment amount in the Consolidated Income Statement. Anyreversal of the impairment loss is recognised as an adjustment
to the investment in the associate to the extent that therecoverable amount of the investment increases. As such, thegoodwill related to EADS’ associates is not individually tested
for impairment.

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through the Consolidated Income Statement; increases in theirfair value are recognised directly in AOCI.
In case of the impairment of debt instruments classiﬁed asavailable-for-sale, interest continues to be accrued at theoriginal 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 theincrease 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.

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 thatthe debtors or a group of debtors is experiencing signiﬁcant
ﬁnancial difﬁculty, default or delinquency in interest or principal
payments, the probability that they will enter bankruptcy orother ﬁnancial reorganisation and where observable data
indicate that there is a measurable decrease in the estimatedfuture cash ﬂows, such as changes in arrears or economic
conditions that correlate with defaults.

Non-current assets / disposal groups classiﬁed as held
for sale — Non-current assets / disposal groups classiﬁed
as assets held for sale and stated at the lower of carrying
amount and fair value less costs to sell if their carrying amountis recovered 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. In addition, equity accounting ofinvestments in associates ceases once classiﬁed as held forsale or distribution. Liabilities directly associated with noncurrent assets held for sale in a disposal group are presented
separately on the face of the Consolidated Statement of
Financial Position. Interest and other expenses attributable tothe liabilities of a disposal group classiﬁed as held for sale iscontinued to be recognised.

Equity investments classiﬁed as available-for-sale areconsidered for impairment in addition to the indicators statedabove in case of a signiﬁcant or prolonged decline of their fairvalue below their cost. If any such evidence exists for availablefor-sale ﬁnancial assets, the cumulative loss – measured as
the difference between the acquisition cost and the current fairvalue, less any impairment loss on that ﬁnancial asset previously
recognised in the Consolidated Income Statement – is removed
from AOCI and recognised in the Consolidated Income
Statement. Impairment losses recognised in the Consolidated
Income Statement on equity instruments are not reversed

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.

EADS FINANCIAL STATEMENTS 2011 I 25

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
If a component of EADS has either been disposed of or isclassiﬁed as held for sale and i) represents a separate major lineof business or geographical area of operations, ii) is part of asingle co-ordinated plan to dispose of a separate major line ofbusiness or geographical area of operations or iii) is a subsidiaryacquired exclusively with a view to resale the component 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 or are (b) a component of hybrid
ﬁnancial instruments that include both the derivative and hostcontract (“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 recognising resulting gains or losses depends onwhether the derivative ﬁnancial instrument has been designatedas hedging instrument, and if so, on the nature of the item being
hedged. While derivative ﬁnancial instruments with positive
fair values are recorded in “current / non-current other ﬁnancial
assets”, such derivative ﬁnancial instruments with negative fairvalues 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 cash
flows attributable to the hedged risk, the effectiveness ofthe hedge can be reliably measured and there is formal
designation and documentation of the hedging relationships
and EADS’ risk management objective and strategy forundertaking 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 andprospectively its assessment of whether the derivatives
used in hedging transactions are highly effective in offsettingchanges in fair values or cash flows of hedged items withregard 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 (“CashFlow Hedges”) or (iii) hedges of a net investment in a foreign
entity.

26 I EADS FINANCIAL STATEMENTS 2011

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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 aresimultaneously 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 attributable torecognised assets and liabilities. Changes in fair value ofthe hedging instruments related to the effective part of thehedge are reported in AOCI, a separate component of total
equity, net of applicable income taxes and recognised in
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 thehedging instrument that were previously recorded in equity
are generally recognised in “Profit for the period”. Apart fromderivative financial instruments, the Group 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 in equity remain in equity until theforecasted 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 addition, EADS uses certain foreign currency derivatives tomitigate its foreign currency exposure arising from changes in
the fair value of recognised assets and liabilities (natural hedge).
To reﬂect the largely natural offset those derivatives provide to
the remeasurement gains or losses of speciﬁc foreign currency
balance sheet items, EADS accordingly presents the gains orlosses of those foreign exchange rate derivatives as well as
the fair value changes of the relating recognised assets andliabilities in EBIT insofar as certain formal requirements are met.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
Finally, in case certain derivatives or portions of thesederivatives do not qualify for hedge accounting under the
speciﬁc rules of IAS 39 “Financial Instruments: Recognition
and Measurement” (for example, the non-designated timevalue of options or de-designated derivatives in general) or do
not belong to a Natural Hedge, changes in fair value of suchderivative ﬁnancial instruments or its portions are recognised
immediately as part of the ﬁnancial result.
The fair values of various derivative ﬁnancial instruments usedas hedging instruments are disclosed in Note 33 “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 34 “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”,
unless bifurcated foreign currency embedded derivatives
are designated as hedging instruments.
See Note 34 “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 aswell as the methods used to determine such fair values.
Income taxes — Tax expense (tax income) is the aggregate
amount included in the determination of net proﬁt or loss for theperiod in respect of (i) Current tax and (ii) Deferred tax.

i)

ii)

Current tax is the amount of income taxes payableor recoverable in a period. Current income taxes arecalculated applying respective tax rates on the periodic
taxable profit or tax loss that is determined in accordancewith rules established by the competent taxation authorities.
Current tax liabilities are recognised for current tax to theextent unpaid for current and prior periods. A current tax
asset is recognised in case the tax amount paid exceeds
the amount due to current and prior periods. The benefit ofa tax loss that can be carried back to recover current taxes
of a previous period is recognised as an asset provided
that the related benefit is probable and can be measured
reliably.
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
and liabilities are measured using enacted tax rates tobe applied to taxable income in the years in which those

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temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities ofa change in tax rates is recognised in the period the newrates are enacted or substantially enacted. As deferred
tax assets anticipate potential future tax benefits, they arerecorded in the Consolidated Financial Statements of EADS
only to the extent that it is probable that future taxable
profits will be available against which deferred tax assets will
be utilised. The carrying amount of deferred tax assets isreviewed at each 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 and a
reliable estimate of the obligation’s amount can be made. Whenthe effect of the time value of money is material, provisions aremeasured at the present value of the expenditure expected tobe required to settle the Group’s present obligation. As discountfactor, a pre-tax rate is used that reﬂects current market
assessments of the time value of money and the risks speciﬁcto the obligation. The provision’s increase in each period
reﬂecting the passage of time is recognised as ﬁnance cost.
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 theend of its useful life and the site on which it is located restored.
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
the amount 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.

EADS FINANCIAL STATEMENTS 2011 I 27

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
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 write
downs of work-in-process for that portion of the work which has
already been completed, and as provisions for the remainder.
Losses are determined on the basis of estimated results oncompletion 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 futureagainst the Group which are a result of past events, where itis 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.
Restructuring provisions are only recognised when a detailed
formal plan for the restructuring – including the concernedbusiness or part of the business, the principal locations
affected, details regarding the employees affected, therestructuring’s timing and expenditures that will have to beundertaken – has been developed and the restructuring haseither commenced or the plan’s main features have alreadybeen publicly announced to those affected by it.
Employee beneﬁts — The valuation of pension and postretirement beneﬁts classiﬁed as deﬁned beneﬁt plans is based
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 the plan according
to its share in the related deﬁned beneﬁt plan.

28 I EADS FINANCIAL STATEMENTS 2011

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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.
Share based compensation — Stock options issued by
EADS up to 2006 are accounted for in accordance withIFRS 2 “Share-based Payment” and qualify as equity settled
share-based payments. In 2007, EADS also introduced aperformance and restricted unit plan (LTIP) which qualiﬁes ascash settled share-based payment plan under IFRS 2. For
both types, associated services received are measured at fairvalue 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 / end of the reporting period. The fairvalue of the option (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 plans acorresponding liability is recognised. Until the liability is settled
its fair value is remeasured at each end of the reporting period
through the Consolidated Income Statement.
Part of the grant of both types of share-base 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 thatsome of the performance objectives will not be met and, hence,
the number of equity instruments expected to vest differs fromthat originally expected, the expense is adjusted accordingly.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

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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 expensein EADS’ Consolidated Income Statements at grant date.

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 thesuccess of the project.

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.

Further, EADS designates certain ﬁnancial liabilities representing
payment obligations towards airlines denominated in USD as
hedging instruments to hedge the foreign currency risk inherent
in future aircraft sales under a cash ﬂow hedge.

The participating companies are permitted to trade thoseemission rights. To avoid a penalty a participant is required
to deliver 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 end of thereporting period.
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 at fairvalue. Trade liabilities having a maturity of more than 12 months
are subsequently measured at amortised cost using theeffective interest rate method.
Financing liabilities — Financing liabilities comprise
obligations towards ﬁnancial institutions, issued corporate
bonds, loans, loans to afﬁliated non-consolidated companies
as well 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 the ﬁnancing
liability.
Current / non-current other ﬁnancial liabilities —Current / non-current other ﬁnancial liabilities mainly include
refundable advances and derivatives with a negative market

Current / non-current other liabilities — Current / non-current
other liabilities mainly consist of advance payments received
from customers.
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 32 “Litigation and claims”.

Use of accounting estimates
EADS’ signiﬁcant accounting policies, as described in Note 2,
are essential for the understanding of the Group’s resultsof operations, ﬁnancial positions and cash ﬂows. Certainof these accounting policies require accounting estimatesthat involve complex and subjective judgements and theuse of assumptions, some of which may be for matters thatare inherently uncertain and susceptible to change. Suchaccounting estimates could change from period to period
and might have a material impact on the Group’s results ofoperations, ﬁnancial positions and cash ﬂows. The assumptions
and estimates used by EADS’ management are based onparameters which are derived from the knowledge at the time of
preparing the Consolidated Financial Statements.

EADS FINANCIAL STATEMENTS 2011 I 29

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION1
In particular, the circumstances prevailing at this time andassumptions as to the expected future development of the
global and industry speciﬁc environment were used to estimate
the Company’s future business performance. Where these
conditions develop differently than assumed, and beyond thecontrol of the Company, the actual ﬁgures may differ from thoseanticipated. In such cases, the assumptions, and if necessary,the carrying amounts of the assets and liabilities concerned, areadjusted accordingly.
These estimates and underlying assumptions are reviewed
on an ongoing basis. Revisions to accounting estimates arerecognised in the period in which the estimate is revised if therevision affects only that period, or in the period of the revisionand future periods if the revision affects both current and future
periods.
Subjects that involve assumptions and estimates and that havea signiﬁcant inﬂuence on the amounts recognised in EADS’
Consolidated Financial Statements are further described or are
disclosed in the respective Notes mentioned below.
Revenue recognition on construction contracts — EADS
conducts a signiﬁcant portion of its business under construction
contracts with customers, for example within aerospace related
governmental programmes. The Group generally accounts
for construction projects using the percentage-of-completion
method, recognising revenue as performance on a contract
progresses measured either on a milestone or on a cost-tocost basis depending on contract terms. This method placesconsiderable importance on accurate estimates at completion
as well as on the extent of progress towards completion. For
the determination of the progress of the construction contract
signiﬁcant estimates include total contract costs, remaining
costs to completion, total contract revenues, contract risks
and other judgements. Management of the operating Divisions
continually review all estimates involved in such construction
contracts and adjusts them as necessary. See Note 19 “Trade
receivables” for further information.
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 assets 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

30 I EADS FINANCIAL STATEMENTS 2011

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concerned and any changes in the discount rate applied. See
Note 14 “Intangible assets” for further information.
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 Cash Generating
Unit (CGU) to which goodwill is allocated involves the use of
estimates by management. The outcome predicted by theseestimates is inﬂuenced by several assumptions including
for example growth assumptions of CGUs, availability andcomposition of future defence and institutional budgets,foreign exchange ﬂuctuations or implications arising from thevolatility of capital markets. EADS generally uses discounted
cash ﬂow based methods to determine these values. These
discounted cash ﬂow calculations basically use ﬁve-year
projections that are based on the operative plans approvedby management. Cash ﬂow projections take into account pastexperience and 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. See
Note 14 “Intangible assets” for further information.
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 including potential
impacts from the EU sovereign debt crisis and analysis ofhistorical bad debts. See Note 19 “Trade receivables” for further
information.
Foreign currency derivatives — Fair value measurements offoreign currency derivates are based on market assumptions
relating to, among others, foreign exchange basis spreads andrelevant interest rate levels. See Note 34 “Information about
Financial Instruments” for further information.
Employee beneﬁts — The Group accounts for pension andother postretirement beneﬁts in accordance with actuarial
valuations. These valuations rely on statistical and otherfactors in order to anticipate future events. These factors
include key actuarial assumptions including the discount rate,
expected return on plan assets, expected salary increases andmortality rates. The discount rate assumptions are determinedby reference to yields on high quality corporate bonds of

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1appropriate duration and currency at the end of the reporting
period. In case such yields aren’t available discount rates
are based on government bonds yields. Expected returns onplan assets assumptions are determined considering longterm historical returns and asset allocations. These actuarial
assumptions may differ materially from actual developments
due to changing market and economic conditions and therefore
result in a signiﬁcant change in postretirement employee beneﬁt
obligations and the related future expense. See Note 25b)
“Provisions for retirement plans” for further information.
Provisions — The determination of provisions, for example
for onerous contracts, warranty costs and legal proceedings
is based on best available estimates. Onerous sales contracts
are identiﬁed by monitoring the progress of the contract aswell as the underlying programme and updating the estimateof contract costs, which also requires signiﬁcant judgement
related to achieving certain performance standards as wellas estimates involving warranty costs. Depending on the size
and nature of our contracts and related programmes, theextent of assumptions, judgements and estimates in thesemonitoring processes differs. Especially, the introduction of
new commercial aircraft programmes (such as the A350 XWB)
or major derivative aircraft programmes particularly involves anincreased level of estimates and judgements associated with the
expected development, production and certiﬁcation schedules
and expected cost components. A commercial aircraft contract
or amendment to a contract may include option clauses forextension as well as termination of full or part of the contract.
The assessment of the probability of execution of these options
is based on management’s best estimates. Estimates andjudgements are subject to change based on new informationas contracts and related programmes progress. Furthermore,
the complex design and manufacturing processes of EADS’industry require challenging integration and coordination along
the supply chain including an ongoing assessment of supplier’s
assertions which may additionally impact the outcome of thesemonitoring processes. See Note 25c) “Other provisions” forfurther information.

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Legal contingencies – EADS companies are parties tolitigations related to a number of matters as described in
Note 32 “Litigation and claims”. The outcome of these matters
may have a material effect on the ﬁnancial position, resultsof operations or cash ﬂows of EADS. Management regularly
analyses current information about these matters and provides
provisions for probable contingent losses including theestimate of legal expense to resolve the matters. Internal andexternal lawyers are used for these assessments. In making
the decision regarding the need for provisions, management
considers the degree of probability of an unfavourable outcome
and the ability to make a sufﬁciently reliable estimate of theamount of 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. See Note 32 “Litigation and claims” for further
information.
Income taxes — EADS operates and earns income in numerous
countries and is subject to changing tax laws in multiple
jurisdictions within these countries. Signiﬁcant judgements arenecessary in determining the worldwide income tax liabilities.
Although management believes that it has made reasonableestimates about the ﬁnal outcome of tax uncertainties, noassurance can be given that the ﬁnal tax outcome of thesematters will be consistent with what is reﬂected in the historicalincome tax provisions. Such differences could have an effecton the income tax liabilities and deferred tax liabilities in the
period in which such determinations are made. At each end of
the reporting period, EADS assesses whether the realisation of
future tax beneﬁts is sufﬁciently probable to recognise deferred
tax assets. This assessment requires the exercise of judgmenton the part of management with respect to, among other things,
beneﬁts that could be realised from available tax strategies andfuture taxable income, as well as other positive and negative
factors. 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. See Note 13 “Income Taxes” for further information.

3. Scope of Consolidation
Perimeter of consolidation (31 December 2011) —The Consolidated Financial Statements include, in addition
to EADS NV:
O 2011: 245 (2010: 190) companies which are fully
consolidated;
O 2011: 46 (2010: 41) companies which are proportionately
consolidated;

O 2011: 18 (2010: 19) investments in associates accounted forusing the equity method.
The number of investments in associates only comprises therespective parent company.
Signiﬁcant subsidiaries, associates and joint ventures are listed
in the Appendix entitled “Information on principal investments”.

EADS FINANCIAL STATEMENTS 2011 I 31

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

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4. Acquisitions and Disposalsa) Acquisitions and other M&A Transactions
In addition to pursuing organic growth via its divisions, EADS
has signiﬁcantly strengthened its services and platform portfolio
by several M&A transactions during 2011.

Acquisition of Vector Aerospace GroupOn 30 June 2011, Eurocopter Holding S.A.S., a subsidiary of
EADS N.V., acquired 98.3% of Vector Aerospace Corporation,
Toronto (Canada), (hereafter referred to as “Vector”) following a
CAD 13.00 / share cash offer for all of the outstanding commonshares of Vector, including all shares that may be issued on theexercise of options granted under Vector’s share option plan.
The remaining 1.7% shares of Vector were acquired via linked
squeeze out procedures ﬁnalised on 4 August 2011.
Vector is an independent global provider of Original Equipment
Manufacturer (OEM) approved Maintenance, Repair andOverhaul aviation services (MRO services) for aircraft andhelicopter operators. The acquisition of Vector will help toincrease the growth of support and services activities for
Eurocopter and EADS in both the civil and governmental
markets. Vector will also strengthen EADS’ presence in North
America and the UK, in alignment with the Company’s strategic
goals as outlined in EADS’ Vision 2020 plan.
The total consideration includes the amount paid in cash forthe acquisition of 98.3% of Vector’s shares (€ 452 million) at theend of June 2011 as well as the amount of € 8 million paid to theremaining shareholders within squeeze out procedures.
The acquired intangible assets of € 158 million identiﬁed withina purchase price allocation include customer relationships,
a brand name as well as supplier relationships. The goodwillof € 185 million includes a control premium reﬂecting the
expected synergies arising from the combination with theexisting MRO business of Eurocopter and EADS, joint future
market developments as well as the signiﬁcant value ofVector’s assembled workforce. The gross amount of the tradereceivables acquired of € 88 million reﬂects their fair value. Noneof the trade receivables have been signiﬁcantly impaired and it
is expected that the full contractual amounts can be collected.

Acquisition of Satair GroupOn 5 October 2011, Airbus S.A.S., a subsidiary of EADS N.V.,
obtained control of Satair A/S, Copenhagen, Denmark(hereafter referred to as “Satair”) via its subsidiary Airbus
Denmark Holding ApS following a public voluntary conditionaltender offer of DKr 580 / share for all of the outstanding
shares of Satair, including an offer of DKr 378.66 / warrant foreach warrant holder. As a result of the public voluntary offer
EADS acquired 98.5% of Satair’s shares during October andNovember 2011, while the remaining 1.5% of Satair’s shareswere acquired via linked squeeze out procedures ﬁnalised on
6 February 2012.
32 I EADS FINANCIAL STATEMENTS 2011

Satair is a Danish premier independent distributor of
aircraft parts and services specialised in expendables andcomponents. Through its worldwide supply chain network andits regional sales ofﬁces, Satair provides aviation parts andinnovative services to a broad customer base around the world,
supporting all major aircraft families in the commercial aviation
market. The acquisition will facilitate the growth of Airbus’material management business and offers an opportunity todevelop new services both in civil and governmental markets.
The total consideration of € 351 million for this acquisition
includes € 346 million paid in cash for 98.5% of Satair’s sharesand 100% of warrants during October and November 2011
as well as an amount of € 5 million paid to the remaining
shareholders (1.5% of Satair’s shares) within the linked squeeze
out procedures ﬁnalised in February 2012.
Intangible assets of € 139 million currently subject to a purchaseprice allocation primarily include supplier relationships anda brand name. The goodwill of € 163 million reﬂects theassembled workforce of Satair as well as the expected businessvolume from the future expansion of aerospace supplier
relationships.
At the acquisition date the trade and other receivables comprisegross contractual amounts due of € 48 million of which€ 1 million were expected to be uncollectible resulting in a fairvalue of the trade receivables portfolio of € 47 million.

Acquisition of Vizada GroupOn 19 December 2011, Astrium Holding S.A.S., a subsidiaryof EADS N.V., acquired 100% of MobSat Group Holding
S.a.r.l., Munsbach, Luxemburg, being the ultimate parent
company of Vizada group (hereafter referred to as “Vizada”)
from a consortium of investors led by Apax France, a French
Private Equity fund and the former majority shareholder. The
total consideration paid by Astrium included € 413 million
for the acquisition of Vizada’s equity instruments as well as€ 325 million due to a mandatory extinguishment of the former
Vizada debt structure.
Vizada – being a world leader in commercial satellite
communications services – comprises Vizada Americas,
Vizada Networks, Vizada EMEA & Asia and Marlink. By serving
200,000 end-customers across all major satcom sectors suchas maritime, aero, land or media, but also non governmentalorganisations and various governmental/defence customers,
Vizada offers mobile and ﬁxed connectivity services frommultiple satellite network operators both directly and througha network of currently 400 service provider partners. Thisacquisition will broaden the range of services offered globallyby Astrium, as such strengthening also EADS’ presence acrossEurope, the Middle East, Asia, Africa and the United States. As
Astrium’s existing satellite communications portfolio is heavily
focused on governmental and secure civil satcom services,NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
Vizada forms a perfect complement to Astrium’s current service
portfolio and will enable Astrium to be more innovative and todiversify its range of satcom services.
Intangible assets of € 101 million currently identiﬁed in a provisionalpurchase price allocation primarily include customer relationships,
brand names as well as satcom licenses. The preliminary goodwill

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Back to Contentsof € 538 million includes a control premium reﬂecting expectedsynergies arising from the business combination as well as
future customer relationships in the global satcom market. At theacquisition date the trade and other receivables comprise grosscontractual amounts due of € 118 million of which € 4 million are
expected to be uncollectible resulting in a fair value of the tradereceivables portfolio of € 114 million.

The following table summarises for all three signiﬁcant M&A transactions described above (Vector, Satair and Vizada) as well as for all
remaining individually insigniﬁcant M&A transactions mentioned below the consideration transferred, the fair value of identiﬁable assets
acquired, liabilities assumed and any non-controlling interest as at the acquisition date. For all M&A transactions, fair values remain
provisional due to ongoing purchase price allocation projects, but will be ﬁnalised within 12 months after each acquisition date.

Fair value recognisedon acquisition(In € million)

Intangible assets (1)Customer / supplier
relationships (1)Technologies / Licenses(1)

Trademarks (1)Acquisitionof Vizada

Remaining
individuallyinsignificant
acquisitions

Total
acquisitions

139

101

124

522

93

66

59

31

249

16

5

1

86

108

Acquisitionof Vector
Aerospace

Acquisitionof Satair

158

49

68

41

7

165

Property, plant and equipment

85

8

74

54

221

Inventories

103

87

6

78

274

Trade receivables

88

47

114

143

392

Other assets

7

41

0

97

145

Cash and cash equivalents

28

4

29

35

96

469

326

324

531

1,650

Provisions

10

0

11

104

125

Financing liabilities

19

52

0

132

203

Trade liabilities

66

35

106

81

288

Tax liabilities

53

31

7

17

108

Other liabilities

46

20

0

138

204

194

138

124

472

928

Net assets acquired

275

188

200

59

722

Non-controlling interests

0

0

0

7 (4)

EADS’ portion in net
assets acquired

275

188

200

52

715

0

0

0

(2)

(2)

185

163

538

82

968

460

351

738

132

1,681

Preliminary badwill (2) arisingon acquisition

7 (4)

(3)

Preliminary goodwill arisingon acquisition (see Note 14“Intangible assets”)
Total consideration(5)(1) Depending on the specific fact pattern of each M&A transaction, customer / supplier relationships, technologies / licences and trademarks are expected to be amortised over a
period between 3-28 years, 5-14 years and 1-8 years respectively (the latter only regarding product and specific corporate trademarks in connection with the ND SatCom, Signalis
and Grintek transaction, as most of the acquired corporate trademarks are considered to have an indefinite life).
(2) The badwill of € 2 million arose in the context of the ND SatCom acquisition and has been recognised as a gain in the current year, within ‘other income’ in the Consolidated Income
Statement.
(3) None of the goodwill portions of EADS’ 2011 M&A transactions is considered to be tax deductable in the respective local tax accounts.
(4) Except for the non-controlling interest in ND SatCom, which was measured at its fair value of € 2 million with reference to the acquisition price of the shares acquired by Astrium,
all remaining non-controlling interest portions in Grintek and i-cubed of € 5 million in total were measured at their proportional share in net assets.
(5) The total consideration (€ 1,681 million) exceeds total consideration paid gross of acquired cash in 2011 (€ 1,631 million) by € 50 million due to the inclusion of € 5 million paid to noncontrolling shareholders of Satair in a linked-squeeze out transaction in February 2012, the recognition of previously held shares within the step-acquisitions of Grintek and i-cubedat their fair values of € 27 million (resulting in an included step-up gain of € 6 million), a merger gain of € 14 million arisen in the Signalis transaction as well as due to impacts from theseparate recognition of settlements of pre-existing relationships (€ 4 million). All gains related to business combinations were presented within ‘other income’ in the Consolidated
Income Statement.

EADS FINANCIAL STATEMENTS 2011 I 33

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
In addition to these three signiﬁcant 2011 M&A transactions thefollowing M&A activities of EADS’ divisions are summarised in
the column “remaining individually insigniﬁcant acquisitions” inthe table above.

Additional M&A transactions of the Airbus Division
On 19 October 2011, Airbus Americas, Inc., Herndon, Virginia(USA), a subsidiary of EADS N.V., acquired 100% of the sharesand voting rights of Metron Holdings, Inc., Dulles, Virginia (USA),the ultimate parent company of Metron Aviation (hereafterreferred to as “Metron”) from its management team and two
institutional investors for a total consideration of € 55 million. In
general, Metron provides advanced research, Air Trafﬁc Flow
Management (ATFM), airspace design, energy and environmental
solutions to Air Navigation Service Providers (ANSPs), airlines
and airports worldwide. Especially, Metron is a US prime
contractor on System Engineering 2020 (SE-2020), the FAA’s
strategic programme in connection with the US Next Generation
Air Transportation System (NextGen) initiative to modernise theU.S. national airspace system. Metron also provides advanced
research and development services related to SESAR - theSingle European Sky ATM Research Programme of the European
Commissions and EUROCONTROL. This acquisition strengthens
Airbus’ strategy to accelerate and support ATFM programmesthat will signiﬁcantly improve global air transportation capacity,
efﬁciency and environmental sustainability. Metron reported
revenues of € 32 million for the full year 2011.
On 20 October 2011, Airbus Operations GmbH, a subsidiaryof EADS N.V., acquired 74.9% of the shares and voting rights
of PFW Aerospace AG, Speyer, Germany, the ultimate parent
company of PFW Aerospace Group (hereafter referred toas “PFW”) in a linked transaction for a total consideration of€ 4 million primarily arising from impacts due to the separate
recognition of settlements of pre-existing relationships(€ 4 million). PFW is a specialised producer of tube and ductsystems, aircraft on-board cargo loading systems as well as
structural and assembly components. Airbus’ investment isintended to stabilise PFW’s ﬁnancial position and operational
set up during its current turnaround situation. EADS and Airbus
are still in the process of assessing various implications of
this transaction for EADS’ ﬁnancial reporting. PFW reported
revenues of € 167 million for the full year 2011.

Additional M&A transactions of the Astrium
Division
On 28 February 2011 Astrium Services GmbH, Ottobrunn,
Germany, a subsidiary of EADS N.V., obtained control of ND
SatCom GmbH, Immenstaad (Germany), a supplier of satellite
and ground systems equipment and solutions, by acquiring
75.1% of the shares and voting interests in the company for a
total consideration of € 5 million from SES ASTRA. With thisacquisition, Astrium and SES ASTRA will further reinforce theirlong-term relationship, and will also explore the potential forthe two companies to work together in the development of
new business opportunities in the government and institutions
sector, as well as other speciﬁc satellite infrastructure

34 I EADS FINANCIAL STATEMENTS 2011

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projects. This acquisition also provides an opportunity to
Astrium to deploy a signiﬁcantly wider product range by
combining Astrium’s secure satcoms, networks and terminals
expertise with ND SatCom’s for a stronger offering to the civil,
governmental and military markets. ND SatCom reported
revenues of € 52 million for the full year 2011.
On 10 May 2011, the GEO Information Division of Astrium
Services (formerly Spot Image and Infoterra, hereafter referred
to as GEO) expanded its investment in i-cubed LLC, Fort
Collins, Colorado (USA), (hereafter referred to as i-cubed)
from 25.6% to 77.7% by a step-acquisition of additional 52.1%
for € 6 million via its US subsidiary SPOT Image Corporation,
Chantilly, Virginia (USA). i-cubed is a leading worldwide providerof value-added imagery and geospatial data management
technologies for commercial and governmental customers,
including amongst others earth imaging satellite operators,
wireless telecommunications companies, geo-related internet
portals and various governmental agencies. This step acquisition
strengthened GEO’s longstanding relationships with i-cubed
and will enable GEO to capitalise on combined resources acrossAstrium to assist in delivering i-cubed’s innovative solutions forgeospatial content management to the global market. i-cubed
reported revenues of € 8 million for the full year 2011.
Finally, Astrium announced on 21 December 2011, that Astrium
Holding S.A.S. acquired 66.8% of Space Engineering, Rome (Italy), a
specialist in digital telecommunications, RF and antenna equipment
engineering for both space and ground based applications. Thisacquisition is expected to enhance Astrium’s capability to develop
and manufacture sophisticated telecommunications hardware andunderlines Astrium’s commitment to the Italian space market. The
completion of this transaction is subject to customary conditions,
including regulatory approvals.

Additional M&A transactions of the Cassidian
Division
On 11 January 2011, Cassidian and Atlas Elektronik GmbH,
Bremen, Germany (hereafter referred to as Atlas Elektronik), a
joint venture of ThyssenKrupp AG and Cassidian, completed
the merger of their maritime safety and security activities
formerly carried out via their separate subsidiaries Sofrelog andAtlas Maritime Security. The new company named SIGNALIS
was set up as a medium-sized corporation which will be
co-owned by Cassidian (60%) and Atlas Elektronik (40%).
SIGNALIS will address markets worldwide with innovative,
reliable and cost effective maritime security products ranging
from small-scale Vessel Trafﬁc Service (VTS) systems to highperformance Coastal Surveillance Systems (CSS). It will also
provide solutions for harbour security, port management andinformation systems, as well as other related radar processing
applications. This merger will allow Cassidian and Atlas
Elektronik to offer their customers solutions that will respondto even more complex safety and security needs covering landand sea based on SIGNALIS’ proven capabilities to integrate thelatest sensor systems, communications, and data processing
technologies. For the full year 2011, SIGNALIS reported
revenues of € 39 million.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.1 BASIS OF PRESENTATION

1
On 9 June 2011, Cassidian increased via EADS DeutschlandGmbH, Ottobrunn, Germany, (hereafter referred to as Cassidian)its 45.0% shareholding in Grintek Ewation (Pty) Ltd., Pretoria,
South Africa, (herafter referred to as GEW) by acquiring a
42.4% stake formerly held by Saab South Africa Ltd., Centurion,
South Africa, for € 21 million within a step-acquisition. A 12.6%
shareholding is still held by Kunene Finance Company (Pty.)
Ltd., Gauteng, South Africa, a South African private equity
investor. GEW is a system engineering company for the design
and production of sophisticated communication monitoringand direction ﬁnding systems, equipment for the managementof frequency spectrums and related countermeasures as wellas integrated security systems incorporating a wide range ofsurveillance and monitoring products. The new shareholding
structure takes the long standing relationship between GEW
and Cassidian to a new level and provides the opportunity for
future growth and competitiveness on a global scale in the ﬁeldof governmental intelligence and electronic protection. GEWreported revenues of € 58 million for the full year 2011.

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In addition, Cassidian and Rheinmetall Defence agreed on
22 December 2011 to pursue Rheinmetall’s Unmanned Aerial
Systems (UAS) activities within a new entity, which is expected
to provide access to broader development resources andinternational markets for this Airborne Systems productunit. In addition, former Rheinmetall activities related to thedevelopment and production of cargo loading systems for the
A380 and A400M programmes will also be carried out by thisentity in the future.
For all these individually insigniﬁcant transaction mentioned, thepreliminary goodwill of € 82 million primarily reﬂects expectedsynergies from combining these acquired companies withthe operations of the acquiring EADS’ divisions as well as theexpertise of their assembled workforces. At the acquisition
date trade and other receivables of these acquired companies
comprise gross contractual amounts due of € 145 million ofwhich € 2 million are expected to be uncollectible resulting in afair value of the trade receivables portfolio of € 143 million.

The table attached summarises selected proﬁt and loss related key ﬁgures of these 2011 M&A transactions, such as thecontributions of all acquired entities to EADS Group’s revenue, EBITDA and proﬁt for the 2011 period since their acquisition dates aswell as their revenues, EBITDA and proﬁt during the 12 months period ended 31 December 2011.

(In € million) (1)Acquisition date
Acquisition costs(2)

VectorAerospace

SatairVizadaRemaining individuallyinsignificant acquisitions

Total
acquisitions

30 June 2011

5 October 201119 December 2011

various dates

various dates

8

6

7

5

26

2011 revenue contributions
since acquisition date

210

86

0

159

455

2011 contributions
to the EBITDA of EADS
since acquisition date

13

1

0

0

14

2011 contributions
to the profit of EADS
since acquisition date

(13)

0

0

(13)

(26)

Revenues during
the 12 months period ended
31 December 2011

411

326

447

378

1,562

Pro-forma EBITDA during
the 12 months period ended
31 December 2011 (3)

40

28

61

4

133

Pro-forma profit (loss) during
the 12 months period ended
31 December 2011 (3)

17

7

10

(60)

(26)

(1) If not stated otherwise.
(2) All acquisition related costs mentioned have been excluded from the consideration transferred and have been recognised as an expense in the current year, within ‘other expenses’
in the Consolidated Income Statement.
(3) EADS considers these ‘pro-forma’ profit figures to represent an initial approximate measure to determine the performance of the combined group on an annualised basis andto provide an initial reference point for comparisons in future periods without considering additional impacts arising from synergies, exceptionals and one-offs that related to theacquisition or will contribute to the future efficiency of the acquired companies as well as any unwinding effects on the profit for the period from amortisation impacts of intangible
assets recognised within the purchase price allocations.

Transactions with non-controlling shareholders
On 7 June 2011, EADS N.V. purchased the remaining 25% of
DADC Luft- und Raumfahrt Beteiligungs AG, Munich (Germany),
from Daimler Luft- and Raumfahrt Holding AG, Ottobrunn, for a
total consideration of € 110 million.

Acquisitions and other M&A transactions during
2010
On 3 December 2010, Astrium GmbH, Ottobrunn, Germany,acquired Jena-Optronik GmbH, Jena (Germany), one of theinternational leading providers of space sensors and optoelectronic instruments. The acquisition of Jena-Optronik
complemented Astrium’s optical expertise in Germany andenhanced its reputation in the development and production
EADS FINANCIAL STATEMENTS 2011 I 35

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.2 NOTES TO THE CONSOLIDATED INCOME STATEMENTS (IFRS)

1of sophisticated earth observation satellites and sub-systems
for space applications. During 2011, EADS and Astrium GmbHﬁnalised the purchase price allocation of Jena-Optronik,
resulting in the recognition of intangible assets of € 17 million in
the form of customer relationships, technologies and a brandname as well as deferred tax liabilities of € 5 million and a ﬁnal
goodwill of € 22 million.

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On 13 May 2011, EADS North America, Inc., Herndon, Virginia(USA), sold its subsidiary EADS North America Defense Security
and Systems Solutions, Inc., San Antonio, Texas (USA), toCamber Corporation, Huntsville, Alabama (USA), for a total
consideration of € 18 million.

Apart from those mentioned, other acquisitions of EADS were
not signiﬁcant – neither individually nor collectively.
The cash ﬂows of the disposed shares as well as the capital gain on sale were as follows:2011(In € million)

Consideration received in cash and cash equivalents

18

Total selling price including contingent consideration

18

Net assets disposed of(18)

Capital gain

0

Cassidian Air Systems sold its shares in ASL Aircraft Services Lemwerder GmbH per 31 December 2010, to SGL Rotec GmbH &Co. KG, which intends to establish a production line for rotor blades at Lemwerder site. The programme related assets and liabilitiesof the Euroﬁghter, Tornado, A400M and C160 programmes were transferred to Premium Aerotec GmbH.
The cash ﬂows of the disposed shares as well as the capital gain on sale were as follows:2010(In € million)

Consideration received in cash and cash equivalents

12

Total selling price including contingent consideration

12

Net assets disposed of(1)

Capital gain

11

Overall, the ASL transactions had a negative EBIT impact of €-4 million in 2010, thereof €-15 million are related to restructuring costs.
Apart from those mentioned, other disposals by the Group were not signiﬁcant.

2.2 Notes to the Consolidated Income
Statements (IFRS)
5. Segment Reporting
Through the end of 2011, the Group operated in ﬁve reportablesegments which reﬂect the internal organisational andmanagement structure according to the nature of the products
and services provided.

36 I EADS FINANCIAL STATEMENTS 2011

O Airbus Commercial — Development, manufacturing,marketing and sale of commercial jet aircraft of more than
100 seats; aircraft conversion and related services.
O Airbus Military — Development, manufacturing, marketingand sale of military transport aircraft and special mission
aircraft and related services.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.2 NOTES TO THE CONSOLIDATED INCOME STATEMENTS (IFRS)

1
The above mentioned reportable segments Airbus Commercialand Airbus Military form the Airbus Division.

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security market solutions such as integrated systems for
global border security and secure communications solutions
and logistics; training, testing, engineering and other related
services.

O Eurocopter — Development, manufacturing, marketing andsale of civil and military helicopters; provision of helicopter
related services.
O Astrium — Development, manufacturing, marketing and saleof satellites, orbital infrastructures and launchers; provision of
space related services.
O Cassidian — Development, manufacturing, marketingand sale of missiles systems, military combat aircraft andtraining aircraft; provision of defence electronics and of global

The following tables present information with respect to theGroup’s business segments. “Other Businesses” mainlycomprises the development, manufacturing, marketing and saleof regional turboprop aircraft, aircraft components as well as theGroup’s activities managed in the US.
Consolidation effects, the holding function of EADSHeadquarters and other activities not allocable to the reportablesegments are disclosed in the column “HQ/Conso.”.

a) Business Segment Information for the year ended 31 December 2011
Airbus Airbus
Other
Commercial Military Eurocopter Astrium Cassidian Businesses(In € million)

Total
Segments HQ/Conso. Consolidated

Total revenues

31,159

2,504

5,415

4,964

5,803

1,252

51,097

31

51,128Internal revenues

(770)

(374)

(458)

(15)

(221)

(162)

(2,000)0(2,000)30,389

2,130

4,957

4,949

5,582

1,090

49,097

31

49,128

Revenues
Segment result

533

36

254

264

294

29

1,410

39

1,449

Thereof additions to otherprovisions (see Note 25c)

702

41

681

222

723

28

2,397

93

2,490

Share of profit from associates
accounted for under the equity
method

(16)

12

4

(1)

18

0

17

147

164

Profit before finance costs
and income taxes

517

48

258

263

312

29

1,427

186

1,613

Goodwill impairment/disposal

0

0

0

0

12

30

42

0

42

Exceptional depreciation/
disposal

26

1

1

4

7

0

39

2

41

EBIT pre-goodwill impairment
and exceptionals(see definition in Note 5c)

543

49

259

267

331

59

1,508

188

1,696

Total finance costs(220)

Income tax expense(356)

Profit for the period

1,037

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

1,033

Non-controlling interests

4

OTHER INFORMATION
Identifiable segment assets(incl. goodwill) (1)32,439

4,086

8,467

8,169

10,1001,035

64,29670

64,366

6,657

12

319

1,171

2,551

35

10,74515

10,760

0

0

4

1

117

3

125

2,552

2,677

33,518

6,632

7,768

8,196

10,574953

67,641

61

67,702

5,998

1,994

2,175

986

2,748

120

14,021964

14,985

Capital expenditures(excl. leased assets)

1,331

110

200

344

149

49

2,183

14

2,197

Depreciation, amortisation

1,065

120

140

235

167

58

1,785

99

1,884

Research and development
expenses

2,467

14

235

109

275

10

3,110

42

3,152

Thereof goodwill
Investments in associates
Segment liabilities(2)

Thereof provisions (see Note 25)(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.

EADS FINANCIAL STATEMENTS 2011 I 37

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2.2 NOTES TO THE CONSOLIDATED INCOME STATEMENTS (IFRS)

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Back to Contentsb) Business Segment Information for the year ended 31 December 2010
Airbus Airbus
Other
Commercial Military Eurocopter Astrium Cassidian Businesses(In € million)

Total revenues

27,673

Internal revenues
Revenues

2,684

4,830

5,003

5,933

1,182

Total
Segments

47,305

HQ/Conso. Consolidated

29

47,334

(606)

(196)

(439)

(18)

(186)

(137)

(1,582)0(1,582)

27,067

2,488

4,391

4,985

5,747

1,045

45,72329

45,752

Segment result

284

11

182

279

441

25

1,222

(162)

1,060

Thereof additions to otherprovisions (see Note 25c)

(310)

(124)

(512)

(194)

(631)

(12)

(1,783)(125)(1,908)

Share of profit from associates
accounted for under the equity
method

(20)

8

0

0

9

0

(3)

130

127

Profit (loss) before financecosts and income taxes

264

19

182

279

450

25

1,219

(32)

1,187

Exceptional depreciation/
disposal

27

2

1

4

7

0

41

3

44

EBIT pre-goodwill impairment
and exceptionals(see definition in Note 5c)

291

21

183

283

457

25

1,260

(29)

1,231

Total finance costs(371)

Income tax benefit(244)

Profit for the period

572

Attributable to:Equity owners of the parent(Net income)553

Non-controlling interests

19

OTHER INFORMATION
Identifiable segment assets(incl. goodwill) (1)30,930

3,649

6,934

7,459

10,064

1,067

60,103(47)

60,056

6,425

12

117

644

2,533

64

9,795

14

9,809

9

0

2

3

117

3

134

2,317

2,451

29,692

6,774

6,609

7,978

10,812817

62,682

144

62,826

5,265

2,383

1,741

822

2,688

131

13,030949

13,979

Capital expenditures(excl. leased assets)

1,419

64

166

339

212

20

2,220

30

2,250

Depreciation, amortisation

959

35

91

218

141

25

1,469

113

1,582

Research and development
expenses

2,311

10

189

85

251

10

2,856

83

2,939

Thereof goodwill
Investments in associates
Segment liabilities(2)

Thereof provisions (see Note 25)(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.

As a rule, inter-segment transfers are carried out on an arm’s
length basis. Inter-segment sales predominantly take place
between Airbus Commercial and Airbus Military and between
Eurocopter and Airbus Commercial as well as between
Cassidian and Airbus Military.

38 I EADS FINANCIAL STATEMENTS 2011

Capital expenditures represent the additions to property, plantand equipment and to intangible assets (excluding additions
to goodwill of € 968 million in 2011 and € 34 million in 2010; forfurther details see Note 5e) “Capital expenditures”).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.2 NOTES TO THE CONSOLIDATED INCOME STATEMENTS (IFRS)

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Back to Contentsc) EBIT Pre-Goodwill Impairment and Exceptionals
EADS uses EBIT pre-goodwill impairment and exceptionals as a key indicator of its economic performance. The term “exceptionals”
refers to such items as depreciation expenses of fair value adjustments relating to the EADS merger, the Airbus Combination andthe formation of MBDA, as well as impairment charges thereon. EBIT pre-goodwill impairment and exceptionals is treated bymanagement as a key indicator to measure the segments’ economic performances.
(In € million)

2011

2010

2009

Profit (loss) before finance costs and income taxes

1,613

1,187

(380)

Disposal and impairment of goodwill

42

0

0

Exceptional depreciation/ disposal

41

44

58

1,696

1,231

(322)

2011

2010

2009

Germany

5,074

5,381

5,018

France

4,762

4,422

3,807

United Kingdom

2,757

2,280

2,983

702

1,018

1,322

EBIT pre-goodwill impairment and exceptionalsd) Revenues by Destination(In € million)

Spain
Other European Countries

7,359

8,301

8,310

Asia/Pacific

14,303

11,335

8,618

North America

5,852

3,507

6,138

Middle East

5,111

6,247

3,857

Latin America

2,874

2,537

1,893

Other Countries

334

724

876

Consolidated

49,12845,752

42,822

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

e) Capital Expenditures(In € million)

2011

2010

2009

France

951

882

1,001

Germany

576

693

509

United Kingdom

333

385

228

Spain

255

228

133

Other Countries
Capital expenditures excluding leased assets
Leased assets
Capital expenditures

82

62

86

2,197

2,250

1,957

243

270

9

2,440

2,520

1,966

EADS FINANCIAL STATEMENTS 2011 I 39

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.2 NOTES TO THE CONSOLIDATED INCOME STATEMENTS (IFRS)

1

f)

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Property, Plant and Equipment by Geographical Area

(In € million)

2011

2010

2009

France

4,992

4,698

4,448

Germany

3,963

3,846

3,635

United Kingdom

2,728

2,535

2,376

Spain

1,273

1,210

1,071

629

379

275

13,585

12,66811,805

Other Countries
Property, plant and equipment by geographical area

Property, plant and equipment split by geographical area excludes leased assets (2011: € 574 million, 2010: € 759 million and 2009:€ 703 million).

6. Revenues
Revenues in 2011 reach € 49,128 million compared to€ 45,752 million in 2010 and € 42,822 million in 2009.
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 2011, the revenues comprise revenues fromservices including the sale of spare parts of € 6,027 million
compared to € 5,113 million in 2010.
For a breakdown of revenues by business segment andgeographical area, refer to Note 5 “Segment Reporting”.

Detail of Revenues:
2011

2010

2009

49,12845,752

42,82235,31331,93030,430

Revenues from rendering of services according to IAS 18

4,656

3,906

3,820

Revenues from construction contracts

8,808

9,716

8,377

351

200

195

(In € million)

Total revenues
Revenues from sale of goods according to IAS 18

Other revenues

Revenues of € 49,128 million (2010: € 45,752 million) increase by
7%. Airbus Commercial delivered more aircraft (534, but 536
with revenue recognition versus 510 in the previous year, thereof
508 with revenue recognition) and Eurocopter contributed

also positively. Airbus Military includes revenues related to the
A400M programme of € 758 million (in 2010: € 1,043 million).
Cassidian and Astrium revenues decrease slightly.

7. Functional Costs
Inventories recognised as an expense during the periodamount to € 35,036 million (2010: € 32,840 million; 2009:€ 30,274 million).

40 I EADS FINANCIAL STATEMENTS 2011

Further included in cost of sales are amortisation expenses offair value adjustments of non-current assets in the amount of€ 40 million (2010: € 44 million; 2009: € 56 million); these are
related to the EADS merger, the Airbus Combination.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.2 NOTES TO THE CONSOLIDATED INCOME STATEMENTS (IFRS)

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Personnel expenses are:
2011

2010

2009

Wages, salaries and social contributions

10,286

9,625

9,094

Net periodic pension cost (see Note 25b)

424

452

424

10,71010,077

9,518(In € million)

Total

The Gross Margin increases by € 619 million to € 6,843 million
compared to € 6,224 million in 2010. This improvement is mainly
related to better performance of legacy programmes at Airbus
Commercial. The operational improvement at Airbus (including

better pricing and positive volume/ mix effects) and Eurocopter
is partly compensated by unfavourable foreign exchange rate
effects at Airbus Commercial and onerous contract charges for
the A350XWB.

8. Research and Development Expenses
Research and development expenses in 2011 amountto € 3,152 million compared to € 2,939 million in 2010 and€ 2,825 million in 2009, primarily reﬂecting R&D activities atAirbus Commercial. Most of the increase was attributable tohigher expenses at Airbus Commercial and Eurocopter, due
to the development of the A350 XWB programme and various
helicopter programmes.

9. Other Income(In € million)

2011

2010

2009

Other income

359

171

170

Thereof badwill and other gains related to business combinations

26

0

0

Thereof rental income

16

13

22

Thereof income from sale of fixed assets

9

33

42

Thereof release of allowances

2

1

3

The increase in other income in 2011 is mainly due to a release of refundable advances of € 192 million at Airbus (see Note 27“Other Liabilities”).

10. Other Expenses(In € million)

2011

2010

2009

Other expenses

221

102

102

Thereof goodwill impairment charge

20

0

0

Thereof loss from disposal of fixed assets

18

7

19

Regarding the goodwill impairment charge please refer to Note 14 “Intangible assets”.

EADS FINANCIAL STATEMENTS 2011 I 41

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.2 NOTES TO THE CONSOLIDATED INCOME STATEMENTS (IFRS)

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11. Share of Proﬁt from Associates Accounted for under the Equity
Method and Other Income from Investments(In € million)

2011

2010

2009

Share of profit from associates

164

127

115

Other income from investments

28

18

19

Total

192

145

134

The share of proﬁt from associates accounted for underthe equity method in 2011 is mainly derived from the resultof the equity investment in Dassault Aviation of € 146 million(2010: € 130 million; 2009: € 120 million). For the ﬁrst semester
2011, Dassault Aviation published a net income of € 88 million
which has been recognised by EADS in its half year ﬁnancial
statements 2011 with its share of 46.32% amounting to€ 41 million. Since for the second half-year 2011 no publishedﬁnancial information is available yet from Dassault Aviation at
the date of authorisation for issue of the 2011 Consolidated
Financial Statements, EADS uses a best estimate for the net
income of Dassault Aviation. Furthermore, EADS’ net income
includes an IFRS catch-up adjustment for its equity investment
in Dassault Aviation.

For the ﬁrst semester 2010, Dassault Aviation published a net
income of € 141 million which has been recognised by EADS in
its half year ﬁnancial statements 2010 with its share of 46.32%
amounting to € 65 million. Since for the second half-year 2010
no published ﬁnancial information was available from Dassault
Aviation at the date of authorisation for issue of the 2010
Consolidated Financial Statements, EADS used a best estimate
for the net income of Dassault Aviation. Furthermore, EADS’
net income included an IFRS catch-up adjustment for its equity
investment in Dassault Aviation.

12. Total Finance Costs
Interest result in 2011 comprises interest income of€ 377 million (2010: € 316 million; 2009: € 356 million) andinterest expense of €-364 million (2010: €-415 million; 2009:€-503 million). Included in interest income is the return on
cash and cash equivalents, securities and ﬁnancial assets
such as loans and ﬁnance leases. Interest expense includes
interests on ﬁnancing liabilities and on European Government
refundable advances of €-92 million (2010: €-132 million;
2009: €-235 million) which are positively impacted by therelease of € 120 million following the termination of the A340
programme (see Note 27 “Other Financial Liabilities”). A similar
positive impact was recorded in the previous year.
Other ﬁnancial result in 2011 amounts to €-233 million(in 2010: €-272 million and in 2009: €-445 million) andmainly includes charges from the negative revaluation ofﬁnancial instruments (€-94 million; 2010: €-184 million;

42 I EADS FINANCIAL STATEMENTS 20112009: €-147 million) and the unwinding of discounts by€-172 million (2010: €-176 million; 2009: €-307 million), partly
compensated by the positive impact from foreign exchangetranslation of monetary items of €+109 million (2010:€+71 million; 2009: €+54 million).
As a result from the reﬁnement of its hedging policy in 2010,
EADS presents the fair value gains or losses of certain foreignexchange rate derivatives, which are not part of a formal hedge
accounting relationship, in EBIT to better reﬂect the naturaloffset these derivatives provide to the remeasurement gains
or losses of speciﬁc foreign currency balance sheet items(‘natural hedge’). The foreign currency remeasurement impactof these derivatives recorded in EBIT instead of in ﬁnancial
result amounts to €+89 million as of 31 December 2011(2010: €+125 million).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
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13. Income Taxes
The beneﬁt from (expense for) income taxes is comprised of the following:(In € million)

2011

2010

2009

Current tax expense

(253)

(259)

(208)

Deferred tax benefit/ (expense)

(103)

15

428

Total

(356)

(244)

220

Deferred tax assets and liabilities are measured using enacted
tax rates to be applied to taxable income in the years in whichthose temporary differences are expected to be recovered or
settled. The Group’s parent company, EADS NV, legally seatedin Amsterdam, The Netherlands, applies Dutch tax law using
an income tax rate of 25.0% for 31 December 2011 and 25.5%
for 31 December 2010 and 2009. In 2010, a new tax law wasenacted reducing the income tax rates from 2011 onwards to
25.0%.
On 19 December 2011 a new tax law has been enacted in
France increasing the income tax rate from previously 34.43%(in 2009 and 2010) to 36.10% for the years 2011 and 2012. For
the years 2013 and following the previous rate of 34.43% will beapplicable.

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 amount to 14.2%. In aggregate, the enacted tax rate
which has been applied to German deferred taxes amounts to
30% in 2011, 2010 and 2009.
With respect to the Spanish subsidiaries, the corporate income
tax rate amounts to 30% in 2011, 2010 and 2009.
All other foreign subsidiaries apply their national tax rates.

The following table shows a reconciliation from the theoretical income tax beneﬁt (expense) – using the Dutch corporate tax rate of
25.0% to the reported tax beneﬁt (expense). The reconciling items represent, besides the impact of tax rate differentials and tax ratechanges, non-taxable beneﬁts or non-deductible expenses arising from permanent differences between the local tax base and thereported Consolidated Financial Statements according to IFRS rules.
(In € million)

2011

2010

2009

Profit (loss) before income taxes

1,393

816

(972)

* Corporate income tax rate

25.0%

25.5%

25.5%

Expected benefit (expense) for income taxes

(348)

(208)

248

Effects from tax rate differentials

(103)

(53)

122

Income from investments/ associates

58

42

48

Tax credit for R&D expenses

68

59

54

Change of tax rate

(45)

(1)

0

Change in valuation allowances

(12)

(73)

(236)

Non-deductible expenses and tax-free income

(10)

(5)

(12)

Other
Reported tax benefit (expense)

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. The
amount of change in valuation allowances of €-12 million in2011 excludes a positive impact of € 22 million from a change
in tax rates which is presented in the line “change of tax rate”.
Changes of tax rates mainly relates to changes in the tax
laws in France and United Kingdom. In 2011, the line “Other”

36

(5)

(4)

(356)

(244)

220

mainly reﬂects a release of an income tax provision related to areassessment of tax audit proceedings.
Deferred income taxes are the result of temporary differences
between the carrying amounts of certain assets and liabilities inthe 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.

EADS FINANCIAL STATEMENTS 2011 I 43

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Deferred income taxes as of 31 December 2011 are related to the following assets and liabilities:(In € million)

31 December 2010

Movement
through equity

Tax
assetsOCI/
IAS 19Others (1)Taxliabilities

Movement throughincome statement
DeferredR&D tax
tax benefit
credits(expense)

31 December 2011

Tax assets

Tax liabilities

Intangible assets

10

(281)

0

(89)

0

34

27

(353)

Property, plant and equipment

228

(937)

0

(26)

0

(34)

242

(1,011)

Investments and other long-term
financial assets

331

(83)

17

0

0

173

541

(103)

Inventories

1,108

(140)

0

14

0

136

1,192

(74)

740

(1,639)

(604)

32

0

(200)

229

(1,900)Receivables and other assets
Prepaid expenses
Provision for retirement plans
Other provisions

8

0

0

0

0

(11)

2

(5)

877

(172)

167

1

0

(274)

883

(284)

1,888

(162)

0

(1)

0

151

2,052

(176)

Liabilities

613

(641)

751

2

0

(227)

1,058

(560)

Deferred income

181

0

0

3

0

(26)

161

(3)

Net operating loss and tax credit
carry forwards

2,058

0

0

29

28

165

2,280

0

Deferred tax assets / (liabilities)
before offsetting

8,042(4,055)

331

(35)

28

(113)

8,667

(4,469)Valuation allowances on deferred
tax assets

(932)

0

0

(17)

0

10

(939)

0

Set-off(2,860)

2,860

0

0

0

0

(3,419)3,419

Net Deferred tax
assets / (liabilities)

4,250(1,195)

331

(52)

28

(103)

4,309

(1,050)(1) “Others” mainly comprises changes in the consolidation scope and foreign exchange rate effects.

Deferred income taxes as of 31 December 2010 are related to the following assets and liabilities:
Movement
through equity

31 December 2009

Movement throughincome statement
DeferredR&D tax
tax benefit
credits(expense)

31 December 2010

Tax
assetsTax
liabilities

OCI/
IAS 19Others (1)Tax assets

Tax liabilities

Intangible assets

16

(207)

0

0

0

(80)

10

(281)

(In € million)

Property, plant and equipment

220

(982)

0

24

0

29

228

(937)

Investments and other long-term
financial assets

237

(37)

9

0

0

39

331

(83)

Inventories

912

(171)

0

1

0

226

1,108

(140)

Receivables and other assets

116(1,501)

189

2

0

295

740

(1,639)Prepaid expenses

15

(3)

0

0

0

(4)

8

0

Provision for retirement plans

653

0

97

0

0

(45)

877

(172)

1,801

(106)

0

0

0

31

1,888

(162)

Liabilities

648

(733)

801

11

0

(755)

613

(641)

Deferred income

319

0

0

6

0

(144)

181

0

Net operating loss and tax credit
carry forwards

1,521

0

0

33

8

496

2,058

0

Deferred tax assets / (liabilities)
before offsetting

6,458(3,740)

1,096

77

8

88

8,042

(4,055)

Valuation allowances on deferred
tax assets

(813)

0

0

(46)

0

(73)

(932)

0

Set-off(2,989)2,989(2,860)2,860

Net Deferred tax
assets / (liabilities)

2,656

(751)

4,250

(1,195)

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

44 I EADS FINANCIAL STATEMENTS 2011

1,096

31

8

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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
down of deferred tax assets may increase or decrease. The
Group has 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
future income taxes that may be owed for all open tax years.

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Companies in deﬁcit situations in two or more subsequent years
recorded a total deferred tax asset balance of € 867 million (in2010: € 811 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 (“régime d’intégration fiscale” 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:

FranceGermany

Spain

UK

Netherlands

Othercountries

31 December
2011

31 December
2010

1,667

1,821

190

2,875

2

90

6,645

5,800

Trade tax loss carry forwards

0

2,048

0

0

0

0

2,048

1,490

Tax credit carry forwards

0

0

319

0

0

4

323

315

Tax effect

575

578

376

719

0

32

2,280

2,058

Valuation allowances

(12)

(79)

(119)

(444)

0

(3)

(657)

(653)

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

563

499

257

275

0

29

1,623

1,405

(In € million)

Net Operating Losses (NOL)

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 18 years and 15 years respectively. The ﬁrst tranche of tax credit carry forwards(€ 13 million) will expire in 2017. In the Netherlands, NOLs and tax credit carry forwards expire after 9 years.
Roll forward of deferred taxes:(In € million)

2011

2010

Net deferred tax asset beginning of the year

3,055

1,905

Deferred tax (expense) benefit in income statement

(103)

15

Deferred tax recognised directly in AOCI (IAS 39)

164

999

Variation of Defined benefit plan actuarial gains

167

97

Others

(24)

39

3,259

3,055

2011

2010

(1)

(18)

Net deferred tax asset at year end

Details of deferred taxes recognised cumulatively in equity are as follows:(In € million)

Available-for-sale investments
Cash flow hedges

776

629

Defined benefit plan actuarial losses

635

468

1,410

1,079

Total

EADS FINANCIAL STATEMENTS 2011 I 45

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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 2011 is asfollows:

Cost(In € million)

Goodwill

Balance at
1 January
2011

Exchangedifferences

10,93433

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2011

0

968

0

(22)

11,913

Capitalised development
costs

1,234

8

97

0

26

0

1,365

Other intangible assets

1,855

22

198

522

25

(70)

2,552

Total

14,023

63

295

1,490

51

(92)

15,830

Balance at
1 January
2011

Exchangedifferences

Amortisation
chargeChanges in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2011

Goodwill(1,125)

(8)

(20)

0

0

0

(1,153)

Capitalised development
costs

(288)

(1)

(116)

0

(13)

0

(418)

Amortisation(In € million)

Other intangible assets(1,311)

(5)

(241)

0

(21)

64

(1,514)

Total(2,724)

(14)

(377)

0

(34)

64

(3,085)

Net Book Value(In € million)

Goodwill
Capitalised development
costs
Other intangible assets
Total

Balance at
1 January
2011

Balance at
31 December
2011

9,809

10,760

946

947

544

1,038

11,29912,74546 I EADS FINANCIAL STATEMENTS 2011

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A schedule detailing gross values, accumulated depreciation and net values of intangible assets as of 31 December 2010 is asfollows:

Cost(In € million)

Goodwill

Balance at
1 January
2010

Exchangedifferences

10,85941

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2010

0

34

0

0

10,934

Capitalised development
costs

1,052

6

145

0

32

(1)

1,234

Other intangible assets

1,694

12

192

1

18

(62)

1,855

Total

13,605

59

337

35

50

(63)

14,023

Balance at
1 January
2010

Exchangedifferences

Amortisation
chargeChanges in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2010

Goodwill(1,118)

(7)

0

0

0

0

(1,125)

Capitalised development
costs

(255)

(1)

(34)

0

1

1

(288)

Amortisation(In € million)

Other intangible assets(1,172)

(4)

(185)

(1)

(2)

53

(1,311)

Total(2,545)

(12)

(219)

(1)

(1)

54

(2,724)

Net Book Value
Balance at
1 January
2010

Balance at
31 December
2010

Goodwill

9,741

9,809

Capitalised development
costs

797

946

(In € million)

Other intangible assets
Total

522

544

11,06011,299The regular amortisation charge and impairments (if any) of capitalised development costs and other intangible assets are mainly
accounted for in cost of sales.

Goodwill Impairment Tests
EADS 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 2011 and 2010, goodwill was allocated to CGUs, which is summarized in the following schedule on segment level:
AirbusCommercial

AirbusMilitary

Goodwill as of 31 December 2011

6,657

12

319

1,171

Goodwill as of 31 December 2010

6,425

12

117

644

(In € million)

Eurocopter Astrium

Due to internal reorganisations in 2011 the former CGUs
Cassidian Air Systems, Cassidian Systems and CassidianElectronics have been combined and a goodwill in the amountof € 1,895 million has been allocated to this new CGU. For

OtherBusinesses

HQ/Conso.

Consolidated

2,551

35

15

10,760

2,533

64

14

9,809

Cassidian

MBDA the allocation of goodwill in the amount of € 656 million
remains unchanged. The Astrium CGUs consist of Astrium
Satellites, Astrium Space Transportation and Astrium Services.
The increase in the goodwill of Astrium is mainly caused by the

EADS FINANCIAL STATEMENTS 2011 I 47

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acquisition of Vizada (€ 538 million) in the CGU Astrium Services(€ 612 million). Furthermore, the increase in Airbus Commercial
and Eurocopter mainly relates to the acquisition of Satair Groupand Vector (for further details please refer to Note 4 Acquisition
and Disposals).

Airbus Commercial

General assumptions applied in the planning
process

The assessment was based on the following key speciﬁc
assumptions, which represent management’s current best
assessment as of the date of these Consolidated Financial
Statements:

The 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 - approved by the Board of Directors on
8 December 2011 - takes into account general economic data
derived from external macroeconomic and ﬁnancial studies.
The operative planning assumptions reﬂect for the periods
under review speciﬁc inﬂation rates and future labour expenses
in the European countries where the major production facilities
are located. Regarding the expected future labour expenses, anincrease of 2 to 3% was implied. In addition, future interest rates
are also projected per geographical market, for the European
Monetary Union, Great Britain and the USA.
EADS follows an active policy of foreign exchange risk hedging.
As of 31 December 2011, the total hedge portfolio withmaturities up to 2017 amounts to US$ 75 billion and covers amajor portion of the foreign exchange exposure expected overthe period of the operative planning (2012 to 2016). The averageUS$/€ hedge rate of the US$/€ hedge portfolio until 2017
amounts to 1.37 US$/€ and for the US$/GBP hedge portfolio
until 2017 amounts to 1.59 US$/GBP. For the determinationof the operative planning in the CGUs management assumed
future exchange rates of 1.35 US$/€ from 2012 onwards toconvert in € the portion of future US$ which are not hedged.
Foreign exchange exposure arises mostly from Airbus and to alesser extent from the other EADS divisions.
The assumption for the perpetuity growth rate used to
calculate the terminal values as of 31 December 2011 has been
determined with 1% (previous year: 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 as wellas 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.

48 I EADS FINANCIAL STATEMENTS 2011

The goodwill allocated to Airbus Commercial relates to thecreation of EADS in 2000 and the Airbus Combination in 2001.
In 2011 the goodwill increased mainly due to the acquisitions of
Satair, PFW and Metron.

O projected cash flows for the next five years were presented to
EADS Board of Directors in the frame of the operative plan.
This planning scenario takes into account the decision to
ramp-up in 2012 the production of the A320 programme to
42 a/c, of the Long Range-programme to 9.5 a/c and of the
A380 - programme to 2.7 a/c. In the absence of long-term
financial reference, expected cash flows generated beyond
the planning horizon are considered through a terminal value.
The terminal value reflects management’s assessment of
a normative operating year based on an outlook of a fullaeronautic cycle over the next decade;O Long-term commercial assumptions are based on General
Market Forecast updated in 2011. The development ofmarket share per segment considers enlargement of thecompetition as per current best assessment. Current market
evolutions are considered through sensitivities. Cash flow
projections include all of the estimated cost savings of thePower8/Power8 Plus programme as well as non-recurring
cost improvement plan and benefits from initiatives alreadylaunched in the frame of “Future EADS”;
O cash flows are discounted using a euro weighted average
cost of capital pre-tax (WACC) of 10.4% (in 2010: 11.2%);
O carrying value as well as planned cash flows include impacts
from the existing hedge portfolio as per end December 2011.
With regard to the assessment of the value in use for the CGU
Airbus Commercial, management believes that the likelihood ofa change in the above key assumptions to an extent that would
cause the recoverable amount to fall below the carrying value isremote.
The recoverable amount is particularly sensitive to the following
areas:
O change of the euro against the US$ (reference scenario at
1.35 US$/€): A change by 10 cents, + or - would however not
imply an impairment charge in the EADS accounts;
O change of the WACC: An increase of 50 basis points in the
WACC would not imply an impairment charge in the EADS
accounts.
The current positive difference between the recoverable value
and the carrying value of Airbus Commercial’s net assets
indicates that the assessed (negative) impacts of the sum ofthese sensitivities would not imply an impairment charge in
EADS accounts.

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Airbus Military
For impairment testing purposes, the cash ﬂows have been
discounted using a weighted average cost of capital pre-tax(WACC) of 8.7% (in 2010: 9.1%).
A400M launch order from OCCAR is included as per
assumptions used for the preparation of these Consolidated
Financial Statements. A400M is based on the contract
amendment negotiations with OCCAR and the seven A400M
launch customer nations ﬁnalised on 7 April 2011.
This adjusted plan is the reference for projected cash ﬂows forthe next ﬁve years. Expected cash ﬂows generated beyond
the planning horizon are considered through a terminal value.
The terminal value reﬂects management’s assessment of anormative operating year.
Value in use of the CGU Airbus Military is above carrying value,indicating no goodwill impairment for 2011 and 2010.

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 9.6% (in 2010: 9.1%),
whereas Cassidian applied a weighted average cost of capital
pre-tax (WACC) of 8.8% (in 2010: 8.8%) and Astrium applied a
pre-tax WACC of 9.8% (in 2010: 8.8%). Cash ﬂow projections
are based on operative planning covering a ﬁve-year planning
period.
For the Cassidian Division, a slight growth in revenues isassumed in the operative planning. This is driven by a strong
order backlog and further key orders expected in the next
years in the domestic market as well as in global markets,
as for example Euroﬁghter contracts, ramp-up in Unmanned
Aerial Vehicles (“UAV”), orders for Missile export, Security andCommunication Solutions, Integrated Systems, Electronic
Warfare and Radar business. In spite of additional efforts for
globalisation and product renewal, the Division continuously
expects a strong performance over the operative planning

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period thanks to the investment in new products and thetransformation of the Division into a new global business model.
The strong order book of the Astrium Division as of
31 December 2011 (including satellites, launchers, ballistic
missiles and military telecom services) supports the positive
revenue development which is assumed for this Division over
the operative planning period. Based on key achievements in
2011, like the successful launch of 13 Astrium-built satellites,
including 5 telecommunication satellites and the ﬁrst two Galileo
In-Orbit-Validation satellites, as well as 5 successful Ariane 5
launches and the successful mission of the second AutomatedTransfer Vehicle spacecraft, the planning period is characterisedby business development in telecom services and Earthobservation services and further order intake in established
key areas (e.g. M51, Ariane 5, telecom and Earth observation
satellites). The operating margin and the Free Cash Flow
are planned to increase continuously, supported by existingprocess improvement programmes.
The recoverable amounts of all CGU’s in Cassidian, Astrium andEurocopter have exceeded their carrying amounts, indicating no
goodwill impairment for 2011 and 2010.

Due to the divestment of EADS NA Defense Security Systems
Solutions Inc. a goodwill of € 10 million was disposed in Other
Businesses. For impairment testing purposes, the cash ﬂows
have been discounted using a weighted average cost of capital
pre-tax (WACC) of 8.9% (in 2010: 8.8%). The annual impairment
test within Other Businesses resulted in an impairment chargeof € 20 million in 2011.

Development Costs
EADS has capitalised development costs in the amount of€ 947 million as of 31 December 2011 (€ 946 million as of
31 December 2010) as internally generated intangible assets
mainly for the Airbus A380 programme. The amortisation for the
A380 programme development costs is performed on a unit ofproduction basis.

EADS FINANCIAL STATEMENTS 2011 I 49

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15. Property, Plant and Equipment
Schedules detailing gross values, accumulated depreciation and net values of property, plant and equipment show the following asof 31 December 2011:

Cost
Balance at
1 January
2011

Exchangedifferences

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

7,364Technical equipment
and machinery
Other equipment, factoryand office equipment(In € million)

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2011

23

88

79

490

0

8,044

12,517

130

222

68

565

(115)

13,387

3,712

42

428

42

103

(443)

3,884

Construction in progress

2,517

29

1,404

32

(969)

(2)

3,011

Total

26,110

224

2,142

221

189

(560)

28,326

Balance at
1 January
2011

Exchangedifferences

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2011

Land, leasehold improvements
and buildings including
buildings on land owned
by others(3,192)

(7)

(266)

0

(82)

0

(3,547)

Technical equipment
and machinery(7,299)

(79)

(803)

0

(2)

38

(8,145)

Other equipment, factoryand office equipment(2,192)

(27)

(297)

0

(14)

55

(2,475)Construction in progress

0

0

0

0

0

0

0

(12,683)(113)(1,366)

0

(98)

93

(14,167)

Depreciation(In € million)

Total

Net Book Value
Balance at
1 January
2011

Balance at
31 December
2011

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

4,172

4,497

Technical equipment
and machinery

5,218

5,242

Other equipment, factoryand office equipment

1,520

1,409

Construction in progress

2,517

3,011

13,427

14,159(In € million)

Total

50 I EADS FINANCIAL STATEMENTS 2011

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Schedules detailing gross values, accumulated depreciation and net values of property, plant and equipment show the following asof 31 December 2010:

Cost
Balance at
1 January
2010

Exchangedifferences

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

6,838

Technical equipment
and machinery

11,868Other equipment, factoryand office equipment

3,521

Construction in progress

1,877

Total

24,104292(In € million)

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2010

28

173

(1)

326

0

7,364

155

210

(4)

451

(163)

12,517

72

437

(1)

(28)

(289)

3,712

37

1,385

0

(775)

(7)

2,517

2,205

(6)

(26)

(459)

26,1102

Depreciation
Balance at
1 January
2010

Exchangedifferences

Land, leasehold improvements
and buildings including
buildings on land owned
by others(2,835)

Technical equipment
and machinery
Other equipment, factoryand office equipment(In € million)

Construction in progress
Total

Additions

Changes in
consolidation
scope

Reclassification

Disposals

Balance at
31 December
2010

(9)

(286)

0

(62)

0

(3,192)(6,668)

(72)

(723)

1

10

153

(7,299)(2,049)

(39)

(215)

2

34

75

(2,192)

(44)

0

4

0

40

0

0

(11,596)(120)(1,220)

3

22

228

(12,683)

Net Book Value
Balance at
1 January
2010

Balance at
31 December
2010

Land, leasehold improvements
and buildings including
buildings on land owned byothers

4,003

4,172

Technical equipment
and machinery(In € million)

5,200

5,218

Other equipment, factoryand office equipment

1,472

1,520

Construction in progress

1,833

2,517

12,50813,427

Total

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Property, plant and equipment include at 31 December
2011 and 2010, buildings, technical equipment and otherequipment accounted for in ﬁxed assets under ﬁnance leaseagreements for net amounts of € 141 million and € 146 million,
net of accumulated depreciation of € 60 million and € 49 million.
The related depreciation expense for 2011 was € 11 million(2010: € 10 million; 2009: € 8 million).

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Other equipment, factory and ofﬁce equipment include
the net book value of “aircraft under operating lease” for€ 574 million and € 759 million as of 31 December 2011 and2010, respectively; related accumulated depreciation is€ 746 million and € 687 million. Depreciation expense for 2011
amounts to € 59 million (2010: € 31 million; 2009: € 49 million).

The “aircraft under operating lease” include:i)Group’s sales finance activity in the form of aircraft which have been leased out to customers and are classified as operatingleases: They are reported net of the accumulated impairments. These sales financing transactions are generally secured by theunderlying aircraft used as collateral (see Note 33 “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 2011 are as follows:(In € million)

Not later than 201246

Later than 2012 and not later than 2016

103

Later than 2016

2

Total

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

151

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 (seeNote 30 “Deferred income”).

The total net book values of aircraft under operating lease are as follows:
31 December 201131 December 2010

Net book value of aircraft under operating lease before impairment charge

497

579

Accumulated impairment

(127)

(75)

370

504

204

255

574

759

(In € million)(i)

Net book value of aircraft under operating lease(ii)

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

Total Net Book value of aircraft under operating lease

For details please refer to Note 33 “Commitment and contingencies”.
Contractual commitments for purchases of “Land, leasehold improvements and buildings including buildings on land owned byothers” amount to € 161 million as of 31 December 2011.

52 I EADS FINANCIAL STATEMENTS 2011

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16. 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 € million)

Book value of Investment Property

Historicalcost

Accumulated
depreciation
Book value Disposals
31 December 31 December Historical Depreciation/
2010
2010
cost Amortisation

213

(136)

As of 31 December 2011, the fair value of the Group’s
investment property amounts to € 80 million (in 2010:€ 81 million). For the purposes of IAS 40 “Investment property”,
the fair values have been determined by using external appraisal

77

(2)

(1)

Accumulated
depreciation
31 December
2011Book value
31 December
2011

(137)

74

reports or using discounted cash ﬂow projections for estimatedrental income less rental expenses. Related rental income in2011 is € 9 million (in 2010: € 8 million) with direct operating
expenses amounting to € 1 million (in 2010: € 2 million).

2

17. 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 € million)

Investments in associates accounted for under the equity method

31 December 201131 December 2010

2,677

2,451

466

415

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

1,912

1,971

Total non-current other investments and other long-term financial assets

2,378

2,386

172

111

Current portion of other long-term financial assets

Investments in associates accounted for under the equity
method as of 31 December 2011 and 2010, mainly comprise
EADS’ interest in Dassault Aviation (46.32% at 31 December
2011 and 2010) of € 2,552 million and € 2,318 million. Since forthe second half-year 2011 no published ﬁnancial information isavailable yet from Dassault Aviation at the date of authorisation
for issue of 2011 ﬁnancial statements, EADS used a best
estimate for the net income of the second half year 2011 of
Dassault Aviation. In addition the equity investment income from
Dassault Aviation includes an IFRS catch-up adjustment. The
30 June 2011 equity components have been used to estimate
the 2011 year-end consolidated equity position of Dassault
Aviation.

Since for the second half-year 2010 no ﬁnancial information wasavailable from Dassault Aviation at the date of authorisation for
issue of 2010 ﬁnancial statements, EADS used a best estimate
for the net income of the second half year 2010 of Dassault
Aviation. In addition the equity investment income from Dassault
Aviation included an IFRS catch-up adjustment. The 30 June2010 equity components have been used to estimate the 2010
year-end consolidated equity position of Dassault Aviation.
EADS’ 46.32% interest in Dassault Aviation’s market
capitalisation, derived from an observable free ﬂoat of 3.5%,
amounts to € 2,673 million as of 31 December 2011 (as of
31 December 2010: € 2,819 million).

EADS FINANCIAL STATEMENTS 2011 I 53

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The following table reﬂects summarised most recent published proportionate ﬁnancial information of Dassault Aviation in which
EADS holds 46.32%:
30 June 201131 December 2010

Non-current assets

2,490

2,938

Current assets

2,250

2,148

(In € million)

Share of the associate’s financial position:

Non-current liabilities

132

120

Current liabilities

2,548

2,923

Total equity

2,060

2,043

6 months

12 months

Revenues

Share of the associate’s revenues and profit:

610

1,939

Net Income

41

124

(In € million)

31 December 201131 December 2010

2,552

2,318

Carrying amount of the investment at 31 December

Further signiﬁcant associates, being accounted for under the equity method (like Air Tanker, Daher-Socata SA, Patria Oyi, United
Monolithic Semiconductors and ESG), are stated in aggregate in the following table:(In € million)

31 December 201131 December 2010

1,079

697

Share of the associate’s financial position:
Non-current assets
Current assets

248

188

Non-current liabilities

1,165

735

Current liabilities

279

155

Total equity

(117)

(5)

12 months

12 months

Revenues

571

396

Net Income

249(In € million)

31 December 201131 December 2010

109

59

Share of the associate’s revenues and profit:

Carrying amount of the investments at 31 December

The cumulative unrecognized comprehensive loss in 2011
amounts to €-221 million (thereof €-158 million for the period).
A list of major investments in associates and the proportion ofownership is included in Appendix “Information on principal
investments”.
Other investments mainly comprise EADS’ participations, themost signiﬁcant being at 31 December 2011 the participations in
CARMAT SAS (EADS share: 30.7%) amounting to € 106 million(2010: € 35 million) and AviChina (EADS share: 5.0%) amounting
to € 80 million (2010: € 88 million).

54 I EADS FINANCIAL STATEMENTS 2011

Other long-term ﬁnancial assets of € 1,912 million (2010:€ 1,971 million) and the current portion of other longterm ﬁnancial assets of € 172 million (in 2010: € 111 million)
encompass other loans in the amount of € 1,135 million and€ 969 million as of 31 December 2011 and 2010 and the Group’s
sales ﬁnance activities in the form of ﬁnance lease receivables
and loans from aircraft ﬁnancing. They are reported net ofaccumulated impairments. These sales ﬁnancing transactions
are generally secured by the underlying aircraft used ascollateral (see Note 33 “Commitments and contingencies” fordetails on sales ﬁnancing transactions).

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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 € million)

31 December 201131 December 2010

Outstanding gross amount of loans to customers

503

558

Accumulated impairment

(82)

(72)

Total net book value of loans

421

486

Finance lease receivables from aircraft ﬁnancing are as follows:
31 December 201131 December 2010

Minimum lease payments receivables

697

809

Unearned finance income

(79)

(78)

Accumulated impairment

(90)

(104)

Total net book value of finance lease receivables

528

627

(In € million)

2

Future minimum lease payments from investments in ﬁnance leases to be received are as follows (not discounted):(In € million)

Not later than 2012124

Later than 2012 and not later than 2016

402

Later than 2016

171

Total

697

18. Inventories
Inventories at 31 December 2011 and 2010 consist of the following:
31 December 201131 December 2010

Raw materials and manufacturing supplies

1,980

1,654

Work in progress

14,803

13,631(In € million)

Finished goods and parts for resale

1,719

1,618

Advance payments to suppliers

4,061

3,959

22,563

20,862Total

The increase in work in progress of €+1,172 million is mainly
driven by Eurocopter, Airbus Commercial and Astrium
programmes. Raw materials were built-up at Airbus and at
Eurocopter. Advance payments provided to suppliers mainly
increase at Airbus and at Astrium partly compensated by lower
advance payments made at Cassidian and Eurocopter.
The ﬁnished goods and parts for resale before write down
to net realisable value amount to € 2,220 million in 2011(2010: € 2,091 million) and work in progress before write

down to net realisable value amounts to € 16,270 million(2010: € 14,766 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 2011, write downs of inventories in the amountof €-194 million (2010: €-249 million) are recognised in Cost ofSales, whereas reversal of write downs amounts to € 132 million(2010: € 81 million). At 31 December 2011 € 4,888 million of workin progress and € 1,239 million of ﬁnished goods and parts forresale were carried at net realisable value.

EADS FINANCIAL STATEMENTS 2011 I 55

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19. Trade Receivables
Trade receivables at 31 December 2011 and 2010 consist of the following:
31 December 201131 December 2010

Receivables from sales of goods and services

6,765

6,953

Allowance for doubtful accounts

(366)

(321)

Total

6,399

6,632

(In € million)

The trade receivables decrease by €-233 million mainly
caused by Astrium (€-669 million) and Airbus (€-179 million),
partly compensated by an increase at Eurocopter (€+527 million)
and Cassidian (€+76 million).

The aggregate amount of costs incurred and recognised
proﬁts (less recognised losses) to date amounts to€ 55,858 million comparable to € 50,305 million at year-end
2010.

Trade receivables are classiﬁed as current assets. As of
31 December 2011 and 2010, respectively, € 668 million and€ 383 million of trade receivables are not expected to becollected within one year.

The gross amount due from customers for construction work
amounts to € 4,204 million (in 2010: € 3,973 million) and relates
to construction contracts where incurred contract costs plus
recognised proﬁts less the sum of recognised losses exceed
progress billings.

In application of the percentage of completion (PoC) method,
as of 31 December 2011 an amount of € 2,170 million (in 2010:€ 2,829 million) for construction contracts is included in the
trade receivables net of related advance payments received.

The gross amount due to customers amounts to€ 1,688 million (in 2010: € 2,500 million) and corresponds to theconstruction contracts whose total of incurred contract costs
plus recognised proﬁts less the sum of recognised losses andprogress billings is negative.

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

2011

2010

Allowance balance at 1 January

(321)

(364)

Utilisations/disposals

113(Additions)/ release

(56)

41

0

(1)

(366)

(321)

Foreign exchange rate differences
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 € 4,125 million (in 2010: € 5,081 million).

56 I EADS FINANCIAL STATEMENTS 2011

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20. Other Financial Assets
Other ﬁnancial assets at 31 December 2011 and 2010 consist of the following:
31 December 201131 December 2010

Positive fair values of derivative financial instruments

486

602

Option premiums

1299(In € million)

Non-current other financial assets

Others

133

170

Total

631

871

Positive fair values of derivative financial instruments

404

364

Receivables from related companies

871

790

Loans

78

54

Current other financial assets

Others

386

367

Total

1,739

1,575

31 December 201131 December 2010

1,050

887

35

70

21. Other Assets
Other assets at 31 December 2011 and 2010 consist of the following:(In € million)

Non-current other assets
Prepaid expenses
Capitalised settlement payments to German Government
Others

168

147

Total

1,253

1,104

Value added tax claims

1,130

805

Prepaid expenses

591

521

Others

532

386

Total

2,253

1,712

Current other assets

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.

EADS FINANCIAL STATEMENTS 2011 I 57

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22. Securities
The Group’s security portfolio amounts to € 11,501 millionand € 11,166 million as of 31 December 2011 and 2010,
respectively. The security portfolio contains a non-current
portion of available-for-sale-securities of € 7,212 million (in 2010:€ 5,035 million) and securities designated at fair value throughproﬁt and loss of € 17 million (in 2010: € 297 million) as well as acurrent portion of available-for-sale-securities of € 4,222 million(in 2010: € 5,834 million) and securities designated at fair value
through proﬁt and loss of € 50 million (in 2010: € 0 million).
Included in the securities portfolio as of 31 December 2011
and 2010, respectively, are corporate and government bonds
bearing either ﬁxed rate coupons (€ 10,075 million nominal

value; comparably in 2010: € 9,307 million) or ﬂoating rate
coupons (€ 1,057 million nominal value; comparably in 2010:€ 1,138 million) as well as Structured Rate Notes (€ 175 million
nominal value; 2010: € 265 million) and foreign currency Funds
of Hedge Funds (€ 19 million nominal value; 2010: € 275 million).
With regard to the Consolidated Statements of Cash Flows,in 2011 the change of securities presented in cash used forinvesting activities comprises additions of €-11,091 million(2010: €-10,751 million) and disposals of €+10,713 million (2010:€+7,604 million) reﬂecting the investment in long-term securities.

23. Total Equity
The following table shows the development of the number of shares outstanding:
2011

2010

816,402,722

816,105,061

Issued for ESOP2,445,5270Issued for exercised options

1,712,892

297,661

Cancelled(78,850)0820,482,291

816,402,722( In number of shares)

Issued as at 1 January

Issued as at 31 December
Treasury shares as at 31 December(5,585,780)(5,341,084)

Outstanding as at 31 December

814,896,511

811,061,638

EADS’ shares are exclusively ordinary shares with a parvalue of € 1.00. The authorised share capital consists of
3,000,000,000 shares.
On 26 May 2011, 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 0.15% 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 held in
2012. The mentioned powers include without limitation theapproval of share-related long-term incentive plans (such as
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.

58 I EADS FINANCIAL STATEMENTS 2011

The Shareholders’ General Meeting on 26 May 2011 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 sharecapital and at a price not less than the nominal value and not
more than the higher of the price of the last independent trade
and the highest current independent bid on the trading venuesof the regulated market of the country in which the purchaseis carried out. This authorisation supersedes and replaces theauthorisation given by the Annual General Meeting of 1 June
2010.
Furthermore, the Shareholders’ General Meeting authorised
both the Board of Directors and the Chief Executive Ofﬁcer,with powers of substitution, to cancel up a maximum of
78,850 shares. As per decision of the Chief Executive Ofﬁcer,
on 9 August 2011, 78,850 shares have been cancelled.

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On 26 May 2011, the Shareholders’ General Meeting decided
to add the net proﬁt of the ﬁscal year 2010 of € 553 million toretained earnings. It also decided to distribute a gross amountof € 0.22 per share, which was paid on 6 June 2011. For theﬁscal year 2011, the EADS Board of Directors proposes a cash
distribution payment of € 0.45 per share.
Capital stock comprises the nominal amount of shares
outstanding. The addition to capital stock represents thecontribution for exercised options of € 1,712,892 (in 2010:€ 297,661) in compliance with the implemented stock option
plans and by employees of € 2,445,527 (in 2010: € 0) under the
Employee Stock Ownership Plans. In 2010 the usual Employee

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Stock Ownership Plan was replaced by a Free Share Plan,
which did not lead to an issuance of new shares (see Note 35b)
“Employee Stock Ownership Plan (ESOP)”).
Share premium mainly results from contributions in kind in thecourse of the creation of EADS, cash contributions from theInitial Public Offering, capital increases and reductions dueto the issuance and cancellation of shares as well as cash
distributions to EADS NV shareholders. In 2011, € 21 million arereclassiﬁed from currency translation adjustments to proﬁt or
loss. Treasury shares represent the amount paid for own shares
held in treasury.

24. 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. Consequently,
operating liquidity is of great importance.
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 cost of capital which
positively impacts its stakeholder value (entity value). Next toother also non-ﬁnancial parameters, the credit rating is basedon factors such as capital ratios, cash ﬂow ratios, proﬁtability
and liquidity ratios. EADS focuses on keeping them in apreferable range.

EADS developed the following guiding principles with regard to
this value based management approach:Financial value is created if proﬁts exceed the cost of the capital.
The Value Creation is measured through Economic Proﬁt(EP) as the residual of: net operating proﬁt after tax (NOPAT)
after deducting the cost of capital employed (with the cost of
the capital employed being derived from the Average Capital
Employed multiplied with the weighted average cost of capital(WACC)).
The Group also monitors the level of dividends paid to its
shareholders.

Standard & Poor’s upgraded the outlook of EADS’ longterm rating to A- positive outlook on 20 September 2011 andMoody’s Investors Services reconﬁrmed the A1 long-term ratingof EADS to A1 stable outlook on 24 August 2011. In accordancewith its conservative ﬁnancial policy it is essential for EADS to
maintain a strong investment grade rating.

EADS generally 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 backand cancel its own shares following the decisions of the Boardof Directors and approval of the Annual General Meeting. Apartfrom this purpose, EADS generally does not trade with treasury
shares.

EADS’ management uses a Value Based Management
approach in order to guide the Company towards management
for sustainable value creation. The key elements of the Value
Based Management concept are:

EADS complies with the capital requirements under applicablelaw and its Articles of Association.

O the measurement of value creation;
O prioritisation of actions based on the financial value drivers
and operational business drivers; andO the assessment of value creation with reference to thecompetition and the industry in total.

EADS FINANCIAL STATEMENTS 2011 I 59

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25. Provisions
Provisions are comprised of the following:(In € million)

31 December 201131 December 2010

5,463

4,938

358

283

5,821

5,221

Provision for retirement plans (see Note 25b)
Provision for deferred compensation (see Note 25a)
Retirement plans and similar obligations
Other provisions (see Note 25c)

9,164

8,758

14,985

13,979Thereof non-current portion

9,125

8,213

Thereof current portion

5,860

5,766

Total

As of 31 December 2011 and 2010, respectively, € 5,628 million and € 5,037 million of retirement plans and similar obligations and€ 3,497 million and € 3,176 million of other provisions mature after more than one year.

a) Provisions for Deferred Compensation
This amount represents obligations that arise if employees elect to convert part of their remuneration or bonus into an equivalentcommitment for deferred compensation which is treated as a deﬁned beneﬁt post-employment plan. The development in 2011 is asfollows:(In € million)

Deferred Compensation

Balance at
1 January
2011

283

Utilisation

Transfer
to otherliabilities

Change inconsolidatedGroup

Actuarial
gains andlosses

(1)

(6)

2

19

b) 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 end of
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 last year oron 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. EADS
implemented a Contractual Trust Arrangement (CTA) for EADS’
pension obligation. The CTA structure is that of a bilateral trust

60 I EADS FINANCIAL STATEMENTS 2011

Additions

Increasefrompassageof timeBalance at
31 December
2011

48

13

358

arrangement. Assets that are transferred to the CTA qualify asplan assets under IAS 19.
In the UK, the EADS Astrium Pension Scheme was
implemented by Astrium Ltd., Stevenage (UK). This plancomprises all eligible employees of Astrium Ltd. as well as
all personnel, who is newly recruited by one of the EADS
companies located in the UK. The majority of the Scheme’s
liabilities relates to Astrium Ltd. Moreover, EADS participates in
the UK in several funded trustee-administered pension plansfor both executive and non-executive employees with BAE
Systems being the principal employer. These plans qualify as
multi-employer deﬁned beneﬁt plans under IAS 19 “Employee
Beneﬁts”. EADS’ most signiﬁcant investments in terms of
employees participating in these BAE Systems UK pension
plans are Airbus Operations Ltd., UK and MBDA UK Ltd., UK.
Participating Airbus Operations Ltd., 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

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.3 NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IFRS)

1adequately fund the schemes. The different UK pension plans inwhich EADS investments participate are currently underfunded.
BAE Systems has agreed with the trustees various measuresdesigned to make good the underfunding. These includei) regular contribution payments for active employees well
above such which would prevail for funded plans 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)
were capped until July 2011 for Airbus Operations Ltd., UK.
Contributions exceeding the respective capped amounts were
paid by BAE Systems. Even after the expiry of the contribution
cap the unique funding 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 Operations Ltd., UK
to rates applicable to all participating employers.
Based on detailed information about the different multiemployer pension schemes provided by BAE Systems. EADS
is able to appropriately and reliably estimate the share of its

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participation in the schemes, 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 2011 and 2010, taking
into account the impact of the capped contributions as well
as future extra contributions agreed by BAE Systems with theTrustees. Therefore, EADS accounts for its participation in BAE
Systems’ UK deﬁned beneﬁt schemes under the deﬁned beneﬁt
accounting approach in accordance with IAS 19.
In 2011, the share of Airbus in BAE Systems’ main schemesamounts to 17.76% (in 2010: 17.88%). 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.

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

Assumptions in %Germany

FranceUK

BAE Systems UK

31 December

31 December

31 December

31 December

2011

2010

2009

2011

2010

2009

2011

2010

2009

2011

2010

2009

4.75

Discount rate

4.5

4.7

5.3

4.75

5.25

4.8

5.4

5.7

4.8

5.5

5.7

Rate of compensation
increase

3.0

3.0

2.75

3.1 3.0-3.5 3.0-3.5

3.6

4.0

4.1

3.4

4.4

4.5

Inflation rate

2.0

1.75

1.75

2.0

2.0

2.0

2.9

3.3

3.5

2.9

3.4

3.5

Expected return on plan
assets as of 1 January

6.5

6.5

6.5

6.5

6.5

6.5

5.8

5.8

5.8

6.9

7.1

7.1

The amount recorded as provision in the Consolidated Statement of Financial Position can be derived as follows:

Change in defined benefit obligations(In € million)

2011

2010

2009

Defined benefit obligations at beginning of year

9,645

8,845

7,777

Service cost

265

237

189

Interest cost

472

483

450

Actuarial (gains) and losses

506

387

634

Acquisitions, curtailments and other

46

(19)

(21)

Benefits paid

(408)

(382)

(352)

Foreign currency translation adjustment

113

94

168

10,639

9,645

8,845

Defined benefit obligations at end of year

Included in the line “acquisitions, curtailments and others” are € 61 million from acquisitions in 2011.
Actuarial losses which are related to the BAE Systems UK pension plans amount to € 213 million (2010: € 16 million) and foreign
currency translation adjustment amounts to € 99 million (2010: € 84 million).

EADS FINANCIAL STATEMENTS 2011 I 61

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2.3 NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IFRS)

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Change in plan assets(In € million)

2011

2010

2009

Fair value of plan assets at beginning of year

4,662

3,706

3,335

Expected return on plan assets

317

272

221

Actuarial gains and losses on plan assets

(222)

283

49

Contributions

489

553

173

Acquisitions and other

47

13

0

(244)

(230)

(202)

Foreign currency translation adjustments

Benefits paid

86

65

130

Fair value of plan assets at end of year

5,135

4,662

3,706

The actuarial gains and losses on plan assets includes among
others, also €-10 million (2010: € 251 million; 2009: € 42 million)
relating to the BAE Systems’ UK pension plans. Furthermore,€-136 million (2010: €-123 million; 2009: €-102 million) of beneﬁts
paid and € 71 million (2010: € 57 million; 2009: € 116 million) of
foreign currency translation adjustments relate to BAE Systems’
UK pension plans.

Germany with € 94 million (2010: € 125 million; 2009: € 70 million)
and the BAE Systems UK pension plans with € 78 million (2010:€ 66 million; 2009: € 66 million). In 2012, further contributions areintended.

In 2011, EADS companies contributed in total € 489 million(2010: € 553 million; 2009: € 173 million) in cash. Main
contributions were made into the CTA with € 300 million(2010: € 300 million; 2009: € 0 million), into the relief fund in

In 2011, 38% (in 2010: 43%) of plan assets are invested inequity securities and 47% (in 2010: 40%) in debt securities. The
remaining plan assets are mainly invested in cash and othersecurities.

Based on past experience, EADS expects for 2012 a rate of
return for plan assets of 5.5% for Euro-countries.

Recognised Provision(In € million)

2011

2010

2009

2008

2007

Funded status (1)

5,504

4,983

5,139

4,442

4,542

(41)

(45)

(49)

(55)

(25)

5,463

4,938

5,090

4,387

4,517

Unrecognised past service cost
Provision recognised in the statementsof financial position(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 provisioncontains 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 € million)

2011

2010

2009

Service cost

265

237

189

Interest cost

472

483

450

Expected return on plan assets

(317)

(272)

(221)

Past service cost
Net periodic pension cost

4

4

6

424

452

424

The expected return on plan assets for BAE Systems’ UK pension plans amounts to €-151 million (in 2010: €-141 million).

62 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.3 NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IFRS)

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Actuarial gains and losses for retirement plans and deferred compensation are recognised net of deferred taxes in total equity anddevelop as follows:

Actuarial gains and losses recognised directly in total equity (cumulative)(In € million)

Cumulative amount at 1 January
Recognised during the period
Cumulative value at 31 December
Deferred Tax Asset at 31 December
Actuarial gains and losses recognised directly in equity, net

2011

2010

2009

(2,277)(2,140)(1,545)

(746)

(137)

(595)

(3,023)(2,277)(2,140)

635

468

371

(2,388)(1,809)(1,769)

Employer’s contribution to state and private pension plans, mainly in Germany and France, are to be considered as deﬁned
contribution plans. Contributions in 2011 amount to € 643 million (in 2010: € 633 million).

c) Other Provisions

2

Movements in provisions during the year were as follows:

Balance at
1 January
2011

Exchangedifferences

Increasefrompassageof time

Used

Released

Balance at
31 December
2011

Contract losses

3,429

1

80

458

(482)

(165)

(69)

3,252

Outstanding costs

1,718

2

0

854

(90)

(350)

(63)

2,071

Aircraft financing risks

976

18

60

49

0

(124)

(20)

959

Personnel charges

286

8

(227)

(22)

570

(In € million)

Reclassification /Change inconsolidated
Additions
Group

520

1

4

Obligation from services
and maintenanceagreements

424

0

23

117

(15)

(93)

(76)

380

Warranties

235

0

0

214

1

(54)

(23)

373

Restructuring measures/
pre-retirement part-time work

229

0

2

97

1

(78)

(27)

224

Litigations and claims

194

(1)

0

38

0

(12)

(34)

185

Asset retirement

100

0

3

1

0

0

0

104

Other risks and charges

933

0

5

376

143

(260)

(151)

1,046

8,758

21

177

2,490

(434) (1,363)

(485)

9,164

Total

The provision for contract losses mainly relates to Airbus Military
in conjunction with the A400M and to the A350 programme in
Airbus Commercial.
The addition to provisions for outstanding costs mainly relates
to Eurocopter and Cassidian and mainly corresponds to tasks
to complete on construction contracts.
The provision for aircraft ﬁnancing risks fully covers, in line with
the Group’s policy for sales ﬁnancing risk, the net exposure toaircraft ﬁnancing of € 224 million (€ 293 million at 31 December2010) and asset value risks of € 735 million (€ 683 million at
31 December 2010) related to Airbus, Eurocopter and ATR (seeNote 33 “Commitments and contingencies”).

The provision for restructuring measures/pre-retirement parttime work mainly relates to Cassidian, Eurocopter and Airbus.
“Reclassiﬁcation / Change in consolidated Group” mainly relates
to offsetting of contract provisions to respective inventories.
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.
The majority of the Company’s other provisions are generally
expected to result in cash outﬂows during the next 1 to
13 years.

EADS FINANCIAL STATEMENTS 2011 I 63

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.3 NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IFRS)

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26. Financing Liabilities
In 2011, EADS entered into US$ 721 million long-term credit
agreement with EIB (European Investment Bank) maturing in
2021 under which EADS pays variable interest rate of 3-month
USD Libor +0.849%. Concurrently, EADS swapped the variableinterest rate into ﬁxed rate of 3.2%. In 2004, the EIB (European
Investment Bank) granted a long-term loan to EADS in theamount of US$ 421 million maturing in 2014 and bearing a ﬁxed
interest rate of 5.1% (effective interest rate 5.1%). In 2011, EADS
entered into a US$ 300 million credit facility maturing in 2021
with the Development Bank of Japan under which EADS drew
the full amount and pays a variable interest rate of 3 month USD
Libor +1.15%. Concurrently, EADS swapped the variable interest
rate into ﬁxed rate of 4.8%.

a coupon of 4.625% (effective interest rate 4.7%) 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 € 224 million(2010: € 275 million).

EADS issued under its EMTN Programme (Euro Medium Term
Note Programme) two currently outstanding euro denominatedbonds. The ﬁrst issue of € 0.5 billion maturing in 2018 carriesa coupon of 5.5% (effective interest rate 5.6%) which was
swapped during 2005 into variable rate of 3M-Euribor +1.72%.
The second issue of € 1 billion in 2009 maturing 2016 carries

Financing liabilities include liabilities connected with sales
ﬁnancing transactions amounting to € 532 million (2010:€ 631 million), mainly at variable interest rates.

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 from 1 day to
12 months. The issued volume at 31 December 2011 amounted
to € 0 million (2010: € 0 million). The programme has been set up
in 2003 with a maximum volume of € 2 billion.

Non recourse Airbus ﬁnancing liabilities (risk is supported byexternal parties) amount to € 455 million (2010: € 532 million).

31 December 201131 December 2010

1,605

1,535

1,480

783

372

375

171

177

3,628

2,870

Bonds

0

0

Liabilities to financial institutions

74

39

Loans

279

200

Liabilities from finance leases

13

13

1,110

1,156

(In € million)

Bonds
thereof due in more than five years: 549 (31 December 2010: 1,535)
Liabilities to financial institutions
thereof due in more than five years: 679 (31 December 2010: 135)
Loans
thereof due in more than five years: 185 (31 December 2010: 161)
Liabilities from finance leases
thereof due in more than five years: 112 (31 December 2010: 119)Long-term financing liabilities

OthersShort-term financing liabilities (due within one year)

1,476

1,408

Total

5,104

4,278

Included in “Others” are ﬁnancing liabilities to joint ventures.

64 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.3 NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IFRS)

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The aggregate amounts of ﬁnancing liabilities maturing during the next ﬁve years and thereafter are as of 31 December 2011 asfollows:
Financing liabilities(In € million)

2012

1,476

2013

139

2014

482

2015

209

2016

1,273

Thereafter

1,525

Total

5,104

The aggregate amounts of ﬁnancing liabilities maturing during the next ﬁve years and thereafter are as of 31 December 2010 asfollows:
Financing liabilities(In € million)

2011

1,408

2012

166

2013

134

2014

473

2015

147

Thereafter

1,950

Total

4,278

27. Other Financial Liabilities
31 December 201131 December 2010

Thereof European Governments refundable advances

5,526

5,968

Thereof liabilities for derivative financial instruments

2,140

2,109

Others

527

547

8,193

8,624

Thereof liabilities to related companies

10

11

Thereof liabilities for derivative financial instruments

995

821

(In € million)

Non-current other financial liabilities

Total
Current other financial liabilities

OthersTotal

European Governments refundable advances including interest
accretion for the total amount of € 406 million representing
obligations arising out of contracts associated with the longrange programme in Airbus Commercial have been settled asa result of actions taken by Airbus in the third quarter 2011,
due to the termination of the A340 programme. The release of

682

402

1,687

1,234

the liabilities has positively affected the consolidated income
statement before taxes by € 192 million in other operating
income and by € 120 million in interest result. The settlement
has further resulted in an associated operating cash outﬂow of€ 94 million in the fourth quarter 2011.

EADS FINANCIAL STATEMENTS 2011 I 65

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.3 NOTES TO THE CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IFRS)

1Regarding the interest expenses on European Governments
refundable advances see Note 12 “Total ﬁnance costs”. Dueto their speciﬁc nature, namely their risk-sharing features andthe fact that such advances are generally granted to EADS
on the basis of signiﬁcant development projects, European
Governments refundable advances are accounted for by EADS
within “Non-current / current other ﬁnancial liabilities” on the

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statement of ﬁnancial position including accrued interests andpresented within “cash provided by operating activities” in theConsolidated Statements of Cash Flows.
Included in “Other ﬁnancial liabilities” are € 1,753 million(2010: € 1,228 million) due within one year and € 4,526 million(2010: € 4,697 million) maturing after more than ﬁve years.

28. Other Liabilities(In € million)

31 December 201131 December 2010

9,256

8,817

558

447

9,814

9,264

25,00623,285595

545

Non-current other liabilities
Thereof customer advance payments
Others
Total
Current other liabilities
Thereof customer advance payments
Thereof tax liabilities (excluding income tax)
Others
Total

Included in “Other liabilities” are € 23,617 million(2010: € 20,608 million) due within one year and € 3,493 million(2010: € 5,512 million) maturing after more than ﬁve years.

2,069

1,942

27,67025,772

Advance payments received relating to construction contracts
amount to € 9,586 million (2010: € 8,403 million) mainly resulting
from Airbus Military (€ 3,668 million), Astrium (€ 2,834 million)
and Cassidian (€ 2,119 million).

29. Trade Liabilities
As of 31 December 2011, trade liabilities amounting to € 74 million (€ 118 million as of 31 December 2010) mature after morethan one year.

30. Deferred Income
31 December 201131 December 2010

Non-current deferred income

290

315

Current deferred income

875

790

1,165

1,105

(In € million)

Total

The main part of deferred income is related to sales of Airbus and ATR aircraft that include asset value guarantee commitments andthat are accounted for as operating leases (€ 198 million and € 227 million as of 31 December 2011 and 2010, respectively).

66 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.4 NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS (IFRS)

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2.4 Notes to the Consolidated Statementsof Cash Flows (IFRS)
31. Consolidated Statement of Cash FlowsFor 2011’ Consolidated Financial Statements, EADS haschanged the presentation of contributions to plan assets forpension obligations in the Consolidated Statement of Cash
Flows and presents these contributions within the cash ﬂow
from operating activities rather than within the cash ﬂow frominvesting activities. Given prevailing practice’s presentationof contributions to plan assets in the operating section of the
cash ﬂow statement, this change in presentation seeks toprovide more relevant ﬁnancial information to investors as it will
improve comparability with ﬁnancial information of other users.

In accordance with IAS 8, EADS has applied this change inaccounting policies retrospectively.
As of 31 December 2011, EADS’ cash position (stated as cash
and cash equivalents in the Consolidated Statements of Cash
Flows) includes € 710 million (€ 735 million and € 751 million asof 31 December 2010 and 2009, respectively) which represent
EADS’ share in MBDA’s cash and cash equivalents, depositedat BAE Systems and Finmeccanica and which are available
upon demand.

The following chart provides details on cash ﬂow for acquisitions (resulting in additional assets and liabilities acquired) of subsidiaries,
joint ventures and businesses:(In € million)

Total purchase pricethereof paid in cash and cash equivalents
Cash and cash equivalents included in the acquired subsidiaries,
joint ventures and businesses
Cash Flow for acquisitions, net of cash

30 December 2011

30 December 2010

30 December 2009

(1,631)

(45)

(21)

(1,631)

(45)

(21)

96

7

0

(1,535)

(38)

(21)

In 2011, the aggregate cash ﬂow for acquisitions, net of cash of € -1,535 million includes mainly the acquisition of Vizada(€ -709 million), Vector (€ -432 million) and Satair (€ -342 million).
In 2010, the aggregate cash ﬂow for acquisitions, net of cash results from the acquisition of Jena-Optronik GmbH amounted to€ -38 million.
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.

EADS FINANCIAL STATEMENTS 2011 I 67

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2.4 NOTES TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS (IFRS)

1(In € million)

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30 December 2011

30 December 2010

30 December 2009

Intangible assets; property, plant and equipment

743

3

0

Inventories

274

9

1

Trade receivables

392

13

4

Other assets

145

1

0

Cash and cash equivalents

96

7

0

Assets

1,650

33

5

Provisions

(125)

(3)

(3)

Trade liabilities

(288)

(5)

(1)

Financing liabilities

(203)

0

0

Tax liabilities and other liabilities

(312)

(14)

0

Liabilities

(928)

(22)

(4)

Fair value of total net assets

722

11

1

Increase in non-controlling interests due to acquisitions

(7)

0

0

Fair value of net assets acquired

715

11

1

Goodwill arising on acquisitions

968

34

14

Badwill(2)00Other gains related to business combinations

(24)

0

0

Non-cash effective consideration of investments held prior to theacquisitions

(21)

0

0

Linked non-controlling interests squeeze out transactions settled
after the balance sheet date

(5)

0

0

Reduction in non-controlling interests

0

0

6

Less cash and cash equivalents of acquired subsidiaries, joint
ventures and businesses
Acquisitions, net of cash

(96)

(7)

0

1,535

38

21

The following chart provides details on cash ﬂow from disposals (resulting in assets and liabilities disposed) of subsidiaries:(In € million)

Total selling pricethereof received by cash and cash equivalents

30 December 2011

30 December 2010

30 December 2009

18

12

15

18

12

15

Cash and cash equivalents included in the (disposed) subsidiaries

0

0

(2)

Cash Flow from disposals, net of cash

18

12

13

The aggregate cash ﬂow from disposals, net of cash, in 2011 of € 18 million results from the sale of EADS NA Defense Security
Systems Solutions Inc.
The aggregate cash ﬂow from disposals, net of cash, in 2010 of € 12 million results from the sale of ASL Aircraft Services LemwerderGmbH.
The aggregate cash ﬂow from disposals, net of cash, in 2009 of € 13 million results from the sale of 70% of the interest in EADS
Socata.

68 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

1(In € million)

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4

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30 December 2011

30 December 2010

30 December 2009

Intangible assets; property, plant and equipment

(8)

(4)

(50)

Inventories

0

0

(78)

Trade receivables

(4)

(3)

(26)

Other assets

0

(14)

(37)

Cash and cash equivalents

0

0

(2)

Assets

(12)

(21)

(193)

Provisions

2

8

26

Trade liabilities

0

0

83

Financing liabilities

0

0

26

Other liabilities

2

12

43

Liabilities

4

20

178

Book value of net assets

(8)

(1)

(15)

Related disposal of Goodwill

(10)

0

0

0

(11)

0

Result from disposal of subsidiaries
Less cash and cash equivalents of disposed subsidiaries
Disposals, net of cash

0

0

2

(18)

(12)

(13)

2.5 Other Notes to the Consolidated Financial
Statements (IFRS)
32. 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 hadin the recent past signiﬁcant effects on EADS’ or the Group’s
ﬁnancial position or proﬁtability.

WTO
Although EADS is not a party, EADS is supporting the European
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, theEU launched a parallel WTO case against the US in relation
to its subsidies to Boeing. On 31 March 2011, the ﬁnal report
was published in the case brought by the EU concerning
subsidies to Boeing and has been appealed. On 1 June 2011,
the WTO adopted the ﬁnal report in the case brought by the US

assessing funding to Airbus from European governments. On
1 December 2011, the EU informed the WTO that it had taken
appropriate steps to bring its measures fully into conformity
with its WTO obligations, and to comply with the WTO’s
recommendations and rulings. Because the US did not agree,
the matter has now been referred to arbitration under WTO
rules. Exact timing of further steps in the WTO litigation process
is subject to further rulings and to negotiations between the US
and the EU. Unless a settlement, which is currently not underdiscussion, is reached between the parties, the litigation is
expected to continue for several years.

Securities Litigation
Following the dismissal of charges brought by the French
Autorité des marchés financiers for alleged breaches of market
regulations and insider trading rules with respect primarily to theA380 delays announced in 2006, proceedings initiated in otherjurisdictions have also been terminated. Nevertheless, following
criminal complaints ﬁled by several shareholders in 2006
(including civil claims for damages), a French investigating judge
is still carrying out an investigation based on the same facts.
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2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

1CNIM
On 30 July 2010, Constructions Industrielles de laMéditerrannée (“CNIM”) brought an action against EADS
and certain of its subsidiaries before the commercial courtof Paris, alleging anti-competitive practices, breach of longterm contractual relationships and improper termination ofpre-contractual discussions. CNIM is seeking approximately€ 115 million in damages on a joint and several basis. On
12 January 2012, the court rejected all of CNIM’s claims,
following which CNIM has ﬁled for appeal.

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Regarding EADS’ provisions policy, EADS recognises provisions
for litigation and claims when (i) it has a present obligation fromlegal actions, governmental investigations, proceedings andother 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 such obligation and(iii) a reliable estimate of the amount of such obligation can be
made. EADS believes that it has made adequate provisions tocover current or contemplated general and speciﬁc litigation
risks. For the amount of provisions for litigation and claims, seeNote 25c) “Other provisions”.

GPT
EADS has commissioned an independent investigation into
compliance allegations made in connection with one of its
subsidiaries, GPT Special Project Management Ltd. The
independent investigation remains ongoing.

33. Commitments and Contingencies
Commitments and Contingent Liabilities
Sales 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 fromprotective 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 the amount of ﬁnancing commitments given
and the collateral value of the aircraft ﬁnanced is provided foras an impairment to the relating asset, if assignable, or as aprovision for aircraft ﬁnancing risk. The basis for this write down
is a risk-pricing-model, which is applied at every closing toclosely monitor the remaining value of the aircraft.

Depending on which party assumes the risks and rewards ofownership of a ﬁnanced aircraft, the assets relating to sales
ﬁnancing are accounted for on the statement of ﬁnancial
position either as (i) an operating lease (see Note 15 “Property,
plant and equipment”) 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
and other long-term ﬁnancial assets”). As of 31 December
2011, related accumulated impairment amounts to € 127 million(2010: € 75 million) for operating lease and to € 172 million(2010: € 176 million) for loans and ﬁnance lease receivables. As
part of provisions for aircraft ﬁnancing risks € 45 million (2010:€ 37 million) are recorded (see Note 25c) “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.

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 2011 as follows:(In € million)

Not later than 2012103

Later than 2012 and not later than 2016

404

Later than 2016

82

Total

589

Of which commitments where the transaction has been sold to third parties(336)

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

253

70 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

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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 2010 as follows:(In € million)

Not later than 2011

146

Later than 2011 and not later than 2015

474

Later than 2015

162

Total

782

Of which commitments where the transaction has been sold to third parties(403)

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

379

Total aircraft lease commitments of € 589 million as of
31 December 2011 (2010: € 782 million) arise from aircraft headleases and are typically backed by corresponding sublease
income from customers with an amount of € 443 million(2010: € 515 million). A large part of these lease commitments(€ 336 million and € 403 million as of 31 December 2011
and 2010) 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 € 179 million as of 31 December 2011(2010: € 256 million), as part of the provision for aircraft ﬁnancing
risks (see Note 25c) “Other provisions”).

As of 31 December 2011 and 2010, the total consolidated – on and off balance sheet – Commercial Aviation Sales Financing
Exposure is as follows (Airbus Commercial, Eurocopter and 50% for ATR):
31 December 201131 December 2010

Total gross exposure

1,289

1,470

Estimated fair value of collateral (aircraft)

(766)

(926)

Net exposure (fully provided for)

523

544

(In € million)

Details of provisions/accumulated impairments are as follows:
31 December 201131 December 2010

Accumulated impairment on operating leases (see Note 15 “Property, plant andequipment”)

127

75

Accumulated impairment on loans from aircraft financing and finance leases (see Note 17“Investments in associates accounted for under the equity method, other investments andother long-term financial assets”)

172

176

Provisions for aircraft financing risk (on balance sheet) (see Note 25c) “Other provisions”)

45

37(In € million)

Provisions for aircraft financing risk (commitment off balance sheet) (see Note 25c) “Other
provisions”)

179

256

Total provisions/accumulated impairments for sales financing exposure

523

544

Asset value guarantees — Certain sales contracts may
include the obligation of an asset value guarantee whereby
Airbus Commercial, Eurocopter or ATR guarantee a portionof the value 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 2022. If the present
value of the guarantee given exceeds 10% of the sales priceof the aircraft, the sale of the underlying aircraft is accounted
for as an operating lease (see Note 15 “Property, plant andequipment” and Note 30 “Deferred income”). In addition,
EADS is contingently liable in case asset value guarantees withless 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 2011, the nominal value of asset value guarantees
provided to airlines, that do not exceed the 10% criteria,
amounts to € 1,117 million (2010: € 1,095 million), excluding

EADS FINANCIAL STATEMENTS 2011 I 71

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2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

1€ 354 million (2010: € 406 million) where the risk is considered
to be remote. In many cases the risk is limited to a speciﬁc
portion of the residual value of the aircraft. The present valueof the risk inherent to the given asset value guarantees where asettlement is being considered as probable is fully provided forand included in the total amount of provisions for asset value
risks of € 735 million (2010: € 683 million) (see Note 25c) “Other
provisions”). This provision covers a potential expected shortfall
between the estimated value of the aircraft of the date uponwhich the guarantee can be exercised 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 Commercial’s and ATR’s backlog are also
given, such commitments are not considered to be part ofgross exposure until the ﬁnancing is in place, which occurs
when the aircraft is delivered. This is due to the fact that

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ﬁnancings actually will be implemented (although it is possiblethat customers not beneﬁting from such commitments may
nevertheless request ﬁnancing assistance ahead of aircraft
delivery), (ii) until the aircraft is delivered, Airbus Commercial or
ATR retain the asset and do not incur an unusual risk in relation
thereto, and (iii) third parties may participate in the ﬁnancing.
In order to mitigate Airbus Commercial and ATR credit risks,such commitments typically contain ﬁnancial conditions whichguaranteed parties must satisfy in order 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 € 968 million (2010: € 986 million)
as of 31 December 2011, and relate mainly to procurement
operations (e.g. facility leases, car rentals).

Maturities as of 31 December 2011 are as follows:(In € million)

Not later than 2012131

Later than 2012 and not later than 2016

362

Later than 2016

475

Total

968

The respective maturities as of 31 December 2010 are as follows:(In € million)

Not later than 2011130

Later than 2011 and not later than 2015

364

Later than 2015

492

Total

986

34. Information about Financial Instrumentsa) 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, interest raterisks, equity price risks and commodity price 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

72 I EADS FINANCIAL STATEMENTS 2011derivative ﬁnancial instruments and, to a minor extent, nonderivative ﬁnancial liabilities to hedge certain risk exposures.
The ﬁnancial risk management of EADS is generally carried out
by the Central Treasury department at EADS Headquarters
under policies approved by the Board of Directors or by
the Chief Financial Ofﬁcer. The identiﬁcation, evaluationand hedging of the ﬁnancial risks is in the responsibility of
established treasury committees with the Group’s Divisions andBusiness Units.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

1Market 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’s functional
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 Commercial. 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, to theextent that EADS does not use ﬁnancial instruments to cover 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 tomanage 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 andcorresponding 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 Commercial to a minor extent
non-derivative ﬁnancial liabilities.
EADS endeavours to hedge the majority of its exposure based
on 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 behedged 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 includedin the internally audited order book or is very likely to materialisein view of contractual evidence. The coverage ratio is adjusted
to take into account macroeconomic movements affecting
the spot rates and interest rates as well as the robustness ofthe commercial cycle. For the non-aircraft business EADS
hedges in- and outﬂows in foreign currencies from sales andpurchase contracts following the same logic which are typicallycontracted in lower volumes.

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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 currency ofthe signiﬁcant parties to the contract, principally USD and GBP.
Gains or losses relating to such embedded foreign currency
derivatives are reported in other ﬁnancial result if not designatedas hedging instrument. In addition, EADS hedges currency risk
arising from ﬁnancial transactions in other currencies than euro,
such as funding transactions 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
market instruments and bonds. For this portfolio, EADS holds
on a regular basis an Asset Management Committee whichaims at limiting the interest rate risk on a fair value basis througha value-at-risk approach. EADS is investing in short-term
instruments as well as in mid-term bonds in order to manage
any interest rate risk in this portfolio. Any related interest rate
hedges qualify for hedge accounting as either fair value hedges
or cash ﬂow hedges.
Commodity price risk — EADS is exposed to risk relating toﬂuctuations in the prices of commodities used in the supply
chain. EADS manages these risks in the procurement process
and to a minor extent uses derivative ﬁnancial instruments inorder to mitigate the risks associated with the purchase of raw
materials.
Equity 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 the estimatedpotential loss that will not be exceeded on the portfolio overa speciﬁed period of time (holding period) from an adverse
market movement with a speciﬁed conﬁdence level. The VaR
used by EADS is based upon a 95 percent conﬁdence level andassumes a 5-day holding period. The VaR model used is mainly
based on the so called “Monte-Carlo-Simulation” method.
Deriving the statistical behaviour of the markets relevant for

EADS FINANCIAL STATEMENTS 2011 I 73

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2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

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the portfolio out of market data from the previous two years andobserved interdependencies between different markets andprices, the model generates a wide range of potential futurescenarios for market price movements.

O a 95 percent confidence level does not reflect losses that
may occur beyond this level. Even within the model used
there is a five percent statistical probability that losses could
exceed the calculated VaR;EADS VaR computation includes the Group’s ﬁnancial debt,
short-term and long-term investments, foreign currency
forwards, swaps and options, commodity contracts, ﬁnancelease receivables and liabilities, foreign currency trade payables
and receivables, including intra-Group payables and receivables
affecting Group proﬁt and loss.

O the use of historical data as a basis for estimating thestatistical behaviour of the relevant markets and finallydetermining the possible range of future outcomes out of
this statistical behaviour may not always cover all possible
scenarios, especially those of an exceptional nature.

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:
O a five-day holding period assumes that it is possible to hedge
or dispose of positions within that period. This is considered
to be a realistic assumption in almost all cases but may not
be the case in situations in which there is severe market
illiquidity for a prolonged period;

The Group uses VaR amongst other key ﬁgures in order todetermine the riskiness of its ﬁnancial instrument portfolio andin order to optimise the risk-return ratio of its ﬁnancial asset
portfolio. Further, the Group’s investment policy deﬁnes a
VaR limit for the total portfolio of cash, cash equivalents andsecurities. The total VaR as well as the different risk-factor
speciﬁc VaR ﬁgures of this portfolio are measured and serve
amongst other measures as a basis for the decisions of theAsset Management Committee.

A summary of the VaR position of EADS’ ﬁnancial instruments portfolio at 31 December 2011 and 31 December 2010 is as follows:
Total VaR

Equity price VaR

Currency VaR

Commodity price VaRInterest rate VaR

FX hedges for forecast transactions
or firm commitments

1,249

0

1,264

0

128

Financing liabilities, financial assets(incl. cash, cash equivalents,
securities and related hedges)

192

164

71

0

37

Finance lease receivables andliabilities, foreign currency trade
payables and receivables

61

0

10

0

56

Commodity contracts

8

0

1

7

0

Diversification effect

(219)

0

(27)

0

(44)

All financial instruments

1,291

164

1,319

7

177

FX hedges for forecast transactions
or firm commitments

1,203

0

1,230

0

160

Financing liabilities, financial assets(incl. cash, cash equivalents,
securities and related hedges)

102

85

53

0

25

Finance lease receivables andliabilities, foreign currency trade
payables and receivables

49

0

9

0

48

Diversification effect

(186)

0

(106)

0

(41)

All financial instruments

1,168

85

1,186

0

192

(In € million)

31 December 201131 December 2010

The increase of total VaR compared to 31 December 2010
is mainly attributed to an increase of the foreign exchange
portfolio and an increase of the investment portfolio incomparison to year end 2010. 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

74 I EADS FINANCIAL STATEMENTS 2011

on the hedges’ actual effectiveness – offset by corresponding
opposite market risks of the underlying forecast transactions,assets or liabilities. Under IFRS 7 the underlying forecast
transactions do not qualify as ﬁnancial instruments and are
therefore not included in the tables shown above. The VaR of
the FX hedging portfolio in the amount of € 1,249 million (2010:€ 1,203 million) cannot be considered as a risk indicator forNOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

1
the Group in the economic sense. Beginning with 2011, EADS
started to use ﬁnancial instruments to mitigate its exposure tocommodity risk.
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% compensated by thecorresponding currency ﬂuctuations recognised in a separate
component of equity when translating the foreign entity into
EADS functional currency. At 31 December 2011, the related
total VaR amounts to € 70 million (2010: € 91 million).

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 as of

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31 December 2011 and 2010, 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. EADS
continues to keep within the asset portfolio the focus on low
counterparty risk, however, adverse changes in the capital
markets could increase the Group’s funding costs and limit 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 yearNon-derivative financial liabilities(15,742)(16,512)(11,513)

Derivative financial liabilities(3,135)(3,556)(919)(18,877)(20,068)(12,432)(13,732)(14,567)(10,197)(In € million)2

1 year2 years

2 years3 years

3 years4 years

4 years5 years

More than
5 years

(314)

(610)

(340)

(1,567)(2,168)(1,052)

(769)

(597)

(144)

(75)

(1,366)(1,379)(937)(1,711)(2,243)

(365)

(271)

(690)

(424)

(2,620)31 December 2011

Total
31 December 2010
Non-derivative financial liabilities
Derivative financial liabilities
Total(2,930)(2,517)

(781)

(695)

(527)

(314)

(226)

26

(16,662)(17,084)(10,978)(1,060)(798)(1,004)(650)(2,594)

The above table analyses EADS ﬁnancial liabilities by relevant
maturity groups based on the period they are remaining on
EADS Consolidated Statement of Financial Position to thecontractual 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 34b) “Carrying amounts and fair values ofﬁnancial instruments”. Due to their speciﬁc nature, namely theirrisk-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€ 5,737 million (2010: € 6,020 million).

Credit Risk
EADS is exposed to credit risk to the extent of non-performanceby either its customers (e.g. airlines) or its counterparts withregard to ﬁnancial instruments. However, the Group has policies
in place to avoid concentrations of credit risk and to ensure thatcredit risk is limited.
As far as central treasury activities are concerned, credit risk
resulting from ﬁnancial instruments is managed on Group level.
Counterparts for transactions on cash, cash equivalents andsecurities as well as for derivative transactions are limited tohighly rated ﬁnancial institutions, corporates or sovereigns.
For such ﬁnancial transactions EADS has set up a credit limit
system to actively manage and limit its credit risk exposure. This
limit system assigns maximum exposure lines to counterpartsof ﬁnancial transactions, taking into account the lowest of their
credit ratings as published by Standard & Poors, Moody’s andFitch IBCA. Besides the credit rating, the limit system takes
into consideration fundamental counterparty data, as well
as sectoral and maturity allocations and further qualitative

EADS FINANCIAL STATEMENTS 2011 I 75

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1
and quantitative criteria such as credit risk indicators. The
credit exposure of EADS is reviewed on a regular basis andthe respective limits are regularly monitored and updated.
Further, EADS constantly aims for maintaining a certain level ofdiversiﬁcation in its portfolio between individual counterparts aswell as between ﬁnancial institutions, corporates and sovereignsin order to avoid 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
to hedge, to divest from or to restructure ﬁnancial instruments
having undergone a downgrade of the counterparts’ credit
rating or showing an unsatisfactory performance. These
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.
European ﬁnancial markets have recently experienced
signiﬁcant disruptions. Such disruptions affected the credit
markets and created uncertainty regarding the near-term
economic prospects of countries in the EU as well as the qualityof loans to sovereign debtors and banks in the EU. There has
also been an indirect impact on ﬁnancial markets worldwide.
If economic conditions in the relevant European countries
or in Europe more generally were to deteriorate or if more
pronounced market disruptions were to occur, there could be a
new or incremental tightening in the credit markets, low liquidity
and extreme volatility in credit, currency and equity markets.
This could have a number of effects on EADS’ business,
including:

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universe of counterparties and lower availability of credit,
which may in turn reduce the availability of bank guarantees
needed by EADS for its businesses or restrict its ability to
implement desired foreign currency hedges; andO default of investment or derivative counterparties and otherfinancial institutions, which could negatively impact EADS’
treasury operations.
EADS’ ﬁnancial results could also be negatively affected
depending on gains or losses realised on the sale or exchangeof ﬁnancial instruments, impairment charges resulting
from revaluations of debt and equity securities and otherinvestments, interest rates, cash balances and changes in fairvalue of derivative instruments.
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 Commercial and ATR,EADS may agree to participate in the ﬁnancing of customers,
on a case-by-case basis, directly or through guarantees
provided to third parties. In determining the amount and termsof 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 withappropriate assumptions as to the anticipated future value ofthe ﬁnanced asset.
The booked amount of ﬁnancial assets represents the
maximum credit exposure. The credit quality of ﬁnancial
assets can be assessed by reference to external credit rating(if available) or internal assessment of customers’ (e.g. airlines’)
creditworthiness by way of internal risk pricing methods.

O continued de-leveraging as well as mergers and bankruptcies
of banks or other financial institutions, resulting in a smaller
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 the end of the reporting periods is thefollowing:(In € million)

2011

2010

Receivables, neither past due nor impaired

4,984

6,011

Not past due to negotiations and not impaired

52

48

Receivables impaired individually

18

3

1,139

788

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

314

343

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

331

86

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

233

144

Receivables not impaired and past due > 12 months
Total

76 I EADS FINANCIAL STATEMENTS 2011

835

531

7,906

7,954

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

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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.

The fair value of a ﬁnancial instrument is the price at which one
party would assume the rights and/or duties of another party.
Fair values of ﬁnancial instruments have been determined withreference to available market information at the end of thereporting period and the valuation methodologies discussed

The following tables present the carrying amounts and fair values of ﬁnancial instruments according to IAS 39 measurement
categories as of 31 December 2011 and 2010 respectively:

31 December 2011(In € million)

AssetsFair Value throughprofit or loss
Held fortrading DesignatedFair Valuefor hedge
relations
Fair value

Available
for Sale
Book
Fair
value
Value

Loans and Receivables
and Financial liabilities
at amortised cost
Other (3)Amortised
Fair
Cost
Value

Financial
Instruments
Total
Book
Fair
Value
Value

Other investments andother long-term financial
assets• thereof at amortised
cost

-

-

-

-

-

1,296

1,296

432

1,728

1,728

-

-

-

279

(1)

-

-

-

279

(1)

-

-

-

371

371

-

-

-

371

371

Current portion of otherlong-term financial assets

-

-

-

-

-

76

76

96

172

172

Non-current and current
other financial assets

412

-

490

-

-

1,468

1,468

-

2,370

2,370

Trade receivables

-

-

-

-

-

6,399

6,399

-

6,399

6,399

Non-current and current
securities

-

67

-

11,434 11,434

-

-

-

11,501

11,501-

2,842• thereof at cost
• thereof Fair value
via OCI

Cash and Cash
Equivalents
Total

-

365

412

432

2,842

2,077

2,077

-

5,284

5,284

490 14,926 14,647

11,316

11,316528

28,104

27,825

-

-

-

-

-

(4,920)(5,180)(184)(5,104)(5,364)(131)-(3,060)--(6,689)(6,689) (2)-(9,880)(9,880)(9,630)(9,630)-(9,630)(9,630)(21,239) (21,499)(184)

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

-

-

-

-

-

(131)

-

(3,060)--(24,614) (24,874)(1) Fair value is not reliably measurable.
(2) The European Governments refundable advances of € 5,737 million are measured at amortised cost; a fair value cannot be measured reliably due to their risk sharing nature anduncertainty about the repayment dates. They may be reassessed as relating programmes approach the end of production.
(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 of thesereceivables/payables approximate their fair values.

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31 December 2010(In € million)

AssetsFair Value
Fair Value through for hedge
profit or loss
relationsHeldfortrading Designated Fair value

2

3

5

4

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Loans and Receivables
and Financial liabilities
at amortised cost
Other (3)Financial
Instruments
Total

Fair
Value

Amortised
Cost

Fair
Value

Book
Value

Fair
Value

Available for
Sale
Book
value

4

Other investments and otherlong-term financial assets• thereof at amortised cost
• thereof at cost
• thereof Fair value via OCI

-

-

-

-

-

1,265

1,265

554

1,819

1,819

-

-

-

291

(1)

-

-

-

291

(1)

-

-

-

276

276

-

-

-

276

276

Current portion of otherlong-term financial assets

-

-

-

-

-

38

38

73

111

111

Non-current and current
other financial assets

313

-

752

-

-

1,381

1,381

-

2,446

2,446

-

-

-

-

-

6,632

6,632

-

6,632

6,632

Non-current and current
securities-297- 10,869 10,869

Cash and Cash Equivalents

-

376

-

313

673

Trade receivables

Total

Liabilities

Held fortrading---

11,166

11,166

2,725

1,929

1,929

-

5,030

5,030

752 14,161 13,870

11,245

11,245627

27,771

27,480FV viaOCI At cost

Amortised
Cost

Fair
Value

Book
Value

Fair
Value

(4,278)(4,504)

Designated Fair value

2,725

Long-term and short-term
financing liabilities

-

-

-

-

-

(4,088)(4,314)Non-current and current
other financial liabilities

(69)

-

(2,962)--(6,827)(6,827) (2)-(9,858)(9,858)

-

-

-

-

-

(8,546)(8,546)-(8,546)(8,546)(69)-(2,962)--(19,461)(19,687)(190)

Trade liabilities
Total

(190)

(22,682) (22,908)(1) Fair value is not reliably measurable.
(2) The European Governments refundable advances of € 6,020 million are measured at amortised cost; a fair value can not be measured reliably due to their risk sharing nature anduncertainty about the repayment dates. They may be reassessed as relating programmes approach the end of production.
(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 of thesereceivables/payables approximate their fair values.

The fair value hierarchy consists of the following levels:
O Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities;
O 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); andO Level 3: inputs for the asset or liability that are not based on observable market data.
The following tables allocate the ﬁnancial assets and liabilities measured at fair value to the three levels of the fair value hierarchy
as of 31 December 2011 and 2010 respectively:
31 December 2011(In € million)

Level 1

Level 2

Level 3

Total

365

440

39

844

Financial assets measured at fair value
Financial assets measured at fair value through profit or loss
Derivative financial instruments for hedge relations

-

490

-

490

11,6492,998-

14,647

12,014

3,928

39

15,981

Financial liabilities measured at fair value through profit or loss

-

(131)

-

(131)

Financial instruments for hedge relations-(3,004)(56)(3,060)-(3,135)(56)(3,191)

Available for Sale financial assets
Total
Financial liabilities measured at fair value

Total

78 I EADS FINANCIAL STATEMENTS 2011

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The development of ﬁnancial instruments of Level 3 is as follows:
Total gains or losses in
Financial assets andliabilities on Level 3

Balance at
1 January
2011

profitor loss

Other
comprehensive
incomeSettlements

Transfer toliabilities

Balance at
31 December
2011

Purchases

Issues

-

39

-

-

-

-

-

39

(101)

(5)

(1)

-

-

51

-

(56)

Level 1

Level 2

Level 3

Total

376

610

-

986

-

752

-

752

Financial assets
Financial assets measured
at fair value through profit
or loss
Financial liabilities
Financial instruments forhedge relations

31 December 2010(In € million)

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

9,189

4,681

-

13,870

9,565

6,043

-

15,608

-

(69)

-

(69)

Financial liabilities measured at fair value
Financial liabilities measured at fair value through profit and loss
Financial instruments for hedge relations
Total

Financial 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 value of
future cash ﬂows, fair values are based on estimates. However,methods and assumptions followed to disclose data presented
herein are inherently judgemental and involve various limitations
like estimates as of 31 December 2011 and 2010, which are
not necessarily indicative of the amounts that the Company
would record upon further disposal/termination of the ﬁnancial
instruments. Unquoted other investments are measured at cost
as their fair value is not reliably determinable.
The methodologies used are as follows:
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 and its
expected realisation.
Securities – The fair value of securities included in availablefor-sale investments is determined by reference to their quoted
market price at the end of the reporting period. 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 end of the reporting period.

-(2,861)(101)(2,962)-(2,930)(101)(3,031)

Currency, Interest Rate and Commodity Contracts – Thefair value of these instruments is the estimated amount that theCompany would receive or pay to settle the related agreements
as of 31 December 2011 and 2010. EADS determines the fairvalues of derivative ﬁnancial instruments using recognised
valuation techniques such as option-pricing models anddiscounted cash ﬂow models. The valuation is based on market
data such as currency rates, interest rates and credit spreads
as well as price and rate volatilities obtained from recognizedvendors of market data.
Financial markets disruptions witnessed in recent years have beenaccompanied with dissolving of no-arbitrage relations, which
impact the fair values of the ﬁnancial instruments held by EADS. For
this reason per year-end 2011, the Group changed the approachfor the estimate of fair values of currency forwards and swaps fromthe zero coupon method towards the currency forward rate based
par method. This represents a change of accounting estimate
as deﬁned in IAS 8.5. The zero coupon method derives forward
exchange rates from differences in the relevant interest yield curvesof the currencies involved and was used as a proxy for the forward
rate based par method that uses quoted forward points, rather thaninterest rate quotes, to obtain forward exchange rates. In effect, had
the Group applied the interest-rate differential method as of yearend 2011, total unrealised loss recognised in AOCI, net of tax, would
have increased by € 0.6 billion. The effect from using a reﬁned fairvalue measure will reverse in AOCI over the life of the currency
forwards and swaps outstanding at year end 2011.

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The fair value of ﬁnancing liabilities as of 31 December 2011 has been estimated including all future interest payments. It also reﬂects theinterest rate as stated in the tables above. The fair value of the EMTN bonds has been assessed using public price quotations.
The following types of ﬁnancial assets held at 31 December 2011 and 2010 respectively are designated at fair value through proﬁt or loss:
Nominal amount at
initial recognition
as of 31 December
2011

Money Market Funds (accumulating)Foreign currency Funds of Hedge Funds(In € million)

Fair value as of
31 December 2011

Nominal amount at
initial recognition
as of 31 December
2010

Fair value as of
31 December 2010

365

365

376

376

19

17

275

247

Designated at fair value through profit or loss
at recognition:

Uncapped Structured Interest Rate Notes
Total

50

50

50

50

434

432

701

673

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.

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.

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 € 2,609 million (2010: € 2,281 million).

c) 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:
Remaining period

Year ended 31 December 2011(In € million)

2012

2013

2014

2015

2016

2017

2018

2019+

Total

13,457

14,707

12,916

8,567

2,359

(92)

(235)

(275)

51,404Foreign Exchange Contracts:
Net forward sales contracts
Foreign Exchange Options:Purchased USD call options

1,525

415

0

0

0

0

0

0

1,940

Purchased USD put options

2,814

1,222

0

0

0

0

0

0

4,036

Written USD call options

2,723

1,236

0

0

0

0

0

0

3,959

4,821

130

225

0

228

0

0

0

5,404

FX swap contracts

Remaining period

Year ended 31 December 2010
2011

2012

2013

2014

2015

2016

2017

2018+

Total

12,054

12,166

10,353

7,003

4,057

125

49

(365)

45,442

Purchased USD call options

728

1,230

402

0

0

0

0

0

2,360

Purchased USD put options

2,122

2,585

402

0

0

0

0

0

5,109

2,122

2,585

402

0

0

0

0

0

5,109

2,679

35

130

225

0

0

0

0

3,069

(In € million)

Foreign Exchange Contracts:
Net forward sales contracts
Foreign Exchange Options:

Written USD call options
FX swap contracts

80 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
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The notional amounts of interest rate contracts are as follows:
Remaining period

Year ended 31 December 2011(In € million)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021 +

Total

Interest Rate Contracts

230

1,073

1,330

983

1,507

142

610

1,157

0

922

7,954

Please also refer to Note 26 “Financing Liabilities”.
Remaining period

Year ended 31 December 2010(In € million)

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020 +

Total

Interest Rate Contracts

431

188

516

373

163

1,090

109

606

1,229

58

4,763

Notional amounts of commodity contracts:
Remaining period

Year ended 31 December 2011(In € million)

2012

2013

2014

Total

Commodity contracts

283

104

6

393

d) 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 asof 31 December 2011 and 2010:31 December 2011
Interest rate in %

EUR

USD

GBP

6 months

1.82

0.93

1.45

1 year

2.15

1.35

1.96

5 years

1.73

1.21

1.57

10 years

2.37

2.03

2.31

Interest rate in %

EUR

USD

GBP

6 months

1.20

0.54

1.23

1 year

1.48

0.85

1.53

5 years

2.48

2.17

2.65

10 years

3.31

3.35

3.57

31 December 2010

EADS FINANCIAL STATEMENTS 2011 I 81

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The development of the foreign exchange rate hedging instruments recognised in AOCI as of 31 December 2011 and 2010 is as follows:
Equity attributable
to equity owners of
the parent(In € million)

1 January 2010

Non-controllinginterests

Total

828

2

830

Unrealised gains and losses from valuations, net of tax(2,090)(1)(2,091)

Transferred to profit or loss for the period, net of tax

(111)

0

(111)

Changes in fair values of hedging instruments recorded in AOCI, net of tax(2,201)(1)(2,202)31 December 2010 / 1 January 2011

(1,373)

1(1,372)

(276)

1

(275)

Unrealised gains and losses from valuations, net of tax
Transferred to profit or loss for the period, net of tax
Changes in fair values of hedging instruments recorded in AOCI, net of tax
31 December 2011

(124)

0

(124)

(400)

1

(399)

(1,773)2(1,771)In the year 2011 an amount of € 171 million (in 2010: € 201 million) was reclassiﬁed from equity mainly to revenues resulting frommatured cash ﬂow hedges. No material ineffectiveness arising from hedging relationship has been determined.
Corresponding with its carrying amounts, the fair values of each type of derivative ﬁnancial instruments is as follows:
31 December 201131 December 2010

AssetsLiabilities

AssetsLiabilities

Foreign currency contracts – Cash Flow Hedges

233(2,742)603(2,617)

Foreign currency contracts – not designatedin a hedge relationship

361

(55)

202

(64)

Interest rate contracts – Cash Flow Hedges

0

(61)

0

(15)

Interest rate contracts – Fair Value Hedges(In € million)

257

(116)

149

(138)

Interest rate contracts – not designated in a hedge
relationship

0

(19)

0

0

Commodity contracts – not designated in a hedge
relationship

39

(28)

0

0

Embedded foreign currency derivatives –Cash Flow Hedges

0

(85)

0

(91)

Embedded foreign currency derivatives –not designated in a hedge relationship
Total

0

(29)

12

(5)

890

(3,135)966(2,930)e) Net gains or losses
EADS net gains or (losses) recognised in proﬁt or loss in 2011 and 2010 respectively are as follows:
2011

2010

Held for trading

71

35

Designated on initial recognition

4

22

Loans and receivables

19

(123)

Financial liabilities measured at amortised cost

105

97

(In € million)

Financial assets or financial liabilities at fair value through profit or loss:

Interest income from ﬁnancial assets or ﬁnancial liabilities through proﬁt or loss is included in net gains or losses.
Net gains or (losses) of loans and receivables contain among others impairment losses.
Net gains or (losses) of € -20 million (2010: €+12 million) are recognised directly in equity relating to available-for-sale ﬁnancial assets.

82 I EADS FINANCIAL STATEMENTS 2011

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In 2011, the net gains or (losses) of ﬁnancial liabilities measured at amortised cost include among others the gains from the release ofEuropean government refundable advances due to the termination of the A340 programme (see Note 27 “Other ﬁnancial liabilities”).

f)Total interest income and total interest expenses

In 2011, the total interest income amounts to € 372 million (in 2010: € 309 million) for ﬁnancial assets which are not measured at fairvalue through proﬁt or loss. For ﬁnancial liabilities which are not measured at fair value through proﬁt or loss € -364 million (in 2010:€ -415 million) are recognised as total interest 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 2011 and 2010 respectively:(In € million)

2011

2010

Available-for-sale financial assets

(12)

(39)

Loans and receivables

(156)

(60)

Other

(1)

Total

(2)

(6)

(170)

(105)

(1) Concerns finance lease receivables.

35. Share-Based Paymenta) 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 and 2001. 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.
In 2011, 2010, 2009, 2008 and 2007, the Board of Directors of
the Company approved the granting of performance units andrestricted units in the Company. The grant of so called “units”
will not physically be settled in shares but represents a cash
settled plan in accordance with IFRS 2.

In 2011, compensation expense for Long-Term Incentive Plans was recognised for an amount of € 99 million (in 2010 for Long-Term
Incentive Plan and Stock Option: € 47 million). The fair value of units granted per vesting date is as follows (LTIP plan 2011):
In € (per unit granted)

Expected vesting date

FV of restricted and performance units to be settled in cash

May 2015

23.25

November 201523.12

May 2016

23.00

November 201622.87

As of 31 December 2011 provisions of € 160 million (2010: € 61 million) relating to LTIP have been recognised.
The lifetime of the performance and restricted units (2011) is contractually ﬁxed (see within the description of the “thirteenth
tranche”). The measurement is based on an Option Pricing Model which is, next to other market data, mainly affected by the shareprice as of the end of the reporting period (€ 24.15 as of 31 December 2011) and the lifetime of the units.

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The principal characteristics of the options as well as performance and restricted units as at 31 December 2011 are summarized in
the various tables below:
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

8,524,250

7,276,700-

1,593,543

1,650

1,562

Number of options granted
Number of options outstanding
Total number of eligible employees

Exercise date

Expiry date

50% of options may be exercised after a period of two years and four weeks
from the date of grant of the options; 50% of options may be exercised
as of the third anniversary of 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
VestedExercise price
Exercise price conditions
Number of exercised options

Date of Shareholders’ Meeting
Date of Board of Directors meeting (grant date)

8 August 2012
One option for one share

100%

100%

€ 24.66€ 16.96

110% of fair market value of the shares at the date of grant
3,492,831

5,058,674

Fifth tranche

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

3,165,988

5,269,000

1,491

1,495

Total number of eligible employees

Exercise date

Expiry date

50% of options may be exercised after a period of two years and four weeks
from the date of grant of the options; 50% of options may be exercised asof the third anniversary of 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

7 October 2014
One option for one share

Vested100%

100% (1)

Exercise price€ 15.65€ 24.32

Exercise price conditions
Number of exercised options

110% of fair market value of the shares at the date of grant
3,771,068

5,900(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.

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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

5,800,678

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 dateof grant of the options; 50% of options may be exercised as of the third
anniversary of 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”). 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

Vested100% (1)

Exercise price€ 33.91

Exercise price conditions

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.

Eighth tranche

Date of Shareholders’ Meeting
Date of Board of Directors meeting (grant date)

4 May 2006
18 December 2006
Stock option plan

Number of options granted

1,747,500

Number of options outstanding

1,639,500

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 dateof grant of the options; 50% of options may be exercised as of the third
anniversary of the date of grant of the options (subject to specificprovisions 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

VestedExercise price
Exercise price conditions
Number of exercised options

100%€ 25.65
110% of fair market value of the shares at the date of grant
0

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Ninth tranche

Date of Board of Directors meeting (grant date)

7 December 2007
Performance and restricted unit plan

Number of units granted
Number of units outstanding

Performance units

Restricted units

1,693,940

506,060

0234,508

Total number of eligible beneficiaries

Vesting dates

Number of vested units

1,617
The restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates.
Vesting schedule is made up of 4 payments over two years:• 25% in May 2011;• 25% in November 2011;• 25% expected in May 2012;• 25% expected in November 2012.
4,240

241,352

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

2,104,820

761,420

Total number of eligible beneficiaries

Vesting dates

Number of vested units*

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 two years:• 25% expected in May 2012;• 25% expected in November 2012;• 25% expected in May 2013;• 25% expected in November 2013.
5,600

3,780

Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board can decide toreview the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).

Eleventh tranche

Date of Board of Directors meeting (grant date)

13 November 2009
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted*

2,697,740

928,660

Number of units outstanding

2,612,380

910,360

Total number of eligible beneficiaries

Vesting dates

Number of vested units*

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 two years:• 25% expected in May 2013;• 25% expected in November 2013;• 25% expected in May 2014;• 25% expected in November 2014.
7,850

3,400

Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board can decide toreview the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).

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Twelfth tranche

Date of Board of Directors meeting (grant date)

10 November 2010
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted*

2,891,540

977,780

Number of units outstanding

2,843,440

956,400

Total number of eligible beneficiaries

Vesting dates

Number of vested units*

1,711
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 two years:• 25% expected in May 2014;• 25% expected in November 2014;• 25% expected in May 2015;• 25% expected in November 2015.
00

Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board can decide toreview the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).

2

Thirteenth tranche

Date of Board of Directors meeting (grant date)

9 November 2011
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted*

2,588,950

877,750

Number of units outstanding

2,588,950

877,750

Total number of eligible beneficiaries

Vesting dates

Number of vested units*

1,771
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 two years:• 25% expected in May 2015;• 25% expected in November 2015;• 25% expected in May 2016;• 25% expected in November 2016.
00

Based on 100% target performance achievement. A minimum of 50% of performance units will vest; 100% in case of on-target performance achievement; up to a maximum of
150% in case of overachievement of performance criteria. In case of absolute negative results (cumulative EBIT* of EADS) during the performance period, the Board can decide toreview the vesting of the performance units including the 50% portion which is not subject to performance conditions (additional vesting condition).

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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

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

7,926,425

2002-

7,926,425--

7,926,425

2003-

7,926,425-(107,700)

7,818,725

Third Tranche

2001

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

2010-

3,299,659-(267,900)

3,031,759

2011

3,031,759-(3,031,759)

0Fourth Tranche

Balance at
1 January

Forfeited

Balance at
31 December

Number of Options
Options granted

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

2005-

6,777,828(2,409,389)(9,250)4,359,189

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

2010-

2,459,276(88,881)(86,925)

2,283,470

2011

2,283,470(664,727)(25,200)

1,593,543

Fifth Tranche

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

Number of Options

2006

-

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

5,229,965

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

2010-

4,615,853(208,780)(168,120)

4,238,953

4,238,953(1,044,665)(28,300)

3,165,988

2011

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Number of Options
Options granted

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

2004

7,777,280---

7,777,280

2005-

Sixth Tranche

2006

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

2010-

6,016,706-(419,680)

5,597,026

2011

5,597,026(3,500)(324,526)

5,269,000

Seventh Tranche

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

Number of Options
Options granted

2005

7,981,760---

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

2010-

6,245,431-(149,040)

6,096,391

2011

6,096,391-(295,713)

5,800,678

Eighth Tranche

Options granted

Balance at
1 January

Exercised

Forfeited

Balance at
31 December

1,747,500---

1,747,500

Number of Options

2006
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

2010-

1,667,000-(16,500)

1,650,500

1,650,500-(11,000)

1,639,500

40,871,470

22,898,099(12,328,473)(11,074,288)

17,468,709

Units granted

Balance at
1 January

Forfeited

Balance at
31 December

2011

Total options for all Tranches

Number of Units
Ninth Tranche

VestedPerformance 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

Performance units in 2010-

Performance units in 2011

1,634,100(1,720)(29,100)

1,603,280

1,603,280-(1,603,280)

0Restricted units in 2007

506,060---

506,060

Restricted units in 2008-

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

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

Restricted units in 2010-

493,320(640)(5,960)486,720

486,720(240,712)(11,500)

234,5082,200,000

2,090,000(245,592)(1,719,900)

234,508

Restricted units in 2011
Total units

EADS FINANCIAL STATEMENTS 2011 I 89

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Number of Units
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

Performance units in 2010-

2,170,340(2,520)(29,120)

2,138,700

2,138,700(1,960)(31,920)

2,104,820

Tenth Tranche

Performance units in 2011
Restricted units in 2008

801,860---

801,860

Restricted units in 2009-

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

Restricted units in 2010-

795,380(2,940)(10,480)

781,960

781,960(840)(19,700)

761,4202,994,600

2,920,660(9,380)(118,980)

2,866,240

Units granted

Balance at
1 January

Forfeited

Balance at
31 December

Restricted units in 2011
Total units

Number of Units
Eleventh Tranche

VestedPerformance units in 2009

2,697,740---

2,697,740

Performance units in 2010-

2,697,740(4,250)(29,400)

2,664,090

Performance units in 2011

2,664,090(3,600)(48,110)2,612,380

Restricted units in 2009

928,660---

928,660

Restricted units in 2010-

928,660(400)(1,400)926,860

926,860(3,000)(13,500)

910,360

3,626,400

3,590,950(11,250)(92,410)

3,522,740

Units granted

Balance at
1 January

VestedForfeited

Balance at
31 December

2,891,540--(1,400)2,890,140

Restricted units in 2011
Total units

Number of Units
Twelfth Tranche

Performance units in 2010
Performance units in 2011

2,890,140-(46,700)

2,843,440

977,780

-

-

(460)

977,320

977,320-(20,920)

956,400

3,869,320

3,867,460-(69,480)

3,799,840

Units granted

Balance at
1 January

VestedForfeited

Balance at
31 December

Restricted units in 2010
Restricted units in 2011
Total units

Number of Units
Thirteenth Tranche

Performance units in 2011

2,588,950--

2,588,950

Restricted units in 2011

877,750--

877,750

3,466,700--

3,466,700

Total units

90 I EADS FINANCIAL STATEMENTS 2011

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Back to Contentsb) Employee Stock Ownership Plan (ESOP)In 2011, the Board of Directors approved an additional ESOP
as in previous years. For the 2011 ESOP, eligible employees
were able to purchase a ﬁxed number of previously unissued
shares at fair value (10, 30, 50, 100, 200 or 400 shares). EADS
matched each ﬁxed number of shares with a number of free
EADS shares based on a determining ratio (10, 20, 30, 43, 67
and 107 free shares, respectively). During a lockup period ofat least one year or, provided the purchase took place in thecontext of a mutual fund (regular saving plan), of ﬁve years,
employees are restricted from selling the shares, but have theright to receive all dividends paid. Employees who purchased
directly EADS shares have in addition the ability to vote at theannual Shareholder Meetings. The subscription price was equal
to the opening price at the Paris stock exchange on 3 June
2011 and amounted to € 21.49. Investing through the mutualfund led to a price which was the higher of the subscription

price or the average opening price at the Paris stock during the
20 trading days immediately preceding 3 June 2011, resulting
in a price of € 22.15. EADS issued and sold 2,445,527 ordinary
shares with a nominal value of € 1.00 in total. Compensation
expense of € 15 million (in 2010: € 21 million) was recognised inconnection with ESOP.
In 2010, the normal ESOP plan was replaced through a worldwide
10 years EADS – Special Anniversary Free Share Plan for about
118,000 employees in 29 countries. Each eligible employee was
granted 10 free shares in EADS, resulting in the distribution of
1,184,220 shares in total. Such shares were bought from thecapital market and therefore had no impact on the issued sharecapital. This exceptional free share grant was implemented inorder to celebrate the initial public offering of EADS ten years ago
and to strengthen each employee’s sense of belonging to EADS.

2

36. Related Party Transactions
Related parties — The Group has entered into varioustransactions with related companies in 2011 and 2010 thathave all been carried out in the normal course of business.
As is the Group’s policy, related party transactions have to be
carried out at arm’s length. Transactions with related parties
include the French government and its related entities, Daimler
AG, Lagardère and the Spanish government (SEPI). Except
for the transactions with the French and Spanish government
and the transaction with the Daimler AG mentioned below,

the transactions are not considered material to the Groupeither individually or in the aggregate. The transactions with
the French government include mainly sales from Eurocopter,
Astrium, Cassidian and Airbus Military for programmes like
Tiger, M51/M45 ballistic missiles, SCALP naval cruise missiles
and A400M. The transactions with the Spanish government
include mainly sales from Airbus Military and Cassidian for
military programmes. The transactions with the joint ventures
mainly concern the Euroﬁghter programme.

The following table discloses the related party transactions on a full EADS’ share as of 31 December 2011:(In € million)

French government

Sales of goods
and services
and otherincome in2011

Purchases ofgoods andservices andother expense in2011

Receivables
due as of
31 December
2011

Payablesdue as of
31 December
2011

Other
Liabilities/ Loans
received as of
31 December
2011 (1)

1,252

139

1,484

0

2,351

Spanish government (SEPI)

63

0

67

0

535

Daimler AG

2

16

1

3

0

Lagardère group

0

6

0

0

0

1,317

161

1,552

3

2,886

714

509

92

151

0

Total transactions with joint ventures

2,110

39

723

18

1,526

Total transactions with associates

1,005

25

339

14

0

Total transactions with shareholder
Total transactions with French government
related entities(1) Including European Governments refundable advances from the French and Spanish government.

As of 31 December 2011, EADS granted guarantees to the Spanish State in the amount of € 181 million mainly relating to advancepayments received and performance bonds and in the amount of € 334 million to Air Tanker group in the UK, a loan to Daher-Socata
SA in the amount of € 24 million and as well as a loan to OnAIR B.V. in the amount of € 23 million.

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Regarding the acquisition of 25% in DADC Luft- und Raumfahrt Beteiligungs AG, Munich (Germany) from Daimler AG, please refer toNote 4 “Acquisitions and Disposals”.
The following table discloses the related party transactions on a full EADS’ share as of 31 December 2010:
Sales of goods
and services
and otherincome in2010

Purchases ofgoods andservices andother expense in2010

Receivables
due as of
31 December
2010

1,365

102

1,021

6

2,665

Spanish government (SEPI)

53

0

24

0

221

Daimler AG

3

14

1

3

0

Lagardère group

0

0

0

0

15

Total transactions with shareholder

1,421

116

1,046

9

2,901

Total transactions with joint ventures

2,002

21

816

14

1,394

815

30

330

11

0

(In € million)

French government

Total transactions with associates

Other
Payables Liabilities/ Loansdue as ofreceived as of
31 December
31 December
2010
2010 (1)(1) Including European Governments refundable advances from the French and Spanish State.

As of 31 December 2010, EADS granted guarantees to the Spanish government in the amount of € 211 million mainly relating toadvance payments received and performance bonds and in the amount of € 325 million to Air Tanker group in the UK as well as aloan to Daher-Socata SA in the amount of € 24 million.
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:

2011

Compensation expense

PensionDefined benefit obligation (1)Pension expense (2)

-

-

3.0

2.9

0.6

17.0

32.0

3.1

(In € million)

Non-Executive Board Members
Executive Board Member

(3)

1.6

(4)

Other Executive Committee Members (5)
(1)
(2)
(3)
(4)
(5)

Amount of the net pension defined benefit obligation.
Aggregated amount of current service and interest costs related to the defined benefit obligation accounted for during fiscal year 2011.
Non-Executive Board Members in office as at 31 December 2011.
The Chief Executive Officer was the sole Executive Board Member in office as at 31 December 2011.
Executive Board Members in office as at 31 December 2011, including specific exceptional bonus if any and EADS NV compensation.

2010

Compensation expense

PensionDefined benefit obligation (1)(In € million)

Pension expense (2)Non-Executive Board Members (3)

1.7

-

-

Executive Board Member (4)

2.6

2.3

0.6

Other Executive Committee Members (5)

15.7

27.0

2.7

(1)
(2)
(3)
(4)
(5)

Amount of the net pension defined benefit obligation.
Aggregated amount of current service and interest costs related to the defined benefit obligation accounted for during fiscal year 2010.
Non-Executive Board Members in office as at 31 December 2010.
The Chief Executive Officer was the sole Executive Board Member in office as at 31 December 2010.
Executive Board Members in office as at 31 December 2010, including specific exceptional bonus if any and EADS NV compensation.

Additionally, performance units granted in 2011 to the Chief
Executive Ofﬁcer and to the other Executive Committee
Members represented 356,350 units.

For more information in respect of remuneration of Directors,
see “Notes to the Company Financial Statements – Note 11:
Remuneration”.

The amounts detailed above do neither comprise thetermination package nor the estimated cost of long-term
incentives granted to Executive Committee Members.

EADS has not provided any loans to / advances to / guarantees
on behalf of Directors, former Directors or Executive Committee
Members except for salary and reimbursement advances andan undertaking to potentially assume certain legal defence

92 I EADS FINANCIAL STATEMENTS 2011

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costs for certain of its Executive Committee Members in relation
with certain regulatory or judicial proceedings.
The Executive Committee Members are furthermore entitledto a termination indemnity when the departure results from adecision by the Company. The maximum termination indemnity
comprises 18 months of an annual total target salary.
The indemnity could be reduced pro rata or would even not beapplicable depending on age and date of retirement.

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Under the LTIP 2011, 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.
The Company grants the Members of the Executive Committee
appropriate insurance coverage, in particular D&O insurance.
Executive Committee Members are also entitled to a company
car.

37. 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, ATR and since 2011 also including Signalis and Emiraje Systems) in aggregate:(In € million)

2011

2010

Non-current assets

564

528

3,049

2,989

490

437

Current liabilities

2,607

2,608

Revenues

1,876

1,783

154

144

Current assets
Non-current liabilities

Profit for the period

The Group’s proportional share in contingent liabilities of these joint ventures as of 31 December 2011 amounts in aggregate to€ 391 million (2010: € 333 million).

38. Earnings per Share
Basic earnings per share – Basic earnings per share are calculated by dividing proﬁt (loss) for the period attributable to equity
owners of the parent (Net income (loss)) by the weighted average number of issued ordinary shares during the year, excluding
ordinary shares purchased by the Group and held as treasury shares.
2011

Profit (loss) for the period attributable to equity owners of the parent(Net income (loss))
Weighted average number of ordinary shares
Basic earnings (losses) per share

Diluted earnings per share – 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. After the end of the vesting period of the performanceand restricted shares granted under the 8th tranche, the

2010

2009

€ 1,033 million€ 553 million€ (763) million

812,507,288

810,693,339

809,698,631€ 1.27€ 0.68€ (0.94)

Group’s only remaining category of dilutive potential ordinary
shares is stock options. In 2011, the average share price of
EADS exceeded the exercise price of the 4th and the 5th stock
option plan (in 2010: the 5th stock option plan, in 2009: noneof the stock option plans). Hence, 1,194,624 shares related to

EADS FINANCIAL STATEMENTS 2011 I 93

2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.5 OTHER NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)

1stock options (in 2010: 242,591 shares, in 2009: no shares)
were considered in the calculation of diluted earnings per
share. Since the average price of EADS shares during 2009
exceeded the price for performance and restricted shares,

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 share

2

3

4

5

4

Back to Contents

1,491,482 shares related to performance and restricted shares
granted under the 8th tranche were considered in the calculationof the year 2009.

2011

2010

2009

€ 1,033 million€ 553 million€ (763) million

813,701,912

810,935,930

811,190,113€ 1.27€ 0.68€ (0.94)

39. Number of Employees
The number of employees at 31 December 2011 is 133,115 as compared to 121,691 at 31 December 2010.

40. Events after the Reporting Date
On 15 February 2012, Airbus, EADS EFW and ST Aerospace, asubsidiary of ST Engineering based in Singapore (Singapore),signed a Heads of Agreement for a strategic partnership todevelop the A330 Passenger-to-Freighter (P2F) conversion
programme. For this conversion programme, ST Aerospace is
expected to lead the A330P2F engineering development, while
EADS EFW will subsequently be responsible for this conversion
programme during the industrial phase and will undertake most

94 I EADS FINANCIAL STATEMENTS 2011of the conversions at its facilities in Dresden, Germany. Under
the agreement it is also planned that EADS EFW will become
the European center for ST Aerospace’s global maintenance,
repair and overhaul operations.
These Consolidated Financial Statements have been authorisedfor issuance by the Board of Directors on 7 March 2012.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.6 APPENDIX “INFORMATION ON PRINCIPAL INVESTMENTS” — CONSOLIDATION SCOPE

1

2

3

4

5

4

Back to Contents

2.6 Appendix “Information on Principal
Investments” — Consolidation Scope
2011

%

2010

%

Company

Head officeF

100.00F

100.00AD Grundstückgesellschaft mbH & Co. KG

Pullach i. Isartal (Germany)F

100.00F

100.00Aerolia S.A.S.

Toulouse (France)F

100.00F

100.00AFS Cayman 11 Ltd.

Cayman Islands

F

100.00F

100.00

AIFS (Cayman) Ltd.

Cayman Islands

F

100.00F

100.00

AIFS Cayman Liquidity Ltd.

Cayman Islands

F

100.00F

100.00

AIFS Leasing Company Ltd.

Dublin (Ireland)

F

70.00

F

70.00

Airbus (Beijing) Engineering Centre Company Limited

Beijing (China)

Airbus (China) Enterprise Management& Services Company Ltd.

Beijing (China)

Airbus Commercial

F

100.00F

100.00F

100.00Airbus (TIANJIN) Delivery Center Ltd.

Tianjin (China)

P

51.00

P

51.00

Airbus (TIANJIN) Final Assembly Company Ltd.

Tianjin (China)

P

51.00

P

51.00

Airbus (TIANJIN) Jigs & Tools Company Ltd.

Tianjin (China)F100.00F

100.00Airbus Americas Sales, Inc.

Herndon, VA (USA)F

100.00F

100.00Airbus Americas Customer Services, Inc.

Herndon, VA (USA)F

100.00F

100.00Airbus Americas Engineering, Inc.

Herndon, VA (USA)F

100.00F

100.00Airbus Americas, Inc.

Herndon, VA (USA)F

100.00F

100.00Airbus China Ltd.

Hong Kong (China)F100.00F

100.00Airbus Corporate Jet Centre S.A.S. (ACJC)

Toulouse (France)F

100.00Airbus Denmark Holdings ApS

Copenhagen (Denmark)F

100.00F

100.00Airbus Financial Service Unlimited

Dublin (Ireland)

E

50.00

E

50.00

Airbus Freighter Conversion GmbH

Dresden (Germany)F

100.00F

100.00Airbus Invest

Blagnac (France)

Airbus Invest II S.A.S.

Blagnac (France)

100.00Airbus Operations GmbH

Hamburg (Germany)F

100.00F

100.00FF

100.00F

100.00Airbus Operations Ltd.

Filton (United Kingdom)F

100.00F

100.00Airbus Operations S.A.S.

Toulouse (France)F

100.00F

100.00Airbus Operations S.L.

Madrid (Spain)F

100.00Airbus Prosky S.A.S.

Blagnac (France)F

100.00F

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

Pullach i. Isartal (Germany)F

100.00F

100.00Airbus S.A.S

Blagnac (France)F

100.00F

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

Blagnac (France)

E

18.18

E

18.18

Aviateur Capital Ltd.

Dublin (Ireland)

F

100.00F

100.00Aviateur Finance Ltd.

Dublin (Ireland)

F

100.00F

100.00Aviateur International Ltd.

Dublin (Ireland)

F

100.00F

100.00Aviateur Leasing Ltd.

Dublin (Ireland)Blue Sky Alliance GmbH

Kaltenkirchen (Germany)

E

33.33

F

100.00F

100.00CIMPA GmbH

Hamburg (Germany)F

100.00F

100.00CIMPA Ltd.

Bristol (United Kingdom)F

100.00F

100.00CIMPA S.A.S.

Blagnac (France)

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

EADS FINANCIAL STATEMENTS 2011 I 95

2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.6 APPENDIX “INFORMATION ON PRINCIPAL INVESTMENTS” — CONSOLIDATION SCOPE

1

2011

%

2010

%

F

100.00FF

100.00

2

3

4

5

4

Back to Contents

Company

Head office100.00CTC GmbH

Stade (Germany)F

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

Augsburg (Germany)
Dresden (Germany)F

100.00F

100.00Elbe Flugzeugwerke GmbH

P

50.00

P

50.00

Hua-Ou Aviation Support Centre Limited

Beijing (China)

P

50.00

P

50.00

Hua-Ou Aviation Training Centre Limited

Beijing (China)F100.00IFR France S.A.S.

Colomiers (France)F

100.00Metron Aviation, Inc.

Dulles, VA (USA)F

100.00Metron Holdings, Inc.

Dulles, VA (USA)

E

30.05

F

74.90

F

100.00F

100.00F

E

OnAIR N.V.

Amsterdam (Netherlands)

PFW Aerospace AG

Speyer (Germany)

Premium AEROTEC GmbH

Augsburg (Germany)

Satair A/S

Kastrup (Denmark)100.00

Satair China

Beijing (China)F100.00

Satair Pte Ltd.

SingaporeF

100.00

Satair UK Ltd.

Heston (United Kingdom)F

100.00

Satair USA, Inc.

Atlanta, GA (USA)F

100.00

E

29.50

F

F
F

30.04
100.00100.00100.00Star Real Estate S.A.S.

Toulouse (France)

Telair International Services Pte Ltd.

Singapore (Singapore)

Total Airline Service Company Dubai (United Arab Emirates)

Additionally consolidated are 28 SPEs.
Airbus Military
F

90.00

F

90.00

Airbus Military S.L.

Madrid (Spain)

E

40.00

E

40.00

AirTanker Holdings Ltd.*

London (United Kingdom)F

100.00F

100.00EADS CASA North America, Inc

Chantilly, VA (USA)F

100.00F

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

Madrid (Spain)

F

78.54

F

78.54

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, TX (USA)

F

60.00

F

100.00F

100.00F

100.00

F

90.00

F

F

90.00

F

100.00F

Eurocopter

American Eurocopter LLC

Dallas, TX (USA)Australian Aerospace Composites Pty Ltd.

Sydney (Australia)

Australian Aerospace Ltd.

Bankstown (Australia)

EADS Seca S.A.S.

Le Bourget (France)

90.00

Eurocopter Japan Co. Ltd.

Tokyo (Japan)

F

90.00

Eurocopter Japan RG Co. Ltd.

Tokyo (Japan)

F

100.00EIP Holding Pty. Ltd.

Bankstown (Australia)

75.00

F

75.00

Eurocopter South East Asia Pte. Ltd.

Singapore (Singapore)F

100.00F

100.00F

100.00F

100.00F

100.00F

100.00F

100.00F

100.00F

100.00F

100.00Eurocopter España S.A.

Madrid (Spain)F

100.00F

100.00Eurocopter Financial Services Ltd.

Dublin (Ireland)

F

100.00F

100.00Eurocopter Holding S.A.

Paris (France)F

100.00Eurocopter Canada Ltd.

Ontario (Canada)

Eurocopter de Mexico Planta Queretaro S.A. de C.V.

Queretaro (Mexico)

Eurocopter de Mexico S.A.

Mexico D.F. (Mexico)

Eurocopter Deutschland GmbH

Donauwörth (Germany)

Eurocopter Deutschland Real Estate GmbH & Co. KG

Pullach i. Isartal (Germany)

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

96 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.6 APPENDIX “INFORMATION ON PRINCIPAL INVESTMENTS” — CONSOLIDATION SCOPE

4Back to Contents

Company

Head office

Eurocopter International Services Ltd.

Dublin (Ireland)

Eurocopter Japan T&E Co. Ltd.

Osaka (Japan)

Eurocopter Malaysia Sdn Bhd

Subang Selongor (Malaysia)

1

2011

%

F

100.00

F

90.00

F

100.00

F

2

3

4

5

2010

%

F

54.00

95.00

F

100.00Eurocopter S.A.S.

Marignane (France)F

100.00F

100.00Eurocopter South Africa Pty. Ltd.

Lanseria (South Africa)

F

100.00F

100.00Eurocopter Training Services S.A.S

Marignane (France)F

100.00Eurocopter UK Ltd.

Oxford (United Kingdom)

F

85.66

Itajuba (Brazil)

F

85.66

Helibras - Helicopteros do Brasil S.A.

F

50.00

Heliescuela S.A.P.I. de C.V.

Mexico D.F. (Mexico)

E

25.00

E

25.00

HFTS Helicopter Flight Training Services GmbH

Hallbergmoos (Germany)F

100.00F

100.00

Korean Helicopter Development Support Ltd.

Sacheon-si (South Korea)

F

100.00The Sigma Aerospace Pension Trustee Ltd.

Croydon (United Kingdom)F

100.00

Vector Aerospace (UK-Holdings) Ltd.

Aberdeen (United Kingdom)F

100.00

Vector Aerospace Africa (PTY) Ltd.

Lanseria (South Africa)

F

100.00

Vector Aerospace Corporation

Toronto (Canada)F

100.00

Vector Aerospace Engine Services UK Ltd.

Croydon (United Kingdom)F

100.00

Vector Aerospace Engine Services-Atlantic, Inc.

Toronto (Canada)

F

67.70

Vector Aerospace Helicopter Services California, Inc.

Sacramento, CA (USA)F

100.00

Vector Aerospace Helicopter Services, Inc.

Toronto (Canada)F

100.00

Vector Aerospace Holdings Ltd.

Toronto (Canada)F

100.00

Vector Aerospace International Ltd.

Gosport (United Kingdom)F

100.00

Vector Aerospace USA Holdings, Inc.

Las Vegas, NV (USA)F

100.00

Vector Aerospace USA, Inc.

Montgomery, AL (USA)F

100.00

Vector Holding S.A.S.

Marignane (France)

F

25.00

Vector-Hawk Aerospace LLC

Sacramento, CA (USA)

E

24.01

Advanced Lithium Systems Europe S.A.

Athens (Greece)

CassidianF

100.00F

100.00Apsys S.A.

Suresnes (France)

E

14.70

E

14.70

Atlas Defence Technology SDN.BHD

Kuala Lumpur (Malaysia)

P

49.00

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(United Kingdom)

P

49.00

P

49.00

Atlas Elektronik UK Ltd.

Newport, Wales(United Kingdom)

P

49.00

P

49.00

Atlas Hydrographic GmbH

Bremen (Germany)

P

49.00

P

49.00

Atlas Maridan ApS

Horsholm (Denmark)

P

49.00

P

49.00

Atlas Naval Engineering Company

Kyungnam (South Korea)

P

49.00

P

49.00

Atlas Naval Systems Malaysia SDN.BHD.

Kuala Lumpur (Malaysia)

P

49.00

P

49.00

Atlas North America LLC

Virginia Beach, VA (USA)

F

43.89

F

43.89

Aviation Defense Service S.A.

Saint-Gilles (France)
Aschau/Inn (Germany)

P

37.50

P

37.50

Bayern-Chemie Gesellschaft
für flugchemische Antriebe mbH

F

100.00F

100.00Cassidian Aviation Training Services S.A.S.

Paris (France)F

100.00F

100.00Cassidian Belgium N.V.

Oostkamp (Belgium)

F

100.00F

100.00Cassidian Communications GmbHUlm (Germany)F

100.00F

100.00Cassidian Communications, Inc.

Temecula, CA (USA)

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

EADS FINANCIAL STATEMENTS 2011 I 97

2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.6 APPENDIX “INFORMATION ON PRINCIPAL INVESTMENTS” — CONSOLIDATION SCOPE

1

2

3

4

5

4

Back to Contents

2011

%

2010

%

Company

Head officeF

100.00F

100.00Cassidian Finland Oy

Helsinki (Finland)

F

100.00F

100.00Cassidian Ltd.

Newport, Wales(United Kingdom)F

100.00F

100.00Cassidian Ltd. - Holding

Newport, Wales(United Kingdom)F

100.00F

100.00Cassidian Real Estate Manching GmbH & Co. KG

Pullach i. Isartal (Germany)

100.00Cassidian Real Estate Ulm/Unterschleissheim
GmbH & Co. KG

Pullach i. Isartal (Germany)
Elancourt (France)F

100.00FF

100.00F

100.00Cassidian S.A.S.

F

100.00F

100.00Cassidian Solutions S.A.U.

Madrid (Spain)
Wimborne, Dorset(United Kingdom)F

100.00F

100.00Cassidian Test & Services Ltd.

F

100.00F

100.00Cassidian Test & Services S.A.S.

Velizy (France)

E

19.60

E

19.60

CybiCOM Atlas Defence Pty. Ltd.

Umhlanga Rocks(South Africa)

F

100.00F

100.00Dornier Consulting GmbHFriedrichshafen (Germany)F

100.00F

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

Madrid (Spain)F

100.00F

100.00EADS Defence and Security Saudi Ltd.

Riyadh Olaya District(Saudi Arabia)

F

100.00F

100.00EADS Deutschland GmbH (Unit: Cassidian)

Ottobrunn (Germany)F

100.00F

100.00EADS Operations & Services UK Ltd.

Newport, Wales(United Kingdom)F

100.00F

100.00EADS Secure Networks S.A.S.

Elancourt (France)F

100.00F

100.00EADS Telecom Mexico SA de CV

Mexico D.F. (Mexico)

P

49.00

Emiraje Systems LLC

Abu Dhabi(United Arab Emirates)

E

30.00

E

ESG Elektroniksystem- und Logistikgesellschaft GmbH

Munich (Germany)

E

24.50

E

24.50

ET Marinesysteme GmbH

Wilhelmshaven (Germany)F

100.00F

100.00Fairchild Controls Corporation

Frederick, MD (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.S.

Castres (France)

30.00

F

87.40

E

45.00

Grintek Ewation Pty. Ltd.

Pretoria (South Africa)

P

49.00

P

49.00

Hagenuk Marinekommunikation GmbH

Flintbek (Germany)F

100.00IFR France S.A.

Blagnac (France)

P

37.50

P

37.50

LFK – Lenkflugkörpersysteme GmbH

Schrobenhausen (Germany)

P

50.00

P

50.00

Maîtrise d’Oeuvre Système S.A.S.

Issy les Moulineaux (France)

P

37.50

P

37.50

E

49.00

E

49.00

P

37.50

Matra Électronique S.A.S. Le Plessis Robinson (France)
Matrium GmbH

Karlsruhe (Germany)

MBDA España S.L.

Madrid (Spain)

P

37.50

P

37.50

MBDA France S.A.S.

Velizy (France)

P

75.00

P

75.00

MBDA Holding S.A.S.

Velizy (France)

P

37.50

P

37.50

MBDA International Ltd. Stevenage (United Kingdom)

P

37.50

P

37.50

MBDA Italy SpA

Roma (Italy)

P

37.50

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 S.A.

Velizy (France)

P

37.50

P

37.50

MBDA Treasury Ltd.

Jersey (United Kingdom)

P

37.50

P

37.50

P

37.50

P

37.50

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

98 I EADS FINANCIAL STATEMENTS 2011

MBDA UK Ltd. Stevenage (United Kingdom)
MBDA, Inc.

Westlack, CA (USA)NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.6 APPENDIX “INFORMATION ON PRINCIPAL INVESTMENTS” — CONSOLIDATION SCOPE

1

2011

%

2

3

4

4

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Company

Head office

Helsinki (Finland)

5

%

2010

E

26.80

E

26.80

Patria Oyj

F

80.00

F

80.00

Pentastar S.A.

Paris (France)
Saint-Médard-en-Jalles(France)

E

18.75

E

18.75

Roxel S.A.

P

79.60

P

49.00

Signalis GmbH

Bremen (Germany)

P

79.60

Signalis Holding GmbH

Unterschleißheim (Germany)

P

79.60

F

100.00Signalis S.A.S.

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)
Schrobenhausen (Germany)

P

37.50

P

37.50

TDW - Ges. für verteidigungstechnische
Wirksysteme GmbH

E

50.00

E

50.00

United Monolithic Semiconductors Holding*Orsay (France)

F

90.00

F

90.00

UTE CASA y Aeronautica industrial S.A.

Madrid (Spain)F

100.00F

100.00Astrium GmbH (Unit: Satellites)

Munich (Germany)F

100.00F

100.00Astrium GmbH (Unit: Space Transportation)

Munich (Germany)F

100.00F

100.00Astrium Holding S.A.S.

Paris (France)F

100.00F

100.00F

100.00F

100.00F

100.00F

100.00Astrium S.A.S. (Unit: Satellites)

Toulouse (France)F

100.00F

100.00Astrium S.A.S. (Unit: Services)

Paris (France)F

100.00F

100.00Astrium S.A.S. (Unit: Space Transportation)

Les Mureaux (France)F

100.00F

100.00Astrium Services GmbH

Ottobrunn (Germany)F

100.00F

100.00Astrium Services UK Ltd. Stevenage (United Kingdom)

F

98.86

F

98.86

Axio-Net GmbHHannover (Germany)

F

54.40

F

54.40

Beijing Spot Image Co Ltd.

Beijing (China)F100.00F

100.00Computadoras, Redes e Ingenieria SA (CRISA)

Madrid (Spain)

F

99.99

F

99.99

DMC International Imaging Ltd.

Surrey (United Kingdom)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

100.00GPT Special Project Management Ltd.

Riyadh (Saudi Arabia)

F

77.70

E

25.58

I-Cubed (I3C)

Fort Collins, CL (USA)F

100.00F

100.00Imass Holding Limited Group

Newcastle (United Kingdom)F

100.00F

100.00Imass Ltd.

Newcastle (United Kingdom)F

100.00F

100.00

Infoterra GmbHFriedrichshafen (Germany)F

100.00F

100.00

Infoterra Ltd.

Leicester (United Kingdom)F

100.00

Infoterra S.A.S.

Toulouse (France)F

100.00Jena-Optronik GmbH

Jena (Germany)

Marlink AS

Lysaker (Norway)

Astrium

Astrium Ltd. (Unit: Satellites) Stevenage (United Kingdom)
Astrium Ltd. (Unit: Services) Stevenage (United Kingdom)F

100.00F

100.00F

100.00F

100.00F

100.00Marlink KK Ltd. (Japan)

Tokyo (Japan)

F

100.00Marlink Pte Ltd. (Singapore)

Singapore (Singapore)F

100.00Marlink S.A.

Brussel (Belgium)

F

100.00Marlink, Inc.

Rockville, MD (USA)F

100.00Marlink FZ LLC (Dubai) Dubai (United Arab Emirates)
Marlink Hellas MEPE

F

100.00Athen (Greece)

Matra Marconi Space UK Ltd. Stevenage (United Kingdom)

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

EADS FINANCIAL STATEMENTS 2011 I 99

2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IFRS)
2.6 APPENDIX “INFORMATION ON PRINCIPAL INVESTMENTS” — CONSOLIDATION SCOPE

1

2010

%

F

74.90

2

3

4

5

4

Back to Contents

2011

%

F

100.00

F

74.90

F

100.00Mobsat Holding 1BV

Amsterdam (Netherlands)

F

100.00Mobsat Holding 2BV

Amsterdam (Netherlands)

F

100.00Mobsat Holding Norway AS

Lysaker (Norway)

F

100.00Mobsat Holding US Corp.

Rockville, MD (USA)F

100.00Mobsat Group Holding S.A.R.L.

Munsbach (Luxembourg)F

100.00

MobSat S.A.S.

Paris (France)

Nahuelsat S.A.

Buenos Aires (Argentina)

F

75.10

ND SatCom Defence GmbH

Immenstaad (Germany)

F

75.10

ND Satcom GmbH

Immenstaad (Germany)

F

75.10

ND SatCom Products GmbH

Immenstaad (Germany)

F

75.10

ND SatCom Satellite Commuication
Systems (Beijing) Co. Ltd.

Beijing (China)

E

57.10

Company

Head office

MCG Marlink Comm Gmbh

Hamburg (Germany)

MilSat Services GmbH

Bremen (Germany)

F

75.10

F

75.10

ND SatCom ZFE Dubai (United Arab Emirates)

F

100.00F

100.00

Paradigm Secure Communications Ltd. Stevenage (United Kingdom)F

100.00F

100.00

Paradigm Services Ltd. Stevenage (United Kingdom)

F

89.98

F

89.98

Sodern S.A.

Limeil Brevannes (France)

F

69.23

F

69.23

Spot Asia Pte Ltd.

Singapore (Singapore)

F

98.91

F

98.91

Spot Image Brasil Servicios en Image

Sao Paulo (Brazil)

F

98.91

F

98.91

Spot Image Corporation, Inc.

Chantilly, VA (USA)

F

98.91

F

98.91

Spot Image S.A.S.

Toulouse (France)

F

98.90

F

98.90

Spot Imaging Services Pty. Ltd.

Weston Creek (Australia)

F

99.99

F

99.99

Surrey Satellite Investments Ltd.

Surrey (United Kingdom)

F

99.99

F

99.99

Surrey Satellite Services Ltd.

Surrey (United Kingdom)

F

99.99

F

99.99

Surrey Satellite Technology Holdings, Inc.

Delaware (USA)

F

99.99

F

99.99

Surrey Satellite Technology Ltd.

Surrey (United Kingdom)

F

99.99

F

99.99

Surrey Satellite Technology US LLC

Delaware (USA)F

100.00TD Com S.A.S.

Choisy Le Roi (France)F

100.00F

100.00TESAT-Spacecom Geschäftsführung GmbH

Backnang (Germany)F

100.00F

100.00TESAT-Spacecom GmbH & Co. KG

Backnang (Germany)

F

98.91

F

50.44

Tokyo Spot ImageTokyo (Japan)

F

100.00Vizada AS

Lysaker (Norway)

F

100.00Vizada B.V. ‘s-Gravenhage (Netherlands)

F

100.00FFND Satcom, Inc.

Richardson, TX (USA)Vizada GmbH

Köln (Germany)

100.00Vizada, Inc.

Rockville, MD (USA)100.00Vizada Network Slovakia S.r.o.

Bratislava (Slovakia)

F

100.00Vizada Networks AS

Holmestrand (Norway)

F

100.00Vizada Networks B.V.

Hoofddorp (Netherlands)

F

65.00

Vizada Networks Ltd.

Dar es Salaam (Tansania)

F

100.00Vizada S.A.S.

Paris (France)F

100.00Vizada Services LLC

Rockville, MD (USA)Singapore (Singapore)

Other Businesses
P

50.00

P

50.00

ATR Eastern Support Pte. Ltd.

P

50.00

P

50.00

ATR G.I.E.

Blagnac (France)

P

50.00

P

50.00

ATR India Customer Support Pte. Ltd.

Bangalore (India)

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

100 I EADS FINANCIAL STATEMENTS 2011

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2.6 APPENDIX “INFORMATION ON PRINCIPAL INVESTMENTS” — CONSOLIDATION SCOPE

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Company

Head office

5

2011

%

2010

P

50.00

P

50.00

ATR International S.A.S.

Blagnac (France)

P

50.00

P

50.00

ATR North America, Inc.

Dulles, VA (USA)

P

50.00

ATR North American Training Center, Inc.

Montreal (Canada)

P

50.00

ATR South African Training Center (Proprietary) Ltd.

Illovo (South Africa)

P

50.00

P

ATR Training Center S.A.R.L.

Blagnac (France)

P

50.00

P

50.00

ATRiam Capital Ltd.

Dublin (Ireland)

F

100.00F

100.00Composites Aquitaine S.A.

Salaunes (France)F

100.00F

100.00Composites Atlantic Ltd.

Halifax (Canada)

E

30.00

E

30.00

Daher - Socata S.A.*

Louey (France)F

100.00F

100.00EADS ATR S.A.

Colomiers (France)F

100.00EADS North America Defense Security
Systems Solutions, Inc.

San Antonio, TX (USA)F

100.00EADS North America, Inc.

Arlington, VA (USA)F

100.00EADS Seca S.A.S.

Le Bourget (France)F

100.00F

100.00F

100.00F

100.00F

100.00

%

2

50.00

EADS Sogerma S.A.

Mérignac (France)

EADS Supply Services, Inc.

Rockville, MD (USA)F

100.00

Maroc Aviation S.A.

Casablanca (Morocco)F

100.00Noise Reduction Engineering B.C.

Washington, D.C. (USA)Aero Reassurance

Luxembourg (Luxembourg)

Headquarters
F

100.00F

100.00F

100.00F

100.00Aeroassurance

Paris (France)

99.73

AL Objekt Taufkirchen GrundstücksVerwaltungsgesellschaft mbH & Co. KG

Grünwald (Germany)
Munich (Germany)

F

99.73

F

F

100.00F

75.00

DADC Luft- und Raumfahrt Beteiligungs AG

E

46.32

E

46.32

Dassault Aviation*

Paris (France)F

100.00F

99.12

Dornier GmbH – Zentrale

Friedrichshafen (Germany)F

100.00F

100.00EADS CASA France

Paris (France)F

100.00F

100.00EADS CASA S.A. (Unit: Headquarters)

Madrid (Spain)F

100.00F

100.00EADS Deutschland GmbH (Unit: Headquarters)

Munich (Germany)F

100.00F

100.00EADS Finance B.V.

Amsterdam (Netherlands)

F

100.00F

100.00EADS France Headquarters

Paris (France)F

100.00F

100.00EADS Management Service GmbH

Munich (Germany)F

100.00F

100.00EADS North America Holdings, Inc.

Herndon, VA (USA)F

100.00F

99.12

EADS Real Estate Dornier Grundstücke GmbH & Co. KG

Taufkirchen (Germany)F

100.00F

100.00EADS Real Estate Taufkirchen GmbH & Co. KG

Pullach (Germany)F

100.00F

100.00EADS UK Ltd.

London (United Kingdom)F

100.00F

100.00Manhattan Beach Holding Company

Herndon, VA (USA)F

100.00F

100.00

Matra Aerospace, Inc.

Herndon, VA (USA)F

100.00F

100.00

Matra Défense

Velizy (France)F

100.00F

100.00

Matra Holding GmbH

Kehl (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 EADS N.V.
* Regarding associated investments, only the parent company is stated in this list.

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Auditors’ report on the Consolidated
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To: The EADS N.V. Shareholders:

Report on the Consolidated Financial Statements
We have audited the accompanying Consolidated Financial Statements 2011 which are part of the ﬁnancial statements of European
Aeronautic Defence and Space Company EADS N.V., Amsterdam, and comprise the consolidated statement of ﬁnancial position
as at 31 December 2011, the consolidated statements of income, comprehensive income, cash ﬂow and changes in equity forthe year then ended and notes, comprising a summary of the signiﬁcant accounting policies and other explanatory information.

Management’s responsibility
Management 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. Furthermore, management is responsible for such internal control as it determines is necessary to enable the preparation of
the Consolidated Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility
Our responsibility is to express an opinion on these Consolidated Financial Statements based on our audit. We conducted our audit
in accordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements
and plan and perform the audit to obtain reasonable assurance about whether the Consolidated Financial Statements are free frommaterial 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 of material
misstatement of the Consolidated Financial Statements, whether due to fraud or error. In making those risk assessments, theauditor 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.

OpinionIn 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 2011 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.

104 I EADS FINANCIAL STATEMENTS 2011

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Report on other legal and regulatory requirements
Pursuant to the legal requirements under Section 2:393 sub 5 at e and f of the Netherlands Civil Code, we have no deﬁciencies
to report as a result of our examination whether the report of the Board of Directors, to the extent we can assess, has been
prepared in accordance with Part 9 of Book 2 of this Code, and if the information as required under Section 2:392 sub 1 at b-hhas been annexed. Further, we report that the report of the Board of Directors, to the extent we can assess, is consistent with theConsolidated Financial Statements as required by Section 2:391 sub 4 of the Netherlands Civil Code.
Utrecht, 7 March 2012

Rotterdam, 7 March 2012

KPMG Accountants N.V.

Ernst & Young Accountants LLP

J.C.M. van Rooijen RA

C.T. Reckers RA

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Company Financial Statements
Balance Sheet of the Company Financial Statements

108

Income Statement of the Company Financial Statements

109

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Balance Sheet of the Company Financial Statements(In € million)

AssetsNote

At 31 December 2011

At 31 December 2010

Goodwill

2

4,354

4,354

Financial fixed assets

2

9,802

7,960

Non-current securities

4

Fixed assets

7,103

5,172

21,25917,486

6,362

4,874

Non-fixed assets
Receivables and other assets

3

Current securities

4

4,140

5,756

Cash and cash equivalents

4

3,394

3,199

13,896

13,82935,15531,315

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

820

816

Share premium

7,519

7,645

Revaluation reserves(1,207)(989)

Legal reserves

3,544

3,532

Treasury shares

(113)

(112)

Retained earnings(2,746)(2,604)

Result of the year

1,033

553

8,850

8,841

Non-current liabilities
Financing liabilities

6

3,090

2,194

3,090

2,194

0

29

Current liabilities
Financing liabilities

7

Other current liabilities

7

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

108 I EADS FINANCIAL STATEMENTS 201123,215

20,251

23,21520,28035,15531,315COMPANY FINANCIAL STATEMENTS

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Income Statement of the Company Financial Statements(In € million)

Note

Income from investments
Other results
Net result

8

2011

2010

1,010

463

23

90

1,033

553

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Notes to the Company
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COMPANY FINANCIAL STATEMENTS

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Contents

1.

Basis of presentation

113

2.

Fixed assets

114

3.

Receivables and other assets

115

4.

Securities, Cash and cash equivalents

115

5.

Stockholders’ equity

115

6.

Non-current ﬁnancing liabilities

116

7.

Current liabilities

116

8.

Net income

116

9.

Financial instruments

10. Commitments and contingent liabilities

117
117

11. Remuneration

117

12. Employees

120

13. Related party transactions

120

14. Auditor Fees

120

Supplementary Information

121

Independent Auditors’ report

121

Other Supplementary Information

122

1.

Appropriation of result

122

2.

Subsequent events

122

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NOTES TO THE COMPANY FINANCIAL STATEMENTS

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1. Basis of presentation
1.1 General
EADS N.V., having its legal seat in Amsterdam, the Netherlands,
is engaged in the holding, coordinating and managing ofparticipations or other interests in and to ﬁnance and assume
liabilities, provide for security and/or guarantee debts of legal
entities, partnerships, business associations and undertakingsthat are involved in the aeronautic, defence, space and/or
communication industry or activities that are complementary,
supportive or ancillary thereto.
The company ﬁnancial statements are part of the 2011 ﬁnancial
statements of EADS N.V.
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 theIncome Statement is presented in abbreviated form.

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 resultfor its Company Financial Statements, EADS N.V. makes useof the option provided in section 2:362 (8) of the Netherlands

Civil Code. As from 2005, the Netherlands Civil Code allows
that the principles for the recognition and measurement ofassets 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 (herein referred to as EU-IFRS). Please
see Note 2 of the Consolidated Financial Statements for a
description of these principles.
Subsidiaries, over which signiﬁcant inﬂuence is exercised, arestated on the basis of the Net Asset Value.
The share in the result of participating interests consists of theshare of EADS N.V. in the result of these participating interests.
Results on transactions, where the transfer of assets andliabilities between EADS N.V. and its participating interests andmutually between participating interests themselves, are notincorporated insofar as they can be deemed to be unrealised.
Undistributed results from investments are included in the legal
reserves to the extent the Company cannot enforce dividend
distribution.

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2. Fixed assets
At the end of 2011, goodwill acquisition cost amounts to € 5,676 million (2010: € 5,676 million) and the cumulative amortization andimpairments to € 1,322 million (2010: € 1,322 million).
The movements in ﬁnancial ﬁxed assets are detailed as follows:(In € million)

Subsidiaries

Participations

Loans

Total

7,805

127

1,646

9,578

Balance at 31 December 2009
Additions

305

305

Redemptions

(102)

(102)

Share-based payments

43

Net income from investments

462

43
1

463

Actuarial gains/losses IAS 19

(32)

(32)

Dividends received

(182)

(182)

Translation differences/other changes(2,194)21

60(2,113)

Balance at 31 December 2010

5,902

149

1,909

7,960

1,625

1,735

(109)

(109)

Additions

110

Redemptions
Share-based payments

16

Net income from investments

1,004

Actuarial gains/losses IAS 19

(579)

16
6

1,010
(579)

Dividends received(75)

Translation differences/other changes

(252)

(6)

102

(156)

Balance at 31 December 2011

6,126

149

3,527

9,802

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 availablefor-sale securities measured at fair value and investments inassociated companies 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.
Signiﬁcant subsidiaries, associates and joint ventures are listed
in the Appendix “Information on principal investments” to theConsolidated Financial Statements.

114 I EADS FINANCIAL STATEMENTS 2011(75)

The loans provided to subsidiaries increased to € 2,981 million(2010: € 1,476 million) and the loans provided to participations
increased to € 63 million (2010: € 44 million). The increase ofloans is mainly driven by loans provided to the subsidiaries
Airbus SAS, EADS Astrium NV and Astrium Holding SAS.
The item redemptions mainly reﬂects the repayment of a loan
provided to EADS Astrium NV. An amount of € 2,916 million
has a maturity between ﬁve and ten years and an amount of€ 361 million matures after ten years. On average, the interest
rate of the loans is 3.5%.

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3. Receivables and other assets(In € million)

2011

2010

Receivables from subsidiaries

5,907

4,619

455

255

6,362

4,874

Other assets
Total receivables and other assets

The receivables from subsidiaries include mainly receivables in connection with the cash pooling in EADS N.V.
Other assets include deferred tax assets amounting to € 20 million (2010: nil).
The receivables and other assets in the current year and in the previous year are 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 € 7,103 million (2010: € 5,172 million). For further
information please see Note 22 of the Consolidated Financial
Statements.

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

5. Stockholders’ equity(In € million)

Balance at 31 December 2009

Capital
stock

Share
premiums

Revaluation
reserves

Legal
reserves

TreasurysharesRetainedearnings

Result of
the yearTotal
equity

816

7,683

1,389

3,116

(109)

(1,597)(763)

10,535

Capital increase55Net income

553

Share-based payments

(43)

23

Transfer to legal reserves

239

Purchase of treasury shares(239)(2,378)177

Capital increase

816

7,645

(989)

3,532

4

59

(3)
(28)

Appropriation of result
Balance at 31 December 2010

(112)

(2,229)

(763)

763

(2,604)

553

1,033

Cash distribution

(178)
15

Transfer to legal reserves

86(7)

Others

7,519

15

(86)
(1)

(218)

(74)

(1,207)

3,544

(8)
(624)

Appropriation of result
820

1,033
(178)

Share-based payments

Purchase/sale of treasury shares

8,841
63

Net income

Balance at 31 December 2011

(20)

(3)

Others

553

(113)

(916)

553

(553)

(2,746)

1,033

8,850

EADS FINANCIAL STATEMENTS 2011 I 115

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NOTES TO THE COMPANY FINANCIAL STATEMENTS

1
For further information to the Stockholders’ equity, please see
Note 23 of the Consolidated Financial Statements.
As of 31 December 2011, the item “Revaluation reserves” relates
to € 566 million (2010: € 384 million) resulting from unrealized
positive fair values of securities classiﬁed as available-for-saleand fair values of cash ﬂow hedges, recognised directlyin equity with a negative amount of € 1,773 million (2010:€ 1,373 million negative fair values). The cash ﬂow hedges areincluded in “Subsidiaries”.
The legal reserves are related to EADS’ share in theundistributed results from investments for € 1,237 million (2010:€ 1,152 million), internally generated capitalised development
costs of € 947 million (2010: € 946 million) and € 1,360 million(2010: € 1,434 million) resulting from currency translation effects
of afﬁliated companies.

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The retained earnings include actuarial losses arising fromdeﬁned beneﬁt plans, recognised in equity, with an amount of€ 2,388 million (2010: € 1,781 million).
Pursuant to Dutch law, limitation exist relating to the distributionof stockholders’ equity with an amount of € 4,930 million(2010: € 4,732 million). The limitations relate to capital stockof € 820 million (2010: € 816 million) and to legal reserves of€ 3,544 million (2010: € 3,532 million). In 2011, unrealised gains
related to revaluation reserves with an amount of € 566 million(2010: 384 million) were not distributable. In general, gains
related to available-for-sale securities, fair values of cash ﬂow
hedges, currency translation effects of afﬁliated companies
and capitalised development costs reduce the distributable
stockholders’ equity.

The internally generated development costs reﬂect capitalised
development costs in the consolidated subsidiaries andare allocated to other legal reserves in accordance with
Article 2:389 paragraph 6 of the Dutch Civil Code.

6. Non-current ﬁnancing liabilities
The non-current ﬁnancing liabilities include a long-term loan,
granted by the European Investment Bank to EADS with anamount of US$ 1,142 million, a loan granted by EADS Finance
B.V. with an amount of € 1,493 million and an US$ 300 million

loan granted in 2011 by the Bank of Japan. In 2011, the loan
granted by the European Investment Bank increased by
US$ 721 million. For further details, please see Note 26 of theConsolidated Financial Statements.

7. Current liabilities
2011(In € million)

Financing liabilities

2010

0

29

Liabilities to subsidiaries

21,60918,651

Liabilities to participations

1,392

1,437

Other liabilities
Total

214

163

23,21520,280The ﬁnancing liability in 2010 of € 29 million related to a shareholder loan granted by SOGEADE. The loan was repaid in 2011.
The liabilities to subsidiaries comprise mainly liabilities in connection with the cash pooling in EADS N.V.

8. Net income
The net income in 2011 amounts to € 1,033 million (2010: net income of € 553 million).

116 I EADS FINANCIAL STATEMENTS 2011

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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

and conditions of the ﬁnancial instruments and the respective
fair values is provided in Note 34 of the Consolidated Financial
Statements.

10. Commitments and contingent liabilities
EADS N.V. issues guarantees on behalf of consolidated
companies with an amount of € 1,348 million. The commitmentsof these companies to third parties mainly relate to theiroperating business as described in Note 33 and Note 36 to theConsolidated Financial Statements. The Company is heading

a ﬁscal unity, which also includes EADS Finance B.V., EADS
Astrium N.V. and Dutch Space B.V. and therefore the Company
is several and jointly liable for income tax liabilities of the ﬁscal
unity as a whole.

11. 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 2011 and 2010 can be summarized as follows:

Non-Executive Members of the Board
2011

2010

Fixum

1,170,000

1,170,000

Fees

425,000

520,000

2011

2010

Base Salary

990,000

900,000

Annual Variable Pay

1,993,475

1,732,500(In €)

Executive Members of the Board(In €)

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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 2011*
Fixum
Attendance Fees(in €)(in €)

Directors’ remuneration related to 2010*
Fixum
Attendance Fees(in €)(in €)

Current Non-Executive Board Members*

Bodo Uebber

210,000

90,000210,000

120,000

Rolf Bartke

100,000

45,000100,000

50,000Dominique D’Hinnin

120,000

45,000120,000

60,000Juan Manuel Eguiagaray Ucelay

80,00040,00080,00060,000Arnaud Lagardère

100,000

30,000100,000

20,000Hermann-Josef Lamberti

130,000

35,000130,000

45,000Lakshmi N. Mittal

80,00030,00080,00040,000Sir John Parker

130,000

35,000130,000

45,000Michel Pébereau

100,000

35,000100,000

35,000Wilfried Porth
Total*

120,000

40,000120,000

45,0001,170,000

425,000

1,170,000

520,000

The Fixum related to 2010 was paid in 2011; the Fixum related to 2011 will be paid in 2012.

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
Directors’ remuneration in respect of 2011
Base Salary
Annual Variable Pay(in €)(in €)

Directors’ remuneration in respect of 2010
Base Salary
Annual Variable Pay(in €)(in €)

Executive Board Members

Louis Gallois

990,000

1,993,475

900,000

1,732,500

The bonus conditions are disclosed in the Board Report, chapter 4.3.1.2.
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 Jan 2011

Granted in2011

Exercisedduring 2011

As at
31 Dec 2011

Exercise
price (in €)Expirydate

67,50067,500--67,50025.65

Dec. 16, 2016

Louis Gallois
2006

Performance units plan
Number of performance units**:

Louis Gallois

118 I EADS FINANCIAL STATEMENTS 2011

Granted in2007

33,700Forfeited in 2011

33,700
Performance conditions were not met.
Consequently, the units are forfeited.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

1

Louis Gallois

Louis Gallois

Louis Gallois

Louis Gallois

**

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Granted in 2008

Vesting date

40,000

Vesting schedule is made up of 4 payments over two years:• 25% expected in May 2012
• 25% expected in November 2012
• 25% expected in May 2013
• 25% expected in November 2013

Granted in 2009

Vesting date

46,000

Vesting schedule is made up of 4 payments over two years:• 25% expected in May 2013
• 25% expected in November 2013
• 25% expected in May 2014
• 25% expected in November 2014

Granted in 2010

Vesting date

54,400

Vesting schedule is made up of 4 payments over two years• 25% expected in May 2014
• 25% expected in November 2014
• 25% expected in May 2015
• 25% expected in November 2015

Granted in 2011

Vesting date

51,400

Vesting schedule is made up of 4 payments over two years:• 25% expected in May 2015
• 25% expected in November 2015
• 25% expected in May 2016
• 25% expected in November 2016

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 andto the Group’s senior management, the number of outstanding
stock options amounted to 17,468,709 at 31 December 2011(2010: 22,898,099).
During the year 2011, none of the Executive Committee
Members, have exercised options granted under the various
EADS stock option plans. 18,000 options were exercised byformer Executive Board Directors. Exercises of options by
the EADS Executive Committee Members are disclosed on
the EADS internet website in accordance with the applicableregulations.

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 13,890,028 at
31 December 2011 (2010: 12,458,890).
The expense accounted for in 2011 for performance shares andperformance units granted to the Chief Executive Ofﬁcer was€ 1.1 million (2010: € 0.9 million for long-term incentive plans andstock options).
For further information on these various plans, please see
Note 35 of the consolidated IFRS ﬁnancial statements.

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 once they reach retirement age.
These rights can gradually increase to 60% after a second
term, usually after ten years of service in the EADS Executive
Committee. However, in order to reach the replacement ratioof 60% as mentioned before, the respective Member of the
Executive Committee must also have 12 years of Seniority
within the Group.
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 withnational regulations.
For the Chief Executive Ofﬁcer, the amount of the pension
deﬁned beneﬁt obligation (i.e. the book cash value) amounted
to € 2.9 million as of 31 December 2011, while the amount of
current service and interest cost related to his pension promise
accounted for the ﬁscal year 2011 represented an expense of€ 0.6 million. This obligation has been accrued in the ﬁnancial
statements.
EADS FINANCIAL STATEMENTS 2011 I 119

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NOTES TO THE COMPANY FINANCIAL STATEMENTS

1Other 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. The Company grants to the Members of
the Executive Committee appropriate insurance coverage, inparticular a Directors and Ofﬁcers liability insurance.

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The Chief Executive Ofﬁcer is entitled to a company car. The
value of his company car is € 24,120 (excluding VAT).
EADS has not provided any loans to/advances to/guarantees onbehalf of Directors.
For further information on the remuneration, please see Note 36of the Consolidated Financial Statements.

12. Employees
The number of persons employed by the Company at year end 2011 was 2 (2010: 2).

13. Related party transactions
An interest free loan was granted by Lagardère and the French State to EADS in 2007. The amount of € 29 million was repaid in 2011.

14. Auditor Fees
Services of Statutory Auditors and Members of their Network rendered to the Group for the ﬁnancial years 2011 and 2010:
KPMG Accountants N.V.
2011
Amount
in €K

5,675

Ernst & Young Accountants LLP

2010%Amount
in €K

70.0

5,710

2011
%

Amount
in €K

81.1

5,851

2010
%

Amount
in €K

%

69.2

4,493

70.8

Audit
Audit process, certification,
examination of individual andconsolidated accounts
Additional tasks

1,678

20.7

516

7.4

2,338

27.6

1,607

25.4

Sub-total

7,353

90.7

6,226

88.5

8,189

96.8

6,100

96.2

Legal, tax, employment

715

8.8

628

8.9

201

2.4

123

1.9

Information Technology

37

0.5

12

0.2

70

0.8

121

1.9

Other (to be specified if > 10% of
the fees for the audit)

6

0.1

172

2.4

0

0

Other services as relevant

Sub-total

758

9.3

812

11.5

271

3.2

244

3.8

Total

8,111

100.0

7,038

100.0

8,460

100.0

6,344

100.0

120 I EADS FINANCIAL STATEMENTS 2011

NOTES TO THE COMPANY FINANCIAL STATEMENTS
SUPPLEMENTARY INFORMATION

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Supplementary Information
Independent Auditors’ report
To: The EADS N.V. Shareholders:

Report on the Company Financial Statements
We have audited the accompanying company ﬁnancial statements 2011 which are part of the ﬁnancial statements of European
Aeronautic Defence and Space Company EADS N.V., Amsterdam, and comprise the Company balance sheet as at 31 December
2011, the Company proﬁt and loss account for the year then ended and the notes, comprising a summary of the accounting policies
and other explanatory information.

Management’s responsibility
Management is responsible for the preparation and fair presentation of the Company ﬁnancial statements and for the preparationof the report of the Board of Directors, both in accordance with Part 9 of Book 2 of the Netherlands Civil Code. Furthermore,management is responsible for such internal control as it determines is necessary to enable the preparation of the Company
ﬁnancial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility
Our responsibility is to express an opinion on these company ﬁnancial statements based on our audit. We conducted our audit inaccordance with Dutch law, including the Dutch Standards on Auditing. This requires that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about 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 2011 and of its result for the year then ended in accordance with Part 9 ofBook 2 of the Netherlands Civil Code.

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EADS FINANCIAL STATEMENTS 2011 I 121

NOTES TO THE COMPANY FINANCIAL STATEMENTS
OTHER SUPPLEMENTARY INFORMATION

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Report on other legal and regulatory requirements
Pursuant to the legal requirements under Section 2:393 sub 5 at e and f of the Netherlands Civil Code, we have no deﬁciencies toreport as a result of our examination whether the report of the Board of Directors, to the extent we can assess, has been preparedin accordance with Part 9 of Book 2 of this Code, and if the information as required under Section 2:392 sub 1 at b-h has beenannexed. Further, we report that the report of the Board of Directors, to the extent we can assess, is consistent with the Company
ﬁnancial statements as required by Section 2:391 sub 4 of the Netherlands Civil Code.
Utrecht, 7 March 2012

Rotterdam, 7 March 2012

KPMG Accountants N.V.

Ernst & Young Accountants LLP

J.C.M. van Rooijen RA

C.T. Reckers RA

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 of
Shareholders may dispose of a reserve only upon a proposalof the Board of Directors and to the extent it is permitted bylaw 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.

It will be proposed at the Annual General Meeting of
Shareholders that the net income of € 1,033 million as shown in
the income statements for the ﬁnancial year 2011 is to be added
to retained earnings and that a payment of a gross amount of€ 0.45 per share shall be made to the shareholders.

2. Subsequent events
For further information please see Note 40 of the Consolidated Financial Statements.

122 I EADS FINANCIAL STATEMENTS 2011

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EADS FINANCIAL STATEMENTS 2011 I 123

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9 mm

Photographs © by EADS: Airbus/Fixion - Astrium - Eurocopter/Deulin - Eurofighter/G.Lee
All rights reserved

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9 mm

EUROPEAN AERONAUTIC DEFENCE AND SPACE COMPANY EADS N.V.

FINANCIALSTATEMENTS 2011www.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

Financial Statements

In Spain
Avenida de Aragón 404
28022 Madrid – Spain

2011

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