EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

Year 2004 Report

Unaudited Condensed IFRS Consolidated
Financial Information of EADS N.V.
for the year 2004
Unaudited Condensed IFRS Consolidated Income Statements ...………………………….….......…2
Unaudited Condensed IFRS Consolidated Balance Sheets….…..………….……………...……....…3
Unaudited IFRS Consolidated Cash Flow Statements……………....…………….…….…………...…4
Unaudited Condensed IFRS Consolidated Statements of Changes in Shareholders’ Equity……5
Explanations to the Unaudited Condensed IFRS Consolidated Financial Statements as at
December 31, 2004….…….………………..…..……………...……………..……...…….………………..…5
1. The Company………………………………………………………………………………...….….…5
2. Changes in accounting policies…………………………………………………..……………..…5
3. Changes in the consolidation perimeter of EADS…………………………....…….….…….…6
4. Segment information………………………………..…………..……………………………………6
5. EBIT pre goodwill amortization and exceptional..………..…………………………..…………7
6. Significant profit and loss statement items……………………..………….………..……..……8
7. Significant balance sheet items…………………...…………………………………...…..………9
8. Significant cash flow items…………………………………………………………...…..……….10
9. Number of shares…………………………………………………………...……………….………10
10. Earnings per share……………………………………..………………………...….…..……….…10
11. Related party transactions ………………..…………………...……………...……………..……11
12. Number of employees ……………………………….……………………………..……....………11
13. Events after the balance sheet date………………………...……………………………………11

1

08.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

Unaudited Condensed IFRS Consolidated Income Statements

January 1 December 31, 2004
Revenues
Cost of sales
Gross margin
Selling, administrative & otherexpenses
thereof amortization of goodwill
and related impairment losses
Research and development
expenses
Other income
Income from operating activities
Financial result
Income taxes
Profit from ordinary activities
Minority interests
Net income

Earnings per share
Basic
DilutedM€
31,761-25,5106,251January 1 December 31, 2003

%
100
-80
20

M€
30,133-24,594
5,539-2,296-70Deviation

%
100
-82
18

M€
1,628
-916
712

%

-2,985

-10

689

-23

0

-567

-2

567

-100

-2,126-7-2,189

-7

63

-3

314

1

196

1

118

60

2,143
-246
-664
1,233
-203
1,030

7
-1
-2
4
-1
3

561
131
-474
218
-66
152

2
0
-1
1
0
1

1,582
-377
-190
1,015
-137
878

282
-288
40
466
208
578

5
4
13

€

€

€

1.29
1.28

0.19
0.19

1.10
1.09

2

08.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

Unaudited Condensed IFRS Consolidated Balance Sheets
December 31, 2004
M€

December 31, 2003%

M€

Deviation

%

M€

%

Fixed assets
Intangible assets

10,008

17

9,694

17

314

3

Property, Plant and Equipment

12,90522

11,448

21

1,457

13

Financial Assets

4,090

7

4,129

8

-39

-1

27,003

46

25,271

46

1,732

7

3,075

5

3,279

6

-204

-6

Non-fixed assets
Inventories
Trade receivables

4,406

8

4,001

7

405

10

Other receivables and other assets

11,10519

10,28019825

8Securities

466

1

468

1

-2

0

8,718

15

7,404

14

1,314

18

27,77048

25,432

47

2,338

9

2,543

4

2,724

5

-181

-7

951

2

951

2

0

0

58,267100

54,378

100

3,889

7

810

1

813

1

-3

0

Reserves

10,254

18

9,589

18

665

7

Accumulated other comprehensive
income

6,086

10

5,934

10

152

3

Treasury shares

-177

0

-187

0

10

-5

Cash and cash equivalents
Deferred taxes
Prepaid expenses
Total assets
Shareholders' equity
Capital Stock

16,97329

16,14929

824

5Minority interests

2,370

4

2,179

4

191

9

Provisions

8,573

15

8,726

16

-153

-2

5,126

9

4,767

9

359

8

Trade liabilities

5,860

10

5,117

9

743

15

Other liabilities

13,24023

11,318

21

1,922

17

Liabilities
Financial liabilities

24,22642

21,202

39

3,024

14

Deferred taxes

4,134

7

3,664

7

470

13

Deferred income

1,991

3

2,458

5

-467

-19

Total liabilities andshareholders' equity

58,267100

54,378

100

3,889

7

3

08.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

Unaudited IFRS Consolidated Cash Flow Statements

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

January 1 - December January 1 - December
31, 2004
31, 2003
M€
M€
1,030
152
203
66

1,621
-200
537

2,375
263
-138

-96
-237
2,155
5,013
-3,017
36
-100
0
-482
492
-656
74
-261
110
36
10
9
-3,749
474
-320
-64
43
-81
0
52

-274
246
2,019
4,709
-2,672
47
-92
32
-728
346
-279
8
-443
84
38
336
-152
-3,475
1,132
-240
-38
21
-31
8
852

-2
1,314

-83
2,003

7,404
8,718

5,401
7,404

In 2004, cash flow from changes in securities included in investing activities increased due tocomprised sales of securities by 10 M € (2003: sales of securities of 336 M €). These medium-term
securities are included in Securities as stated in the balance sheet.
As of December 31, 2004, EADS’ cash position (stated as cash and cash equivalents in the unaudited
consolidated cash flow statements) includes 687 M € (273 M € as of December 31, 2003) representing
the amount Airbus has deposited at BAe Systems. Additionally included are 602 M € and 613 M € asof December 31, 2004 and 2003, respectively, which represent EADS’ share in MBDA’s cash and408.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

cash equivalents, deposited at BAe Systems and Finmeccanica. These funds are available for EADS
upon demand.

Unaudited Condensed IFRS Consolidated Statements of Changes inShareholders’ Equity
M€
Equity as of January 1, 2004
Capital increase
Net income
Cash distribution to shareholders
Purchase of treasury shares
OCI
Equity as of December 31, 2004
Equity as of January 1, 2003
Capital increase
Net income
Cash distribution to shareholders
Purchase of treasury shares
OCI
Equity as of December 31, 2003

16,149
43
1,030
-320
-81
152
16,973
12,765
21
152
-240
-31
3,482
16,149Explanations to the Unaudited Condensed IFRS Consolidated Financial
Information as at December 31, 2004
1. The Company
The accompanying Unaudited Condensed Consolidated Financial Statements present theoperations of European Aeronautic Defence and Space Company EADS N.V. and its subsidiaries(“EADS” or the “Group”), a Dutch public limited liability company (naamloze vennootschap) legallyseated in Amsterdam (Le Carré, Beechavenue 130-132, 1119 PR, Schiphol-Rijk, The
Netherlands), and are prepared and reported in Euros (“€”). EADS’ core business is the
manufacturing of commercial aircraft, civil helicopters, commercial space launch vehicles, missiles,
military aircraft, satellites, defence systems, defence electronics and rendering of services related
to these activities.
2. Change in accounting policies
End of March 2004, the IASB completed Phase I of its ongoing Business Combinations Project
and adopted new IFRS 3 “Business Combinations”, superseding IAS 22 “Business Combinations”,
as well as revised Standards IAS 36 “Impairment of Assets” and IAS 38 “Intangible Assets”. EADS
decided to early adopt IFRS 3, revised IAS 36 and IAS 38 and to apply these standards as ofJanuary 1, 2004 mainly due to the abolishment of goodwill amortization. Consequently, EADS
changed its accounting policies regarding the accounting for impairment testing, intangible assets
and business combinations with an agreement date after December 31, 2003. This has been doneprospectively in accordance with transitional provisions required by IFRS 3, IAS 36 and IAS 38.

508.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

Until December 31, 2003, goodwill was amortized on a straight line basis over a period ranging
from five to 20 years and assessed for an indication of impairment at each balance sheet date.
Starting with January 1, 2004, any goodwill acquired in a business combination irrespective ofwhether recognized before or after December 31, 2003 has no longer been amortized but tested
annually for impairment as well as whenever there are indications of impairment. Same rule
applies to any goodwill arising from an interest in a jointly controlled entity and for investments
accounted for by applying the equity method. The Group has reassessed the useful lives ofintangible assets in accordance with the provisions of IAS 38. No adjustment resulted from thisreassessment.
Since January 1, 2004, business combinations are accounted for under the purchase accounting
method as required by IFRS 3; all identifiable assets acquired, liabilities and contingent liabilities
incurred or assumed are recorded at fair value at the date control is transferred to EADS
(acquisition date), irrespective of the extent of any minority interest. The cost of a businesscombination is measured at the fair value of assets given, equity instruments issued and liabilities
incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Any
excess of the cost of the business combination over the Group’s interest in the net fair value of theidentifiable assets, liabilities and contingent liabilities recognized is capitalized as goodwill andtested for impairment at the end of each financial year and whenever there is an indication for
impairment. If the cost of an acquisition is less than the fair value of the net assets of thesubsidiary acquired, the identification and measurement of the identifiable assets, liabilities andcontingent liabilities is reassessed as well as the measurement of the cost of the combination. Anyremaining difference is immediately recognized in the Consolidated Income Statement.
Except for IFRS 3, IAS 36 and IAS 38, EADS has abandoned the option to early adopt any of thenew, revised or amended standards or interpretations before they become effective.
3. Changes in the consolidation perimeter of EADSOn October 4, 2004, the Group acquired RIG Holdings, Inc., Delaware / United States together
with its subsidiaries Racal Instruments US and Racal Instruments Group Ltd. from RIG Holdings,
LP, Delaware in the amount of 105 M US$ cash and debt free. EADS has agreed with the sellers
to an earn out formula whereby the Group pays up to an additional 25 M US$ for guaranteed
future order intake until June 30, 2005.
Apart from this transaction, other acquisitions or disposals by the Group were not material.
4. Segment information
The Group operates in 5 divisions (segments) which reflect the internal organizational andmanagement structure according to the nature of the products and services provided:• Airbus — Development, manufacturing, marketing and sale of commercial jet aircraft of morethan 100 seats and the development and manufacturing of aircraft for military use.
• Military Transport — Development, manufacturing, marketing and sale of military transport
aircraft and special mission aircraft.
• Aeronautics — Development, manufacturing, marketing and sale of civil and military helicopters,
regional turboprop aircraft and light commercial aircraft; and civil and military aircraft conversion
and maintenance services.

608.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

• Defence & Security Systems — Development, manufacturing, marketing and sale of missiles
systems; military combat and training aircraft; and provision of defence electronics, defencerelated telecommunications solutions; and logistics, training, testing, engineering and otherrelated services.
• Space — Development, manufacturing, marketing and sale of satellites, orbital infrastructuresand launchers; and provision of launch services.
The following table presents information with respect to the Group’s business segments.
Consolidation effects, the holding function of EADS headquarters and other activities not allocableto the divisions are disclosed in the column “HQ/ Conso.”.

in M €

AirbusMilitary
Transport

Aeronautics

Defence &Security
SystemsSpace

HQ/ Conso.

Consolidated

Year ended December 31, 2004
External revenues

20,224

1,304

3,876

5,385

2,592

-1,62031,761

Research and development
expenses

1,734

26

68

185

61

52

2,126

EBIT pre goodwill amort. andexceptionals (see definition
below)

1,922

26

206

228

10

52

2,444

External revenues

19,048

934

3,803

5,165

2,424

-1,24130,133

Research and development
expenses

1,819

23

62

223

62

0

2,189

EBIT pre goodwill amort. andexceptionals (see definition
below)

1,353

30

217

171

-400

172

1,543

Year ended December 31, 2003

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

January 1Dec. 31, 2004

January 1Dec. 31, 2003

2,143

561

84

186

0

567

217

229

2,444

1,543

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

708.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

In the context of the Project Airbus Conversion in Euro (PACE) and the relating Advance Pricing
Agreement signed in April 2004 with tax authorities (France, UK, Germany and Spain), the Airbus
GIE – a US-$ denominated entity – has been merged within Airbus SAS – a Euro denominatedentity - with retroactive effect as of January 1, 2004.
As a consequence, operations of former Airbus GIE are from January 1, 2004, considered as“foreign currency operations” and accounted for in accordance with accounting principles
consistently adopted by EADS. Before the merger, Airbus GIE operations used to be recorded at
the current exchange rate of the period except for those hedged with financial instruments. From
January 1, 2004, former Airbus GIE operations are recorded on the basis of historical exchange
rates.
As a result, no additional Currency Translation Adjustment (CTA) is generated from former Airbus
GIE operations. The portion of outstanding CTA as at December 31, 2003, booked for balance
sheet items that relate to future transactions as from January 1, 2004, is gradually released
according to realization of such operations, namely aircraft deliveries.

6. Significant profit and loss statement items
EADS Group revenues reached 31,761 M €, which is compared with 2003 an increase of 1,628 M€. Revenues in 2004 increased in comparison with 2003 in every division. Despite a lower US
Dollar exchange rate compared to Euro and less favourable hedges compared to 2003, therevenues increased mainly due to increased deliveries and a more favourable aircraft mix at
Airbus as well as driven by milestones reached in the A 400 M programme in Military Transport
Aircraft Division.
EADS applied IFRS 3 “business combinations” as of January 1, 2004: Goodwill is no longer
regularly amortized, as previously requested under IAS 22, but instead is subject to annual
impairment tests. In 2004, there was no Goodwill impairment. In 2003, Goodwill amortization
reached 567 M €, which represented regular periodic amortization.
Research and development expenses of 2,126 M € (2003: 2,189 M €) decreased slightly. The
application of accounting policy with respect to capitalization of development costs impacted the
R&D costs recognized as expenses through a capitalization of 165 M € (2003: 4 M €).
Other income of 314 M € (2003: 196 M €) increased, as it includes the release of the provision for
the VT 1 claim in the amount of 106 M €.
The financial result includes a net interest charge of -275 M € (2003: -203 M €), mainlycomprising interest on financial liabilities and European Government refundable advances of 245
M €, partly compensated by the income generated by cash and cash equivalents, securities andfinancial assets such as loans and finance leases.
Income from investments of 84 M € (2003: 186 M €) was mainly influenced by the result ofDassault Aviation of 78 M € (2003: 225 M €). Since for the second half year of 2004 no financial
information according to IFRS is available yet from Dassault Aviation, the net income of thesecond half year 2003 of Dassault Aviation has been used as the best estimate to report thecurrent second half year’s net income for 2004. The current year’s equity investment income from
Dassault Aviation also includes a negative catch-up of the prior year financial performance inaccordance with IFRS, which amounts to -33 M € (in 2003 a positive catch-up of 77 M €).
Other financial result in 2004 of -55 M € (2003: 148 M €) includes, among others, interest
expenses on a tax payment as well as the impact from the fair value measurement of embedded
derivatives not used in hedging relationships.

808.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

7. Significant balance sheet items
Intangible assets of 10,008 M € (prior year: 9,694 M €) include 9,460 M € (prior year: 9,372 M €)of Goodwill. The increase comes mainly from the acquisition of RIG Holdings, Inc. with its
subsidiaries. EADS applied IFRS 3 “business combinations” as of January 1, 2004: Goodwill is nolonger regularly amortized, as previously requested under IAS 22, but instead is subject to annual
impairment tests.
Eliminating foreign exchange-rate effects of -192 M €, Property, plant and equipment increased
by 1,649 M € to 12,905 M € (prior year: 11,448 M €). Most of the increase is made by Airbus, due
to strong capital expenditures related to the A380 project and Space division, mainly caused by
the Skynet V program.
Financial Assets of 4,090 M € (prior year: 4,129 M €) increased in total – excluding foreignexchange-rate effect of -122 M € – by 83 M €, coming mainly from a change in equity-value of
Dassault Aviation.
Inventories of 3,075 M € (prior year: 3,279 M €), net of customer advances, decreased by -204 M€. An increase in work in progress of 417 M € is overcompensated by a decrease in finished goodsof 765 M €, reflecting higher aircraft delivery rates in total compared to production rates. Bothdevelopments are mainly driven by Airbus.
Other receivables and other assets increased by 825 M € to 11,105 M € (prior year: 10,280 M€). The increase is mainly caused by the development of the fair values of financial instruments(+984 M €), as a result of the declining US dollar exchange rate (US$ / € year-end spot rate of
1.36 at December 31, 2004 vs. 1.26 at December 31, 2003).
Securities, Cash and cash equivalents increased from 7,872 M € to 9,184 M €.
Stockholders‘ equity amounts to 16,973 M € (prior year: 16,149 M €), resulting mainly from a Net
income of 1,030 M €, a cash distribution to shareholders of -320 M € and a revaluation of OCI in
the amount of 152 M €.
Minority interests of 2,370 M € (prior year: 2,179 M €) mainly represent shares of BAe Systems
in Airbus Group. The increase in BAe Systems’ minority interest mainly is attributable to its sharein the result of Airbus and the increase in fair values of financial instruments that qualify for hedge
accounting according to IAS 39.
Provisions include 3,947 M € for retirement plans and similar obligations (prior year: 3,772 M €),181 M € of provisions for financial instruments (prior year: 100 M €) and 4,445 M € of otherprovisions (prior year: 4,854 M €).
Financial liabilities of 5,126 M € (prior year: 4,767 M €) – excluding foreign exchange-rate effectof -142 M € – have increased by 501 M €, mainly due to the borrowing of a European Investment
Bank (EIB) loan in the amount of 309 M € and external financing activities for the Skynet V
program (269 M €). The increase is partly compensated by the repayment of the Apollo loan at
Airbus (-194 M €).
Other liabilities increased by 1,922 M € to 13,240 M € (prior year: 11,318 M €). The increase ismainly impacted by higher advance payments received (1,803 M €) and a rise in liabilities fromrefundable government advances (268 M €, mostly from accrued interest), partly compensated bylower tax liabilities (-221 M €).

908.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

8. Significant cash flow items
Cash provided by operating activities increased by 304 M € to 5,013 M € (2003: 4,709 M €).
This increase reflects improvements in operations and a higher level of customer advancepayments received during the year.
Cash used for investing activities increased by 274 M € to -3,749 M € (2003: -3,475 M €).
These outflows were mainly caused by investments in intangible and fixed assets of -3,017 M €(2003: -2,672 M €), thereof -2,153 M € in Airbus, mainly for A 380 and -318 M € in Skynet V withinSpace division. Additionally, the increase in equipment of leased assets by -656 M € (2003: -279
M €) affected the outflows significantly; it mostly relates to aircraft financing activities at Airbus andincludes in 2004 a new operating lease financed by a debt of 369 M €, which is non-recourse to
EADS. Besides that, cash used for investing activities was higher in 2004 than in 2003 due tolower sales of medium-term securities (2004: 10 M €, 2003: 336 M €).
Cash provided by financing activities amounts to 52 M € (2003: 852 M €) and mainly contains a
new EIB loan (309 M €) and bank facilities for Skynet V (269 M €). This is partly compensated by
the repayment of the Apollo loan at Airbus (-194 M €). It is further reduced by the cash distribution
paid to shareholders of -320 M € as well as a dividend paid to minorities (mainly BAe Systems) of 64 M €.
9. Number of shares
The total number of shares outstanding is 799,550,294 and 800,957,248 as of December 31, 2004
and 2003, respectively. EADS’ shares are exclusively ordinary shares with a par value of 1.00 €.
During the year 2004, EADS repurchased 3,787,523 ordinary shares (in 2003: 1,686,682 shares)
in conjunction with the share-buyback program. The General shareholders’ meeting on May 6,
2004 renewed the authorization given to the Board of Directors to repurchase shares of EADS.
5,686,682 of these treasury shares, purchased and held by EADS, were cancelled in July 2004.
10. Earnings per share
Basic earnings per share are calculated by dividing net income attributable to shareholders by
the weighted average number of issued ordinary shares during the period, excluding ordinary
shares purchased by the Group and held as treasury shares:
January 1 to
December 31,
2004
Net income attributable to shareholders
Weighted average number of ordinary shares outstanding
Basic earnings per share

January 1 to
December 31,
2003

1,030 M €152 M €

801,035,035

800,957,248

1.29 €

0.19 €For the calculation of the diluted earnings per share, the weighted average number of ordinary
shares is adjusted to assume conversion of all potential ordinary shares. The Group’s only
category of dilutive potential ordinary shares is stock options. Since in 2004 the exercise price ofthe stock options under the 4th and 5th stock option plans initiated by the Group is below theaverage share price of EADS shares, the inclusion of these potential ordinary shares has a dilutive
effect on the weighted average number of shares. According to IAS 33, 3,047,837 stock options
would be dilutive:

10

08.03.2005

EADS N.V.
Unaudited Condensed IFRS Consolidated Financial Information for the year ending December 31, 2004

January 1 to
December 31,
2004
Net income attributable to shareholders
Weighted average number of ordinary shares outstanding(diluted)
Diluted earnings per share

January 1 to
December 31,
2003

1,030 M €152 M €

804,082,872

800,957,248

1.28 €

0.19 €

11. Related party transactions
The Group has entered into various transactions with related companies in 2004 and 2003 thathave all been carried out in the normal course of business. As is the Group’s policy, all related
party transactions have to be carried out at arm’s length. Transactions with related parties include
the French State, DaimlerChrysler, Lagardère, and SEPI (Spanish State). Except for thetransactions with the French State, the transactions are not considered material to the Groupeither individually or in the aggregate. The transactions with the French State include mainly sales
from the Aeronautics, Defence & Security Systems and Space divisions.
12. Number of employees
The number of employees at December 31, 2004 is 110,662 as compared to 109,135 at
December 31, 2003.
13. Events after the balance sheet date
In February 2005, EADS has sold its Enterprise Telephony Business to Aastra. This business waspart of the Defence & Security Systems division.
The financial statements have been authorized for issuance by the Board of Directors on March 8,
2005.

11

08.03.2005