EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

First Half-year 2006 Report

Unaudited Condensed Consolidated
Financial Information of EADS N.V.
for the first half-year of 2006
Unaudited Condensed IFRS Consolidated Income Statements ...………………………….….......…2
Unaudited Condensed IFRS Consolidated Income Statements for the second quarter 2006 and2005……………………………………………………………………………………………………………….3
Unaudited Condensed IFRS Consolidated Balance Sheets….…..………….……………...……....…4
Unaudited Condensed IFRS Consolidated Cash Flow Statements……………....…...…………...…5
Unaudited Condensed IFRS Consolidated Statements of Changes in equity attributable toequity holders of the parent and minority interests…….………………………..………………………6
Explanations to the Unaudited Condensed IFRS Consolidated Financial Statements
as at June 30th, 2006...….…………………………………………….………...……...………………...……6
1. The Company…………………………………………………………………………………………..6
2. Accounting policies……………….………………………………………………..………………...6
3. Changes in the consolidation perimeter of EADS…………………………....…….….…….…8
4. Segment information………………………………..…………..……………………………………8
5. EBIT pre goodwill impairment and exceptionals…..……..…………………………..…………96. Significant income statement items…………..…………………..………….………..……..….10
7. Significant balance sheet items…………………...…………………………………...…..….....11
8. Significant cash flow items…………………………………………………………...…..……….13
9. Contingencies………………………………………………………………………………………..13
10. Number of shares…………………………………………………………...……………….…...…14
11. Earnings per share……………………………………..………………………...….…..………….14
12. Related party transactions ………………..…………………...……………...……………..……15
13. Number of employees ……………………………….……………………………..……....………15
14. Subsequent events of the period……...……………………………………………………….....15

1

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

Unaudited Condensed IFRS Consolidated Income Statements

January 1 June 30, 2006
Revenues
Cos t of s ales
Gross m argin
Selling, adm inis trative & otherexpens es
Res earch and developm ent
expens es

M€
18,980-15,3743,606January 1 June 30, 2005

%
100
-81
19

M€
16,020-12,739
3,281-1,132-6-1,139Deviation

%
100
-80
20

M€
2,960
-2,635325%-1,079

-7

-53

5

-6

-950

-6

-189

20

196

1

91

1

105

115

18
21
10

Other incom e
Share of profit from as s ociates
and other incom e from
Profit before finance costs andincom e taxes
Finance (cos ts ) incom e
Incom e taxes
Profit for the period

69

0

133

1

-64

-48

1,600
-145
-431
1,024

8
0
-2
6

1,476
26
-511
991

9
0
-3
6

124
-171
80
33

8
-658
-16
3

Attributable to:Equity holders of the parent(Net incom e) *)Minority interes ts *)

1,043
-19

5
0

992
-1

6
0

51
-18

5
---

Ea rnings pe r sha re
Basic *)
Diluted *)

€

€

€

1.31
1.29

1.25
1.24

0.06
0.05

*) For retrospective adjustments concerning first half-year 2005 please refer to Note 2 “Accounting
policies”.

2

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

Unaudited Condensed IFRS Consolidated Income Statements for the second
quarter 2006 and 2005

April 1 June 30, 2006
Revenues
Cost of sales
Gross margin
Selling, administrative & otherexpenses
Research and development
expenses
Other income

M€
9,897
-7,984
1,913

April 1 June 30, 2005

%
100
-81
19

M€
9,015
-7,210
1,805

-557

-6

-603

Deviation

%

M€

%

100
-80
20

882
-774
108

10
11
6

-544

-6

-13

2

-6

-528

-6

-75

14

40

0

53

0

-13

-25

Share of profit from associates andother income from investments
Profit before finance costs andincome taxes
Finance (costs) income
Income taxes
Profit for the period

44

1

66

1

-22

-33

837
-83
-221
533

8
-1
-2
5

852
28
-299
581

9
0
-3
6

-15
-111
78
-48

-2
-396
-26
-8

Attributable to:Equity holders of the parent(Net income) *)Minority interests

527
6

5
0

582
-1

6
0

-55
7

-9
-700

Earnings per share
Basic*)
Diluted *)

€

€

€

0.66
0.65

0.73
0.73

-0.07
-0.08

*) For retrospective adjustments concerning second quarter 2005 please refer to Note 2 “Accounting
policies”.

3

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

Unaudited Condensed IFRS Consolidated Balance Sheets

Non-current assets
Intangible assets
Property, Plant and Equipment
Investments in associates
Other investments and long-term
financial assets
Non-current other assets
Deferred tax assets
Non-current securities
Current assets
Inventories
Trade receivables
Other current assets
Current securities
Cash and cash equivalents
Non-current assets classified asheld for sale
Total assets
Total equity
Equity attributtable to equity holdersof the parent
Capital StockReserves
Accumulated other comprehensive
incomeTreasury shares
Minority interests
Non-current liabilities
Non-current provisions
Long-term financial liabilities
Deferred tax liabilities
Other non-current liabilities
Current liabilities
Current provisions
Short-term financial liabilities
Liability for puttable instruments
Trade liabilities
Current tax liabilities
Other current liabilities
Liabilities directly associated with
non-current assets classified asheld for sale
Total equity and liabilities

June 30, 2006
M€%

December 31, 2005
M€%

10,573
13,819
1,908

15
19
3

11,052
13,951
1,908

16
19
3

-479
-132
0

-4
-1
0

1,774

2

1,938

3

-164

-8

4,174
2,314
1,342
35,904

6
3
2
50

3,610
2,557
1,011
36,027

5
4
1
51

564
-243
331
-123

16
-10
33
0

17,054
4,117
4,814
23
9,307
35,315

24
6
7
0
13
50

15,425
4,802
3,675
29
9,546
33,477

22
7
5
0
14
48

1,629
-685
1,139
-6
-239
1,838

11
-14
31
-21
-3
5

0

0

881

1

-881

-100

71,219100

70,385

100

834

1

822
9,992

1
14

818
9,371

1
13

4
621

0
7

4,883

7

3,982

6

901

23

-486
15,211
161
15,372

0
22
0
22

-445
13,726
176
13,902

0
20
0
20

-41
1,485
-15
1,470

9
11
-9
11

6,340
3,836
2,950
11,39524,521

9
5
4
16
34

6,879
4,189
2,376
11,29524,739

10
6
3
16
35

-539
-353
574
100
-218

-8
-8
24
1
-1

2,464
1,585
2,750
6,693
247
17,58731,326

4
2
4
9
0
25
44

2,727
908
3,500
6,634
174
17,73931,682

4
1
5
10
0
25
45

-263
677
-750
59
73
-152
-356

-10
75
-21
1
42
-1
-1

0

0

62

0

-62

-100

71,219100

70,385

100

834

1

4

Deviation
M€%

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

Unaudited Condensed IFRS Consolidated Cash Flow Statements

Profit for the period attributable to equity holders of the parent(Net income) *)Loss attributable to minority interests *)Adjustments to reconcile profit for the period (net income) to cash
provided by operating activities:
Depreciation and amortization
Valuation adjustments and CTA release
Change in deferred taxes
Results on disposal of non-current assets
Results of companies accounted for by the equity method
Change in current and non-current provisions andcurrent tax assets / liabilities
Change in other operating assets and liabilities
Cash provided by operating activities- Purchase of intangible assets, PPE- Proceeds from disposals of intangible assets, PPE- Acquisitions of subsidiaries (net of cash)- Proceeds from disposals of subsidiaries (net of cash)- Payments for investments in associates and otherinvestments and long-term financial assets- Proceeds from disposals of associates and otherinvestments and long-term financial assets- Dividends paid by companies valued at equity- Increase in equipment of leased assets- Proceeds from disposals of leased assets- Increase in finance lease receivables- Decrease in finance lease receivables
Disposals of non-current assets classified as held for sale
Change of securities
Change in cash from changes in consolidation
Cash used for investing activities
Change in long-term and short-term financial liabilities
Cash distribution to EADS N.V. shareholders
Payments related to liability for puttable instruments
Capital increase
Purchase of treasury shares
Cash used for financing activities
Effect of foreign exchange rate changes and other valuation
adjustments on cash and cash equivalents
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period

January 1 - June 30,
2006
M€

January 1 - June 30,
2005
M€

1,043
-19

992
-1

805
68
216
-271
-48

764
-33
-58
-50
-123

8
-1,219583-1,118
72
-20
81

426
849
2,766
-1,198
42
-2
65

-91

-261

505
46
-6
23
-5
35
214
-330
0
-594
405
-520
-129
82
-41
-203

206
36
-28
123
-206
38
0
-162
11
-1,336
359
-402
-93
15
-205
-326

-25
-239

14
1,118

9,546
9,307

8,718
9,836

*) For retrospective adjustments concerning first half-year 2005 please refer to Note 2 “Accounting
policies”.
As of June 30th, 2006, EADS’ cash position (stated as cash and cash equivalents at end of period in
the unaudited condensed consolidated cash flow statements) includes 1,214 M € (1,202 M € as ofDecember 31st, 2005) representing the amount Airbus has deposited at BAE Systems. Additionally
included are 563 M € (579 M € as of December 31st, 2005), which represent EADS’ share in MBDA’s
cash and cash equivalents, deposited at BAE Systems and Finmeccanica. These funds are available

5

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

for EADS upon demand or are to be reimbursed at transaction date for the Airbus share when theshareholders of BAE Systems approve the sale of their 20 % stake in Airbus (see Note 14“Subsequent events”).

Unaudited Condensed IFRS Consolidated Statements of Changes in equity
attributable to equity holders of the parent and minority interests
Equity attributable
to equity holders Minority interestsof the parent

in M €
Balance at January 1, 2006

13,726

Total equity

176

13,902

Capital Increase

82

Profit for the period

1,043

Cash distribution to shareholders

-520

-520

OCI

901

901

Purchases of treasury shares-41

Others20

4Balance at June 30, 2006

15,211

161

24
15,372

Balance at January 1, 2005, adjusted

16,210144

16,354

Capital Increase

82
-19

1,024

-41

15

15

Profit for the period *)992

Cash distribution to shareholders

-402

-402

-2,668-2,668-205-205

OCI *)
Purchases of treasury shares
Others

-1

991

21

Balance at June 30, 2005

13,96321
143

14,106*) For retrospective adjustments concerning first half-year 2005 please refer to Note 2 “Accounting
policies”.

Explanations to the Unaudited Condensed IFRS Consolidated Financial
Statements as at June 30th, 2006
1. The Company
The accompanying Condensed Interim Consolidated Financial Statements (unaudited) present theoperations of European Aeronautic Defence and Space Company EADS N.V. and its subsidiaries(“EADS” or the “Group”), a Dutch public limited liability company (Naamloze Vennootschap) legallyseated in Amsterdam (Le Carré, Beechavenue 130-132, 1119 PR, Schiphol-Rijk, The
Netherlands), and are prepared and reported in Euros (“€”). EADS’ core business is the
manufacturing of commercial aircraft, civil and military helicopters, commercial space launchvehicles, missiles, military aircraft, satellites, defence systems and defence electronics andrendering of services related to these activities.
2. Accounting policies
These Condensed Interim Consolidated Financial Statements have been prepared in accordancewith IAS 34 “Interim Financial Reporting”. EADS’ Consolidated Financial Statements are preparedin accordance with International Financial Reporting Standards (“IFRS”), adopted by theInternational Accounting Standards Board (“IASB”) as endorsed by the European Union (EU).
They comprise (i) IFRS, (ii) International Accounting Standards (“IAS”) and (iii) Interpretations

6

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

originated by the International Financial Reporting Interpretations Committee (“IFRIC”) or former
Standards Interpretation Committee (“SIC”).
As of January 1st, 2006, EADS adopted the following amendments to existing Standards, newStandards and new Interpretations as required by the following announcements released by the
IASB in December 2004 and throughout 2005:
EADS applies new IFRS 6 “Exploration for and Evaluation of Mineral Resources” and two
amendments to IAS 39 “Financial Instruments: Recognition and Measurement”: “Fair Value
Option” (June 2005) and “Financial Guarantee Contracts” (August 2005) with the latter also
amending IFRS 4. Furthermore, EADS applies new Interpretations IFRIC 5 “Rights to Interests
arising from Decommissioning, Restoration and Environmental Rehabilitation Funds” and IFRIC 6“Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic
Equipment”.
Amendments to IAS 39 Financial Instruments: Recognition and Measurement(i)

Fair Value Option (June 2005): The amendment limits the use of the fair value option to
those financial instruments that meet one of the following conditions: a) fair value option
designation eliminates or significantly reduces an accounting mismatch (i.e. natural
hedging relationship); or b) a group of financial assets, financial liabilities or both ismanaged and its performance is evaluated on a fair value basis in accordance with adocumented risk management or investment strategy. Furthermore, the fair value option
can generally be elected to be applied in case of embedded derivatives to an entire hybrid
contract. EADS currently applies the fair value option for securities / accumulated funds
only (Money Market Funds).

(ii)

Financial Guarantee Contracts (August 2005): The scope of IAS 39 has been widened toinclude financial guarantee contracts issued. In case an issuer of such contracts has
previously asserted that it regards financial guarantee contracts as insurance contracts
and accounted for them accordingly, the issuer may elect to apply either IFRS 4 or IAS 39
to financial guarantee contracts. The issuer can perform the election contract by contract
but the election for each contract remains irrevocable.

The application of the amendments to existing Standards, new Standards and new Interpretations
mentioned above has no major impact on the Condensed Interim Consolidated Financial
Statements.
Besides consequential changes as mentioned above, the accounting policies used in the
preparation of the Condensed Interim Consolidated Financial Statements are consistent with thoseused for the annual Consolidated Financial Statements for the year ended December 31st, 2005
which are disclosed as an integral part of the Group’s Annual Report 2005. The annual
Consolidated Financial Statements were authorised for issue by EADS’ Board of Directors on
March 7th, 2006.
The application of the following standard in 2005 led to retrospective adjustments in theConsolidated Income and Cash Flow Statements as well as in the Statement of changes in equity
for the prior period presented:
IAS 32 Financial Instruments: Disclosure and Presentation (revised 2004) — Since January
1st, 2005, EADS applies revised IAS 32 “Financial Instruments: Disclosure and Presentation”(revised 2004). Amongst others, revised IAS 32 provides modified guidance whether a share in an
entity should be classified as equity or as financial liability. Under certain circumstances, an entity
shall record a financial liability rather than an equity instrument for the exercise price of a written
put on the entity’s equity.

7

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

As part of the Airbus business combination in 2001, the option granted to BAE Systems to put its
20% stake in Airbus to EADS is such a written put option. EADS has the obligation to purchasethese minority shares whenever the minority shareholder requests it, limited to a revolving yearly
window period for an amount equal to the fair value of the shares at the time the option is
exercised, to be paid in cash or an equivalent amount of EADS shares (please refer to Note 14“Subsequent events”). Following revised IAS 32 and despite BAE Systems (legal) minority rights in
Airbus, the related interest has been recognized as financial liability in the EADS Consolidated
Financial Statements, stated at fair value and presented in a separate line of the EADS
Consolidated Balance Sheet as “Liability for puttable instruments”. The fair value at June 30, 2006
has been assessed by reference to the determination provided by an independent third party
valuation expert (please refer to Note 7 “Significant balance sheet items” and Note 14“Subsequent events”). Previous estimations of the fair value had been evaluated by applying a
choice of different valuation techniques, based on best estimates available.
Following IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors”, the adoptionof revised IAS 32 has been treated as a change in accounting policy firstly effecting EADS’
Consolidated Financial Statements as of December 31st, 2005 with corresponding adjustments toprior period presented. The historical minority interests for BAE Systems’ 20% stake in Airbus at
the time of the business combination in 2001 had been replaced by the posting of a liability forputtable instruments, the difference between those two amounts being accounted for against
consolidated total equity.
Prior and current years dividend payments to BAE Systems have been treated as partial
repayments, thus consequently reducing the liability for puttable instruments. All fair valuechanges are treated as contingent consideration in a business combination in accordance withIFRS 3 “Business Combinations” until settlement and led to adjustments of goodwill. (For the effecton previous year figures and the impact on earnings per share, please refer to Note 6, 7 and 11).

3. Changes in the consolidation perimeter of EADSOn February 28th, 2006, LFK GmbH and TDW GmbH, which were fully consolidated by EADS,
have been sold to the European Missile Group MBDA. MBDA is jointly owned by BAE Systems(37.5 %), EADS (37.5 %) and Finmeccanica (25 %). In EADS consolidated financial statements,
MBDA Group is proportionately consolidated with 50 %.
Apart from these transactions, other acquisitions or disposals performed by the Group in the firsthalf-year 2006 are not material to the unaudited Interim Condensed Consolidated Financial
Statements.
4. Segment information
The Group operates in five divisions (segments) which reflect the internal organizational andmanagement structure according to the nature of the products and services provided. Followingchanges in the EADS structure, the Aeronautics Division was dissolved end of June 2005 and split
into Eurocopter Division and Other Businesses. Segment figures have been restated inaccordance with this new structure.
• 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 Aircraft — Development, manufacturing, marketing and sale of militarytransport aircraft and special mission aircraft.

8

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

• Eurocopter — Development, manufacturing, marketing and sale of civil and military helicoptersand maintenance services.
• Defence & Security Systems — Development, manufacturing, marketing and sale of missiles
systems; military combat and training aircraft; provision of defence electronics, defence-related
telecommunications solutions; and logistics, training, testing, engineering and other related
services.
• Space — Development, manufacturing, marketing and sale of satellites, orbital infrastructuresand launchers; and provision of space services.
The following table presents information with respect to the Group’s business segments.
Consolidation effects, the holding functions of EADS Headquarters and other activities notallocable to the divisions are disclosed in the column “HQ/ Conso.”. “Other Businesses” comprises
the development, manufacturing, marketing and sale of regional turboprop aircraft and lightcommercial aircraft, aircraft components as well as civil and military aircraft conversion andmaintenance services.
Military
Transport
AircraftEurocopter

Defence &Security
Systems

13,154

1,244

1,473

2,274

1,273

660

-1,09818,980Research anddevelopment
expenses

-952

-8

-35

-91

-31

-3

-19

-1,139EBIT pre goodwill
imp. and exceptionals(see definition below)

1,491

6

84

96

36

-143

62

1,632

11,262

326

1,266

2,172

1,160

528

-694

16,020Research anddevelopment
expenses

-782

-11

-31

-82

-24

-4

-16

-950

EBIT pre goodwill
imp. and exceptionals(see definition below)

1,444

-14

60

-19

7

-44

106

1,540

in M €

AirbusOther
HQ/ Conso.
Businesses

Space

Consolidated

Six months ended June 30, 2006
Revenues

Six months ended June 30, 2005
Revenues

5. 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 and the 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.
A reconciliation from Profit before finance costs and income taxes to EBIT pre goodwill impairment
and exceptionals is set forth in the following table (in M €):926.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

in M €
Profit before finance costs and income taxes
Fair value adjustments
EBIT pre goodwill impairment and exceptionals

January 1June 30, 2006

January 1June 30, 2005

1,600

1,476

32

64

1,632

1,540

6. Significant income statement items
Revenues of 18,980 M € (first half-year 2005: 16,020 M €) increase by 18 % contributed by all
divisions, mostly by Airbus, MTA and Eurocopter.
The Gross Margin increases by +325 M € to 3,606 M € compared to 3,281 M € in the first halfyear 2005. The increase mainly results from Airbus, Eurocopter, Defence & Security Systems andSpace. On the basis of the financial terms of the Group TAT proposal, EADS has performed an
impairment test of the Sogerma related assets and has accounted for an impairment charge of 117
M € against specific property, plant and equipment as well as inventories.
Research and development expenses of 1,139 M € (first half-year 2005: 950 M €) mainly
increase because of the A350 program and to a lower extent due to the A380 program. Moreover,
EADS capitalized 145 M € of development costs for A380 in the first half-year 2006 (in the firsthalf-year 2005: 114 M €).
Other income increases by +105 M € to 196 M €, due to the gain of 106 M € as a result of thesale of LFK GmbH and TDW GmbH to MBDA Group.
Share of profit from associates and other income from investments of 69 M € (first half-year
2005: 133 M €) is mainly influenced by the result of Dassault Aviation of 48 M € (first half-year
2005: 121 M €), which represents the best estimate based on the most recent available half-year
financial statements of Dassault. The result in the first half-year 2005 of Dassault additionally
included positive 2004 catch up adjustments amounting to +64 M €.
Finance costs deteriorate to -145 M € (first half-year 2005: +26 M €) mainly due to negative
effects from foreign exchange rate revaluations on US dollar-cash balance. These effects are
partly offset by a lower net interest charge of -56 M € (first half-year 2005: -77 M €), mainly due toa higher net cash position at Airbus.
Income taxes of -431 M € (first half-year 2005: -511 M €) result in an effective income tax rate of
30 % (first half-year 2005: 34 %), positively impacted by a tax-free gain from the sale of LFKGmbH and TDW GmbH to MBDA Group.
Loss for the period attributable to minority interests of -19 M € (first half-year 2005: -1 M €)mainly relates to a consolidation impact of the sale of LFK GmbH and TDW GmbH to the MBDA
Group.
Profit for the period attributable to equity holders of the parent (Net income) amounts to
1,043 M € (first half-year 2005: 992 M €). The profit for the first half-year 2005 was adjusted due tothe retrospective application of revised IAS 32 by an amount of +176 M €.

10

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

7. Significant balance sheet items
Non-current assets
Intangible assets of 10,573 M € (prior year: 11,052 M €) include 9,550 M € (prior year: 10,167 M€) of goodwill. It mainly stems from Airbus (6,366 M €), Defence & Security Systems (2,473 M €),Space (559 M €) and Eurocopter (111 M €). An impairment test was performed for Airbus goodwill
on the basis of the purchase price of 2,750 M € for BAE Systems’ stake in Airbus, determined by
the investment bank Rothschild, which did not lead to an impairment.
Eliminating foreign exchange-rate effects of -163 M €, property, plant and equipment increaseby +31 M € to 13,819 M € (prior year: 13,951 M €), including leased assets of 2,109 M €. The
biggest increase comes from Space (+148 M €), partly offset by a decrease in Airbus Division (-74M €) and Other Businesses (-56 M €). Property, plant and equipment comprises “Investment
property” amounting to 125 M € (prior year: 134 M €).
Investments in associates of 1,908 M € (prior year: 1,908 M €) mainly comprise the equity
investment in Dassault Aviation, amounting to 1,869 M € (prior year: 1,867 M €).
Other investments and long-term financial assets of 1,774 M € (prior year: 1,938 M €) areallocated to Airbus in the amount of 1,053 M € (prior year: 1,242 M €), mainly concerning the noncurrent portion of aircraft financing activities with a foreign exchange-rate effect of -74 M €.
Non-current other assets mainly comprise “Non-current financial instruments” and “Non-current
prepaid expenses”. The increase by 564 M € to 4,174 M € (prior year: 3,610 M €) is mainly causedby the variation of the non-current portion of fair values of financial instruments. Non-current
prepaid expenses increase by +19 M €.
Deferred tax assets of 2,314 M € (prior year: 2,557 M €) are presented as non-current assets as
required by IAS 1.
The fair values of financial instruments are included in non-current other assets with an amountof 3,309 M € (prior year: 2,762 M €), in current other assets (1,831 M €, prior year: 1,191 M €), in
non-current provisions (252 M €, prior year: 472 M €) and in current provisions (154 M €, prioryear: 449 M €), which corresponds to a net positive fair value of 4,734 M € (prior year: 3,032 M €).
The volume of hedged US dollar-contracts has risen from 47.1 billion US dollar to 50.0 billion US
dollar and the US dollar exchange rate became less favourable (USD / € spot rate of 1.27 at June
30th, 2006 vs. 1.18 at December 31st, 2005). The average US dollar hedged rate for the hedge
portfolio of the Group as at June 30th, 2006 moved from 1.12 as at December 31st, 2005 to 1.15 as
at June 30th, 2006 (US dollar / € rate respectively).

Current assets
Inventories of 17,054 M € (prior year: 15,425 M €) increase by 1,629 M € in all divisions except
for Military Transport. This is mainly driven by a higher level of unfinished goods and services in
Airbus (mainly for A380 (+883 M €)), the progress of several serial production programs in
Eurocopter (+367 M €) and Defence (+128 M €). Military Transport decreased mainly due toachievement of Milestones concerning the A400 M program.
The decrease in trade receivables by -685 M € to 4,117 M € (prior year: 4,802 M €) comes to alarge extent from Space (-434 M€), Defence (-178 M €) and Eurocopter (-158 M €), partly offset by
Airbus (+121 M €).

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EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

Other current assets include “Current portion of long-term financial assets”, “Current otherassets”, “Current tax assets” and “Current prepaid expenses”. The increase of 1,139 M € to 4,814
M € (prior year: 3,675 M €) is caused in the amount of +640 M € by the variation of the current
portion of fair values of financial instruments (see “Financial instruments” under “Non-current
assets”). Moreover, an increase of +484 M € comes from an escrow account, reflecting sales
financing activities in Airbus previously reported as non-current assets classified as held forsale (0 M € as of June 30th , 2006; prior period: 881 M €).
Cash and cash equivalents decrease from 9,546 M € to 9,307 M €.

Total equity
Equity attributable to equity holders of the parent (including treasury shares) amounts to15,211 M € (prior year: 13,726 M €), the increase mainly results from the profit for the period (Netincome) of +1,043 M € and an increase in OCI of +901 M €, primarily resulting from changes in fairvalues as well as consumption of derivative financial instruments, offset by a cash distribution toshareholders of -520 M €.
Minority interests of 161 M € (prior year: 176 M €) mainly represent shares of Finmeccanica in
MBDA. According to revised IAS 32, minority interests for BAE Systems’ share in Airbus areshown as “Liability for puttable instruments” (please refer to Note 2 “Accounting policies”).

Non-current liabilities
Non-current provisions of 6,340 M € (prior year: 6,879 M €) comprise the non-current portions ofpension provisions with a decrease of -79 M € to 3,821 M €, resulting from a cash contribution to
the EADS Deutschland GmbH pension fund, and other provisions, decreasing by -460 M € to
2,519 M €. Other provisions include among others aircraft financing activities with a decrease of-135 M € (thereof foreign exchange rate effect of -86 M €) to 1,018 M € and provisions forderivative financial instruments according to IAS 39 with a decrease of -220 M € to 252 M €.
Long-term financial liabilities of 3,836 M € (prior year: 4,189 M €), excluding foreign exchangerate effects of -128 M €, decrease by -225 M €.
Deferred tax liabilities of 2,950 M € (prior year: 2,376 M €) are significantly influenced by thedecrease in the fair value of financial instruments. They are defined as non-current liabilities.
Other non-current liabilities comprise “Non-current other liabilities” and “Non-current deferredincome” and slightly increase by +100 M € to 11,395 M € (prior year: 11,295 M €). They mainly
include the non-current portion of European Government refundable advances amounting to 5,138
M € (prior year: 4,950 M €) and non-current customer advance payments received of 4,803 M €(prior year: 4,911 M €). The main part of non-current deferred income of 1,229 M € (prior year:
1,324 M €) is linked to restated revenues of Airbus and ATR according to RVG clauses. The
remaining portfolio, which is included in non-current deferred income is depreciated over thewindow period.

Current liabilities
Current provisions decrease by -263 M € to 2,464 M € (prior year: 2,727 M €) and comprise thecurrent portions of pensions (207 M €, prior year: 220 M €) and other provisions (2,257 M €, priorperiod: 2,507 M €). The decrease reflects the revaluation of derivative financial instruments

12

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EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

according to IAS 39 (-295 M €). Short-term financial liabilities of 1,585 M € (prior year: 908 M €)increase by +677 M €, mainly due to the issue of commercial papers with an amount of 746 M €.
EADS has adopted in 2005 revised IAS 32 and accounts for a liability for puttable instruments
for the 20 % interest of BAE Systems in Airbus. This liability was stated at fair value of 3,500 M€
as at December 31st, 2005. In the course of the exercised put option by BAE Systems, a third party
investment bank has determined on July 2nd, 2006, that the price to be paid by EADS is 2,750 M€.
Considering, that Airbus had paid a dividend of 129 M€ to BAE Systems during the first half of2006, the liability was adjusted accordingly. (Please also refer to Note 14 “Subsequent events”.)
Trade liabilities increase by +59 M € to 6,693 M € (prior year: 6,634 M €).
Other current liabilities include “Current other liabilities” and “Current deferred income”. They
decrease by -152 M € to 17,587 M € (prior year: 17,739 M €). Other current liabilities mainlycomprise the current portion of customer advance payments of 14,444 M € (prior year: 14,078 M€).
8. Significant cash flow items
Cash provided by operating activities amounts to 583 M € (first half-year 2005: 2,766 M €). This
reflects a negative variation in working capital (change in other operating assets and liabilities) of-1,219 M € (first half-year 2005: positive variation of +849 M €), mainly resulting from lower
contributions from received customer advance payments compared to the previous period.
Cash used for investing activities improves by +742 M € to -594 M € (first half-year 2005:-1,336 M €). The outflow is mainly caused by Airbus and Skynet V activities, partly offset bypositive effects from customer financing selldown operations at Airbus.
Cash used for financing activities results to -203 M € (first half-year 2005: -326 M €). The
outflow contains cash distributions to EADS NV shareholders (-520 M €) and BAE Systems (-129M €), partly offset by drawdowns on financial liabilities of +405 M €.
9. Contingencies
Pension commitments - EADS has several common investments with BAES, of which the mostsignificant in terms of employees are Airbus and MBDA. In respect of each investment, UK
employees may stay in the BAES pensions schemes, which currently qualify as multi-employer
defined benefit plans. BAES is applying IFRS as of January 1st, 2005. In accordance with IAS 19,
BAES has disclosed for its UK defined pension schemes a net (pre tax) pension liability as ofDecember 31st, 2005 in a total amount of 4,659 M GBP. As participants in the BAES schemes,
EADS investments are potentially affected by any shortfall of BAES schemes. However, theagreements between EADS and BAES have the effect of capping the contributions that theinvestment has to make to the pension scheme for a certain period of time (until July 2011 for
Airbus and until December 2007 for MBDA). Any additional contribution would be paid by BAES.
EADS is therefore not exposed to increased contribution payments resulting from the pension
underfunding during the period of the contribution caps. EADS has requested detailed information
about these pension schemes. Based on limited information made available, EADS has judged
this information not to be sufficient to properly allocate the pension plans’ deficit and is therefore
not able to reliably determine its participation in any potential future deficit once the period ofcontribution caps will have expired. Consequently, EADS continues to expense the contributions
made to the pension schemes as if the plans were defined contribution plans.

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EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

10. Number of shares
The total number of shares outstanding is 800,081,334 and 791,270,277 as of June 30th, 2006 and2005, respectively. EADS’ shares are exclusively ordinary shares with a par value of 1.00 €.
During the first half-year 2006, the number of own shares hold by EADS increased from20,602,704 as of December 31st, 2005 to 21,779,736 as of June 30th, 2006.
4,117,940 new shares (first half-year 2005: 797,306 shares) were issued as a result of theexercise of stock options in compliance with the implemented stock option plans.
11. Earnings per share
The net income for the first half-year 2005 was adjusted due to retrospective application of revised
IAS 32 in 2005 with an amount of +176 M € representing minority interests of 20 % of Airbus(please refer to Note 2 “Accounting policies”).
Basic earnings per share are calculated by dividing profit for the period attributable to equity
holders of the parent (Net income) by the weighted average number of issued ordinary shares
during the period, excluding ordinary shares purchased by the Group and held as treasury shares:

January 1 toJune 30, 2006
Net income attributable to shareholders
Weighted average number of ordinary shares outstanding
Basic earnings per share

January 1 toJune 30, 2005

1,043 M €992 M €

798,747,495

794,012,149

1.31 €

1.25 €The effect from the retrospective application of IAS 32 (revised) on basic earnings per shareamounts to an increase of 0.22 € in the first half-year 2005.
For calculation of the diluted earnings per share, the weighted average number of ordinary
shares is adjusted to assume conversion of all potential ordinary shares. The Group’s only
category of dilutive potential ordinary shares is stock options. Since the average price of EADS
shares of the first half-year 2006 exceeded the exercise price of the stock options under the 1st,
2nd, 3rd, 4th, 5th and 6th stock option plans (in the first half-year 2005: 1st, 2nd, 4th and 5th stock optionplan) initiated by the Group, the inclusion of the related potential ordinary shares increases theweighted average number of shares. 6,810,912 shares (first half-year 2005: 4,595,260 shares) areconsidered dilutive according to IAS 33.

January 1 toJune 30, 2006
Net income attributable to shareholders
Weighted average number of ordinary shares outstanding(diluted)
Diluted earnings per share

14

January 1 to June30, 2005

1,043 M €992 M €

805,558,407

798,607,409

1.29 €

1.24 €

26.07.2006

EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

The effect from the retrospective application of IAS 32 (revised) on diluted earnings per shareamounts to an increase of 0.22 € in the first half-year 2005.
12. Related party transactions
The Group has entered into various transactions with related companies in the first half-year 2006
and 2005 that have 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 relatedparties include the French State, DaimlerChrysler, Lagardère, and SEPI (Spanish State). Except
for the transactions with the French State, such transactions are not considered material to theGroup either individually or in the aggregate. The transactions with the French State include
mainly sales from the Eurocopter, Defence & Security Systems and Space divisions.
13. Number of employees
The number of employees at June 30th, 2006 is 115,247 as compared to 113,210 at December
31st, 2005.
14. Subsequent events
A350 / A380 - On October 6, 2005, the EADS Board of Directors authorised the go-ahead for
Airbus to launch the industrial program for a new A350 aircraft family. This go-ahead together withthat received from BAE Systems, enabled Airbus to launch the program. On July 17, 2006 andfollowing customers’ recommendations, Airbus presented a revised aircraft family, the A350 XWB,
intended to replace the A350 industrial program started last year. It is anticipated that Airbus will
ask its shareholders EADS and BAE Systems for authorisation to launch the A350 XWB industrial
program around October 2006. Until then, Airbus will be assessing the potential financial impactsof the replacement.
Following the revised Airbus A380 delivery schedule, a detailed review of the A380 production anddelivery program is currently being implemented by the new Airbus CEO complemented by a
EADS review team. This includes the assessment on other aircraft programs, especially A 400 M.
The A 380 program review also considers the assessment of customers and suppliers claims.
Because no decision to launch a new A350 aircraft family has been taken yet and the conclusionof the program reviews are not known to date, these Condensed Interim Financial Statements are
not impacted by the presentation of the revised aircraft family and by the reviews of the A380 andother aircraft programs production processes.

Sogerma – On May, 12 2006, the Board of Directors decided to cease the EADS activities ofSogerma Services in Bordeaux Mérignac. In July 2006, EADS has chosen to exclusively negotiatewith the TAT Group a solution for its industrial activities in Mérignac. The solution includes the saleof Sogerma’s maintenance activities and enables the majority of the concerned employees tocontinue to work on the Mérignac site. The TAT Group has committed itself to retain approximately
500 employees to work in the maintenance business. EADS would keep Sogerma’s aerostructure
activities, which would retain and secure eventually 150 workplaces in Mérignac. In addition,
EADS has proposed in July a mobility initiative and an early retirement plan as an offer toSogerma’s employees. As the communication process to the workers council took place after thebalance sheet date, these Condensed Interim Financial Statements are not impacted by
restructuring expenses, warranties and social package expenses.

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EADS N.V.
Unaudited Condensed Consolidated Financial Information for the six-month period ended June 30, 2006

Put option BAE Systems - EADS had recognised BAE Systems’ put option regarding its 20%
stake in Airbus with its fair value (3,500 M € at March 31, 2006 and December 31, 2005,
respectively) as liability for puttable instruments in the EADS Consolidated Balance Sheet.
BAE Systems exercised the put option on June 7, 2006. In accordance with the Airbus
Shareholders’ Agreement, an independent investment bank was appointed by EADS and BAE
Systems to determine the price in the absence of an agreement between the two parties. On
July 2, 2006, the bank has determined the price to be 2,750 M €. The transaction remains subject
to BAE Systems’ shareholders’ approval.
As the transaction price has been determined by an independent third party and close to June 30,
2006, EADS has adjusted the liability for puttable instruments to an amount of 2,750 M €accordingly. The reduction of the liability’s fair value led to a credit against goodwill of 621 M €after a partial repayment of the liability through a dividend distribution of 129 M € to BAE Systems
in June 2006.

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