Registration
Document
2010
Financial Statements

Registration
Document 2010

European Aeronautic Defence and Space Company EADS N.V. (the “Company” or “EADS” and together with its subsidiaries,
the “Group”) is a Dutch company, which is listed in France, Germany and Spain. The applicable regulations with respect to public
information and protection of investors, as well as the commitments made by the Company to securities and market authorities, aredescribed in this registration document (the “Registration Document”).
In addition to historical information, this Registration Document includes forward-looking statements. The forward-looking
statements are generally identified by the use of forward-looking words, such as “anticipate”, “believe”, “estimate”, “expect”,“intend”, “plan”, “project”, “predict”, “will”, “should”, “may” or other variations of such terms, or by discussion of strategy. Thesestatements relate to EADS’ future prospects, developments and business strategies and are based on analyses or forecasts offuture results and estimates of amounts not yet determinable. These forward-looking statements represent the view of EADS
only as of the dates they are made, and EADS disclaims any obligation to update forward-looking statements, except as may
be otherwise required by law. The forward-looking statements in this Registration Document involve known and unknown risks,
uncertainties and other factors that could cause EADS’ actual future results, performance and achievements to differ materiallyfrom those forecasted or suggested herein. These include changes in general economic and business conditions, as well as thefactors described in “Risk Factors” below.
This Registration Document was prepared in accordance with Annex 1 of EC Regulation 809/2004, ﬁled in English
with, and approved by, the Autoriteit Financiële Markten (the “AFM”) on 19 April 2011 in its capacity as competentauthority under the Wet op het ﬁnancieel toezicht (as amended) pursuant to Directive 2003/71/EC. This Registration
Document may be used in support of a financial transaction as a document forming part of a prospectus inaccordance with Directive 2003/71/EC only if it is supplemented by a securities note and a summary approved by the
AFM.

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EADS REGISTRATION DOCUMENT 2010

Registration Document 2010

Risk Factors
1 Information on EADS’ Activities
2 Management’s Discussion
and Analysis of Financial Condition
and Results of Operations
3 General Description of the Company
and its Share Capital
4 Corporate Governance
5 Entity Responsible
for the Registration Document

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Registration Document 2010

Risk Factors

71.

Financial Market Risks82.

Business-Related Risks10

3.

Legal Risks

16

4.

Industrial and Environmental Risks

17

Discussion
2 Management’s
and Analysis of Financial Condition
and Results of Operations

69

2.1

Operating and Financial Review

70

2.1.1

Certain Information

70

2.1.2

Overview

70

2.1.3

Critical Accounting Considerations,
Policies and Estimates73

2.1.4

Measurement of Management’s Performance

77

2.1.5

Results of Operations

81

2.1.6

Changes in Consolidated Total Equity(including Non‑controlling Interests)

87

1

Information
on EADS’ Activities

21

1.1

Presentation of the EADS Group

22

1.1.1

Overview

22

2.1.7

Liquidity and Capital Resources

88

Hedging Activities

95

1.1.2

Airbus

28

2.1.8

1.1.3

Eurocopter

37

2.2

Financial Statements

97

1.1.4

Astrium

41

1.1.5

Cassidian

46

2.3

Statutory Auditors’ Fees

98

1.1.6

Other Businesses

51

2.4

1.1.7

Investments

52

Information Regarding the Statutory
Auditors98

1.1.8

Insurance

54

1.1.9

Legal and Arbitration Proceedings

55

1.1.10 Research and Technology, Intellectual Property

56

1.1.11 Environmental Protection

59

1.1.12 Employees

641.1.13 Incorporation by Reference

65

1.2

65

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EADS REGISTRATION DOCUMENT 2010

Description
3 Generalof the Company

and its Share Capital

101

3.1

General Description of the Company

102

3.1.1

Commercial and Corporate Names,
Seat and Registered Office

102

3.1.2

Legal Form

102

3.1.3

Governing Laws and Disclosures

102

3.1.4

Date of Incorporation and Durationof the Company105

3.1.5

Objects of the Company

105

3.1.6

Commercial and Companies Registry

105

3.1.7

Inspection of Corporate Documents

105

3.1.8

Financial Year

105

3.1.9

Allocation and Distribution of Income106

3.1.10 General Meetings

106

3.1.11 Disclosure of Holdings

108

3.1.12 Mandatory Offers

109

GENERAL TABLE OF CONTENTS ﻿

3.2

General Description of the Share Capital

111

3.2.1

Issued Share Capital

111

3.2.2

Authorised Share Capital

111

3.2.3

Modification of Share Capital or Rights Attachedto the Shares

111

Securities Granting Access to the Company’s
Share Capital

112

Changes in the Issued Share Capital since
Incorporation of the Company

113

3.3

Shareholdings and Voting Rights

114

3.3.1

Shareholding Structure

114

3.3.2

Relationships with Principal Shareholders

116

3.3.3

Form of Shares

121

3.3.4

Changes in the Shareholding of the Company
Since its Incorporation

121

3.3.5

Persons Exercising Control over the Company

123

3.3.6

Simplified Group Structure Chart

123

3.3.7

Purchase by the Company of its Own Shares

125

3.4

Dividends

128

3.4.1

Dividends and Cash Distributions Paid
Since the Incorporation of the Company

128

3.4.2

Dividend Policy of EADS

3.4.3

3.2.4
3.2.5

4 Corporate
Governance133
4.1

Management and Control

135

4.1.1

Board of Directors, Chairman
and Chief Executive Officer

136

4.1.2

Board Committees

147

4.1.3

Executive Committee

148

4.1.4

Enterprise Risk Management System

150

4.1.5

Compliance Organisation

155

4.2

Interests of Directors and Principal
Executive Officers

156

4.2.1

Remuneration Granted to Directors
and Principal Executive Officers156

4.2.2

Long-Term Incentives Granted to
the Chief Executive Officer

159

4.2.3

Related Party Transactions

160

4.2.4

Loans and Guarantees Granted to Directors

160

4.3

Employee Profit Sharing
and Incentive Plans160

4.3.1

Employee Profit Sharing and Incentive
Agreements160

129

4.3.2

Employee Share Ownership Plans

161

Unclaimed Dividends

129

4.3.3

Long-Term Incentive Plans

161

3.4.4

Taxation

129

3.5

Annual Securities Disclosure Report

130

Responsible
5 Entity
for the Registration Document

171

5.1

Entity Responsible for the Registration
Document172

5.2

Statement of the Entity Responsible
for the Registration Document

172

5.3

Information Policy

173

5.4

Undertakings of the Company regarding
Information173

5.5

Significant Changes

EADS REGISTRATION DOCUMENT 2010

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Risk Factors
1.

Financial Market Risks82.

Business-Related Risks10

3.

Legal Risks

16

4.

Industrial and Environmental Risks

17

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Risk Factors
1 Financial Market Risks

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EADS is subject to many risks and uncertainties that may affect its financial performance. The business, financial condition or
results of operation of EADS could be materially adversely affected by the risks described below. These are not the only risks EADS
faces. Additional risks and uncertainties not presently known to EADS or that it currently deems immaterial may also impair its
business and operations.

1.

Financial Market Risks

Exposure to Foreign Currencies
A significant portion of EADS’ revenues is denominatedin US dollars, while a substantial portion of its costs isincurred in euro, and to a lesser extent, in pounds sterling.
Consequently, to the extent that EADS does not use financial
instruments to hedge its exposure resulting from this foreign
currency mismatch, its profits will be affected by market
changes in the exchange rate of the US dollar against thesecurrencies, and to a lesser extent, by market changes in theexchange rate of pound sterling against the euro. EADS has
therefore implemented a long-term hedging portfolio to help
secure the rates at which a portion of its future US dollardenominated revenues (arising primarily at Airbus and in thecommercial satellite business) are converted into euro or poundsterling, in order to manage and minimise this foreign currency
exposure.

dollar-denominated revenues that is not hedged in accordancewith EADS’ hedging strategy will be exposed to changes inexchange rates, which may be significant.

There are complexities inherent in determining whether andwhen foreign currency exposure of EADS will materialise,in particular given the possibility of unpredictable revenue
variations arising from order cancellations, postponements
or delivery delays. EADS may also have difficulty in fully
implementing its hedging strategy if its hedging counterparties
are unwilling to extend further credit, and is exposed to the riskof non-performance or default by these hedging counterparties.
The exchange rates at which EADS is able to hedge its foreign
currency exposure may also deteriorate, as has been the caseduring the past several years with the steady appreciation of
the euro against the US dollar. Accordingly, EADS’ foreign
currency hedging strategy may not protect it from significant
changes in the exchange rate of the US dollar to the euro
and the pound sterling, in particular over the longer-term,
which could have a negative effect on its results of operationand financial condition. In addition, the portion of EADS’ US

EADS’ consolidated revenues, costs, assets and liabilities
denominated in currencies other than the euro are translated
into the euro for the purposes of compiling its financial
statements. Changes in the value of these currencies relative tothe euro will therefore have an effect on the euro value of EADS’reported revenues, costs, EBIT*, other financial result, assets
and liabilities.

*

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EADS REGISTRATION DOCUMENT 2010

Currency exchange rate fluctuations in those currencies
other than the US dollar in which EADS incurs its principal
manufacturing expenses (mainly the euro) may have the effectof distorting competition between EADS and competitors
whose costs are incurred in other currencies. This is particularly
true with respect to fluctuations relative to the US dollar, as
many of EADS’ products and those of its competitors (eg, inthe defence export market) are priced in US dollars. EADS’ability to compete with competitors may be eroded to theextent that any of EADS’ principal currencies appreciates invalue against the principal currencies of such competitors.

See “Management’s Discussion and Analysis of Financial
Condition and Results of Operations — 2.1.8 Hedging
Activities” for a discussion of EADS’ foreign currency hedging
strategy. See “Management’s Discussion and Analysis ofFinancial Condition and Results of Operations — 2.1.3.6
Accounting for Hedged Foreign Exchange Transactions in the
Financial Statements” for a summary of EADS’ accounting
treatment of foreign currency hedging transactions.

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Exposure to Sales Financing Risk
In support of sales, EADS may agree to participate in thefinancing of customers. As a result, EADS has a significant
portfolio of leases and other financing arrangements withairlines and other customers. The risks arising from EADS’sales financing activities may be classified into two categories:(i) credit risk, which concerns the customer’s ability to perform
its obligations under a financing arrangement, and (ii) aircraft
value risk, which primarily relates to unexpected decreases in
the future value of aircraft. Measures taken by EADS to mitigate
these risks include optimised financing and legal structures,
diversification over a number of aircraft and customers, credit
analysis of financing counterparties, provisioning for the credit
and asset value exposure, and transfers of exposure to third
parties. No assurances may be given that these measures
will protect EADS from defaults by its customers or significant
decreases in the value of the financed aircraft in the resalemarket.
EADS’ sales financing arrangements expose it to aircraft valuerisk, because it generally retains collateral interests in aircraft
for the purpose of securing customers’ performance of theirfinancial obligations to EADS, and because it guarantees part ofthe market value of certain aircraft during limited periods after
their delivery to customers. Under adverse market conditions,the market for used aircraft could become illiquid and themarket value of used aircraft could significantly decrease
below projected amounts. In the event of a financing customer
default at a time when the market value for a used aircraft

has unexpectedly decreased, EADS would be exposed to thedifference between the outstanding loan amount and the market
value of the aircraft, net of ancillary costs (such as maintenanceand remarketing costs, etc.). Similarly, if an unexpected
decrease in the market value of a given aircraft coincided withthe exercise window of an asset value guarantee with respect
to that aircraft, EADS would be exposed to losing as muchas the difference between the market value of such aircraft
and the guarantee amount. No assurances may be given thatthe provisions taken by EADS will be sufficient to cover thesepotential shortfalls. Through the Airbus Asset Management
department or as a result of past financing transactions, EADSis the owner of used aircraft, exposing it directly to fluctuationsin the market value of these used aircraft.
Finally, EADS also has several outstanding backstop
commitments to provide financing related to orders on Airbus’
and ATR’s backlog. While past experience suggests it is unlikelythat all such proposed financing actually will be implemented,
EADS’ sales financing exposure could rise in line with future
sales growth depending on the agreement reached withcustomers. Despite the measures taken by EADS to mitigate
the risks arising from sales financing activities as describedabove, EADS remains exposed to the risk of defaults by its
customers or significant decreases in the value of the financed
aircraft in the resale market, which may have a negative effecton its future results of operation and financial condition.

Exposure to Counterparty Credit Risk
In addition to the credit risk relating to sales financing as
discussed above, EADS is exposed to credit risk to theextent of (i) non-performance by its counterparties forfinancial instruments, such as hedging instruments and cash
investments, and (ii) price risks arising from the credit spreads
embedded in cash investments. However, the Group has
policies in place to avoid concentrations of credit risk and toensure that credit risk is limited.
Cash transactions and derivative counterparties are contractedwith a large number of financial institutions worldwide, but only
if they meet certain high credit quality criteria. EADS has set up

a credit limit system to actively manage and limit its credit risk
exposure. This limit system assigns maximum exposure lines tocounterparties of financial transactions, based at a minimum on
their credit ratings as published by Standard & Poor’s, Moody’s
and Fitch Ratings, on a minimum amount of total assets anda maximum tolerable price to buy credit protection against thedefault of such counterparty. The respective limits are regularly
monitored and updated, but there can be no assurances that
despite these limits and the diversification of counterparties,
EADS will not lose the benefit of certain derivatives, or cash
investments, in case of a systemic market disruptions.

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Exposure on Equity Investment Portfolio
EADS holds several equity investments for industrial or strategic
reasons, the business rationale for which may vary over the lifeof the investment. Equity investments are either accounted forusing the equity method (associated companies), if EADS has
the ability to exercise significant influence, or at fair value. If fairvalue is not readily determinable, the investment is measured at
cost.
EADS’ principal investment in associates is Dassault Aviation.
The net asset value of this investment was € 2.3 billion at
31 December 2010. EADS is exposed to the risk of unexpectedmaterial adverse changes in the fair value of Dassault Aviationand that of other associated companies. For equity investments

other than associates, which make up only a fraction of EADS’
total assets, EADS regards the risk of negative changes in fairvalue or impairments on these investments as non-significant.
Treasury shares held by EADS are not considered to be equity
investments. Additionally, treasury shares are not regarded
as being exposed to risk, as any change in value of treasury
shares is recognised directly in equity only when sold to themarket and never affects net income. Treasury shares areprimarily held to hedge the dilution risk arising from employee
stock ownership plans and the exercise by employees of stock
options.

Pension Commitments
EADS participates in several pension plans for both executive
as well as non-executive employees, some of which are under
funded. For further information related to these plans, see“Management’s Discussion and Analysis of Financial Condition
and Results of Operations” and “Notes to the Consolidated
Financial Statements (IFRS) — Note 25B: Provisions for
retirement plans”. Although EADS has recorded a provisionin its balance sheet for its share of the under funding basedon current estimates, there can be no assurance that theseestimates will not be revised upward in the future, leading EADS
to record additional provisions in respect of such plans.
Necessary adjustments of such provisions are driven by(i) the discount factor (dependent in part on interest rates)
and the inflation rate applied to calculate the net present

2.

value of the pension liabilities, (ii) the performance of the asset
classes which are represented in the pension assets, and(iii) additional cash injections contributed by EADS from time
to time to the pension assets. EADS has taken measures tolimit potential losses in the pension assets and to better matchthe characteristics of the pension liabilities with those of thepension assets as a long-term objective. Nevertheless, any
required additional provisions would in turn have a negative
effect on EADS’ total equity (net of deferred taxes), which could
have a negative effect on its future financial condition.
For further information relating to financial market risks andthe ways in which EADS attempts to manage these risks, see“Notes to the Consolidated Financial Statements (IFRS) —Note 34: Financial risk management”.

Business-Related Risks

Commercial Aircraft Market Cyclicality
Historically, the market for commercial aircraft has shown
cyclical trends, due in part to changes in passenger demand
for air travel and cargo activity, which are in turn primarily
influenced by economic or gross domestic product (“GDP”)
growth. Other factors, however, play an important role indetermining the market for commercial aircraft, such as (i) the
average age and technical obsolescence of the fleet relative
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to new aircraft, (ii) the number and characteristics of aircraft
taken out of service and parked pending potential return into
service, (iii) passenger load factors, (iv) airline pricing policies,(v) airline financial health and the availability of outside financing
for aircraft purchases, (vi) deregulation and (vii) environmental
constraints imposed upon aircraft operations. EADS expects
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2 Business-Related Risks

1cyclical, and that downturns in broad economic trends may
have a negative effect on its future results of operation andfinancial condition.
For example, the recovery in the market for civil helicopters
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particular due to the high number of second hand helicopters in
the market. While the order cancellation trend slowed in 2010,
customers may refrain from placing new orders or seek topostpone or cancel otherwise binding contractual orders for theforeseeable future.

Impact of Terrorism, Epidemics and Catastrophic Events
As past terrorist attacks (such as in New York and Madrid) andthe spread of epidemics (such as H1N1 flu) have demonstrated,
terrorism and epidemics may negatively affect public perceptionof air travel safety and comfort, which may in turn reducedemand for air travel and commercial aircraft. The outbreak ofwars, riots or political unrest in a given region may also affectthe willingness of the public to travel by air. Furthermore, major
airplane crashes may have a negative effect on the public’s orregulators’ perceptions of the safety of a given class of aircraft,form of design, airline or air traffic. As a result of terrorism,
geopolitical instability, epidemics and other catastrophic events,
an airline may be confronted with sudden reduced demand
for air travel and be compelled to take costly security andsafety measures. In response to such events, and the resulting
negative impact on the airline industry or particular airlines,
EADS may suffer from a decline in demand for all or certain
types of its aircraft or other products, and EADS’ customers
may postpone delivery or cancel orders.
Moreover, EADS’ operations may be disrupted by theoccurrence of these and other events, including information
technology or infrastructure attacks or failures, damaging
weather or other acts of nature and other crises that may affectan organisation as complex as EADS. Any such disruptions
could have a significant adverse effect on EADS’ future resultsof operations and financial condition as well as its reputation.

Dependence on Public Spending and on Certain Markets
In any single market, public spending (including defence andsecurity spending) depends on a complex mix of geopoliticalconsiderations and budgetary constraints, and may therefore
be subject to significant fluctuations from year to year andcountry to country. In particular, government interventions to
mitigate the impacts from the recent economic downturn haveresulted in a significant deterioration of the fiscal position andincreased public debt levels of the main industrialised countries,
leading several of them to seek to reduce their future public
spending. This is especially true with respect to defence andsecurity budgets, where certain countries have proposed
substantial reductions. Depending on how such budget
reductions are finally implemented, the termination or reductionof funding for existing or new programmes may have a negative

effect on EADS’ future results of operations and financial
condition. In the case where several countries undertake toenter together into defence or other procurement contracts,
economic, political or budgetary constraints in any one of thesecountries may have a negative effect on the ability of EADS toenter into or perform such contracts.
Further, a significant portion of EADS’ backlog is concentrated
in certain regions or countries, including the United States,
China, India and the United Arab Emirates. Adverse economic
and political conditions as well as downturns in broad
economic trends in these countries or regions may havea negative effect on EADS’ future results of operation andfinancial condition.

Availability of Government and Other Sources of Financing
Since 1992, the EU and the US have operated under anagreement that sets the terms and conditions of financial
support that governments may provide to civil aircraft
manufacturers. In late 2004, however, the US sought tounilaterally withdraw from this agreement, which eventually led
to the US and the EU making formal claims against each otherbefore the World Trade Organization (“WTO”). While both sides

have expressed a preference for a negotiated settlement thatprovides for a level playing field when funding future aircraft
developments, they have thus far failed to reach agreement on
key issues. The terms and conditions of any new agreement,or the outcome of the formal WTO proceedings, may limit
access by EADS to risk-sharing-funds for large projects, may
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1funds by EADS as compared to its US competitors or may
theoretically cause the European Commission and the involved
governments to analyse possibilities for a change in thecommercial terms of funds already advanced to EADS.
In prior years, EADS and its principal competitors have each
received different types of government financing of productresearch and development. However, no assurances can begiven that government financing will continue to be madeavailable in the future, in part as a result of the proceedings
mentioned above.

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Moreover, the availability of other outside sources of financing
will depend on a variety of factors such as market conditions,the general availability of credit, EADS’ credit ratings, as well as
the possibility that lenders or investors could develop a negative
perception of EADS’ long- or short-term financial prospects
if it incurred large losses or if the level of its business activity
decreased due to an economic downturn. EADS may therefore
not be able to successfully obtain additional outside financing
on favourable terms, or at all, which may limit EADS’ future
ability to make capital expenditures, fully carry out its researchand development efforts and fund operations.

Emergence of Public-Private Partnerships and Private Finance Initiatives
Defence customers, particularly in the UK, increasingly request
proposals and grant contracts under schemes known as
public-private partnerships (“PPPs”) or private finance initiatives(“PFIs”). PPPs and PFIs differ substantially from traditional
defence equipment sales, as they often incorporate elements
such as:EADS is party to PPP and PFI contracts, for example throughParadigm with Skynet 5 and related telecommunications
services, and in the AirTanker (FSTA) project. One of thecomplexities presented by PFIs lies in the allocation of risks andthe timing thereof among different parties over the lifetime of the
project.

tt the provision of extensive operational services over the life of
the equipment;

There can be no assurances of the extent to which EADS
will efficiently and effectively (i) compete for future PFI or PPP
programmes, (ii) administer the services contemplated under
the contracts, (iii) finance the acquisition of the equipment andthe ongoing provision of services related thereto, or (iv) accessthe markets for the commercialisation of excess capacity. EADS
may also encounter unexpected political, budgetary, regulatory
or competitive risks over the long duration of PPP and PFI
programmes.

tt continued ownership and financing of the equipment by
a party other than the customer, such as the equipment
provider;tt mandatory compliance with specific customer requirements
pertaining to public accounting or government procurement
regulations; andtt provisions allowing for the service provider to seek additionalcustomers for unused capacity.

Competition and Market Access
The markets in which EADS operates are highly competitive.
In some areas, competitors may have more extensive or
more specialised engineering, manufacturing and marketing
capabilities than EADS. In addition, some of EADS’ largest
customers may develop the capability to manufacture products
or provide services similar to those of EADS. This would resultin these customers supplying their own products or services
and competing directly with EADS for sales of these products
or services, all of which could significantly reduce EADS’revenues. There can be no assurance that EADS will be able tocompete successfully against its current or future competitors
or that the competitive pressures it faces in all business areas
will not result in reduced revenues or market share.

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In addition, the contracts for many aerospace and defence
products are awarded, implicitly or explicitly, on the basis ofhome country preference. Although EADS is a multinational
company which helps to broaden its domestic market, it may
remain at a competitive disadvantage in certain countries,
especially outside of Europe, relative to local contractors
for certain products. The strategic importance and politicalsensitivity attached to the aerospace and defence industries
means that political considerations will play a role in the choiceof many products for the foreseeable future.

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Technologically Advanced Products and Services
EADS offers its customers products and services that are often
technologically advanced, the design and manufacturing of
which can be complex and require substantial integration andcoordination along the supply chain. In addition, most of EADS’
products must function under demanding operating conditions.
Even though EADS believes it employs sophisticated design,
manufacturing and testing practices, there can be no assurance
that EADS’ products or services will be successfully developed,
manufactured or operated or that they will be developed or will
perform as intended.
Certain of EADS’ contracts require it to forfeit part of its
expected profit, to receive reduced payments, to provide a
replacement launch or other products or services, or to reduce
the price of subsequent sales to the same customer if its

products fail to be delivered on time or to perform adequately.
No assurances can be given that performance penalties orcontract cancellations will not be imposed should EADS failto meet delivery schedules or other measures of contract
performance.
In addition to any costs resulting from product warranties,
contract performance or required remedial action, suchproblems may result in increased costs or loss of revenues – inparticular as a result of contract cancellations – which could
have a negative effect on EADS’ future results of operation andfinancial condition. Any problems in this respect may also havea significant adverse effect on the competitive reputation of
EADS’ products.

Major Research and Development Programmes
The business environment in many of EADS’ principal operating
business segments is characterised by extensive research anddevelopment costs requiring significant up-front investmentswith a high level of complexity. The business plans underlying
such investments often contemplate a long payback period
before these investments are recouped, and assume a certain
level of return over the course of this period in order to justify
the initial investment. There can be no assurances that thecommercial, technical and market assumptions underlying suchbusiness plans will be met, and consequently, the payback
period or returns contemplated therein achieved. EADS expects
that its consolidated research and development expenses
may increase significantly in future years in connection with the
ramp-up of new programmes across all Divisions, in particulardevelopment of the A350 XWB.

Successful development of new programmes also depends
on EADS’ ability to attract and retain aerospace engineers andother professionals with the technical skills and experience
required to meet its specific needs. Demand for such engineers
may often exceed supply depending on the market, resulting
in intense competition for qualified professionals. There can be
no assurances that EADS will attract and retain the personnel it
requires to conduct its operations successfully. Failure to attract
and retain such personnel or an increase in EADS’ employee
turnover rate could negatively affect EADS’ future results ofoperation and financial condition.

“Power8 Plus”, “Future EADS” and Other Restructuring,Transformation and Cost Saving Programmes
In 2008, EADS launched a Group-wide cost savings
programme referred to as Power8 Plus, with the goal ofachieving € 650 million in gross annual savings for Airbus andan additional € 350 million for the rest of the Group by the endof 2012. EADS is also currently working on a further integrationand cost savings programme referred to as Future EADS. In
addition, all Divisions are running their transformation and cost
cutting plans to adapt to their new competitive environment

and EADS is working on further other cost saving initiatives
for effect up to the end of 2014 to improve competitiveness,compensate inflation and achieve profitability targets.
Anticipated cost savings mentioned above are based on
preliminary estimates, however, and actual savings underthese programmes may vary significantly. In particular, EADS’cost reduction measures are based on current conditions and

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do not take into account any future cost increases that could
result from changes in its industry or operations, including new
business developments, wage and cost increases or otherfactors. EADS’ failure to successfully implement these planned
cost reduction measures, or the possibility that these efforts
may not generate the level of cost savings it expects going
forward, could negatively affect its future results of operationand financial condition.
In addition to the risk of not achieving the anticipated level ofcost savings from the programmes above, EADS may also
incur higher than expected implementation costs. In many
instances, there may be internal resistance to the variousorganisational restructuring and cost reduction measurescontemplated. Restructuring, closures, site divestitures and job
reductions may also harm EADS’ labour relations and public

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relations, and have led and could lead to work stoppages and/or demonstrations. In the event that these work stoppages
and/or demonstrations become prolonged, or the costs ofimplementing the programmes above are otherwise higher
than anticipated, EADS’ future results of operation and financial
condition may be negatively affected.
Finally, EADS may fail to fully realise the anticipated benefits ofthe programmes above. Divestitures may result in continued
financial involvement in the divested businesses following thetransaction, such as through guarantees or other financial
arrangements. They may also trigger the recording of an
impairment charge at or prior to closing, which would havea negative impact on EADS’ future results of operationand financial condition. Risk-sharing partners at divested
businesses may also fail to perform as expected.

Dependence on Certain Suppliers and Subcontractors
EADS is dependent on numerous key suppliers andsubcontractors to provide it with the raw materials, parts andassemblies that it needs to manufacture its products. Certain of
these suppliers may experience financial or other difficulties in
the future, in particular those with a significant foreign currency
mismatch between revenues denominated in US dollars anda substantial portion of costs incurred in euro. Dependingon the severity of these difficulties, some suppliers could beforced to reduce their output, shut down their operations orfile for bankruptcy protection, which could disrupt the deliveryof supplies to EADS. It may be difficult for EADS to find a
replacement for certain suppliers without significant delay,
which could negatively affect EADS’ future results of operationand financial condition. EADS may decide in the future toprovide financial or other assistance to certain suppliers toensure an uninterrupted supply of materials and parts, which
could expose it to credit risk on the part of such suppliers.
EADS’ suppliers or subcontractors may also make claims
or assertions against it for higher prices or other contractual
compensation, in particular in the event of significant changes
to development or production schedules, which could
negatively affect EADS’ future profitability.
Finally, if the macro-economic environment leads to higher thanhistoric average inflation, the labour and procurement costs of
EADS may increase significantly in the future. This may lead tohigher component and production costs which could in turnnegatively impact EADS’ future profitability and cash flows,
to the extent EADS is unable to pass these costs on to its
customers or require its suppliers to absorb such costs.

Industrial Ramp-Up
As a result of the large number of new orders for aircraft
recorded in recent years, EADS intends to accelerate its
production rate in order to meet the agreed upon delivery
schedules for such new aircraft. As it nears full capacity, EADS’ability to further increase its production rate will be dependent
upon a variety of factors, including execution of internal
performance plans, availability of raw materials, parts (such asaluminium, titanium and composites) and skilled employees
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by suppliers and subcontractors (particularly suppliers ofbuyer-furnished equipment) who may experience resource or
financial constraints due to ramp-up. Management of suchfactors is also complicated by the development of new aircraft
programmes in parallel, in particular at Airbus, which carry
their own resource demands. Therefore, the failure of any or allof these factors could lead to missed delivery commitments,
and depending on the length of delay in meeting delivery
commitments, could lead to additional costs and customers’
rescheduling or terminating their orders.

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Programme-Specific Risks
In addition to the risk factors mentioned above, EADS also
faces the following programme-specific risks (while this list does
not purport to be comprehensive, it highlights the current risks
believed to be material by management):tt A350 XWB programme. In connection with the A350 XWB
programme, EADS faces the following main challenges:(i) ensuring the maturity of technology linked to composite
aspects, (ii) meeting the technical performance targets
for the aircraft and respecting the development schedule,(iii) ensuring the production ramp-up and the rampup of key skilled personnel, eg for composite stressand design, (iv) securing the achievement of recurring
cost targets, (v) ensuring that the new Airbus industrialorganisation resulting from Power8 supports effective
development, (vi) ensuring the performance of the risk
sharing partners, including those selected for sites divested
by Airbus and those involved in the extended enterpriseframework, (vii) maintaining customer satisfaction with a
new customisation policy which is a key enabler for the
production ramp-up, and (viii) managing customer contracts
in coherence with the industrial delivery plan;tt A380 programme. In connection with the A380 programme,
EADS faces the following main challenges: (i) management ofstress in the supply chain as a result of the steep ramp-up in
production in coming years, (ii) successful implementation ofa digital mock-up for future A380 production, (iii) managing
maturity in service and (iv) avoidance of production
disruptions and related costs, in particular following a Rolls
Royce engine failure at the end of 2010 which could have aknock-on effect for deliveries in 2011;
tt A400M programme. In connection with the A400M
programme, EADS faces the following main challenges:(i) managing a flight test programme that differs significantly

from that of commercial Airbus aircraft, (ii) integrating thecivil systems (flight management, navigation, etc.) withthe complex military systems, (iii) ensuring that the aircraft
is both commercially certified and meets the range ofmilitary qualifications required by programme customers,(iv) managing the anticipated difficulties on the ramp-up, and(v) meeting the new negotiated time schedule;

tt A320neo programme. In connection with the A320neo
programme, EADS faces the following main challenges:(i) management of stress in the supply chain as a result of
the industrial ramp-up, (ii) meeting the engine development
status and its schedule, and (iii) ensuring the availability ofskilled personnel for the programme;
tt NH90 programme. In connection with the NH90
programme, EADS faces the following main challenges:(i) meeting the development schedule, the cost objectives
and the technical content (full operational configurationof the TTH (Tactical Transport Helicopter) version andfinal configuration of the NFH (NATO Frigate Helicopter)version) of ongoing development programmes on the
numerous versions, (ii) managing the industrial ramp-up
on the programme, and (iii) assuring support readiness inconnection with multiple fleets entering into service; andtt Lead systems integration. In connection with leadsystems integration projects (in particular Saudi bordersurveillance contract), EADS faces the following main
challenges: (i) meeting the schedule and cost objectives
with a high number of sites to deliver and the integrationof COTS products (radars, cameras, sensors) with theirinterfaces into the system, (ii) assuring an efficient projectand staffing ramp-up, and (iii) managing the rollout including
subcontractors as well as training and organisational
adaptation of the customer.

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Legal Risks

Dependence on Joint Ventures and Minority Holdings
EADS generates a substantial proportion of its revenues
through various consortia, joint ventures and equity holdings.
These arrangements include primarily:

tt the Eurofighter and AirTanker consortia;
tt three principal joint ventures: MBDA, ATR and Atlas
Electronik; andtt investment in associates: Dassault Aviation.
The formation of partnerships and alliances with other market
players is an integral strategy of EADS and the proportionof sales generated from consortia, joint ventures and equity
holdings may rise in future years. This strategy may from time
to time lead to changes in the organisational structure, or
realignment in the control, of EADS’ existing joint ventures.

EADS exercises varying and evolving degrees of control in
the consortia, joint ventures and equity holdings in which it
participates. While EADS seeks to participate only in ventures inwhich its interests are aligned with those of its partners, the riskof disagreement or deadlock is inherent in a jointly controlled
entity, particularly in those entities that require the unanimous
consent of all members with regard to major decisions andspecify limited exit rights. The other parties in these entities may
also be competitors of EADS, and thus may have interests thatdiffer from those of EADS.
In addition, in those holdings in which EADS is a minority
partner or shareholder, EADS’ access to the entity’s books
and records, and as a consequence, EADS’ knowledge of theentity’s operations and results, is generally limited as compared
to entities in which EADS is a majority holder or is involved in
the day-to-day management.

Product Liability and Warranty Claims
EADS designs, develops and produces a number of high profile
products of large individual value, particularly civil and military
aircraft and space equipment. EADS is subject to the risk of
product liability and warranty claims in the event that any of its

products fails to perform as designed. While EADS believes thatits insurance programmes are adequate to protect it from suchliabilities, no assurances can be given that claims will not arisein the future or that such insurance cover will be adequate.

Intellectual Property
EADS relies upon patent, copyright, trademark and trade
secret laws, and agreements with its employees, customers,
suppliers and other parties, to establish and maintain its
intellectual property rights in technology and products
used in its operations. Despite these efforts to protect its
intellectual property rights, any of EADS’ direct or indirect
intellectual property rights could be challenged, invalidated
or circumvented. Further, the laws of certain countries do notprotect EADS’ proprietary rights to the same extent as thelaws in Europe and the United States. Therefore, in certain
jurisdictions EADS may be unable to protect its proprietary
technology adequately against unauthorised third-party copying
or use, which could adversely affect its competitive position.

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In addition, although EADS believes that it lawfully complies
with the intellectual property rights granted to others, it has
been accused of infringement on occasion and could haveadditional claims asserted against it in the future. These claims
could harm its reputation, cost it money and prevent it fromoffering certain products or services. Any claims or litigationin this area, whether EADS ultimately wins or loses, could betime-consuming and costly, injure EADS’ reputation or require it
to enter into licensing arrangements. EADS might not be able toenter into these licensing arrangements on acceptable terms. If
a claim of infringement were successful against it, an injunction
might be ordered against EADS, causing further damages.

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Export Controls and Other Laws and Regulations
The export market is a significant market for EADS. In addition,
many of the products EADS designs and manufactures formilitary use are considered to be of national strategic interest.
Consequently, the export of such products outside of EADS’
domestic markets may be restricted or subject to licensing
and export controls, notably by the UK, France, Germany andSpain, where EADS carries out its principal military activities
as well as by other countries where suppliers come from,notably, the US. There can be no assurance (i) that the export
controls to which EADS is subject will not become more
restrictive, (ii) that new generations of EADS products will notalso be subject to similar or more stringent controls or (iii) thatgeopolitical factors will not make it impossible to obtain export
licenses for one or more clients or constrain EADS’ ability toperform under previously signed contracts. Reduced access tomilitary export markets may have a significant adverse effect on
EADS’ business, results of operation and financial condition.

EADS is also subject to a variety of other laws and regulations
that may adversely affect its business and financial condition,
including among others, those relating to commercial
relationships, the use of its products and dealings with foreign
officials. In addition, EADS’ ability to market new products andenter new markets may be dependent on obtaining government
certifications and approvals in a timely manner. Although EADS
seeks to comply with all such laws and regulations, evenunintentional violations or a failure to comply could have amaterial adverse effect on EADS’ business, results of operationand financial condition.
In addition, EADS is sometimes subject to government inquiries
and investigations of its business and competitive environmentdue, among other things, to the heavily regulated nature of
its industry. Any such inquiry or investigation could result inan unfavourable ruling against EADS, which could have anegative effect on its business, results of operation and financial
condition.

Litigation
EADS is currently engaged in a number of legal proceedings.
See “Information on EADS’ Activities — 1.1.9 Legal andArbitration Proceedings”. EADS expects to continue to incur
time and expenses associated with its defence, regardlessof the outcome, and this may divert the efforts and attentionof management from normal business operations. Although

4.

EADS is unable to predict the outcome of these proceedings,
it is possible that they will result in the imposition of damages,
fines or other remedies, which could have a negative effect on
EADS’ business, results of operation and financial condition. An
unfavourable ruling could also negatively impact EADS’ stock
price and reputation.

Industrial and Environmental Risks

Given the scope of its activities and the industries in which it
operates, EADS is subject to stringent environmental, healthand safety laws and regulations in numerous jurisdictions
around the world. EADS therefore incurs, and expects tocontinue to incur, significant capital expenditure and otheroperating costs to comply with increasingly complex laws andregulations covering the protection of the natural environment
as well as occupational health and safety, including costs
to prevent, control, eliminate or reduce emissions into theenvironment, releases of air pollutants into the atmosphere,
discharges to surface and subsurface water and soil, usageof certain substances and the content of EADS’ products, thedisposal and treatment of waste materials, and costs to comply
with reporting or warning regulations. Moreover, new laws andregulations, the imposition of tougher licence requirements,
increasingly strict enforcement or new interpretations of existinglaws and regulations may cause EADS to incur increased
capital expenditure and operating costs in the future in relation
to the above, which could have a negative effect on its resultsof operation and financial condition.
If EADS fails to comply with these environmental, health andsafety laws and regulations, even if caused by factors beyond
its control, that failure may result in the assessment of civil or

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criminal penalties and fines against it. Regulatory authorities
may require EADS to conduct investigations and undertake
remedial activities, curtail operations or close installations or
facilities temporarily, including to prevent imminent risks. In
the event of an industrial accident or other serious incident,
employees, customers and other third parties may file claims
for personal injury, property damage or damage to theenvironment (including natural resources). Further, liability undersome environmental laws relating to contaminated sites canbe imposed retroactively, on a joint and several basis, andwithout any finding of non-compliance or fault. These potential
liabilities may not always be covered by insurance, or may be
only partially covered. The obligation to compensate for suchdamages could have a negative effect on EADS’ results ofoperation and financial condition.
In addition, the various products manufactured and soldby EADS must comply with relevant environmental, healthand safety and substances/preparations related laws
and regulations in the jurisdictions in which they operate.

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Although EADS seeks to ensure that its products meet thehighest quality standards, increasingly stringent and complex
laws and regulations, new scientific discoveries, deliveryof defective products or the obligation to notify or provide
regulatory authorities or others with required information(such as under the EU regulation known as “REACH”, which
addresses the production and use of chemical substances)
may force EADS to adapt, redesign, redevelop, recertify
and/or eliminate its products from the market. Seizures ofdefective products may be pronounced, and EADS may
incur administrative, civil or criminal liability. In the event of an
accident or other serious incident involving a product, EADS
may be required to conduct investigations and undertake
remedial activities. Employees, customers and other third
parties may also file claims for personal injury, property damage
or damage to the environment (including natural resources). Any
problems in this respect may also have a significant adverse
effect on the competitive reputation of EADS’ products.

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Information on EADS’ Activities
1.1 Presentation of the EADS Group

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1.1.1 Overview22

1.1.2 Airbus

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1.1.3 Eurocopter37

1.1.4 Astrium

41

1.1.5 Cassidian46

1.1.6 Other Businesses

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1.1.7 Investments

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1.1.8 Insurance

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1.1.9 Legal and Arbitration Proceedings

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1.1.10 Research and Technology, Intellectual Property

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1.1.11 Environmental Protection

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1.1.12 Employees

641.1.13 Incorporation by Reference

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1.2 Recent Developments

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1.1 Presentation of the EADS Group
1.1.1 Overview
Due to the nature of the markets in which EADS operates and theconfidential nature of its businesses, any statements with respect
to EADS’ competitive position set out in paragraphs 1.1.1 through1.1.7 below have been based on EADS’ internal information
sources, unless another source has been specified below.
With consolidated revenues of € 45.8 billion in 2010, EADSis Europe’s premier aerospace and defence company andone of the largest aerospace and defence companies in theworld. In terms of market share, EADS is among the top
two manufacturers of commercial aircraft, civil helicopters,commercial space launch vehicles and missiles, and a leading
supplier of military aircraft, satellites and defence electronics.
In 2010, it generated approximately 73% of its total revenues
in the civil sector and 27% in the defence sector. As of
31 December 2010, EADS’ active headcount was 121,691.

2010 HIGHLIGHTS
2010 was a year of substantial progress for EADS, with astrengthening recovery in the commercial aircraft market,
reflected in Airbus new orders and deliveries, and a new
agreement reached with launch customer nations which
secures the future of the A400M programme. In the faceof pressure on government budgets and a slower recovery
in the commercial helicopter market, EADS’ Divisions
took further steps to strengthen their competitive position,
investing in new products and capacity and driving efficiency
programmes. EADS’ initiative to boost engagement among its
120,000 employees showed the first improvements in 2010,
as demonstrated by the results of the second annual employee
engagement survey.
Revenues in 2010 reached a new high of € 45.8 billion,
increasing by 6.8% due to growth from both volume andmix effects across core business which more than offset
an approximate € -500 million negative impact of exchange
rate effects. EBIT* for 2010 amounted to € 1.2 billion. At
31 December 2010, the order book of EADS reached€ 448.5 billion. The net cash position of € 11.9 billion was higher
than anticipated, due to better performance and higher orderintake. The order intake amounted to € 83.1 billion in 2010,
driven by the improved momentum in commercial aviation.
Institutional markets including helicopters, defence and publicbudgets have to be monitored.
In its 10th anniversary year, the Group achieved significant
milestones on a number of key programmes. The launch*

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customer nations and EADS concluded negotiations on theoverall A400M discussions. Following approval in Franceand Germany, negotiations on the export levy facility (“ELF”)
scheme are to be finalised with some customer nations andare targeted for completion in 2011. In the meantime, theprogramme is delivering results with four development aircraft
flying. The A400M maturity gate milestone was passed in
February 2011, which clears the way for the start of series
production. Civil certification is planned for 2011.
Manufacturing of the first A350 XWB began in 2010, while theA330 Multi-Role Tanker Transport (“MRTT”) received civil andmilitary certification. Deliveries of the A380 increased, as diddeliveries on the helicopter programmes NH90 and Tiger. The
Ariane 5 launcher completed its 41st consecutive successful
take-off. Finally, a successful rebranding of EADS and its
Divisions was executed in September 2010, which reflects theunity and strength of the Group.
To adapt to changes in the market environment, Eurocopterand Astrium drove transformation programmes (referred to as“SHAPE” and “AGILE”, respectively). These programmes aim
to prepare the business for sustainable future growth in a morecompetitive marketplace. Following the final implementationin 2010 of the four-year restructuring programme at Airbus
referred to as Power8 (which targeted € 2.1 billion of grossannual savings against the projected cost base), Airbus
is channelling the momentum created into the follow-on
programme, Power8 Plus. Launched in 2008, Power8 Plus
aims at adding a further € 650 million in gross annual savings
for Airbus and an additional € 350 million for the rest of theGroup by the end of 2012. “Future EADS”, launched at theend of 2008 and aiming at better integrating the organisational
structure, improving the decision making processes and saving
costs was progressing as planned in 2010. Other cost saving
initiatives are currently being reviewed for effect up to the endof 2014.
Following the financial crisis, the global economy returned to
growth faster than expected in 2010, with emerging markets
driving the recovery. Continued financial market volatility shows
how fragile economic recovery remains in developed markets,with the capital markets questioning the ability of sovereign
nations to repay their debts. Also, despite some short term
exchange rate improvement in 2010, persistent US dollar
weakness has continued to disadvantage EU companies with acost base mainly in euros whereas US manufacturers continue
to derive benefit from more attractively priced exports.

Information on EADS’ Activities
1.1 Presentation of the EADS Group1

In contrast to 2009, the commercial aviation businessexperienced a significant recovery in passenger demand anda return to profitability in 2010. However, there were significant
regional differences, with Asian Pacific carriers contributing
nearly half of the profit, while European airlines narrowly avoided
a loss. Aircraft manufacturers succeeded in maintaining solid
order books built over the preceding years through carefulbacklog management. Emerging markets were also driving
additional demands that did not exist in the past. Defence
and institutional activities which are normally more resilient todownturns were put under scrutiny, especially in Europe as wellas in the US, whereas defence spending has increased in areas
such as the Middle East.
While European defence budgets are expected to experiencecuts over the coming years, the impact on industry is still
unclear. The need for some EU countries to reduce public
sector spending but still maintain defensive capabilities has
driven governments to look for ways to mitigate the impact on
defence budgets. Compromises need to be found between
maintaining procurement budgets on the one hand andconsidering adaptations of the operational budgets on theother. Governments may pursue further outsourcing of defencerelated services to industry players to strive for better value fortaxpayers’ money. Additionally, sustained growth in security
spending both from government and private sectors has
been driven by the need to respond effectively to emergency
response requirements such as large-scale natural disasters,
fires, flooding and earthquakes, as well as asymmetric terrorist
threats.
Airbus generated revenues of € 30.0 billion in 2010,
representing an increase of 6.8% compared to 2009. In 2010,
Airbus achieved a new company record of 510 commercial
aircraft deliveries to 94 customers (including 19 new ones).
Deliveries included 401 A320 family aircraft, 91 A330/
A340s and 18 A380s. Airbus Military delivered 20 light andmedium military transport aircraft (CN235 and C295). Airbus
outperformed its order intake target by recording a total of
644 ross commercial aircraft orders, thereof 452 A320 family
aircraft and 32 new orders for the A380. The A350 XWB
continued to win key strategic campaigns during 2010,
boosting total orders for the family to 583 and the number ofcustomers to 36 by year-end. In 2010, Airbus launched theA320neo (new engine option), offering 15% less fuel burncompared to the current A320. The A400M accomplishedmore than 1,000 flight hours in over 300 test flights with fourdevelopment aircraft, while moving ahead towards an imminent
start of series production. Civil certification is planned to beobtained before the end of 2011. The A330 MRTT also passed
a milestone achieving civil and military certification in 2010.
Delivery of the first two MRTTs to the Royal Australian Air Forceis in the final stages.
Eurocopter generated revenues of € 4.8 billion in 2010,
representing an increase of 5.7% compared to 2009. 527

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helicopters were delivered to customers in 2010 and net neworders totalled 346 helicopters. These orders, well balanced
between civil (51%) and military activities (49%), included
key Super Puma family contracts for Malaysia and Mexicoand strategic Ecureuil orders in Russia and the US. Supportand service activities were robust and accounted for 36% ofrevenues in 2010. Despite another challenging year for theindustry, Eurocopter remained a leader in the worldwide civil
and parapublic market with a 50% market share. 2010 was
also a year of progress for Eurocopter’s military programmes:
28 NH90 and 15 Tiger helicopters were delivered in 2010,
twice as many as in 2009. The Tiger proved its operationalreliability in Afghanistan with the French forces, while three newcustomers took delivery of their first NH90 helicopter during theyear. A key innovation milestone was achieved in 2010 with thesuccessful first flight of the X3 demonstrator, a new generationof high-speed helicopter. Eurocopter continued to expand its
global footprint during the year.
At Astrium, revenues in 2010 rose by 4.3% to € 5.0 billion
despite a difficult economic climate. New orders amounted to€ 6 billion, taking the order book to € 15.8 billion at the end of
the year. The Ariane 5 launcher continued to prove its reliability
by completing six launches in one year, including three in twomonths. The Ariane 5 achieved its 41st successful launch
in a row. Astrium is currently preparing the next generationof launcher, through the Ariane 5 ME (Mid-life Evolution)
programme. During 2010, Astrium delivered 10 satellites tocustomers and signed contracts for eight new satellites: three
for telecommunication and five for Earth observation. Within its
defence activities, the M51 acceptance launch was successfully
carried out. In services, orders almost tripled compared to2009.
Revenues at Cassidian increased by 10.6% to € 5.9 billion,
driven by growth in Eurofighter, an increase in contributions
from the newer security segments and missile businesses
growth. Profitability increased slightly, despite higher self-funded
research and development for future business and a charge
resulting from the UK’s cancellation of the Firecontrol security
contract. Regarding unmanned aircraft systems (“UAS”), 2010
was marked by the successful first flight of the Euro Hawk andcompletion of a series of four test flights for the Barracuda
demonstrator, which demonstrated the ability to fly in civil
airspace. Cassidian accomplished the delivery of the complete
second batch of 35 DRAC systems, while also progressing
with its self-funded Talarion programme. At Cassidian Systems,
the Saudi Arabian border surveillance programme successfully
passed test cases for the northern border in 2010. With thisprogramme, Cassidian confirms its competitive position as leadsystems integrator for global security projects. The Divisionalso expanded its security capabilities through the extensionof Tetra networks in India and Bulgaria. Cassidian Electronics
was awarded a new order for the development of the next
generation of radar for the Eurofighter aircraft.

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1.1 Presentation of the EADS Group1

EADS continues to pursue the Vision 2020 goal of balancing
revenues from the Airbus commercial aviation businesswith revenues from other Divisions. To prepare the futureof the Company, EADS is investing in further research anddevelopment, with a particular focus on eco-efficiency, andexploring new growth opportunities on global markets.
In 2010, EADS proved its resilience to the economic crisis andis now emerging stronger. 2010 was a year of progress that
helped pave the way for the development of EADS in its second
decade.

STRATEGY
In order to maximise value for its shareholders, management
intends to reinforce EADS’ position as a leader in major
global aerospace and defence markets. Beyond addressing
current operational challenges, EADS will continue to focus onproviding superior value to its customers through innovative
product and service solutions. EADS has defined the following
long-term objectives for the future pursuant to its Vision 2020
plan:

tt Improve portfolio balance between Airbus Commercial
manufacturing and other EADS activities. In 2010, revenuesat Airbus Commercial manufacturing continued to represent
a significant portion of EADS’ consolidated revenues forthe year. As a result, the Group remains highly vulnerable
to commercial aircraft cycles, the financial burden andrisk associated with aircraft programmes and US dollar
exchange rate fluctuation. EADS will therefore seek toincrease the contribution to revenues from other businesssegments in future years, while still maintaining long-term
parity with Boeing in the commercial aircraft segment. In
particular, EADS will seek to increase the proportion ofrevenues emanating from its defence, security and services
businesses. The Group will consider all options for achieving
such growth, including targeted acquisitions or partnershipsthat enhance its overall competitive position and add
capabilities to its portfolio, in particular in Asia, the Middle
East and the Americas;
tt Increase profitability. Through better internal costs control,
optimal resource allocation, enhanced programme execution
and risk management, ability to cope with the US$ volatility
as well as growth, particularly of more profitable segments.
EADS has taken the initial steps towards restoring its
profitability. EADS intends to increasingly focus on its core
activities, which means moving towards a new businessmodel and reallocating resources away from certain noncore legacy activities. Through more optimal resource
allocation and stronger development of more profitablesegments, EADS will strive to establish a level of profitability
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tt Expand its services offering. Historically, EADS’ growthhas been driven by the sale of technologically advanced
products and solutions. At the same time, management
is focused on increasing EADS’ presence in the highvalue services market, given its countercyclical nature andopportunities for sustained growth. Factors supporting thismarket include the rapid expansion of EADS’ in-service
commercial and defence fleet — which will require support
throughout its lifecycle — as well as the increasing tendency
on the part of defence and governmental agencies to
outsource various key functions. EADS will seek to provide
high value-added services related to both platforms
and systems, including advanced in-service support, airtraffic management systems and training. Revenue fromservices activities is targeted to account for 25% of EADS’
consolidated revenues by 2020. Such ambitions would
require further growth as EADS intends to continue playing
an increasingly important role in Europe;
tt Become a truly global industrial group. A significant portionof EADS’ suppliers, facilities and employees are based inEurope, while the majority of its revenues originate fromoutside of Europe. In order to achieve access to certain
markets and technology, optimise costs and hedge against
future US dollar volatility, EADS will aim to implement a
long-term industrial strategy that corrects this imbalanceby expanding its industrial footprint and partnerships in key
markets outside of Europe, including the Americas, China,
Russia and India. In the US, the goal is to establish a firmindustrial and commercial presence in the world’s largest
defence and homeland security market. Consequently, by
2020, EADS is seeking to have 40% of its sourcing and 20%
of its employees based outside of Europe;
tt Continue to foster innovation. Innovation in product,
technology, manufacturing and customer offerings will define
EADS’ future. With development cycles shortening andnew competitors emerging in all fields, EADS must maintainits technological edge and cover a broad spectrum ofcapabilities in order to remain a market leader. To maintain its
innovative edge, EADS will seek to systematically employ thelatest digital design and engineering tools in order to complete
major platform developments more quickly, and will seek toaccelerate the pace at which it reviews its core technologies
so as to close gaps against the competition. These coretechnologies are expected to include C4I, network centric
operations and UAV technology, among others;
tt Focus on the environment. EADS will seek to anticipate
and address future environmental challenges as part ofits commitment to reconciling environmental responsibility
with economic success. Being greener, cleaner, quieter
and smarter, the A380 has already set new standards
for air transport and the environment. EADS will pursue
additional initiatives in the future – including a comprehensive
environmental management system based on ISO 14001 toInformation on EADS’ Activities
1.1 Presentation of the EADS Group1cover all EADS activities – in order to render eco-efficiency acompetitive advantage over the long-term;

tt Develop our people. EADS needs motivated and competentemployees. EADS leadership culture is based on mutual
trust, empowerment, recognition and accountability.
Employee development is a core activity of EADS managers.
To this end, it is the duty of EADS and its management
to provide employees with the opportunities to meet theirprofessional expectations, develop their professional skills
and realise their personal potential. This requires active
management development based on a new leadershipmodel. EADS will also encourage stronger mobility andgreater internal diversity in the teams.

ORGANISATION OF EADS BUSINESSESEADS organises its businesses into the following four operating
Divisions: (1) Airbus (including Airbus Commercial and Airbus
Military), (2) Eurocopter, (3) Astrium and (4) Cassidian. The chart
set out in “General Description of the Company and its Share
Capital — 3.3.6 Simplified Group Structure Chart” illustrates the
allocation of activities among these four Divisions.

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Airbus Military
Airbus Military produces and sells special mission aircraft, which
are derived from existing aircraft platforms and are dedicated to
specialised military and security tasks such as in-flight refuellingcapabilities, maritime surveillance and antisubmarine warfare.
Airbus Military also manufactures and sells medium and light
military transport aircraft and is responsible for the European
heavy military transport A400M project. See “— 1.1.2 Airbus —Airbus Military”.

Eurocopter
Eurocopter is a global leader in the civil and military helicopter
market, offering one of the most complete and modern rangesof helicopters and related services. With approximately 2,900
operators worldwide, this product range currently includes lightsingle-engine, light twin-engine, medium and medium-heavy
helicopters which are adaptable to all kinds of mission types
based on customer needs. In 2010, Eurocopter recorded
revenues of € 4.8 billion, representing 10.6% of EADS’ total
revenues. See “— 1.1.3 Eurocopter”.

Astrium

Airbus recorded revenues of € 30.0 billion in 2010 – including
revenues of € 2.7 billion at Airbus Military – representing 65.5%
of EADS’ total revenues.

Astrium designs, develops and manufactures satellites, orbital
infrastructures and launcher systems and provides space
services. It is the third largest space systems manufacturing
company in the world after Boeing and Lockheed Martin
and the leading European supplier of satellites, orbital
infrastructures, launchers and associated services. Astrium
has three main Business Units: Astrium Satellites, Astrium
Space Transportation and Astrium Services. These Business
Units include the provision of launch services through Astrium’s
shareholdings in Arianespace (Ariane 5 launcher), Starsem(Soyuz launcher) and Eurockot (Rockot launcher), as well as
services related to telecommunication and Earth observation
satellites through wholly or majority owned subsidiaries such as
Paradigm Secure Communications, Infoterra and Spot Image.
In 2010, Astrium recorded revenues of € 5.0 billion, representing
10.9% of EADS’ total revenues. See “— 1.1.4 Astrium”.

Airbus Commercial

CassidianSince it was founded in 1970 and up to the end of 2010,
Airbus has received orders for 10,060 commercial aircraftfrom approximately 323 customers around the world. With
510 aircraft deliveries in 2010 (498 in 2009), Airbus was thelargest supplier of commercial aircraft in the world for theeighth consecutive year. Airbus received 644 gross orders in2010 (compared to 310 gross orders in 2009), or 51% of thegross worldwide market share (in units) of aircraft beyond 100
seats. After accounting for cancellations, net order intake for2010 was 574 aircraft (compared to 271 aircraft in 2009). As
of 31 December 2010, Airbus’ backlog of commercial orders
was 3,552 aircraft, representing approximately 84% of total
EADS worldwide backlog. See “— 1.1.2 Airbus— Airbus
Commercial”.

Cassidian serves as the main pillar of EADS’ defence andsecurity activities. By combining its electronics, air systems,
defence and communication systems and missile systems(consisting of EADS’ 37.5% stake in MBDA) capabilities within
one Division, EADS has streamlined its defence and security
business to better meet the needs of customers that require
integrated defence and security solutions. The Division’s
rebranding in 2010 reflects Cassidian’s long-term strategy
of becoming a truly global player in the defence and security
markets. In 2010, Cassidian recorded revenues of € 5.9 billion,
representing 13.0% of EADS’ total revenues. See “— 1.1.5
Cassidian”.

AirbusAirbus is one of the world’s leading aircraft suppliers, with a
mission to provide aircraft best suited to the market’s needs
and to support these aircraft with the highest quality ofservice. The Airbus commercial product line comprises highly
successful families of aircraft ranging from 107 to 525 seats:
the single-aisle A320 family (A318/A319/A320/A321), thewide-body long-range A330/A340 family, the next-generation
A350 XWB family and the ultra long-range, double-decker
A380 family. Airbus also continues to broaden its scope andproduct range by applying its expertise to the military market,
as well as extending its portfolio of freighter aircraft.

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Other Businesses

Investments

Other Businesses include turboprop manufacturer ATR,
aerostructure and aircraft seat business Sogerma, US operating
unit EADS North America and 30% (consolidated at equity) ofDaher-Socata. Other Businesses do not form part of EADS’
four Divisions.

Among its significant investments, EADS holds a 46.3%
stake in Dassault Aviation, a major participant in the world
market for military jet aircraft and business jets. See “— 1.1.7
Investments”.

SUMMARY FINANCIAL AND OPERATING DATA
The following tables provide summary financial and operating data for EADS for the past three years.

tt Consolidated Revenues by Division for the years ended 31 December 2010, 2009 and 2008
Year ended 31 December 2010
Amount in € bn

Amount in € bn

30.0

65.5%

Airbus Commercial

27.7

Airbus Military

2.7

Eurocopter

In percentage

Year ended 31 December 2008
(1)

Amount in € bn

In percentage (1)

28.1

65.6%

29.0

66.8%

60.5%

26.4

61.6%

26.5

61.1%

5.9%

2.2

5.2%

2.8

6.4%

4.8

10.6%

4.6

10.7%

4.5

10.3%

Astrium

5.0

10.9%

4.8

11.2%

4.3

9.9%

Cassidian

5.9

13.0%

5.3

12.5%

5.7 (3)13.0%

Total Divisional revenues

45.7

100%

42.8

100%

43.5

100%

Airbus (2)In percentage

Year ended 31 December 2009
(1)

Other Businesses

1.2

1.1

1.3

HQ/Consolidation (4)

(1.1)

(1.1)

(1.5)

Total

45.8

42.8

43.3

(1) Before “Other Businesses” and “HQ/Consolidation”.
(2) Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Aribus division level.
(3) Augsburg site’s revenues are included in Cassidian in 2008 and amounted to €438 million. As of 2009, the Augsburg site is consolidated within Airbus Commercial.
See “Management’s Discussion and Analysis of Financial Condition and Results of Operations —2.1.2 Overview”.
(4) HQ/Consolidation includes, in particular, adjustments and eliminations for intercompany transactions.

tt Consolidated Revenues by Geographical Area for the years ended 31 December 2010, 2009 and 2008
Year ended 31 December 2010

Year ended 31 December 2009

Year ended 31 December 2008

Amount in € bn

In percentage (1)Amount in € bn

In percentage (1)Amount in € bn

In percentage (1)43.6%

Europe

21.4

46.8%

21.4

50.1%

18.9

North America

3.5

7.6%

6.1

14.3%

7.8

18.0%

Asia/Pacific

11.4

24.8%

8.6

20.1%

10.8

24.9%

Rest of the World (2)

9.5

20.8%

6.7

15.5%

5.8

13.5%

Total

45.8

100%

42.8

100%

43.3

100%

(1) Percentage of total revenues after eliminations.
(2) Including the Middle East.

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tt Consolidated Orders Booked for the years ended 31 December 2010, 2009 and 2008
Year ended 31 December 2010
Amount in € bn

Year ended 31 December 2009

In percentage(1)

Amount in € bn

1

Year ended 31 December 2008

In percentage(1)

Amount in € bn

In percentage(1)

Orders booked (2)
68.2

83%

23.9

52%

85.5

87%

Airbus Commercial

68.2

83%

23.5

51%

82.1

83%

Airbus Military

0.2

0%

0.6

1%

5.1

5%
5%

Airbus (3) (4)Eurocopter

4.3

5%

5.8

13%

4.8

Astrium

6.0

7%

8.3

18%

3.3

3%

Cassidian

4.3

5%

8.0

17%

5.3

5%

Total Divisional orders

82.8

100%

46.0

100%

98.9

100%

Other Businesses

1.7

0.9

1.7

HQ/Consolidation

(1.4)

(1.1)

(2.0)

Total

83.1

45.8

98.6

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

Before “Other Businesses” and “HQ/Consolidation”.
Without options.
Based on catalogue prices for commercial aircraft activities.
Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus division level.

tt Consolidated Backlog for the years ended 31 December 2010, 2009 and 2008 (1)Year ended 31 December 2010
Amount in € bn

Year ended 31 December 2009
(2)

Amount in € bn

400.4

89%

Airbus Commercial

378.9

Airbus Military

22.8
14.5

Backlog

In percentage

Year ended 31 December 2008
(2)

In percentage

Amount in € bn

In percentage (2)

339.7

87%

357.8

90%

85%

320.3

82%

337.2

84%

5%

20.7

5%

22.3

6%

3%

15.1

4%

13.8

3%
3%

(3)

Airbus (4) (5)Eurocopter
Astrium

15.8

4%

14.6

4%

11.0

Cassidian

16.9

4%

18.8

5%

17.0

4%

Total Divisional backlog

447.6

100%

388.2

100%

399.6

100%

Other Businesses

2.5

2.0

3.2

HQ/Consolidation

(1.6)

(1.1)

(2.6)

Total

448.5

389.1

400.2

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

For a discussion on the calculation of backlog, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — 2.1.4.1 Order Backlog”.
Before “Other Businesses” and “HQ/Consolidation”.
Without options.
Based on catalogue prices for commercial aircraft activities.
Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus division level.

RELATIONSHIP BETWEEN EADS N.V.
AND THE GROUP

management service agreements have been put in place withthe subsidiaries and services are invoiced on a cost plus basis.

EADS N.V. itself does not engage in the core aerospace,defence or space business of its Group but coordinates related
businesses, sets and controls objectives and approves majordecisions for its Group. As the parent company, EADS N.V.
conducts activities which are essential to the Group activities
and which are an integral part of the overall management of theGroup. In particular, finance activities pursued by EADS N.V. arein support of the business activities and strategy of the Group.
In connection therewith, EADS N.V. provides or procures theprovision of services to the subsidiaries of the Group. General

For management purposes, EADS N.V. acts through its Boardof Directors, Executive Committee, and Chief Executive Officer
in accordance with its corporate rules and procedures detailed
in “Corporate Governance”.
Within the framework defined by EADS, each Division,
Business Unit and subsidiary is vested with full entrepreneurial
responsibility.

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1.1.2 Airbus
Airbus is one of the world’s leading aircraft suppliers, with a
mission to provide aircraft best suited to the market’s needs
and to support these aircraft with the highest quality ofservice. The Airbus commercial product line comprises highly
successful families of aircraft ranging from 107 to 525 seats:
the single-aisle A320 family (A318/A319/A320/A321), thewide-body long-range A330/A340 family, the next-generation
A350 XWB family and the ultra long-range, double-decker
A380 family. Airbus also continues to broaden its scope andproduct range by applying its expertise to the military market,
as well as extending its portfolio of freighter aircraft.
In 2010, Airbus recorded revenues of € 30.0 billion – including
revenues of € 2.7 billion at Airbus Military – representing 65.5%
of EADS’ total revenues.

AIRBUS COMMERCIAL

Introduction and Overview
Since it was founded in 1970 and up to the end of 2010,
Airbus has received orders for 10,060 commercial aircraftfrom approximately 323 customers around the world. With
510 aircraft deliveries in 2010 (498 in 2009), Airbus was thelargest supplier of commercial aircraft in the world for theeighth consecutive year. Airbus received 644 gross orders in2010 (compared to 310 gross orders in 2009), or 51% of thegross worldwide market share (in units) of aircraft beyond 100
seats. After accounting for cancellations, net order intake for2010 was 574 aircraft (compared to 271 aircraft in 2009). As of
31 December 2010, Airbus’ backlog of commercial orders was
3,552 aircraft, representing approximately 84% of total EADS
worldwide backlog.

Developing the most comprehensive line of products
in response to customer needs
Airbus continuously seeks to develop and deliver new products
to meet customers’ evolving needs, while also improving its
existing product line. For example, Airbus decided at the end of2010 to offer new fuel saving engines as an option on its A320
family. The A320neo (new engine option) has been developed
to respond to strong market demand for fuel efficient aircraft
and increased competition in the single-aisle market.
Airbus is also currently pursuing (i) development and production
on the new A350 XWB programme, (ii) the gradual expansionof relevant freighter applications across the range of Airbus
aircraft with the A330-200F and the A320 passenger-tofreighter conversion programme aimed at replacing themany ageing small freighters in service today, (iii) additional
opportunities in the military business through the A400M or thedevelopment of military derivatives products such as the A330
MRTT (see “— Airbus Military” below), and (iv) research on thedevelopment of new aircraft in the short and medium range
segments.

Expanding its customer services offering
Airbus seeks to remain at the forefront of the industry by
expanding its customer services offering to meet customers’
evolving needs. As a result, Airbus has developed a wide
range of added value and customised services whereby
customers can select the products and services they needaccording to their own business model and outsourcing policy.
This approach provides Airbus operators with solutions tosignificantly reduce their operating costs, increase aircraft
availability and enhance the quality of their operations.

StrategyMarketAirbus’ primary goal is to deliver strong results in a sustainedmanner, while commanding between 40% and 60% of theworldwide commercial aircraft market over the long-term andexpanding its customer services offering. To achieve this goal,
Airbus is actively:

Cyclicality and Market Drivers

Building a leaner, more fully integrated company
Following the final implementation in 2010 of the four-year
restructuring programme at Airbus referred to as Power8,
Airbus is currently working on a further cost savings
programme referred to as “Power8 Plus”. This programme
has the goal of achieving gross annual savings of € 650 million
against the projected cost base beginning in 2011-2012. Airbus
management intends to achieve Power8 Plus objectives byextending Power8 initiatives up to 2012 (€ 350 million) andthrough further globalisation of engineering and manufacturing
work (€ 300 million).

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The main factors affecting the commercial aircraft market
include passenger demand for air travel, cargo activity,
economic growth cycles, national and international regulation(and deregulation), the rate of replacement and obsolescenceof existing fleets and the availability of aircraft financing sources.
The performance, competitive posture and strategy of aircraft
manufacturers, airlines, cargo operators and leasing companies
as well as wars, political unrest, pandemics and extraordinary
events may also precipitate changes in demand and lead toshort-term market imbalances.
In recent years, China and India have emerged as significant
new aircraft markets. According to internal estimates, they are
expected to constitute the second and fifth most important
markets for aircraft deliveries respectively, in the next twenty
years. As a result, Airbus has sought to strengthen its

Information on EADS’ Activities
1.1 Presentation of the EADS Group1commercial and industrial ties in these countries. New aircraft
demand from airlines in the Middle East has also become
increasingly important, as they have rapidly executed strategies
to establish themselves with a global presence and to leverage
the benefits the region can deliver.
The no-frills/low-cost carriers also constitute a significant
sector, and are expected to continue growing around the world,
particularly in Asia, where emerging markets and continued
deregulation should provide increased opportunities. While
Airbus single-aisle aircraft continue to be a popular choice forthese carriers, demand for Airbus’ range of twin-aisle aircraft
may also increase as some of these carriers begin testing themarket with new long-range operations.

Overall Growth. The long-term market for passenger aircraft
depends primarily on passenger demand for air travel, which isitself primarily driven by economic or GDP growth, fare levels
and demographic growth. Measured in revenue passenger
kilometres, air travel increased every year from 1967 to 2000,
except for 1991 due to the Gulf War, resulting in an averageannual growth rate of 7.9% for the period. Demand for airtransportation also proved resilient in the years following
2001, when successive shocks, including 9/11 and SARS in
Asia, dampened demand. Nevertheless, the market quickly
recovered.
More recently, the financial crisis and global economic
difficulties witnessed at the end of 2008 and into 2009 resulted
in only the third period of negative traffic growth during thejet age, and a cyclical downturn for airlines in terms of traffic(both passenger and cargo), yields and profitability. By the endof 2010 however, traffic had recovered strongly from 2009
levels, with a number of industry participants, including theInternational Civil Aviation Organisation (ICAO), forecasting
continued positive growth in 2011.
Beyond the near-term market uncertainties and based oninternal estimates, Airbus believes that air travel remains a
growth business and will grow at 4.8% per annum during theperiod 2010-2029. Airbus therefore expects passenger traffic,
as measured in revenue passenger kilometres, to more thandouble in the next twenty years.

Cyclicality. Despite the expected overall long-term growth in
air travel, the market for commercial aircraft has proven to be
cyclical, due to the volatility of airline profitability, cyclicality of
the world economy and occasional unforeseen events which
can further depress demand for air travel, such as the spreadof H1N1 flu. Accordingly, following the peak in new orders
reached in 2007, Airbus recorded significantly fewer new orders
in 2008 and 2009 as a result of the cyclical downturn. In 2010,
the rebound in traffic (both passenger and cargo), improved
yields and higher load factors helped support a cyclicalrecovery among airlines globally, which in turn was reflected inincreased orders as well as record deliveries at Airbus in 2010.

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When cyclical downturns do occur, aircraft manufacturers
have typically experienced decreases in aircraft orders andhave made fewer deliveries, with some customers seeking topostpone or cancel their existing orders. In the past this has
generally been followed by a period of sustained new orderand delivery activity. However, as with any macro-economic
development, it is difficult to predict how the current recovery
and the next cycle will develop.

1Regulation/Deregulation. National and international
regulation (and deregulation) of international air services andmajor domestic air travel markets affect demand for passenger
aircraft as well. In 1978, the United States deregulated its
domestic air transportation system, followed by Europe in
1985. The more recently negotiated “Open Skies Agreement”
between the US and Europe, which became effective in 2008,
allows any European or US airline to fly any route between
any city in the EU and any city in the US. Other regions andcountries are also progressively deregulating, particularly in
Asia. This trend is expected to continue, facilitating and in somecases driving demand. In addition to providing greater market
access (which may have formerly been limited), deregulation
may allow for the creation and growth of new airlines or new
airline models, as has been the case with the no-frills/low-costairline model, which has increased in importance throughout
major domestic and intra regional markets since deregulation(eg, in the US and Europe).
Airline Network Development: “Hub” and “Point-to-Point”
Networks. Following deregulation, major airlines have sought
to tailor their route networks and fleets to continuing changes
in customer demand. Accordingly, where origin and destination
demand prove sufficiently strong, airlines often employ direct,
or “point-to-point” route services. However, where demand
between two destinations proves insufficient, airlines havedeveloped highly efficient “hub and spoke” systems, which
provide passengers with access to a far greater number of air
travel destinations through one or more flight connections.
The chosen system of route networks in turn affects aircraft
demand, as hubs permit fleet standardisation around both
smaller aircraft types for the short, high frequency and lower
density routes that feed the hubs (between hubs and spokes)
and larger aircraft types for the longer and higher density
routes between hubs (hub-to-hub), themselves large pointto-point markets. As deregulation has led airlines to diversify
their route network strategies, it has at the same time therefore
encouraged the development of a wider range of aircraft inorder to implement such strategies.
Airbus, like others in the industry, believes that route networks
will continue to grow through expansion of capacity on existing
routes and through the introduction of new routes, which will
largely be typified by having a major hub city at least at one
end of the route. These new route markets are expected to be

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well served by Airbus’ latest product offering, the A350 XWB.
In addition, the A380 has been designed primarily to meet thesignificant demand between the major hub cities, very often
also the major centres of population such as London, Paris,
New York and Beijing for example. Airbus has identified 32
such cities in its market analysis. Airbus believes that it is well
positioned to meet current and future market requirements
given its complete family of products, from the 107-seat A318
to the 525-seat A380.

Alliances. The development of world airline alliances has
reinforced the pattern of airline network development describedabove. According to data from Ascend, a UK-based aviationindustry consultancy, approximately one third of the world’s
jetliner seats being flown today are operated by just 15 airlines
as of January 2011. In the 1990s, the major airlines began toenter into alliances that gave each alliance member access tothe other alliance members’ hubs and routings, allowing airlines
to concentrate their hub investments while extending theirproduct offering and market access. Airlines have also begun to
explore different merger possibilities in recent years. Examples
include the merger of Air France and KLM, Delta and Northwest
and United and Continental, with talks between other airlines
currently ongoing.

Market Structure and Competition
Market Segments. According to a study conducted by
Airbus, a total of 14,240 aircraft with more than 100 seats
were in service with airlines worldwide at the beginning of 2010(as compared to 14,016 aircraft at the beginning of 2009).
Currently, Airbus competes in each of the three principal market
segments for aircraft with more than 100 seats.
“Single-aisle” aircraft, such as the A320 family, have 100-210
seats, typically configured with two triple seats per row divided
by one aisle, and are used principally for short-range andmedium-range routes.
“Twin-aisle” or “wide body” aircraft, such as the A330/A340/
A350 XWB families, have a wider fuselage with more than 210
seats, typically configured with eight seats per row and with
two aisles. The A330/A340/A350 XWB families are capable ofserving all short to long-range markets, with the A340-500/600
designed for ultra-long-range operations in particular.
“Very large aircraft”, such as the A380 family, are designed
to carry more than 400 passengers, non-stop, over very
long-range routes with superior comfort standards and withsignificant cost-per-seat benefits to airlines. Freight aircraft,which form a fourth, related segment, are often converted
ex-passenger aircraft. See “— 1.1.7 Investments —Aerostructures, Aircraft Conversion and Floor Panels — EFW”.

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Airbus also competes in the corporate, VIP business jet market
with the ACJ, an A319-based Corporate Jetliner, and the A318
Elite. It has also recently sold the A320, A340 and A380 toserve the business jet market in private, corporate shuttle andin government/VIP roles.

Geographic differences. The high proportion of single-aisle
aircraft in use in both North America and Europe reflects the
predominance of domestic short-range and medium-range
flights, particularly in North America due to the development ofhubs following deregulation. In comparison with North America
and Europe, the Asia-Pacific region uses a greater proportion oftwin-aisle aircraft, as populations tend to be more concentrated
in fewer large urban centres. The tendency towards use oftwin-aisle aircraft is also reinforced by the fact that many of theregion’s major airports limit the number of flights, due either
to environmental concerns or to infrastructure constraints that
limit the ability to increase flight frequency. These constraints
necessitate higher average aircraft seating capacity per flight.
However, Airbus believes that demand for single-aisle aircraft in
Asia will grow over the next 20 years, particularly as domestic
markets in China and India continue to develop. Aircraft
economics will also help to drive aircraft size, with airlines
looking to reduce the cost per seat through higher density
aircraft cabins and the use of larger aircraft types and variants
where possible.
Competition. Airbus has been operating in a duopoly since
Lockheed’s withdrawal from the market in 1986 and Boeing’s
acquisition of McDonnell Douglas in 1997. As a result, themarket for passenger aircraft of more than 100 seats is now
effectively divided between Airbus and Boeing. According to the
manufacturers’ published figures, in 2010 Airbus and Boeing,respectively, accounted for 52% and 48% of total deliveries,
52% and 48% of total net orders, and 51% and 49% of thetotal year-end backlog.
Nevertheless, the high technology and high value natureof the business makes aircraft manufacturing an attractive
industry in which to participate, and besides Boeing, Airbus
faces aggressive international competitors who are intent on
increasing their market share. Regional jet makers Embraer andBombardier, coming from the less than 100-seat commercial
aircraft market, continue to develop larger and more capable
airplanes (such as the new 100- to 149-seat C-Series launchedby Bombardier). Additionally, other competitors from Russia,
China, and Japan are likely to enter the 70- to 150-seat aircraft
market over the next few years. This market environment has
resulted in intense pressures on pricing and other competitive
factors.

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1.1 Presentation of the EADS Group1

Customers
As of 31 December 2010, Airbus had 323 customers, 6,508
Airbus aircraft had been delivered to operators worldwide since
the creation of Airbus, and 3,552 aircraft were on order. The
table below shows Airbus’ largest commitments in terms of
total gross firm orders by customer for the year 2010.
Customer

Firm Orders*

Virgin America

60

Gecas

60

CASC

56

Air Lease Corporation

51

Lan Airlines

50

Emirates

32

BOC Aviation

30*

Options are not included in orders booked or year-end backlog.

Products and Services
The Family Concept — Commonality across the Fleet
Airbus’ aircraft families promote fleet commonality. Thisphilosophy takes a central aircraft and tailors it to create
derivatives to meet the needs of specific market segments,
meaning that all new-generation Airbus aircraft share thesame cockpit design, fly-by-wire controls and handlingcharacteristics. Pilots can transfer among any aircraft within
the Airbus family with minimal additional training. Cross-crewqualification across families of aircraft provides airlines withsignificant operational flexibility. In addition, the emphasis on
fleet commonality permits aircraft operators to realise significant
cost savings in crew training, spare parts, maintenance andaircraft scheduling. The extent of cockpit commonality within
and across families of aircraft is a unique feature of Airbus that,in management’s opinion, constitutes a sustainable competitive
advantage.
In addition, technological innovation has been at the core of
Airbus’ strategy since its creation. Each product in the Airbus
family is intended to set new standards in areas crucial toairlines’ success, such as cabin comfort, cargo capacity
performance, economic performance, environmental impact
and operational commonality. Airbus innovations often provide
distinct competitive advantages, with many becoming standard
in the aircraft industry.
In 2010 for example, Airbus continued to pioneer thedevelopment of sustainable bio-fuels as a future replacement
for traditional kerosene fuel, in order to reduce CO2 emissions
from aviation. A partnership was set up early in the year with
Qatar Airways, Qatar Science & Technology Park and Qatar

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Petroleum to develop, produce and supply a second generationof bio-fuels. At the end of 2010 and for the very first time, an
A320 from Tam Airlines performed a flight in Latin America
using 50% bio-kerosene and 50% traditional kerosene.

A320 Family. Airbus’ family of single aisle aircraft, based on theA320 (which entered service in 1988 following a development
programme launched in 1984), includes the A318, A319 andA321 derivatives, as well as the A319-based Airbus Corporate
Jetliner and A318 Elite business jet, which Airbus launched in
1997 and 2005, respectively. Each aircraft in the A320 family
shares the same systems, cockpit, operating procedures andcross-section. The A320 family covers the market from 100 to
220 seats, flying routes up to 3,000 nm/5,700 km.
At 3.96 metres diameter, the A320 family has the widest
fuselage cross-section of any competing single-aisle aircraft.
This provides a roomy passenger cabin, a high comfort
level and a more spacious underfloor cargo volume than its
competitors. The A320 family incorporates digital fly-by-wire
controls, an ergonomic cockpit and a lightweight carbon fibre
composite horizontal stabiliser. The use of composite material
has also been extended to the vertical stabiliser. The A320
family’s competitor is the Boeing 737 series.
With more than 6,944 aircraft sold and 4,526 currently
in service, the A320 family has proven extremely popularwith customers, offering high standards of cabin comfort,
technology and economic performance. Its success with lowcost airlines in particular demonstrates the economic appeal of
the A320 family.
Airbus continues to invest in the A320 family, introducing
enhancements and new technology to maintain the aircraft’s
appeal to customers. In 2010, Airbus introduced new “sharklet”
wingtip devices as an option for customers, an innovation
expected to result in around 3.5% reduced fuel burn over longsectors as well as increased payload-range and improved takeoff performance. The first A320 fitted with sharklets is expected
to be delivered from the end of 2012.
In addition, Airbus decided at the end of 2010 to offer new fuelsaving engines as an option on its A320 family. The A320neo isdesigned not only to deliver fuel savings of up to 15% (including
sharklets), but A320neo customers will also benefit from adouble-digit reduction in NOx emissions, reduced engine noise,
lower operating costs and up to 500nm (950 km) more rangeor two tonnes more payload. This new engine option will beoffered on the A321, A320 and A319 models, with an entry into
service targeted for October 2015.
In 2010, Airbus received 416 firm orders for the A320 family of
aircraft, and delivered 401 to customers.

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tt A320 Family Technical Features (standard version)
Model*

Entry into service

Passenger capacity*

Maximum range (km)Length (metres)

Wingspan (metres)

A318

2003

107

6,000

31.4

34.1

A319

1996

124

6,800

33.8

34.1

A320

1988

150

5,700

37.6

34.1

A321

1994

185

5,600

44.5

34.1

*

Two-class layout.

A330/A340 Family. With approximately 1,483 aircraft soldand 1,125 currently in service, the A330/A340 family is Airbus’
solution for regional, long-range and ultra long-range travel,
designed to carry between 250 to 350 passengers. The A330/
A340 family concept is unique: one airframe is powered byeither two or four engines. The combination of low operating
costs, high efficiency, flexibility and optimised performancemakes the twin-engine A330 popular with an ever-increasing
operator base, while the four-engine A340 is tailored to meetthe needs of the 300-seat long-range market offering direct
point-to-point services and increased flight frequencies at lower
cost.
The A330/A340 family is composed of six passenger versions.
Each shares the same 222-inch fuselage cross-section, cockpit
and other advanced features, delivering the commonality thatencourages airlines to adopt the most efficient mix of aircraft
for their networks. The A330/A340 family offers high levels of
passenger comfort as well as large under-floor cargo areas.
The competitors of the A330/A340 family are the Boeing 767,
777 and 787 aircraft series.
Airbus has also developed a new dedicated cargo variant of
the A330 family, the A330-200F, a mid-size long-range cargo
aircraft that is designed to respond to the current market
dynamics of rising fuel prices and increased pressure on yields.
The A330-200F received Type Certification from the European
Aviation Safety Agency in April 2010, with the first delivery to
Etihad Airways occurring in July 2010.
In 2010, Airbus received 63 firm orders for the A330/A340
family of aircraft, and delivered 91 to customers.

tt A330/A340 Family Technical Features
Model*

Entry into service

Passenger capacity*

Maximum range (km)Length (metres)

Wingspan (metres)

A330-200

1998

253

12,50059.0

60.3

A330-300

1994

295

10,50063.7

60.3

A340-300

1992

295

13,70063.7

60.3

A340-500

2002

313

16,70067.8

63.6

A340-600

2002

380

14,600

75.3

63.6

*

Three-class layout.

A380. The A380 is the most spacious passenger aircraft on themarket, and represents Airbus’ offering in the very large aircraft
segment. Its cross-section provides flexible and innovative
cabin space, allowing passengers to benefit from wider seats,
wider aisles and more floor space, tailored to the needs ofeach airline. Seating 525 passengers in three classes andwith a range of 8,000nm/15,000km, the A380 offers superior
economic performance, lower fuel consumption, less noise andreduced emissions. The A380’s main competitor is the 400seat Boeing 747-8.
In 2010, Airbus received 32 firm orders for the A380, for a totalof 234 firm orders from 17 customers at the end of the year. At
the same time, Airbus delivered 18 A380 aircraft to customers
in 2010 (compared to 10 in 2009). Airbus is targeting delivery of
between 20 and 25 aircraft in 2011.

tt A380 Technical Features
Model*

Entry into service

Typical capacity*

Maximum range (km)Length (metres)

Wingspan (metres)

2007

525

15,00073.0

79.8

A380-800*

Three-class layout.

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New Product Development
A350 XWB Family. At the end of 2006, Airbus launched theA350 XWB Family, a new extra-wide body medium-capacity
long-range family, which will accommodate between 270 and
350 passengers and is expected to enter service in 2013. The
A350 XWB features A380 technology, a wider fuselage thanthat of competing new generation aircraft, and a greater use ofcomposite material. The A350 XWB’s main competitors are the
Boeing 787 and 777 aircraft series.

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In 2010, the A350 XWB programme moved from the definition
into the manufacturing phase. With industrial suppliers now
selected, the first metal cut for the centre wing box took placeat Airbus’ site in Nantes, France in early 2010. Preparations
are currently being made for assembly of the aircraft at Airbus
factories and supplier facilities around the globe, including a
new final assembly line in Toulouse, France.
In 2010, Airbus received 63 firm orders for the A350 XWB
family of aircraft, for a total of 583 firm orders from 36
customers at the end of the year.

tt A350 XWB Family Technical Features
Model*

Entry into service

Passenger capacity*

Maximum range (km)Length (metres)

Wingspan (metres)

A350-800

2014

270

15,80061.0

64.0

A350-900

2013

314

15,00067.3

64.0

A350-1000

2015

350

14,800

74.3

64.0

*

Three-class layout.

A400M. For information related to the A400M programme,see “— Airbus Military” below.

Asset Management
The Airbus Asset Management division was established in
1994 to manage and re-market used aircraft acquired by
Airbus, originally as a result of customer bankruptcies, andsubsequently in the context of certain buy-back commitments.
The Division operates with a dedicated staff and manages afleet comprised of Airbus aircraft across the range of models.
Through its activities, the Asset Management division helps
Airbus respond more efficiently to the medium and long-term
fleet requirements of its customers.
Its key roles comprise commercial and risk management of the
Airbus portfolio of used aircraft. Most of the aircraft are available
to customers for cash sale, while some can only be offered on
operating lease, depending on the financing attached to suchaircraft. At the end of 2010, the Airbus Asset Management
portfolio contained 16 aircraft (including six aircraft added in2010). The Asset Management division also provides a fullrange of support services, including assistance with entry into
service, interior reconfiguration and maintenance checks.

Customer Finance
Airbus favours cash sales, and does not envisage customer
financing as an area of business development. However, Airbus
recognises the commercial need for manufacturers to assist
customers in arranging financing of new aircraft purchases, andin certain cases to participate in financing those aircraft or theairline itself.
Extension of credit or assumption of exposure is subject tocorporate oversight and monitoring, and follows strict standardsof discipline and caution. Airbus’ dedicated customer financeteam has accumulated decades of expertise in aircraft finance.
When Airbus finances a customer, the financed aircraft generally
serve as collateral, with the engine manufacturer participating in
the financing. These elements assist in reducing the risk borne
by Airbus. Airbus’ customer financing transactions are designed
to facilitate subsequent sell-down of the exposure to the financial
markets, third party lenders or lessors.
In 2010, Airbus was able to begin taking advantage ofimproved financing markets by selling down more exposure
than it added. The markets, however, remain unpredictable
and Airbus continues to allow for potential additional financing
exposure. Management believes, in light of its experience, thatthe level of provisioning protecting Airbus from default costs
is adequate and consistent with standards and practice in theaircraft financing industry. See “Management’s Discussion andAnalysis of Financial Condition and Results of Operations”.

Customer Services
Airbus Customer Services’ prime role is to help its customers
operate their Airbus fleet safely and profitably and to the satisfactionof passengers. As a result of its continued growth, Airbus’ customer
base has increased consistently over the past years.
A team of more than 3,700 people cover all areas of support
from technical engineering/operational assistance and spareparts supply, to crew and personnel training. Hundreds oftechnical specialists provide advice and assistance to Airbus
customers 24 hours a day, 7 days a week. There are over 280
customer support representatives positioned around the world
in more than 166 cities close to the airlines they serve, and aninternational network of support centres, training centres andspares’ stores.

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Beyond the core customer support activities, Airbus Customer
Services department has developed a wide range of modular
and customised services driven by the unique added value thatan aircraft manufacturer can bring. Those services are clusteredaround four main domains of activity: fly-by-the-hour services,material management, systems and cabin upgrade, and training
and flight operations. Innovative and integrated solutions
have been developed in those domains, such as the Flight
Hour Services Component programs (FHS Component) andTailored Support Package (FHS TSP) that provide integrated
engineering/maintenance and component packages to enable
customers to reduce their investments and support costs while
increasing operational reliability. Similar integrated solutions
have also been developed in system and cabin upgrade.

Production
Industrial Organisation
Each task in the building of Airbus aircraft (from design,
definition and production to product or operational support)
is allocated to a designated Centre of Excellence (“CoE”)
according to its specialised expertise. The current CoEs coverFuselage/Cabin, Wing/Pylon and Empennage/Aft Fuselage aswell as transversal CoE Industrial Processes & Aerostructures.
The development of CoEs constitutes an essential feature of
Airbus manufacturing.
The CoEs are overseen by Airbus’ Head of Operations and his
team, who are in charge of all industrial processes. This includes
ensuring that harmonised and standardised processes, methods
and tools are selected and implemented across the CoEs inorder to increase efficiency and reduce costs.
Programmes, which is responsible for the work of the final
assembly lines including cabin definition and installation as
well as overall management processes, works closely with
the CoEs, to secure firm commitments from them on what isdelivered to the final assembly lines.
The CoEs also maintain close links with core functions suchas Engineering, Procurement, Quality, Human Resources andCustomer Services to develop and manage skills, manage
policies and ensure that Airbus employees share knowledge
and ideas in a cross-functional way.
Following completion of the aerostructures reorganisation strategy
initiated under Power8, two new entities, Premium AEROTECGmbH and Aerolia S.A., commenced full operations on 1 January
2009 under EADS ownership, and are well positioned to become
major players on the global aerostructure market. See “— 1.1.7
Investments — Aerostructures, Aircraft Conversion and Floor
Panels — Aerolia” and “– Premium AEROTEC”.

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Engineering
Airbus Engineering is a global organisation that develops
complete aircraft and aircraft components and conducts
research that can be applied to the next generation of
aircraft. The Centres of Competence (“CoCs”) and CoEs
that make up Airbus Engineering operate transnationally,
with most engineers employed at four Airbus sites in France,
Germany, the UK and Spain. A growing population ofexperienced aerospace engineers worldwide are employedat five further engineering centres in Wichita (Kansas, US),
Mobile (Alabama, US), Moscow (Russia), Bangalore (India)
and Beijing (China).
A key part of the Airbus engineering organisation is theArchitect and Integration centre, which ensures, together witha team of senior aircraft architects and the programme chiefengineers, that a consistent and multi-disciplinary approach isapplied during aircraft development.
In 2010, Airbus Engineering made significant progress
regarding the A350 programme with specific and component
designs, large-scale structural demonstrators, further finetuning of aerodynamic performance, maturing of systems
architecture design, major system supplier selection andpropulsion integration studies. A number of components havealready been manufactured and the first systems have now
started testing with the major test benches.
Airbus Engineering also made a major contribution to thelaunch decision for the A320neo and a successful delivery of
the first A330-200F and the A400M flight test phase.

Manufacturing Facilities and Production Flow
The CoEs are responsible for the design and manufacturing offully equipped and tested deliverables, ranging from specificparts to major aircraft components. Aircraft components aretransferred between the network of sites and the final assemblylines using Airbus’ five custom built A300-600 “Beluga” Super
Transporters. To support the A380 production flow, Airbus
has integrated road, river and sea transport. Typical lead times
between customer definition freeze and industrial delivery forsingle-aisle aircraft are 7-8 months, and 9-12 months for longrange twin-aisle aircraft.

Targeted Deliveries in 2011
Airbus delivered 510 aircraft in 2010 (compared to 498 in 2009)and is targeting between 520 and 530 aircraft deliveries in2011. Any major production or market disruption or economic
downturn could lead to revision of these figures.

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AIRBUS MILITARY

Introduction and Overview
Airbus Military produces and sells special mission aircraft, which
are derived from existing aircraft platforms and are dedicated to
specialised military and security tasks such as in-flight refuellingcapabilities, maritime surveillance and antisubmarine warfare.
Airbus Military also manufactures and sells medium and light
military transport aircraft and is responsible for the European
heavy military transport A400M project.
In 2010, Airbus Military recorded revenues of € 2.7 billion.

Strategy
Airbus Military’s strategy is to further develop its corebusinesses and increase market share by leveraging EADS’technology know-how, while at the same time enhancing
profitability. Accordingly, Airbus Military is actively:

Strengthening its position as a major supplier of
special mission aircraft
As a supplier of special mission aircraft, Airbus Militarysatisfies customers’ mission-specific requirements by relying
on its own specialised technologies (refuelling boom system,
fully integrated tactical system (“FITS”), maritime patrol andantisubmarine warfare solutions) as well as those of EADS’
wide range of platforms and systems. Airbus Military will seek
further consolidation of its position in this market in the future, inparticular through its offering of the A330 MRTT, which received
civil and military certification in 2010.

Maintaining its leadership for military transport aircraft
Airbus Military is a global leader in the medium and light militarytransport aircraft markets. Through the addition of the A400M
heavy military transport aircraft—which has so far accumulated
more than 1,000 successful flight test hours—Airbus Militaryoffers a full range of tactical military transport aircraft capable ofcovering all mission needs.

MarketSpecial Mission AircraftSpecial mission aircraft are derived from existing aircraft
platforms and adapted to particular missions, in general for
military and security customers. Adaptations to the platform
require thorough knowledge of the basic airframe, which
generally only the aircraft manufacturer possesses. The skills
necessary for the overall systems integration into the aircraft areextensive and the number of participants in the world market isvery limited.
Moreover, modern defence and warfare require independent
access to complex forms of information in various operational
theatres, and customers are therefore increasingly demanding
comprehensive systems tailored to their specific operational
requirements. This development and European defence and

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security needs are expected to boost demand for special
mission aircraft in the near term. Airbus Military believes that
it is well positioned in this market based on the range ofcustomised solutions that it offers.

1

Military Transport Aircraft
Governments and national organisations constitute the main
customers in the market for military transport aircraft. This
market consists of three segments: (i) light transport aircraft,with a payload of one to three tonnes, (ii) medium transport
aircraft, with a payload of four to 14 tonnes, and (iii) heavytransport aircraft, with a payload of 15 tonnes or more.
According to an analysis by DMS Forecast International — anindependent aerospace and defence industry consulting firm —the global market for military transport aircraft is expected toamount to approximately US$ 65 billion from 2010 through2019.

Heavy Military Transport. This market segment has been
driven historically by US policy and budget decisions, andtherefore has been dominated by US manufacturers, inparticular Lockheed Martin’s C-130 Hercules. The A400M
represents Airbus Military’s entry into this market, at a time
when the US and Europe are expected to begin upgrading andreplacing their existing fleets. In the upper part of the segment,
the A400M could compete against the C-17 from Boeing.
Medium Military Transport. Management believes that thismarket will continue to grow at a moderate rate. Airbus Military
aircraft are leaders in this segment, specifically the CN235 andC295 aircraft, which have a combined average market shareof 49% over the last ten years according to internal estimates.
Their competitors are the C-27J Spartan, manufactured by
Alenia Aeronautica, and the An-32, manufactured by Antonov.
Light Military Transport. This is a mature market that isdiminishing in size as countries develop economically and areable to afford medium military transport aircraft. The C212
has historically led this market segment, with an average
market share of 19% over the last ten years according tointernal estimates. The C212’s main competitors are the M-28,
manufactured by Polskie Zaklady Lotnice Mielec, and the DHC6 Series 400, manufactured by Viking, Canada.

Products and Services
Special Mission Aircraft
Multi-Role Tanker Transport — A330 MRTT. The A330
MRTT, a derivative of the successful Airbus A330/A340 family,is the world’s leading air-to-air refuelling aircraft. Its huge basic
fuel capacity means that no auxiliary tanks are needed to give
air-to-air refuelling performance that far exceeds its nearest
competitors. Fuel is passed through an innovative fly-by-wirerefuelling boom that delivers a larger fuel flow rate, refuellingenvelope and better control than other systems available on themarket. As the A330 MRTT does not need auxiliary fuel tanks,

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1.1 Presentation of the EADS Group1the entire cargo bay is available for freight, with the possibility ofincorporating standard LD3 or LD6 containers, military pallets
and/or any other type of load device in use today.
To date, Airbus Military has won contracts for the A330 MRTTwith the governments of Australia, Saudi Arabia (including one
repeat order), the UAE and the UK, with a total backlog of
28 aircraft at the end of 2010. This includes a 27-year contract
with the UK Ministry of Defence (“MoD”) in connection with thelatter’s Future Strategic Tanker Aircraft (“FSTA”) programmethrough the AirTanker consortium. The FSTA programme calls
for the provision of a fleet of 14 new tanker aircraft (based on
the latest generation Airbus A330-200) to enter service from2011, replacing the previous fleet of VC-10 and Tristar refuelling
aircraft. The contract also includes provision for all necessary
infrastructure, training, maintenance, flight management, fleet
management and ground services to enable the Royal Air Forceto fly air-to-air refuelling and transport missions worldwide.
In 2010, Airbus Military achieved civil and military certification
for the A330 MRTT. Two MRTTs were awaiting delivery to theRoyal Australian Air Force at the end of the year. A further
five MRTTs were making test flights at year end, with four
undergoing conversion.
In the US, the Air Force has been conducting a programme
to replace its ageing fleet of air-to-air refuelling aircraft. In early
2008, the US Air Force announced that it had awarded theinitial contract to Northrop Grumman (as prime contractor), withwhich EADS had teamed up. Following a challenge by Boeingof this contract award that was upheld by the Government
Accountability Office, the US Department of Defense publisheda new request for proposal in early 2010. EADS decided tocompete as prime contractor and a proposal was submitted
by EADS North America in July 2010. On 24 February 2011,
the contract was awarded to Boeing. See “— 1.2 Recent
Developments”.
Airbus Military has led a technological programme aimed atdeveloping a new air-to-air refuelling boom system (“ARBS”).
The new ARBS is designed to provide a refuelling performancethat is substantially faster than that of the competition — aconsiderable advantage given the vulnerability of the aircraft
during the refuelling procedure. The ARBS has been tested withover 1,300 dry and wet contacts on a wide range of aircraft,including F-16 and F/A-18 fighters and E-3 AWASCS, andreceived civil and military certification on the A330 MRTT in
2010.

Maritime Patrol Aircraft. Airbus Military provides different
solutions ranging from maritime surveillance to anti-submarine
warfare missions through aircraft based on the C212, CN235,
C295 or P-3 Orion platforms. Airbus Military aircraft, specificallythe CN235 and C295, have a combined average market shareof 43% over the last ten years according to internal estimates.
Their main competitors are maritime patrol versions of theBombardier Dash-8 Q200/Q300 and Alenia ATR 42/72.
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Airbus Military also develops FITS, which is the core of themission system installed on these maritime patrol platforms.
FITS is a new generation system that enhances tacticalawareness and facilitates decision-making processes andoperations within a network-centric environment.
In 2010, the US Coast Guard ordered three additional CN235s
for use within the Deepwater programme. Airbus Military also
booked an order for four additional aircraft that will be operated
by the Mexican Navy for maritime patrol missions. In terms ofdeliveries, Airbus Military delivered six CN235 and four C295
maritime patrol aircraft in 2010 (three CN235 for the US Coast
Guard, two CN235 for Mexico, one CN235 for Colombia andfour C295 for Portugal).
Airbus Military is also involved in the modernisation andoperational upgrade of P-3 Orion Maritime Patrol Aircraft for the
Spanish and Brazilian Air Forces. The programme includes the
FITS installation together with new mission sensors and avionicequipment. In 2010 a new upgraded P-3 was delivered to the
Spanish Air Force.

Military Transport Aircraft
CN235 — Medium Military Transport. The first version
in the CN235 family, the S-10, entered into service in 1987.
The latest one, the Series 300, is a new-generation, twinturboprop, pressurised aircraft. The CN235-300 is capable oftransporting a payload of up to 6,000 kg, accommodating (i) 36
paratroopers, (ii) 18 stretchers plus three medical attendants,(iii) four of the most widely used types of freight pallets, or(iv) oversized loads such as aircraft engines or helicopter
blades. Paratrooper operations can be performed through thetwo lateral doors in the rear part of the aircraft or over the rear
ramp. Variants of the CN235-300 are used for other missions
such as maritime patrol or pollution control, among others.
Considering all variants, over 275 CN235 have been sold since
the beginning of the programme.
C295 — Medium Military Transport. Certified in 1999, theC295 has a basic configuration similar to the CN235, with astretched cabin to airlift a 50% heavier payload at greater speed
over longer distances. The C295 is equipped with integrated
avionics incorporating digital cockpit displays and a flight
management system, enabling tactical navigation, planning andthe integration of signals from several sensors.
Both the CN235 and the C295 have been designed ascomplements or replacements for the ageing C130 Hercules,
accomplishing most of their missions at a much lower operatingcost.
In 2010, Airbus Military received an order for eight
CN235 aircraft from France and for a total of six C295 aircraftfrom Mexico, Finland and Egypt (which became a newcustomer), respectively. During 2010, Airbus Military delivered atotal of nine C295 aircraft to the Czech Republic and Mexico.

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1

Over 70 C295 have been delivered to 12 operators from 11
countries. The C295 has accumulated 90,000 flight hours inall kind of environments: from the polar arctic areas to deserts.
The CN235/C295 family has an in-service experience of over
1.1 million flight hours.

C212 — Light Military Transport. The C212 was designed
as a simple and reliable unpressurised aircraft able to operatefrom makeshift airstrips in order to perform both civilian andmilitary tasks. The first version, the S-100, entered into service
in 1974. The latest version, the S-400, incorporates several
improvements such as new avionics and engines for enhanced
performance in hot climates and high altitudes, as well as
improved short take-off and landing performance. In addition,
the C212’s rear cargo door provides multi-mission capability
with a configuration that can be changed quickly and easily,
thereby reducing turnaround times.

New Product Development
A400M. The A400M is an all-new military airlifter designed
for tactical, strategic and logistic applications, intended torespond to the needs of the world’s armed forces for military,
humanitarian and peacekeeping missions. Airbus Military’s
objective is to develop a leadership position in the market forheavy military transport aircraft, which together with its medium
and light military transport aircraft will allow it to offer a full rangeof tactical military transport aircraft to customers. In addition
to the 174 A400M aircraft currently on order as a result of thecancellation of 10 options (seven by Germany and three by
the UK) after the negotiation with the launch customer nations

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opportunities for the A400M while providing in-service support
for customers following entry into service.
Since the A400M’s maiden flight in December 2009, three moreaircraft joined the flight test campaign during 2010, with morethan 1,000 flight test hours logged by year end. The fifth andlast aircraft that will form part of the flight test campaign entered
final assembly in Seville at the end 2010. The first A400M is
expected to be delivered to the first customer, the French Air
Force, by the end of 2012/early 2013.
In 2010, Airbus Military announced that it had negotiated a
new programme approach for the A400M with the launchcustomer nations through OCCAR. The revised OCCAR
agreement is subject to ratification by each customer nation
before final adoption. For a discussion of the related financial
consequences, see “Management’s Discussion and Analysisof Financial Condition and Results of Operations” and “Notes
to the Consolidated Financial Statements (IFRS) — Note 3:
Accounting for the A400M programme”.

Production
A final assembly line for light and medium aircraft is locatedat the San Pablo factory in Seville (southern Spain). The
facilities – which are shared with the A400M – have a surface
area of 600,000 m2. A new Airbus Military training centre wasalso officially opened in Seville in October 2010. The facility
has space for six full-flight simulators and a range of othercomputer-based training devices.

1.1.3 Eurocopter
INTRODUCTION AND OVERVIEW

STRATEGY

Eurocopter is a global leader in the civil and military helicopter
market, offering one of the most complete and modern rangesof helicopters and related services. With approximately 2,900
operators worldwide, this product range currently includes lightsingle-engine, light twin-engine, medium and medium-heavy
helicopters which are adaptable to all kinds of mission types basedon customer needs. In 2010, Eurocopter recorded revenues of€ 4.8 billion, representing 10.6% of EADS’ total revenues.

Eurocopter aims at further strengthening its market position andincreasing its share of revenue generated by services activities
in order to achieve sustained profitable growth. To this end,
Eurocopter is actively:

With 527 helicopter deliveries in 2010 (compared to 558 in2009), Eurocopter met its business performance and delivery
objectives for the year. Orders remained stable in terms of units
sold but decreased in terms of value compared to 2009, withnew military orders failing to offset the reduction in civil orders.
After accounting for cancellations, net order intake for 2010
was 346 aircraft (compared to 344 in 2009). With 395 grossorders in 2010, Eurocopter maintained its leadership in the civil
and parapublic market. At 31 December 2010, Eurocopter’sbacklog of orders was 1,122 aircraft.

Pursuing internal growth and international
expansion
Management is focused on strengthening Eurocopter’s positionin the markets where it has traditionally held a strong position,such as the US civil and homeland security market, and further
developing its presence in potential growth markets suchas China, India, South East Asia, Latin America and Eastern
Europe. Part of its strategy relies on the offering of leadingedge technology products in all its markets, such as the Super
Puma (12 orders for the Royal Malaysian Air Force, nine for
the Mexican MoD and five for the Albanian MoD in 2010), theEC135 (8 orders received for the Russian company Gazprom
in 2010) and other helicopter systems to be delivered to the
US Army. Eurocopter will seek to pursue expansion through
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Eurocopter will also seek to capitalise on its experience ofcooperation with local industries for programme development
and joint production projects such as the EC175 with China,
the Korean Helicopter Programme (“KHP”) in Korea and thejoint venture in Kazakhstan for the assembly of EC145s.

Implementing an ambitious productand services policy
In order to maintain market leadership and technologicalsuperiority, Eurocopter will continuously invest in the renewalof its comprehensive product/service line of civil and militaryhelicopters. Accordingly, management is currently focusedon launching a number of platform upgrades and other new
developments to enhance its product line and strengthen themarket position of key products such as the Ecureuil family, theDauphin, the EC135, the EC145 and the EC225/725. Productline renewal is conducted either internally or through codevelopment. A particular emphasis is put on the medium andintermediate segments (EC175 and Dauphin successor), forwhich new platforms will incorporate the latest innovations, andthe Bluecopter programme for environmentally friendly rotorcraft
technology. Through a combination of core technologicalsolutions with high-value customisation capabilities, Eurocopter
succeeds to offer a cost efficient solution to multi-mission
needs, for both civil and military customers throughout all
segments of the helicopter market.
In addition, Eurocopter will seek a significant expansion in its
service offering in order to enhance aircraft availability as well as
mission performance and cost effectiveness for its customers.
Support and service efficiency is a major focus in the latest new
product developments, aimed at generating revenues in the
future and increasing customer satisfaction equally. Eurocopter
is also considering further development on training andsoftware maintenance activities, which have been identified as
key drivers for the future.

Building a leaner, more streamlined company
The SHAPE transformation programme, which aims togenerate € 200 million in cost savings by the end of 2011, wasimplemented in early 2010 to counter the economic downturnand respond to competitive challenges. By the end of 2010
it was more than halfway towards achieving its cost savings
target, having already delivered results in terms of new productdevelopments, enhanced customer service, innovation andstreamlined organisation.

MARKET

Market Drivers
The value of helicopters delivered worldwide grew from anestimated € 12 billion in 2009 to an estimated € 13.5 billion in2010. According to market forecasts published by The TealGroup, Honeywell and Rolls Royce, between 7,000 to 9,500

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civil helicopters and 6,500 to 6,800 military helicopters are
expected to be built globally between 2009 and 2018. This
forecast, particularly with respect to the military segment, relies
to a large extent on large US development programmes.
Demand for military helicopters, which are usually larger andhave more sophisticated systems than civil helicopters, ismainly driven by budgetary and strategic considerations, andthe need to replace ageing fleets. Management believes thatthe advanced age of current fleets, the emergence of a newgeneration of helicopters equipped with integrated systems
and the ongoing introduction of combat helicopters into manynational armed forces will contribute to increased militaryhelicopter procurement over the next years. Recent large-scale
military programmes, such as those conducted by Australia,
Brazil, Spain, UK, Korea and the Nordics Standard Helicopter
Project, have confirmed this trend. Nevertheless, demand
from the military segment has historically been subject to large
year-to-year variations due to evolving strategic considerations,and short-term growth potential may be limited due toincreasing budgetary constraints on public spending. Market
data indicates that in 2010, worldwide deliveries of militaryhelicopters stood at 532 units.
The military segment is highly competitive and is characterisedby competitive restrictions on foreign manufacturers’ access tothe domestic defence bidding process, sometimes to the virtual
exclusion of imports. Nevertheless, with the introduction of the
Tiger, NH90 and EC725 and with a more aggressive approach
to international industrial cooperation, Eurocopter’s share of the
global market for military helicopters has increased. In 2010,
Eurocopter ranked second in the military segment by deliveries ina market still dominated by US manufacturers. Eurocopter’s maincompetitors in this segment are Agusta-Westland in Europe,and Sikorsky, Boeing and Bell Helicopter (a division of TextronInc.) in the United States. In addition, Russian manufacturers
have reappeared after a complete commercial and industrial
reorganisation. Recently they have been more aggressive
particularly in the Asian and Latin American markets. Military
sales accounted for 46% of Eurocopter’s revenues in 2010.
Helicopters sold in the civil sector, in which Eurocopter ismarket leader, provide transport for corporate executives,
offshore oil operations, diverse commercial applications andstate agencies, including coast guard, police, medical and firefighting services. Market data indicates that in 2010, worldwide
deliveries of civil turbine helicopters stood at approximately 874
units. At Eurocopter, the lower order intake for light helicoptersin 2010 will lead to lower production rates in 2011, while militaryhelicopter production rates will increase.
Eurocopter’s main worldwide civil competitors are AgustaWestland, Sikorsky and Bell Helicopter. The civil helicopter
market has grown more competitive in recent years, with
Sikorsky and Agusta-Westland having increased their market
share in the heavy and medium helicopter classes.

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Customers and Marketing
Approximately 2,900 operators worldwide currently operate
Eurocopter helicopters in 147 countries, forming a broadbase for Eurocopter’s customer support activities. 85% ofEurocopter’s customers have fleets of between one and four
helicopters. Eurocopter’s principal military clients are European
MoDs, as well as MoDs in Asia, the US and Latin America.
In the civil and parapublic market, Eurocopter has a leading
market share in Europe, the US and Canada.
The versatility and reliability of Eurocopter products have madethem the preferred choice of the most prominent customers.
The world’s largest offshore operators (such as Bristow,
CHC, Era and PHI) use Eurocopter helicopters for passenger
transport and offshore oil industry support. In the emergency
medical services market segment, Eurocopter helicopters
dominate the fleets of large operators such as Air Methods in

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the US and ADAC in Germany. Agencies with high serviceability
requirements, including police and armed forces, also rely on
Eurocopter products.
Eurocopter’s global marketing strategy is reflected in the scaleof its large international network. Eurocopter’s network currently
encompasses 27 foreign subsidiaries, complemented by arich network of authorised distributors and service centres
aimed at a large number of existing and potential clients. In
2010, Eurocopter further strengthened the network through theinauguration of its subsidiary Eurocopter India with the goals
of expanding commercial presence in this highly-promisingmarketplace, reinforcing the support and services network
throughout the country, and further developing the company’s
four-decade relationship with Indian industry. Eurocopter has
developed expertise in production licensing, joint production
and subcontracting agreements, and has been developing links
with industrial partners and suppliers in more than 35 countries.

PRODUCTS AND SERVICES
Eurocopter offers a complete range of helicopters that covers nearly the entire civil and military market spectrum, which it updates
continuously with leading-edge technologies. This product range includes light single-engine, light twin-engine, medium andmedium-heavy helicopters, and is based on a series of new-generation platforms designed to be adaptable to both military and civil
applications. In addition, products share multiple technical features as part of a family concept approach.
The following table sets forth Eurocopter’s existing product line, consisting of optimised products for different mission types:
Helicopter TypePrimary Missions

Light Single Engine
EC120 “Colibri”

Corporate/Private, Civil & Military Training

Single Engine (“Ecureuil” Family)
AS350 “Ecureuil”/AS550 “Fennec”
EC130

Parapublic*, Civil & Military Utility**, Corporate/Private
Tourism, Oil & Gas, Corporate/Private

Light Twin Engine
AS355NP/AS555

Parapublic*, Utility, Corporate/Private

EC135/EC635

Emergency Medical, Parapublic*, Oil & Gas, Corporate/Private

EC145/LUH (UH-72)/EC645

Civil & Military Utility**, Emergency Medical, Parapublic*, Shuttle

Medium (“Dauphin” Family)
AS365 “Dauphin”/AS565 “Panther”
EC155

Parapublic* (in particular Coast Guard & SAR), Oil & Gas
Corporate/Private, VIP, Oil & Gas, Parapublic*, Shuttle

Medium Heavy
AS332 “Super Puma”/AS532 “Cougar”
EC225/EC725
NH90 (TTH/ NFH)

Military Transport, Oil & Gas, Shuttle
SAR, Combat-SAR, Military Transport, Oil & Gas, VIP
SAR, Combat-SAR, Military Transport, Naval

Specific
Tiger
*
**

Combat, Armed reconnaissance/Escort

Parapublic includes homeland security, law enforcement, fire fighting, border patrol, coast guard and public agency emergency medical services.
Civil Utility includes different kinds of commercial activities such as aerial works, ENG (Electrical New Gathering), passenger and cargo transport.

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Civil range. Eurocopter has consistently made strong efforts
to update and renew its civil product line in order to enhanceand maintain its competitive edge in the civil segment. Over theyears Eurocopter has successfully introduced internationallynew products such as the light single-engine EC120 and thelight twin-engine EC135, and major product upgrades such as
the EC155 evolution of the medium-class Dauphin, as well as
the EC145. The latest addition to the heavy-class family is theEC225. It is designed for passenger transport, in particular Oil& Gas and VIP, but also for public service missions, such as
search and rescue (SAR).
In 2010, Eurocopter received 346 firm net orders for its civil
range of helicopters (including the respective military derivative
versions), and delivered 484 to customers.

Light Utility Helicopter (LUH) programme. The US Armyhas selected the UH-72A Lakota (a military derivative of
the commercial EC145) as its next-generation LUH, with arequirement for up to 345 aircraft over a 10-year span witha total life-cycle value of more than $ 2 billion. The US Armyordered 42 aircraft in 2006, followed by additional orders for
43 aircraft in 2007, 39 aircraft in 2008, 51 in 2009 and 40 in
2010. There were 52 LUH deliveries in 2010, for a total of 150
deliveries all completed on schedule as of the end of 2010. All
deliveries were made from American Eurocopter’s new facility inColumbus, Mississippi.
NH90. Designed for modern multi-mission capabilities andcost effectiveness throughout its lifecycle, the NH90 has beendeveloped as a multi-role helicopter for both tactical transport(TTH) and naval (NFH) applications. The programme, mainly
financed by the governments of France, Germany, Italy and theNetherlands, has been jointly developed by Eurocopter, AgustaWestland of Italy and Fokker Services of the Netherlands
as joint partners in Nato Helicopter Industries (“NHI”) in
direct proportion to their countries’ expressed procurement
commitments. Eurocopter’s share of NHI is 62.5%.
There were 28 NH90 deliveries in 2010 (almost doubled
compared to 2009 with 15 deliveries), for a total of 68 deliveries
as of the end of 2010.

Tiger. The Tiger combat attack helicopter programme includes
four variants based on the same airframe: the HAP (turreted
gun, rockets and air-to-air missile), 40 of which have beenordered by France and 6 by Spain; the UHT (antitank missile,
air-to-air missile, axial gun and rockets), 80 of which have beenordered by Germany; the ARH (antitank missile, turreted gun
and rockets), 22 of which have been ordered by Australia;
and the HAD (antitank missile, air-to-air missile, turreted gun,rockets and upgraded avionics and engines), 24 and 40 of
which have been ordered by Spain and France, respectively.
Since 2009, the Tiger has been deployed in Afghanistan by the
French Armed Forces with three helicopters permanently onsite (1,600 flight hours).

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There were 15 Tiger deliveries in 2010 (doubled compared to2009 with 7 deliveries), for a total of 70 deliveries as of the endof 2010.

New Product Development
Current product development includes (i) the KHP for military
applications, (ii) the EC175 and (iii) the EC145 T2, as described
below.

KHP. The Korean government chose Eurocopter as the prime
partner of Korea Aerospace Industries (“KAI”) in the new
KHP programme for the development of Korea’s first militarytransport helicopter in the 8 metric tonne class. The 6-year
KHP development phase runs from 2006 to 2011. In thefollowing 10-year production phase, 245 helicopters are to
be manufactured. As the primary partner of KAI, Eurocopter
has a stake of 30% in the development phase and 20% in
the production phase. Eurocopter and KAI established asubsidiary to market the export version of the KHP. In 2010, thesuccessful maiden flight of the first prototype and the awardingof the series production contract occurred.
EC175. Eurocopter and Chinese AVIC II Corporation havelaunched the joint development and production (on a 50/50
basis) of the EC175, a civil helicopter in the 6-tonne category,
which will broaden both partners’ product ranges. The 5-year
development phase began in 2006. In 2008, the EC175
was unveiled at the US-based Heli-Expo, which led to thesignature of letters of intent with 13 operators for a total of
111 aircraft. Assembly of the first prototype began at the endof 2008 in Marignane following the delivery of the first airframe
structure from the Chinese partner. In 2010, the second EC175
prototype helicopter performed its first flight, and the EC175
was presented in its off-shore and SAR configurations. Deliveryof the first EC175 is expected to take place in 2012.
EC145 T2. This twin engine helicopter has been developed
based on the already-proven EC145 and was unveiled in
March 2011 at the Heli-Expo airshow in Orlando, Florida. The
EC145 T2 incorporates Eurocopter’s latest innovations in termsof power, avionics, flight safety, noise reduction and mission
equipment and also features a brand-new tailboom Fenestronassembly. The first prototype’s first flight was successfully
performed in June 2010 and first deliveries are expected totake place in 2013. Designed in cooperation with various
customers and offering increased performance combined with
reduced pilot workload, the new multi-mission EC145 T2 is theideal aircraft for emergency medical service, police, homeland
security, offshore and SAR operators throughout the world.

Technology Demonstrator
X3. In 2010, Eurocopter began flight testing of the X3, a new
high-speed, long range helicopter demonstrator. With main
rotor blades and two propellers installed on short-span fixedwings, the aircraft combines the vertical lift-off capability of a

Information on EADS’ Activities
1.1 Presentation of the EADS Group1helicopter with the speed of a plane. Only two months after
this first flight, the X3 achieved its first important milestone ofreaching the speed of 180 knots.

Customer Support
As of 31 December 2010, Eurocopter had the world’s second
largest manufacturer fleet, with more than 11,200 helicoptersin service worldwide. As a result, customer support activities
to service this large fleet generated 36% of Eurocopter’srevenues for 2010. Eurocopter’s customer support activities
consist primarily of training, technical support, maintenance,
repairs and spare parts supply. To provide efficient worldwide
service, Eurocopter has established an international networkof subsidiaries, authorised distributors and service centres.
Furthermore, in order to meet globalising customer demand,
Eurocopter is extending the range of services it provides to its
customers.
In 2010, Eurocopter inaugurated a brand-new logistics
centre near Marignane, Eurocopter Global Logistics, which
combines all customer interfaces under the same roof andwill allow Eurocopter to improve its spares and repair delivery
performance. On the international front, Eurocopter established
Eurocopter India to reinforce its support and services network
throughout the country. Eurocopter increased its shareholding
participation in its MRO JV in China and defined a 5 year
plan to develop additional maintenance capabilities. A new,enlarged facility was opened in Singapore to support expansion
in training services; maintenance, repair and overhaul (MRO)
capabilities; research and development; and design resources.
In parallel, several flight simulators were launched or went into
operation throughout the year.

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Eurocopter seeks to continuously improve the quality of its
service offering, such as spares delivery performance, which in2010 recorded an on-time delivery ratio of approximately 95%.

PRODUCTION
Eurocopter’s industrial activities are conducted in four primarylocations, two in France, one in Germany and one in Spain.
The French sites are Marignane, in southern France, and
La Courneuve, near Paris. The German site is located in
Donauwörth, and the Spanish site is located in Albacete.
Following major expansion in 2008, the Columbus plant ofAmerican Eurocopter in Mississippi continued to ramp-up
LUH production, assembly and delivery. Industrial activity
had commenced in 2006 with LUH assembly and delivery
and is now at full-scale production following the production
authorisation granted by the Federal Aviation Administration.
Activities at the Columbus plant also include production andassembly of the AS350 and EC120 for US Customs andBorder Patrol as well as the support of the US Coast Guard’s
programme of modernisation of its Dolphin helicopter fleet.
In 2010, construction of a new rotary-wing Centre of Excellence
began in Itajuba, Brazil, where Helibras (Eurocopter’s Brazilian
subsidiary) will produce, assemble and maintain EC725
helicopters acquired by the Brazilian armed forces.
Overall, serial helicopter deliveries decreased by approximately
5% in 2010 and are expected to slightly decrease in 2011
(below the 500 units mark). Eurocopter will continue to pursue
international expansion of its global supply chain with anemphasis on dollar-based and low-cost sourcing in particular,
while also seeking to rationalise its supply network andstreamline its internal industrial organisation in parallel.

1.1.4 Astrium
INTRODUCTION AND OVERVIEW
Astrium designs, develops and manufactures satellites, orbital
infrastructures and launcher systems and provides space
services. It is the third largest space systems manufacturing
company in the world after Boeing and Lockheed Martin
and the leading European supplier of satellites, orbital
infrastructures, launchers and associated services. In 2010,
Astrium recorded revenues of € 5.0 billion, representing 10.9%
of EADS’ total revenues.
Astrium has three main Business Units: Astrium Satellites,
Astrium Space Transportation and Astrium Services. These
Business Units include the provision of launch services throughAstrium’s shareholdings in Arianespace (Ariane 5 launcher),Starsem (Soyuz launcher) and Eurockot (Rockot launcher),as well as services related to telecommunication and Earthobservation satellites through wholly or majority owned
subsidiaries such as Paradigm Secure Communications,
Infoterra and Spot Image.

STRATEGY
With its established presence in five European countries thathave active space programmes (France, Germany, United
Kingdom, Spain and the Netherlands), Astrium is the only
European company to offer comprehensive expertise in all areasof the space industry (satellites, launchers, orbital infrastructure,equipment and services). Astrium’s strategy is to strengthen its
position in the market by offering to its customers a wide rangeof solutions built on these key strategic assets. In particular,
with the launcher and satellite markets being flat, Astrium has
successfully built a services activity which is expected to provide
the largest part of its development in the coming years.
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Generate profitable growth in a flat market
Institutional and military spending on space activities is almost
flat in Europe due to existing budget constraints. Competitionin commercial markets for launchers and telecommunication
satellites is also intense, in particular given weakness of the
US dollar against the euro in recent years. Within this difficult
market context, Astrium is pursuing the following strategy:

tt with respect to the Ariane launcher and M51 missile
systems, Astrium Space Transportation has sought torationalise and streamline its activities by assuming therole of prime contractor (as opposed to a main supplierand industrial architect only). This has strongly contributed
to increasing the reliability and cost effectiveness of theseproducts. In addition, Astrium is currently the second
largest shareholder of Arianespace with a 32.5% stakeafter the French space agency (“CNES”). Astrium SpaceTransportation will seek to build on this leadership to better
serve its customers; andtt with respect to satellites and services, Astrium has sought
in recent years to move from being solely a systems
supplier to a leading satellite service provider in the areas of
secure communication and geo-information. The 30-monthextension of the contract to supply the UK MoD with securecommunication services, along with the completion inprocess of the fourth satellite, and the successful in-orbit
delivery of the second secure communication satellite for theGerman Armed Forces (Bundeswehr), represent important
steps forward in 2010. In the future, Astrium will seek toexpand its offering of innovative, highly competitive end-toend tailored solutions in the field of secure communication.
It will also seek to strengthen its position in geo-information
services.

Be the benchmark in terms of customer service
and attractiveness to employees
Management is committed to the implementation of additional
measures to enhance profitability and as a consequence
dedicate more revenues to fund innovation. Launched in 2010
to counter the increasingly challenging market environment, thetransformation programme AGILE (Ambitious, Globally growing,
Innovative, Lean and Entrepreneurial) strives to improve
Astrium’s agility, competitiveness and innovation, freeing
resources to invest in Astrium’s business. At the same time,
AGILE emphasises customer orientation as well as employee
empowerment.

ASTRIUM SATELLITES
Astrium Satellites is a world leader in the design andmanufacture of satellite systems, payloads, groundinfrastructure and space equipment for a wide range of civil
and military applications. Prime contractor for more than 90
communication satellites, Astrium Satellites is a reference
partner for many of the world’s most prestigious operators.

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Astrium Satellites’ business covers the four categories ofsatellite systems described below:

tt telecommunication satellites, which have multiple
applications, such as long-distance and mobile telephone
links, television and radio broadcasting, data transmission,
multimedia and Internet trunking. They may be used for civilor military applications;tt observation satellites, which allow the collection of
information for various fields, such as cartography,
weather forecasting, climate monitoring, agricultural andforestry management, mineral, energy and water resource
management and military reconnaissance and surveillance
applications;tt scientific satellites, which are tailor-made products adapted
to the specific requirements of the mission assigned to them.
They have applications such as astronomical observation ofradiation sources within the universe, planetary explorationand Earth sciences; andtt navigation satellite systems, which deliver signals that enable
users to determine their geographic position with highaccuracy, and are increasingly significant in many sectorsof commercial activity, such as airlines, transport operatorson land, sea and air, emergency services, agriculture andfisheries, tourism and telecommunication networks.

Market
The commercial telecommunication satellite market isextremely competitive, with customer decisions based on
price, technical expertise and track record. In 2010, Astrium
Satellites’ worldwide market share in terms of new orders
for geostationary satellites amounted to approximately 7%
according to internal estimates. Its main competitors are Loral,
Boeing, Orbital and Lockheed Martin of the United States,
Thales Alenia Space (TAS) of France and Italy, and Information
Satellite Systems Reshetnev of Russia. Following the sales
peak of the past five years, the commercial telecommunication
market is expected to return to a more standard level of orders,with increased competition. Astrium Satellites will seek toconsolidate its position in this market.
In the market for observation, scientific and navigation satellites,
competition in Europe is organised either on a national or
multinational level, such as through the European Space
Agency (“ESA”). There is also sizeable export demand for Earthobservation systems, for which EADS is the leading European
provider. Furthermore, civil state agencies, including ESA, havedisplayed increased needs for Earth observation satellites,
for example in the framework of European environmental
programmes. Management expects this market to continue
growing over the medium term.
Finally, for military customers, demand for telecommunicationand observation satellites has increased in recent years.
The Skynet 5/Paradigm contract in the United Kingdom, the1Information on EADS’ Activities
1.1 Presentation of the EADS Group1

Satcom BW contract in Germany, the Yahsat contract in the
United Arab Emirates and the recently awarded contract for
two optical reconnaissance satellites in France demonstrate thegrowth trend in this market.

Products
Astrium Satellites offers turnkey satellite systems to its
customers, including through an array of wholly owned
subsidiaries such as (i) EADS CASA Espacio (Spain), which
supplies platforms, space-borne antennas, deployment
mechanisms and harness subsystems for telecommunication
satellites, (ii) CRISA (Spain), which designs and manufactureselectronic equipment and software for space applications,(iii) Tesat (Germany), which is in charge of telecommunicationelectronic equipment and subsystems, (iv) Dutch Space(Netherlands), which provides solar arrays and other specialised
items, (v) SSTL (United Kingdom), which provides small
satellites and payloads, and (vi) Jena-Optronik, acquired in
2010, which provides space sensors and optical systems.

Telecommunication Satellites. Astrium Satellites produces
telecommunication satellites for fixed and mobile applications
and direct-to-home broadcast services. EADS’ geostationary
telecommunication satellites are based on the EUROSTAR
family platforms (63 ordered to date), the latest version of which
is EUROSTAR 3000.
Astrium Satellites won orders for two commercial
telecommunication satellites in 2010 (SES-6 for SES
World Skies and W5A for Eutelsat), as well as one military
telecommunication satellite, Skynet 5D, as part of Astrium
Services’ contract extension with the UK MoD. Six
telecommunication satellites, thereof one military, weresuccessfully launched in 2010: Astra 3B for SES Astra(May 2010), Arabsat 5A and 5B for Arabsat (June 2010),
HYLAS-1 for Avanti (November 2010) and Ka-Sat for Eutelsat(December 2010), as well as ComSat BW2 for the German
Army (May 2010).

Observation and Scientific Satellites. Astrium Satellites
is the leading European supplier of Earth observation satellite
systems for both civil and military applications. In this field,
customers derive significant benefits from the common
elements of Astrium Satellites’ civil and military programmes.
Astrium Satellites designs and manufactures a wide rangeof highly versatile platforms, optical and radar instruments,and equipment for the complete scope of remote-sensing
applications, operations and services. Astrium Satellites is theprime contractor for complex missions such as (i) Pleiades,
two small and highly agile Earth observation satellites for civil
and military applications, (ii) Swarm, a climatology satellite
monitoring the evolution of the Earth’s magnetic fields,(iii) Gaia, a global space astrometry mission, (iv) Bepi Colombo,
an observation mission to Mercury, (v) EarthCARE, a joint
European-Japanese cloud and aerosol mission, (vi) Seosat

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and Seosar, a radar Earth observation system for the Spanish
government, and (vii) Spot 6 and Spot 7 for Spot Image, asubsidiary of Astrium Services.
In 2010, Astrium booked order intake for two Earth observation
satellites for KGS, the national Kazakh space company.
Furthermore, Astrium was commissioned by ESA to build thenext flight unit (Sentinel 2B) in the Sentinel series of opticalsatellites, and received an order for two optical reconnaissancesatellites from the French Defence Procurement Agency(“DGA”).
Four Earth observation satellites were successfully launchedin 2010: Cryosat 2 for ESA (April 2010), COMS for the South
Korean Aerospace and Research Institute (June 2010),
TandemX for the German Aerospace Centre (June 2010), andAlsat-2a for the Algerian Space Agency (July 2010).

Navigation Satellites. Following the decision reached by theEuropean Union at the end of 2007 to move ahead with thedevelopment of a European global satellite navigation system,“Galileo”, ESA has been placed in charge of direct procurementof the various necessary components (space segment, groundsegment, system support, launchers, etc.). The Astrium-built
Galileo test satellite Giove B completed its second year in orbit
in April 2010. Astrium is also responsible for the Galileo in-orbit
validation phase (“IOV”) to test the new satellite navigation
system under real mission conditions. The IOV phase covers
the construction of the first four satellites of the constellationand part of the ground infrastructure for Galileo, followed by
the testing of this partial system. Furthermore, Astrium plays
an active role in the full operational capability phase (“FOC”),
in particular through its subsidiary SSTL which will provide thepayloads for the first 14 FOC satellites.

ASTRIUM SPACE TRANSPORTATION
Astrium Space Transportation is the European space
infrastructure and space transportation specialist. It designs,
develops and produces Ariane 5 launchers, the Columbus
laboratory and the Automated Transfer Vehicle (“ATV”) cargo
carrier for the International Space Station (“ISS”), ballistic
missiles for France’s deterrence forces, propulsion systems andspace equipment.

Orbital Infrastructure
The orbital infrastructure segment, in which Astrium SpaceTransportation operates, comprises manned and unmanned
space systems. The ISS, together with related vehicle andequipment development programmes and services, constitutes
the predominant field of activity in this segment. Astrium SpaceTransportation is the prime contractor under an ESA contract
relating to two key elements of the ISS: the Columbus Orbital
Facility laboratory (“COF”) and the ATV cargo carrier.

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MarketDemand for orbital infrastructure systems originates solely frompublicly funded space agencies, in particular from ESA, NASA,
Roscosmos (Russia) and NASDA (Japan). Such systems
are usually built in cooperation with international partners. In
addition to the COF and ATV projects, ESA is responsible for
additional ISS components for the station’s construction andoperational phases. National space agencies, such as DLR and
CNES, are also involved in the development of experimental
facilities to be used on the ISS.

Products
Astrium Space Transportation has been the prime contractor
for the development and integration of the COF. The COF
is a pressurised module with an independent life-support
system. The COF was lifted to the ISS on the shuttle flight of
7 February 2008. It provides a full-scale research environment
under microgravity conditions (material science, medicine,human physiology, biology, Earth observation, fluid physics andastronomy) and serves as a test-bed for new technologies.
Astrium Space Transportation is also the prime contractor forthe development and construction of the ATV cargo carrier,designed to carry fuel and supplies to the ISS and to provide
reboost capability and a waste disposal solution. The first ATV,
“Jules Vernes”, was launched in 2008 and docked to the ISS.
After six months in orbit, it was de-docked from the ISS andburned upon re-entering the atmosphere. The second ATV,
“Johannes Kepler”, has been shipped to Kourou, where thefinal assembly has been completed, Following loading, fuellingand installation on an Ariane 5 ES, it is scheduled for launchin early 2011. The production of ATV units two to five, as well
as mission preparation and operations support, is coveredby the contract which governs the operation and provision ofEuropean components to the ISS.

Launchers & Launch Services
Space systems (including satellites, orbital infrastructureelements and interplanetary probes) depend on rocket
propelled multi-stage launchers, which are consumed during
the launch process, to place them into orbit. Astrium SpaceTransportation is active in two distinct businesses: (i) designingand manufacturing launchers for both civil and military
purposes, and (ii) providing launch services through its interests
in Arianespace, Starsem and Eurockot.
Astrium Space Transportation is the sole prime contractor
for the Ariane 5 system, with responsibility for the delivery to
Arianespace of a complete and fully tested vehicle. Astrium
Space Transportation also supplies all Ariane 5 stages, theequipment bay, the flight software, as well as numerous subassemblies. Additionally, Astrium Space Transportation is theprime contractor for ballistic missile systems to the French

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Back to ContentsState. It is responsible for the development, manufacturing andmaintenance of the submarine-launched missiles and related
operating systems.

Market
The market for commercial launch services continues to evolve.
Competitive pressure is increasing in light of other competitors
entering or coming back into the market. Management believes
that the Arianespace accessible market for commercial launchservices for geostationary satellites is entering a slight decline
from 20 down to 15 payloads per year. However, due to various
factors (such as technology advances and consolidation ofcustomers), this figure remains volatile. This market does notinclude institutional launch services for the US, Russian orChinese military and governmental agencies.
In the area of national defence, Astrium Space Transportation
has been the exclusive supplier of ballistic missiles to the
French State since the early 1960s. In addition to conducting
production and state-financed development work, Astrium
Space Transportation performs substantial maintenance workon the ballistic missile arsenal to ensure system readinessover the life span of the equipment, which may stretch over
several decades. Astrium Space Transportation also provides
on-site support to the French military. Finally, Astrium SpaceTransportation is working in partnership with others on a NATO
contract relating to theatre missile defence architecture.

Products and Services
Launch Services. Astrium Space Transportation is activein the field of launch services through shareholdings in
Arianespace (for heavy-lift launchers), Starsem (for medium-liftlaunchers) and Eurockot (for small-lift launchers):

tt Arianespace. Astrium is Arianespace’s second largest
shareholder (after CNES) with a 32.5% stake (direct andindirect), and its largest industrial shareholder. Arianespaceis the world’s largest commercial launch service provider interms of total order book. Arianespace markets and sells the
Ariane launcher worldwide and carries out launches from the
Guyana Space Centre in Kourou, French Guyana.
In 2010, Arianespace signed a total of 12 Ariane 5 contracts
for geostationary satellites, representing more than 60%of the available market. Arianespace conducted six Ariane
launches, which placed 12 satellites into orbit. Since 1999,
when the first Ariane 5 commercial launch occurred, 55
Ariane 5 rockets have been launched.

tt Starsem. Astrium Space Transportation directly owns
35% of Starsem, a French corporation, along with
Arianespace (15%), the Russian space agency (25%) and
the Russian state-owned Samara Space Center (25%).
Through Arianespace, Starsem markets launch services
by Soyuz launchers for medium-weight spacecrafts into

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low or sun‑synchronous orbits as well as for interplanetary
missions. Work is progressing on the Kourou launch pad,with the maiden launch (to be operated by Arianespace)scheduled in 2011.

tt Eurockot. Astrium Space Transportation (51%) andKhrunichev (49%) jointly control Eurockot Launch Services,which provides launch services for small, low-Earth orbit
satellites with Rockot launchers derived from SS-19 ballistic
missiles.
Commercial Launchers. Astrium Space Transportation
manufactures launchers and performs research anddevelopment for the Ariane programmes. Member states,
through ESA, fund the development cost for Ariane launchers
and associated technology.
Astrium Space Transportation has been the sole prime
contractor for the Ariane 5 system since 2004. Given thecommercial success of Ariane 5, Astrium Space Transportation
signed a contract with Arianespace in 2009 for the productionof 35 Ariane 5 launchers, in addition to the batch of 30
Ariane 5 launchers ordered in 2004. In 2010, Astrium SpaceTransportation contracted the first part of the Phase 1
development for the Ariane 5 Midlife Evolution, which will
increase launcher capacity with an in-service date scheduled
for 2016/2017.

Ballistic Missiles. Astrium Space Transportation is the only
company in Europe which designs, manufactures, tests andmaintains ballistic missiles. Following its contracts with the
French State for the submarine-launched ballistic missiles familyof M1, M2, M20, M4 and M45, Astrium Space Transportation
is now under contract to develop and produce the M51 withincreased technical and operational capabilities. With thesuccessful 4th flight test and acceptance launch in 2010, theM51.1 is set to soon enter service on France’s nuclear-poweredballistic missile submarines. The French Defence Procurement
Agency and Astrium Space Transportation have recently signed
a contract covering the development and production of thesecond version of the M51 strategic missile (M51.2), whichhelps to secure Astrium Space Transportation’s capabilities inthis field. In addition, Astrium Space Transportation manages
the operational maintenance of the M51 missile system onbehalf of the French armed forces.

ASTRIUM SERVICES
Astrium Services offers innovative, highly competitiveend‑to‑end tailored solutions in the fields of securecommunication and geo-information. As the European“one‑stop-shop” provider for military satellite communication
services, Astrium Services delivers secure military satellite
services to a number of countries.

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Products and Services
Military Communication. In 2003, the UK MoD selected
Paradigm to deliver a global military satellite communication
service for its next-generation Skynet 5 programme. This
contract, pursuant to which Paradigm owns and operates the
UK military satellite communication infrastructure, allows the
UK MoD to place orders and to pay for services as required.
Offering a catalogue of services, Paradigm delivers tailored
end-to-end in-theatre and back-to-base communication
solutions for voice, data and video services, ranging froma single voice channel to a complete turnkey system
incorporating terminals and network management. Paradigm
also provides welfare services, ensuring that deployed troops
can call home and can use the Internet. The first three Skynet
5 satellites were launched in 2007 and 2008, enabling the
UK MoD to pronounce full operational service in 2009. In
2010, the contract was extended by 30 months, including
the manufacturing, launch, testing and operation of a fourth
satellite, Skynet 5D.
In Germany, a team led by Astrium Services is providing
Germany’s first dedicated satellites for a secure communication
network. Two military-frequency satellites and a comprehensive
user ground terminal segment give the German Armed Forces(Bundeswehr) a secure information resource for use byunits on deployed missions, with voice, fax, data, video andmultimedia applications. With the first satellite (ComSat BW1)
launched in 2009, the second (ComSat BW2) in May 2010, anduser terminals deployed in theatre, the system commenced
operations in 2010. Astrium Services, through a joint venturewith ND Satcom (Astrium Services: 75%, ND Satcom: 25%) will
operate the system on a long-term basis and provide additional
capacity from commercial operators.
In Abu Dhabi, Astrium Services (together with Thales Alenia
Space) is working on a contract signed in 2007 with Yahsat, awholly owned subsidiary of Mubadala Development Company,
for the construction of a secure satellite communication system.
Astrium Services is managing the programme and will supply
the space segment (except for the payload) and 50% of theground segment. Work is ongoing and deliveries are expected
in 2011.

Geo-Information Services. Astrium Services is a providerof both optical and radar-based geo-information services tocustomers including international corporations, governments
and authorities around the world. The successful launch of
TerraSAR-X in 2007 – a radar-based Earth observation satellitethat provides high-quality topographic information – enabled
Astrium subsidiary Infoterra to significantly expand its
capabilities by proposing new kinds of images based on radar.
TanDEM-X, its almost identical twin, was successfully launched
in June 2010 and will further expand Infoterra’s productportfolio by allowing 3D imagery.

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Since 2008, Infoterra’s parent company Astrium has
progressively increased its shareholding in Spot Image, aprovider of satellite-based geographic information and services,
to 98.9% in 2010. In 2009, Spot Image started work on the“Astroterra programme”, which is designed to replace Spot 5(owned by the French state with an exclusive operating license
granted to Spot Image) before the end of its lifetime with aconstellation of two Earth observation satellites (Spot 6 andSpot 7) in order to maintain high resolution capability through to
2023.

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PRODUCTION
Astrium’s main production facilities are located in France(Elancourt, Les Mureaux, Bordeaux, Toulouse, LimeilBrévannes), Germany (Backnang, Bremen, Friedrichshafen,
Lampoldshausen, Ottobrunn), Spain (Madrid), the United
Kingdom (Portsmouth, Stevenage, Guildford) and theNetherlands (Leiden).

1.1.5 Cassidian
INTRODUCTION AND OVERVIEW
Cassidian serves as the main pillar of EADS’ defence andsecurity activities. By combining its electronics, air systems,
defence and communication systems and missile systems(consisting of EADS’ 37.5% stake in MBDA) capabilities within
one Division, EADS has streamlined its defence and security
business to better meet the needs of customers that require
integrated defence and security solutions. The Division’s
rebranding in 2010 reflects Cassidian’s long-term strategy
of becoming a truly global player in the defence and security
markets.
In 2010, Cassidian recorded revenues of € 5.9 billion,
representing 13.0% of EADS’ total revenues.

STRATEGY

Going forward, Cassidian will continue to work closely withindustry and customer working groups to help define anddeliver solutions that further support the transformation processof defence and security forces in both Europe and abroad.

Pursuing future growth areas
Within the context of increasing budgetary constraints on public
spending, Cassidian will seek to maintain its leadership in coreareas (such as combat aircraft, defence electronics, defence
and security systems and missiles) and simultaneously target
fast growing markets such as:

tt the UAS market, where it has already invested €500 million
in development. Cassidian will seek to develop a leading
position based on its strong experience and projects to date(eg, Talarion, Euro Hawk®, Harfang, Barracuda, DRAC); andtt strongly growing defence and security revenues to balanceGroup commercial aircraft exposure;tt the security market, where Cassidian offers solutions suchas integrated systems for global security, comprehensive
security communications solutions and security electronics.
Project awards in the Middle East make Cassidian a world
leader in integrated nationwide security solutions.

tt improving profitability above benchmark level;

Improving profitability

tt increasing its services business; andThrough the implementation of restructuring programmes
and portfolio management, Cassidian has strongly improved
its profitability over the last few years in order to attain
European benchmark levels. Cassidian will pursue its focus on
profitability through dedicated improvement and transformation
programmes and further integration of the Division to deal witha more challenging budget environment.

Cassidian is seeking to actively support the implementation of
EADS’ Vision 2020 plan, by:tt transforming itself into a truly global Division.

Supporting the transformation processof customers
Through already existing programmes with NATO, the European
Defence Agency (EDA) and the defence ministries of its homecountries (in particular France, UK, Germany and Spain),
Cassidian actively supports the transformation of European andNATO defence and security forces. Cassidian also participatesin the Network Centric Operations Industry Consortium(NCOIC), an industry-based collaborative forum formed torecommend an architectural approach for system and platform
developers within a global network environment.

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Developing customer services
While already a significant player in the services market,
Cassidian will seek to enhance its offering of comprehensive
packages of mission-critical services to its customers, in andoutside EADS home countries. This service portfolio ranges
from consultancy, concept development and simulation, tothrough-life support of aerial platforms, fleet service/flight
service, training, operation and outsourcing.

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Consolidating in home markets while becoming
a global player
Cassidian will seek to consolidate its position in its European
home markets (France, Germany, Spain and the UK). Withinthese markets, Cassidian will aim to leverage its technology andskills in the areas of electronics, airborne platforms, missiles
and system businesses in particular.
Cassidian will also seek to develop in other markets withsignificant growth potential, such as the Middle East, Brazil andIndia. Cassidian is targeting not only wins of key campaigns,
but also the development of a long-term industrial presencein order to be considered as a trusted local player by potential
customers.
In parallel, Cassidian will strive to increase its market share in
the key US market – in close coordination with EADS North
America – by offering superior products and technologies.
Cassidian is also building strong transatlantic industrial
partnerships with US prime contractors to explore newopportunities, including Northrop Grumman (Euro Hawk®), andRaytheon (Missile Defence).

CASSIDIAN SYSTEMS
Cassidian Systems is the EADS “Systems House”. Its mission
is to develop and implement complete communication andinformation system solutions (including platforms). Cassidian
Systems offers its customers comprehensive and tailoredsolutions, including the ability to design, develop and implement
Lead Systems Integration (“LSI”) and link the widest possible
range of individual platforms and subsystems into a single
effective network. LSI has become increasingly important forcustomers engaged in border control and coastal surveillance,
as well as for non-military customers in areas such as
homeland security, all of which are areas of major focus for
Cassidian Systems.

MarketCassidian Systems faces competition from large US andEuropean companies that also specialise in its markets. Maincompetitors include Lockheed Martin, Thales, Motorola andGeneral Dynamics. Cassidian Systems’ key customers primarily
include governmental customers, such as MoDs and interior
ministries in its home markets of France, Germany, Spain andthe UK, with an increasing focus on other European countries,
the Middle East, South Africa, Asia and the US.

Products and Services
Defence. Cassidian Systems offers comprehensive mission
systems and solutions in the areas of air dominance, battle
space systems, intelligence solutions and naval systems,
as well as overall systems support. It is a leading provider

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for full systems design architecture and systems integration
responsibility for military land-, sea-, air- and space‑based
systems. Cassidian Systems designs, integrates andimplements secure fixed, tactical, theatre and mobile
information infrastructure solutions, including all of the services
needed to support integrated mission systems and solutions.
Cassidian Systems is also a major designer and supplier of C4I
systems (Command, Control, Communications, Computers
and Intelligence systems) to the armed forces in France andGermany, and the Joint Staffs in France, Germany and NATO.

Global security/Nationwide security. Cassidian Systems
provides fully integrated global security solutions and services
in the areas of border security, maritime security, crisis andemergency management, critical infrastructure protection
and large event protection. Due to the increased connections
between different areas of threat and in light of the growinginterdependence of internal and external security in particular,
the seamless collaboration of different security organisations
has become increasingly important. Cassidian seeks tomaximise efficiencies through the optimised exchange of dataand information across different security organisations. With
the national security programme for Saudi Arabia in 2009,
Cassidian won the largest contract ever awarded in this area.
Professional Mobile Radio. Cassidian Systems is a leading
provider of digital Professional Mobile Radio (“PMR”) andsecure networks. Its solutions for PMR enable professionalorganisations in various areas – such as public safety, civil
defence, transport and industry – to communicate effectively,
reliably and securely. Cassidian Systems offers its customers
specialised PMR solutions based on TetraPOL, Tetra and P25
technologies.

Signalis
Signalis is a provider of maritime safety and security solutions
and officially started operating as of 1 January 2011. Signalis
regroups all activities of Sofrelog, acquired by Cassidian in 2006
and Atlas Maritime Security, a subsidiary of Atlas Elektronik
Group. Signalis is co-owned by Cassidian (60%) and Atlas
Elektronik (40%). Signalis provides integrated mission criticalreal-time systems using radar and other wide area sensors,
mostly for maritime applications, typically vessel traffic services
and coastal surveillance.

Atlas Elektronik
Atlas Elektronik GmbH, headquartered in Bremen (Germany),
is a joint venture of ThyssenKrupp (51%) and EADS (49%).
Atlas Elektronik provides maritime and naval solutions aboveand below the ocean surface. The company holds a leading
position in all fields of maritime high technology from commandand control systems to coastal surveillance systems andin‑house support.

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Cassidian Electronics provides mission-critical elements fordata gathering, data processing and distribution for defence
and civil security systems. Its main business is focused onhigh‑end security electronic equipment and subsystems
addressing the market for surveillance and reconnaissance,
military mission management, protection of own forces andcritical infrastructures, as well as testing systems and services.

MarketCassidian Electronics’ main competitors in defence
electronics are large and medium-sized US and European
companies (including Raytheon, Northrop Grumman, Thales,
BAE Systems, Galileo Avionica, Indra and Saab) as well ascompetitors from Israel. Cassidian Electronics’ key customers
include MoDs, interior ministries, military services, security
forces, in-house EADS systems suppliers and other LSI’s
worldwide. Through various joint ventures, participations andpartnerships, Cassidian Electronics has access to customers inevery NATO country, in particular in Germany, France, the UK,
Spain and Italy, and to important export markets, such as theUS, Turkey, India and South Africa.

Products and Services
Electronic Warfare and Self Defence. Growth in electronic
warfare (“EW”) and self-defence is a key strategic goal for
Cassidian Electronics. The Business Unit supplies electronic
protection systems for military vehicles and civil installations,such as laser warning, missile warning and active electronic
countermeasure units. For example, Cassidian Electronics
delivers jammers to counter the increasing threat of roadsidebombs. It has subsystem responsibility for the A400M’s
self‑protection system, also supplying core EW equipment
such as the infrared missile warning system MIRAS. For military
mission aircraft, helicopters (NH90, Tiger) and VIP aircraft,
Cassidian Electronics is developing solutions to counter threats
posed by infrared-guided missiles in particular.
Avionics. As a major partner in the field of military mission
avionics for the A400M, Cassidian Electronics assumes
sub‑system responsibility for mission management anddefensive aids. Its offering also comprises avionics equipment,such as digital map units (EuroGrid), flight data recording units
and obstacle warning systems for helicopters. In addition,
Cassidian Electronics is developing multi-sensor integrationand data fusion technology, which is a key future technology for
network-enabled capabilities.

Sensors. Cassidian Electronics is a principal partner in thedevelopment of airborne multi-mode radars such as thecaptor radar in the Eurofighter programme, and also provides
integrated logistics support, maintenance and upgrades. It
is also heavily involved in the technological development andapplication of next-generation active electronically scanning

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Back to Contents(AESA) radars for air, naval and ground applications. In thefield of fighter radars, Cassidian Electronics started full scale
development of the E-Scan fighter radar in 2010. In the areaof air defence, Cassidian Electronics produces mid-range
radars for ship (TRS-3D/4D) and land (TRML-3D) applications.
The Business Unit also takes a lead role in developing andmanufacturing synthetic aperture radars (SAR), which areconsidered essential for future reconnaissance and surveillance
operations. With its newly developed Airport Surveillance Radar(ASR-S), Cassidian Electronics currently provides military air
fields with an advanced air traffic control system.

Test & Services. The Test & Services product range covers
the entire life cycle of equipment and systems and includes
comprehensive solutions that rely on test services and systems.
The solutions are either integrated or sold as stand-alone
elements: instrumentation, system software and application
software. The versatility of Test & Services systems meansthat a multitude of equipment and systems can be tested.
Accordingly, the same airline can use a single model test
bench for maintaining both its Airbus and Boeing fleets, while
the French Army uses the same test system for numerous
weapon systems. Already present worldwide with its civil andmilitary equipment testers, Test & Services is consolidating
its development strategy on the international stage with new
locations in France, Germany, Spain, the UK and the US, aswell as a global distribution network.

CASSIDIAN AIR SYSTEMS
Cassidian Air Systems specialises in the field of combat air
systems – in particular development, production and deliveryof the Eurofighter combat aircraft (46% owned by EADS).
In addition, Cassidian Air Systems produces and tests mission
air systems, including UAS. Cassidian Air Systems offers
corresponding product support, including maintenance,
repair and overhaul, modernisation, logistics optimisation,
product‑specific training and integrated system support centres.

Products and Services
Combat Air Systems. Eurofighter, known as “Typhoon” forexport outside of Europe, is a network-enabled, extremely
agile, high-performance multi-role combat aircraft optimised forswing-role operations in complex air-to-air and air-to-surface
combat scenarios. Eurofighter is designed to enhance fleet
efficiency through a single flying weapon system capable offulfilling supersonic, beyond-visual-range combat, subsonicclose-in air combat, air interdiction, air defence suppression
and maritime and littoral attack roles. The tactical requirementsof the aircraft include all-weather capability, short take-off andlanding capability, high survivability and operational readiness.
The Eurofighter was designed to be adapted and improved
over the long-term, as new avionics and weapons evolve, toprovide for an extended service life.

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The Eurofighter programme is organised through the NATOEurofighter and TORNADO Management Agency (“NETMA”)
for the participating nations. NETMA contracts with Eurofighter
GmbH, the programme management company for theEurofighter programme. The Eurofighter GmbH shareholders
and subcontractors are EADS (46% share), BAE Systems(33% share) and Alenia Aerospazio, a division of Finmeccanica(21% share). With regard to series production, the respective
production work shares of the participating partners within theEurofighter consortium stand at 43% for EADS, 37.5% for BAE
Systems and 19.5% for Alenia, reflecting the relative numberof aircraft ordered by each country’s programme participant.
EADS is responsible for the centre fuselage, the flight control
system, the manufacturing of the right wing and leading edge
slats for all aircraft ordered under the programme, as well as
the final assembly of the 180 aircraft ordered by the German
Air Force and 87 aircraft ordered by the Spanish Air Force. The
final assembly of the Eurofighter takes place in the relevant
contracting country: Manching in Germany, Getafe in Spain,
Warton in the UK and Torino in Italy.

The European countries Germany, France and Spain
have commissioned the programme “Advanced UAV” toanalyse and more closely define the system needed to fulfil
their requirements for future unmanned surveillance andreconnaissance missions. The novel aspect of this approachis a modular system-of-systems design and the integrationof the proposed TALARION MALE UAS in a network-enabled
operations scenario. The three countries awarded a 15-monthrisk-reduction study in 2007 for high performance UAVs which
was successfully delivered by Cassidian Air Systems in 2009.
Since then in-house development has progressed.

In January 1998, NETMA signed an umbrella Eurofighter
contract for 620 aircraft: UK 232 (with 65 options); Germany
180; Italy 121 (with 9 options); and Spain 87 (with 16 options).
The umbrella contract, while fixing a maximum price for theoverall programme, also stipulates that production agreements
are to be awarded in three tranches, with production expected
to continue at least until 2015. The programme includes thedevelopment, production investment and series production of
the aircraft. Currently, 472 aircraft are firmly on order within thecore programme.

Cassidian Air Systems is also working on the “Generic System
Demonstrator Agile UAV in Network Centric Environment”(Agile UAV-NCE). It is a German Armed Forces’ research andtechnology programme aimed at demonstration of technologies
and operational aspects with emphasis on network enabled
operations. The major contribution from Cassidian Air Systems
is the Barracuda demonstrator UAV system – Europe’s largest
UAV ever built – which passed a further week of successful
test flights in Goose Bay, Canada in 2010, in particulardemonstrating its ability to fly in civil airspace.

Delivery of the first tranche of 148 aircraft (including six
instrumented production aircraft) was completed in 2008 andfinal assembly of the second tranche of 236 aircraft is currently
ramping up. Outside the core programme, further export
opportunities are believed to exist in Europe, Asia and the Far
East. To date, 15 aircraft have been sold and delivered to Austria.
In addition, a government to government deal was reached
between the UK and Saudi Arabia for the purchase of 72 aircraft,with deliveries beginning in 2009. In 2010 the Eurofighter
programme delivered the 250th aircraft to the customer.

Atlante is the long endurance tactical unmanned aerial vehicle
that Cassidian Air Systems provides to the Spanish customer.
The unmanned aerial system is designed by Cassidian Air
Systems in Spain and will be operated by the Ejército deTierra to carry out target identification, shoot correction
and damage evaluation operations, among other ISTAR
missions (intelligence, surveillance, target acquisition andreconnaissance).

Mission Air Systems. In response to Germany’s need forwide-area surveillance and stand-off reconnaissance, Cassidian
Air Systems and its US partner Northrop Grumman are,through their joint venture EuroHawk GmbH, supplying theGerman forces with the HALE-UAV System Euro Hawk. Euro
Hawk is a high-altitude unmanned aerial system for signal
intelligence (SIGINT) that is based on the Global Hawk RQ4-B
platform developed by Northrop Grumman. Cassidian Air
Systems is responsible for the overall mission system including
situation analysis and report, as well as sensor-payload andmodifications. In 2010, Euro Hawk successfully undertook its
first flight in Palmdale, California.

Harfang/SIDM (Système Intérimaire de Drone MALE) is a
Medium Altitude Long Endurance (MALE) UAV system thathas been developed for the French Air Force. Harfang – basedon the IAI (Israel Aeronautic Industries) Eagle 1 platform – is alatest-generation system in the MALE category of UAVs andis dedicated to reconnaissance and tracking operations in thedepth of the battlefield. In 2010, the French forces received
their fourth Harfang type UAS.

DRAC (Drone de Renseignement Au Contact) tactical UAS isbased on the TRACKER, developed in partnership between
Cassidian Air Systems and SurveyCopter and is currently inservice with the French Army

Support Services and Upgrades. Cassidian Air Systems
offers its customers a full suite of services associated with
operating their military air systems, including maintenance, repair
and overhaul, modernisation, logistics optimisation, productspecific training and integrated system support centres.
In addition to these services, Cassidian Air Systems offers its
clients the possibility of upgrading their military air systems. If
the purchase of new aircraft is either politically or economicallyunfeasible, conducting an upgrade of existing airframes is

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the most cost-effective solution. Cassidian Air Systems hasdeveloped expertise in this area through upgrade programmes
for such aircraft as the Tornado and C-160 Transall, among
others.

Pilot Training and Training Aircraft and Services. Cassidian
Air Systems offers a pilot training programme for European
fighter jets at its European Advanced Training Jet Pilot Schoolat Talavera together with the Spanish Air Force. The school
provides comprehensive jet pilot training using an upgradedF-5 with near latest-generation combat aircraft performance
characteristics and sophisticated ground equipment. Pursuant
to a ten-year multi-services contract signed in 2006, Cassidian
Air Systems also manages “ab-initio” pilot training for future
military aircrews at the French Air Force’s flying school in
Cognac. The Ecats (EADS Cognac Aviation Training Services)
contract includes the procurement of new aircraft, aircraft
maintenance as well as ground-based training devices.
Cassidian has established collaboration agreements withtrainer aircraft manufacturer Finmeccanica to have a major rolein the Advanced European Jet Pilot Training (AEJPT). Finally,
Cassidian Air Systems offers training for air defence crews anddevelops, produces and maintains aerial target systems andcoordinates aerial target services worldwide.

MISSILE SYSTEMSMBDA (a joint venture between EADS, BAE Systems andFinmecannica with stakes of 37.5%, 37.5% and 25%
respectively) is the missile systems group within Cassidian.
MBDA offers superior capabilities in missile systems and covers
the whole range of solutions for air superiority, land control andsea power missions, while also providing the most advanced
technological solutions in strike weapons and missile defence.
Further integration of the four home markets (France, Germany,
Italy and the UK), consolidation of the business and increased
efforts in the export market remain the principal goals for 2011.

MarketMBDA has a geographically diverse customer portfolio. Beyond
its four national home markets, the Group has direct accessother important European markets, Spain, Greece and Sweden.
It also has a stable foothold in growing export markets such
as Asia, the Gulf region and Latin America, and benefits fromtransatlantic cooperation on programmes such as MEADS, asdiscussed below.
Four principal defence contractors are active in the worldwide
market for tactical missiles and missile systems. The current
worldwide market for missile systems is estimated to exceed€ 12 billion, with a downward trend forecast until 2011.

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Thereafter, the worldwide market is nevertheless expected tostrengthen due to:tt the need to replace older generation missile systems and todevelop new capabilities (such as ground-based air defence
systems, precision and deep strike weapons and naval
superiority integrated combat systems);
tt the entry into service of new missile carrying platforms(Rafale, Eurofighter/Typhoon, Gripen, Tiger helicopter, newfrigates and aircraft carriers and in due course other new
platforms such as the F-35 Lightning II Joint Strike Fighterand UCAVs); andtt the appearance of new requirements for future weapon
systems based on new operational tasks and lessons
learned from past conflicts, in particular network centricwarfare-related systems as well as indirect line of sight or
beyond visual range target acquisition systems.

Products and Services
The broad range of MBDA products covers all six principal
missile system categories: air-to-air, air-to-surface,ground‑to‑air, surface-to-air, anti-ship and surface-to-surface.
MBDA’s product range also includes a portfolio of airborne
countermeasures such as missile warning and decoying
systems and decoy dispensers, airborne combat training andcountermining systems. The most significant programmes
currently under development are the Aster Paams naval air
defence system, the METEOR air superiority missile system,
the Medium Extended Air Defence System (“MEADS”) andthe Scalp NAVAL ship and submarine launched deep strikeweapon, while those in production include Aster SAMP/T air
defence, Storm Shadow/Scalp and Taurus stand-off missile
systems.

Aster Family. The FSAF Phase 3 contract signed with
OCCAR (Organisation Conjointe de Coopération en matièred’Armement) in 2003 is worth € 3 billion (€ 2.3 billion thereof
to be allocated to MBDA). This contract covers the series
production of more than 1,700 Aster missiles and associatedmissile systems and represents Europe’s first advanced naval
and ground-based air defence missile system with anti-tacticalballistic missiles (ATBM). Aster missiles are now in series
production.
METEOR. METEOR is a highly flexible, visual and beyond
visual range, agile, air-to-air weapon system that provides acomprehensive operational capability in the most complex
combat scenarios. METEOR was ordered by the UK MoD andfive other European nations (France, Germany, Italy, Spain and
Sweden) to meet their future air-to-air requirements. In 2010,
MBDA received production contracts from several participating
nations.

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Scalp NAVAL. Benefiting from the effort already invested
in development of the Storm Shadow/Scalp European airlaunched cruise missile programme, MBDA is developing
Scalp NAVAL to provide the French Navy’s FREMM frigatesand Barracuda class submarines with superior deep strikecapability. In 2007, MBDA received the contract notificationfrom the French DGA for 250 of these missiles. The first test
firings were conducted in 2010.
Storm Shadow/Scalp. Already in service in the UK, France
and Italy, the Storm Shadow/Scalp was also selected by
Greece in 2004. The Hellenic Air Force has ordered 34 Storm
Shadow/Scalp missile systems. Deliveries have also been madeto the UAE air force, where the missile is known as “Black
Shaheen”.
Taurus KEPD 350. MBDA Deutschland and SAAB Bofors
worked together through Taurus Systems GmbH to createand deliver the Taurus KEPD 350, a precision stand-off guided
missile system for fighter aircraft. Series production wascompleted in 2010. Export opportunities are being pursued.

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will protect troops during out-of-area missions within thescope of homeland defence. The financial share of the
programme is 58% US, 42% European (German and Italian).
The technical workshare of the companies involved – MBDA
Deutschland, MBDA Italia and Lockheed Martin (United States)– corresponds to the respective cost contribution percentages.
MBDA’s activities are coordinated through the joint venturecompany euroMeads GmbH, which, like Lockheed Martin, has
a 50% share in MEADS International Inc. (MI). The MEADS final
system critical design review was successfully completed in
2010.

PRODUCTION
Cassidian operates several offices worldwide in order tosecure close relationships with customers and partners. As
the Division’s portfolio also covers product development andconsultancy services – mainly in the field of global security –Cassidian has several facilities in the European home countriesof Germany, France, Spain and the UK. The main production
sites are located in Germany (Manching, Ulm) and Spain(Getafe).

MEADS. MEADS, a ground-based tactical air defence
system, is a transatlantic cooperation programme. MEADS

1.1.6 Other Businesses
REGIONAL AIRCRAFT — ATR
ATR (Avions de Transport Régional) is a world leader in the
40 to 74-seat regional turboprop aircraft market. ATR is anequal partnership between EADS and Alenia Aeronautica(Finmeccanica Group), with EADS’ 50% share managed by
Airbus. Headquartered in Blagnac near Toulouse in the southof France, ATR employs more than 800 people, with major
operations in the Midi Pyrénées and Aquitaine regions ofFrance.

Market
The regional turboprop aircraft industry has experienced
growing concentration over the years. During the 1990s, anumber of regional aircraft manufacturers merged, closed orceased production, leading to the withdrawal from the market
of BAe, Beechcraft, Fokker, Saab and Shorts, among others.
Currently, the worldwide market for turboprop aircraft of 40-70
seats in production is dominated by two manufacturers: ATR
and Bombardier.
After a number of years of declining activity, the regional
turboprop aircraft market has since experienced sustained
growth due to the advantages of turboprop aircraft over jet
aircraft in terms of fuel efficiency and CO2 emissions. In the last

six years, turboprops have received more orders than jets in
the regional market and represented nearly 80% of total orders
in the 40-70-seat segment according to internal estimates. In
2010, ATR delivered 51 new aircraft (compared to 54 in 2009)
and recorded orders for 80 new aircraft (compared to 40 in2009). In addition, 50% of the orders were booked for thenewest member of the ATR family: the “-600 series” aircraft.
As of 31 December 2010, ATR had a backlog of 165 aircraft(compared to 136 in 2009). The current backlog represents
close to three years of deliveries. The relative lower operating
cost and reduced CO2 emissions of turboprop aircraft, in anever passenger-yield constrained environment, are expected tolead to sustained market activity over the coming years.

Products and Services
ATR 42 and ATR 72 Series Aircraft. Commencing with the
ATR 42, which entered service in 1985, ATR has developed afamily of high-wing, twin turboprop aircraft in the 40 to 74-seatmarket that are designed for optimal efficiency, operational
flexibility and comfort. In 1995, in order to respond tooperators’ increasing demands for comfort and performance,
ATR launched the ATR 42-500 and two years later, theATR 72‑500 series. Like Airbus, the ATR range is based on
the family concept, which provides for savings in training,
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qualification. In 2009, the ATR 72-600 pre-series aircraft started
its flight test campaign, while the first flight of the ATR 42-600
followed in 2010. An entry into service is expected in 2011.

Customer Service. ATR has established a worldwide customer
support organisation committed to supporting the aircraft
over its service life. Service centres and spare parts stocks arelocated in Toulouse, Paris, the greater Washington D.C. area,
Miami, Singapore, Bangalore, Auckland and Kuala Lumpur.
ATR Asset Management also responds to the market forsecond-hand aircraft by assisting in the placement andfinancing of used and end-of-lease aircraft. By providing
quality reconditioned aircraft at attractive prices, ATR AssetManagement has helped both to broaden ATR’s customer
base, in particular in emerging markets, and to maintain theresidual values of used aircraft. In the past, clients for suchused aircraft have subsequently purchased new aircraft as they
have gained experience in the operation of ATR turboprops.

Production
The ATR fuselage is produced in Naples, Italy, and ATR wings
are manufactured in Merignac near Bordeaux, France. Finalassembly occurs in Saint Martin near Toulouse on the Airbus
production site. Flight-testing, certification and deliveriesalso occur in Toulouse. ATR outsources certain areas of
responsibility to Airbus, such as wing design and manufacture,
flight-testing and information technology.

AEROSTRUCTURES & CABIN INTERIOR ACTIVITIES— EADS SOGERMAEADS Sogerma is a wholly owned subsidiary of EADS whichis specialised in aerostructures and cabin interior activities.
The company designs and manufactures major aerostructureelements in metal and composite for commercial and military
aircraft and is also a leading provider of cockpit and passenger
seats (first and business class) for commercial and military
aircraft as well as for business jets and helicopters.

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In the aerostructures field, EADS Sogerma engages in thedesign, manufacturing and assembly of Airbus aircraft sections(A318/A320/A330/A340), manufacturing and assembly of
ATR wings, design and manufacturing of the A400M ramp
door as well as design and manufacturing of pilot and co-pilot
seats. In the cabin interior segment, EADS Sogerma designs
and manufactures first and business class seats for largecommercial aircraft.
EADS Sogerma employs some 2,200 people and has
three sites in France (Rochefort, Bordeaux and Toulouse),a subsidiary in Morocco (Maroc Aviation) as well as two
subsidiaries specialised in composites: CAQ (Composite
Aquitaine) in France and CAL (Composite Atlantic) in Canada.

EADS NORTH AMERICAEADS North America is the US-based subsidiary of EADS.
Headquartered in Arlington, Virginia, the company offers abroad array of advanced solutions for fixed- and rotary-wing
aircraft, homeland and cyber security, telecommunications,defence electronics and avionics, and services. It is prime
contractor for the US Army’s UH-72A Light Utility Helicopter.

DAHER-SOCATA
In January 2009, EADS sold a 70% stake in Socata to Daher,
while retaining the remaining 30% stake. Daher-Socata
specialises in the aerospace, nuclear, defence and industry
sectors and offers manufacturing and services solutions
combining three areas of expertise (manufacturing, services andtransport) built into a global offer. In aerospace and defence,
Daher-Socata is both a manufacturer and a tier-1 supplierof equipment and services, producing aerostructures andsystems, fitted sections and airframes. In the under 8.6-tonne
category, it produces aircraft with options dedicated to the civil(business aircraft) and military (multi-role aircraft) markets.

1.1.7 Investments
DASSAULT AVIATIONEADS holds a 46.3% stake in Dassault Aviation (listed on
the Eurolist of Euronext Paris), with Groupe Industriel Marcel
Dassault holding a 50.6% stake and a free float of 3.1%.
Dassault Aviation itself holds a 26% stake in Thales, whichmakes it the second largest shareholder of Thales behind theFrench state.
Dassault Aviation is a leader in the world market for military
jet aircraft and business jets. Founded in 1945, Dassault
Aviation has delivered more than 7,900 military and civil aircraftto purchasers in more than 75 countries. On the basis of its
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experience as designer and industrial architect of complex
systems, Dassault Aviation designs, develops and produces
a wide range of military aircraft and business jets. In order toavoid any potential conflict between the military products ofDassault Aviation and EADS (Rafale and Eurofighter) and to
facilitate a “Chinese wall” approach, EADS’ Dassault Aviation
shareholding is managed by EADS Corporate, whereas theEurofighter programme is managed by Cassidian.
In 2010, Dassault Aviation recorded orders totalling a positive€ 1.3 billion (compared to a negative € -1.3 billion in 2009),
including cancellation of nine orders for Falcon businessInformation on EADS’ Activities
1.1 Presentation of the EADS Group1jets (compared to the cancellation of 163 orders in 2009).
Consolidated revenues amounted to € 4.2 billion in 2010
(compared to € 3.4 billion in 2009), with consolidated net
income of € 267 million (compared to € 257 million in 2009).

Military Jet Aircraft
Dassault Aviation offers wide expertise in the design andmanufacture of the latest generation military combat aircraft.

Rafale. The Rafale is a twin-engine, omni-role combat aircraft
developed for both air force and navy applications. According
to decisions made based on the Livre Blanc of the French
MoD, France will be acquiring 286 Rafale, 228 for the air force
and 58 for the navy, for a total programme cost of € 39.6 billion.
180 aircraft have already been ordered; of these, 133 arereserved for the air force, and 47 for the navy. From 2013 andonwards, the new Rafale “Omnirole” will be delivered, withimprovements such as radar, missile launch detector andoptronics.
Mirage 2000. The Mirage 2000 family reached the end of its
production phase in 2006. Today, approximately 500 Mirage
2000 aircraft are in service worldwide.
nEUROn. Dassault Aviation is the prime contractor for thedevelopment of the UCAV (Unmanned Combat Air Vehicle)
demonstrator, nEUROn. The programme was open to
European cooperation and five countries have decided to join inand share the skills of their aerospace industries: EADS CASA
(Spain), SAAB (Sweden), HAI (Greece), RUAG (Switzerland)and Alenia Aeronautica (Italy). The nEUROn demonstrator isscheduled to make its first flight by mid-2012.

Business Jets
Dassault Aviation offers a wide range of products at the top
end of the business jet sector. Over 1,700 Falcon business
jets have been delivered since the first Falcon 20 delivery in
1965. In-service Falcons currently operate in over 65 countries
worldwide, filling corporate, VIP and government transportation
roles. The family of Falcon jets currently includes four tri-jets:
the Falcon 50EX, 900C, 900EX and 7X, the twin-engine Falcon
2000 and the Falcon 2000EX EASy.

AEROSTRUCTURES, AIRCRAFT CONVERSIONAND FLOOR PANELSEADS Elbe Flugzeugwerke GmbH — EFW
EFW is a wholly owned subsidiary of EADS (consolidated within
Airbus) and a core centre for Airbus passenger to freighter
conversion, a centre of excellence for the manufacture offibre-reinforced furnishing components as well as an importantpartner for special programmes such as the conversion of the
MRTT.

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The conversion of passenger aircraft into freighter aircraft
is a common heavy modification undertaken on behalf ofcommercial aircraft owners. The market for aircraft freighter
conversion encompasses freight service airlines such as FedEx,
airlines with small aircraft fleets and finance groups. In theaerostructures field, EFW is the supplier of fibre reinforced flat
sandwich panels for all Airbus models. Its product range covers
floor and ceiling panels, cargo linings and bullet-proof cockpit
doors. EFW’s engineering department is a certified designorganisation that works to develop future products.

Aerolia
Aerolia is a wholly owned subsidiary of EADS (consolidated
within Airbus) which was formed from the spin-off of the former
French Airbus sites in Méaulte and St-Nazaire Ville pursuant
to the aerostructures reorganisation strategy initiated underPower8. Having commenced operations as of 5 January 2009,
Aerolia has 2,300 employees who work on the design andmanufacture of 4 million detail parts and 500 work packages of
the Airbus nose fuselage.
The standalone company operates with four operational
Directorates (Engineering, Operations, Procurement,
Programmes & Commercial) and four support Directorates(Quality, Finances, Human Resources, Strategy &Communications), which are geographically located on threesites: Méaulte (1,350 employees), St-Nazaire (650 employees)
and Toulouse (400 employees). In 2009, a fourth site waslaunched in Tunisia (target is to have 750 employees by 2014).
The design office, based in Toulouse, combines the skills of
approximately 250 engineers and employees, coming for themost part from the Airbus design offices.
The activities integrated in Aerolia will maintain and develop
commercial and industrial relations mainly with Airbus, while
continuing to develop relations with others such as Bombardier,
ATR, Latecoere, Sonaca, Sogerma, Stork Fokker, Piaggio,
SAAB and SABCA.

Premium AEROTEC
Premium AEROTEC is a wholly owned subsidiary of EADS
(consolidated within Airbus) which was formed from thespin-off of the former German Airbus sites in Nordenham and
Varel and the former EADS site in Augsburg pursuant to theaerostructures reorganisation strategy initiated under Power8.
Premium AEROTEC has its own development unit with its
main facilities at its Augsburg site and offices in Bremen,
Hamburg, Munich/Ottobrunn and Manching. The management
headquarters for the operational units are in Varel, while
the company itself is headquartered in Augsburg. Premium
AEROTEC GmbH is also setting up a new plant for processing
aircraft components in Ghimbav/Brasov County in Romania.
This production unit began operations during the course of2010, and is expected to be fully completed by the end of
2011. A second building section is in the pipeline.

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Having commenced operations as of 1 January 2009, the corebusiness of Premium AEROTEC is focused on structures andmanufacturing systems for aircraft construction and related
development activities. The aim of Premium AEROTEC over the
coming years is to further expand its position as the leading tier
1 supplier of civil and military aircraft structures.

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Premium AEROTEC is a partner in all major European
aircraft development programmes, such as the commercial
Airbus aircraft families, the A400M military transport aircraft
programme and the Eurofighter Typhoon. It plays a significant
role in the design of new concepts in such fields as carbon
composite technologies.

1.1.8 Insurance
EADS Corporate Insurance Risk Management (“IRM”) is an
integrated corporate finance function established to proactively
and efficiently respond to risks that can be treated by insurance
techniques. IRM, centralised at EADS headquarters, isaccordingly responsible for all corporate insurance activities
and related protection for the Group and is authorised todeal directly with the insurance and re-insurance markets. A
continuous task of IRM in 2010 was the development, designand structure of efficient and appropriate corporate and project
related insurance solutions based on the individual needs of theDivisions.
IRM’s mission includes the definition and implementation of
EADS’ strategy for insurance risk management to help ensurethat harmonised insurance policies and standards are in place
for all insurable risks underwritten by the Group. A systematic
review and monitoring procedure is in place to assess the
exposure and protection systems applicable to all EADS sites,
aiming at:tt the continuous and consistent identification, evaluation andassessment of insurable risks;
tt the initiation and monitoring of appropriate mitigation
and risk avoidance measures for identified and evaluatedinsurable risks; andtt the efficient, professional management and transfer ofthese insurable risks to protect the assets and liabilities of
EADS adequately against financial consequences due to
unexpected events.
An embedded reporting and information system is in place
to facilitate IRM’s ability, in close relationship with insurance
managers in charge of the Divisions, to respond to insurance
related risks of the Group. This system seeks to ensurethat insurance risk management solutions are developed
under consideration of adequate and competitive terms andconditions as well as a lean and efficient administration toadequately cover the assets and liabilities of EADS.
EADS’ insurance programmes cover high risk exposure
dedicated to protect the assets and liabilities of the Group(Core) and risk exposure dedicated to protect employee-relatedrisks (Non-Core).

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Core insurance policies underwritten by IRM for the Group
cover risks such as:

tt Property Damage and Business Interruption;
tt Aviation Third Party Liabilities including Product Liabilities;
tt Manufacturer’s Aviation Hull Insurance up to the replacement
value of each aircraft;tt Space Third Party Liabilities including Product Liabilities;
tt Commercial General Liabilities including non-aviationand non-space Product Liabilities and risks related toenvironmental accidents; andtt Directors & Officers Liability.
Claims related to Property Damage and Business Interruption
are covered up to a limit of € 2.5 billion per occurrence. Aviation
Liability Coverage is provided up to a limit of € 2.5 billion per
occurrence, with an annual aggregate cap of € 2.5 billion for
product liability claims. Certain sub-limits are applicable forCore insurance policies as outlined above.
Non-Core insurance policies cover risks such as:

tt Personal Accidents;
tt Company Automobiles; andtt Personal and property exposure during business trips.
Amounts insured for Non-Core insurance policies adequately
cover the respective exposure.
EADS follows a policy of seeking to transfer the insurable risk
of EADS to external insurance markets at reasonable rates,on customised and sufficient terms and limits as provided by
the international insurance markets. All insurance policies are
required to satisfy EADS’ mandatory standards of insurance
protection.
However, to be more independent from the volatilities of theinsurance markets, EADS uses the capabilities of a corporateowned reinsurance captive as a strategic tool with respect to
the Property Damage, Business Interruption Programme andthe Aviation Insurance Programme. The captive is capitalised
and protected according to European legal requirements so as
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the scope of coverage of the original insurance policies oradditionally exposing the financial assets of EADS.
The insurance industry remains unpredictable in terms of its
commitment to provide protection for large industrial entities.
There may be future demands to increase insurance premiums,
raise deductible amounts and limit the scope of coverage.

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In addition, the number of insurers that have the capabilities
and financial strength to underwrite large industrial risks iscurrently limited, and may contract further in light of newsolvency requirements. No assurance can be given that EADS
will be able to maintain its current levels of coverage on similar
financial terms in the future.

1.1.9 Legal and Arbitration Proceedings
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.

had complied with all applicable market information duties,
in particular in respect of risk of delays affecting the A380
programme and its development, and that there had been nobreach of insider trading rules. The decision of the Sanction
Commission is final and cannot be appealed. Nevertheless,following criminal complaints filed by several shareholders in2006 (including civil claims for damages), French investigating
judges are still carrying out an investigation based on the samefacts.

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, the EUlaunched a parallel WTO case against the US in relation to its
subsidies to Boeing. On 30 June 2010, the final report was
published in the case brought by the US but did not become
binding because it was appealed by both sides, with appeal
proceedings now underway. On 31 March 2011, the final
report was published in the case brought by the EU concerning
subsidies to Boeing and has also been appealed. Exact timingof further steps in the WTO litigation process is subject tofurther rulings and to negotiations between the US and the EU.
Unless a settlement, which is currently not under discussion,is reached between the parties, the litigation is expected tocontinue for several years.

In Germany, criminal proceedings regarding suspected insider
trading offences did not establish any wrongdoing and havebeen terminated. However, since 2006, several shareholders
have filed civil actions against EADS in Germany in order torecover their alleged losses in connection with the disclosure of
A380 programme delays. Several of these plaintiffs have filed
motions for “model proceedings”, which would allow common
issues of fact or law in multiple individual securities actions to
be decided together with binding effect in all such actions. The
proceedings are in their preliminary stage and the amounts
claimed are relatively small.

The French Autorité des marchés financiers (the “AMF”)
began investigations in 2006 for alleged breaches of market
regulations and insider trading rules with respect to, among
other things, the A380 delays announced in 2006. On 1 April
2008, the AMF announced the notification of charges against
EADS and certain of its current and former executives forbreach of such market regulations and insider trading rules,
respectively. On 22 July 2009, the Rapporteur of the Sanction
Commission of the AMF issued a report regarding the charges
notified by the AMF, which contained various recommendations
to the Sanction Commission on the merits of the charges.
Following oral hearings before the Sanction Commission
which took place from 23-27 November 2009, the Sanction
Commission decided, in a decision published on 17 December
2009, to dismiss all charges against EADS and the othernotified persons. The Sanction Commission held that EADSOn the basis of largely the same facts, institutional shareholders
filed two separate requests in the second half of 2009 with
the Enterprise Chamber (Ondernemingskamer) of the Court ofAppeal in Amsterdam to open an inquiry into the management
and affairs of EADS. On 3 November 2010, the Enterprise
Chamber denied the applicants’ requests to open an inquiry.
While the decision of the Enterprise Chamber is final andcannot be appealed, a Dutch Foundation (Stichting) has
threatened to initiate separate civil proceedings against EADS in
the Netherlands for alleged breaches of market regulations withrespect to the A380 delays announced in 2006.
On 12 June 2008, two actions were initiated in the UnitedStates District Court for the Southern District of New York,
one of which was voluntarily withdrawn shortly thereafter. The
remaining action purported to be a class action brought onbehalf of all persons and entities residing in the United States
who purchased or otherwise acquired EADS’ common stockduring the period from 27 July 2005 through 9 March 2007.
The action sought damages in an unspecified amount, withinterest and attorneys’ fees, for alleged violations of the US
securities laws in connection with financial disclosures issued
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1.1 Presentation of the EADS Group1during that same time frame relating to A380 programmedelays. On 26 March 2010, the Court granted defendants’
motion to dismiss for lack of subject matter jurisdiction. On
23 April 2010, plaintiff filed a notice of appeal of the Court’s
decision, which was voluntarily withdrawn on 23 August 2010.
On 10 November 2009, Airbus Military SL (AMSL) notified
Europrop International GmbH (EPI), the engine manufacturer
under the A400M aircraft programme, that it had a numberof contractual claims against it for breach of Milestones 7, 8
and 9 under the engine agreement, in an amount currently
totalling approximately € 500 million. On 8 February 2010, EPI
notified AMSL of its own claims under the engine agreement
in an amount totalling approximately € 425 million, andon 23 February 2010, EPI sent notice of its intent to seek
arbitration, and of its sending of a request for arbitration to
the International Chamber of Commerce (ICC) on the sameday. On 4 May 2010, AMSL and EPI entered into a Standstill
Agreement to allow without prejudice business discussions andrenegotiations, which are ongoing.
In 2005, the liquidator of FlightLease Holdings Group (aSwissAir subsidiary and 50% shareholder of the special
purpose vehicle GFAC, a joint venture between Swissair and
GATX), prompted a lawsuit by GFAC against Airbus in a court in
New York to recover USD 227 million in pre-delivery payments,
together with interest and costs. The lawsuit followed
Airbus’ termination of a purchase agreement with GFAC in
October 2001 for 38 single-aisle and long-range aircraft, inthe context of Swissair’s bankruptcy. In 2006, the FlightLeaseliquidator brought a separate action before the commercial
court of Paris to recover an additional USD 319 million in
pre-delivery payments, together with interest and costs, on a
separate purchase agreement between Airbus and a wholly
owned subsidiary of FlightLease (which was also terminated by
Airbus in the context of SwissAir’s bankruptcy). On 6 February
2009, the trial judge in the New York action decided in favour of
GFAC. Airbus appealed the decision to the appellate Division.

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In May 2010, while the decision on Airbus’ appeal in the New
York lawsuit was still pending and before trial had commenced
in the Paris lawsuit, the parties agreed on a confidential
settlement to terminate all proceedings.
Following an investigation conducted by the Italian Guardia
di Finanza, Italian tax authorities are currently evaluating
whether Astrium owes any overdue tax in Italy related to its
past contractual relationships. In parallel, the Italian Public
Prosecutor decided at the end of December 2009 to initiate
proceedings against Astrium’s legal representatives for failure
to file a tax declaration and attempted fraud. Astrium has
submitted memoranda to Italian tax authorities in support of its
position, and is currently awaiting a response. In the meantime,
Astrium will continue to defend itself as well as the concerned
legal representatives.
On 30 July 2010, Constructions Industrielles de la Méditerrannée(“CNIM”) brought an action against EADS and certain of its
subsidiaries before the commercial court of Paris, alleging
anti-competitive practices, breach of long term contractual
relationships and improper termination of pre-contractual
discussions. CNIM is seeking approximately € 115 million indamages on a joint and several basis. EADS believes that theplaintiff’s action lacks merit and will mount a vigorous defence.
The proceedings are currently at an early stage.
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 to covercurrent or contemplated general and specific litigation risks. For
the amount of provisions for litigation and claims, see “Notes
to the Consolidated Financial Statements (IFRS) — Note 25C.
Other provisions”.

1.1.10 Research and Technology, Intellectual Property
RESEARCH AND TECHNOLOGY
In 2010, the EADS Corporate Technical Office continued topursue many measures needed to achieve the research andtechnology (“R&T”) goals associated with Vision 2020. These
included pursuing roadmaps for key technologies, continuinga Group-wide “green” technologies group, increasing efforts torecruit sufficient engineering talent and further improving R&T
management.

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EADS has an R&T leadership team across the Divisions,
implementing a streamlined approach to capture synergies.
For example, EADS Innovation Works, the research arm of theGroup, and Cassidian now operate a common research facility
in Newport, Wales (UK).
Management focuses R&T spending on a number of larger
projects, thereby ensuring more concentrated investment of
R&T funds in strategic directions. To maximise the resourcesof the R&T budget, EADS continued to increase its contracting

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activities with European governments. In addition, R&T
operations targets are to increase efficiency by approximately
10% and to reinvest the proceeds in technology development.
Global R&T collaboration continued to grow outside Europe
in order to access a diverse pool of scientific and engineeringexpertise. Partnerships with leading research institutes
expanded in Canada, India, Russia, Singapore, China and theUS.
Across EADS, 2010 was a significant year for technology
development, with notable innovations ranging from civil aircraft
fuel cell research to synthetic fuel testing, low emission diesel
helicopter propulsion and technologies for public security.

Corporate Technical Office Organisation
The Chief Technical Officer’s (“CTO”) mission is to be the
R&T focal point for the entire Group. The CTO ensuresthat business strategy and technology strategy are closely
linked. He is responsible for the development of design andmanufacturing tools, as well as innovation, across EADS. The
CTO is a member of the EADS Executive Committee and has
responsibility for the entire R&T budget and R&T production
within EADS. The CTO seeks to deliver shareholder value
through a disciplined, leading-edge R&T portfolio that enables
the introduction of new technologies on future products withstrong returns on investment. The CTO also aims at maximisingcustomer satisfaction by providing high-value solutions thatmeet technological, performance, safety and cost-competitive
requirements. In addition, the CTO addresses broader publicconcerns with solutions that encompass safety, security,environmental compatibility and energy efficiency.
The EADS Executive Technical Council (“ETC”), chaired by the
CTO, is made up of the technical Directors of each Division.
The ETC is responsible for ensuring alignment with the Group’s
technology strategy and implementation through the GroupR&T roadmap. The ETC ensures that a balance is maintained
between the top-down strategic guidance and bottom-up
activities.
Group Innovation Networks and their leaders in the CTO’s
team report to the Chief Operating Officer-Innovation to ensurethat R&T synergies are exploited throughout the Divisions and
EADS Innovation Works. The COO Innovation is chairperson of
the R&T Council (RTC), which is made up of the R&T Directorsof the Divisions and Business Units, and the head of EADS
Innovation Works.
The CTO steers the EADS-wide harmonisation of transversal
technical processes, methods and tools, and skills
development programmes, such as systems engineering,common tools for product life-cycle management (PLM/Phenix)
and systems engineering training and qualification. The CTO
team also carries out technical assessments on behalf of the
CEO and the EADS Executive Committee.

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The head of EADS Innovation Works reports to the CTO. EADS
Innovation Works manages the corporate R&T production thatdevelops the Group’s technical innovation potential. Driven
by the EADS R&T strategy, EADS Innovation Works seeks to
identify new technologies that will create long-term innovation
value for the Group. EADS Innovation Works operates two
main sites near Munich and Paris and employs approximately
700 people including doctorates and university interns.
Proximity centres are maintained in Toulouse, Nantes, Hamburg
and Stade to support knowledge transfer to the Business
Units. A liaison office operates in Moscow, which coordinates
relations with leading Russian scientific institutes. EADS
operates R&T centres in the UK, Spain and Singapore, andestablished a presence in India in 2009 through the opening of
EADS Innovation Works India in Bangalore. This new centre,
which is located within Airbus’ Indian engineering centre, will
look at developing software and also develop technologies forhomeland security.
EADS Innovation Works and the EADS R&T community in
the Divisions maintain and continually grow partnerships withleading universities and high-tech engineering schools throughemployment of thesis students, post-graduate interns anddoctorates, and through research contracts.

Performance and Best Practices
The R&T strategic approach
Strategic obligations for EADS include the development of corecompetencies and technologies for platform and platformbased systems architecture and integration. In parallel, EADS
strives to keep the innovation pipeline flowing in order toreplace ageing technologies and processes.
Building on the identification, evaluation and clear prioritisationof critical technologies for the Group, EADS is shaping atechnological policy that strengthens Group synergies andis aimed at maintaining and when needed, increasing EADS
R&T efforts. Each Division is responsible for proposing its own
targets, and for securing public and private R&T funding.
The EADS R&T strategy is driven by:

tt shareholder value: a stringent, leading-edge R&T portfoliothat seeks to enable seamless introduction of newtechnology on future products and a strong return on
investment;
tt customer satisfaction: high-value solutions that meet thetechnological, performance, safety and cost-competitive
pressures that challenge the future;
tt upstream contribution to successful on-time, on-quality, onprice introduction of new products and processes;
tt technology leadership to fuel business growth; andEADS REGISTRATION DOCUMENT 2010

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tt societal responsibility: R&T solutions that contribute tomobility, environmental protection, safety and security
requirements.

R&T production and management
EADS R&T activities cover a wide spectrum of technologicaldomains, are targeted at different levels of the value chain,
and are structured according to the timelines of short-term
committed programmes, medium-term optional programmes
and long-term advanced concepts for the introduction of newtechnologies into the Company’s product and manufacturing
pipeline.

R&T for advanced concepts – integrated
demonstrators technological/operational studies
All Divisions work to generate new product concepts in line with
the R&T strategy to maximise future business potential. These
concepts explore and generate new ideas, while pushing thelimits of what is technically possible currently.
The portfolio is currently focused around four growth axes:
Mobility (eg air traffic management), Environmental Protection(eg energy solutions, optimised platforms), Defence, Safety
and Security (eg illicit materials detection and aircraft
communications protection), and Services.

EADS Corporate Foundation for research
Created in 2004, the EADS Research Foundation’s ambition
is to develop ties between the public sector researchcommunities and the aeronautics and space industrial andtechnical communities.
The EADS Research Foundation also participates as a founderor donor in other public interest foundations and associations.
Over the past five years, the EADS Research Foundation has
sponsored 75 research programmes, created six researchand teaching chairs and honoured 69 researchers. The EADS
Research Foundation supports 10 upstream original frontierresearch projects conducted by public research organisations.
One of the EADS Research Foundation’s goals is to build ties
between the public research community and the education
sectors. To this end, each year it honours excellence in the
research field by scientists who achieve milestones in theirresearch work in collaboration with the industrial sector. It also
hands out six “Best Thesis” awards annually in mathematics,
engineering sciences, earth sciences, physics, information
technologies and interdisciplinary disciplines.
The EADS Research Foundation supports other organisations
with which it shares common objectives, namely: the French
Aeronautics and Space Research Foundation; the Institutefor Higher Scientific Studies (IHES), which is dedicated58

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to advanced research in mathematics and theoretical physics;
and the C. Génial Foundation, which helps to increase scientificand technical interest, particularly among young people.
Through this latest effort, the EADS Research Foundation
supports the “Science in Schools” initiative, aimed at creatinga new image for teaching science in middle schools, grammar
schools and foundation courses.

Bauhaus Luftfahrt (an aviation research think tank)
EADS and the government of the German state of Bavaria
have joined forces with two other German aerospacecompanies to fund Bauhaus Luftfahrt, a think tank forcreative and interdisciplinary research activities in the field of
aeronautics. Bauhaus Luftfahrt enables EADS to consider new,groundbreaking research in the field of aeronautics by adopting
an innovative approach to future-oriented, visionary solutions.

Competence management
In 2005, EADS implemented an expert policy in order to
identify and promote employees mastering the Group’s criticaltechnical capabilities. Experts are indeed a cornerstone of
EADS’ policy to reinforce its technological leadership. There areapproximately 1,150 experts, senior and executive experts fromthe Divisions, who cover all technical fields and contribute to:tt supporting customers with complex problem solving;
tt implementing innovations into new products and services;tt increasing and sharing technical knowledge; andtt securing intellectual property.

Recognising talent as a strategic human capital
The EADS Hall of Fame was instituted by the CTO together
with the Head of Human Resources, with the objective of
encouraging innovation within EADS, sharing best practices,
promoting intellectual property and instilling pride andrecognition among the EADS workforce by recognisingand honouring employees who have made outstanding
contributions to the Company.
In 2007 and 2009, EADS hosted Hall of Fame ceremonies,
which awarded prizes to employees from across the Group.
There were four categories of awards: the best inventors, forthose who develop and patent new technological inventions;the best innovators, for those who implement innovative
projects which generate a significant revenue increase orcompetitive advantage; the craftsmen, for those who possess
unique skills that give the company a valuable competitive
advantage; and a “Special Prize” to a team, in order torecognise the best improvement initiatives to generate savings,
to deliver on time or to increase quality (in 2007 and 2009: the“Best Lean Manufacturing Team”).

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PROTECTING INNOVATION: INTELLECTUAL
PROPERTY
Intellectual Property (“IP”), including patents, trademarks,
copyrights and know-how, plays an important role in the
production and protection of EADS’ technologies and products.
The use of IP rights enables EADS to remain competitive in themarket and to manufacture and sell its products freely, and toprevent competitors from exploiting protected technologies. It
is EADS’ policy to establish, protect, maintain and defend its
rights in all commercially significant IP and to use those rights in
responsible ways.

Organisation
The general management of IP in EADS is conducted throughan IP Council led by the EADS Chief IP Counsel. Executives
responsible for IP at the main Divisions sit on this council.
Each of the Division companies of the Group owns the IP thatis specific to its particular business and has been generated
by the Division. Where IP is of common interest throughout
the Group, the Division that generated it may issue a licenceallowing its use elsewhere (respecting the interests of the othershareholders when appropriate). EADS also owns IP directly or

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under licence agreements with its Divisions. EADS centralises
and coordinates the Group’s IP portfolio, participates with theDivisions in its management and promotes licensing of common
IP between the Divisions. EADS controls the protection of its IP
made in the strategic countries.

Performance and Best Practices
To increase the added value of the Group, the EADS CTO teampromotes sharing within the Group of all the knowledge of theBusiness Units and the sharing of resources, skills, researchand budget to develop new knowledge, while respecting
existing contractual and legal frameworks. For example, all of
the contracts between Business Units of the Group concerning
shared R&T must have provisions allowing for the flow ofknowledge (EADS R&T network rules).
In 2010, the EADS IP portfolio comprised approximately 9,000
inventions (approximately 8,000 in 2009), which are covered bymore than 29,000 patents throughout the world. The number ofpatents filed during 2010 gives a good indication of the greater
momentum in R&T and product development: 1,006 patents
were filed in 2010.

For international patent protection, EADS uses the Patent Cooperation Treaty, which provides a simplified system for international
patent filing.
2010

2009

2008

New inventions filed by EADS (some of which are covered by several patents)

1,006

1,073

1,088

EADS patent portfolio (year-end)

32,18829,123

25,665

In 2009, EADS launched a technology licensing initiative. EADSTechnology Licensing provides access to a wide range oftechnologies that are available to help companies outside theGroup to develop new products, improve production methods

and expand their market opportunities. EADS Technology
Licensing seeks to generate revenues by exploiting EADS’ large
patent portfolio and related know-how.

1.1.11 Environmental Protection
Protection of the environment is a global priority that requires
engagement and responsibility by citizens, government andindustry, often working together in partnership. Eco-efficiency
is therefore a major goal of EADS’ “Vision 2020” strategic
roadmap, which aims at maximising the benefits of EADS’
products and services for customers and other stakeholders
while minimising the environmental impact of manufacturing
and operating these products throughout their life cycle.
The implementation of further innovative and eco-efficienttechnologies and processes is a key factor in ensuring EADS’sustainability, increasing the attractiveness of its products andits overall competitiveness, benefiting growth, safeguarding
employment and creating added value for all stakeholders.
EADS continuously pursues eco-efficiency by (i) seizing “green”
business opportunities, (ii) seeking to mitigate the environmental
impact of the Company’s activities and products throughout
their life cycle and (iii) developing breakthrough technologies,
products and services.

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ORGANISATION
While each Division, Business Unit and corporate function
remains fully responsible for the implementation of EADS’environmental policy in pursuit of eco-efficiency, the EADS
Environmental Network ensures the consistency of the various
initiatives Group-wide. Composed of representatives of themain business areas and headed by the EADS Corporate
Secretary, the mission of the EADS Environmental Network
is to seek continuous improvement of EADS’ environmental
performance, to promote sharing of best practices, to monitor
opportunities and risks and to anticipate regulatory changes.
Sub-working groups on specific topics have been establishedin areas such as Climate Change/Energy, Environmental
Reporting, “REACH” and Hazardous Substances, and Designfor Environment/Life Cycle Practices. Corporate objectives
are periodically reviewed at various levels through a set ofindicators and advanced reporting tools and processes, within
the framework of the corporate Environmental Management
Systems (“EMS”) that are currently being implemented.
EADS strives to develop joint initiatives within industry inorder to improve the overall environmental performance of
the aerospace and defence industry in the most effective,
consistent and cost-efficient manner possible. EADS leads orparticipates in various European and international environmental
working groups such as:

tt ICCAIA (International Coordinating Council of Aerospace
Industries Associations — Aircraft Noise & Engine Emissions
Environment Committee: Vice-Chaired by Airbus);
tt ASD and ADS (REACH Working Groups Chairmanships);andtt GIFAS Environment and Sustainable Development
Committee Chairmanship.
EADS also participates in the environmental working groupsof national industry organisations such as GIFAS in France,
TEDAE in Spain, BDLI in Germany and ADS in the UK.
Cooperation has also been initiated with AIA (Aerospace
Industries Association of Americas) and SAE to develop
appropriate standards to facilitate the supply chain’s
compliance with the REACH regulation (the EU regulation which
addresses the production and use of chemical substances) andfuture regulatory changes.

EADS ENVIRONMENTAL ROADMAP TOWARDS
ECO-EFFICIENCYEADS is committed to moving towards an eco-efficiententerprise. In order to support this effort through an effective
series of concrete projects and actions, a Corporate
Environmental Roadmap has been established. Establishedat each Business Unit, it provides a general framework and

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timeline for aggressive management, operational and productoriented performance goals to be achieved by 2020, including
in particular:

Environmental management goals
tt Full EADS coverage with ISO 14001 with a life cycle
orientation and a single corporate certification; andtt Integration of eco-efficiency within the development of any
new product or technology as well as in the supply chain.

Performance operational goals (against 2006
baseline)
tt 80% reduction of water discharge;
tt 50% reduction of waste, water consumption, CO2 andvolatile organic compound (“VOC”) emissions;tt 30% reduction of energy consumption;
tt 20% sourcing of energy from renewable sources;
tt Pursuit of ACARE (Advisory Council for Aeronautics
Research in Europe) research goals for aviation and thevarious defined goals for other products; andtt Development of eco-efficient solutions for core and adjacentcustomer segments that provide sustainable value creation
for the Company.

ENVIRONMENTAL MANAGEMENT ISO 14001/EMASEADS encourages not only the environmental certificationof its operations but also the development of a full life cycle
orientation for its products and services, as this remains themost cost-efficient and practical way to effectively reduce
the environmental impact. Robust certified EMS have been
progressively implemented across EADS manufacturing sites,with the objective to achieve full coverage of EADS and a single
corporate certification against ISO 14001. As of 31 December
2010, 90 sites representing approximately 90% of EADS’ total
workforce now operate according to a certified ISO 14001 (orregistered EMAS) EMS.
In 2010, further progress was achieved in terms of ISO 14001
coverage and certification renewal:

tt Airbus successfully renewed its certification, which
encompasses all activities throughout the lifecycle ofmanufactured products. Coverage was expanded to include
the A320 final assembly line in Tianjin;
tt Astrium Space Transportation was globally certified ISO 14001,
and this certification encompasses eco-conception on the
French activities of Astrium Space Transportation;
tt Eurocopter renewed the certification of its German andSpanish sites (France to be completed by 2011), while

Information on EADS’ Activities
1.1 Presentation of the EADS Group1certification of subsidiaries (Australian Aerospace, Helibras,
EC UK) is underway;

tt other steps include EADS Sogerma (3 sites certified in
March 2010), EADS Cassidian UK, and ATR (lifecycle
certification targeted for 2011).
Monitoring of the various achievements against objectives isbeing performed through the collection of a carefully chosen
set of indicators. Consistency and reliability of the reporting
exercise is being ensured through corporate procedure andguidelines derived from GRI requirements combined with anadvanced Environmental Management Information System(ENABLON) that is fully operational within EADS worldwide.

CLIMATE CHANGE AND ENERGY RELATED ISSUES
Recognising that climate change and energy-related issues aresome of the main environmental challenges to be addressed,
EADS has launched a climate change and energy initiative.
This initiative, which mobilises a wide range of complementary
expertise from all EADS business areas, provides EADS witha robust and detailed assessment of EADS challenges andopportunities in a “low carbon economy” for both products andmanufacturing sites.

Aircraft operations: a major focus of attention
The impact of climate change associated with aircraft occurs
mostly during operations, with CO2 emissions proportional tofuel consumption (which also demonstrates the high correlationof environmental performance with operating performance).
EADS is therefore indirectly but significantly exposed to theenvironmental challenges that airlines face head on.
According to the IPCC (Intergovernmental Panel on Climate
Change), air transport currently causes 2% of the total CO2
emissions worldwide related to human activity). The Group isaccordingly committed to mobilising all necessary expertiseand significantly increasing its research and technology efforts
for designing, developing and manufacturing the cleanest,greenest and lowest energy demanding technologies andproducts. This includes supporting ICAO in the developmentof a CO2 metric for commercial aircraft, targeted for
implementation from 2013.
In the research and technology area, EADS participates orleads major international and European technology projects toaddress climate change related matters such as:

tt MOZAIC, COMET, IAGOS, and QUANTIFY to monitor
gas and water vapour in the upper troposphere, to better
understand air components, meteorology and climatechange phenomenon, and to seek mitigation strategies ofaviation impact on climate change;

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tt CORINE, an EU-funded project, is focusing on acollaborative eco-design tool for small and medium size
companies (all helicopter industry subcontractors), to be
used for aero and non-aero parts;

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tt the EU “Clean Sky” Joint Technology Initiative (“JTI”). The
Clean Sky JTI is the largest research project ever set up
jointly with the European Commission and will run overa seven-year period with a total budget of €1.6 billion(half financed by the European Commission and half
by industry). Supporting the ACARE goals, “Clean Sky”
intends to radically improve the impact of air transport on
the environment in delivering innovative technologies andsolutions, supporting step changes in the reduction ofnoise (50% reduction in perceived noise), emissions (50%reduction of CO2 and 80% of NOX) and consumption for the
next generation of aircraft by 2020. It also covers researchon green product lifecycle design including manufacturing,
maintenance and disposal.
While Airbus, Eurocopter and EADS CASA each co-lead a
specific integrated technology demonstrator (respectively
smart fixed-wing aircraft, green rotorcraft and green regional
aircraft), EADS Innovation Works and ATR participate asassociate companies. Other initiatives dedicated to reducing
CO2 emissions in which EADS participates include the SESAR(Single European Sky ATM Research) programme, whichaims at improving EU air traffic management through theimplementation of the “Single European Sky”. A potential
climate change risk to EADS operations relates to the expectedscarcity of fossil fuels and the subsequent upward pressure onenergy costs, combined with the planned construction of new
infrastructure and increase in air traffic over the coming years.
The recent inclusion of aviation into the EU Emission Trading
Scheme (EC directive 2008/101) also creates an additional
challenge currently addressed in close relation with thestakeholders of the air transport sector.
Substantial research efforts are being devoted within Airbus
in joint cooperation with key external partnerships to movetowards environmentally friendly alternatives to fossil fuels. An
alternative fuel advisory Board has been implemented grouping
all necessary internal stakeholders. Airbus and Eurocopter
have been working with universities, existing fuel companies
and start-up companies, as well as with certification bodies,
to develop “drop-in” biofuels and ensure their availability forcommercial aviation. “Drop-in” fuels do not require either achange of the aircraft systems or any specific infrastructure.
Airbus, Qatar Airways, Qatar Science & Technology Park(QSTP) and Qatar Petroleum (QP) have recently joined forces
to carry out engineering and economic analysis into thedevelopment, production and supply of sustainable biofuel.

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As a member of the aviation industry, and together with its
peers, Airbus promotes the view that use of sustainablebiofuels should be reserved for the aviation industry. Unlike
other industries, aviation has no other efficient alternative wayof significantly limiting its carbon impact, despite the major
reduction in fuel consumption already achieved through recent
programmes such as the Airbus A380. Airbus is currently
bringing together farmers, oil-refiners and airlines to spearhead
the commercialisation of sustainable biofuel production
worldwide and in particular in Brazil. Airbus is also supporting
life-cycle and sustainability projects to ensure that any CO2emission-reduction solutions have a positive “social” impact
and do not compete with local resources including land, food orwater. TAM Airlines and Airbus were first to fly Jatropha-based
biofuel in Latin America. Various studies indicate that Jatrophabased biofuel could reduce aircraft carbon footprint by up to80%.
Renewing its commitment made in the frame of COP15, theaviation sector expects to reach CO2 neutral growth from 2020,
and will also work towards halving net CO2 emissions by 2050
(against 2005 baseline). Additional research is being heavily
developed in this field: Astrium is exploring how to harvest solar
energy from satellites and to ease its restitution on earth. All ofthese studies demonstrate EADS’ dedication to more ecoefficient and carbon neutral aviation and industry as a whole.

Energy efficient and Low CO2 infrastructures
and technologies as a must
In order to meet stakeholders’ increasing demands for carbon
related information and further movement towards a low carbon
economy, and in anticipation of more stringent regulation (eg,emission trading schemes, carbon inventory and labelling), a
carbon footprint including both scope 1 and scope 2 emissions
has been performed according to the GreenHouse Gas
Protocol (GHG protocol). This allows the identification of thevarious risks, but also of the opportunities to further reduce
GHG emission and relevant carbon dependencies. Further
testing was made to estimate the amount of carbon contained
within EADS’ supply chain (Scope 3) as part of the GHG roadtesting experimentation.
An EADS-wide energy project was initiated to reduce the overall
energy footprint of its infrastructure and install some renewablesources of energy, such as solar panels, geothermal heatingor power stations. In 2010, plans to build new energy efficient
infrastructures and expand the use of renewable sources ofenergy have progressed: renewable energy heating systems
are being implemented in assembly line buildings (geothermalin Getafe, solar panels in San Pablo, biomass boilers in
Broughton, photovoltaic cells and bio climatic A350 building inToulouse, New Eco shaped building in Hamburg, and optimised
natural light windows in Tianjin). Parking lots are due to beequipped with solar panels in Marignane.

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To measure progress and performance, EADS-wide
environmental reporting has been ramping up for the past two
years, and was externally audited on the entire Airbus perimeterin 2010. Despite the measures implemented, and mainly
due to the ramping up of activities in Airbus, the total energy
consumption of EADS slightly increased in 2010 compared tothe same perimeter of 2009.

WASTE AND NATURAL RESOURCES
Various initiatives have been implemented across the Groupto reduce the level of total waste produced or eliminated.
Considering the expected scarcity of some raw materials aswell as the volatility of their relevant prices, reverse supply chain
might certainly become of growing interest.
Despite efforts in recycling and recovery paths developedwith the main waste management companies, the total waste
production compared to ISO perimeter has significantly
increased. Recycling of cured and uncured CFR composites
has been carefully studied with the aim to separate and reuserecovered carbon fibres in some aerospace or secondary
industry applications; various efficient technologies havebeen tested and some are being industrialised such as
pyrolysis. Airbus has set up a three step approach to develop
environmentally friendly dismantling practices. Following
experimentation through the PAMELA project (Process
for Advanced Management of End of Life Aircraft), it has
been shown that significant improvements can be obtained
compared to current dismantling practices. The optimised
combination of advanced 3D techniques (Decommissioning,
Disassembling and Dismantling) allows for a materials recovery
rate of over 80% compared to less than 60% today. An
industrial platform for dismantling has now been installedwith partners; the TARMAC-AEROSAVE Company now
effectively offers appropriate industrial services in this end of life
management field.

AIR POLLUTANTS
Reducing air pollutants from operations and processes andthroughout the life cycle has been a key priority for years.
The main emissions are currently associated with VOCs as
well as with other air pollutants emitted at ground level from
infrastructures or products. A major reduction in VOCs has
been obtained due to the development and implementation of
new VOC smart painting techniques. In all Divisions, ambitious
programmes to substitute some critical solvents such astrichloroethylene have been conducted, and paint schemes
now generally incorporate low VOC.

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REACH AND HAZARDOUS SUBSTANCESMANAGEMENTDEVELOPING BREAKTHROUGH TECHNOLOGIESAND SERVICES

The European REACH (Registration, Evaluation andAuthorisation of Chemicals) regulation (EU No. 2007/1906)
came into force on 1 June 2007. REACH aims at improving
the protection of human health and the environment throughcloser regulation of chemical use by industry; it replaces thepre-existing EU regulatory framework on chemicals. REACH
introduces a range of new obligations over a period of 11 years
which are intended to reduce risk that the 30,000 mostfrequently used chemicals may cause. The regulation will also
bring about the phased withdrawal from use of some of thesubstances that are considered to be of very high concern forhuman health and environment.

EADS’ evolving technology portfolio, arising from aerospaceand defence research, has applications inside and outside
EADS’ core business, contributing to innovation across othersectors. Illustrating this approach, Astrium is positioning its
observation, navigation, telecom satellites and services asenablers of three component solutions to Earth’s environmental
challenges: Monitoring (to provide policy makers with solid
data for decisions), Mitigation (of the negative impact of humanactivities), and Adaptation (to environmental degradation).

Taking on Board the lessons learned from the managementof the RoHS and WEE directives and in order to provide a
consistent and cost-efficient compliance approach for thewhole Company and support its supply chain, a dedicatedworking group has been created as part of the EADS
Environmental Network which brings together all EADS
business areas.
EADS and its Divisions are also joining forces at theinternational level (SAE, ASD, etc.) together with other majorinternational aerospace companies to further structure theentire sector’s compliance approach. Following pre-registration,
additional intensive efforts were devoted in 2010 to follow
the various registrations and anticipate possible disruptions
that might result from non- or partial registrations. Voluntary
ambitious elimination plans have been initiated to track andget rid of the most critical substances for the sector, including
chromate-free, cadmium-free, lead-free projects, nanoparticles or radioactive substances tracking projects. Strong
exchanges within the Business Units, industrial peers and the
supply chain are necessary to allow the qualification of themost standardised possible solutions. While proactively moving
towards the elimination of these substances, EADS and its
Divisions are committed to the highest achievable control ofemissions, in full compliance with the applicable regulatory
framework. EADS is currently developing efforts to shareapproaches with other sectors (automotive, mechanical and or
manufacturers/retailers of complex articles).

Satellites are long established as a Monitoring tool forenvironmental scientists and policy makers. Astrium
observation technologies provided to the European Space
Agency have become durable monitoring tools within the EU
GMES programme.
Space is also an invaluable vantage point, for the Adaptation
segment, in times of crisis (extreme weather, floods, forest fires,
earthquakes, etc.) to support rescue teams with terrain data
and victim location, or to do preventive mapping of vulnerable
zones. On the Mitigation front, Astrium offers services toagriculture that help to reduce the use of fertilisers. The use ofnavigation aids to make mobility more efficient presents further
opportunities.
In 2010, Europe’s ice research satellite CryoSat-2, built
by Astrium, was placed in its polar orbit to provide uniquemeasurements of the arctic and Antarctic ice covers. The
Franco-Spanish SMOS (Soil Moisture and Ocean Salinity
mission) satellite, for which Astrium built a breakthroughradiometric instrument, was launched to effect measures on
a global scale, and better understand the Earth’s water cycle
and ultimately climate change. A significant agreement was
signed with the AFD (Agence Française de Développment) forthe provision of satellite observation data to countries that own
tropical forests, allowing them to assess their CO2 retention
capacity for the carbon-credit market.

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1.1.12 Employees
At 31 December 2010, the EADS workforce amounted to121,691 employees (compared to 119,506 employees in 2009
and 118,349 employees in 2008), 96.6% of which consistedof full time employees. Depending on country and hierarchy
level, the average working time is between 35 and 40 hours per
week.
In 2010, 5,047 employees worldwide joined EADS (comparedto 5,663 in 2009 and 7,081 in 2008). At the same time,
3,213 employees left EADS (compared to 3,308 in 2009 and
5,078 in 2008).
Employees by Division

Airbus*Former MTA division

In total, 94.1% of EADS’ active workforce is located in Europe
on more than 100 sites.

WORKFORCE BY DIVISION AND GEOGRAPHIC AREA
The tables below provide a breakdown of EADS employees by
Division and geographic area, including the percentage of parttime employees. Employees of companies accounted for by the
proportionate method (such as ATR, MBDA) are included in thetables on the same proportionate basis.

31 December 201031 December 200931 December 2008

62,751

61,98753,906

-

-

4,910

Eurocopter

16,76016,316

15,667

Astrium

15,34014,624

13,674

Cassidian21,181

21,09322,787

Headquarters and Others

5,659

5,486

7,405

121,691

119,506

118,349

Total EADS*

Figures for 2010 and 2009 include Airbus Military, following integration of the former MTA division into Airbus. Figures for 2008 have not been restated.

Employees by geographic area

31 December 201031 December 200931 December 2008

France45,58044,76044,380Germany

43,96643,81442,987

Spain

10,498

10,46910,104

UK

12,813

12,733

13,826

Italy

487

483

455

US

2,692

2,512

2,555

Other

5,655

4,735

4,042

121,691

119,506

118,349

31 December 201031 December 200931 December 2008

France

4.1%

4.1%

3.9%

Germany

3.7%

3.4%

3.7%

Spain

0.7%

1.0%

0.9%

UK

2.1%

2.0%

1.8%

US

0.7%

1.3%

0.1%

Total EADS% Part time employees

Other

2.8%

3.0%

3.2%

Total EADS

3.4%

3.3%

3.3%

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1.2 Recent Developments

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1.1.13 Incorporation by Reference
The English versions of the following documents shallbe deemed to be incorporated in and form part of this
Registration Document:

tt “Section 1.1 Presentation of the EADS Group” of theRegistration Document filed in English with, and approved
by, the AFM on 22 April 2009;
tt “Section 1.1 Presentation of the EADS Group” of theRegistration Document filed in English with, and approved
by, the AFM on 21 April 2010;
tt the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2008, together with the related notes,
appendices and Auditors’ reports, as attached to andincorporated by reference in the Registration Document filed
in English with, and approved by, the AFM on 22 April 2009
and filed in English with the Chamber of Commerce of The
Hague;
tt the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year

1
ended 31 December 2009, together with the related notes,
appendices and Auditors’ reports, as attached to andincorporated by reference in the Registration Document filed
in English with, and approved by, the AFM on 21 April 2010
and filed in English with the Chamber of Commerce of The
Hague; andtt the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2010, together with the related notes,
appendices and Auditors’ reports (as attached hereto).
Copies of the above-mentioned documents are available
free of charge upon request in English, French, German
and Spanish at the registered office of the Company and onwww.‌eads.‌com.
Copies of the above-mentioned Registration Documents
are also available in English on the website of the AFM onwww.‌afm.nl. The above-mentioned financial statements
are also available in English for inspection at the Chamber ofCommerce of The Hague.

1.2 Recent Developments
A400M contract amendment finalised with launch customer nations
On 7 April 2011, EADS announced that the A400M contract
amendment had been signed by OCCAR and the seven
A400M launch customer nations. The contract amendment
implements the changes which were agreed in principle as partof the A400M Understanding signed on 5 March 2010. With

four aircraft flying, the A400M had already achieved over 1,400
test flight hours and close to 450 flights by April 2011, while
the fifth aircraft had started the final control phase prior to aplanned first flight in early Fall.

Eurocopter to acquire Vector Aerospace Corporation
On 28 March 2011, Eurocopter Holding, a subsidiary of EADS,
and Vector Aerospace Corporation, a Canadian company
listed on the Toronto Stock Exchange (“TSX”), announced
that they had entered into a Support Agreement pursuant towhich Eurocopter Holding will acquire all of the issued andoutstanding common shares of Vector Aerospace by way of a
take-over bid for consideration of C$13 in cash per Common
Share (the “Offer”). The Offer values Vector Aerospace equity at
approximately C$625 million.

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Vector Aerospace, a leading provider of multi-platform
helicopter maintenance, repair and overhaul (MRO) services
and of rotary and fixed-wing aircraft engine repair and overhaul,
will become Eurocopter Holding’s independent multi-platform
MRO services provider. Vector Aerospace, which employssome 2,500 persons, is principally located in Canada and theUK, and enjoys an important presence in the US and South

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Africa. Vector Aerospace will maintain and develop its worldrenowned brand name.
Completion of the Offer is subject to usual and customary
conditions including, but not limited to, a minimum of 66% of
the Common Shares of Vector Aerospace being tendered to
the Offer, as well as the obtaining of regulatory approvals.

US tanker programme
On 4 March 2011, EADS North America announced that it
would not protest the US Air Force’s selection of the Boeing
offering in the competition to replace the service’s aging fleetof KC-135 aerial refuelling tankers. The company expressed
appreciation to the Air Force for running a competition
consistent with the rules set out in its Request for Proposal.

Airbus to increase A330 production rate
On 3 February 2011, Airbus announced that it had decided toraise the production rate for its A330 family to ten aircraft permonth from the second quarter of 2013. Currently Airbus turns

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out eight A330 family aircraft each month. This monthly rate will
increase to nine per month in early 2012, before reaching therate of ten per month in the second quarter of 2013.

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Management’s Discussion
and Analysis of Financial Condition
and Results of Operations
2.1 Operating and Financial Review70

2.1.1 Certain Information

70

2.1.2 Overview70

2.1.3 Critical Accounting Considerations, Policies and Estimates

73

2.1.4 Measurement of Management’s Performance

77

2.1.5 Results of Operations81

2.1.6 Changes in Consolidated Total Equity (including Non‑controlling Interests)

87

2.1.7 Liquidity and Capital Resources

88

2.1.8 Hedging Activities

95

2.2 Financial Statements

97

2.3 Statutory Auditors’ Fees

98

2.4 Information Regarding the Statutory Auditors

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2.1 Operating and Financial Review
The following discussion and analysis is derived from and should be read together with the audited Consolidated Financial Statements(IFRS) of EADS as of and for the years ended 31 December 2010, 2009 and 2008 incorporated by reference herein. These financial
statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) issued by the International
Accounting Standards Board as endorsed by the European Union, and with Part 9 of Book 2 of the Dutch Civil Code.

2.1.1 Certain Information
EXCHANGE RATE INFORMATION
The financial information presented in this document is expressed in euros, US dollars or pounds sterling. The following table setsout, for the periods indicated, certain information concerning the exchange rate between the euro and the US dollar and poundsterling, calculated using the official European Central Bank fixing rate:
AverageYear EndYear ended

€-US$

€-£

€-US$

€-£

31 December 2008

1.47080.7963

1.39170.952531 December 2009

1.39480.89091.44060.888131 December 2010

1.32570.85781.33620.8608RATINGS
EADS is currently rated A1 with a stable outlook by Moody’s Investors Service, A- with a stable outlook by Standard and Poor’s and
BBB+ with a stable outlook by Fitch Ratings.

2.1.2 Overview
With consolidated revenues of € 45.8 billion in 2010, EADSis Europe’s premier aerospace and defence company andone of the largest aerospace and defence companies in theworld. In terms of market share, EADS is among the top
two manufacturers of commercial aircraft, civil helicopters,commercial space launch vehicles and missiles, and a leading
supplier of military aircraft, satellites and defence electronics.
In 2010, it generated approximately 73% of its total revenues
in the civil sector (compared to 75% in 2009) and 27% in the
defence sector (compared to 25% in 2009). As of 31 December
2010, EADS’ active headcount was 121,691.
EADS organises its businesses into the following five reportablesegments:

tt Airbus Commercial: Development, manufacturing,marketing and sale of commercial jet aircraft of more than
100 seats and aircraft conversion;

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tt Airbus Military: Development, manufacturing, marketingand sale of military transport aircraft and special mission
aircraft; this includes the former Military Transport Aircraft
division (MTAD) as well as Airbus A400M activities.
The above mentioned reportable segments, Airbus
Commercial and Airbus Military, form the Airbus division. The
effect of internal subcontracting between Airbus Commercialand Airbus Military is eliminated in the consolidated figures of
the Airbus division;

tt Eurocopter: Development, manufacturing, marketingand sale of civil and military helicopters and provision ofhelicopter-related services;tt Astrium: Development, manufacturing, marketing andsale of satellites, orbital infrastructures and launchers andprovision of space services; andManagement’s Discussion and Analysis of Financial Condition and Results of Operations
2.1 Operating and Financial Review

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tt Cassidian (formerly known as the Defence & Security
division): Development, manufacturing, marketing and saleof missile systems, military combat aircraft and training
aircraft; provision of defence electronics and global security
market solutions such as integrated systems for global
border security and secure communications solutions andlogistics; training, testing, engineering and other related
services.
“Other Businesses” mainly consist of the development,
manufacturing, marketing and sale of regional turboprop
aircraft, aircraft components as well as the Group’s activities
managed in the US. Following EADS’ sale of 70% of the sharesin Socata to Daher in January 2009, the remaining 30% ofSocata is accounted for using the equity method and presented
within “Other Businesses”; figures for 2008 have not been
restated.
Finally, in connection with the aerostructures reorganisation
strategy initiated under Power8, the Augsburg site (previously
consolidated within Cassidian) has been consolidated within
Airbus Commercial from 2009 onwards. Figures for 2008 havenot been restated.

2.1.2.1 SIGNIFICANT PROGRAMMEAND RESTRUCTURING DEVELOPMENTS
IN 2008, 2009 AND 2010
A400M programme. In September 2008, EADS announced
an undefined delay of the first flight of the A400M. As a resultof this undefined delay and the uncertain technical environment
which eventually led to the proposal of a new A400M
programme approach to the European launch nations (through
OCCAR), EADS applied the early stage method of accounting
on the A400M programme beginning in September 2008.
Under this method, all A400M related work-in-progress, which
would have been expensed upon the completion of technicalmilestones according to the estimate at completion method of
accounting, was expensed as incurred, with related revenues
recognised up to the recoverable part of these costs as per the
initial A400M launch contract. At the same time, the A400M
loss-making contract provision was updated on the basis of
the probable excess contract costs over remaining contract
revenues that could be estimated at year-end 2008, which led
to the recording of an additional loss-making contract provisionand charges totalling € -0.7 billion in 2008.
During 2009, negotiations among EADS/Airbus/AMSL, OCCAR
and the launch nations addressed various aspects of a newprogramme approach for the A400M. Given the progress
made on the commercial negotiations between EADS and thelaunch nations, the successful first flight of the A400M and thesignificantly higher visibility on total expected production costson the A400M programme, EADS decided to discontinue theearly stage method of accounting for the A400M programme
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as of the end of 2009 and to re-assess the A400M loss-making
contract provision as part of the related year-end closing
procedures.
The re-assessment of the need and amount of additional
provisions for the continuation and completion of the A400M
programme was based on the “Understanding on theContinuation of the A400M Programme” signed between the
launch nations and EADS/Airbus/AMSL on 5 March 2010(“A400M Understanding”). Based on different elements
and the best estimate of EADS’ management at the time, anadditional loss-making contract provision and charges totalling€ -1.8 billion were recorded in 2009. EADS resumed thepercentage of completion method of accounting for the A400M
programme based on milestones from January 2010 onwards.
On 5 November 2010, EADS/Airbus/AMSL concluded thenegotiations with OCCAR and the launch nations with anagreement further detailing the A400M Understanding reachedin March 2010. The revised OCCAR agreement is subject to
ratification by each customer nation before final adoption. While
the overall economics of the A400M Understanding remainunchanged, the government payments are now more backloaded than previously expected. Negotiations on the related
export levy facility (“ELF”) scheme are to be finalised withsome nations in line with the A400M Understanding (following
approval in France and Germany), as well as negotiations
with certain suppliers. The full receipt of the € 1.5 billion ELF isconditional on the finalisation of the ELF contract negotiations
with all OCCAR nations targeted for completion in 2011.
The ongoing technical progress of the A400M programme
resulted in the recognition of A400M-related revenues of€ 1.0 billion in 2010, including a partial utilisation of the
A400M loss provision of € -157 million. The A400M loss
making contract provision as at 31 December 2010 has also
been re-assessed based on the current best estimate of
EADS’ management with reference to 174 firm aircraft orders
confirming the remaining provision levels. As stated previously,
a further re-assessment of the revenue assumptions underlying
the provision could have a significant impact on future results.
For further information, see “Notes to the Consolidated
Financial Statements (IFRS) — Note 3: Accounting for the
A400M programme”.

A380 programme. In 2008, the business update of the A380
programme led to the recording of an additional loss-making
contract provision of € -1.1 billion (before foreign exchange
effects). This charge incorporated changes to the A380
production plan to be implemented in 2009 and certain higher
recurring costs reflecting the ramp-up challenges faced by
Airbus. In addition, ongoing support costs were reflected in theunderlying EBIT* performance in 2008.

EBIT pre-goodwill impairment and exceptionals.

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In 2009, the A380 programme continued to weigh significantly
on underlying performance. Following completion of an industrial
and financial review on the programme, certain deliveries were
rescheduled and an additional loss-making contract provisionof € -0.2 billion (before foreign exchange effects) was recorded
to reflect both this shift as well as an increase in recurring costs.
Beyond the adjustment of the provision, ongoing fleet support,
inefficiencies and under absorption of fixed costs had a negative
impact on 2009 performance.
In 2010, 18 A380 were delivered. The programme is stabilisingand EADS is making significant progress on the learning curve,
leading to an improvement of the gross margin per aircraftin 2010. However, the A380 programme continued to weighsignificantly on underlying performance.

A350 XWB programme. Following passage of the detailed
definition freeze milestone on the A350 XWB programme at
the end of 2008, development continued to progress in 2009.
In 2010, the A350 XWB programme moved from the definition
into the manufacturing phase. The time schedule remains
challenging, with entry into service now expected in the second
half of 2013.
Power8, Power8 Plus and Future EADS programmes.
At the beginning of 2007, Airbus launched a four-year
restructuring programme referred to as “Power8”, with thegoal of achieving annual EBIT* contributions of € 2.1 billion
from 2010 onwards and an additional € 5 billion of cumulative
cash flow from 2007 to 2010. As part of the planned
measures under Power8 to reduce overhead costs, andspecifically headcount, EADS recorded a restructuring
expense of € -624 million in EBIT* in 2007. In 2008, 2009
and 2010, € 194 million, € 140 million and € 49 million of thisprovision were reversed, respectively, to reflect a lower levelof restructuring obligation than originally anticipated. Savings
realised pursuant to Power8 provided gross cost savings of€ 2 billion in 2009 compared to the projected cost baseline andfurther positive effects in 2010.

*

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In 2008, EADS launched a Group-wide cost savings
programme referred to as Power8 Plus, with the goal ofachieving € 650 million in gross annual savings for Airbus andan additional € 350 million for the rest of the Group by the endof 2012. EADS is also currently working on a further integrationand cost savings programme referred to as Future EADS. In
addition, all Divisions are running their transformation and cost
cutting plans to adapt to their new competitive environment
and EADS is working on further other cost saving initiatives
for effect up to the end of 2014 to improve competitiveness,compensate inflation and achieve profitability targets.

2.1.2.2 TRENDS
In 2010, Airbus announced that it would increase the monthly
production rate for its A320 family from the current rate of
36 aircraft per month. This monthly rate will increase to 38
per month in the third quarter of 2011 and to 40 per monthfrom the first quarter 2012. In addition, in early 2011, Airbus
announced that it would increase the monthly production rate
for its A330 family from the current rate of around eight aircraft
per month. This monthly rate will increase to nine per monthin early 2012, before reaching the rate of ten per month in
the second quarter of 2013. Airbus is targeting between 520
and 530 aircraft deliveries in 2011, as well as a level of grossorders that is above deliveries. Any major production or market
disruption or economic downturn could lead to revision of thesefigures.
Underlying performance should reflect higher deliveries andan improvement in aircraft pricing at Airbus Commercial in2011 which are expected to be roughly offset by continued
currency deterioration linked to the declining dollar ratein the hedge portfolio, as well as increased research anddevelopment expenses and a less favourable mix of activities
at Cassidian. The A380 programme will continue to weighsubstantially on underlying performance at roughly the samelevel as in 2010. Going forward, the EBIT* performance of
EADS will be dependent on the Group’s ability to execute on
the A400M, A380 and A350 XWB programmes in line with thecommitments made to its customers, as well as on exchange
rate fluctuations.

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2.1.3 Critical Accounting Considerations, Policies and Estimates
2.1.3.1 SCOPE OF AND CHANGES INCONSOLIDATION PERIMETER

This purchase led to the recognition of final goodwill of
US$ 278 million.

Disposals and acquisitions of interests in various businesses
can account, in part, for differences in EADS’ results ofoperations for one year as compared to another year.

On 28 July 2008, EADS increased its share in Spot Image from
40% to 81%, but had been consolidating it fully in Astrium since
1 January 2008 based on effective control since that date. Thisadditional purchase increased goodwill by € 4 million.

Acquisitions and Disposals
On 31 December 2010, Cassidian Air Systems sold its sharesin ASL Aircraft Services Lemwerder GmbH to SGL Rotec
GmbH & Co. KG, which intends to establish a production
line for rotor blades at the Lemwerder site. The programme
related assets and liabilities of the Eurofighter, Tornado, A400M
and C160 programmes were transferred to Premium AerotecGmbH.

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

On 3 December 2010, Astrium GmbH acquired Jena-Optronik
GmbH, Jena (Germany), one of the international leading
providers of space sensors and opto-electronic instruments.
The acquisition of Jena-Optronik will complement Astrium’s
optical expertise in Germany and enhance its reputationin the development and production of sophisticated earth
observation satellites and sub-systems for space applications.
This purchase led to the recognition of preliminary goodwill of€ 34 million.

See “Notes to the Consolidated Financial Statements (IFRS) —Note 5: Acquisitions and disposals”.

On 1 October 2009, Atlas Elektronik GmbH, a joint ventureof EADS and ThyssenKrupp, acquired via its subsidiary Atlas
Elektronik UK, the underwater systems business of QinetiQ
based in Winfrith, Dorset (United Kingdom). The acquired
business “Synge” will primarily serve as a contributor inadvancing Atlas Elektronik’s market position for sonar andhydro-acoustic solutions. This purchase led to the recognitionof final goodwill of € 8 million.
On 7 January 2009, EADS sold 70% of the shares in Socata to
Daher. The remaining 30% of Socata is accounted for using theequity method and presented in “Other Businesses”.
On 5 January 2009, EADS sold its Airbus site in Filton (UK) to
GKN.
During 2009, EADS increased its share in Spot Image basedin Toulouse (France), a world leader in the provision of satellite
imagery and geo-information value-added services, from
81% to 96% by acquiring further shares from non-controllingshareholders. These transactions increased goodwill by€ 1 million. In 2010, further purchases of shares led to anincrease in EADS’ share in Spot Image to 99%.
On 22 April 2008, EADS acquired PlantCML based in California(US), a leading provider of emergency response solutions,which is fully consolidated from that date in Cassidian.

2.1.3.2 UK PENSION COMMITMENTS
In the UK, EADS participates in several funded trusteeadministered pension plans for both executive and nonexecutive employees, with BAE Systems being the principal
employer. These plans qualify as multi-employer defined
benefit plans under IAS 19 “Employee Benefits”. EADS’ mostsignificant investments in terms of employees participating inthese BAE Systems UK pension plans are Airbus Operations
Ltd. and MBDA UK. For Airbus, this remains the case evensubsequent to EADS’ acquisition of BAE Systems’ 20% noncontrolling interest in Airbus on 13 October 2006. Participating
Airbus Operations Ltd. employees have continued to remain
members in the BAE Systems UK pension plans due to the UK
pension agreement between EADS and BAE Systems and achange in UK pension legislation enacted in April 2006.
The different UK pension plans in which EADS investments
participate are currently underfunded. Accordingly, EADS has
recorded a provision of € 642 million as of 31 December 2010
(compared to € 839 million as of 31 December 2009) for its
current share of the net pension underfunding in these plans.
A related amount of actuarial gains and losses of € -810 million
has been recorded in total equity (net of deferred taxes) asof 31 December 2010 (compared to € -1,013 million as of
31 December 2009) in accordance with IAS 19.
For further information related to EADS’ participation in
multi-employer pension plans in the UK, see “Notes to theConsolidated Financial Statements (IFRS) — Note 25B:
Provisions for retirement plans”.

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2.1.3.3 FAIR VALUE ADJUSTMENTS
The merger of the operations of Aerospatiale Matra, Daimler
Aerospace AG and Construcciones Aeronáuticas SA, leading to
the creation of EADS in 2000, was recorded using the purchasemethod of accounting with Aerospatiale Matra as the acquirer.
Accordingly, the book value of certain assets and liabilities,
mainly property, plant and equipment and inventories, wasadjusted by an aggregate amount of € 1.8 billion, net of income
taxes, to allocate a portion of the respective fair market valuesof Daimler Aerospace AG and Construcciones Aeronáuticas SA
at the time of the merger (the “fair value adjustments”). These
aggregate additions in value are generally being depreciatedover four to 15 years for fixed assets and were amortisedover approximately 24 months for inventories. In addition, in
2001 in connection with the formation of Airbus S.A.S., EADS
adjusted the book value of Airbus fixed assets and inventories
by an aggregate amount of € 0.3 billion, net of income taxes,
to reflect their fair market values. The fair value adjustments
lead to a depreciation expense that is recorded in cost of
sales in the consolidated income statement. For management
reporting purposes, EADS treats these depreciation charges
as non-recurring items in EBIT pre-goodwill impairment andexceptionals. See “— 2.1.4.2 Use of EBIT*”.

2.1.3.4 IMPAIRMENT/WRITE-DOWN OF ASSETS
When a triggering event such as an adverse material market
event or a significant change in forecasts or assumptions
occurs, EADS performs an impairment test on the assets,group of assets, subsidiaries, joint ventures or associates likely
to be affected. In addition, EADS tests goodwill for impairment
in the fourth quarter of each financial year, whether or notthere is any indication of impairment. An impairment loss isrecognised in the amount by which the asset’s carrying amountexceeds its recoverable amount.
Generally, the discounted cash flow method is used todetermine the value in use of the assets. The discounted
cash flow method is particularly sensitive to the selecteddiscount rates and estimates of future cash flows by EADS’management. Consequently, slight changes to these elements
can materially affect the resulting asset valuation and therefore
the amount of the potential impairment charge.
The discount rates used by EADS are derived from theweighted average cost of capital of the businesses concerned.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 2: Summary of significant accounting policies —Significant Accounting Policies — Impairment of non-financial
assets” and “— Note 14: Intangible assets”.
An impairment of goodwill would have an effect on profitability,
as it is recorded in the line item “Other expenses” on EADS’
consolidated income statement. No goodwill was impaired in
2008, 2009 or 2010.
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2.1.3.5 RESEARCH AND DEVELOPMENT
EXPENSES
Pursuant to the application of IAS 38 “Intangible Assets”,
EADS assesses whether product-related development costs
qualify for capitalisation as internally generated intangible
assets. Criteria for capitalisation are strictly applied. All researchand development costs not meeting the IAS 38 criteria are
expensed as incurred in the consolidated income statement.
€ 87 million of product-related development costs were
capitalised in accordance with IAS 38 in 2008, € 53 million in2009 and € 145 million in 2010, with a large portion of the latter
relating to Cassidian for development in the systems businesssegment.
Capitalised development costs are generally amortised overthe estimated number of units produced. If the number of units
produced cannot be estimated reliably, capitalised development
costs are amortised over the estimated useful life of theinternally generated intangible asset. Amortisation of capitalised
development costs is recognised within “Cost of sales”.
Amortisation of capitalised development costs amounted to€ -56 million in 2008, € -146 million in 2009 and € -34 million in
2010, the latter relating mostly to the Airbus A380 programme.
Internally generated intangible assets are reviewed for
impairment annually when the asset is not yet in use andsubsequently whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 2: Summary of significant accounting policies —Significant Accounting Policies — Research and development
expenses”.

2.1.3.6 ACCOUNTING FOR HEDGED FOREIGNEXCHANGE TRANSACTIONS IN THE
FINANCIAL STATEMENTS
More than 60% of EADS’ revenues are denominatedin US dollars, whereas a substantial portion of its costs isincurred in euros and, to a lesser extent, pounds sterling. EADS
uses hedging strategies to manage and minimise the impact
of exchange rate fluctuations on its profits. See “— 2.1.8.1
Foreign Exchange Rates” and “Risk Factors — 1. Financial
Market Risks — Exposure to Foreign Currencies”.

Cash flow hedges. The Group generally applies cash flow
hedge accounting to foreign currency derivative contracts
that hedge the foreign currency risk on future sales as wellas to certain interest rate swaps that hedge the variability of
cash flows attributable to recognised assets and liabilities.
Changes in fair value of the hedging instruments related to theeffective part of the hedge are reported in accumulated othercomprehensive income (“AOCI”)—a separate component of
total consolidated equity, net of applicable income taxes—andrecognised in the consolidated income statement in conjunction

Management’s Discussion and Analysis of Financial Condition and Results of Operations
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1with the result of the underlying hedged transaction, whenrealised. See “— 2.1.6 Changes in Consolidated Total Equity(including Non-controlling Interests)”. The ineffective portion isimmediately recorded in “Profit (loss) for the period”. Amounts
accumulated in equity are recognised in profit or loss in the
periods when the hedged transaction affects the income
statement, such as when the forecast sale occurs or when thefinance income or finance expense is recognised in the income
statement. If hedged transactions are cancelled, gains andlosses on the hedging instrument that were previously recordedin equity are generally recognised in “Profit (loss) for theperiod”. If the hedging instrument expires or is sold, terminatedor exercised, or if its designation as hedging instrument isrevoked, amounts previously recognised in equity remain in
equity until the forecasted transaction or firm commitment
occurs. Apart from derivative financial instruments, the Groupalso uses financial liabilities denominated in a foreign currency
to hedge foreign currency risk inherent in forecast transactions.
See “— 2.1.8.1 Foreign Exchange Rates”.
Revenues in currencies other than the euro that are not hedged
through financial instruments are translated into euro at the spot
exchange rate at the date the underlying transaction occurs.

“Natural” hedges. EADS uses certain foreign currency
derivatives to mitigate its foreign currency exposure arising fromchanges in the fair value of recognised assets and liabilities.
To reflect the largely natural offset those derivatives provide to
the remeasurement gains or losses of specific foreign currency
balance sheet items, EADS has further refined its natural
hedging policy and presents the gains or losses of those foreignexchange rate derivatives as well as the fair value changes of
the relating recognised assets and liabilities in EBIT* (rather thanpresenting the gains or losses of those foreign exchange rate
derivatives in “other financial result” but the fair value changesof the relating recognised assets and liabilities in EBIT*) insofar
as certain formal requirements are met, with no impact on net
income. See “Notes to the Consolidated Financial Statements(IFRS) — Note 2: Summary of significant accounting policies— Significant Accounting Policies — Derivative financial
instruments” and “— Note 12: Total finance costs — Other
financial result”.

2.1.3.7 FOREIGN CURRENCY TRANSLATIONEADS’ consolidated financial statements are presented
in euros. The assets and liabilities of foreign entities whose
reporting currency is other than euro are translated using
period-end exchange rates, while the corresponding income
statements are translated using average exchange rates during
the period. All resulting translation differences are included as acomponent of AOCI.
Transactions in foreign currencies are translated into euro at theexchange rate prevailing on transaction date. Monetary assets
*

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and liabilities denominated in foreign currencies at period-end
are translated into euro using the period-end exchange rate.
Foreign exchange gains and losses arising from translationof monetary assets are recorded in the consolidated income
statement, except when deferred in equity as qualifying hedging
instruments in cash flow hedges.
Non-monetary assets and liabilities denominated in foreign
currencies, which are stated at historical cost, are translated
into euro at the exchange rate in effect on 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 acquisitionof a foreign entity that was acquired after 31 December 2004
are treated as assets and liabilities of the acquired company
and are translated into euro at the period-end exchange rate.
Regarding transactions prior to that date, goodwill, assets andliabilities acquired are treated as those of the acquirer.
See “Notes to the Consolidated Financial Statements (IFRS)— Note 2: Summary of significant accounting policies —Significant Accounting Policies — Foreign currency translation”.

Currency Translation Adjustment Related to
AirbusFollowing the signing of an advance pricing agreement with tax
authorities in April 2004, Airbus GIE (a US dollar-denominatedentity) was merged into Airbus S.A.S. (a euro-denominatedentity) with retrospective effect as of 1 January 2004.
Consequently, as from such date, operations of the former
Airbus GIE are treated as “foreign currency operations” andaccounted for in accordance with EADS’ consistently applied
accounting principles.
Prior to the merger, Airbus GIE operations, with the exceptionof those hedged with financial instruments, were recordedat the exchange rate prevailing at the time of aircraft delivery,
with outstanding operations being re-valued in the balance
sheet at each period end using the closing exchange rate ofsuch period. From 1 January 2004, all non-hedged US dollardenominated operations, including outstanding operations of
the former Airbus GIE, are recorded on the basis of exchange
rates prevailing at the date of receipt or payment of US dollars.

Currency Translation Mismatch
Customer advances (and the corresponding revenues
recorded when sales recognition occurs) are translated at theexchange rate prevailing on the date they are received. US
dollar-denominated costs are converted at the exchange rate
prevailing on the date they are incurred. To the extent that
US dollar-denominated customer advances differ, in terms of

EBIT pre-goodwill impairment and exceptionals.

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1timing of receipt or amount, from corresponding US dollardenominated costs, there is a foreign currency exchange
impact (mismatch) on EBIT*. Additionally, the magnitude of any
such difference, and the corresponding impact on EBIT*, issensitive to variations in the number of deliveries.

2.1.3.8 ACCOUNTING FOR SALES FINANCING
TRANSACTIONS IN THE FINANCIAL
STATEMENTS
In order to support product sales, primarily at Airbus,
Eurocopter and ATR, EADS may agree to participate in thefinancing of customers, on a case-by-case basis, directlyor through guarantees provided to third parties. Certain
sales contracts may include the provision of an asset value
guarantee (“AVGs”), whereby EADS guarantees a portion of
the market value of an aircraft during a limited period, startingat a specific date after its delivery (in most cases, 12 years
post-delivery). See “— 2.1.7.4 Sales Financing” and “Notes
to the Consolidated Financial Statements (IFRS) — Note 33:
Commitments and contingencies”. The accounting treatment ofsales financing transactions varies based on the nature of thefinancing transaction and the resulting exposure.

On Balance Sheet. When, pursuant to a financing transaction,
the risks and rewards of ownership of the financed aircraft
reside with the customer, the transaction is characterised aseither a loan or a finance lease. In such instances, revenues
from the sale of the aircraft are recorded upon delivery, while
financial interest is recorded over time as financial income. The
outstanding balance of principal is recorded on the statementof financial position (on balance sheet) in long-term financial
assets, net of any accumulated impairments. See “Notes to
the Consolidated Financial Statements (IFRS) — Note 17:
Investments in associates accounted for under the equity
method, other investments and other long-term financial
assets”.
By contrast, when the risks and rewards of ownership remain
with the Group, the transaction is characterised as an operatinglease. EADS’ general policy is to avoid, whenever possible,
operating leases for new aircraft to be delivered to customers.
Therefore, new operating leases primarily arise in connection
with the re-marketing of aircraft. Rather than recording 100%of the revenues from the “sale” of the aircraft at the time ofdelivery, rental income from such operating leases is recorded
in revenues over the term of the respective leases. The leased
aircraft are recorded at production cost on the statement offinancial position (on balance sheet) as property, plant andequipment, and the corresponding depreciation and potential
impairment charges are recorded in cost of sales. See “Notes
to the Consolidated Financial Statements (IFRS) — Note 15:
Property, plant and equipment”.

*

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If the present value of an AVG exceeds 10% of the sales priceof the aircraft, the sale of the underlying aircraft is accounted foras an operating lease in the consolidated financial statements.
In this case, upon aircraft delivery, the cash payment received
from the customer is recognised on the consolidated statementof financial position as deferred income and amortised straightline up to the amount, and up to the last exercise date, of
the AVG. The production cost of the aircraft is recorded on
the statement of financial position as property, plant andequipment. Depreciation expenses are recorded in cost of
sales in the consolidated income statement. See “Notes to theConsolidated Financial Statements (IFRS) — Note 15: Property,
plant and equipment” and “Note 30: Deferred income”.

Off Balance Sheet — Contingent Commitments. Certain
sales financing commitments, such as lease in/lease out
structures and AVGs the present value of which is below the
10% threshold, are not recorded on the statement of financial
position (on balance sheet).
As a result, transactions relating to such AVGs are accounted
for as sales, with the related exposure deemed to be acontingent commitment. To reduce exposure under AVGs
and to minimise the likelihood of their occurrence, the Groupextends them with prudent guaranteed asset values andrestrictive exercise conditions, including limited exercise
window periods.
Under lease in/lease out structures, which Airbus and ATR
applied in the past to allow investors to take advantage of
certain jurisdictions’ leasing-related tax benefits, the risks andrewards of ownership of the aircraft are typically borne by athird party, usually referred to as the head lessor. The headlessor leases the aircraft to Airbus or ATR, which in turn subleases it to the customer. To the extent possible, the terms of
the head lease and sub-lease match payment streams andother financial conditions. Such commitments by Airbus or
ATR are reported as off-balance sheet contingent liabilities.
See “Notes to the Consolidated Financial Statements (IFRS) —Note 33: Commitments and contingencies”.

Provisions and Allowances. Under its provisioning policy forsales financing risk, EADS records provisions to fully cover its
estimated financing and asset value net exposure. Provisions
pertaining to sales financing exposure, whether on-balance
sheet or off-balance sheet, are recorded as impairments of therelated assets or in provisions. Provisions recorded as liabilities
relate primarily to off-balance sheet commitments. See “Notes
to the Consolidated Financial Statements (IFRS) — Note 25C:
Other provisions”. Provisions are recorded as impairmentsof the related assets when they can be directly related to thecorresponding asset. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 15: Property, plant and equipment”
and “— Note 17: Investments in associates accounted for2Management’s Discussion and Analysis of Financial Condition and Results of Operations
2.1 Operating and Financial Review

1

under the equity method, other investments and other longterm financial assets”. While management views its estimatesof valuations of collateral as conservative, changes in provisions
reflecting revised estimates may have a material impact on net
income in future periods.

2.1.3.9 PROVISIONS FOR LOSS-MAKINGCONTRACTS
EADS records provisions for loss-making contracts when it
becomes probable that total contract costs will exceed total
contract revenues. Due to the size, length of time and natureof many of EADS’ contracts, the estimation of total revenues
and costs at completion is complicated and subject to many

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assumptions, judgments and estimates. The introduction of
new aircraft programmes (such as the A350 XWB) or major
derivative aircraft programmes adds an additional elementof complexity to the assumptions, judgments and estimates
related to expected development, production and certification
schedules and anticipated cost components, including possible
customer penalties and supplier claims. Loss-making contract
provisions are therefore reviewed and reassessed regularly.
However, future changes in the assumptions used by EADS
or a change in the underlying circumstances, such as thefluctuation of certain foreign exchange rates, may lead to arevaluation of past loss-making contract provisions and havea corresponding positive or negative effect on EADS’ futurefinancial performance.

2.1.4 Measurement of Management’s Performance
2.1.4.1 ORDER BACKLOG
Year-end order backlog consists of contracts signed up tothat date. Only firm orders are included in calculating orderbacklog – for commercial aircraft, a firm order is definedas one for which EADS receives a non-refundable down
payment on a definitive contract not containing a “walk-away”
provision. Defence-related orders are included in the backlog
upon signature of the related procurement contract (and thereceipt, in most cases, of an advance payment). Commitments
under defence “umbrella” or “framework” agreements bygovernmental customers are not included in backlog until they
are officially notified to EADS.
For civil market contracts, amounts of order backlog reflectedin the table below are derived from catalogue prices, escalated
to the expected delivery date and, to the extent applicable,
converted into euro (at the corresponding hedge rate for thehedged portion of expected cash flows, and at the period-end
spot rate for the non-hedged portion of expected cash flows).
The amount of defence-related order backlog is equal to thecontract values of the corresponding programmes.

tt Consolidated Backlog for the years ended 31 December 2010, 2009 and 2008 (1)Year ended 31 December 2010

Year ended 31 December 2009

Year ended 31 December 2008

Amount in € bn

In percentage (2)Amount in € bn

In percentage (2)Amount in € bn

In percentage (2)

400.4

89%

339.7

87%

357.8

90%

Airbus Commercial

378.9

85%

320.3

82%

337.2

84%

Airbus Military

22.8

5%

20.7

5%

22.3

6%

Airbus (3) (4)Eurocopter

14.5

3%

15.1

4%

13.8

3%

Astrium

15.8

4%

14.6

4%

11.0

3%

Cassidian

16.9

4%

18.8

5%

17.0

4%

Total divisional backlog

447.6

100%

388.2

100%

399.6

100%

Other Businesses

2.5

2.0

3.2

HQ/Consolidation

(1.6)

(1.1)

(2.6)

Total

448.5

389.1

400.2

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

Without options.
Before “Other Businesses” and “HQ/Consolidation”.
Based on catalogue prices for commercial aircraft activities.
Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus divisionlevel. See “—2.1.2 Overview”.

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The € 59.4 billion increase in the order backlog from 2009, to€ 448.5 billion, primarily reflects the strong order intake at EADSin 2010 (€ 83.1 billion), which largely exceeded the revenues
accounted for in the same year (€ 45.8 billion). In addition, thestronger US dollar spot rate used for conversion of the nonhedged portion of the backlog into euro at year end (€-US$ 1.34
as compared to €-US$ 1.44 at the end of 2009) had a positive
impact on order backlog of approximately € 25 billion.
Airbus’ backlog increased by € 60.7 billion from 2009, to€ 400.4 billion, primarily reflecting a strong increase at Airbus
Commercial. Airbus Commercial’s backlog increased by€ 58.6 billion from 2009, to € 378.9 billion, primarily reflecting
a book-to-bill ratio of more than one with new orders of€ 68.2 billion and, to a lesser extent, the positive net foreign
currency adjustment to the non-hedged portion of the orderbacklog. Order intake consisted of 574 net orders in 2010(as compared to 271 in 2009). Total order backlog at Airbus
Commercial amounted to 3,552 aircraft at the end of 2010(as compared to 3,488 aircraft at the end of 2009). Airbus
Military’s backlog increased by € 2.1 billion from 2009,to € 22.8 billion, primarily reflecting the terms of the newagreement reached among EADS/Airbus/AMSL, OCCAR andthe launch nations with respect to the A400M programme.
Order intake at Airbus Military consisted of 11 new net orders
in 2010, including 21 orders for medium and light military

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aircraft, partially offset by a reduction of ten firm orders for
A400M aircraft by Germany and the UK. Total order backlog at
Airbus Military amounted to 241 aircraft at the end of 2010 (ascompared to 250 aircraft at the end of 2009).
Eurocopter’s backlog decreased by € 0.5 billion from 2009,to € 14.5 billion, reflecting a book-to-bill ratio of less than one
with new orders of € 4.3 billion. Order intake consisted of 346
net orders in 2010 (as compared to 344 in 2009), remaining
roughly stable in terms of units but decreasing in terms ofvalue compared to 2009. Total order backlog amounted to
1,122 helicopters at the end of 2010 (as compared to 1,303
helicopters at the end of 2009).
Astrium’s backlog increased by € 1.1 billion from 2009, to€ 15.8 billion, reflecting a book-to-bill ratio of more than one
with new orders of € 6.0 billion. Order intake consisted primarilyof contracts with the French DGA for M51 evolution andmaintenance and two optical reconnaissance satellites, as well
as extension of the Skynet 5 contract with the UK MoD.
Cassidian’s backlog decreased by € 1.9 billion from 2009, to€ 16.9 billion, reflecting a book-to-bill ratio of less than one
with new orders of € 4.3 billion. Order intake included orders
for Eurofighter integrated logistics support and captor radar, as
well as Team Complex Weapons in the UK.

The table below illustrates the proportion of civil and defence backlog at the end of each of the past three years.
Year ended 31 December 2010

Year ended 31 December 2009

Year ended 31 December 2008

Amount in € bn (1)In percentage

Amount in € bn (1)In percentage

Amount in € bn (1)In percentage

Civil Sector

390

87%

332

85%

345

86%

Defence Sector

58

13%

57

15%

55

14%

Total

448

100%

389

100%

400

100%

Backlog:(1) Including “Other Businesses” and “HQ/Consolidation”.

2.1.4.2 USE OF EBIT*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 offair value adjustments relating to the EADS merger, the Airbus
combination and the formation of MBDA, as well as impairment(in €m)Profit (loss) before finance costs and income taxes
Exceptional depreciation
Exceptional disposal (fixed assets)
EBIT*

*

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charges thereon. It also comprises disposal impacts related
to goodwill and fair value adjustments resulting from thesetransactions.
Set forth below is a table reconciling EADS’ profit (loss)
before finance costs and income taxes (as reflected in EADS’
consolidated income statement) with EADS’ EBIT*.
Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

1,187

(380)

2,772

44

56

52

-

2

6

1,231

(322)

2,830

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2.1.4.3 EBIT* PERFORMANCE BY DIVISION
Set forth below is a breakdown of EADS’ consolidated EBIT* by Division for the past three years.
(in €m)Airbus (1)Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008305

(1,371)

1,815

Airbus Commercial

291

386

2,306

Airbus Military21(1,754)(493)

Eurocopter

183

263

293

Astrium

283

261

234

Cassidian

457

449

408

Total Divisional EBIT*

1,228

(398)

2,750

Other Businesses

25

21

43

HQ/Consolidation (2)

(22)

52

37

1,231

(322)

2,830

Total

(1) Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus divisionlevel. See “—2.1.2 Overview”.
(2) HQ/Consolidation includes results from headquarters, which mainly consist of the “share of profit from associates accounted for under the equity method” from EADS’
investment in Dassault Aviation.

2010 compared to 2009. EADS’ consolidated EBIT* increased
from € -0.3 billion for 2009 to € 1.2 billion for 2010, primarilyreflecting the increased EBIT* at Airbus. Partially offsetting thisincrease was a deterioration in EBIT* at Eurocopter in 2010.

Airbus Military’s EBIT* increased from € -1,754 million for 2009to € 21 million for 2010, primarily due to a favourable delivery
mix and the A400M programme at zero margin compared tothe charge of € -1.8 billion recorded in 2009.

Airbus’ EBIT* increased from € -1.4 billion for 2009 to€ 0.3 billion for 2010, due to an increase at Airbus Military.
Airbus Commercial’s EBIT* decreased by 24.6%, from€ 0.4 billion for 2009 to € 0.3 billion for 2010, primarily due toan approximate € -0.6 billion negative exchange rate effectcompared to 2009. This decrease in 2010 EBIT* at Airbus
Commercial was partially offset by (i) good underlying businessperformance, including higher aircraft deliveries (510 in 2010 ofwhich 508 qualified for margin recognition, as compared to 498
in 2009) and a favourable mix effect and (ii) an improvementin the price of delivered aircraft net of escalation. In 2010, theA380 continued to weigh significantly on Airbus Commercial’s
underlying performance. See “— 2.1.2.1 Significant Programme
and Restructuring Developments in 2008, 2009 and 2010”.

Eurocopter’s EBIT* decreased by 30.4%, from € 263 million
for 2009 to € 183 million for 2010, primarily due to (i) negative
effects of € -0.1 billion, driven mainly by charges for the NH90
and restructuring and (ii) higher research and development
expenses for innovation and product investment. The decreasein EBIT* was partially offset by a favourable mix effect.

The approximate € -0.6 billion negative exchange rate effect at
Airbus Commercial compared to 2009 related to generally lessfavourable rates of hedges that matured in 2010 as compared
to 2009, which had a negative effect of € -0.9 billion, partially
offset by (x) the revaluation of loss-making contract provisions
which had a positive effect of € 0.1 billion on EBIT* compared to2009, and (y) other currency translation adjustments, including
those related to the mismatch between US dollar-denominatedcustomer advances and corresponding US dollar-denominatedcosts, which had a positive effect of € 0.3 billion on EBIT*
compared to 2009. See “— 2.1.3.7 Foreign Currency Translation”.

*

Astrium’s EBIT* increased by 8.4%, from € 261 million for2009 to € 283 million for 2010, primarily due to growthand productivity in defence and military services as well as
operational improvement in institutional activities.
Cassidian’s EBIT* increased by 1.8%, from € 449 million for2009 to € 457 million for 2010, primarily due to volume andmargin growth in mature programmes. Partially offsetting thisincrease was significant growth in research and development
expenses in projects such as UAS and secure communications,as well as a net negative one-time effect of approximately€ -20 million reflecting among others the cancellation of theFirecontrol contract by the UK government.
The EBIT* of Other Businesses increased by 19.0%, from€ 21 million for 2009 to € 25 million for 2010, primarily due toincreases at ATR (including a positive foreign exchange effect of€ 15 million) and Sogerma. The increase was partially offset byhigher investment at EADS North America.

EBIT pre-goodwill impairment and exceptionals.

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2009 compared to 2008. EADS’ consolidated EBIT*
decreased from € 2.8 billion for 2008 to € -0.3 billion for 2009,
primarily reflecting the decreased EBIT* at Airbus. Partially
offsetting the decrease was an improvement in EBIT* at Astrium
and Cassidian in 2009.

productivity in earth observation satellites and Ariane 5
production as well as growth in telecommunications services.
The increase was partially offset by negative exchange rate
effects as a result of the decline in the pound sterling versus the
euro.

Airbus’ EBIT* decreased from € 1.8 billion for 2008 to€ -1.4 billion for 2009, due to a decline at both Airbus
Commercial and Airbus Military. Airbus Commercial’s EBIT*
decreased from € 2.3 billion for 2008 to € 0.4 billion for 2009,
primarily due to (i) an approximate € -2.5 billion negative
exchange rate effect compared to 2008, (ii) an approximate€ -0.4 billion deterioration in the price of delivered aircraft netof escalation, and (iii) cost increases, including an increase inresearch and development costs in connection with the rampup on the A350 programme. The negative exchange rate effectrelated to (x) revaluation of loss-making contract provisions
which had a negative effect of € -0.9 billion compared to 2008,(y) generally less favourable rates of hedges that matured in2009 as compared to 2008, which had a negative effect of€ -0.9 billion, and (z) other currency translation adjustments,
including those related to the mismatch between US dollardenominated customer advances and corresponding US
dollar-denominated costs, which had a negative effect of€ -0.7 billion compared to 2008. See “— 2.1.3.7 Foreign
Currency Translation”. This decrease in 2009 EBIT* at
Airbus Commercial was partially offset by (i) good underlying
business performance, including an increase in the number ofaircraft delivered (498 in 2009, as compared to 483 in 2008),
although A380 continued to weigh significantly on underlying
performance due to inefficiencies and excess capacity
due to the lower level of deliveries, (ii) lower loss-making
contract provision charges on A380 in 2009, and (iii) savings
from Power8. See “— 2.1.2.1 Significant Programme andRestructuring Developments in 2008, 2009 and 2010”.

Cassidian’s EBIT* increased by 10.0%, from € 408 million for2008 to € 449 million for 2009, primarily due to a combinationof growth and margin improvements on core and export in theareas of military aircraft systems and missile programmes aswell as operational improvements. The increase was partially
offset by higher research and development expenses in areas
such as radar and UAS, as well as by the carve-out of the
Augsburg aerostructures activity from Cassidian in 2009.

Airbus Military’s EBIT* decreased from € -0.5 billion for 2008
to € -1.8 billion for 2009, primarily due to the A400M chargesof € -1.8 billion in 2009 compared to charges of € -0.5 billion in2008 and a weaker mix in medium and light aircraft activities.
The decrease was partially offset by higher tanker activity in2009.
Eurocopter’s EBIT* decreased by 10.2%, from € 293 million
for 2008 to € 263 million for 2009, primarily due to (i) higher
research and development expenses for innovation andproduct investment, (ii) margin pressure on the NH90
programme reflecting qualification and acceptance difficulties
despite first process improvements, and (iii) negative foreignexchange impact. The decrease in EBIT* was partially offset bypositive contributions from services and cost savings initiatives.
Astrium’s EBIT* increased by 11.5%, from € 234 million for2008 to € 261 million for 2009, primarily due to the increased*

80

EBIT pre-goodwill impairment and exceptionals.

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The EBIT* of Other Businesses decreased by 51.2%, from€ 43 million for 2008 to € 21 million for 2009. A positive costevolution at Sogerma was more than offset by negative
exchange rate effects at ATR and a lower EBIT* at EADS North
America.

Foreign Currency Impact on EBIT*. More than 60% of
EADS’ revenues are denominated in US dollars, whereas asubstantial portion of its costs is incurred in euros and, to alesser extent, pounds sterling. Given the long-term natureof its business cycles (evidenced by its multi-year backlog),
EADS hedges a significant portion of its net foreign exchange
exposure to mitigate the impact of exchange rate fluctuations
on its EBIT*. See “— 2.1.8.1 Foreign Exchange Rates” and“Risk Factors – 1. Financial Market Risks – Exposure to Foreign
Currencies”. In addition to the impact that hedging activities
have on EADS’ EBIT*, the latter is also affected by the impactof revaluation of certain assets and liabilities at the closing rate
and the impact of natural hedging.
During 2010, cash flow hedges covering approximately
US$ 18.5 billion of EADS’ US dollar-denominated revenues
matured. In 2010, the compounded exchange rate at which
hedged US dollar-denominated revenues were accounted forwas € -US$ 1.35, as compared to € -US$ 1.26 in 2009. Thisdifference resulted in an approximate € -1.0 billion decrease in
EBIT* from 2009 to 2010, of which approximately € -0.9 billion
was at Airbus. In addition, other currency translation
adjustments, including those related to the mismatch between
US dollar-denominated customer advances and corresponding
US dollar-denominated costs as well as the revaluation of lossmaking contract provisions, had a positive effect of € 0.4 billion
on EBIT* compared to 2009. See “— 2.1.3.7 Foreign Currency
Translation”.
During 2009, cash flow hedges covering approximately
US$ 16.5 billion of EADS’ US dollar-denominated revenues
matured. In 2009, the compounded exchange rate at which
hedged US dollar-denominated revenues were accounted for2Management’s Discussion and Analysis of Financial Condition and Results of Operations
2.1 Operating and Financial Review

1was €-US$ 1.26, as compared to €-US$ 1.18 in 2008. Thisdifference resulted in an approximate € -0.9 billion decrease in
EBIT* from 2008 to 2009, of which approximately € -0.9 billion
was at Airbus. In addition, the revaluation of loss-making
contract provisions had a negative effect of € -0.9 billion on

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EBIT* compared to 2008, while other currency translation
adjustments, including those related to the mismatch between
US dollar-denominated customer advances and corresponding
US dollar-denominated costs, had a negative effect of€ -0.7 billion on EBIT* compared to 2008.

2.1.5 Results of Operations
Set forth below is a summary of EADS’ consolidated income statements (IFRS) for the past three years.
(in €m, except for earnings (losses) per share)

Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

Revenues

45,752

42,82243,265

Cost of sales(39,528)(38,383)(35,907)

Gross margin

6,224

4,439

7,358

Selling and administrative expenses(2,312)(2,196)(2,186)

Research and development expenses(2,939)(2,825)(2,669)Other income

171

170

189

Other expenses
Share of profit from associates accounted for under the equity method
and other income from investments

(102)

(102)

(131)

145

134

211

Profit (loss) before finance costs and income taxes

1,187

(380)

2,772

Interest result

(99)

(147)

36

Other financial result

(272)

(445)

(508)

Income taxes

(244)

220

(703)

Profit (loss) for the period

572

(752)

1,597

553

(763)

1,572

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

19

11

25

Earnings (losses) per share (basic) (in €)0.68(0.94)

1.95

Earnings (losses) per share (diluted) (in €)0.68(0.94)

1.95

Set forth below are year-to-year comparisons of results of operations, based upon EADS’ consolidated income statements.

*

EBIT pre-goodwill impairment and exceptionals.

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CONSOLIDATED REVENUES
Set forth below is a breakdown of EADS’ consolidated revenues by Division for the past three years.
Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

29,97828,06728,991

Airbus Commercial

27,673

26,37026,524

Airbus Military

2,684

2,235

2,759

Eurocopter

4,830

4,570

4,486

Astrium

5,003

4,799

4,289

Cassidian

5,933

5,363

5,668 (2)Total divisional revenues

45,74442,79943,434

Other Businesses

1,182

1,096

1,338

HQ/Consolidation (3)(1,174)(1,073)(1,507)

Total

45,752

42,82243,265(in €m)Airbus (1)(1) Airbus reports in two segments: Airbus Commercial and Airbus Military. Eliminations between Airbus Commercial and Airbus Military are treated at the Airbus divisionlevel. See “—2.1.2 Overview”.
(2) Augsburg site’s revenues are included in Cassidian in 2008 and amounted to €438 million. As of 2009, the Augsburg site is consolidated within Airbus Commercial. See“—2.1.2 Overview”.
(3) HQ/Consolidation includes, in particular, adjustments and eliminations for intercompany transactions.

For 2010, consolidated revenues increased by 6.8%, from € 42.8 billion for 2009 to € 45.8 billion for 2010. The increase was due tohigher revenues across all Divisions.
For 2009, consolidated revenues decreased by 1.0%, from € 43.3 billion for 2008 to € 42.8 billion for 2009. The decrease wasprimarily due to lower revenues at Airbus and Other Businesses during 2009, partially offset by revenue increases at Astrium andEurocopter.

AirbusFor 2010, Airbus’ consolidated revenues increased by 6.8%, from € 28.1 billion for 2009 to € 30.0 billion for 2010. The increase wasprimarily due to higher revenues at Airbus Commercial, as well as a small increase in revenues at Airbus Military.
For 2009, Airbus’ consolidated revenues decreased by 3.2%, from € 29.0 billion for 2008 to € 28.1 billion for 2009. The decrease
was primarily due to lower revenues at Airbus Military, as well as a small decrease in revenues at Airbus Commercial.

Airbus Commercial
Set forth below is a breakdown of deliveries of commercial aircraft by product type for the past three years.
Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

Single Aisle

401

402

386

Long-Range

91

86

85

Large Aircraft

18

10

12

498

483

Number of aircraft

Total

510

(1)

(1) 508 aircraft with revenue recognition (two A330-200 delivered under operating lease).

For 2010, Airbus Commercial’s consolidated revenues
increased by 4.9%, from € 26.4 billion for 2009 to € 27.7 billion
for 2010. The increase was primarily due to higher aircraft
deliveries (510 in 2010 of which 508 qualified for revenue
recognition, as compared to 498 in 2009), a favourable mix
effect (in particular the increased number of A380s deliveredin 2010) as well as an improvement in the price of delivered
aircraft net of escalation. Partially offsetting this revenue

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increase was an approximate € -0.5 billion negative impact
of exchange rate effects. For a discussion of the impact of
exchange rate variations on EADS’ results of operations,see “— 2.1.3.6 Accounting for Hedged Foreign Exchange
Transactions in the Financial Statements”, “— 2.1.3.7 Foreign
Currency Translation”, “— 2.1.8.1— Foreign Exchange Rates”
and “Risk Factors — 1. Financial Market Risks — Exposure to
Foreign Currencies”.

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For 2009, Airbus Commercial’s consolidated revenues
decreased by 0.6%, from € 26.5 billion for 2008 to € 26.4 billion
for 2009. This slight decrease was primarily due to (i) an
approximate € -0.4 billion deterioration in the price of delivered
aircraft net of escalation, (ii) an approximate € -0.4 billion

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negative impact of exchange rate effects and (iii) a decrease in
Hawker activity. Partially offsetting this revenue decrease werehigher aircraft deliveries (498 in 2009 as compared to 483 in2008), in particular single-aisle A318/A319/A320/A321 aircraft.

Airbus Military
Set forth below is a breakdown of deliveries of military transport aircraft by product type for the past three years.
Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

CN-235

6

4

7

C-212

-

-

1

C-295

13

12

11

Number of aircraft

P-3

1

-

-

Total

20

16

19

For 2010, Airbus Military’s consolidated revenues increased
by 20.0%, from € 2.2 billion for 2009 to € 2.7 billion for 2010.
The increase was primarily due to € 0.5 billion in higher revenue
recognition on the A400M programme in 2010, partially offset
by a decrease in revenues from tanker and medium and lightaircraft activities.

For 2009, Airbus Military’s consolidated revenues decreased by
19.0%, from € 2.8 billion for 2008 to € 2.2 billion for 2009. The
decrease was primarily due to € -1.0 billion in lower revenue
recognition on the A400M programme in 2009, with 2008
figures benefiting from the A400M power-on milestone and theinitial application of early stage accounting. Partially offsetting
this decrease was an increase in revenues from tanker andmedium and light aircraft activities during 2009.

Eurocopter
Set forth below is a breakdown of deliveries of helicopters by product type for the past three years.
Number of aircraftYear ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

Tiger

15

7

15

Light

260

284

302

Medium

197

219

229

Heavy

55

48

42

of which NH90

28

15

14

Total

527

558

588

For 2010, consolidated revenues of Eurocopter increased
by 5.7%, from € 4.6 billion for 2009 to € 4.8 billion for 2010,
despite an overall decrease in helicopter deliveries from 558
in 2009 to 527 in 2010. The increase was primarily due to afavourable mix effect (in particular the higher number of NH90
and Tiger helicopters delivered in 2010) and growth in support
revenues.

For 2009, consolidated revenues of Eurocopter increasedby 1.9%, from € 4.5 billion for 2008 to € 4.6 billion for 2009,
despite an overall decrease in helicopter deliveries from 588
in 2008 to 558 in 2009. The increase was primarily due toa favourable mix in serial helicopter deliveries and growth incustomer services, partially offset by lower governmental anddevelopment revenues.

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Astrium
Set forth below is a breakdown of deliveries of telecommunications satellites for the past three years.

Telecommunication Satellites

For 2010, consolidated revenues of Astrium increased by
4.3%, from € 4.8 billion for 2009 to € 5.0 billion for 2010. The
increase was due to strong deliveries in telecommunication andearth observation satellites and growth in defence revenues,
which more than offset the catch-up effect for in-orbit incentive
schemes booked in 2009 (€ -0.2 billion).
For 2009, consolidated revenues of Astrium increased by
11.9%, from € 4.3 billion for 2008 to € 4.8 billion for 2009.
The increase was due to revenue growth across all Business
Units and included a non-operational catch-up effect(€ +0.2 billion) for in-orbit incentive schemes on commercial
telecommunication satellites with low margin recognition.

Cassidian
For 2010, consolidated revenues of Cassidian increased by
10.6%, from € 5.4 billion for 2009 to € 5.9 billion for 2010. The
increase primarily reflects volume growth in core and export
markets for Eurofighter and missile programmes as well as
progress in LSI border security contracts.
For 2009, consolidated revenues of Cassidian decreased
by 5.4%, from € 5.7 billion for 2008 to € 5.4 billion for 2009.
The decrease primarily reflects the carve-out of the Augsburg
aerostructures activity from Cassidian in 2009 (€ -0.4 billion).
This was partially offset by higher revenues from a ramp-up in
tranche 2 production and export deliveries for Eurofighter aswell as integrated logistics support.

Other Businesses
For 2010, consolidated revenues of Other Businesses
increased by 7.8%, from € 1.1 billion for 2009 to € 1.2 billion
for 2010. The increase mainly reflects the ramp-up in LUH
deliveries at EADS North America (53 in 2010 compared to 45
in 2009).
For 2009, consolidated revenues of Other Businesses
decreased by 18.1%, from € 1.3 billion for 2008 to € 1.1 billion
for 2009. The decrease mainly reflects the change inconsolidation perimeter following the sale of 70% of Socata to
Daher in January 2009. See “—2.1.3.1 Scope of and Changes
in Consolidation Perimeter”.

CONSOLIDATED COST OF SALESFor 2010, consolidated cost of sales increased by 3.0%, from€ 38.4 billion for 2009 to € 39.5 billion for 2010. The increase

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Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

5

4

6

was primarily due to strong delivery patterns, cost escalationand costs related to business growth at Airbus, which werepartially offset by additional Power8 savings in 2010 and theabsence of loss-making contract charges incurred on the
A400M and the A380 programmes in 2009 (€ -2.1 billion).
See “— 2.1.2.1 Significant Programme and Restructuring
Developments in 2008, 2009 and 2010”. Consolidated cost of
sales also includes the amortisation of capitalised development
costs pursuant to IAS 38, which amounted to € -34 million in2010 compared to € -146 million in 2009. Mainly as a resultof the above stated items and despite a negative dollar effectat Airbus in respect of revenues compared to 2009, the grossmargin increased from 10.4% in 2009 to 13.6% in 2010.
For 2009, consolidated cost of sales increased by 6.9%, from€ 35.9 billion for 2008 to € 38.4 billion for 2009. The increase
was primarily due to the higher loss-making contract provision
recorded in respect of the A400M programme and negative
foreign exchange effects, partially offset by the lower lossmaking contract charges recorded in respect of the A380
programme, additional Power8 savings in 2009 and positive
contributions from Cassidian and Astrium. See “— 2.1.2.1
Significant Programme and Restructuring Developments
in 2008, 2009 and 2010”. Consolidated cost of sales also
includes the amortisation of capitalised development costs
pursuant to IAS 38, which amounted to € -146 million in 2009
compared to € -56 million in 2008. Mainly as a result of theabove stated items as well as a deterioration in prices fordelivered A330 aircraft and a negative dollar effect at Airbus
in respect of revenues, the gross margin decreased from 17.0%
in 2008 to 10.4% in 2009.

CONSOLIDATED SELLING AND ADMINISTRATIVE
EXPENSESFor 2010, consolidated selling and administrative expenses
increased by 5.3%, from € 2.2 billion for 2009 to € 2.3 billion
for 2010. The increase was primarily due to higher expenses atAirbus and Astrium in connection with bid campaigns.
For 2009, consolidated selling and administrative expenses
remained stable, at the 2008 level of € 2.2 billion. Higher
expenses at Airbus and Astrium (primarily related toconsolidation effects) were largely offset by lower expenses at
Cassidian and at Other Businesses.

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CONSOLIDATED RESEARCH AND DEVELOPMENT
EXPENSESFor 2010, consolidated research and development (“R&D”)
expenses increased by 4.0%, from € 2.8 billion for 2009 to€ 2.9 billion for 2010. The increase was primarily due to higher
expenses at Cassidian for the UAS and systems businesses
and at Eurocopter across the product range. At Airbus, theincrease in A350 XWB-related expenses was roughly offset bydecreases in other programmes, in particular the A380 and
the A330-200F. See “— 2.1.3.5 Research and Development
expenses”.
For 2009, consolidated R&D expenses increased by 5.8%, from€ 2.7 billion for 2008 to € 2.8 billion for 2009. The increase wasprimarily due to higher expenses at Airbus, due to developmenton the A350 XWB programme, and to a lesser extent, higher
expenses at Eurocopter and Cassidian for innovation andproduct investment. This increase was partially offset by less
R&D for the A380 programme.

CONSOLIDATED OTHER INCOME
AND OTHER EXPENSES
Consolidated other income and other expenses include gains
and losses on disposals of investments in fixed assets andincome from rental properties.
For 2010, the net of other income and other expenses was
positive € 69 million as compared to positive € 68 million for2009. Gains and losses roughly offset each other compared to2009.
For 2009, the net of other income and other expenses was
positive € 68 million as compared to positive € 58 million for2008. The increase was mainly attributable to the gain from
disposal of the Filton site in 2009, partially offset by various
other items.

CONSOLIDATED SHARE OF PROFIT FROMASSOCIATES ACCOUNTED FOR UNDER
THE EQUITY METHOD AND OTHER INCOME
FROM INVESTMENTS
Consolidated share of profit from associates accounted forunder the equity method and other income from investments
principally includes results from companies accounted forunder the equity method and the results attributable to nonconsolidated investments.
For 2010, EADS recorded € 145 million in consolidated shareof profit from associates accounted for under the equity
method and other income from investments as comparedto € 134 million for 2009. The € 11 million increase primarilyreflects the increased contribution from EADS’ equity
investment in Dassault Aviation.

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See “Notes to the Consolidated Financial Statements (IFRS) —Note 11: Share of profit from associates accounted for underthe equity method and other income from investments”.
For 2009, EADS recorded € 134 million in consolidated shareof profit from associates accounted for under the equity
method and other income from investments as compared to€ 211 million for 2008. The € -77 million decrease primarilyreflects the reduced contribution from EADS’ equity investment
in Dassault Aviation.

CONSOLIDATED INTEREST RESULT
Consolidated interest result reflects the net of interest income
and expense arising from financial assets and liabilities,
including interest expense on refundable advances provided by
European governments to finance R&D activities.
For 2010, EADS recorded a consolidated net interest expenseof € -99 million, as compared to a consolidated net interest
expense of € -147 million for 2009. The improvement isdue primarily to lower interest expense paid on the Group’s
financing liabilities and to the reassessment of future cash
outflows of European government refundable advances.
For 2009, EADS recorded a consolidated net interest expenseof € -147 million, as compared to a consolidated net interest
result of € 36 million for 2008. The decrease is due primarily to a
decline in interest rates paid on EADS’ net cash balance during
2009, partially offset by lower interest expense paid on theGroup’s financing liabilities.

CONSOLIDATED OTHER FINANCIAL RESULTThis line item includes, among others, the impact of revaluation
changes of US dollar- and pound sterling-denominated cash
balances on the euro-denominated statements of financial
position of Group companies as well as the effect of the markto-market valuation of “embedded derivatives”. See “Notes
to the Consolidated Financial Statements (IFRS) — Note 2:
Summary of significant accounting policies — Significant
Accounting Policies — Derivative financial instruments —Embedded derivatives”. This line item also includes thevaluation of the premium paid for US dollar options used forforeign exchange hedging.
For 2010, consolidated other financial result improved to€ -272 million from € -445 million for 2009. This positive€ 173 million change results primarily from the lower unwindingof discounts in 2010 compared to 2009, due in turn to thelower discounted provisions outstanding. See “Notes to theConsolidated Financial Statements (IFRS) — Note 12: Total
finance costs” for further discussion.

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For 2009, consolidated other financial result improved to€ -445 million from € -508 million for 2008. This positive€ 63 million change results from the improvement in the impactof revaluation changes of US dollar- and pound sterlingdenominated cash balances on the euro-denominated balance
sheets of Group companies, as well as from the effect of themark-to-market valuation of “embedded derivatives”.

CONSOLIDATED INCOME TAXESFor 2010, income taxes yielded a € -244 million expense,
compared to a € 220 million benefit in 2009. The expense wasdue to the taxable income of € 816 million recorded in 2010,
as compared to a taxable loss of € -972 million recorded in
the previous year. The effective tax rate was 30% in 2010. See“Notes to the Consolidated Financial Statements (IFRS) —Note 13: Income taxes”.
For 2009, income taxes yielded a € 220 million benefit,
compared to a € -703 million expense in 2008. The benefit wasdue to the taxable loss of € -972 million recorded in 2009, ascompared to the taxable income of € 2,300 million recordedin the previous year. The effective tax rate was 23% in 2009reflecting some impairment of tax assets.

CONSOLIDATED NON-CONTROLLING INTERESTS
For 2010, consolidated profit for the period attributable tonon-controlling interests was € 19 million, as compared to€ 11 million for 2009.
For 2009, consolidated profit for the period attributable tonon-controlling interests was € 11 million, as compared to€ 25 million for 2008. The decrease for 2009 primarily relates to86

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a decrease of the result attributable to non-controlling interestsof subsidiaries of Airbus Financial Services.

CONSOLIDATED PROFIT (LOSS) FOR THE PERIODATTRIBUTABLE TO EQUITY OWNERS OF THE
PARENT (NET INCOME (LOSS))As a result of the factors discussed above, EADS recorded
consolidated net income of € 553 million for 2010, as compared
to a consolidated net loss of € -763 million for 2009 andconsolidated net income of € 1,572 million for 2008.

EARNINGS PER SHARE (EPS)
Basic earnings per share moved from a loss of € -0.94 pershare in 2009 to a profit of € 0.68 per share in 2010. The
number of outstanding shares at 31 December 2010 was
811,061,638. The denominator used to calculate EPS was
810,693,339 shares, reflecting the weighted average numberof shares outstanding during the year. In 2008, EADS reported
basic earnings per share of € 1.95.
Diluted earnings per share moved from a loss of € -0.94 pershare in 2009 to a profit of € 0.68 per share in 2010. The
denominator used to calculate diluted EPS was 810,935,930,
reflecting the weighted average number of shares outstanding
during the year, adjusted to assume the conversion of all
potential ordinary shares. In 2008, EADS reported diluted
earnings per share of € 1.95.
See “Notes to the Consolidated Financial Statements (IFRS) —Note 23: Total equity” and “— Note 38: Earnings per share”.

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2.1.6 Changes in Consolidated Total Equity(including Non‑controlling Interests)
The following table sets forth a summary of the changes in consolidated total equity for the period 1 January 2010 through31 December 2010.
(in €m)Balance at 31 December 2009

10,641

Actuarial gains and losses(42)

Accumulated other comprehensive income(2,203)

Thereof currency translation adjustments

176

Profit for the period

572

Capital increase5

Capital decrease(49)

Share-based payment (IFRS 2)

23

Dividends paid to non-controlling interests(7)

Equity transaction (IAS 27)(4)

Change in non-controlling interests

3

Change in treasury shares(3)

Balance at 31 December 2010

The decrease in consolidated total equity in 2010 primarilyreflects the € -2.2 billion decrease in accumulated othercomprehensive income (“AOCI”), mainly due to the negative
variation (net of tax) of the year-end mark-to-market valuationof that portion of EADS’ hedge portfolio qualifying for cash flow
hedge accounting under IAS 39 (“cash flow hedges”). The
decrease in AOCI was partially offset by the profit for the period
recorded for 2010.
Set forth below is a discussion on the calculation of AOCI
and the related impact on consolidated total equity. For a
discussion of the other line items affecting consolidated total
equity, see “Consolidated Financial Statements (IFRS) of EADS
— Consolidated Statements of Changes in Equity (IFRS) for theyears ended 31 December 2010, 2009 and 2008”.

CASH FLOW HEDGE RELATED IMPACT ON AOCI
At 31 December 2010, the notional amount of EADS’ portfolioof outstanding cash flow hedges amounted to US$ 70.2 billion,

8,936

hedged against the euro and the pound sterling. The yearend mark-to-market valuation of this portfolio required under
IAS 39 resulted in a negative pre-tax AOCI valuation changeof € -3.2 billion from 31 December 2009, based on a closing
rate of € -US$ 1.34, as compared to a positive pre-tax AOCI
valuation change of € 1.5 billion at 31 December 2009 from31 December 2008, based on a closing rate of € -US$ 1.44.
Positive pre-tax mark-to-market values of cash flow hedges areincluded in other financial assets, while negative pre-tax markto-market values of cash flow hedges are included in otherfinancial liabilities. Year-to-year changes in the mark-to-market
value of cash flow hedges are recognised as adjustments to
AOCI. These adjustments to AOCI are net of corresponding
changes to deferred tax assets (for cash flow hedges withnegative mark-to-market valuations) and deferred tax liabilities(for cash flow hedges with positive mark-to-market valuations).
Set out below is a graphic presentation of cash flow hedge
related movements in AOCI over the past three years (in € m).

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tt Cash Flow Hedge Related Movements in AOCI in €m (based on year-end exchange rates)

OCI Net Liability

-292
1,191
-2,001Net Deferred Taxes

110
-361
629

Net Equity OCI

31 December 2008: US$ 1.39
31 December 2009: US$ 1.44

-182
830

31 December 2010: US$ 1.34

-1,372

As a result of the negative change in the fair market valuation of
the cash flow hedge portfolio in 2010, AOCI amounted to a net
liability of € -2.0 billion for 2010, as compared to a net asset of€ 1.2 billion for 2009. The corresponding € 1.0 billion tax effectled to a net deferred tax asset of € 0.6 billion at 31 December
2010 as compared to a net deferred tax liability of € -0.4 billion
at 31 December 2009.

CURRENCY TRANSLATION ADJUSTMENT IMPACTON AOCIThe € 176 million currency translation adjustment (“CTA”)
related impact on AOCI in 2010 mainly reflects the positiveeffect of the strengthening US dollar (in total positive€ 195 million), as well as the consequences (negative€ -19 million) of the merger of Airbus GIE (a US dollardenominated entity) into Airbus S.A.S. (a euro-denominatedentity). Before the merger, Airbus GIE operations were recordedat the current exchange rate of the period except for thosehedged with financial instruments. As from 1 January 2004,
former Airbus GIE operations are recorded on the basis ofhistorical exchange rates. As a result, no additional CTA isgenerated by former Airbus GIE operations. The portion ofoutstanding CTA as at 31 December 2003, booked in respectof non-monetary statement of financial position items relating totransactions realised as from 1 January 2004 (i.e. mainly aircraft
deliveries), is gradually released to the consolidated income
statement, in line with such deliveries. See “— 2.1.3.7 Foreign
Currency Translation”.

2.1.7 Liquidity and Capital Resources
The Group’s objective is to maintain sufficient cash andcash equivalents at all times to meet its present and future
cash requirements and maintain a favourable credit rating. It
attempts to achieve this objective by:

tt implementing measures designed to generate cash;
tt developing and maintaining access to the capital markets;
andtt containing its exposure to customer financing.
EADS benefits from a strong positive cash position, with€ 16.2 billion of consolidated gross cash (including securitiesof € 11.2 billion) at 31 December 2010. EADS defines its

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consolidated net cash position as the difference between(i) cash and cash equivalents, (ii) securities less (iii) financing
liabilities (as recorded in the consolidated statement of financial
position). The net cash position at 31 December 2010 was€ 11.9 billion (€ 9.8 billion at 31 December 2009).
This cash position is further supported by a € 3.0 billion
syndicated back-up facility, undrawn as at 31 December
2010 with no financial covenants, as well as a Euro medium
term note programme and commercial paper programme, as
described below. The factors affecting EADS’ cash position,and consequently its liquidity risk, are discussed below.

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2.1.7.1 CASH FLOWSEADS generally finances its manufacturing activities and product development programmes, and in particular the developmentof new commercial aircraft, through a combination of flows generated by operating activities, customer advances, risk-sharing
partnerships with sub-contractors and European government refundable advances. In addition, EADS’ military activities benefit
from government-financed R&D contracts. If necessary, EADS may raise funds in the capital markets.
The following table sets forth the variation of EADS’ consolidated net cash position over the periods indicated.
(in €m)Year ended
31 December 2010

Year ended
31 December 2009

Year ended
31 December 2008

Consolidated net cash position at 1 January

9,797

9,193

7,024

Gross cash flow from operations (1)

2,177

2,423

4,571

Changes in other operating assets and liabilities (working capital) (2)

2,819

15

(172)

Thereof customer financing

63

(406)

(327)

Cash used for investing activities (3)(2,289)(1,853)(1,840)

Thereof industrial capital expenditures(2,250)(1,957)(1,837)

Thereof others

(39)

104

(3)

Cash distribution to shareholders/non-controlling interests

(7)

(166)

(107)

Changes in capital and non-controlling interests

(48)

17

24

Change in treasury shares

(3)

(5)

39

(553)

(173)

(436)

25

346

90

Consolidated net cash position at 31 December

11,918

9,797

9,193

Free cash flow (3)

2,707

585

2,559

Thereof free cash flow before customer financing

2,644

991

2,886

Contribution to plan assets of pension schemes
Other changes in financial position(1) Represents cash flow from operations, excluding variations in working capital.
(2) Including cash outflows of €302 million for option premiums in 2008.
(3) Does not reflect (i) investments in, or disposals of, available-for-sale securities (net addition of €(2,676) million for 2008; net addition of €(821) million for 2009; net
addition of €(3,147) million for 2010), which are classified as cash and not as investments solely for the purposes of this net cash presentation; or (ii) contribution to plan
assets of pension schemes (€(436) million for 2008; €(173) million for 2009; €(553) million for 2010).

The consolidated net cash position at 31 December 2010 was€ 11.9 billion, a 21.6% increase from 31 December 2009. The
increase primarily reflects the € 2.2 billion gross cash flow fromoperations and € 2.8 billion change in working capital, partially
offset by cash used for investing activities (€ -2.3 billion) as wellas other items.

Gross Cash Flow from Operations
Gross cash flow from operations decreased by 10.2% to€ 2.2 billion for 2010, primarily due to foreign exchange effects,
partially offset by a stronger underlying business.

Changes in Other Operating Assets
and Liabilities (Working Capital)
Working capital is comprised of inventory, trade receivables,
other assets and prepaid expenses netted against tradeliabilities, other liabilities (including customer advances),
deferred income and customer financing. Changes in working
capital resulted in a strong positive impact on the net cash
position for 2010 (€ 2.8 billion) compared to a slight positive
impact on the net cash position for 2009 (€ 15 million).

In 2010, the main net contributors to the positive working
capital variation were: (i) the change in inventory (€ 0.7 billion),reflecting inventory reduction at Airbus in particular and (ii) predelivery payments from customers (€ 1.7 billion), which werehigher at Airbus Commercial during 2010 but nonethelessdecreased overall compared to 2009 as a result of lower
advance payments at Astrium and Cassidian following theexceptional order intake booked in 2009, and (iii) the change inother assets and liabilities (€ 0.7 billion, including government
receipts for development programmes. The positive variations
within the year were partially offset by the change in tradereceivables (€ -0.3 billion).
In 2009, the main net contributor to the positive working
capital variation was pre-delivery payments from customers(€ 2.9 billion), which decreased moderately at Airbus compared
to 2008 as expected due to lower commercial activity while
increasing across the other Divisions due to the strong
inflow of institutional orders. This positive variation within theyear was almost entirely offset by (i) the change in inventory(€ -2.0 billion), reflecting inventory growth across all Divisions,in particular at Airbus, (ii) the change in trade receivables(€ -0.5 billion), and (iii) customer financing (€ -0.4 billion).

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European Government Refundable Advances. As of
31 December 2010, total European government refundable
advances received, recorded on the statement of financial
position in the line items “non-current other financial liabilities”
and “current other financial liabilities”, amounted to € 6.0 billion,
including accrued interest.

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For 2010, new receipts of European government refundable
advances totalled € 1.1 billion and reimbursements totalled€ -0.4 billion. Related accrued interest of € 0.1 billion wasrecorded in 2010. 2010 included a reassessment of future
cash outflows from certain refundable advances amounting to€ -0.1 billion.

Set out below is a breakdown of the total amount of European government refundable advances outstanding, by product/project.
(in €bn)

2010

2009

2008

Long Range

1.8

1.2

1.1

A380

3.7

3.6

3.4

Eurocopter

0.2

0.2

0.1

Others

0.3

0.3

0.3

Total

6.0

5.3

4.9

Cash Used for Investing Activities
Management categorises cash used for investing activities
into two components: (i) industrial capital expenditures and(ii) others.

Industrial Capital Expenditures. Industrial capital
expenditures (investments in property, plant and equipment
and intangible assets) amounted to € -2.3 billion for 2010,
as compared to € -2.0 billion for 2009 and € -1.8 billion for2008. Capital expenditures in 2010 related to programmes atAirbus of € -1.5 billion (a large portion of which related to theA350 XWB) and additional projects in the other Divisions of€ 0.8 billion, mainly driven by investment at Astrium.
For the period 2011 to 2012, it is expected that the majority of
EADS’ capital expenditures will occur in connection with Airbus
activities – in particular, for the A350 XWB programme – andbe broadly distributed across EADS’ home markets of France,
Germany, Spain and the UK.

Others. In 2010, the € -39 million figure primarily reflects
payments for investments in associates, other investments andother long-term financial assets. In 2009, the € 104 million figure
primarily reflects the sale of the Airbus site in Filton (UK) to
GKN. In 2008, € -3 million was recorded in this category.

Free Cash Flow
As a result of the factors discussed above, free cash flow
amounted to € 2.7 billion for 2010, as compared to € 0.6 billion
for 2009 and € 2.6 billion for 2008. Free cash flow before
customer financing was € 2.6 billion for 2010, as compared to€ 1.0 billion for 2009 and € 2.9 billion for 2008.

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Contribution to Plan Assets of Pension
Schemes
The cash outflow of € -0.6 billion in 2010 primarily relates toa contribution to the Contractual Trust Arrangement (CTA) for
allocating and generating pension plan assets in accordancewith IAS 19, as well as to plan assets in the UK and to German
benefit funds. The cash outflow of € -0.2 billion in 2009 primarily
relates to a contribution to plan assets in the UK and toGerman benefit funds. In 2008, the cash outflow of € -0.4 billion
primarily relates to a contribution to the CTA. See “Notes to
the Consolidated Financial Statements (IFRS) — Note 25B:
Provisions for retirement plans”. In 2011, EADS intends tomake additional contributions to plan assets in order to reduce
the provision for retirement plans on its statement of financial
position.

Other Changes in Financial Position
In 2010 there was a small positive change of € 25 million,
compared to a positive change of € 346 million in 2009 whichreflects among others currency effects on financing liabilities. In
2008, the positive change of € 90 million generally mirrors thecurrency effects on financing liabilities.

2.1.7.2 CONSOLIDATED CASH AND CASH
EQUIVALENTS AND SECURITIESThe cash and cash equivalents and securities portfolio of
the Group is invested mainly in non-speculative financial
instruments, mostly highly liquid, such as certificates of deposit,
overnight deposits, commercial paper, other money market
instruments and bonds. See “— 2.1.8.2 Interest Rates” and“Notes to the Consolidated Financial Statements (IFRS) —Note 34A: Financial risk management”.

2Management’s Discussion and Analysis of Financial Condition and Results of Operations
2.1 Operating and Financial Review

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EADS has a fully automated cross-border cash pooling system(covering France, Germany, Spain, the Netherlands, the UK and
the US). The cash pooling system enhances management’s
ability to assess reliably and instantaneously the cash positionof each subsidiary within the Group and enables management
to allocate cash optimally within the Group depending upon
shifting short-term needs.

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Total cash and cash equivalents (including available-for-salesecurities) in 2010 included € 0.7 billion from the 37.5%
consolidation of MBDA, compared to € 0.8 billion in 2009 and€ 0.7 billion in 2008.

2.1.7.3 CONSOLIDATED FINANCING LIABILITIESThe following table sets forth the composition of EADS’ consolidated financing liabilities, including both short- and long-term debt,
as of 31 December 2010:31 December 2010(in €m)Not exceeding 1 year

Bonds

Over 1 year up to 5 years

More than 5 years

Total

-

-

1,535

1,535

Liabilities to financial institutions

39

648

135

822

Loans

200

214

161

575

Finance Leases

13

58

119

190

Others

1,156

-

-

1,156

Total

1,408

920

1,950

4,278 (1)(1) Financing liabilities include non-recourse Airbus debt for €532 million.

The outstanding balance of financing liabilities decreased
from € 5.3 billion at 31 December 2009 to € 4.3 billion at
31 December 2010. Financing liabilities include liabilities
connected with sales financing transactions amounting to€ 631 million at 31 December 2010, most of which bore interest
at variable rates. See “— 2.1.7.4 Sales Financing”.

EMTN Programme. EADS has a € 3 billion Euro Medium
Term Note (“EMTN”) Programme in place, with two tranches
outstanding as of 31 December 2010:

tt € 0.5 billion of notes issued in 2003 and maturing in 2018,
bearing interest at 5.5% (effective interest rate: 5.6%) andsubsequently swapped into a variable rate of 3-month
EURIBOR plus 1.72%;
tt € 1.0 billion of notes issued in 2009 and maturing in 2016,
bearing interest at 4.625% (effective interest rate: 4.6%)
and subsequently swapped into a variable rate of 3-month
EURIBOR plus 1.57%.
Commercial Paper Programme. EADS has the ability toissue commercial paper on a rolling basis, under a so-called“billet de trésorerie” programme. This commercial paper would
bear interest at fixed or floating rates with individual maturities
ranging from 1 day to 12 months. The programme has beenin place since 2003 and has a maximum authorised volume
limit of € 2 billion. As of 31 December 2010, there was nocommercial paper outstanding under the programme.
European Investment Bank Loan. In 2004, the European
Investment Bank granted a long-term loan to EADS in theamount of US$ 421 million at an interest rate of 5.1% (effective
interest rate: 5.1%).
For further information, see “Notes to the Consolidated
Financial Statements (IFRS) — Note 26: Financing liabilities”.

2.1.7.4 SALES FINANCINGEADS favours cash sales and encourages independent
financing by customers, in order to avoid retaining credit orasset risk in relation to delivered products. However, in order tosupport product sales, primarily at Airbus, Eurocopter 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.
Despite the financial market recovery and a return of lessor
appetite, EADS may increase its future outlays in connection
with customer financing of commercial aircraft, mostly throughfinance leases and secured loans. Nevertheless, it intends tokeep the amount as low as possible.
Dedicated and experienced teams structure such financing
transactions and closely monitor total EADS finance and asset
value exposure and its evolution in terms of quality, volume
and intensity of cash requirements. EADS aims to structure all
financing it provides to customers in line with market-standard
contractual terms so as to facilitate any subsequent sale or
reduction of such exposure.
In determining the amount and terms of a financing transaction,
Airbus and ATR take into account the airline’s credit rating

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as well as risk factors specific to the intended operating
environment of the aircraft and its expected future value. Market

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yields and current banking practices also serve to benchmark
the financing terms offered to customers.

Approximately 15% of the € 4.3 billion of total consolidated financing liabilities as at 31 December 2010 are derived from thefunding of EADS’ sales financing assets, which are of a long-term nature and have predictable payment schedules.
Set out below is a breakdown of the total amount of sales financing liabilities outstanding.
2010(in €m)Finance Leases
Liabilities to financial institutions

2009

2008

-

1

14

491

590

664

Loans

140

142

158

Total sales financing liabilities (1)

631

733

836

(1) The amounts of total sales financing liabilities at 31 December 2009 and 2008 reflect the offsetting of sales financing liabilities by €306 million and €373 million,
respectively. At 31 December 2010, no sales financing liabilities were offset.

Of the € 631 million total sales financing liabilities at
31 December 2010, € 532 million is in the form of non-recourse
debt, where EADS’ repayment obligations are limited to its
receipts from transaction counterparties. A significant portionof financial assets representing non-cancellable customer
commitments have terms closely matching those of the related
financing liabilities. See “Notes to the Consolidated Financial
Statements (IFRS) — Note 26: Financing liabilities”. See also“— 2.1.3.8 Accounting for Sales Financing Transactions in the
Financial Statements”.
Furthermore, in 1999, Airbus received a reinvestment notefrom Deutsche Bank AG in the amount of US$ 800 million, withan outstanding debt of € 275 million at 31 December 2010(2009: € 305 million, 2008: € 372 million).
Sales financing transactions are generally collateralised by
the underlying aircraft. Additionally, Airbus, Eurocopter and
ATR benefit from protective covenants and from security
packages tailored according to the perceived risk and the legal
environment of each transaction.
EADS classifies the exposure arising from its sales financing
activities into two categories: (i) Customer Financing
Exposure, where the customer’s credit – its ability to perform
its obligations under a financing agreement – constitutes therisk; and (ii) Asset Value Exposure, where the risk relates todecreases in the future value of the financed aircraft. See also
“Risk Factors — 1. Financial Market Risks — Exposure to Sales
Financing Risk”.

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Customer Financing Exposure
Gross Exposure. Gross Customer Financing Exposure iscomputed as the sum of (i) the net book value of aircraft underoperating leases; (ii) the outstanding principal amount of financeleases or loans; and (iii) the net present value of the maximum
commitment amounts under financial guarantees.
Gross Customer Financing Exposure from operating leases,
finance leases and loans differs from the value of related assets
on EADS’ statement of financial position and related off-balance
sheet contingent commitments for the following reasons:(i) assets are recorded in compliance with IFRS, but may relate
to transactions where there is limited recourse to Airbus,
Eurocopter or ATR; (ii) the value of the assets is impaired or
depreciated on the consolidated statement of financial position;(iii) off-balance sheet gross exposure is calculated as thenet present value of future payments, whereas the financial
statements present the total future payments in nominal terms;and (iv) exposure related to certain AVGs recorded as operatingleases in the financial statements is categorised under Asset
Value Exposure, not Customer Financing Exposure.
Airbus’ Gross Customer Financing Exposure amounted to
US$ 1.7 billion (€ 1.3 billion) as of 31 December 2010. The chart
below illustrates the evolution of this exposure during 2010 (inUS$ million).

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tt Evolution of Airbus Gross Exposure during 2010

1,816

December 2009
Additions
Disposals

750
-730

Amortisation
December 2010

Airbus Gross Customer Financing Exposure as of 31 December
2010 is distributed over 79 aircraft, operated at any time byapproximately 19 airlines. In addition, the level of exposure may
include other aircraft-related assets, such as spare parts. 90%
of Airbus Gross Customer Financing Exposure is distributed
over 10 airlines in 9 countries (this excludes backstop
commitments).
ATR’s Gross Customer Financing Exposure amounted to
US$ 0.2 billion (€ 0.1 billion) as of 31 December 2010. This
exposure is distributed over 134 aircraft. EADS proportionallyconsolidates only 50% of ATR and shares the risk with its
partner, Alenia.

2

-145

1,691

Eurocopter’s Gross Customer Financing Exposure amounted
to € 0.1 billion as of 31 December 2010. This exposure is
distributed over approximately 55 helicopters.

Net Exposure. Net exposure is the difference between gross
exposure and the estimated value of the collateral security.
Collateral value is assessed using a dynamic model basedon the net present value of expected future rentals from theaircraft in the leasing market and potential cost of default.
This valuation model yields results that are typically lower thanresidual value estimates by independent sources in order
to allow for what management believes is its conservative
assessment of market conditions, as well as for repossession
and transformation costs. See “— 2.1.3.8 Accounting for Sales
Financing Transactions in the Financial Statements”.

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The table below shows the transition from gross to net financing exposure (which does not include AVGs) as at 31 December 2010,2009 and 2008. It includes 100% of Airbus’ and Eurocopter’s customer financing exposure and 50% of ATR’s exposure, reflecting
EADS’ stake in ATR.
AirbusATR 50%Eurocopter

Total EADS

Note* 31/12/2010 31/12/2009 31/12/2008 31/12/2010 31/12/2009 31/12/2008 31/12/2010 31/12/2009 31/12/2010 31/12/2009 31/12/2008(in €m)Operating leases
Finance leases &
loans

15

579

341

366

-

-

67

-

-

579

341

433

17

1,234

1,569

1,329

14

4

23

41

29

1,289

1,602

1,352

-

-

-

55

108

88

-

-

55

108

88

1,813

1,910

1,695

69

112

178

41

29

1,923

2,051

1,873

448

446

484

46

47

46

48

47

542

540

530

(880)

(985)

(1,012)

-

-

-

-

-

(880)

(985)

(1,012)

(115)

(111)

(115)

-

-

-

-

-

(115)

(111)

(115)

Others
On balance sheet
customer financing
Off balance sheet
customer financing
Non-recourse
transactions onbalance sheet
Off balance sheet
adjustments
Gross customer
financing exposure

33

1,266

1,260

1,052

115

159

224

89

76

1,470

1,495

1,276

Collateral values

33

(759)

(772)

(476)

(105)

(145)

(203)

(62)

(55)

(926)

(972)

(679)

507

488

576

10

14

21

27

21

544

523

597

33

(75)

(70)

(52)

-

-

-

-

-

(75)

(70)

(52)

33

(176)

(158)

(244)

-

-

-

-

-

(176)

(158)

(244)

33

-

-

-

(10)

(14)

(21)

(27)

(21)

(37)

(35)

(21)

33

(256)

(260)

(280)

-

-

-

-

-

(256)

(260)

(280)

(507)

(488)

(576)

(10)

(14)

(21)

(27)

(21)

(544)

(523)

(597)

-

-

-

-

-

-

-

-

-

-

-

Net exposure
Asset impairments
and provisions on:
Operating leases
Finance leases &loans
On balance sheet
commitments
Off balance sheet
commitments
Asset impairments
and provisions
Residual exposure*

The indicated numbers refer to the number of the Notes to Consolidated Financial Statements (IFRS).

The gross value of consolidated operating leases shown in
the table above (€ 579 million in 2010, € 341 million in 2009and € 433 million in 2008) is accounted for in “Property, plantand equipment” at net book value of operating leases before
impairment. Corresponding accumulated asset impairments(€-75 million in 2010, €-70 million in 2009 and €-52 million in2008) are charged against this net book value. See “Notes
to the Consolidated Financial Statements (IFRS) — Note 15:
Property, plant and equipment” and “— Note 33: Commitments
and contingencies”.
Also shown in the table above is the gross value forconsolidated finance leases and loans (€ 1,289 million in
2010, € 1,602 million in 2009 and € 1,352 million in 2008).
Consolidated finance leases (€ 731 million in 2010, € 845 million
in 2009 and € 848 million in 2008) are accounted for as longterm financial assets, recorded at their book value before
impairment. Loans (€ 558 million in 2010, € 757 million in2009 and € 504 million in 2008) are also accounted for as
long‑term financial assets, recorded at their outstanding grossamount. Corresponding overall accumulated impairments

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in 2008) are charged against the book values. See “Notes
to the Consolidated Financial Statements (IFRS) — Note 17:
Investments in associates accounted for under the equity
method, other investments and other long-term financial
assets”.
Off-balance sheet customer financing exposure at Airbus,
ATR (accounted for at 50% by EADS) and Eurocopter was€ 542 million in 2010, € 540 million in 2009 and € 530 million
in 2008. These amounts reflect the total nominal valueof future payments under lease in/lease out structures.
The corresponding net present value of future payments(discounted and net of mitigating factors) is included in total
Gross Financing Exposure for an amount of € 427 million
in 2010, € 429 million in 2009 and € 415 million in 2008. A
provision of € 256 million has been accrued for in EADS’balance sheet as of 31 December 2010 to cover the fullamount of the corresponding net exposure. See “Notes to
the Consolidated Financial Statements (IFRS) — Note 33:
Commitments and contingencies”.

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Asset Value Exposure. A significant portion of EADS’ asset
value exposure arises from outstanding AVGs, primarily at Airbus.
Management considers the financial risks associated with suchguarantees to be manageable. Three factors contribute tothis assessment: (i) the guarantee only covers a tranche of theestimated future value of the aircraft, and its level is considered
prudent in comparison to the estimated future value of eachaircraft; (ii) the AVG-related exposure is diversified over a large
number of aircraft and customers; and (iii) the exercise periods ofoutstanding AVGs are distributed through 2022, resulting in low
levels of exposure maturing in any year. Because exercise dates
for AVGs occur on average in the 12th year following aircraft
delivery, AVGs issued in 2010 will generally not be exercisable
prior to 2022, and, therefore, an increase in near-term exposure
is not expected. In addition, these AVGs must generally be
exercised during a pre-defined window and contain specificconditions that must be met in order for them to be exercisable.
Gross Exposure. Gross Asset Value Exposure is defined as thesum of the maximum guaranteed tranche amounts (as opposedto the sum of the maximum guaranteed asset value amounts)
under outstanding AVGs. At 31 December 2010, Gross Asset
Value Exposure was US$ 2.3 billion (€ 1.7 billion). The off-balance
sheet portion of Gross Asset Value Exposure, representing
AVGs with net present values of less than 10% of the sales priceof the corresponding aircraft, was € 1,095 million, excluding€ 406 million where the risk is considered to be remote. In manycases, the risk is limited to a specific portion of the residual valueof the aircraft. The remaining Gross Asset Value Exposure isrecorded on-balance sheet.
Net Exposure. The present value of the risk inherent to the given
asset value guarantees, where a settlement is considered to beprobable, is fully provided for and included in the total amountof provisions for asset value risks of € 683 million. This provision
covers a potential expected shortfall between the estimatedvalue of the aircraft of the date upon which the guarantee can be
exercised and the value guaranteed on a transaction basis taking
counter guarantees into account. See “Notes to the Consolidated
Financial Statements (IFRS) — Note 25C: Other provisions”.

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Backstop Commitments. While backstop commitments
to provide financing related to orders on Airbus’ and ATR’s
backlog are also given, such commitments are not considered
to be part of gross exposure until the financing is in place,which occurs when the aircraft is delivered. This is due to thefact that (i) past experience suggests it is unlikely that all suchproposed financings actually will be implemented (although it ispossible that customers not benefiting from such commitments
may nevertheless request financing assistance ahead of aircraft
delivery), (ii) until the aircraft is delivered, Airbus or ATR retain
the asset and do not incur an unusual risk in relation thereto(other than the corresponding work-in-progress), and (iii) third
parties may participate in the financing.
Airbus Orders and Backstop Commitments. Over the last
three years (2008, 2009 and 2010), the average number of newly
ordered aircraft in respect of which a backstop commitment has
been offered amounted to 6% of the average orders recorded
over the same period, i.e. 33 supported aircraft per year out of
541 orders per year on average. These financing commitments
may or may not materialise at the contractual delivery date of theaircraft. In addition, the level of financing support together withthe terms and conditions offered to customers will vary.
Airbus Deliveries and Financing Support Implemented
at Delivery. Over the last three years (2008, 2009 and 2010),
the average number of aircraft delivered in respect of which
financing support has been provided by Airbus amounted to
2% of the average number of deliveries over the same period,
i.e. 12 aircraft financed per year out of 497 deliveries per
year on average. This financing support may take the form ofsenior or junior loans or guarantees. Such support may haveoriginated from EADS’ contractual backstop commitments
provided at signing of the purchase agreement (see above) or
may be the result of a request for financing assistance made by
the customer ahead of aircraft delivery.
See “Notes to the Consolidated Financial Statements (IFRS) —Note 33: Commitments and contingencies” for further discussionof EADS’ sales financing policies and accounting procedures.

2.1.8 Hedging Activities
2.1.8.1 FOREIGN EXCHANGE RATESMore than 60% of EADS’ revenues are denominatedin US dollars, with approximately half of such currency
exposure “naturally hedged” by US dollar-denominated costs.
The remainder of costs is incurred primarily in euros, and to alesser extent, in pounds sterling. Consequently, to the extent
that EADS does not use financial instruments to hedge its
net current and future exchange rate exposure from the timeof a customer order to the time of delivery, its profits will be*affected by market changes in the exchange rate of the US
dollar against these currencies, and to a lesser extent, bymarket changes in the exchange rate of pound sterling against
the euro. As EADS intends to generate profits only from its
operations and not through speculation on foreign currency
exchange rate movements, EADS uses hedging strategies
solely to mitigate the impact of exchange rate fluctuations on
its EBIT*. See “— 2.1.4.3 EBIT* Performance by Division —Foreign Currency Impact on EBIT*”. See also “Risk Factors —1. Financial Market Risks — Exposure to Foreign Currencies”.

EBIT pre-goodwill impairment and exceptionals.

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As EADS uses financial instruments to hedge its net foreign
currency exposure, the portion of its US dollar-denominatedrevenues not hedged by financial instruments (approximately
30% of total consolidated revenues) is exposed to changes
in exchange rates. Of this non-hedged portion of revenues, acertain percentage (relating to customer pre-delivery payments)
is converted into euro at the spot rate effective at the time thepayment was received by EADS. The remainder of non-hedged
US dollar-denominated revenues (corresponding to payments
upon delivery) are subject to changes in the spot rate at thetime of delivery. See “— 2.1.3.7 Foreign Currency Translation”.

Exposure on aircraft sales. For products such as aircraft,
EADS typically hedges forecasted sales in US dollars. The
hedged items are defined as the first forecasted highly
probable future cash inflows for a given month based upon
final payments at delivery. The amount of the expected flows
to be hedged can cover up to 100% of the equivalent of the
net US dollar exposure at inception. For EADS, a forecasted
transaction is regarded as highly probable if the future delivery
is included in the firm order book or is very likely to materialisein view of contractual evidence (eg, a letter of intent). The
coverage ratio is adjusted to take into account macroeconomic
movements affecting the spot and interest rates as well as therobustness of the commercial cycle.
Exposure on non-aircraft business. For the non-aircraftbusiness, EADS typically hedges inflows and outflows of foreign
currencies from sales and purchase contracts following thesame logic, typically in lower volumes.
Exposure on treasury operations. In connection with its
treasury operations, EADS enters into foreign exchange swaps(notional amount of € 3.1 billion at 31 December 2010) to
adjust for short-term fluctuations of non-euro cash balancesat the Business Unit level. Year-to-year changes in the fairmarket value of these swaps are recorded in the consolidated
income statement in the line item “other financial result” if notdesignated as hedging instruments. These changes may havea material impact on EADS’ net income.

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Embedded derivatives. EADS also has foreign currency
derivative instruments which are embedded in certain purchaseand lease contracts denominated in a currency other than thefunctional currency of the significant parties to the contract,
principally US dollar and pound sterling. Gains or losses relating
to such embedded foreign currency derivatives are reported
in the line item “other financial result” if not designated as
hedging instruments. These changes may have a material
impact on EADS’ net income. See “Notes to the Consolidated
Financial Statements (IFRS) — Note 2: Summary of significant
accounting policies — Significant Accounting Policies —Derivative financial instruments — Embedded derivatives”.
In addition, EADS hedges currency risk arising from financialtransactions in other currencies than euro, such as fundingtransactions or securities.
Hedge Portfolio. EADS manages a long-term hedge portfoliowith a maturity of several years covering its net exposure to
US dollar sales, mainly relating to the activities of Airbus (andto a lesser extent, of ATR, Eurocopter, Astrium and Cassidian).
The net exposure is defined as the total currency exposure (USdollar-denominated revenues), net of the part that is “naturally
hedged” by US dollar-denominated costs. The hedge portfolio
covers the vast majority of the Group’s hedging transactions.
For financial reporting purposes, EADS mostly designates
a portion of the total firm future cash flows as the hedged
position to cover its expected net foreign currency exposure.
Therefore, as long as the actual gross foreign currency cash
inflows (per month) exceed the portion designated as being
hedged, a postponement or cancellation of sales transactions
and corresponding cash inflows have no impact on the hedging
relationship. As hedging instruments, EADS primarily uses
foreign currency forwards and synthetic forwards, as well as
options. EADS may adjust the pace of its hedging activity
depending on the size of its portfolio and its available capacitywith banks in the forward markets.

The table below sets forth the notional amount of foreign exchange hedges in place as of 31 December 2010, and the average US
dollar rates applicable to corresponding EBIT*.
2011

Total Hedges (in US$ bn)

19.1

(1)

2012

20.4

2013

2014

2015

2016+

Total

(1)

14.9

9.8

5.8

0.2

70.2

Forward Rates (in US$) (2)
€-US$

1.38

1.37

1.38

1.38

1.40

1.36

£-US$

1.75

1.62

1.57

1.58

1.62

1.55

(1) Including US$ 0.8 billion and US$ 1.5 billion of options in 2011 and 2012, respectively.
(2) Including options at their least favourable rates.

For further information regarding the notional amounts of the Group’s foreign exchange derivative financial instruments, see “Notes
to the Consolidated Financial Statements (IFRS) — Note 34C: Notional amounts of derivative financial instruments”.
*

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
2.2 Financial Statements

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2.1.8.2 INTEREST RATESEADS uses an asset and liability management approach withthe objective of limiting its interest rate risk. EADS attempts tomatch the risk profile of its assets with a corresponding liability
structure. The remaining net interest rate exposure is managed
through several types of instruments in order to minimise risks
and financial impacts. Therefore, EADS may use interest rate
derivatives for hedging purposes.
Hedging instruments that are specifically related to debt
instruments (such as the notes issued under the EMTN
programme) have at most the same nominal amounts, as wellas the same maturity dates, as the corresponding hedged item.

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Regarding the management of its cash balance, EADS
invests mainly in short-term instruments and/or floating rate
instruments in order to further minimise any interest risk in its
cash and securities portfolio.
For information regarding the notional amounts of the Group’s
interest rate derivative financial instruments, see “Notes to
the Consolidated Financial Statements (IFRS) — Note 34C:
Notional amounts of derivative financial instruments”.
For further information relating to market risk and the ways
in which EADS attempts to manage this risk, see “Notes to
the Consolidated Financial Statements (IFRS) — Note 34A:
Financial risk management”.

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2.2 Financial Statements
The Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2010, together with the related notes,
appendices and Auditors’ reports, are attached hereto andshall be deemed to be incorporated in and form part of this
Registration Document.
In addition, the English versions of the following documents
shall be deemed to be incorporated in and form part of this
Registration Document:tt the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2008, together with the related notes,
appendices and Auditors’ reports, as attached to andincorporated by reference in the Registration Document filed
in English with, and approved by, the AFM on 22 April 2009
and filed in English with the Chamber of Commerce of The
Hague; andtt the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the year
ended 31 December 2009, together with the related notes,

appendices and Auditors’ reports, as attached to andincorporated by reference in the Registration Document filed
in English with, and approved by, the AFM on 21 April 2010
and filed in English with the Chamber of Commerce of The
Hague; andCopies of the above-mentioned documents are available
free of charge upon request in English, French, German
and Spanish at the registered office of the Company and onwww.‌eads.‌com.
Copies of the above-mentioned Registration Documents
are also available in English on the website of the AFM onwww.‌afm.nl. The above-mentioned financial statements
are also available in English for inspection at the Chamber ofCommerce of The Hague.
EADS confirms that the reports of the Auditors attached hereto(as well as those incorporated by reference herein) have been
accurately reproduced and that as far as EADS is aware and isable to ascertain from the information provided by the Auditors,
no facts have been omitted which would render such reports
inaccurate or misleading.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
2.3 Statutory Auditors’ Fees

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2.3 Statutory Auditors’ Fees
Services provided to the Group by statutory Auditors and members of their network for the financial years 2010, 2009 and 2008:
KPMG Accountants N.V.

Audit
Audit process, certification,
examination of individual andconsolidated accounts

2010
Amount
in €K

5,710

%

2009
Amountin €K

81.1

Ernst & Young Accountants LLP%

2008Amount
in €K

%

2010
Amount
in €K

5,238

72.3

%

2009
Amount
in €K

4,872

67.5

%

2008
Amount
in €K

%

4,493

70.8

4,390

79.9

4,684

84.7

Additional tasks

516

7.4

1,258

17.4

821

11.4

1,607

25.4

969

17.6

548

9.9

Sub-total

6,226

88.5

6,496

89.7

5,693

78.9

6,100

96.2

5,359

97.5

5,232

94.6

Legal, tax, employment

628

8.9

354

4.9

1,191

16.5

123

1.9

137

2.5

160

2.9

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

12

0.2

200

2.7

251

3.5

121

1.9

-

-

-

-

172

2.4

194

2.7

82

1.1

-

-

-

-

138

2.5

Other services as relevant

Sub-total
Total

812

11.5

748

10.3

1,524

21.1

244

3.8

137

2.5

298

5.4

7,038

100.0

7,244

100.0

7,217

100.0

6,344

100.0

5,496

100.0

5,530

100.0

2.4 Information Regarding the Statutory Auditors

KPMG Accountants N.V.
Fascinatio Boulevard 200, 3065 WB Rotterdam — The Netherlands
Represented by L. A. Blok
Ernst & Young Accountants LLP
Boompjes 258, 3011 XZ Rotterdam — The Netherlands
Represented by C. T. Reckers*

Date of First
Appointment

Expiration of Current
Term of Office*

10 May 2000

26 May 201124 July 2002

26 May 2011

A resolution will be submitted to the annual shareholders’ meeting to be held on 26 May 2011, in order to appoint Ernst & Young Accountants LLP and KPMG
Accountants N.V. as the Company’s auditors for the 2011 financial year.

KPMG Accountants N.V., Ernst & Young Accountants LLP and their respective representatives are registered with the Royal NIVRA(Nederlands Instituut van Register Accountants).

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General Description of
the Company and its Share Capital
3.1 General Description of the Company

102

3.1.1 Commercial and Corporate Names, Seat and Registered Office102

3.1.2 Legal Form

102

3.1.3 Governing Laws and Disclosures

102

3.1.4 Date of Incorporation and Duration of the Company

105

3.1.5 Objects of the Company

105

3.1.6 Commercial and Companies Registry

105

3.1.7 Inspection of Corporate Documents

105

3.1.8 Financial Year

105

3.1.9 Allocation and Distribution of Income106

3.1.10 General Meetings

106

3.1.11 Disclosure of Holdings

108

3.1.12 Mandatory Offers

109

3.2 General Description of the Share Capital

111

3.2.1 Issued Share Capital

111

3.2.2 Authorised Share Capital

111

3.2.3 Modification of Share Capital or Rights Attached to the Shares

111

3.2.4 Securities Granting Access to the Company’s Share Capital

112

3.2.5 Changes in the Issued Share Capital since Incorporation of the Company

113

3.3 Shareholdings and Voting Rights

114

3.3.1 Shareholding Structure

114

3.3.2 Relationships with Principal Shareholders116

3.3.3 Form of Shares

121

3.3.4 Changes in the Shareholding of the Company Since its Incorporation

121

3.3.5 Persons Exercising Control over the Company

123

3.3.6 Simplified Group Structure Chart

123

3.3.7 Purchase by the Company of its Own Shares

125

3.4 Dividends

128

3.4.1 Dividends and Cash Distributions Paid Since the Incorporation of the Company

128

3.4.2 Dividend Policy of EADS

129

3.4.3 Unclaimed Dividends

129

3.4.4 Taxation

129

3.5 Annual Securities Disclosure Report

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3.1 General Description of the Company

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3.1 General Description of the Company
3.1.1 Commercial and Corporate Names, Seat and Registered OfficeCommercial Name: EADS

Seat (statutaire zetel): Amsterdam

Corporate Name: European Aeronautic Defence and Space
Company EADS N.V.

Tel: + 31 (0)71 5245 600
Fax: +31 (0)71 5232 807

Registered Office: Mendelweg 30, 2333 CS Leiden, theNetherlands

3.1.2 Legal Form
The Company is a public limited liability company (naamloze
vennootschap) organised under the laws of the Netherlands.

As a company operating worldwide, EADS is subject to, andoperates under, the laws of each country in which it conducts
business.

3.1.3 Governing Laws and Disclosures
The Company is governed by the laws of the Netherlands (inparticular Book 2 of the Dutch Civil Code) and by its Articles of
Association (the “Articles of Association”).

with the relevant competent market authority. EADS must thenensure that Regulated Information remains publicly available forat least five years.

The Company is subject to various legal provisions of the Dutch
Financial Supervision Act (Wet op het financieel toezicht) (the“WFT”). In addition, given the fact that its shares are admitted
for trading on a regulated market in France, Germany andSpain, the Company is subject to certain laws and regulationsin these three jurisdictions. A summary of the main regulations
applicable to the Company in relation to information to be madepublic in these three jurisdictions, as well as the Netherlands, is
set out below.

Finally, Regulated Information must be made available
for central storage by a mechanism that is to be officiallydesignated by EADS’ home member state.

3.1.3.1 PERIODIC DISCLOSURE OBLIGATIONS
Pursuant to Directive 2004/109/EC on the harmonisation oftransparency requirements in relation to information about
issuers whose securities are admitted to trading on a regulated
market (the “Transparency Directive”), EADS is required
to disclose certain periodic and ongoing information (the“Regulated Information”).
Pursuant to the Transparency Directive, EADS must
disseminate such Regulated Information throughout theEuropean Community in a manner ensuring fast access to suchinformation on a non-discriminatory basis. For this purpose,
EADS may use a professional service provider (wire). In
addition, Regulated Information must be filed at the same time
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Dutch Regulations
For the purpose of the Transparency Directive, supervision of
EADS is effected by the member state in which it maintains
its registered office, which is the Netherlands. The competentmarket authority that assumes final responsibility for supervisingcompliance by EADS in this respect is the AFM.
Under the Transparency Directive as implemented underDutch law, EADS is subject to a number of periodic disclosure
requirements, such as:

tt publishing an annual financial report, together with anaudit report drawn up by the statutory Auditors, within fourmonths after the end of each financial year;
tt publishing a semi-annual financial report, within two months
after the end of the first six months of the financial year; andtt publishing quarterly financial reports, within a period
between ten weeks after the beginning and six weeks
before the end of the first or second six-month period of thefinancial year.

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3.1 General Description of the Company

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In addition, the Company must file with the AFM, within fivedays following their adoption by the Company’s shareholders,
its audited consolidated annual financial accounts, themanagement report, the Auditors’ report and other information
related to the financial accounts.
The Company has also provided in this Registration Document
a list of certain corporate and financial documents and otherinformation that it has published or made available to the public
over the last 12 months and details of where these documents
can be obtained (see “— 3.5 Annual Securities Disclosure
Report”).

French Regulations
Since the Transparency Directive was implemented in France
on 20 January 2007, EADS is no longer required to comply
with certain disclosure obligations pursuant to the generalregulations of the AMF.
In accordance with the requirement set forth in theTransparency Directive to disseminate Regulated Information
throughout the European Community, EADS is required toprovide simultaneously in France the same information as thatprovided abroad.

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Spanish Regulations
Since the entering into force of the law and regulation
implementing the Transparency Directive in Spain in April and
December 2007, respectively, EADS is no longer required
to comply with certain disclosure obligations pursuant to
the Spanish Securities Act as developed by Royal Decree1362/2007 of 19 October 2007.
In accordance with the requirement set forth in theTransparency Directive to disseminate Regulated Information
throughout the European Community, EADS is required toprovide simultaneously in Spain the same information as thatprovided abroad.

3.1.3.2 ONGOING DISCLOSURE OBLIGATIONS
Pursuant to the Transparency Directive, Regulated Information
includes in particular inside information as defined pursuant
to Article 6 of Directive 2003/6/EC on insider dealing andmarket manipulation (the “Market Abuse Directive”). Suchinformation must be disseminated throughout the European
Community (see introduction to section “— 3.1.3.1 Periodic
Disclosure Obligations”).

Since the Transparency Directive was implemented in Germany
on 20 January 2007, EADS is no longer required to comply withcertain disclosure obligations pursuant to the German Stock
Exchange Act (Börsengesetz) and the German Stock Exchange
Admissions Regulation (Börsenzulassungs-Verordnung).

Inside information shall mean information of a precise nature
which has not been made public, relating, directly or indirectly,
to one or more issuers of financial instruments or to one ormore financial instruments and which, if it were made public,
would be likely to have a significant effect on the prices of
those financial instruments or on the price of related derivative
financial instruments.

Due to the listing of the Company’s shares in the Prime
Standard sub-segment of the Regulated Market (regulierter
Markt) of the Frankfurt Stock Exchange, the Company issubject to certain post-listing obligations as described below.
The Company is included in the selection index MDAX, the
MidCap index of Deutsche Börse AG.

Inside information must be disclosed to the markets as soon as
possible. However, an issuer may under its own responsibility
delay the public disclosure of inside information so as not toprejudice its legitimate interests provided that such omission
would not be likely to mislead the public and provided that theissuer is able to ensure the confidentiality of that information.

Pursuant to sections 65 and 66 of the Exchange Rules(Börsenordnung) of the Frankfurt Stock Exchange, theCompany is required to publish consolidated annual andhalf-yearly financial statements as well as quarterly reports,
which may be prepared in English only. In addition, pursuant tosection 67 of the Exchange Rules, the Company is required to
publish a financial calendar at the beginning of each financial
year in German and English. The Company is also required tohold an analysts’ meeting at least once per year in addition to
the press conference regarding the annual financial statements.

Dutch Regulations

German Regulations

Save for certain exceptions, pursuant to section 69 of theGerman Stock Exchange Admissions Regulation, the Company
has to apply for admission of shares issued at a later date to
the Regulated Market (regulierter Markt) of the Frankfurt Stock
Exchange.

Following the implementation of the Transparency Directive into
Dutch law, EADS must publicly disclose Regulated Information
and also file Regulated Information with the AFM, which willkeep all relevant Regulated Information in a publicly available
register. EADS will, whenever it discloses inside information
pursuant to applicable mandatory law as part of the RegulatedInformation, disclose and disseminate throughout the European
Community any such information.
Under Dutch law, the Company must also publish any change
in the rights attached to its shares, as well as any changes in
the rights attached to any rights issued by the Company toacquire the Company’s shares.

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3.1 General Description of the Company

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French Regulations
Any inside information as defined above will be disclosed
in France by means of dissemination throughout theEuropean Community, as it will be organised under Dutch
law implementing the Transparency Directive so as to provide
simultaneously in France equivalent information to that provided
abroad.

German Regulations
Any inside information as defined above will be disclosed
in Germany by means of dissemination throughout theEuropean Community, as it will be organised under Dutch
law implementing the Transparency Directive so as to provide
simultaneously in Germany equivalent information to thatprovided abroad.

Spanish Regulations
Pursuant to Article 82 of the Spanish Securities Act, theCompany is required to make public, as soon as possible,
any fact or decision that may substantially affect the quotationof its shares (“a relevant event”). Any relevant event must
be notified to the CNMV simultaneously with its diffusion by
any other means, as soon as the relevant fact is known, therelevant decision has been made or, the relevant agreement
has been executed, as the case may be. EADS may, under its
own responsibility, delay the publication of any relevant event if itconsiders that such publication damages its legitimate interests,
provided that such lack of publication does not mislead
the public and that EADS is in a position to guarantee theconfidentiality of the relevant information. Nonetheless, EADS
will immediately inform the CNMV should it decide to delay the
publication of any relevant event. Furthermore, pursuant to the
Spanish Securities Act, EADS must post details of any relevant
event on its website. EADS must try to ensure that the relevant
information is disclosed simultaneously to all types of investors
in the member States of the European Union where it is listed.
An order dated 1 June 2009 requires that EADS appoint atleast one official spokesperson to respond to any inquiries that104

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the CNMV may have in relation to a relevant event disclosed
by EADS. This spokesperson must be able to officially reply onbehalf of EADS and must have access to senior management
in order to verify any information requested by the CNMV.
A circular dated 4 November 2009 further specifies theprocess for communicating the appointment of the CNMV
spokesperson and any subsequent replacement. It also
provides that the publication of any relevant event must be
made via the CIFRADOC system (the CNMV’s electronicsystem for notifications and communications) and thatpublication by a different means is only possible under
exceptional circumstances, subject to approval by the General
Markets Directorate (Dirección General de Mercados).
Pursuant to the Spanish Securities Act and its implementing
rules and regulations, EADS is also required:(i) to have rules of the Board of Directors which must be filedwith the CNMV and published on EADS’ website;(ii) to file with the CNMV a description of the relevant Dutch
law provisions and provisions in the Articles of Association
governing the conduct of shareholders’ meetings and postsuch description on its website;(iii) to have a website which must contain as a minimum theinformation specified by Spanish regulations;(iv) to file a corporate governance report with the CNMV on anannual basis; and(v) in respect of the provisions of any shareholders’agreement which relate to the exercise of voting rights atshareholders’ meetings or restrictions or conditions on thefree transferability of shares or convertible bonds, to (a)provided EADS is a party to the shareholders’ agreement,
file such provisions with the CNMV who will then publish
the provisions as a relevant event, (b) post the provisions
on EADS’ website, unless the CNMV exempts EADS fromdoing so, and (c) set out details of the provisions in theannual corporate governance report referred to in (iv) above.

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3.1.4 Date of Incorporation and Duration of the Company
The Company was incorporated on 29 December 1998 for an unlimited duration.

3.1.5 Objects of the Company
Pursuant to Article 2 of the Articles of Association, theobjects of the Company are to hold, co-ordinate and manage
participations or other interests and to finance and assume
liabilities, provide for security and/or guarantee debts of legal
entities, partnerships, business associations and undertakingsthat are involved in:tt the aeronautic, defence, space and/or communicationindustry; ortt activities that are complementary, supportive or ancillary
thereto.

3.1.6 Commercial and Companies Registry
The Company is registered with the Registry of the Chamber of Commerce of The Hague (Handelsregister van de Kamer van
Koophandel en Fabrieken voor Den Haag) under number 24288945.

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3.1.7 Inspection of Corporate Documents
The Articles of Association are available for inspection in Dutchat the Chamber of Commerce of The Hague.
In France, the Articles of Association are available at the head
office of EADS in France (37, boulevard de Montmorency,
75016 Paris, France, Tel.: + 33 1 42 24 24 24).

In Germany, the Articles of Association are available at the head
office of EADS in Germany (Willy-Messerschmitt-Str. − Tor 1,
81663 Munich, Germany, Tel.: + 49 89 60 70).
In Spain, the Articles of Association are available at the CNMV
and at the head office of EADS in Spain (Avda. Aragón 404,
28022 Madrid, Spain, Tel.: + 34 91 585 70 00).

3.1.8 Financial YearThe financial year of the Company starts on 1 January and ends on 31 December of each year.

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3.1.9 Allocation and Distribution of Income
3.1.9.1 DIVIDENDS
The Board of Directors shall determine which part of the profits
of the Company shall be attributed to reserves. The remaining
distributable profit shall be at the disposal of the shareholders’meeting.

another date for payment is proposed by the Board of Directors
and approved by the shareholders’ meeting.
Dividends, interim dividends and other distributions on sharesshall be paid by bank transfer to the bank or giro accounts
designated in writing to the Company by, or on behalf of,shareholders at the latest 14 days after their announcement.

The shareholders’ meeting may resolve (if so proposed by the
Board of Directors) that all or part of a dividend shall be paid inshares of the Company as opposed to cash.

3.1.9.2 LIQUIDATION

The declaration of a dividend, an interim dividend or another
distribution to the shareholders shall be made known to themwithin seven days after such declaration. Declared dividends
shall be payable within four weeks of such declaration unlessIn the event of the dissolution and liquidation of the Company,
the assets remaining after payment of all debts and liquidation
expenses shall be distributed amongst the holders of theshares in proportion to their shareholdings.

3.1.10 General Meetings
3.1.10.1 CALLING OF MEETINGS
Shareholders’ meetings are held as often as the Board of
Directors deems necessary or upon the request of shareholders
holding, individually or together, at least 10% of the total
issued share capital of the Company. The annual shareholders’meeting of the Company is held within six months of the end of
the financial year.
Following the implementation of Directive 2007/36/EC (the“Shareholders Directive”) into Dutch law on 1 July 2010, theBoard of Directors must give notice of general meetings at least
42 days before the day of the meeting through publication of anotice on the Company’s website (www.eads.com), which will
be directly and permanently accessible until the meeting. The
convening notice must state the items as set out under Section
2:114 paragraph 1 of the Dutch Civil Code.
Shareholders’ meetings are held in Amsterdam, The Hague,
Rotterdam or Haarlemmermeer (Schiphol Airport). The Boardof Directors may decide that shareholders’ meetings may
be attended by means of electronic or video communication
devices from the locations mentioned in the convening notice.
The Board of Directors must announce the date of the annual
shareholders’ meeting at least two months before the meeting.
Requests made by one or more shareholders collectively
representing at least 1% of the issued share capital (or shares
having an aggregate market value of € 50 million), to put itemson the agenda for the annual shareholders’ meeting, must
be effected by the Board of Directors, if such requests to theBoard of Directors have been made at least 6 weeks prior to
the date scheduled for the meeting and unless reasonablenessand fairness require otherwise.

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A request as referred to in the preceding paragraph may only
be made in writing. The Board of Directors can decide that in“writing” is understood to include a request that is recorded
electronically.

3.1.10.2 RIGHT TO ATTEND MEETINGS
Each holder of one or more shares may attend shareholders’meetings, either in person or by written proxy, to speak and tovote according to the Articles of Association. See “— 3.1.10.4
Conditions of Exercise of Right to Vote”.
A shareholder or person who has the right to attend a meetingcan see to it that he is represented by more than one proxyholder, provided that only one proxy holder can be appointed
for each share.
Following the implementation of the Shareholders Directive into
Dutch law, the persons who have the right to attend and voteat shareholders’ meetings are those who are so on record in aregister designated for that purpose by the Board of Directors
on the 28th day prior to the day of the shareholders’ meeting(the “Registration Date”), irrespective of who may be entitledto the shares at the time of that meeting.
Any person who is entitled to exercise the rights set out
in the above paragraph (either in person or by means of awritten proxy) and is attending the meeting from anotherlocation in such a manner that the person acting as Chairmanof the meeting is convinced that such a person is properly
participating in the meeting, shall be deemed to be present or
represented at the meeting, shall be entitled to vote and shallbe counted towards a quorum accordingly.

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As a prerequisite to attending the shareholders’ meeting and to
casting votes, the Board of Directors, or alternatively an entity
or person so designated by the Board of Directors, should
be notified in writing by each holder of one or more sharesand those who derive the aforementioned rights from theseshares, not earlier than the Registration Date, of the intention
to attend the meeting. Ultimately this notice must be received
by the Board of Directors, or alternatively an entity or person sodesignated by the Board of Directors, on the day mentioned in
the convening notice.
Holders of shares that are registered in the shareholders’register kept in Amsterdam have the option of holding themthrough Euroclear France S.A. In this case the shares areregistered in the name of Euroclear France S.A.
Shareholders holding their EADS shares through Euroclear
France S.A. who wish to attend general meetings will haveto request from their financial intermediary or accountholder
an admission card and be given a proxy to this effect fromEuroclear France S.A. in accordance with the instructions
specified by the Company in the convening notice. For thispurpose, a shareholder will also be able to request that it beregistered directly (and not through Euroclear France S.A.) in
the register of the Company. However, only shares registeredin the name of Euroclear France S.A. may be traded on stock
exchanges.
In order to exercise their voting rights, the shareholders will
also be able, by contacting their financial intermediary or
accountholder, to give their voting instructions to Euroclear
France S.A. or to any other person designated for this purpose,as specified by the Company in the convening notice.
Pursuant to the Articles of Association, EADS may provide forelectronic means of convocation, attendance and voting at theshareholders’ meetings. The introduction of such electronicmeans will depend on the availability of the necessary technicalmeans and the market practice.

3.1.10.3 MAJORITY AND QUORUM
All resolutions are adopted by means of a simple majority of thevotes cast except when a qualified majority is prescribed by the
Articles of Association or by Dutch law. No quorum is required
for any shareholders’ meeting to be held. Dutch law requires a
special majority for the passing of certain resolutions: inter alia,

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capital reduction, exclusion of pre-emption rights in connection
with share issues, statutory mergers or statutory de-mergers;
the passing of such resolutions requires a majority of two-thirdsof the votes cast if 50% of the share capital with voting rights
is not present at the meeting (or otherwise a simple majority).
In addition, resolutions to amend the Articles of Association or
to dissolve the Company may only be adopted with a majority
of at least two-thirds of the valid votes cast at a shareholders’meeting, whatever the quorum present at such meeting.
Pledgees of shares and beneficiaries of a usufruct, which do
not have voting rights, do not have the right to attend and to
speak at shareholders’ meetings. The owners of shares which
are subject to a pledge or a usufruct, which do not have voting
rights, are entitled to attend and to speak at shareholders’meetings.

3.1.10.4 CONDITIONS OF EXERCISE OF RIGHTTO VOTEIn all shareholders’ meetings, each shareholder has one votein respect of each share it holds. The major shareholders of
EADS – as set forth in “— 3.3.2 Relationships with Principal
Shareholders” – do not enjoy different voting rights from thoseof the other shareholders.
A shareholder whose shares are subject to a pledge or usufruct
shall have the voting rights attaching to such shares unlessotherwise provided by law or by the Articles of Association
or if, in the case of a usufruct, the shareholder has granted
voting rights to the usufructuary. Pursuant to the Articles of
Association and subject to the prior consent of the Board of
Directors, a pledgee of shares in the Company may be granted
the right to vote in respect of such pledged shares.
Article 25 (paragraph 2 and 3) of the Articles of Association
provides that “The right to vote can be granted to an
usufructuary. The right to vote can be granted to a pledgee,
but only with the prior consent of the Board of Directors. No
vote may be cast at the general meeting of shareholders ona share that is held by the Company or a subsidiary; nor fora share in respect of which one of them holds the depositary
receipts. Usufructuaries and pledgees of shares that are heldby the Company or its subsidiaries are, however, not excluded
from their voting rights, in case the right of usufruct or pledge
was vested before the share was held by the Company or its
subsidiary.”

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3.1.11 Disclosure of Holdings
Pursuant to the WFT, any person who, directly or indirectly,
acquires or disposes of an interest in the capital or voting rights
of EADS must immediately give written notice to the AFM bymeans of a standard form, if, as a result of such acquisition or
disposal, the percentage of capital interest or voting rights heldby such person meets, exceeds or falls below the following
thresholds: 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%,
60%, 75% and 95%. Any person whose interest in the capitalor voting rights of EADS meets, exceeds or falls below one orseveral of the above-mentioned thresholds due to a change
in EADS’ outstanding capital, or in voting rights attached tothe shares as notified to the AFM by EADS, should notify the
AFM no later than the fourth trading day after the AFM has
published the notification by EADS. Among other things, EADS
is required to notify the AFM immediately if its outstanding sharecapital or voting rights have changed by 1% or more since theCompany’s previous notification.
If at the end of a calendar year the composition of an investor’sholding differs from its previous disclosure as a result of theconversion of certain types of securities or following theexercise of rights to acquire voting rights, this investor mustthen provide an update of its previous disclosure within fourweeks of the end of each calendar year by giving written notice
thereof to the AFM. The disclosures are published by the
AFM on its website (www.afm.nl). Pursuant to the Articles of
Association, shareholders must also notify the Company whencrossing the thresholds above.
The Articles of Association also require that any person
acquiring directly or indirectly or with others with whom it isacting in concert more than one tenth of the issued share capitalor voting rights of the Company must notify the Company of
its intentions (i) to buy or sell shares of the Company in thefollowing 12 months; (ii) to continue or to stop acquiring sharesor voting rights of the Company; (iii) to acquire control of theCompany; or (iv) to seek to designate a member of the Board of
Directors of the Company. The Company will provide the AMF
with the information received in this context.
Failure to comply with the legal obligation to notify a change inshareholding under the WFT is a criminal offence punishable
by criminal and administrative penalties as well as civil law
penalties, including the suspension of voting rights.

DISCLOSURE REQUIREMENTS FOR MEMBERS OF
THE BOARD OF DIRECTORS AND THE EXECUTIVECOMMITTEE

Disclosure of holdings
In addition to the requirements under the WFT regarding thedisclosure of holdings in case the specified thresholds are met
or exceeded or if holdings fall below these thresholds, Membersof the Board of Directors must report to the AFM the numberof shares in EADS and attached voting rights (1) held by him or
an entity controlled by him, within two weeks following their
appointment as director, whether or not such shareholdings
meet or exceed any of the specified thresholds. Subsequently,
any member of the Board of Directors is required to notify the
AFM of any changes in such number of shares in EADS andattached voting rights.

Disclosure of transactions carried out on any
securities issued by the Company
Based on Section 5:60 of the WFT, certain persons discharging
managerial responsibilities within the Company and, whereapplicable, persons closely associated with them (together“Insiders”, as defined below), notify the AFM of all transactions
conducted for their own account involving shares of theCompany, or derivatives or other financial instruments related tosuch shares. These persons notify the AFM of the transactions
within five trading days unless the aggregate amount ofsuch transactions does not exceed € 5,000 in respect of alltransactions in a calendar year.
“Insiders” for EADS include (i) Members of the Board of
Directors and the Executive Committee of the Company,(ii) persons closely associated with any person mentioned
under category (i) (including their spouses, dependent children
and other relatives who have shared the same household),and (iii) legal entities, trusts or partnerships whose managerial
responsibilities are discharged by any person referred to in
categories (i) or (ii) or which are directly or indirectly controlled
by such a person, or that have been set up for the benefit ofsuch a person, or whose economic interests are substantiallyequivalent to those of such a person.
EADS has adopted specific internal insider trading rules (the“Insider Trading Rules”) in order to ensure compliancewith the above requirements and with other share trading
regulations applicable in the Netherlands, France, Germany andSpain. Pursuant to the Insider Trading Rules, (i) all employees
and Directors are prohibited from conducting transactions in
EADS shares or stock options if they have inside information,(1) In this context, the term “shares” also includes for example depositary receipts for shares and rights resulting from an agreement to acquire shares or depositary receipts forshares, specifically call options, warrants, and convertible bonds. Equally, the term “voting rights” also includes actual or contingent rights to voting rights (eg, embedded in call
options, warrants or convertible bonds).

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1and (ii) certain persons are only allowed to trade in EADS
shares or stock options within very limited periods and havespecific information obligations to the ITR Compliance Officerof the Company and the competent financial market authorities
with respect to certain transactions. The updated version of the
Insider Trading Rules effective from 1 January 2007 is available
on the Company’s website.
Hans Peter Ring, Chief Financial Officer of EADS, has been
appointed as the ITR Compliance Officer by the Board of
Directors of EADS. The ITR Compliance Officer is responsible
for the implementation of the Insider Trading Rules and forreporting to the AFM.
Pursuant to section 5:59 paragraph of the WFT, the Company
must maintain a list of all persons working for it by virtue ofa labour relationship or otherwise, who may have access to
inside information. Equivalent requirements exist under French,
German and Spanish law.

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According to paragraph 15a of the German Securities Trading
Act, persons with significant managerial responsibility within
the Company (i.e. for EADS, the Members of the Board of
Directors and of the Executive Committee), or the persons
closely associated with them, must disclose transactions
conducted for their own account involving shares of theCompany or financial instruments that relate to those shares,
especially derivatives. These persons have to notify theCompany and the German Federal Financial Supervisory
Authority of the transactions within five trading days unlessthe aggregate amount of such transactions does not exceed€ 5,000 in respect of all transactions in a calendar year. Upon
implementation of the Transparency Directive into German law
on 20 January 2007, EADS is no longer required to publish
such notifications on its website or in a German supra-regional
mandatory stock exchange newspaper.

3.1.12 Mandatory Offers

3

3.1.12.1 TAKEOVER DIRECTIVE

3.1.12.2 DUTCH LAW

The Directive 2004/25/EC on takeover bids (the “Takeover
Directive”) sets forth the principles governing the allocation oflaws applicable to EADS in the context of a takeover bid for theshares of the Company. The Takeover Directive refers to therules of the Netherlands and the rules of the European Union
Member State of the competent authority that must be chosen
by EADS from among the various market authorities supervising
the markets where its shares are listed.

The bill implementing the Takeover Directive (the “TakeoverAct”) in Dutch Law entered into force on 28 October 2007.
In accordance with the Takeover Act, shareholders are
required to make an unconditional public offer for all issued
and outstanding shares in the Company’s share capital ifthey – individually or acting in concert (as such term is defined
below), directly or indirectly – have 30% or more of the voting
rights (significant control) in the Company. In addition to theother available exemptions listed below, the requirement tomake a public offer does not apply to persons, who at the time
the Takeover Act came into force, already held – individuallyor acting in concert – 30% or more of the voting rights in the
Company.

For EADS, matters relating to, inter alia, the consideration
offered in the case of a bid, in particular the price, and mattersrelating to the bid procedure, in particular the information on
the offeror’s decision to make a bid, the contents of the offer
document and the disclosure of the bid, shall be determinedby the laws of the European Union Member State having thecompetent authority, which will be selected by EADS at a futuredate.
Matters relating to the information to be provided to theemployees of EADS and matters relating to company law, inparticular the percentage of voting rights which confers control
and any derogation from the obligation to launch a bid, theconditions under which the Board of Directors of EADS mayundertake any action which might result in the frustration of
the bid, the applicable rules and the competent authority will
be governed by Dutch law (see “— 3.1.12.2 Dutch Law” and“— 3.1.12.3 Articles of Association”). Dutch law also contains
provisions on the consideration offered, in particular the priceand determination of a fair price by the Enterprise Chamber ofthe Amsterdam Court of Appeals at the request of the bidder,
the target company or any holder of shares.

Under the Takeover Act, natural persons, legal entities orcompanies are “acting in concert” if they cooperate on thebasis of an agreement with the objective to acquire significant
control (as defined above) in the target company, or if they
cooperate with the target company with the objective toprevent the success of an announced public offer for theshares in such target company. The following categories ofnatural persons, legal entities or companies are deemed to
be “acting in concert” under the Takeover Act: (i) legal entities
or companies that form a group of companies as definedin section 2:24b of the Dutch Civil Code, (ii) legal entities orcompanies and their subsidiaries, and (iii) natural persons andtheir subsidiary companies.

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In addition to the exemption stated above, the obligation to
make a public offer does not apply to the natural person, legal
entity or company that, amongst others:

tt acquires significant control as a result of declaring
unconditional (gestand doen) a public offer made for all
shares (or depositary receipts) in the target company;
tt is a legal entity, independent from the target company,that acquires significant control after a public offer has
been announced by a third party, provided that such entity(i) holds the shares in the target company for a maximum
period of two years and for purposes of protection of thetarget company and (ii) the corporate objects of such entity
are to preserve the interests of the target company;
tt is a legal entity, independent from the target company, which
has issued depositary receipts for the shares in the target
company;tt acquires significant control as a result of: (i) an intra-grouptransfer of the shares representing significant control; or (ii) atransfer between a parent company and its subsidiary;tt acquires significant control acting in concert with one ormore other natural persons, legal entities or companies,in which case the obligation to make a public offer lies
with the natural person, legal entity or company that can
exercise most of the voting rights in the general meeting ofshareholders of the target company; andtt acts as a custodian (if and to the extent it cannot exercise
any voting rights in its sole discretion).
The obligation to make a public offer also does not apply if:

tt the natural person, legal entity or company, after acquiring
significant control, loses such control within a thirty day
grace period, unless (i) loss of control is due to a transfer toa natural person, legal entity or company to which one of the
exemptions set out above applies, or (ii) the acquirer of thesignificant control has exercised its voting rights during thisthirty day period; ortt the target company’s general meeting of shareholders
agrees upfront with the acquisition of significant control –and any subsequent acquisition of shares – by a third party
with 95% of votes cast in favour of such proposal, excluding
any votes by such third party and any of its concert parties.
Under the Takeover Act, a minority shareholder may also
make a request for his shares to be purchased by an offeror
who holds at least 95% of the issued share capital and thevoting rights. This claim must be brought before the Enterprise
Chamber of the Court of Appeals in Amsterdam within thethree-month period after the closing of the acceptance periodof the public offer.

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3.1.12.3 ARTICLES OF ASSOCIATION
Without prejudice to the provisions of the Takeover Act as set
out in section — 3.1.12.2 above, the Company’s Articles of
Association contain a number of provisions that could also
trigger the requirement to make a public offer for the shares in
the Company.
Pursuant to Article 15 of the Articles of Association, in the eventthat a direct or indirect acquisition of shares in the Company
results in a person acting alone or in concert (as set out in
Section 5:45 of the WFT) holding shares or voting rights where
the control over the number of shares or votes reaches orexceeds 33 1/3% of the issued share capital of the Company
then such person(s) is (are) required to make an unconditional
public offer to all shareholders to acquire all of their shares or
to procure that such an offer is made. Such offer must comply
with all of the applicable regulatory or other legal requirementsin each jurisdiction in which the Company’s shares are listed.
Pursuant to Article 16 of the Articles of Association, in theevent of a failure to launch such an offer (or if the offer does notsatisfy the relevant legal or regulatory requirements in each of
the jurisdictions where the Company’s shares are listed) within
two months after notification to the Company of shareholdings
reaching or exceeding 33 1/3% or failing such notification,
within a period of 15 days of receipt of notice from the Boardof Directors confirming the obligation to make the public offer,then any person(s) who is (are) required to make the offer shallwithin the period specified by the notice sent by the Board of
Directors exchange for depositary receipts to be issued by
the Stichting Administratiekantoor EADS (the “Foundation”),
such percentage of shares they hold over and above the 33
1/3% of the shares issued by the Company (the “Excess
Percentage”). From the date specified in the notice sent by
the Board of Directors, the right to attend meetings, to voteand to receive dividends shall be suspended in respect of theExcess Percentage. If, within a period of 14 days from a further
notice from the Board of Directors, the person required to
exchange his shares representing his Excess Percentage fordepositary receipts still has not done so, then the Company isirrevocably authorised to exchange such shares for depositary
receipts issued by the Foundation. The constitutive documentsof the Foundation provide that the Foundation shall not havethe right to attend shareholders’ meetings of the Company asa shareholder, to speak at such meetings and to exercise thevoting rights attached to the shares it holds, except if, in theview of the Board of Directors of the Foundation, such action isrequired for the performance of the mandatory offer provisions
in the Articles of Association.
Pursuant to Article 17 of the Articles of Association, theobligation to make a public offer does not apply in the following
situations:

tt to a transfer of shares to the Company itself or to theFoundation;

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tt to a securities custody, clearing or settlement institution
acting in that capacity, provided that the provisions ofArticle 16 of the Articles of Association described above shallbe applicable where shares are held for persons acting inbreach of the provisions of Articles 15 and 16 of the Articles
of Association described above;
tt to a transfer of shares by the Company or to an issue ofshares by the Company on a merger or on an acquisition by
the Company of another company or business;
tt to a transfer of shares from one party to another party who isa party to an agreement as envisaged in the WMZ to define“concert parties” where the agreement is entered into before
31 December 2000 (as amended, supplemented or replaced
by a new agreement by the admission of one or more new

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parties or the exclusion of one or more parties), except that
this exemption will not apply to a new party that individuallyor with its subsidiaries and/or group companies holds atleast 33 1/3% of the control over shares or votes in the
Company; this exemption is intended to exclude the parties
to the Participation Agreement (See “— 3.3.2 Relationships
with Principal Shareholders”) (as amended, supplemented
or replaced by a new agreement by the admission of one ormore new parties or the exclusion of one or more parties)
from the obligation to make the mandatory offer in the eventof a transfer of shares between themselves; ortt to a transfer by a shareholder to a subsidiary in which it
holds more than 50% or by a shareholder to a company
which holds more than 50% in such transferring shareholder.

3.2 General Description of the Share Capital3

3.2.1 Issued Share Capital
As at 31 December 2010, the Company’s issued share capital amounted to € 816,402,722, consisting of 816,402,722 fully paid-up
shares of a nominal value of € 1.0 each.

3.2.2 Authorised Share Capital
As at 31 December 2010, the Company’s authorised share capital amounted to € 3 billion, consisting of 3,000,000,000 shares of€ 1.0 each.

3.2.3 Modification of Share Capital or Rights Attached to the Shares
Unless such right is limited or eliminated by the shareholders’meeting as described below, holders of shares have apre‑emptive right to subscribe for any newly issued shares pro
rata to the aggregate nominal value of shares held by them,
except for shares issued for consideration other than cash andshares issued to employees of the Company or of a Group
company. For the contractual position as to pre-emption rights,
see “— 3.3.2 Relationships with Principal Shareholders”.

The shareholders’ meeting also has the power to limit or to
exclude pre-emption rights in connection with new issues ofshares, and may authorise the Board of Directors for a periodof no more than five years, to limit or to exclude pre-emption
rights. All resolutions in this context must be approved by a
two-thirds majority of the votes cast during the shareholders’meeting in the case where less than half of the capital issued ispresent or represented at said meeting.

The shareholders’ meeting has the power to issue shares.
The shareholders’ meeting may also authorise the Board of
Directors for a period of no more than five years, to issue
shares and to determine the terms and conditions of shareissuances.

In accordance with the seventh resolution passed by the annual
shareholders’ meeting of EADS held on 27 May 2009, theBoard of Directors was granted the powers (i) to issue sharesand to grant rights to subscribe for shares which are part of
EADS’ authorised share capital, provided that such powers
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shall be limited to 1% of the Company’s authorised sharecapital from time to time and (ii) to limit or exclude preferential
subscription rights, in both cases for a period expiring at theannual shareholders’ meeting to be held in 2011. Shareholders
will be asked to renew this authority at this meeting.

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The shareholders’ meeting may reduce the issued share capitalby cancellation of shares or by reducing the nominal valueof the shares by means of an amendment to the Articles of
Association, the latter requiring the approval of at least twothirds of the votes cast at the general meeting.

3.2.4 Securities Granting Access to the Company’s Share Capital
Except for stock options granted for the subscription of EADS
shares (See “Corporate Governance — 4.3.3 Long-Term

Incentive Plans”), there are no securities that give access,
immediately or over time, to the share capital of EADS.

The table below shows the total potential dilution that would occur if all the stock options issued as at 31 December 2010 were exercised:

Total number of EADS shares issued
as of 31 December 2010
Total number of EADS shares which may be
issued following exercise of stock options
Total potential EADS share capital*

112

Number of shares% of diluted capital

Number of voting rights% of diluted voting rights*

816,402,722

97.3%

813,207,546

97.3%

22,898,099

2.7%

22,898,099

2.7%

839,300,821

100%

836,105,645

100%

The potential dilutive effect on capital and voting rights of the exercise of these stock options may be limited as a result of the Company’s share purchase programmes
and in the case of subsequent cancellation of repurchased shares. See “— 3.3.7.1 Dutch law and information on share repurchase programmes”.

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3.2.5 Changes in the Issued Share Capital since Incorporationof the Company

Date

Nature of Transaction

29 December 1998 Incorporation
3 April 2000

Conversion into €Issue of shares in exchange for contributions by
8 July 2000
Aerospatiale Matra, DASA AG and SEPI
Issue of shares for the purpose of the initial public
13 July 2000
offering and listing of the Company
Issue of shares for the purpose of the employee
offering carried out in the context of the initial public
21 September 2000 offering and listing of the Company
Issue of shares for the purpose of an employee
offering (note d’opération approved by the COB** on
5 December 2001 13 October 2001 under number 01-1209)
Issue of shares for the purpose of an employee offering(note d’opération approved by the COB on 11 October
4 December 2002 2002 under number 02-1081)
Issue of shares for the purpose of an employee
offering (note d’opération approved by the COB on
5 December 2003 25 September 2003 under number 03-836)
Cancellation of shares upon authorisation granted by
20 July 2004
the annual shareholders’ meeting held on 6 May 2004
Issue of shares for the purpose of an employee
offering (note d’opération approved by the AMF on
3 December 2004 10 September 2004 under number 04-755)
Issue of shares following exercise of options granted to
In 2004
employees***
Cancellation of shares upon authorisation granted by
25 July 2005
the annual shareholders’ meeting held on 11 May 2005
Issue of shares for the purpose of an employee
offering (note d’opération approved by the AMF on
29 July 2005
4 May 2005 under number 05-353)
Issue of shares following exercise of options granted to
In 2005
employees***
Cancellation of shares upon authorisation granted by
20 July 2006
the annual shareholders’ meeting held on 4 May 2006
Issue of shares following exercise of options granted to
In 2006
employees***
Cancellation of shares upon authorisation granted by
In 2007
the annual shareholders’ meeting held on 4 May 2007

Total number
of issued
shares after
transaction

Total issued
capital after
transaction-

100

NLG 100,000-

50,000€50,000

715,003,828€1,511,477,044

715,053,828€715,053,828€1

80,334,580€1,365,687,860

795,388,408€795,388,408€1

11,769,259€168,300,403

807,157,667€807,157,667€1

2,017,894€19,573,571.80

809,175,561€809,175,561€1

2,022,939€14,470,149.33

811,198,500€811,198,500€11,686,682€19,363,109.36

812,885,182€812,885,182€1

5,686,682-

807,198,500€807,198,500€12,017,822€34,302,974

809,216,322€809,216,322€1

362,747€6,133,436

809,579,069€809,579,069€1

1,336,358-

808,242,711€808,242,711€1

1,938,309€34,618,198.74

810,181,020€810,181,020€17,562,110€144,176,031.61

817,743,130€817,743,130€1

6,656,970-

811,086,160€811,086,160€1

4,845,364€89,624,589

815,931,524€815,931,524

Nominalvalue pershare

Number ofshares issued/
cancelled

Premium*

NLG 1,000

100€1

50,000€1€14,568,405-

811,363,119€811,363,119

Issue of shares for the purpose of an employee offering
Issue of shares following exercise of options granted to
employees***
Cancellation of shares upon authorisation grantedby the annual shareholders’ meeting held on
26 May 2008

€1

2,037,835€33,482,173

813,400,954€813,400,954€1

613,519€9,438,683

814,014,473€814,014,473€1

1,291,381-

812,723,092€812,723,092

Issue of shares for the purpose of an employee offering
Issue of shares following exercise of options granted to
employees***
Cancellation of shares upon authorisation granted by
the annual shareholders’ meeting held on 27 May 2009€1

2,031,820€22,084,500

814,754,912€814,754,912€1

14,200€208,030

814,769,112€814,769,112€1

22,987-814,746,125€814,746,125

18 December 2009 Issue of shares for the purpose of an employee offering
Issue of shares following exercise of options granted to
In 2010
employees***€1

1,358,936€13,263,215

816,105,061€816,105,061€1

297,661€4,477,168

816,402,722€816,402,722

9 May 2007
In 2007

In 2008
25 July 2008
In 2008
31 July 2009*
The costs (net of taxes) related to the initial public offering of the shares of the Company in July 2000 have been offset against share premium for an amount of €55,849,772.
** Predecessor of the AMF.
*** For information on stock option plans under which these options were granted to EADS employees, see “Corporate Governance — 4.3.3 Long-Term Incentive Plans”.

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3.3 Shareholdings and Voting Rights
3.3.1 Shareholding Structure
EADS combined the activities of Aerospatiale Matra(“Aerospatiale Matra” or “ASM”), Daimler Aerospace AG(“DASA AG”) (with the exception of certain assets and liabilities)
and Construcciones Aeronáuticas SA (“CASA”) pursuant to aseries of transactions completed in July 2000.
In this document, the term “Completion” relates to theJuly 2000 completion of the contributions made by Aerospatiale
Matra, DASA AG and Sociedad Estatal de Participaciones
Industriales (“SEPI”) (a Spanish state holding company) to
EADS to combine such activities into EADS.
The term “Indirect EADS Shares” relates to the EADS shares
held by Daimler AG (“Daimler”), SEPI and Société de Gestion
de l’Aéronautique, de la Défense et de l’Espace (“Sogeade”),
for which EADS Participations B.V. exercises all the attachedvoting rights, as well as, for Lagardère SCA (“Lagardère”)
and Société de Gestion de Participations Aéronautiques(“Sogepa”), or the companies of their group, the number
of EADS shares held indirectly via Sogeade, reflecting bytransparency, their respective interest in Sogeade.
Unless the context requires otherwise, the shareholdingsof DASA AG in EADS are referred to in this document asshareholdings of Daimler, and the rights and obligations of
DASA AG pursuant to the agreements described herein arereferred to as rights and obligations of Daimler.

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As at 31 December 2010, 22.46% of EADS’ share capital
was held by DASA AG, which is a 66.67% subsidiary ofDaimler Luft- und Raumfahrt Holding AG (“DLRH”), a 99.90%
subsidiary of Daimler. The remaining 33.33% of DASA AG is
held by a consortium of private and public-sector investors.
Sogeade, a French partnership limited by shares (société
en commandite par actions) whose share capital, as at
31 December 2010, is held 66.67% by Sogepa (a French stateholding company) and 33.33% by Désirade (a French société
par actions simplifiée wholly owned by Lagardère), held 22.46%
of EADS’ share capital. Thus, 44.92% of the share capital of
EADS was held by Daimler and Sogeade who jointly control
EADS through a Dutch law contractual partnership managed
by EADS Participations B.V. (the “Contractual Partnership”).
SEPI, which is a party to the Contractual Partnership, held
5.47% of the share capital of EADS. The public (including EADS
employees) and the Company held, respectively, 49.16% and0.39% of the share capital of EADS. The République française
(the “French State”) directly held 0.06% of EADS’ sharecapital, such shareholding being subject to certain specificprovisions.
The diagram below shows the ownership structure of
EADS as at 31 December 2010 (% of capital (voting rights)
before exercise of outstanding stock options granted for thesubscription of EADS shares). See “Corporate Governance —4.3.3 Long-Term Incentive Plans”.

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tt Ownership Structure of EADS as at 31 December 2010

French State

SogepaSpanish State

Lagardère

Daimler

99.90%

100%

Private and public sector investors

Désirade

33.33%

100%

66.67%

SogeadeSEPI

22.46%

5.47%(22.55%)

DLRH(4)66.67%
33.33%(5.49%)

DASA

22.46%(22.55%)Contractual partnership(Managed by EADS Participations B.V.)

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50.39%(50.59%)(1)

0.06%(0.06%)(2)(3)

EADS N.V.

49.16%(49.35%)

Public0.39%(-)(5)

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

EADS Participations B.V. exercises the voting rights attached to these EADS shares pledged by Sogeade, Daimler and SEPI who retain title to their respective shares.
The French State exercises the voting rights attached to these EADS shares (such shares being placed with the Caisse des Dépôts) in the same way that EADSParticipations B.V. exercises the voting rights pooled in the Contractual Partnership.
Shares held by the French State following the distribution without payment of consideration to certain former shareholders of Aerospatiale Matra as a result of its
privatisation in June 1999. All the shares currently held by the French State will have to be sold on the market.
DLRH is 99.90% held by Daimler; the balance is held by individual minority shareholders.
As at 31 December 2010, the Company holds, directly or indirectly through another company in which the Company holds directly or indirectly more than 50% of
the share capital, 3,195,176 of its own shares. The EADS shares owned by the Company itself do not carry voting rights.

For the number of shares and voting rights held by Membersof the Board of Directors and Executive Committee, see“Corporate Governance — 4.2.1 Compensation Granted to
Directors and Principal Executive Officers”.

Approximately 2.0% of the share capital (and voting rights) are
held by EADS employees as of 31 December 2010.

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3.3.2 Relationships with Principal Shareholders
The principal agreements governing the relationships between
the founders of EADS are an agreement (the “Participation
Agreement”) entered into on Completion between Daimler,
DASA AG, Lagardère, Sogepa, Sogeade and SEPI, and a
Dutch law Contractual Partnership agreement entered into
on Completion between Sogeade, DASA AG, SEPI andEADS Participations B.V. (the “Contractual Partnership
Agreement”), which repeats certain terms of the Participation
Agreement and a certain number of other agreements(in particular, a shareholder agreement (the “Sogeade
Shareholders’ Agreement”) entered into on Completion
between Sogepa and Lagardère and an agreement between
the French State, Daimler and DLRH). EADS Participations
B.V. is a Dutch private company with limited liability (besloten
vennootschap met beperkte aansprakelijkheid) and is the
managing partner of the Contractual Partnership. The Indirect
EADS Shares held by Daimler, Sogeade and SEPI have been
pledged to EADS Participations B.V., which has been granted
the exclusive power to exercise the voting rights attached tothe pledged shares (including the right to attend and speak atshareholders’ meetings) in accordance with the ContractualPartnership Agreement.
The agreements above contain, among other things, provisions
relating to the following matters:

tt the composition of the boards of Directors of EADS,EADS Participations B.V. and Sogeade Gérance (gérant
commandité of Sogeade);tt restrictions on the transfer of EADS shares and Sogeade
shares;tt pre-emptive and tag-along rights of Daimler, Sogeade,
Sogepa and Lagardère;
tt defences against hostile third parties;
tt consequences of a change of control of Daimler, Sogeade,
Lagardère, Sogepa or SEPI;
tt a put option granted by Sogeade to Daimler over its EADS
shares in certain circumstances;tt specific rights of the French State in relation to certain
strategic decisions, regarding among other issues, EADS’ballistic missiles activity; andtt certain limitations on the extent of the French State’sownership of EADS.
Further details on the agreements among the principal
shareholders of EADS are set out below.

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ORGANISATION OF EADS PARTICIPATIONS B.V.
The Board of Directors of EADS Participations B.V. has anequal number of Directors nominated by Daimler and by
Sogeade, respectively (taking into account proposals madeby Lagardère in respect of the Sogeade-nominated Directors).
Daimler and Sogeade each nominate two Directors, unlessotherwise agreed, and the Daimler-Directors and the SogeadeDirectors jointly have the right to nominate and to remove the
Chairman and the chief executive officer. In addition, SEPI has
the right to nominate a director, as long as the shareholding of
SEPI in EADS is 5% or more but in any case until the annual
shareholders’ meeting to be held in 2012. The Chairman
shall either have French or German nationality and the chief
executive officer shall have the other nationality.
This structure gives Daimler and Sogeade equal nominatingrights in respect of the majority of the Directors of the decisionmaking body of EADS Participations B.V. All decisions of EADSParticipations B.V.’s Board of Directors shall require the vote infavour of at least four Directors, including the vote in favour of
all Sogeade-Directors and all Daimler-Directors. The quorum fortransacting any business at a meeting of the Board of Directorsof EADS Participations B.V. is one Sogeade director and one
Daimler director being present.

TRANSFER OF EADS SHARES
Daimler, Sogeade, SEPI, Lagardère and Sogepa each havethe right to sell its EADS shares on the market, subject to thefollowing conditions:tt if a party wishes to sell any EADS shares, it shall first sell its
shares other than its Indirect EADS Shares before exercising
its right to sell its Indirect EADS Shares in accordance withthe provisions set out below;
tt on the sale of Indirect EADS Shares, Daimler (in the caseof a sale by Sogeade), Sogeade (in the case of a sale byDaimler) or Sogeade and Daimler (in the case of a sale by
SEPI) may either exercise a pre-emption right or sell theirrespective Indirect EADS Shares on the market in the same
proportions as the respective Indirect EADS Shares of therelevant parties bear to each other;tt any transfer of Indirect EADS Shares by either Sogepa or
Lagardère is subject to a pre-emption right in favour of
Lagardère or Sogepa, as the case may be. In the event thatsuch pre-emption right is not exercised, the Indirect EADS
Shares may be sold (a) to an identified third party subject
to Lagardère’s or Sogepa’s consent (as the case may be)
and also to Daimler’s consent and (b) if such consent is not
obtained, the Indirect EADS Shares may be sold on themarket, subject to Daimler’s pre-emption right referred toabove;

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tt Lagardère and Sogepa shall each have a proportional rightto tag-along on a sale of its Indirect EADS Shares; andtt the pre-emption and tag-along rights of Lagardère andSogepa referred to above do not apply to a transfer of EADS
shares directly held by one of them.
Any sale on the market of EADS shares in accordance with
the Participation Agreement shall be conducted in an orderly
manner so as to ensure the least possible disruption to themarket of EADS shares. To this effect, the parties shall consult
with each other before any such sale.

CONTROL OF EADSIn the event that a third party to which Daimler or Sogeade
objects (a “Hostile Third Party”) has a direct or indirectinterest in EADS shares equal to 12.5% or more of the numberof such EADS shares the voting rights of which are pooled
through the Contractual Partnership (a “Qualifying Interest”),
then, unless a Hostile Offer (as defined below) has been madeby the Hostile Third Party or until such time as Daimler andSogeade agree that the Hostile Third Party should no longer beconsidered a Hostile Third Party or the Hostile Third Party nolonger holds a Qualifying Interest, the parties to the Participation
Agreement shall exercise all means of control and influence inrelation to EADS to avoid such Hostile Third Party increasing its
rights or powers in relation to EADS.
The parties to the Participation Agreement may accept an offer(whether by way of tender offer or otherwise) by a Hostile Third
Party which is not acceptable to either Daimler or Sogeade (a“Hostile Offer”), subject to provisions requiring, inter alia, theparty wishing to accept, to first offer its EADS shares to Daimler
and/or Sogeade, in which case Daimler and/or Sogeade may
exercise their pre-emption rights in respect of some or all of the
EADS shares held by the party wishing to accept the Hostile
Offer.
Any sale of EADS shares, other than the EADS Indirect Shares,
by Daimler, Sogeade or Lagardère, at a time when a Hostile
Third Party is a shareholder and purchaser of EADS shareson the market, is subject to the pre-emption right of Sogeade,
Daimler and Sogepa respectively. In the case of a sale by
Lagardère, if Sogepa does not exercise its right of pre-emption,
Daimler has in turn a pre-emption right.

DISSOLUTION OF CONTRACTUAL PARTNERSHIPAND EADS PARTICIPATIONS B.V.
The Contractual Partnership and EADS Participations B.V. will
be dissolved and wound up upon the occurrence of certain
events (each, a “Termination Event”) including:(i) if the proportion which the Indirect EADS Shares of either
Daimler or Sogeade bears to the total number of EADS
shares is less than 10%, unless the difference between
the holdings of Daimler and Sogeade (calculated as a

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percentage by reference to the number of Indirect EADS
Shares held by each of them as against the total number of
EADS shares) is 5% or less, in which case the dissolution
and winding up shall only occur if the proportion which theIndirect EADS Shares of Daimler or Sogeade bears to thetotal number of EADS shares is 5% or less; or(ii) if, on a change of control of either Lagardère, Sogepa,
Sogeade or Daimler, no notice of an offer by a third party
to purchase the Sogeade shares or the Indirect EADS
Shares held by the party undergoing the change of control(the “Changed Party”) (which offer the Changed Party
wishes to accept) has been served in accordance with theParticipation Agreement (see below “Change of Control”)
within 12 months of the date of the change of control
occurring (the absence of notice of an offer by a third party
to purchase the Indirect EADS Shares held by SEPI upon achange of control of SEPI does not trigger a dissolution of
the Contractual Partnership or EADS Participations B.V. butshall cause SEPI to lose its main rights or liabilities under
the Participation Agreement or the Contractual Partnership
Agreement).
On the occurrence of a Termination Event, EADS Participations
B.V. is prohibited from conducting further business except as isnecessary to its liquidation or the liquidation of the ContractualPartnership.

CHANGE OF CONTROLThe Participation Agreement provides, inter alia, that if (a)Lagardère or Sogepa undergoes a change of control andDaimler so elects (b) Sogeade undergoes a change of control
and Daimler so elects (c) Daimler undergoes a change ofcontrol and Sogeade so elects (d) SEPI undergoes a change ofcontrol and Sogeade or Daimler so elects then:(i) the party undergoing the change of control shall use its
reasonable efforts to procure the sale of its Sogeadeinterest (if the party undergoing the change of control is
Lagardère or Sogepa) or of its Indirect EADS Shares (if theparty undergoing the change of control is Daimler, Sogeade
or SEPI) to a third party purchaser on bona fide arm’s length
terms. When the party subject to the change of control is
Lagardère or Sogepa, the third party purchaser shall be
nominated with Daimler’s consent, not to be unreasonably
withheld; and(ii) in the event that a third party offers to purchase the
Sogeade interest held by Lagardère or Sogepa or the
Indirect EADS Shares held by Daimler, Sogeade or SEPI as
the case may be, is received and the party undergoing thechange of control wishes to accept that offer, such offer
shall immediately be notified to (a) Daimler in the case ofa change of control occurring to Lagardère or Sogepa, (b)Sogeade in the case of the change of control occurring toDaimler, (c) Daimler in the case of the change of control
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occurring to Sogeade, or (d) Daimler or Sogeade in thecase of the change of control occurring to SEPI (the party
notified under (a), (b), (c) or (d) being the “Non-Changed
Party”). The Non-Changed Party shall have a first right topurchase the Sogeade interest or the Indirect EADS shares
being offered for sale at the price being offered by the third
party. In relation to (d), if Daimler and Sogeade have bothelected that SEPI procure a third party purchaser, then theyshall each have the right to acquire SEPI’s Indirect EADS
Shares in the respective proportions which the number of
their EADS shares bear to one another at that time. In theevent that the Non-Changed Party does not give notice of
its intention to purchase the Sogeade interest or the Indirect
EADS Shares within 30 days of the offer being made, thenthe Changed Party is obliged to sell such Sogeade interest
or Indirect EADS Shares to the third party on the terms ofthe third party’s original offer.
The third party purchaser may not be a competitor of EADS,
Sogeade or Daimler (as the case may be) nor a member of theGroup which has taken control of the Changed Party.

EVENTS OF DEFAULT OTHER THAN CHANGE
OF CONTROLThe Participation Agreement provides for certain actions
following events of default (other than a change of control) (i.e.
insolvency-related or a material breach of the Participation
Agreement). In particular, if such an event of default occurs in
relation to Daimler, Sogeade or SEPI, the non-defaulting party(respectively Sogeade, Daimler and Sogeade and Daimler
acting together) has a call option over the defaulting party’s
EADS shares and interest in EADS Participations B.V. If suchan event of default occurs in relation to Lagardère or Sogepa,
such party is obliged to use its best efforts to sell its interestin the capital of Sogeade on bona fide arm’s length terms
to a third party purchaser (who must not be a competitor of
EADS or Daimler). In the case of a sale by Lagardère, the third
party purchaser must be nominated by Sogepa with Daimler’s
consent (which may not be unreasonably withheld). In the caseof such a sale by Sogepa, Daimler must consent to the sale(again, such consent may not be unreasonably withheld).

SPECIFIC RIGHTS AND UNDERTAKINGS
OF THE FRENCH STATEThe French State, not being a party to the Participation
Agreement, entered into a separate agreement, governed by
French law, with Daimler and DLRH on 14 October 1999 (asamended) pursuant to which:tt the French State undertakes to hold an interest of no morethan 15% of the entire issued share capital of EADS throughSogepa, Sogeade and EADS Participations B.V.;

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tt the French State undertakes that neither it nor any of its
undertakings will hold any EADS shares directly; andtt in each case disregarding (i) those EADS shares held by the
French State following the distribution without payment ofconsideration to certain former shareholders of Aerospatiale
Matra as a result of its privatisation in June 1999 and which
will have to be sold on the market; (ii) those shares held bySogepa or the French State which may be sold or acquired
pursuant to the Participation Agreement or the Sogeade
Shareholders’ Agreement (see below); and (iii) those shares
held for exclusively investment purposes.
Moreover, pursuant to an agreement entered into between
EADS and the French State (the “Ballistic Missiles
Agreement”), EADS has granted to the French State (a)a veto right and subsequently a call option on the ballistic
missiles activity exercisable in the event that (i) a third party
which is not affiliated to the Daimler and/or Lagardère Groups
acquires, directly or indirectly, either alone or in concert, morethan 10% or any multiple thereof of the share capital or voting
rights of EADS or (ii) the sale of the ballistic missiles assets orof the shares of such companies carrying out such activity is
considered after the termination of the Sogeade Shareholders’
Agreement and (b) a right to oppose the transfer of any
such assets or shares during the duration of the Sogeade
Shareholders’ Agreement.

SOGEADE
Sogeade is a French partnership limited by shares (société
en commandite par actions) the share capital of which is split
between Sogepa (66.67%) and Désirade, a French société
par actions simplifiée (33.33%). The share capital of Désirade
is itself wholly owned by Lagardère. Lagardère hence owns
indirectly 33.33% of Sogeade.
The general partner (associé commandité) of Sogeade,
Sogeade Gérance, is a French société par actions simplifiée
which is the manager of Sogeade and the share capital ofwhich is split equally between Sogepa and Lagardère SCA.
Sogeade Gérance’s Board of Directors consists of eight
Directors, four of them nominated by Lagardère (amongwhom one shall be designated as the Chairman of the Board)and four by Sogepa. Decisions of Sogeade Gérance’s Board
shall be approved by a simple majority of Directors except
for the following matters which require the approval of aqualified majority of six of the eight Directors: (a) acquisitions ordivestments of shares or assets the individual value of which
exceeds € 500 million; (b) agreements establishing strategic
alliances, or industrial or financial co-operation; (c) a capitalincrease of EADS of more than € 500 million to which no
preferential right to subscribe for the shares is attached; (d) any
decision to divest or create a security interest over the assets
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integration of ballistic missiles or the majority shareholdingsin the companies Cilas, Sodern, Nuclétudes and the GIE
Cosyde (each a “Sogeade Reserved Matter”). The decisions
contemplated under (d) above are also governed by the
Ballistic Missiles Agreement (see above “Specific Rights andUndertakings of the French State”).
When a vote of Sogeade Gérance’s Board on such matters
does not reach the qualified majority of six Directors by reasonof any of the Sogepa-nominated Directors casting a negative
vote, the Sogeade-nominated Directors on the Board of EADSParticipations B.V. are obliged to vote against the proposal. Thismeans that the French State as the owner of Sogepa can vetoany decisions on these matters within EADS Participations B.V.
and in turn within EADS as long as the Sogeade Shareholders’
Agreement remains in existence.
In addition, in the case where the Board of Directors of EADSParticipations B.V. and/or the Board of Directors of EADS would
be called to address the following matters:(a) appointment/removal of the Chairman and the Chief
Executive Officer of EADS and appointment/removal of the
Chief Executive Officer of Airbus;(b) investments, projects, launch of new products ordivestments within the Group with an individual value/amount exceeding €500 million;(c) strategic and cooperation agreements;(d) modifications of the authorised share capital of EADS andincrease in the issued capital of EADS, with the exceptionof capital increases for the purposes of ESOP or othersecurities issuances in favour of employees for an amount,
per year or per plan, less than 2% of the issued capital;(e) modifications of (1) the Articles of Association of EADS,(2) the internal rules for the Board of Directors and (3) theinternal rules for the Executive Committee;(f) change of name, place of incorporation and nationality of
EADS; and(g) significant decisions in connection with the ballistic missiles
activities of EADS.
Sogeade Gérance’s Board shall previously meet to come to adecision on the appropriateness of any of the above-mentioned
matters. In this respect, the decision of Sogeade Gérance’s
Board shall be in writing and require the approval of a qualified
majority of six of the eight Directors; it being understood that
the Sogeade-nominated Directors on the Board of EADSParticipations B.V. shall in no event be bound by such decision.
Such procedure shall not apply in the case where the relevant
matter will have been examined as a Sogeade Reserved Matterin accordance with the above.

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The shareholding structure of Sogeade shall reflect at all times
the indirect interests of all the shareholders of Sogeade in
EADS.
In certain circumstances, in particular in the event of a changeof control of Lagardère, Lagardère shall grant a call option overits Sogeade shares to any non-public third party designatedby Sogepa and approved by Daimler. This option may be
exercised during the term of the Sogeade Shareholders’
Agreement on the basis of the market price for the EADS
shares.
The Sogeade Shareholders’ Agreement shall terminate if
Lagardère or Sogepa ceases to hold at least 20% of the capitalof Sogeade, except that: (a) the provisions relating to the call
option granted by Lagardère described above shall remain
in force as long as the Participation Agreement is in force,(b) as long as Sogepa holds at least one Sogeade share, itwill remain entitled to nominate a Sogeade Gérance director
whose approval will be required with respect to any decision
to divest or create a security interest over the assets relating toprime contractor status, design, development and integrationof ballistic missiles activity or the majority shareholdingsin the companies Cilas, Sodern, Nuclétudes and the GIE
Cosyde; and (c) the Sogeade Shareholders’ Agreement will beterminated in the event of a dissolution of EADS Participations
B.V. caused by Daimler. In the latter case, the parties haveundertaken to negotiate a new shareholders’ agreement in
the spirit of the shareholders’ agreement between them dated
14 April 1999 relating to Aerospatiale Matra and with regard
to their respective shareholdings in Sogeade at the time of the
dissolution of EADS Participations B.V.

PUT OPTION
Under the Participation Agreement, Sogeade has granted aput option to Daimler over its EADS shares which shall be
exercisable by Daimler, (i) in the event of a deadlock arising fromthe exercise by Sogepa of its rights relating to certain strategic
decisions (listed above under the description of Sogeade) otherthan those relating to the ballistic missiles activity or (ii) duringcertain periods provided that in both cases the French State
still holds any direct or indirect interest in EADS shares. The put
option may only be exercised in respect of all and not someonly of Daimler’s EADS shares.
The exercise price of the option will be calculated on the basisof an average market price for EADS shares.
In the event that Daimler exercises the put option granted
to it by Sogeade, Sogeade will acquire the EADS sharesfrom Daimler. However, Lagardère has the right to require
Sogepa to substitute itself for Sogeade in relation to theacquisition of Daimler’s EADS shares following the exercise
by Daimler of the put option. Such substitution right has been
accepted by Daimler. In the event that Lagardère does not

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exercise such substitution right, Lagardère would have toprovide its pro rata part of the financing necessary for suchacquisition. Sogepa undertakes to provide its pro rata part of
the financing corresponding to its rights in Sogeade. Should
Lagardère decide not to take part in the financing, (a) Sogepa
undertakes to substitute itself for Sogeade to buy the shares
sold by Daimler as a result of the exercise of its put optionand (b) Sogepa or Lagardère may request the liquidation of
Sogeade and EADS Participations B.V. and the terminationof the Sogeade Shareholders’ Agreement (notwithstanding
the termination provisions of the Sogeade Shareholders’
Agreement described under the paragraph “Sogeade” above).
In that case, Lagardère could freely sell its EADS shares on themarket or in a block sale to a third party.

PLEDGE OVER EADS’ SHARES GRANTED TO EADSPARTICIPATIONS B.V.
Upon Completion and in order to secure their undertakings
under the Contractual Partnership Agreement and theParticipation Agreement, Sogeade, Daimler and SEPI granted
a pledge over their respective Indirect EADS Shares to EADSParticipations B.V. for the benefit of EADS Participations B.V.
and the other parties to the Contractual Partnership Agreement.

DADC
EADS holds 75% of the shares in DADC Luft- und Raumfahrt
Beteiligungs AG (“DADC”) (the other 25% being held by DLRH).
The share capital of Dornier GmbH is held as to 97.1% by
DADC and as to 2.9% by the Dornier family. In shareholders’meetings, DADC is entitled to more than 95.2% and the Dornierfamily to less than 4.8% of the voting rights in Dornier GmbH.
DADC and Dornier GmbH have entered into a control and profit
and loss transfer agreement.
A considerable number of shareholders’ resolutions in DornierGmbH require a majority of 100% of the votes cast in theshareholders’ meeting notably resolutions to dissolve theCompany, alterations of the Articles of Association if theyterminate, limit or have an impact on the rights of the minority
shareholders, reduction of share capital, mergers (unlessDornier GmbH is the surviving entity), the transfer of holdings
in other enterprises or the transfer of whole areas of enterprise
activities with the exception of transfers of assets in return forshares or as a contribution in kind or to a company associatedwith Daimler, which is assumed to be the case if Daimler
controls at least 20% of its share capital. The same requirement
applies with regard to all transfers of shares of Dornier GmbHheld by the Daimler Group (including associated enterprises)
subject to certain exceptions including the transfer to otherDaimler Group companies (including associated enterprises).
Furthermore, the Dornier family receives a guaranteed dividend
from Dornier GmbH (depending on the nature of the shares) of
8.7% or 15% of the nominal amount of their shares plus any
corporation tax credits. The guaranteed dividend is indexed.

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Daimler has guaranteed the payment of the minimum dividend
to the Dornier family shareholders. In the case of the profit andloss transfer agreement, which presently exists between DADC
and Dornier GmbH, the Dornier family shareholders are entitled
to receive payments corresponding at least to the amountwhich they would be entitled to in the absence of such profit
and loss transfer agreement. Internally DADC has assumed thisobligation.
On 30 November 1988 Daimler and the Dornier family enteredinto a separate agreement to strengthen the rights of Daimler
and, simultaneously, to protect the economic interestsof the minority shareholders. The latter can, in particular,
demand that their shares in Dornier GmbH be bought (i) for
cash consideration or (ii) in exchange for Daimler shares or(iii) in exchange for shares in a company in which, or underwhich, Daimler concentrates its aerospace activities byDaimler or another company associated with Daimler andnominated by Daimler. On 29 March 2000 Daimler, DLRH,
DADC, EADS Deutschland GmbH and DASA AG enteredinto an agreement according to which Daimler has the rightto demand from DADC to buy the shares so offered by the
Dornier family shareholders. Daimler shall reimburse DADC for
any amount to be paid being above the fair market value ofthe shares. Moreover, DADC will assume certain other rights
and obligations relating to the protection of the interests of theDornier family.
On 29 December 2004, Silvius Dornier and Daimler enteredinto an agreement to transfer all of the remaining shares ofSilvius Dornier in Dornier GmbH (3.58%) to Daimler or anothercompany of the Daimler Group nominated by Daimler and tosettle all of the rights and potential claims of Silvius Dornier
resulting from or in connection with his shareholding in DornierGmbH. None of the other family shareholders exercised theirthree month right of first refusal to acquire these shares so thatthe legal transfer became effective on 17 April 2005. According
to the above mentioned agreement between Daimler,
DLRH, DADC, EADS Deutschland GmbH and DASA AG(“Handhabungsvereinbarung”), DADC had irrevocably offered toDaimler to buy these shares at market value upon effectivenessof their sale to Daimler, which offer was accepted by Daimler
and the deal being brought to closure on 3 May 2005.
Under the terms of the business combination agreements
entered into in the context of the creation of EADS, DLRH hasundertaken to indemnify Lagardère (for itself and on behalf ofeach member of the Lagardère Group) and SEPI and shall keepthem indemnified, against (save in respect of any consequential
loss not foreseeable by DLRH (or any member of the Daimler
Group)) all or any costs, claims, demands, expenses, losses
or liabilities that they (or any of them) may suffer or incur fromthe date of the business combination agreements entered into
in the context of the creation of EADS as a result of all or anyof the shareholders of Dornier GmbH other than a member ofthe DASA Group obtaining or seeking to obtain any rights or

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remedies against Lagardère (or any member of the LagardèreGroup), SEPI, the Contractual Partnership, EADS Participation
B.V., DASA AG, EADS or any entity contributed by or on
behalf of Daimler which is to become a member of the Groupor any member of the DASA AG Group. This indemnity shallalso extend to EADS to the extent that such protection is notprovided for in the transfer of the DASA business to EADS.

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Other than the relationships between the Company and its
principal shareholders described above in this Section 3.3.2,
there are no potential conflicts of interest between the duties
to the Company of the Directors and their respective privateinterests or other duties.

3.3.3 Form of Shares
The shares of EADS are in registered form. The Board of
Directors may decide with respect to all or certain shares, onshares in bearer form.
Shares shall be registered in the shareholders’ register without
the issue of a share certificate or, should the Board of Directors

so decide, with respect to all or certain shares, with the issue ofa certificate. Share certificates shall be issued in such form as
the Board of Directors may determine. Registered shares shallbe numbered in the manner to be determined by the Board of
Directors.

3.3.4 Changes in the Shareholding of the Company Since
its Incorporation
The Company was founded with an authorised share capital of
500,000 Netherlands Guilders (“NLG”) divided into 500 shareseach having a nominal value of 1,000 NLG, of which 100 were
issued to Aerospatiale Matra on 29 December 1998. Theseshares were transferred to DASA AG by way of notarised
transfer certificate on 28 December 1999.
The changes in the shareholding of the Company since its initialpublic offering and listing are set forth below (for a descriptionof the changes in the issued share capital of the Company
since its incorporation, see “— 3.2.5 Changes in the Issued
Share Capital since Incorporation of the Company”).
Since July 2000, 4,293,746 EADS shares have been distributed
without payment of consideration by the French State to certain
former shareholders of Aerospatiale Matra as a result of its
privatisation in June 1999. The last distribution took place inJuly 2002.
In addition, in January 2001, the French State and Lagardère
sold on the market all of their EADS shares (respectively
7,500,000 and 16,709,333 EADS shares) other than their
Indirect EADS Shares (and, in the case of the French
State, other than the EADS shares to be distributed toformer shareholders of Aerospatiale Matra, see “— 3.3.2
Relationships with Principal Shareholders — Specific Rights
and Undertakings of the French State”) that they held as aresult of the non-exercise of the over-allotment option granted
to the underwriters in the context of the initial public offering
carried out by the Company for the purpose of its listing inJuly 2000 (including, in the case of Lagardère, those shares

3

other than its Indirect EADS Shares purchased from the French
Financial Institutions at the end of the exercise period of theover-allotment option).
On 8 July 2004, Daimler announced that it had placed on themarket (in the context of a hedging transaction) all of its EADS
shares (22,227,478 EADS shares), representing 2.73% of
the capital and 2.78% of the EADS voting rights at that date,
except for its Indirect EADS Shares.
On 11 November 2005, DASA AG transferred its entire interest
in EADS to its wholly owned subsidiary DaimlerChrysler Luftund Raumfahrt Beteiligungs GmbH & Co. KG (“DC KG”).
However, in November 2006, DC KG then transferred its entire
interest in EADS back to DASA AG.
On 4 April 2006, Daimler and Lagardère announced the entry
into simultaneous transactions aimed at reducing by 7.5% each
their respective shareholdings in EADS. Daimler entered into
a forward sale agreement of approximately 61 million EADS
shares with a group of investment banks. Daimler indicatedthat it had lent these shares to the banks in anticipation of thesettlement of the forward sale. Lagardère issued mandatoryexchangeable bonds. The EADS shares deliverable at thematurity of the bonds represented a maximum of 7.5% of
the share capital of EADS, or approximately 61 million EADS
shares, and were delivered in three equal tranches representing
2.5% of the share capital of EADS. The first two tranches weredelivered in June 2007 and June 2008, with delivery of the third
tranche brought forward from June 2009 to March 2009, as
discussed below.

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On 8 September 2006, the Company was notified that JSC
Vneshtorgbank (formerly Bank of Foreign Trade) acquired
41,055,530 shares of EADS, representing 5.04% of the sharecapital of EADS at that date.

On 26 December 2007, JSC Vneshtorgbankhas soldand transferred 41,055,530 EADS shares to the Bank forDevelopment and Foreign Economic Affairs (Vnesheconombank).
EADS was notified of such transaction thereafter.

On 9 February 2007, Daimler reached an agreement with aconsortium of private and public-sector investors by which
it effectively reduced its shareholding in EADS from 22.5%
to 15%, while keeping and maintaining the balance of voting
rights between German and French controlling shareholders.
Pursuant to this agreement, on 13 March 2007, Daimler has
placed its entire 22.5% equity interest in EADS into a newcompany controlled by Daimler, in which the consortium ofinvestors has acquired a one-third interest through a specialpurpose entity. This effectively represents a 7.5% stake in
EADS. Daimler continues to control the voting rights of theentire 22.5% package of EADS shares. Daimler has the optionof dissolving the new structure on 1 July 2010 at the earliest. If
the structure is dissolved, Daimler has the right either to provide
the investors with EADS shares or to pay cash compensation.
If EADS shares are provided, the German State, and theFrench State and Lagardère through Sogeade, will be entitledto pre-empt such EADS shares to retain the balance between
the German and the French side. This transaction constitutes
a specific exception to the agreements described in “— 3.3.2
Relationships with Principal Shareholders”.

On 26 January 2009, Lagardère and Natixis, the sole
subscriber to and sole holder of the outstanding mandatoryexchangeable bonds issued by Lagardère in 2006, signed anamendment to the subscription contract whereby they agreed,on the initiative of Natixis, to bring forward the redemption dateof the mandatory exchangeable bonds – and consequently,
the delivery date of the third tranche of EADS shares – from25 June 2009 to 24 March 2009. Under the terms of thisamendment, Lagardère delivered 20,370,000 EADS shares,
representing 2.5% of the capital and voting rights of EADS, toNatixis on 24 March 2009.
On 19 March 2010, Daimler and the consortium of private andpublic-sector investors confirmed to continue the agreement
reached on 9 February 2007 concerning the equity interestsand voting rights in EADS (as discussed above). At Germany’s
Federal Chancellery on 16 March 2010, Daimler and theinvestors stated their willingness to continue the existing
agreement without any changes. As a result, Daimler continues
to hold 22.5% of the voting rights in EADS while its economic
interest is still 15%. Thus, the existing balance of voting rights
between German and French shareholders remains unchanged.

The evolution in ownership of the share capital and voting rights of the Company over the past three years is set forth in the tablebelow:
Position as at 31 December 2010

Position as at 31 December 2009

Position as at 31 December 2008

Shareholders% ofcapital% ofvoting rights

Numberof shares% ofcapital% ofvoting rights

Numberof shares% ofcapital% ofvoting rights

Numberof shares

DASA AG

22.46%

22.55%

183,337,704

22.46%

22.55%

183,337,704

22.50%

22.59%

183,337,704

Sogeade22.46%

22.55%

183,337,704

22.46%

22.55%

183,337,704

25.00%

25.10%

203,707,704

SEPI
Sub-total ContractualPartnership

5.47%

5.49%

44,690,871

5.48%

5.50%

44,690,871

5.49%

5.51%

44,690,871

50.39%

50.59%

411,366,279

50.40%

50.60%

411,366,279

52.99%

53.20%

431,736,279

French State*

0.06%

0.06%

502,746

0.06%

0.06%

502,746

0.06%

0.06%

502,746

Public**49.16%

49.35%

401,338,521

49.15%

49.34%

401,120,240

46.56%

46.74%

379,388,329

Own share buy-back***

0.39%

-

3,195,176

0.39%

-

3,115,796

0.39%

-

3,141,758

Total

100%

100%

816,402,722

100%

100%

816,105,061

100%

100%

814,769,112

*
**
***

Shares held by the French State following the distribution without payment of consideration of 4,293,746 shares to certain former shareholders of Aerospatiale Matraas a result of its privatisation in June 1999. All of the shares currently held by the French State will have to be sold on the market.
Including EADS employees. As at 31 December 2010, EADS employees held approximately 2.0% of the share capital (and voting rights).
The shares owned by the Company do not carry voting rights.

To the knowledge of the Company, except as disclosed
previously in “— 3.3.2 Relationships with Principal Shareholders”,
there are no pledges over the shares of the Company.
The Company requested a disclosure of the identity ofthe beneficial holders of its shares held by identifiable
holders (“Titres au porteur identifiables”) holding more than
2,000 shares each. The study, which was completed on

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EADS REGISTRATION DOCUMENT 201031 December 2010, resulted in the identification of 1,809
shareholders holding a total of 357,511,609 EADS shares(including 6,067,328 shares held by Iberclear on behalf of the
Spanish markets and 41,392,012 shares held by Clearstream
on behalf of the German market).
The current shareholding structure of the Company is as shownin the diagram in “— 3.3.1 Shareholding Structure”.

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3.3.5 Persons Exercising Control over the Company
See “— 3.3.1 Shareholding Structure” and “— 3.3.2 Relationships with Principal Shareholders”.

3.3.6 Simplified Group Structure Chart
The following chart illustrates the simplified organisational
structure of EADS as of 31 December 2010, comprisingfour Divisions and the main Business Units. For ease ofpresentation, intermediate holding companies have been
omitted. The coloured boxes denote entities forming part ofone of EADS’ four Divisions. The non-coloured boxes denote
entities that are holding companies or participations notwithin one of EADS’ four Divisions and do not directly form
part of the management responsibility of a specified director.
ATR, Sogerma, EADS North America and Daher-Socata areallocated to “Other Businesses” and do not form part of EADS’
four Divisions. See “Information on EADS’ Activities — 1.1.1
Overview — Organisation of EADS Businesses”.

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EADS REGISTRATION DOCUMENT 2010CASSIDIAN

EUROCOPTERAIRBUSAIRBUS MILITARY

Premium AEROTEC***

Aerolia***Q*
EADS holds its interest in Dassault Aviation through EADS France.
** EADS’ interest in Eurofighter is jointly held by EADS Deutschland and EADS CASA.
*** ATR, Sogerma, EADS North America and Daher-Socata are consolidated within “Other Businesses” for purposes of segment reporting; EFW, Aerolia and Premium AEROTEC are consolidated within Airbus.

ASTRIUM

Eurofighter **ATR GIE***

EADS ATR***

Daher-Socata***

EADS Sogerma***

EFW***

5

EADS France

Airbus Military

Airbus4

EADS CASAEurocopter

EADS CASA

3

Dassault Aviation *Atlas Electronik

MBDA

Cassidian Secure
Networks

Cassidian

Dornier

DADC

EADS France

2

AviChina

Arianespace

Paradigm Services

Paradigm Sec Com

Astrium

EADS Deutschland

1

PatriaEADS N.A. Defense

EADS North America***

EADS N.V.

(Simplified Structure)

tt EADS Group Main Shareholdings

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3.3.7 Purchase by the Company of its Own Shares
3.3.7.1 DUTCH LAW AND INFORMATION ON
SHARE REPURCHASE PROGRAMMES
Pursuant to EC Regulation No. 2273/2003, the Company issubject to conditions for share repurchase programmes anddisclosure relating thereto, as described below.
Under Dutch Civil law, the Company may acquire its
own shares, subject to certain provisions of the law of
the Netherlands and the Articles of Association, if (i) the
shareholders’ equity less the payment required to make theacquisition does not fall below the sum of paid-up and called
portion of the share capital and any reserves required by thelaw of the Netherlands and (ii) the Company and its subsidiaries
would not thereafter hold or hold in pledge shares with anaggregate nominal value exceeding one-half (50%) of theCompany’s issued share capital. Share acquisitions may beeffected by the Board of Directors only if the shareholders ingeneral meeting have authorised the Board of Directors toeffect such repurchases. Such authorisation may apply for a
maximum period of 18 months.
Shares held by the Company do not carry voting rights.
Usufructuaries and pledgees of shares that are held by theCompany are, however, not excluded from their voting rights
in such cases where the right of usufruct or pledge was vested
before the share was held by the Company.
The annual shareholders’ meeting of EADS held on
1 June 2010 authorised the Board of Directors, in a resolutionthat renewed the previous authorisation given by the annual
shareholders’ meeting of EADS held on 27 May 2009, fora period of 18 months from the date of such meeting, torepurchase shares of the Company, by any means, including
derivative products, on any stock exchange or otherwise, aslong as, upon such repurchase, the Company will not holdmore than 10% of the Company’s issued share capital and at
a price not less than the nominal value and not more than thehigher of the price of the last independent trade and the highest
current independent bid on the trading venues of the regulated
market of the country in which the purchase is carried out.
A resolution will be submitted to the annual shareholders’meeting of EADS called for 26 May 2011 in order to renew theauthorisation given by the annual shareholders’ meeting heldon 1 June 2010 and authorise the Board of Directors, for a
new period of 18 months as from the date of such meeting, torepurchase shares of the Company, by any means, including
derivative products, on any stock exchange or otherwise, aslong as, upon such repurchase, the Company will not holdmore than 10% of the Company’s issued share capital and at

a price not less than the nominal value and not more than thehigher of the price of the last independent trade and the highest
current independent bid on the trading venues of the regulated
market of the country in which the purchase is carried out.
As of the date of this document, the Company held 3,345,494
of its own shares, representing 0,41% of its share capital.

3.3.7.2 FRENCH REGULATIONS
As a result of its listing on a regulated market in France, theCompany is subject to the regulations summarised below.
Pursuant to Articles 241-1 to 241-6 of the AMF General
Regulations, the purchase by a company of its own
shares requires the publication of the description of theshare repurchase programme. Such description must be
published prior to the implementation of the share repurchaseprogramme.
Under Articles 631-1 to 631-4 of the AMF General Regulations,a company may not trade in its own shares for the purpose ofmanipulating the market. Articles 631-5 and 631-6 of the AMF
General Regulations also define the conditions for a company’s
trading in its own shares to be valid.
After purchasing its own shares, the Company is required todisclose on its website specified information regarding such
purchases within at least seven trading days.
In addition, the Company must report to the AMF, on at least
a monthly basis, all the specified information regarding such
purchases previously published on its website and information
concerning the cancellation of such repurchased shares.

3.3.7.3 GERMAN REGULATIONS
As a foreign issuer, the Company is not subject to German rules
on repurchasing its own shares, which only apply to German
issuers.

3.3.7.4 SPANISH REGULATIONS
As a foreign issuer, the Company is not subject to Spanish
rules on trading in its own shares, which only apply to Spanish
issuers.
However, according to the Conduct Rules under the Spanish
Securities Act 24/1988 of 28 July 1988, the Company may
not trade in its own shares for the purpose of manipulating themarket.

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3.3.7.5 DESCRIPTION OF THE SHARE
REPURCHASE PROGRAMME TO
BE AUTHORISED BY THE ANNUAL
SHAREHOLDERS’ MEETING TO BE HELDON 26 MAY 2011
Pursuant to Articles 241-2-I and 241-3 of the AMF General
Regulations, below is a description of the share repurchaseprogramme (“descriptif du programme”) to be implemented by
the Company:

tt Date of the shareholders’ meeting to authorise theshare repurchase programme: 26 May 2011.
tt Intended use of the EADS shares held by the Company
as at the date of this document: the reduction of sharecapital by cancellation of all or part of the repurchased
shares, in particular to avoid the dilution effect related tocertain share capital increases for cash (i) reserved or to bereserved for employees of the EADS Group and/or (ii) carriedout or to be carried out in the context of the exercise ofstock options granted or to be granted to certain EADSGroup employees: 3,345,494 shares.
For information on shares held by EADS at the date of theentry into force of EC Regulation No. 2273/2003 and still
held by EADS at the date of this document, see below.

tt Purposes of the share repurchase programme to be
implemented by the Company (by order of decreasingpriority, without any effect on the actual order ofuse of the repurchase authorisation, which will be
determined on a case-by-case basis by the Board of
Directors based on needs and possibilities):
tt the reduction of share capital by cancellation of all orpart of the repurchased shares, in particular to avoid the
dilution effect related to certain share capital increases forcash (i) reserved or to be reserved for employees of the
EADS Group and/or (ii) carried out or to be carried out inthe context of the exercise of stock options granted or to
be granted to certain EADS Group employees, it being
understood that the repurchased shares shall not carryany voting or dividend rights,
tt the owning of shares for the performance of obligations
related to (i) debt financial instruments convertible into
EADS shares, or (ii) employee share option programmes
or other allocations of shares to EADS Group employees,
tt the purchase of shares for retention and subsequent use
for exchange or payment in the framework of potential
external growth transactions, andtt the liquidity or dynamism of the secondary market of
the EADS shares carried out pursuant to a liquidity
agreement to be entered into with an independent
investment services provider in compliance with thedecision of the AMF dated 1 October 2008 related toapproval of liquidity agreements recognised as market
practices by the AMF;
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tt Procedure:tt maximum portion of the issued share capital that may be
repurchased by the Company: 10%,
tt maximum number of shares that may be repurchasedby the Company: 81,687,671 shares, based on anissued share capital of 816,876,719 shares as of thedate of this document. Assuming the exercise of all stock
options outstanding as of the date of this document, thethreshold of 10% would represent 83,977,481 sharesbased on the 839,774,818 shares which would make up
the entire fully-diluted share capital of the Company,tt the amounts to be paid in consideration for the purchaseof the treasury shares must not, in accordance withapplicable Dutch law, exceed the equity components
which are repayable or distributable to the shareholders.
“Equity components repayable or distributable to theshareholders” means the contribution premiums (inrelation to contributions in kind), the issue premiums (inrelation to cash contributions) and the other reserves as
set out in the financial statements of EADS, from which
the repurchase price for the treasury shares must be
deducted.
As at 31 December 2010, the respective values ofeach of these EADS equity components which are by
nature repayable or distributable to the shareholders
were: €7,645,000,000 (contribution premiums),€-3,424,000,000 (other reserves and retained earnings,
including net profit for the year) and €-112,000,000(treasury shares), i.e. an aggregate amount of€4,109,000,000.
EADS reserves the right to implement the share purchaseprogramme to its full extent and undertakes not toexceed, directly or indirectly, the threshold of 10%of the issued share capital as well as the amount of€4,109,000,000 throughout the term of the programme.
Finally, EADS undertakes to maintain at any time asufficient number of shares in public hands to meet thethresholds of NYSE Euronext,
tt shares may be bought or sold at any time (including
during a public offering) to the extent authorised by thestock exchange regulations and by any means, including,
without limitation, by means of block trades and including
the use of options, combinations of derivative financial
instruments or the issue of securities giving rights inany way to EADS shares within the limits set out inthis document. Moreover, EADS will use call options
and swaps that have been acquired pursuant to theagreements it had entered into during the previous share
repurchase programme (see below) and does not exclude
the possibility of using a structure of transaction similar
to the one that had been used in the previous share
repurchase programme in order to repurchase its own
shares.

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The portion of shares repurchased through the useof block trades may amount to all the shares to be
repurchased in the context of this programme,

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Back to Contents(i) that such a programme be continued and renewed until
at least 17 December 2016 (16 December 2016 being thelatest date upon which an employee of the EADS Group may
exercise all or part of his/her stock options granted in 2006)
and (ii) that the EADS annual shareholders’ meeting be asked
to renew the authorisations until such date.

tt in addition, in the event that derivative financial
instruments are used, EADS will ensure that it does notuse mechanisms which would significantly increase thevolatility of the shares in particular in the context of call
options,

The 1,843,814 EADS shares held by EADS at the date of
the entry into force of EC Regulation No. 2273/2003 of
22 December 2003 on 13 October 2004 and still held by EADSat the date of this document shall be, in order of decreasingpriority, either (i) cancelled pursuant to a decision to be
made, according to Dutch law, by an annual shareholders’meeting, to avoid the dilution effect related to certain sharecapital increases for cash carried out, during the financial year
preceding such annual shareholders’ meeting, in the context ofan EADS employee share ownership programme and/or upon
the exercise of stock options granted to certain EADS Group
employees, or (ii) retained in order to allow the performanceof certain obligations described within the aims of the share
repurchase programme referred to in this document, or (iii) used
for exchange or payment in the framework of a potential
external growth transaction, or (iv) sold in the context of aliquidity agreement.

tt characteristics of the shares to be repurchased by theCompany: shares of EADS, a company listed on Euronext
Paris, on the regulierter Markt of the Frankfurt Stock
Exchange and on the Madrid, Bilbao, Barcelona andValencia Stock Exchanges,
tt Daimler, DASA AG, the French State, Lagardère, SEPI,
Sogeade and Sogepa will retain all of their rights,
depending on the circumstances, to sell their available
EADS shares to EADS as part of this share repurchaseprogramme,
tt maximum purchase price per share: €50;

tt Term of the share repurchase programme and othercharacteristics: this share repurchase programme shall bevalid until 26 November 2012 inclusive, i.e. the date of expiryof the authorisation requested from the annual shareholders’meeting to be held on 26 May 2011. As one of the main aimsof this EADS share repurchase programme is related to thepossible exercise by EADS Group employees of stock options
granted to them from 2001 to 2006, it is currently intended

As of the date of this document, EADS has not entered into any
liquidity agreement with an independent investment services
provider in the context of the share repurchase programme.

In the context of the share repurchase programme, EADS has used derivative financial instruments (see below). These derivative
financial instruments (call options) have the characteristics set out in the table below:
Opening positions as of the date of this document
Opening position on the purchase

Number of Shares
Average Maximum Maturity Date*

Forward sale

Call purchased

Sale

9 August 2012

-

-

-

-

-

-

-

Average Exercise Price**

Opening position on the sale

Call purchased 6,710,403

See “Corporate Governance — 4.3.3 Long-Term Incentive Plans”.

In order to compensate for the dilution effect related to theshare capital increases in cash which would result from theexercise of stock options granted to certain EADS Group
employees in 2001 and 2002, EADS has implemented a share
repurchase programme according to the neutral delta method.
In this regard, EADS has entered into the following agreements:(i) call options agreements allowing EADS to acquire from a
top ranking French bank a number of EADS’ shares equal to
the number of shares to be created as a result of the exerciseof stock options granted to certain EADS Group employees
in 2001 and 2002, and (ii) swap agreements for the periodical
adjustment of an amount in cash equal to the premiums paid
by EADS to a top ranking French bank pursuant to the call
options agreements, in accordance with the neutral delta
method.

Pursuant to these agreements, the call options which EADS
acquired from a top ranking French bank, have the same terms(as to exercise prices, exercise dates, quantities and expiry
dates) as the stock options granted pursuant to the 2001 and2002 stock option plans. If the EADS share price increases,
the top ranking French bank must buy the number of EADS
shares which then derived from the increase in price according
to the delta neutral method formula. The total amount paid forthese shares by the top ranking French bank corresponds tothe financial charge borne by EADS, as determined from thevariable amounts in the swap agreement. On the other hand, inthe case of a reduction in the EADS share price, the top ranking
French bank must sell a number of EADS shares which derived
from the reduction in the share price according to the neutral
delta method formula. The total amount received by the top

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3.4 Dividends

1ranking French bank for the sale of these shares corresponds
to the financial revenues received by EADS as determinedfrom the variable amounts in the swap contract. Under these
conditions, the final amount due as a result of the purchasesof the call options is only known at the time of the payment as
determined from the last variable amount of the swap contract.
The structure of the transaction aims at covering the dilution
effect and the price risk for EADS linked to the exercise of stock
options granted to certain EADS Group employees in 2001
and 2002. Within this context, EADS uses the internal control
procedures put in place by the Company in order to ensure
the reliability of the management of the risks linked to thesecall options and swap. The procedures and tools for reporting
have been set up, the responsibility and powers have beendelegated to the Finance and Treasury department of EADS
which has responsibility for all operational decisions and allactivities within its competence. The relevant competent bodies
within the organisation must be made aware of all substantial
transactions, activities and risks.

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From an accounting standpoint, the call options qualify as
equity instruments, provided that they are physically settled
in EADS’ own stock (IAS 32.16). The initial accounting led
to a reduction in cash balances for the premiums paid andin stockholder’s equity for the same corresponding amount.
With each variable payment made in application of the deltaneutral method formula, there is a corresponding impact on
cash and on equity to reflect the cumulative premiums paidon the call options. Upon exercise of the call options, EADS
decreases cash by the amount paid (strike price times numberof options) and deducts treasury shares from shareholder’sequity. Variations in the market value of the call options are notrecognised in the financial statements. All such transactions are
therefore neutral on the income statement.
The top ranking French bank has contractually undertaken tocomply with the regulations in force in relation to repurchaseprocedures applicable to EADS and in particular the provisionsof Articles 241-1 to 241-6 and 631-1 et seq. of the AMF
General Regulations.

3.4 Dividends
3.4.1 Dividends and Cash Distributions Paid Since the Incorporationof the Company
Cash distributions paid to the shareholders since the incorporation of the Company are set forth in the table below:
Financial Year

Date of the cash distribution payment

Gross amount per share*

2000

27 June 2001€  0.50

2001

28 June 2002

€ 0.502002

12 June 2003

€ 0.302003

4 June 2004

€ 0.402004

8 June 2005

€ 0.502005

1 June 2006

€ 0.652006

16 May 2007

€ 0.122007

4 June 2008

€ 0.12

2008

8 June 2009

€ 0.20

2009

-

-

*

Note: figures have not been adjusted to take into account changes in the number of shares outstanding.

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3.4.2 Dividend Policy of EADSEADS’ dividend policy is determined by the Board of Directors,
which may consider a number of factors, including the Group’s
financial performance, future cash needs as well as thedividends paid by other international companies in the same
sector. EADS cannot guarantee the amount of dividends that
may be paid in respect of any financial year.
Based on earnings per share of € 0.68 in 2010, the Board of
Directors has proposed to the next annual general meeting ofshareholders a dividend of € 0.22 per share (exceptionally, due
to the significant loss incurred in 2009, no dividend was paid inrespect of such year). Subject to approval by the annual general
meeting, the dividend is expected to be paid on 6 June 2011
(expected record date of 3 June 2011).
It is the Group’s ambition to gradually improve profitability inthe mid-term, which is the key indicator for a better dividend
distribution in the future.

3.4.3 Unclaimed Dividends
Pursuant to Article 31 of the Articles of Association, the claim
for payment of a dividend or other distribution approved by thegeneral meeting shall lapse five years after the day on whichsuch claim becomes due and payable. The claim for payment

of interim dividends shall lapse five years after the day on which
the claim for payment of the dividend against which the interim
dividend could be distributed becomes due and payable.

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3.4.4 Taxation
The statements below represent a broad analysis of thecurrent Netherlands tax laws. The description is limited to thematerial tax implications for a holder of the Company’s shares(the “Shares”) who is not, or is not treated as, a resident of
the Netherlands for any Netherlands tax purposes (a “NonResident Holder”). Certain categories of holders of theCompany’s shares may be subject to special rules which are
not addressed below and which may be substantially different
from the general rules described below. Investors who are in
doubt as to their tax position in the Netherlands and in theirstate of residence should consult their professional advisors.

WITHHOLDING TAX ON DIVIDENDS
In general, a dividend distributed by the Company in respectof Shares will be subject to a withholding tax imposed by the
Netherlands at a statutory rate of 15%. Dividends include
dividends in cash or in kind, deemed and constructive
dividends, repayment of paid-in capital not recognised ascapital for Netherlands dividend withholding tax purposes, andliquidation proceeds in excess of the average paid-in capital
recognised as capital for Netherlands dividend withholding tax
purposes. Stock dividends paid out of the Company’s paid-inshare premium, recognised as capital for Netherlands dividend
withholding tax purposes, will not be subject to this withholdingtax.
A Non-Resident Holder of Shares can be eligible for a partial orcomplete exemption or refund of all or a portion of the above
withholding tax under a tax convention that is in effect between

the Netherlands and the Non-Resident Holder’s country ofresidence. The Netherlands has concluded such conventions
with the US, Canada, Switzerland, Japan, almost all European
Union member states and other countries.

WITHHOLDING TAX ON SALE OR OTHERDISPOSITIONS OF SHARES
Payments on the sale or other dispositions of Shares will not
be subject to Netherlands withholding tax, unless the sale orother disposition is, or is deemed to be, made to the Company
or a direct or indirect subsidiary of the Company. A redemption
or sale to the Company or a direct or indirect subsidiary of theCompany will be treated as a dividend and will in principle besubject to the rules set forth in “Withholding Tax on Dividends”
above.

TAXES ON INCOME AND CAPITAL GAINSA Non-Resident Holder who receives dividends distributed by
the Company on Shares or who realises a gain from the saleor disposition of Shares, will not be subject to Netherlands
taxation on income or capital gains unless:

tt such income or gain is attributable to an enterpriseor part thereof which is either effectively managed in
the Netherlands or carried on through a permanentestablishment (“vaste inrichting”) or permanent
representative (“vaste vertegenwoordiger”) in The
Netherlands;

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General Description of the Company and its Share Capital
3.5 Annual Securities Disclosure Report

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tt the Non-Resident Holder is not an individual and the
Non-Resident Holder has or is deemed to have, directly or
indirectly, a substantial interest (“aanmerkelijk belang”) ora deemed substantial interest in the Company and suchinterest does not form part of the assets of an enterprise; ortt the Non-Resident Holder is an individual and (i) the NonResident Holder has, directly or indirectly, a substantial
interest (“aanmerkelijk belang”) or a deemed substantial
interest in the Company and such interest does not form
part of the assets of an enterprise, or (ii) such income or gain
qualifies as income from miscellaneous activities (“belastbaar
resultaat uit overige werkzaamheden”) in the Netherlands
as defined in the Dutch Income Tax Act 2001 (“Wetinkomstenbelasting 2001”).
Generally, a Non-Resident Holder of Shares will not have asubstantial interest in the Company’s share capital, unless the
Non-Resident Holder, alone or together with certain related
persons holds, jointly or severally and directly or indirectly,
Shares in the Company, or a right to acquire Shares in the
Company representing 5% or more of the Company’s total
issued and outstanding share capital or any class thereof.
Generally, a deemed substantial interest exists if all or part ofa substantial interest has been or is deemed to have been
disposed of with application of a roll-over relief.

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GIFT OR INHERITANCE TAXESNetherlands gift or inheritance taxes will not be levied on
the transfer of Shares by way of gift, or upon the death of a
Non-Resident Holder, unless the transfer is construed as aninheritance or gift made by or on behalf of a person who, at thetime of the gift or death, is or is deemed to be resident in the
Netherlands.

VALUE-ADDED TAXNo Netherlands value-added tax is imposed on dividends on
the Shares or on the transfer of the Shares.

OTHER TAXES AND DUTIESThere is no Dutch registration tax, transfer tax, capital tax,
stamp duty or any other similar tax or duty other than court
fees payable in the Netherlands in respect of or in connection
with the execution, delivery and/or enforcement by legal
proceedings (including any foreign judgment in the courts of
the Netherlands) with respect to the dividends relating to the
Shares or on the transfer of the Shares.

RESIDENCE
A Non-Resident Holder will not become resident, or be deemed
to be resident, in the Netherlands solely as a result of holding
a Share or of the execution, performance, delivery and/or
enforcement of rights in respect of the Shares.

3.5 Annual Securities Disclosure Report
The list of the following announcements comprises the disclosures made pursuant to Section 5:25f of the WFT and constitutes
the annual securities disclosure report in application of Article 10 of Directive 2003/71/EC. The announcements and underlying
information are on display and may be inspected during the life of this Registration Document on www.eads.com:
Press release – First Quarter 2010 Results
Press release – First Half 2010 Results

14 May 2010
30 July 2010

Press release – EADS and Airbus welcome A400M agreement with customer nations

5 November 2010

Press release – Third Quarter 2010 Results

12 November 2010

Press release -- Airbus offers new fuel saving engine options for A320 Family

1 December 2010

Press release – 2010 Annual Results

9 March 2011

In addition, EADS publishes announcements made in the ordinary course of business which are also available on www.eads.com.

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Corporate Governance
4.1 Management and Control

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4.1.1 Board of Directors, Chairman and Chief Executive Officer

136

4.1.2 Board Committees

147

4.1.3 Executive Committee

148

4.1.4 Enterprise Risk Management System

150

4.1.5 Compliance Organisation

155

4.2 Interests of Directors and Principal Executive Officers

156

4.2.1 Remuneration Granted to Directors and Principal Executive Officers

156

4.2.2 Long-Term Incentives Granted to the Chief Executive Officer

159

4.2.3 Related Party Transactions160

4.2.4 Loans and Guarantees Granted to Directors

160

4.3 Employee Profit Sharing and Incentive Plans

4160

4.3.1 Employee Profit Sharing and Incentive Agreements

160

4.3.2 Employee Share Ownership Plans

161

4.3.3 Long-Term Incentive Plans

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In accordance with Dutch law and with the provisions of the
Dutch Corporate Governance Code as amended at the endof 2008 (the “Dutch Code”), which includes a number of
non-mandatory recommendations, the Company either applies
the provisions of the Dutch Code or, if applicable, explains andgives sound reasons for their non-application. While EADS,
in its continuous efforts to adhere to the highest standards,
applies most of the current recommendations of the Dutch
Code, it must, in accordance with the “apply or explain”
principle, provide the explanations below.
For the full text of the Dutch Code, please refer towww.‌commissiecorporategovernance.nl.

1.

EADS IS A CONTROLLED COMPANY AND,
THEREFORE, A NUMBER OF THE MEMBERS
OF THE BOARD OF DIRECTORS, AUDITCOMMITTEE, REMUNERATION ANDNOMINATION COMMITTEE AND STRATEGICCOMMITTEE ARE DESIGNATED AND CAN BEREMOVED BY ITS CONTROLLINGSHAREHOLDERS

Nevertheless, it should be noted that a self-assessment of theBoard of Directors confirmed that the Members of the Boardof Directors designated by the controlling shareholders holdopinions and defend positions that are in all relevant aspectsaligned with the economic interests of individual shareholders.
Given the absence of material conflicting business interests
between EADS and its controlling shareholders, and the
independence of the controlling shareholders from one another,
the Members of the Board of Directors designated by thecontrolling shareholders are deemed to fairly represent theinterest of all shareholders in acting critically and independentlyof one another and of any particular interests. Furthermore, theBoard of Directors’ composition, as reshaped in October 2007
to increase in particular the number of independent Board
Members, with a wide range of different experiences
represented in the Board of Directors and the running of
meetings is conducive to the expression of autonomous andcomplementary views.
Accordingly:(a) four Members of the Board of Directors out of eleven
are independent (whereas provision III.2.1 of the Dutch
Code recommends that there be no more than one nonindependent Board Member);(b) Members of the Board of Directors retire simultaneously
on a five-year basis (whereas provision III.3.6 of the Dutch
Code recommends that there be a retirement schedule to
avoid, as far as possible, a situation in which many nonExecutive Members of the Board of Directors retire at thesame time);

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Back to Contents(c) the Board of Directors is headed by the Chairman of theBoard of Directors. In case of dismissal or resignation of
the Chairman, the Board shall immediately designate a new
Chairman. There is therefore no need for a Vice-Chairman
to deal with the situation when vacancies occur (whereas
provision III.4.1(f) of the Dutch Code recommends that there
be a Vice-Chairman);(d) EADS’ Audit Committee does not meet without the Chief
Executive Officer being present (whereas provision III.5.9 of
the Dutch Code recommends this);(e) EADS’ Audit Committee includes two Members of
the Board of Directors designated by the controllingshareholders (whereas provision III.5.1 of the Dutch
Code recommends that there be no more than one nonindependent Audit Committee member);(f) EADS’ Remuneration and Nomination Committee includes
two Members of the Board of Directors designated by thecontrolling shareholders (whereas provision III.5.1 of the
Dutch Code recommends that there be no more than one
non-independent Committee member);(g) EADS’ Remuneration and Nomination Committee is not
the relevant body responsible for the selection procedureand nomination proposals for Members of the Board of
Directors (whereas provision III.5.14 (a) of the Dutch Coderecommends that such Committee focus on drawing up
selection criteria and the appointment procedures for
Members of the Board of Directors; and provision III.5.14 (d)recommends that such Committee focus on making
proposals for appointments and reappointments).

2.

AS FOR REMUNERATION OF MEMBERS OF
THE BOARD OF DIRECTORSEADS applies different rules for the remuneration of Executive(the Chief Executive Officer) and non-Executive Members of
the Board of Directors, as explained in “— 4.2.1.2 Detailed
Remuneration Policy”.
In case of dismissal from the Company of the Chief Executive
Officer, a termination indemnity equal to one and a half times
the annual total target salary would be paid subject to thefollowing conditions (whereas provision II.2.8 of the Dutch Coderecommends that the maximum remuneration in the event of
dismissal be one year’s salary, and that if the maximum of one
year’s salary would be manifestly unreasonable for an Executive
Board Member who is dismissed during his first term of office,such Board Member be eligible for severance pay not exceeding
twice the annual salary): the Board of Directors has concluded
that the Chief Executive Officer can no longer fulfil his position asa result of change of EADS’ strategy or policies or as a result of achange in control of EADS. The termination indemnity would only
be paid provided that the performance conditions assessed by the
Board of Directors had been fulfilled by the Chief Executive Officer.

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However, this termination indemnity is no longer applicable,
since the Chief Executive Officer has reached the age of 65 andis able to retire immediately.

3.

EADS IS LISTED ON THE FRANKFURT, PARIS
AND SPANISH STOCK EXCHANGES ANDENDEAVOURS TO STRICTLY COMPLY WITH
THE RELEVANT REGULATIONS AND TAKE INTO
ACCOUNT THE GENERAL PRINCIPLES ON
THESE MARKETS PROTECTING ALL OF ITSSTAKEHOLDERS(a) Moreover, EADS has adopted Insider Trading Rules
providing for specific internal rules, inter alia, governing
members’ of the Board of Directors holding and trading ofshares in EADS and other companies. Therefore, in line withthese rules and these regulations and common practices in
the jurisdictions in which the Company is listed;

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Back to Contents(b) EADS does not require Members of the Board of Directors
to hold their securities in the Company as a long-term
investment (whereas provision III.7.2 of the Dutch Coderecommends such a treatment);(c) The term of the office of Members of the Board of Directors
is five years without limitation on renewal (whereas
provisions II.1.1 and III.3.5 of the Dutch Code recommendthat there be no more than three four-year terms for nonExecutive Members of the Board of Directors and that
there be four-year terms (without limitation on renewal) for
Executive Members of the Board of Directors);(d) EADS does not follow various recommendations for
dealings with analysts, including allowing shareholders tofollow meetings with analysts in real time and publishingpresentations to analysts on the website as set out inprovision IV.3.1 of the Dutch Code.

4.1 Management and Control
Since its creation in 2000 and until 22 October 2007, EADS
was led by a dual-headed management structure, with two
Chairmen and two co-Chief Executive Officers, which provided
the necessary balance and stability required for a company withsuch a unique industrial and multi-national heritage.
On 16 July 2007, Daimler (formerly DaimlerChrysler), theFrench Government and Lagardère decided, together with the
EADS management team, to implement a new management
and leadership structure. The German Government wasalso consulted. Guiding principles of this modification
were efficiency, cohesiveness and simplification of EADS’management and leadership structure, towards corporate
governance best practices while maintaining a balance
between the French and the German core shareholders. Under
the simplified management structure, EADS is now led by asingle Chairman and a single Chief Executive Officer.

number of independent members on the Board of Directors toappropriately reflect the global profile of EADS by conforming tointernational corporate governance best practices.
In this respect, both Daimler and Sogeade relinquished twoseats on the Board of Directors and four independent Directors
were elected during the Extraordinary General Meeting of
Shareholders held on 22 October 2007. Apart from the Chief
Executive Officer, the Board of Directors no longer comprises
Executive Directors.
The core shareholders have also decided to amend the
responsibilities assumed by the Board of Directors, theChairman, the Chief Executive Officer and the Executive
Committee, as described below. These modifications were
fully implemented and became effective from the Extraordinary
General Meeting of Shareholders and Board of Directors’
meeting both held on 22 October 2007.

The core shareholders also concluded that it was in thebest interest of the Group to recommend an increase in the

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4.1.1 Board of Directors, Chairman and Chief Executive Officer
4.1.1.1 COMPOSITION, POWERS AND RULES
Pursuant to the Articles of Association, the Board of Directors is
responsible for the management of the Company.
The Board of Directors consists of a maximum of elevenmembers appointed and removed by the shareholders’ meeting.
The Board of Directors adopted rules governing its internalaffairs (the “Rules”) at a Board of Directors’ meeting held on
7 July 2000. The Rules were amended at a Board of Directors’
meeting held on 5 December 2003 to take into accountrecommendations for changes to corporate governance. These
Rules were further amended at a Board of Directors’ meeting
held on 22 October 2007, to take into account the corporate
governance modifications approved during the Extraordinary
General Meeting of Shareholders held the same day.
The Rules specify the composition, the role and the key
responsibilities of the Board of Directors, and also determine
the manner of appointment and the responsibilities of the
Chairman and the Chief Executive Officer. The Rules also
specify the creation of three committees (the Audit Committee,
the Remuneration and Nomination Committee and theStrategic Committee) and specify their composition, roleand operating rules.
The Board of Directors has also adopted specific Insider
Trading Rules, which restrict its members from trading in EADS
shares in certain circumstances (for more information, pleasesee “General Description of the Company and its Share Capital— 3.1.3 Governing Laws and Disclosures”).
The parties to the Participation Agreement (as amended on
22 October 2007 and as defined in the opening paragraph of“General Description of the Company and its Share Capital —3.3.2 Relationships with Principal Shareholders”) have agreed
that the voting rights attached to the Indirect EADS Shares shallbe exercised by EADS Participations B.V. to ensure that theBoard of Directors of EADS comprises the Directors of EADSParticipations B.V. and four additional independent Directors.
According to the Rules, an independent Director is defined
as “a director who is not an officer, director, employee, agent
or otherwise has any significant commercial or professional
connection with either the DASA Group, the Lagardère Group,
the Sogepa Group, the SEPI Group, the French State, theGerman State, the Spanish State or the EADS Group”.
Pursuant to the Participation Agreement, the Board of
Directors comprises eleven members as follows (the “Boardof Directors”, the Members of the Board of Directors beingreferred to as the “Directors”):

tt one non-Executive Chairman, appointed on joint proposal by
the Daimler-Directors and the Sogeade-Directors;

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tt the Chief Executive Officer of EADS, appointed on joint
proposal by the Daimler-Directors and the SogeadeDirectors;
tt two Directors nominated by Daimler;tt two Directors nominated by Sogeade;tt one Director nominated by SEPI, so long as the Indirect
EADS Shares held by SEPI represent 5% or more of the total
number of EADS Shares but in any case until the Annual
Shareholders’ Meeting of EADS to be held in 2012; andtt four independent Directors, jointly proposed by the
Chairman and the Chief Executive Officer of EADS andindividually approved by the Board.
Pursuant to the Articles of Association, each member ofthe Board of Directors holds office for a term that expires at
the Annual Shareholders’ Meeting of EADS to be held in 2012.
Members of the Board of Directors will be elected at each fifth
Annual Shareholders’ Meeting thereafter.
The shareholders’ meeting may at all times suspend or dismiss
any member of the Board of Directors. There is no limitation on
the number of terms that a Director may serve.
The Board of Directors appoints a Chairman, upon the joint
proposal of the Daimler-Directors and the Sogeade-Directors.
The Chairman ensures the smooth functioning of the Board of
Directors in particular with respect to its relations with the Chief
Executive Officer with whom he teams up for top level strategic
discussions with outside partners, which are conducted under
his supervision.
The Chairman shall have either French or German nationality,
provided that the Chief Executive Officer is of the othernationality.
The Chairman can submit his resignation as Chairman to theBoard of Directors or can be dismissed as Chairman by the
Board of Directors, upon the joint proposal of the DaimlerDirectors and the Sogeade-Directors. The appointment
further terminates if the Chairman is dismissed or resigns as
Director. Immediately following the dismissal or resignation of
the Chairman, and if the Daimler-Directors and the SogeadeDirectors do not immediately jointly designate a new Chairman,
the Board of Directors appoints by simple majority a Director(with the same citizenship as the former Chairman) as interim
Chairman for a period which expires at the earlier of either(i) twenty clear days after the Daimler-Directors and the
Sogeade-Directors jointly designate a new Chairman (during
which period, a Board of Directors meeting is called in order
to appoint the new Chairman, upon the joint proposal of
the Daimler-Directors and the Sogeade-Directors), or (ii) two
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Upon request by any member of the Board of Directors madethree years after the beginning of the Chairman’s term andalleging that significant adverse deviation(s) from objectives
and/‌or failure(s) to implement the strategy defined by the Boardof Directors occurred, the Board of Directors shall meet, todecide whether deviations and/or failures actually occurred
during this period and if so, to decide whether to renew its
confidence in the Chairman (the “Vote of Confidence”). The
Board of Directors resolves upon such Vote of Confidenceby simple majority. The Chairman is removed if he does not
obtain such Vote of Confidence, a new Chairman being thenappointed in accordance with the above.
Upon the joint proposal by the Daimler-Directors and the
Sogeade-Directors. the Board of Directors has appointed
a Chief Executive Officer to be responsible for the dayto-day management of the Company. The way the Chief
Executive Officer can resign or be dismissed and the way
the Chief Executive Officer would, if any, be replaced are
identical to those applying to the Chairman. The Vote ofConfidence procedure stated above is also applicable to theChief Executive Officer under the same conditions as for the
Chairman.

Powers of the Board of Directors
The Company is represented by the Board of Directors or by
the Chief Executive Officer. The Chief Executive Officer may notenter into transactions that form part of the key responsibilitiesof the Board of Directors unless these transactions have been
approved by the Board of Directors.
The key responsibilities of the Board of Directors include
amongst others:

tt approving any change in the nature and scope of thebusiness of the Group;
tt approving any proposal to be submitted to the general
meeting of shareholders in order to amend the Articles of
Association of EADS (Qualified Majority, as defined below);tt approving the overall strategy and the strategic plan of theGroup;
tt approving substantial changes to the business plan and theyearly budget of the Group;
tt setting the major performance targets of the Group;tt designating or removing the Chairman and the Chief
Executive Officer and deciding upon the designation or
removal of the Chief Executive Officer of Airbus; it being
understood that (i) the Chairman and the Chief Executive
Officer of Airbus shall be of the same citizenship, either
French or German, and the Chief Executive Officer andthe Airbus COO of the other citizenship, and (ii) the Chief
Executive Officer and the Airbus Chief Executive Officer may
not be the same person (Qualified Majority);

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tt appointing the members of the Executive Committee (seebelow), as a whole team, not on an individual basis;tt establishing and approving amendments to the Rules and to
the rules for the Executive Committee (Qualified Majority);
tt deciding upon the appointments of the Airbus Shareholder
Committee, the EADS Corporate Secretary and the
Chairmen of the Supervisory Board (or similar organ) of otherimportant Group companies and Business Units;
tt approving material changes to the organisational structure of
the Group;
tt approving investments, projects or product decisions
or divestments of the Group with a value exceeding€ 350,000,000 (it being understood that this item shallrequire the Qualified Majority only for investments, projects
or product decisions or divestments of the EADS Group witha value exceeding € 500,000,000);
tt approving strategic alliances and co-operation agreementsof the Group (Qualified Majority);
tt approving matters of shareholder policy, major actions or
major announcements to the capital markets;
tt approving any material decision regarding the ballistic
missiles business of the Group (Qualified Majority);
tt approving other measures and business of fundamental
significance for the Group or which involve an abnormal levelof risk;
tt approving any proposal by the Chairman and the Chief
Executive Officer as to the appointment of the independent
Directors, for submission to the general meeting ofshareholders; andtt approving of principles and guidelines governing the
conduct of the Group in matters involving non-contractual
liabilities (like environmental matters, quality assurance,
financial announcement, integrity) as well as the corporate
identity of the Group.

Voting and rules
Each Director has one vote, provided that, if there are more
Sogeade-nominated Directors than Daimler-nominatedDirectors present or represented at the meeting, the Daimlernominated Director who is present at the meeting can exercise
the same number of votes as the Sogeade-nominated Directors
who are present or represented at the meeting, and vice versa.
All decisions of the Board of Directors are taken by a simple
majority of votes (six Directors, present or represented, voting
in favour of the decision), except for the votes relating to certain
matters which can only be validly resolved upon a majorityof votes including the unanimous vote of the two Sogeadenominated Directors and the two Daimler nominated Directors(the “Qualified Majority”). The quorum for the transaction ofbusiness at meetings of the Board of Directors requires thepresence of at least one of the Sogeade-nominated Directors
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and one of the Daimler-nominated Directors. A Director canauthorise another Director to represent him or her at a Board
meeting and to vote on his or her behalf. Such authorisationmust be in writing.

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not negate the joint responsibility of all Directors. The quorum
for the transaction of business at any meeting of a committee
requires the presence of at least one of the Sogeadenominated Directors and one of the Daimler-nominatedDirectors. All decisions of a committee require the simple
majority of the members.

In the event of a deadlock in the Board of Directors, otherthan a deadlock giving Daimler the right to exercise the put
option granted to it by Sogeade (see “General Descriptionof the Company and its Share Capital — 3.3.2 Relationships
with Principal Shareholders — Put Option”), the matter shallbe referred to Arnaud Lagardère (or such person as shall be
nominated by Lagardère) as representative of Sogeade andto the Chief Executive Officer of Daimler. In the event that thematter in question, including a deadlock giving Daimler the rightto exercise the put option (but in this case with the agreementof Sogepa and Daimler) is a matter within the competence ofthe general meeting of EADS, a resolution on the issue shall be
put to the general meeting, with the voting rights of Sogeade,
Daimler and SEPI being negated.

In addition to the Rules, the work of the Board of Directors
is governed by internal Directors’ guidelines (the “Directors’
Guidelines”) adopted in light of corporate governance bestpractices. The Directors’ Guidelines are composed of a
Directors’ charter (the “Directors’ Charter”) detailing therights and duties of the Members of the Board of Directors, an
Audit Committee charter (the “Audit Committee Charter”),
a Remuneration and Nomination Committee charter (the“Remuneration and Nomination Charter”) and a Strategic
Committee charter (the “Strategic Committee Charter”),
with each such charter setting forth the respective committees’
roles.

Pursuant to the Rules, the Board of Directors may form
committees from its members. In addition to the Audit
Committee, the Remuneration and Nomination Committee andthe Strategic Committee, the Board of Directors may form othercommittees to which it may transfer certain minor or ancillarydecision-making functions although such assignment does

The Directors’ Charter sets out core principles that bind eachand every Director, such as acting in the best interest of theCompany and its stakeholders, devoting necessary time andattention to the carrying out of their duties and avoiding any
and all conflicts of interest.

Composition of the Board of Directors
Name

Age

Term started (as memberof the Board of Directors)

Termexpires

Bodo Uebber

51

2007

Louis Gallois

67 2000, re-elected in 2005 and 2007

Principal function

Status2012

Chairman of EADS

Non-Executive

2012

Chief Executive Officer of EADS

Executive

Rolf Bartke

63

2007

2012

Chairman of Keiper-Recaro-Group

Nominated by Daimler

Dominique D’Hinnin
Juan Manuel Eguiagaray
Ucelay51

20072012 Co-Managing Partner of Lagardère SCA

65

2005, re-elected in 20072012

Economic Advisor

Nominated by Sogeade
Nominatedby SEPI

Arnaud Lagardère

49 2003, re-elected in 2005 and 2007

2012

Hermann-Josef Lamberti

55

2007

2012

Lakshmi N. Mittal

60

2007

2012

Sir John Parker

68

2007

2012

Michel Pébereau

69

2007

2012

Wilfried Porth

52

2009

2012

Managing Partner of Lagardère SCA
Member of the Management Boardof Deutsche Bank
Chairman and Chief Executive Officer
of ArcelorMittal
Chairman of National Grid PLC
and Anglo American PLC
Chairman of the Board of Directorsof BNP Paribas
Member of the Board of Managementof Daimler

Nominated by Sogeade
Independent
Independent
Independent
Independent
Nominated by Daimler

Note: Status as of 1 March 2011. The professional address of all Members of the Board of Directors for any matter relating to EADS is Mendelweg 30, 2333 CS Leiden, The Netherlands.

Within EADS, each Director must have the required mix ofexperience, qualifications, skills and industrial knowledge
necessary to assist the Company in formulating and achieving
its overall strategy, together with the specific expertise required
to fulfil the duties assigned to him or her as member of one of
the Board’s committees. The Board of Directors recognises thathaving a diverse composition among its members with respect
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to gender, experience, national origin, etc. is valuable for thequality and efficiency of its work.
The Board of Directors will propose candidates who can, in
combination with the other Directors, manage EADS in a waythat strengthens its position as a leader in the aerospace anddefence industry. In this regard, the Board of Directors will take4

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diversity — in particular with respect to gender — into accountwhen assessing and proposing candidates for the upcoming
renewal of the entire Board of Directors in 2012.

óó Former mandates for the last five years:

The Company has not appointed observers to the Board of
Directors. Pursuant to applicable Dutch law, the employees are
not entitled to elect a Director. There is no minimum number ofshares that must be held by a Director.

óó Member of the Board of Directors of DaimlerChrysler México
Holding S.A. de C.V. (resigned 31 July 2007);CURRICULUM VITAE AND OTHER MANDATESAND DUTIES PERFORMED IN ANY COMPANY BY
THE MEMBERS OF THE BOARD OF DIRECTORS

Bodo Uebber
Mr Bodo Uebber was appointed Chairman of EADS in
April 2009. He is a member of the Board of Management ofDaimler AG, responsible for Finance and Controlling (since
16 December 2004) as well as for the Daimler Financial
Services division (since 16 December 2003). He previously held
various leadership positions in finance within Dornier LuftfahrtGmbH, DASA AG and MTU Aero Engines GmbH. Mr Uebber
was born on 18 August 1959 in Solingen. He graduated in1985 with a degree in engineering and economics at theTechnical University of Karlsruhe. In the same year, he joined
Messerschmitt-Bölkow-Blohm GmbH (MBB).
Current mandates in addition to the one listed in the chart
above are set forth below:

óó Member of the Board of Management of Daimler AG;
óó Chairman of the Board of Directors of EADS Participations
B.V.;
óó Chairman of the Supervisory Boardof Daimler Financial Services AG;
óó Member of the Supervisory Boardof Mercedes‑Benz Bank AG;

óó Member of the Supervisory Board of Hannover
Rückversicherungs AG (resigned 12 May 2006);

óó Chairman of the Board of Directors of DaimlerChrysler
North America Holding Corporation (DCNAH) (resigned
3 August 2007);
óó Chairman of the Board of Directors of DaimlerChrysler
Corporation (DCC) (resigned 3 August 2007);
óó Chairman of the Board of Directors of DC UK Holding plc(resigned 1 November 2007);
óó Member of the Supervisory Board of Daimler España
Holding S.A. (resigned 30 June 2008);
óó Chairman of the Supervisory Board of Daimler France
Holding S.A.S. (resigned 31 October 2008);
óó Member of the Board of Directors of Freightliner LLC(resigned 30 September 2009); andóó Member of the Supervisory Board of McLaren (resigned
10 November 2009).

Louis Gallois
Mr Louis Gallois has been Chief Executive Officer (CEO) of
EADS since August 2007, after having been co-CEO of EADS,and President and CEO of Airbus since 2006. Previously,
he served successively as Chairman and CEO of SNECMA,
Chairman and CEO of Aerospatiale and Chairman of SNCF.
Earlier in his career, he held positions in the French Ministry of
Economy and Finance, the Ministry of Research and Industry,
and the Ministry of Defence. Mr Gallois graduated from the
École des Hautes Etudes Commerciales in economic sciences
and is an alumnus of the École Nationale d’Administration.

óó Member of the Supervisory Boardof Stiftung Deutsche Sporthilfe;

Current mandates in addition to the one listed in the chart
above are set forth below:

óó Member of the Investment Councilof ”Stifterverband der Deutschen Wissenschaft”;

óó Chief Executive Officer of EADS Participations B.V.;

óó Member of the Supervisory Board of Talanx AG;
óó Member of the Advisory Board of Daimler
Unterstützungskasse GmbH;óó Member of the Advisory Board of Deutsche Bank AG
in Munich;óó Member of the Advisory Board of Landesbank
Baden‑Württemberg;
óó Member of the Donor’s Circle of the Jewish Museum, Berlin;
óó Member of the Board of Trustees „Museumsinsel“, Berlin; andóó Member of the Board of Trustees „Stuttgarter Galerieverein“.

óó Member of the Board of Directors of Stichting
Administratiekantoor EADS;óó Member of the Supervisory Board of Michelin;
óó Member of the Board of Directors of École Centrale des Arts
et Manufactures; andóó President of the Fondation Villette-Entreprises.
Former mandates for the last five years:

óó President of SNCF (resigned 2 July 2006); andóó Member of the Board of Directors of Dassault Aviation(resigned 26 November 2008).

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Rolf Bartke
Mr Rolf Bartke is Chairman of Keiper-Recaro-Group. He was
Chairman of Kuka AG until 2009 after being Head of the vans
Business Unit at DaimlerChrysler AG from 1995 to 2006.
Previously, he was Mercedes Benz’s Managing Director in thefields of commercial vehicle planning and projects, commercial
vehicle development, marketing and sales planning for Unimog
and MB-trac. He started his career in 1976 as Managing
Director of commercial agents of Unimat GmbH in Düsseldorf.
Mr Bartke holds a PhD in economics from the University ofKarlsruhe.

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Current mandates in addition to the one listed in the chart
above are set forth below:

óó Chairman and Managing Director of Ecrinvest 4 S.A.;óó Administrator of Hachette S.A.;óó Member of the Supervisory Boardof Lagardère Active S.A.S.;óó Permanent representative of Hachette S.A. at theSupervisory Board of Lagardère Active Broadcast;óó Administrator of Lagardère Entertainment S.A.S.;

Current mandates in addition to the one listed in the chart
above are set forth below:

óó Administrator of Lagardère Services S.A.S;

óó Chairman of the Supervisory Board of SFC Energy AG(formerly called SFC Smart Fuel Cell AG);óó Administrator of Lagardère Ressources S.A.S.;óó Member of the Board of Directors of Campus Community
Parnership Foundation (formerly called J&R Carter
Partnership Foundation);óó Administrator of Hachette Livre S.A.;óó Member of the Supervisory Boardof Lagardère Sports S.A.S.;
óó Administrator of Sogeade Gérance S.A.S.;óó Member of the Board of Directorsof SORTIMO North America Inc.;óó Member of the Supervisory Boardof Financière de Pichat & CIE SCA;óó Member of the Board of Directorsof EADS Participations B.V.; andóó Member of the Supervisory Boardof Matra Manufacturing & Services S.A.S.;óó Member of the Advisory Board
of HUF Hülsbeck & Fürst GmbH & Co. KG.

óó Chairman of the “Club des Normaliens dans l’Entreprise”;

Former mandates for the last five years:

óó Chairman of the Supervisory Boardof Daimler Ludwigsfelde GmbH (resigned 31 March 2006);

óó Member of the Trustee Board and Treasurerof “Fondation de l’École Normale Supérieure”;
óó Chairman of the “Institut d’expertise et de prospective
de l’École Nationale Supérieure”;

óó Member of the Supervisory Board of Daimler Manufacturing
International LLC (resigned 31 March 2006);

óó Vice-Chairman of Atari S.A. (former Infogrames
Entertainment S.A.) and Chairman of the Audit Committeeof Atari S.A.;óó Member of the Supervisory Board of Daimler España S.A.
(resigned 31 March 2006);

óó Administrator of Le Monde Interactif S.A.;óó Chairman of the Board of Directors of SAF-Holland S.A.
(resigned 31 January 2009); andóó Chairman of Kuka AG (resigned 18 September 2009).

Dominique D’Hinnin
Mr Dominique D’Hinnin was appointed Co-Managing Partnerof Lagardère SCA in March 2010. He joined Lagardère in 1990
as advisor to the Chairman of the Finance Committee of theGroup. After that, he held different positions within the Group,
first being appointed as Internal Audit Manager, and then CFO
Hachette Livre in 1993, before being appointed Executive Vice
President of Grolier Inc in the United States and Chief Financial
Officer of Lagardère SCA in 1998. Mr D’Hinnin is an alumnusof the École Normale Supérieure and is an Inspecteur desFinances.

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óó Member of the Supervisory Board and of the Audit
Committee of CANAL + France S.A.;óó Director of Lagardère North America, Inc;óó Member of the Board of Directorsof EADS Participations B.V.; andóó Member of the Strategic Committee of PWC France.
Former mandates for the last five years:

óó Permanent representative of Lagardère SCA in the
Supervisory Board of Hachette Filipacchi Medias(transformed in S.A.S. on 25 October 2006);
óó Chairman and Managing Director of Lagardère Télévision
Holdings S.A. (resigned January 2007);
óó Administrator of Legion Group S.A. (resigned May 2007);

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óó Director of Lagardère Management, Inc (resigned
October 2007);
óó Member of the Supervisory Board of Hachette
Holdings S.A.S. (resigned December 2007);
óó Member of the Supervisory Boardof Financière Pichat S.A.S. (resigned April 2008);
óó Chairman of the Supervisory Board of Newsweb S.A.
(resigned June 2008);
óó Chairman of Eole S.A.S (resigned February 2009); andóó Member of the Supervisory Board and Chairman of the Audit
Committee of Le Monde S.A. (resigned November 2010).

Juan Manuel Eguiagaray Ucelay
Mr Juan Manuel Eguiagaray Ucelay is an economist andeconomic advisor for various social institutions and privatecompanies. He has been a full time Professor of Economics
at Deusto University in Bilbao (1970-1982), and Associate
Professor of Economics at Carlos III University in Madrid.
Mr Eguiagaray Ucelay holds degrees in economics and law,as well as a Ph.D, from Deusto University. Formerly Spain’s
Minister for Public Administration (1991-1993) and Minister for
Industry and Energy (1993-1996), he resigned from Parliamentin 2001 to devote himself to economic and social activities.
Current mandates in addition to the one listed in the chart
above are set forth below:

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Arnaud Lagardère
Mr Arnaud Lagardère has been General Partner and Chief
Executive Officer (CEO) of Lagardère since 2003. Mr Lagardère
is also personally involved in Lagardère Unlimited, a Lagardère
division which establishes itself as a key player in the businessof sports and entertainment. Previously, he was CEO of
Grolier Inc. in the United States, Head of emerging activities
and electronic media for Matra and Vice President of theSupervisory Board of Arjil bank. He began his career in 1986 asGeneral Manager of MMB, the holding company of Hachetteand Europe 1. Mr Lagardère graduated in economics from the
University of Paris Dauphine.
Current mandates in addition to the one listed in the chart
above are set forth below:

óó Chairman and Chief Executive Officer of Lagardère Media(corporate name: Hachette S.A.);
óó Director of Hachette Livre (S.A.);
óó Chairman of the Supervisory Board of Lagardère Services(S.A.S.) (ex Hachette Distribution Services);óó Chairman of the Supervisory Boardof Lagardère Active (S.A.S.);óó Chairman of the Supervisory Boardof Lagardère Sports (S.A.S.);óó Director of Lagardère Ressources (S.A.S.);óó President of Solidaridad Internacional (NGO);óó President, Lagardère Unlimited INC;

óó Member of the Council Adviser of EPTISA (former Fundación
Grupo EP);

óó Permanent Representative of Lagardère Unlimited INC,
Managing member of Lagardère Unlimited LLC;

óó Member of the Council Adviser of Cap Gemini Spain;

óó Chairman and Chief Executive Officer
of SOGEADE Gérance (S.A.S.);óó Member of the Board of Directorsof EADS Participations B.V.;
óó Member of the Council Adviser of Siemens S.A.;óó Chairman of the Advisory Committee at Fundacion
Alternativas; andóó Chairman of an UNESPA mission for social and institutional
initiative.
Former mandates for the last five years:

óó Associate Professor of Macroeconomics at the University ofCarlos III in Madrid (resigned 30 September 2006);
óó Member of the Council Adviser of Creation, Advising andDevelopment (Creade), S.L. (resigned 1 July 2007); andóó Economic Adviser of Arco Valoraciones S.A. (resigned
1 November 2007).

4

óó Member of the Board of Directorsof EADS Participations B.V.;
óó Chairman of Fondation Jean-Luc Lagardère;óó President of the sports association, Lagardère Paris Racing
Ressources (Association loi 1901);
óó President of the sports association Lagardère Paris Racing(Association loi 1901);
óó Chairman and Chief Executive Officer of Lagardère (S.A.S.);óó Chairman and Chief Executive Officer of Lagardère Capital &Management (S.A.S.);óó Chairman and Chief Executive Officer of Arjil Commanditée— ARCO (S.A.); andóó Chairman of Sport Investment Company LLC.

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Former mandates for the last five years:

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óó Director of Fimalac (S.A.) (resigned January 2006);

In 1997, he was appointed Chairman of the Managementof IBM Germany. He started his career in 1982 with Touche
Ross in Toronto, before joining the Chemical Bank in Frankfurt.
Mr Lamberti studied business administration at the Universities
of Cologne and Dublin, and graduated with a Master’s degree.

óó Chairman and Chief Executive Officer
of Lagardère Active (S.A.S.) (resigned October 2006);

Current mandates in addition to the one listed in the chart
above are set forth below:

óó Director of Hachette Filipacchi Medias (S.A.) (resigned
October 2006);

óó Member of the Supervisory Board of BVV Pensionsfonds
des Bankgewerbes AG;

óó Permanent Representative of Hachette S.A. to theManagement Board of SEDI TV-TEVA (SNC) (resigned
December 2006);

óó Member of the Supervisory Board of BBV
Versicherungsverein des Bankgewerbes A.G.
und BVV Versorgungskasse des Bankgewerbes e.V.;

óó Chairman and Chief Executive Officer (Président Délégué)of Lagardère Active Broadcast (S.A Monégasque) (resigned
March 2007);

óó Member of the Supervisory Board of Carl Zeiss AG;

óó Member of the Supervisory Board of Lagardère Sports(S.A.S.) (resigned April 2007);

óó Chairman of the Supervisory Board of Deutsche Bank Privatund Geschäftskunden AG;

óó Director of Lagardère Management, Inc (resigned
October 2007);

óó Member of the Board of Management of Arbeitgeberverband
des privaten Bankgewerbes e:V.;

óó Chairman of the Board of Directors of Lagardère Active
North America, Inc (resigned October 2007);

óó Member of the Advisory Board of Barmenia VersicherungenWuppertal;

óó Chairman of the Supervisory Board of Hachette Holding(S.A.S.) (ex Hachette Filipacchi Medias) (resigned
December 2007);óó Deputy member of the Deposit Insurance Committee of
Bundesverband deutscher Banken e:V.;

óó President of the Association “Club des Entreprises Paris2012” (resigned January 2006);

óó Member of the Supervisory Board of Deutsche Börse AG;

óó Director of France Télécom (S.A.) (resigned January 2007);óó Delegate of the Delegatesassembly of Bundesverband
deutscher Banken e.V.;óó Member of the Supervisory Board of Virgin Stores (S.A.)(resigned February 2008);

óó Member of the Financial Community Germany Committee of
Bundesverband deutscher Banken e.V.;óó Member of the Supervisory Board of Le Monde (S.A.)(resigned February 2008);

óó Member of the Board of Management of Deutsches
Aktieninstitut e.V.;

óó President (Chief Executive Officer) of Lagardère Active
Broadband (S.A.S.) (resigned June 2008);

óó Member of the Board of Trustees of e-Finance Lab Frankfurt
am Main;óó Director of LVMH-Moet Hennessy Louis Vuitton (S.A.)(resigned May 2009);

óó Member of the Stock Exchange Council of Eurex
Deutschland;óó Permanent Representative of Lagardère Active Publicité
to the Board of Directors of Lagardère Active RadioInternational (S.A.) (resigned May 2009);

óó Member of the Stock Exchange Council of Frankfurter
Wertpapierbörse AG;

óó Member of the Supervisory Board of Daimler (AG) (resigned
April 2010); andóó President of the “Association des Amis de Paris Jean-Bouin
C.A.S.G.” (Association loi 1901) (resigned September 2010).

Hermann-Josef Lamberti
Mr Hermann-Josef Lamberti is a member of the Management
Board of Deutsche Bank AG since 1999 and is the bank’s Chief
Operating Officer. From 1985, he held various management
positions within IBM, working in Europe and the United States,in the fields of controlling, internal application development,
sales, personal software, marketing and brand management.
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óó Chairman of the Society of Freunde der Bachwoche
Ansbach e.V.;óó Member of the Board of Trustees of Institute for Law and
Finance Frankfurt;
óó Member of the Advisory Board of Institut fürUnternehmensplanung - IUP;
óó Member of the Board of Trustees of Junge Deutsche
Philharmonie;óó Deputy Chairman of the Board of Trustees of the Society ofPromotion of Kölner Kammerorchester e.V.;

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óó Member of the Programme Advisory Board of LOEWE
Landes-Offensive zur Entwicklung Wissenschaftlichökonomischer Exzellenz des Hessischen Ministeriums fürWissenschaft und Kunst;
óó Member of the Advisory Circle of Münchner Kreis;óó Deputy member of the Advisory Board and the Examination
Board of Prüfungsverband deutscher Banken e.V.;óó Member of the Board of Trustees of The Frankfurt
International School e.V.;

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óó Member of the Verband der Sparda-Banken e.V. (resigned
30 September 2007);
óó Member of the Foundation Board of Otto A. WipprechtStiftung (resigned 31 May 2008);
óó Member of the Advisory Board of Universität Augsburg(resigned 30 September 2008);
óó Executive Customer of the Advisory Council of Symantec
Corporation (resigned 12 May 2010);

óó Member of the managing Committee of the Institut fürWirtschaftsinformatik der HSG of the Universität St. Gallen;

óó Member of the Board of Trustees of Baden-Badener
Unternehmergespräche - Gesellschaft zur Förderung desUnternehmensnachwuchses e.V. (resigned 13 May 2010);

óó Member of the Administrative Council of
Universitätsgesellschaft Bonn-Freunde, Förderer, Alumni;

óó Member of the Founder Council of Wallraf-Richartz-Museum(resigned 31 January 2011); andóó Member of the Advisory Board in the centre for marketorientated corporate management of WHU;

óó Member of the Board of Trustees of Wallraf-RichartzMuseum und Museum Ludwig e.V. (resigned
31 January 2011);

óó Member of the Steering Committee and of the Federal
Committee of Wirtschaftsrat der CDU e.V.;óó Member of the Commission of
Börsensachverständigenkommission(Bundesfinanzministerium);óó Member of the Board of Management of Frankfurt Main
Finance e.V.;óó Member of the Senate of Fraunhofer Gesellschaft;óó Member of the Advisory Board of Franhofer-IUK-Verbund;óó Member of the University Council of the University of
Cologne;óó Member of the Board of Directors of Stichting
Administratiekantoor EADS;óó Member of the Board of Directors of Wirtschaftsinitiative
FrankfurtRheinMain e.V.;óó Member of the Executive Committeeof FrankfurtRheinMain e.V. (i.G);
óó Member of the Senate of acatech – Deutsche Akademie derTechnikwissenschaften e.V.;óó Member of the Board of Directors of American Chamber ofCommerce in Germany;

Lakshmi N. Mittal
Lakshmi N. Mittal is the Chairman and CEO of ArcelorMittal.
He founded Mittal Steel Company in 1976 and led its 2006
merger with Arcelor to form ArcelorMittal, the world’s largest
steel maker. He is widely recognised for his leading role inrestructuring the global steel industry, and has over 35 years’
experience working in steel and related industries. Mr Mittal
was awarded Fortune magazine’s “European Businessman of
the year 2004”, “Business Person of 2006” by Sunday Times,“International Newsmaker of the year 2006” by Time Magazine,“Person of the year 2006” by Financial Times, “2007 Dwight D.
Eisenhower Global Leadership Award”, “Grand Cross of Civil
Merit from Spain”, “Padma Vibushan” by the President of Indiaand “Fellowship from King’s College London”. Mr Mittal is also
closely associated with a number of not-for-profit organisations.
Current mandates in addition to the one listed in the chart
above are set forth below:

óó Chairman of the Board of Directors and CEOof ArcelorMittal S.A.;óó Chairman of the Board of Directors of Aperam S.A.;óó Member of the Board of Directors of Goldman Sachs;

óó Member of the Board of Directors of Hanns Martin
Schleyer‑Stiftung; andóó Member of the Executive Committee of World Steel
Association (earlier named International Iron and SteelInstitute);

óó Member of the Editorial Board of scientific journal„Wirtschafstinformatik“.

óó Member of the World Economic Forum’s International
Business Council;

Former mandates for the last five years:

óó Member of the Foreign Investment Council in Kazakhstan;óó Member of the Supervisory Board of Schering AG (resigned
20 March 2006);

óó Member of the Prime Minister of India’s Global Advisory
Council;óó Member of the Board of Directors of Fiat S.p.A. (resigned
24 July 2007);

óó Member of the Presidential International Advisory Board ofMozambique;
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óó Member of the Board of Commonwealth Business Council
Limited;óó Member of the Business Council;
óó Member of the Advisory Board of the Kellogg School ofManagement;
óó Member of Board of Trustees of Cleveland Clinic;
óó Member of Executive Board of Indian School of Business;óó Platinum Patron of Prince’s Trust;óó Member of the Board of ArcelorMittal USA Inc.;

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óó Member of the International Advisory Board of Citigroup;óó Chancellor of the University of Southampton;
óó Director of White Ensign Association Limited;óó Member of the Board of Directors of Stichting
Administratiekantoor EADS;óó Member of the Royal Academy of Engineering; andóó Visiting member of the University of Oxford.
Former mandates for the last five years:

óó President of Ispat Inland ULC;

óó Senior Non-Executive Director of Bank of England (resigned
June 2009); andóó Gouverneur of ArcelorMittal Foundation;

óó Joint Chairman Mondi Group (resigned August 2009).

óó Member of the Board of ONGC Mittal Energy Ltd.;

Michel Pébereau

óó Member of the Board of ONGC Mittal Energy Services Ltd.;Mr Michel Pébereau has been BNP Paribas’ Chairman of theBoard since 2003. He presided over the merger that created
BNP Paribas in 2000, becoming Chairman and Chief Executive
Officer (CEO). In 1993, he was appointed Chairman and CEO of
the Banque Nationale de Paris and privatised it. Previously, he
was Chairman and CEO of the Crédit Commercial de France.
He started his career in 1967 at the Inspection Générale desFinances. In 1970 he joined the French Treasury where heheld various high ranking posts. Mr Pébereau is an alumnusof the École Nationale d’Administration and of the École
Polytechnique.

óó Trustee of Gita Mittal Foundation;
óó Trustee of Gita Mohan Mittal Foundation;
óó Trustee of Lakshmi and Usha Mittal Foundation;
óó Member of the Managing Committee of Lakshmi Niwas andUsha Mittal Foundation;
óó Chairman of Governing Council of LNM Institute ofInformation Technology;
óó Trustee of Mittal Champion Trust; andóó Trustee of Mittal Children’s Foundation.
óó Former mandates for the last five years:
óó Member of the International Advisory Board of Citigroup(resigned June 2008); andóó Member of the Board of Directors of ICICI Bank Limited(resigned May 2010).

Sir John Parker
Sir John Parker is Chairman of National Grid PLC and Anglo
American PLC, Deputy Chairman of DP World (Dubai), NonExecutive Director of Carnival PLC and Carnival Corporation,a member of the International Advisory Board of Citigroup andChancellor of the University of Southampton. His career has
spanned the engineering, shipbuilding and defence industries,
including some 25 years’ experience as a Chief Executive
Officer with Harland & Wolff and the Babcock International
Group. He studied Naval Architecture and MechanicalEngineering at the College of Technology, Queens University,
Belfast.
Current mandates in addition to the one listed in the chart
above are set forth below:

óó Director of Carnival plc and Carnival Corporation;
óó Deputy Chairman of D.P. World (Dubai);

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Current mandates in addition to the one listed in the chart
above are set forth below:

óó Member of the Board of Directors of Lafarge;
óó Member of the Board of Directorsof Compagnie de Saint-Gobain;
óó Member of the Board of Directors of Total;
óó Member of the Board of Directors of Pargesa Holding S.A.,
Switzerland;óó Member of the Board of Directors of BNP Paribas S.A.,
Switerland;óó Member of the Board of Directors of Axa;
óó Member of the Supervisory Board of Banque Marocaine
pour le Commerce et l’Industrie, Morocco;
óó Censor of Galeries Lafayette S.A.;óó Chairman of the European Financial Round Table;
óó Chairman of the Investment Banking and Financial Markets
Committee of Fédération Bancaire Française;óó Chairman of the Management Board of Institut d’études
Politiques de Paris;
óó Member of the Supervisory Board of Institut Aspen France;

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óó Member of the Executive Committee of the Institut del’Entreprise;óó Officer of Daimler Vans Manufacturing, LLC (resigned
August 2009).

óó Member of the Executive Committee of Mouvement desEntreprises en France;

Independent Directors

óó Member of the Haut Conseil de l’Éducation;
óó Member of the Institut International d’études Bancaires;
óó Member of the International Advisory Panel of Monetary
Authority of Singapore;óó Member of the International Capital Markets Advisory
Committee of Federal Bank of New York;óó Member of the International Business Leaders’ Advisory
Council for the Mayor of Shanghai (IBLAC); andóó Member of the “Académie des sciences morales etpolitiques”.
Former mandates for the last five years:

óó Member of the Board of Directorsof EADS Participations B.V. (resigned 22 October 2007).

Wilfried Porth
Mr Wilfried Porth is a member of the Board of Management ofDaimler AG and the Director of Labor Relations, responsiblefor Human Resources, IT-management and Procurement of
Non-Production Material and Services. Until 2006, he was
Executive Vice President, MB Van and prior to that, he was
Chief Executive Officer of Mitsubishi Fuso Truck & Bus Corp.
He previously held various engineering management positions
within the Daimler Group, including several years of experienceabroad. Mr Porth graduated in engineering at the University of
Stuttgart.
Current mandates in addition to the one listed in the chart
above are set forth below:

óó Member of the Supervisory Board of Daimler Financial
Services AG;
óó Member of the Board of Directorsof EADS Participations B.V.; andóó Member of the Board of Trustees of Hanns Martin Schleyer
Stiftung.
Former mandates for the last five years:

óó Member of the Advisory Board of Westfalia
Van Conversion GmbH (resigned November 2007);
óó Member of the Supervisory Board of Mercedes-Benz
Ludwigsfelde GmbH (resigned March 2009);
óó Member of the Advisory Board of Mercedes-Benz
España, S.A. (resigned June 2009);
óó Member of the Board of Directors of Daimler Vans
Manufacturing, LLC (resigned August 2009); andThe four independent Directors appointed pursuant to thecriteria of independence set out above are Hermann-Josef
Lamberti, Lakshmi N. Mittal, Sir John Parker and Michel
Pébereau.

Prior Offences and Family Ties
To the Company’s knowledge, none of the Directors (in either
their individual capacity or as director or senior manager of
any of the entities listed above) has been convicted in relation
to fraudulent offences, been the subject of any bankruptcy,
receivership or liquidation, nor been the subject of any official
public incrimination and/or sanction by a statutory or regulatory
authority, nor been disqualified by a court from acting as amember of the administrative, management or supervisory
bodies of any issuer or conduct of affairs of any company,
during at least the last five years. As of the date of thisdocument, there are no family ties among any of the Directors.

4.1.1.2 OPERATION OF THE BOARD
OF DIRECTORS IN 2010

Board Meetings
The Board of Directors met 12 times during 2010 and wasregularly informed of developments through business reports
from the Chief Executive Officer, including rolling forecasts aswell as strategic and operational plans. The average attendance
rate at such meetings was 80%.
Throughout 2010, the Board of Directors monitored theprogress of significant aircraft programmes, such as theA350 XWB, A380, NH90 and the Tiger helicopter. It was kept
informed about the A380 Qantas engine incident and reviewed
the status of the programme management improvement
initiative throughout the Group. The Board of Directors
approved the launch of the A320 with a new engine option(neo), as well as the US tanker bid. It was also involved in the
A400M contract negotiations.
Along with the objectives set forth in the Vision 2020, theBoard also focused on cash management, the savings from
improvement and efficiency programmes, compliance in
key business processes and last but not least, employee
engagement.
The Board of Directors also addressed: EADS’ strategy(including the competitive environment), the Group’s financial
results and forecasts, a thorough review of the Enterprise
Risk Management results and system, Investor Relations
and financial communication policy, as well as legal risks.
The Board of Directors approved a change in the company’s
Executives remuneration structure and system. It also focusedon succession planning.
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Finally, it decided to replace the 2010 employee shareownership plan by a free share plan for every eligible EADS
employee, in celebration of EADS’ 10th anniversary.

Board Self-Assessment
The Board of Directors carries out a yearly self-assessmentof its performance, with an assessment also conducted byindependent consultants every three years (as was the case inearly 2010). A thorough discussion of the findings takes place
at a subsequent meeting of the Board of Directors.
The Corporate Secretary conducted the most recent selfassessment in early 2011, which explored the role of the Boardof Directors, its operations, how well it fulfils its mission, and the
documentation and processes that influence its performance.
The Directors concluded that as the Board gains in maturity its
work as a team has grown increasingly efficient, allowing it to
explore new domains and tackle relevant matters in the bestinterest of the Group.
The Directors consider the frequency and length of meetings
adequate to cover all issues, although the addition of several
unscheduled meetings for specific decisions makes EADS
Board Membership demanding. Supporting documentation has
improved and is better focused to support decision-making,while remaining quite detailed. Information provided at meetings
remains comprehensive due to the complexity of the business;the proportion of debate versus information delivery during
meetings has improved.
With regard to teamwork, Directors unanimously find that
discussions are uninhibited and that differing views areboth encouraged and constructive. Moreover, the working
relationship between the Board of Directors and the membersof the Executive Committee is considered productive.

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The Directors feel that the Board agenda is flexibly managed
and allows them to fulfil their duty; attention to compliance
permeates the work of the Board of Directors. They find thatthe Board of Directors is given more time to address longer
term questions than in the past. The Board of Directors
devoted a full day meeting to strategy for the second time in2010, on an industrial site. This practice is considered beneficial
and will be continued. Other meetings of the Board of Directors
in 2010 related to, among others: discussing key programmes,
particularly the A400M contract re-negotiation and A380
stabilisation; overhauling the executive remuneration system;
adapting the business model of certain segments; launching
new products and making business portfolio decisions.
Overall, the Board of Directors considers that it assembles avery international and varied set of skills, with competencies
centred on business and finance; it believes that its renewal in2012 will be an opportunity to fine-tune its composition, which
may improve gender diversity.
With regard to Committees, their work is very thorough andprofessional, and the interaction of the Audit Committee andthe Remuneration and Nomination Committee with the rest of
the Board of Directors is satisfactory. Nevertheless, Committee
meetings — which are increasingly held on different dates
from Board meetings — should focus even further on special
and technical issues before presentation to the full Board of
Directors, to avoid repetition of work.
Finally, the Chairmanships of the Board of Directors and theCommittees are recognised as very competent and dedicated.
Since the last assessment, in 2010, the time and quality ofstrategic reviews (including the competitive landscape), thediscussion of financial strategy, and the ability to anticipate
and respond to significant questions are widely recognised
improvements. There should be further focus on issues suchas succession planning and talent development, organisationand the role of support functions and the methodology of the
globalisation effort, and effectiveness of governance.

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4.1.2 Board Committees
4.1.2.1 SUMMARY OF MEMBERSHIPS 2010
In 2010, membership on Board Committees was as follows:
Director

Audit Committee

Remuneration & Nomination Committee

Bobo Uebber (Chairman)

Strategic Committee

ChairmanLouis Gallois (CEO)X

Rolf Bartke

X

Dominique D’Hinnin

X

X

ChairmanX

Juan Manuel Eguiagaray Ucelay
Arnaud Lagardère
Hermann-Josef LambertiX

Lakshmi N. Mittal
Michel Pébereau
Sir John Parker
Wilfried Porth

4.1.2.2 AUDIT COMMITTEE
Pursuant to the Rules, the Audit Committee makes
recommendations to the Board of Directors on the appointmentof auditors and the determination of their remuneration, as
well as the approval of the annual financial statements andthe interim accounts, it discusses with the auditors their audit
programme and the results of their audit of the accounts andit monitors the adequacy of the Group’s internal controls,
accounting policies and financial reporting. The Audit
Committee has responsibility for ensuring that the internal andexternal audit activities are correctly directed and that audit
matters are given due importance at meetings of the Board of
Directors. The rules and responsibilities of the Audit Committee
have been set out in the Audit Committee Charter.
The Audit Committee reviews the quarterly, half and full year
accounts on the basis of the documents distributed in advanceand its discussions with the auditors. It also surveys theGroup’s ERM (Enterprise Risk Management) system and theCompliance Organisation.
The Chairman of the Board of Directors and the Chief Executive
Officer are invited as guests to each meeting of the Committee.
The Head of Accounting and the Chief Financial Officer are
requested to attend meetings of the Audit Committee toanswer questions.
The Audit Committee must meet four times a year, or more
frequently, if necessary. It met eight times during 2010,
with an 88% average attendance rate, to review financial
results, performance and disclosure. It also reviewed thecompliance organisation’s processes and reinforcement,
and its achievements. Finally, it focused on the ERM systemeffectiveness and the internal Audit activities.

X
X

ChairmanX

X

4.1.2.3 REMUNERATION AND NOMINATIONCOMMITTEE
Pursuant to the Rules, the Remuneration and Nomination
Committee makes recommendations to the Board of Directors
regarding the appointment of the EADS Corporate Secretary,
the members of the Airbus Shareholder Committee, andthe Chairmen of the Supervisory Board (or similar organ) of
other important Group member companies and Business
Units. The Remuneration and Nomination Committee also
makes recommendations to the Board of Directors regarding
remuneration strategies and long-term remuneration plans anddecides on the service contracts and other contractual mattersin relation to the Board of Directors and Executive Committee
Members. Once approved by the Chairman, it also reviews the
proposals by the Chief Executive Officer for the appointmentof members of the Executive Committee. The rules andresponsibilities of the Remuneration and Nomination Committee
have been set out in the Remuneration and Nomination Charter.
The guiding principle governing management appointmentsin the Group is that the best candidate should be appointed
to the position (“best person for the job”), while at the sametime seeking to achieve a diverse composition with respect togender, experience, national origin, etc.
The implementation of these principles should not create
restrictions on the diversity of nationalities within the EADS
executive management team.
The Chairman of the Board of Directors and the Chief Executive
Officer are invited as guests to each meeting of the Committee.
The Remuneration and Nomination Committee must meet
twice a year, or more frequently, if necessary.

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It met four times during 2010, with an 88% average attendance
rate. In addition to making recommendations to the Boardof Directors for major appointments within the Group, theRemuneration and Nomination Committee reviewed proposedchanges to the Executives remuneration structure and systemfor 2011 onwards, the salary levels of the Executive Committee
Members for 2010, the long-term incentive plan, the variable
pay for 2009, and more generally the succession planning.
Based on the outcome of the Free Share plan, it also discussed
a possible adaptation for the 2011 ESOP plan.

4.1.2.4 STRATEGIC COMMITTEEThe Strategic Committee is not a decision making body but aresource available to the Board of Directors for the preparationof decisions on strategic matters. Pursuant to the Rules, theStrategic Committee makes recommendations to the Board

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strategies, major merger and acquisition projects, major
investments, projects or product decisions or divestments, aswell as major research and development projects. The rules
and responsibilities of the Strategic Committee have been set
out in the Strategic Committee Charter.
The Strategic Committee must meet twice a year, or more
frequently if necessary. It met twice during 2010, with a
90% average attendance rate. In addition to monitoring
major strategic initiatives, acquisition targets and divestment
candidates, and the top priorities of the Group for the year, it
made recommendations to the Board of Directors linked to thecompetitive landscape and home countries industrial policy,
company perception in key markets, the new constraints
on defence budgets, and conducted a review of technology
development in EADS.

4.1.3 Executive Committee
The Chief Executive Officer, supported by an Executive
Committee (the “Executive Committee”), is responsible formanaging the day-to-day operations of the Company. The
Executive Committee, chaired by the Chief Executive Officer,
also comprises the Heads of the major Functions and Divisionsof the Group. The Executive Committee met 11 times during
2010.
The following matters are discussed, amongst others, at the
Executive Committee meetings:

óó appointment approvals of their management teams by theheads of the Group Divisions (with the exception of the
Airbus Chief Operating Officer);óó investment approvals up to € 350,000,000;
óó setting up and control of the implementation of the strategy
for EADS businesses;
óó management, organisational and legal structure of theGroup;
óó performance level of the Group’s businesses and support
functions; andóó all business issues, including the operational plan of theGroup and its Divisions and Business Units.
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the joint responsibilities as defined above, each member ofthe Executive Committee is individually responsible for the
management of his portfolio and must abide by decisions takenby the Chief Executive Officer and the Executive Committee, as
the case may be.
The Chief Executive Officer endeavours to reach consensus
among the members of the Executive Committee on thematters discussed at the Executive Committee meetings. In theevent a consensus is not reached, the Chief Executive Officer
is entitled to decide the matter. If there is a fundamental orsignificant disagreement with respect to any undecided matter,the dissenting Executive Committee member may request that
the Chief Executive Officer submit such matter to the Chairman
for his opinion.
The term of office for the Executive Committee Members is five
years.
The Executive Committee Members are appointed by the
Board of Directors on the proposal of the Chief Executive
Officer first approved by the Chairman after review by the
Remuneration and Nomination Committee. The appointmentof the Executive Committee should be approved as a wholeteam, not on an individual basis, with the exception of the Chief
Executive Officer of Airbus, who shall be appointed by the
Board of Directors individually.

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COMPOSITION OF THE EXECUTIVE COMMITTEE
Name

Age

Current Term started

Term expires

Principal Occupation

Louis Gallois

67

2007

2012

Chief Executive Officer of EADS

François Auque

54

2010

2015

Astrium CEO/Coordination of Space & Defence

Lutz Bertling

48

2006

2011*

Eurocopter CEO

Jean J. Botti

53

2011

2016

Chief Technical Officer of EADS

Fabrice Brégier

49

2007

2012

Airbus COO/EADS Operational Performance

Thomas Enders

52

2007

2012

Airbus CEO

Jussi Itävuori

55

2008

2012

Head of EADS’ Human Resources

Marwan Lahoud

44

2007

2012

Chief Strategy and Marketing Officer of EADS

Sean O’Keefe

55

2010

2014

EADS North America CEO

Hans Peter Ring

60

2007

2012

Chief Financial Officer of EADS

Domingo Ureña-Raso

52

2009

2014

Head of Airbus Military

Stefan Zoller

53

2010

2015

Cassidian CEO

Note: Status as of 1 March 2011. The professional address of all members of the Executive Committee for any matter relating to EADS is Mendelweg 30, 2333 CS Leiden, The Netherlands.
*
The decision regarding the renewal of the mandate will be made in the course of 2011. The current mandate expires on 31 October 2011.

Louis Gallois, Chief Executive Officer of EADS

Fabrice Brégier, EADS Operational PerformanceSee “— 4.1.1 Board of Directors, Chairman and Chief Executive
Officer — Curriculum Vitae and other Mandates and Duties
Performed in any Company by the Members of the Board of
Directors”.

Mr Brégier was appointed Airbus COO in 2006, with additional
responsibility for EADS operational performance. He became
President and Chief Executive Officer (CEO) of Eurocopter
in 2003. Previously, he was CEO of MBDA. He joined Matra
Défense in 1993 as Chairman of the Apache MAW andEurodrone GIEs. He is alumnus of École Polytechnique andÉcole des Mines.

François Auque, Astrium CEO and Coordinationof Space & Defence
Mr Auque was appointed in 2000. He was previously Chief
Financial Officer (CFO) of Aerospatiale then Aerospatiale Matraand Managing Director for satellites of Aerospatiale Matra. He
spent his earlier career with the Suez Group and the French
Cour des Comptes. Mr Auque graduated from École desHautes Études Commerciales, Institut d’Études Politiques andis an alumnus of École Nationale d’Administration.

Lutz Bertling, Eurocopter CEO
Mr Bertling was appointed in 2006, following a year as CEO
of Eurocopter Deutschland. He joined Eurocopter in 2003 as
Head of Governmental Programmes, coming from the Defence& Security division. Previously, he held various positions at
DaimlerChrysler Rail Systems and Braunschweig University. He
earned a PhD in Engineering at the Braunschweig University.

Jean J. Botti, Chief Technical Officer
Mr Botti was appointed as CTO in 2006. He joined from
General Motors, where he was Chief Technologist and thenBusiness Line Executive of the Delphi Powertrain business.
He started his career in 1978 as product engineer for Renault.
Mr Botti holds a degree from INSA Toulouse, an MBA fromCentral Michigan University and a PhD from the Conservatoire
des Arts et Métiers and is an SAE fellow. Mr Botti is a memberof the French Academy of Technology and a member of theEuropean Research Advisory Board (ERAB).

Thomas Enders, Airbus CEO
Mr Enders was appointed in August 2007. Previously, since2005, he was co-CEO of EADS. From 2000 to 2005 he was
Head of the Defence & Security division at EADS. Prior tothat he had been the Director Corporate Development andTechnology at DASA. He joined DASA in 1991. Mr Enders holds
a Doctorate degree from the University of Bonn.

Jussi Itävuori, Head of Human Resources
Mr Itävuori joined EADS in 2001 and became a member ofthe Executive Committee in 2003. Previously, he had worked
for KONE Corporation from 1982, being appointed Head of
Human Resources and member of the Executive Committeeof KONE Corporation in 1995. Mr Itävuori graduated from the
Vaasa School of Economics, Finland in 1982.

Marwan Lahoud, Chief Strategy and Marketing
Officer
Mr Lahoud was appointed in June 2007. Previously, he was
CEO of MBDA. He worked for Aerospatiale on its merger with
Matra and on the foundation of EADS. Within EADS, he served
as Senior Vice President Mergers & Acquisitions. Mr Lahoudis an alumnus of École Polytechnique and graduated from the
École Nationale Supérieure de l’Aéronautique et de l’Espace.

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Sean O’Keefe, EADS North America CEO
Mr O’Keefe was appointed to the Executive Committee in2010. Previously, he was a Corporate Officer of the General
Electric Company. Before joining GE, he held several public
service positions as Chancellor of the Louisiana State
University, NASA Administrator, Deputy Director of the federal
budget at the White House, Secretary of the US Navy and
CFO of the US Defense Department. Between public service
appointments, he held professorships at US universities.
Mr O’Keefe earned academic degrees from Syracuse University
and Loyola University, and has been awarded five honorary
doctoral degrees.

Hans Peter Ring, Chief Financial Officer
Since his appointment in 2002 Mr Ring is the CFO of EADS. In
addition he was acting as a Chief Operating Officer (2005-2007)
and Airbus CFO (2007 - 2008). In 1996, he was made SeniorVice President of Controlling at DASA and, subsequently,
EADS. From 1992, he was CFO and Board Member of Dornier

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Luftfahrt. He holds a degree in Business Administration fromthe University of Erlangen-Nuremberg.

Domingo Ureña-Raso, Head of Airbus Military
Mr Ureña-Raso was appointed in February 2009. He waspreviously in charge of the Power8 and “Future EADS”
programmes. Since 1989, he has held various positions,amongst others at CASA, EADS PZL, Defence & Security
division and Airbus. Mr Ureña-Raso holds degrees from the
Polytechnic University of Madrid, from ESSEC in Paris and has
an MBA.

Stefan Zoller, Cassidian CEO
Mr Zoller was appointed in 2005, having held top management
positions within the Division since 2000. Previously, he held
various management positions within DASA, DaimlerChrysler,
Dornier and Senstar/Canada. Mr Zoller graduated from the
University Tübingen and holds a PhD.

4.1.4 Enterprise Risk Management System
Risk and opportunity management is of paramountimportance to EADS, considering the complex andvolatile business environment in which EADS operates. A
comprehensive ensemble of risk and opportunity management
activities across EADS make up the EADS Enterprise Risk
Management (“ERM”) system.
The objective of the ERM system is to create and preserve
value for EADS’ stakeholders. It is designed and operated
to effectively identify potential events that may affect
EADS, manage risk to be within the defined risk tolerance,
identify and manage opportunities, and provide reasonableassurance regarding the achievement of targets. Top risks andopportunities are reported quarterly to the Board of Directors.
To achieve this, EADS seeks to have one integrated, consistent,
comprehensive, efficient and transparent ERM system, using
the same understanding, practice and language. It seeks toembed the risk management philosophy into the EADS culture,in order to make risk and opportunity management a regularand everyday process for employees.
The Board of Directors and EADS top management regard
ERM as a key management process to steer the Company
and enable management to effectively deal with risks andopportunities. It is designed to achieve the following:óó strategy: the selection of high level strategic objectives,supporting the EADS vision and consistent with risk
appetite;óó operations: the effectiveness and efficiency of operations
and resource allocation; the delivery of products on time

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and in accordance with cost and quality objectives; thecapability to achieve performance and financial targets; theimplementation of risk-enabled decisions and managerial
processes;

óó reporting: reliability of reporting and especially of financial
reporting; andóó compliance: compliance with applicable laws andregulations.
An integrated, comprehensive and lean organisation andprocess for risk management is necessary to ensure that EADS
has a view on risks and opportunities, and that important
processes, programmes and projects are covered.

4.1.4.1 ERM PROCESSThe objectives, principles and process for the ERM system
as endorsed by the Board of Directors are set forth in the
EADS ERM Policy and communicated throughout the Group.
The EADS ERM Policy is supplemented by various manuals,
guidelines, handbooks, etc. The ERM system is based on theInternal Control and Enterprise Risk Management Frameworkof the Committee of Sponsoring Organisations of the Treadway
Commission (COSO II). External standards that contribute to
the EADS ERM system include the Internal Control and ERM
frameworks of COSO, as well as industry-specific standards as
defined by the International Standards Organization (ISO).
The ERM system comprises an integrated hierarchical bottomup and top-down process to enable better management andtransparency of risks and opportunities. At the top, the Board

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of Directors and the Audit Committee discuss major risks
and opportunities, related risk responses and opportunity
capture as well as the status of the ERM system, including
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judgement. The results are then fed back into the organisation.
The design of the ERM system seeks to ensure compliancewith applicable laws and regulations with respect to Internal
Control (“IC”) and Risk Management (“RM”). It addresses both
IC and RM in parallel.

The ERM process consists of the following four elements:
ERM operational process

8 ERM components (Risk and Opportunity Management - ROM) to enhance operational risk andopportunity management throughout EADS by using a consistent standard:
Operational ROM Procedures:(1) Objective Setting,(2) R/O Identification,(3) R/O Assessment,(4) R/O Response,(5) Control Activities,(6) Monitoring
General ROM Procedures:(7) Information & Communication,(8) Internal Environment

ERM reporting process

Procedures for the status reporting of the ERM system and the risk / opportunity situation

ERM compliance process

Procedures to substantiate the Board of Directors and Audit Committee,
EADS CEO and EADS CFO assessment of the effectiveness of the EADS ERM system

ERM support process

Procedures to increase the quality and provide further substantiation of the quality of the EADS ERM system

uu

uu

uu
uu

The ERM process applies to all possible sources of risks
and opportunities, with both internal and external sources,
quantifiable and unquantifiable, potentially affecting EADSin the short-, middle- and long-term. It also applies to all of
EADS’ businesses, activities and departments. Management
at each level discusses ERM when they run the business, aspart of their decision making and related activities. Accordingly,
the ERM process is part of the management process andinterrelated with other processes. The details of application of
the ERM process vary with the risk appetite of management
and the size, structure and nature of the organisational unit,
programme/project, department or process. Nonetheless, thefundamental principles of the EADS ERM Policy generally apply.
For a discussion of the main risks to which the Group is
exposed, see “Risk Factors”.

4.1.4.2 ERM GOVERNANCE AND RESPONSIBILITY
The governance structure and related responsibilities for the
ERM system are as follows:óó the Board of Directors and Audit Committee supervise theoverall effectiveness of the ERM system;óó the EADS Chief Executive Officer is responsible for aneffective ERM system, the related internal environment(i.e. values, culture) and risk philosophy. He defines the levelof risk that EADS wishes to accept on a corporate level;
óó the EADS Chief Financial Officer is accountable for the ERM
system design and the implementation of the ERM process
throughout EADS;óó the EADS ERM department guides the ERM implementationand configuration throughout the Group and is headed by
the EADS Chief Risk Management Officer;
óó the Divisions, Business Units and Headquarters’
departments assume responsibility for the operationand monitoring of the ERM system. They seek to ensuretransparency and effectiveness of the ERM system andadherence to its objectives. They take responsibility for the
implementation of appropriate response activities to reduce
probability and impact of risk exposures, and conversely forthe implementation of appropriate responses to increaseprobability and impact of opportunities. They are responsible
for the communication of risks and opportunities which
affect others within EADS.

4.1.4.3 ERM EFFECTIVENESSEADS has established recurring ERM self-assessment
mechanisms, to be applied across EADS. This seeks to allow
EADS to reasonably assure the effectiveness of its ERM
system. The ERM effectiveness assurance comprises thefollowing components and related objectives:

óó ERM process: Needs to be present and functioning
throughout EADS without any material weaknesses andneeds to fulfil the EADS ERM Policy requirements;
óó risk appetite: Needs to be in accordance with the EADS risk
environment;óó ERM IC system: Needs to have an effective IC system for
the ERM process in place.

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For the coverage of all of its activities, EADS has defined
20 high level business processes. In order to achieve ERM
effectiveness, the ERM process as an overlaying process isan integral part of all other business processes and needs tobe operated. ERM effectiveness is assured if the achievementof the ERM process objectives is secured by adequate
ERM controls which are operating effectively throughout theorganisation and are within the respective risk appetite level.
Operating effectiveness is measured inter alia by judging on
major failings in the ERM system which have been discovered

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in the business year or any significant changes made to thesystem.
When the ERM system is determined to be effective, theBoard of Directors and the EADS CEO and EADS CFO havereasonable assurance and are made aware, in a timely manner,of the extent to which EADS is moving toward achievementof its strategic and operational objectives, and that EADS’reporting is reliable and applicable laws and regulations arebeing complied with.

The combination of the following controls is designed to achieve reasonable assurance about ERM effectiveness:
Organisation

Board of Directors / Audit Committee
Top Management

Management

ERM Department
Corporate Audit
Compliance

ERM control with explanations

Regular monitoring
The Board of Directors and the Audit Committee review, monitor and audit the ERM system.
ERM top management discussions
This control is the most important step of the ERM Sub-Process “Compliance”. All the results of the“Scoping”, “Self Assessment” and “Confirmation” procedures are presented by the Divisions or Business
Units Top Management and discussed and challenged at EADS top level.
ERM confirmation letter procedure
Confirmation of ERM and especially IC effectiveness and deficiencies or weaknesses.
The scope of entities and processes/departments that participate in the annual ERM compliance
procedures is determined by aligning coverage of EADS business with management’s risk appetite.
ERM effectiveness measurement
Assess ERM effectiveness by performing operational risk management for the ERM process, benchmarks, etc.
Audits on ERM
Provide independent assurance to the Audit Committee on the effectiveness of the EADS ERM System.
Alert System
Provide evidence for deficiencies of the EADS ERM system.

4.1.4.4 DEVELOPMENTS IN 2010 AND OUTLOOKDuring 2010, EADS’ approach to ERM has been further
developed and integrated into the business and is increasingly
used as a management and decision making tool. The qualityof the ERM system has improved. Major cornerstones are:óó implementation of new governance and a more structured
process, as set forth in the updated EADS ERM Policy;
óó establishment and progress on major Group-wide ERM
improvement projects;
óó increased focus on risk culture/understanding of ERM
through joint efforts of top management and ERM
department, including ERM training sessions;óó ERM compliance process successfully finalised for 2010,
i.e. ERM confirmation letters were received and all ERM top
management discussions took place;óó choice of one IT tool for ERM Group-wide and integrated
roadmap.
Looking ahead, EADS seeks to:óó reduce risk criticality and encourage seizing of opportunity
by use of the ERM methodology;

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óó further raise the quality of ERM in the organisation andfurther develop lean ERM effectiveness measurement;óó further implement and harmonise the Group-wide ERM IT
tool;óó establish a skills model and career path for risk managers.
EADS continuously seeks to evaluate and improve theoperating effectiveness of the ERM system. For example, in
2010, EADS conducted an internal audit of various business
controls designed to ensure compliance with applicable laws
and regulations. While progress continues to be made in thisarea – including through the roll-out of a revised Group Ethics
Code (“Integrity & Transparency”) and implementation of a
new ethics alert system (“OpenLine”) in 2010 – EADS will use
the recommendations from this audit to further strengthen
its business controls related to compliance in the future;decisions have already been made to modify reporting lines in
the compliance organisation, and to implement a new process
to be reflected in the book of EADS Corporate Management
Principles and Responsibilities (“Blue Book”).

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4.1.4.5 BOARD DECLARATION – LIMITATIONSThe Board of Directors believes to the best of its knowledge
that the internal risk management and control system overfinancial reporting has worked properly in 2010 and provides
reasonable assurance that the financial reporting does notcontain any errors of material importance.
No matter how well designed, all ERM systems haveinherent limitations, such as vulnerability to circumvention or
management overrides of the controls in place. Consequently,
no assurance can be given that EADS’ ERM system andprocedures are or will be, despite all care and effort, entirely
effective.

4.1.4.6 BUSINESS PROCESSES COVEREDBY THE ERM SYSTEM
Based on EADS’ activities, 20 high-level business processes
have been identified within EADS. They are categorised into
core processes (research and development, production,
sales, after-sales and programme management), support
processes (corporate sourcing, Human Resources, accounting,fixed assets, treasury, information technology, mergers andacquisitions, legal and insurance) and management processes(strategy, corporate audit, controlling, compliance, enterpriserisk management and management controls). These businessprocesses, together with the corresponding ERM procedures,are designed to control process risks that have significant
potential to affect the Group’s financial condition and resultsof operations. Below is a description of the main businessprocesses at the respective headquarters’ level which were inplace during 2010.

Accounting
At the core of EADS’ ERM system are accounting processes
and controls designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparationof financial statements and other financial information usedby management and disclosed to EADS’ investors andother stakeholders. The integrated approach to planningand reporting aims to improve internal communication andtransparency across departments and organisational units
within EADS.
The EADS financial control model defines the planning andreporting procedures that apply to all operational units of theGroup, as well as the responsibilities of the Chief Financial
Officer, who is charged with developing, implementing andmonitoring these procedures. Among the Chief Financial
Officer’s primary tasks is oversight of the preparation of theconsolidated financial statements of EADS, which are prepared
under the direct supervision of the Chief Accounting Officer(“CAO”). The CAO is responsible for the operation of theGroup’s consolidation systems and rules and for the definitionof Group-wide accounting policies which comply with IFRS,

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reporting rules and financial guidelines that ensure theconsistency and quality of financial information reported by theDivisions and Business Units. EADS’ accounting policies are
set out in a written accounting manual, which is agreed with theCompany’s external auditors. Changes to the EADS accounting
manual require approval by the CAO, and, where significant
changes are involved, the Chief Financial Officer or the Board of
Directors (based upon the advice of the Audit Committee).
Control of the financial planning and reporting processes isachieved not only through the development of Group-wideaccounting systems and policies, but also through an organised
process for providing information from the reporting units on atimely basis as an up-to-date decision-making tool to control
the operational performance of the Group. This information
includes regular cash and treasury reports, as well as otherfinancial information used for future strategic and operativeplanning and control and supervision of economic risks arisingfrom the Group’s operations.
During the course of each reporting cycle, the Business Unit
chief financial officers are in regular contact with the Divisional
chief financial officers, and frequently meet with the CAO
and his responsible staff to discuss the financial information
generated by the Divisions and Business Units.
Prior to being disclosed to the public and subsequently
submitted for approval to the shareholders, the consolidated
year-end financial statements are audited by EADS’ external
auditors, reviewed by the Audit Committee and submitted forapproval by the Board of Directors. A similar procedure is used
for the semi-annual and quarterly closing. Group auditors are
involved before EADS financial statements are submitted to theBoard of Directors.

Treasury
Treasury management procedures, defined by EADS’ central
treasury department at Group headquarters, enhance
management’s ability to identify and assess risks relating toliquidity, foreign exchange rates and interest rates. Controlledsubsidiaries fall within the scope of the centralised treasury
management procedures, with similar monitoring procedures
existing for jointly controlled affiliates, such as MBDA.

Cash Management
Management of liquidity to support operations is one of the
primary missions of the EADS central treasury department.
Regular cash planning, in conjunction with the planning/
reporting department, as well as monthly cash reporting by
the central treasury department, provide management with theinformation required to oversee the Group’s cash profile andto initiate necessary corrective action in order to ensure overallliquidity. To maintain targeted liquidity levels and to safeguardcash, EADS has implemented a cash pooling system withdaily cash sweeps from the controlled subsidiaries to centrally

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managed accounts. Payment fraud prevention procedures havebeen defined and communicated throughout the Group.

party, the Commercial Committee is responsible for developing
the EADS position on proposed commercial contracts.

Hedge Management

Legal

Commercial operations generate material foreign exchange
and interest rate exposures. A Group hedging policy is definedand updated regularly by the Board of Directors. In order toensure that all hedging activity is undertaken in line with theGroup hedging policy, the central treasury department executes
all hedging transactions. The central treasury department
conducts ongoing risk analysis and proposes appropriate
measures to the Divisions and Business Units with respect
to foreign exchange and interest rate risk. Subsidiaries
are required to calculate, update and monitor their foreignexchange and interest rate exposure with the EADS central
treasury department on a monthly basis, in accordance withdefined treasury procedures. See “Management’s Discussion
and Analysis of Financial Condition and Results of Operations— 2.1.8 Hedging Activities”.

EADS is subject to myriad legal requirements in eachjurisdiction in which it conducts business. The mission of the
EADS Legal department, in coordination with the Division
and Business Unit legal departments, is to actively promoteand defend the interests of the Group on all legal issues andto ensure its legal security at all times. By carrying out thismission it is responsible for implementing and overseeing theprocedures designed to ensure that EADS’ activities comply
with all applicable laws, regulations and requirements. It isalso responsible for overseeing all major litigation affecting theGroup, including intellectual property.

Sales Financing
In connection with certain commercial contracts, EADS may
agree to enter into sales financing arrangements. In respect ofsales financing at Airbus, an annual sales financing budget isdefined as part of the EADS operative planning process. Sales
financing transactions are approved on a case-by-case basiswith the involvement of top management, in line with certain
risk assessment guidelines and managed by a Group-wide
integrated organisation.

Sales
Commercial contracts entered into by EADS’ operating
subsidiaries have the potential to expose the Group tosignificant financial, operational and legal risks. To control theserisks, Management has implemented contract proposal review
procedures that seek to ensure that EADS does not enter intomaterial commercial contracts that expose it to unacceptablerisk or are not in line with the Group’s overall objectives. These
procedures include (i) Board of Directors-approved thresholds
and criteria for determining the risk and profitability profilesand (ii) a mandated pre-approval process for contracts defined
as “high-risk”. Contracts falling within the defined thresholdcategories require approval by the respective Divisional chief
financial officer. Contracts that are deemed “high-risk” and/‌orexceed certain thresholds must be submitted to a standing
Commercial Committee (with the Chief Financial Officer andthe Chief Strategy and Marketing Officer serving as Chairmen,
and a possible escalation to the Chief Executive Officer
when needed). This committee is responsible for reviewing
the proposal and giving recommendations when necessary,
based on which the concerned Business Unit is allowed toremit its offer. In the case of Airbus, contracts are approvedin accordance with Airbus’ own corporate governance policy,
based on EADS guidelines which follow the same principle. In
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The EADS Legal department, together with the Corporate
Secretary, also plays an essential role in the design andadministration of (i) the EADS corporate governanceprocedures and (ii) the legal documentation underlying thedelegation of powers and responsibilities which define the
EADS management and its IC environment.

Corporate Audit
The EADS Corporate Audit department, under the direction of
the Corporate Secretary, provides assurance to the Executive
Committee and Audit Committee Members based upon arisk-oriented approved annual audit plan. The Corporate Audit
department (i) reviews the achievement of the Group’s strategic,
financial or operational objectives, (ii) reviews the reliability andintegrity of Group reporting, (iii) reviews the effectiveness of
the ERM system, (iv) reviews the efficiency and effectivenessof selected processes, entities or functions and (v) reviews
compliance with laws, regulations, Group guidelines andprocedures. Corporate Audit also conducts ad hoc reviews,
performed at the request of management, focusing on current(eg, suspected fraudulent activities) and future (eg, contract
management and programme management) risks.

Corporate Sourcing
The performance of EADS is to a large extent determinedthrough its supply chain. Therefore, sourcing is a key lever for
EADS in its marketplace.
EADS’ size and complexity requires a common approachto maximise market levers and to avoid inefficiencies in the
procurement process. To help ensure that sourcing is carriedout in the most effective, efficient and ethical manner, a set ofcommon procurement processes, which support a common
sourcing strategy and ultimately the Group strategy and vision,is defined by the head of Corporate Sourcing and the Chief
Procurement Officers Council.
The common approach and processes are then implemented
and optimised across all Divisions through the sourcing
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from all Divisions. They are tasked by the EADS Chief
Procurement Officers Council to define and roll out across
EADS strategic sourcing topics such as Supplier RelationshipManagement, Common Processes and Tools, Global
Sourcing, Joint Procurement, Compliance, Corporate Social
Responsibility, and Procurement Performance Management.

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The procurement processes are regularly reviewed by means of
performance indicators, audits and self-assessments and thus
consistently challenged and optimised.

Compliance
See “— 4.1.5 Compliance Organisation” below.

4.1.5 Compliance Organisation
The EADS Group Chief Compliance Officer (“CCO”) is incharge of the design and implementation of the EADS
Ethics and Compliance Programme, which supports theGroup’s commitment to adhering to the highest ethical andcompliance standards in order to sustain the Group’s global
competitiveness.
The EADS Ethics and Compliance Programme seeks toensure that Group business practices conform to applicablelaws and regulations as well as to ethical business principles
endorsed by the Group. It also seeks to promote a cultureof integrity and transparency, together with a commitment
to social responsibility and sustainable development. A key
programme element consists of the Group Ethics Code,“Integrity & Transparency” (updated in 2010 and available onwww.eads.‌com), which seeks to guide the daily behaviour of
all EADS employees.
A compliance organisation and resource network has been
implemented throughout the Group, in a structure that balances
proximity to day-to-day business activities with the necessary
independence. Accordingly, compliance officers throughout theGroup report both to management as well as a point of contact
within the compliance organisation. This is reflected at thevery top of the hierarchy, with the EADS Group CCO reporting
both to the Chief Executive Officer and the Audit Committee,
which oversees the functioning of the Group-wide complianceorganisation as a whole.
Compliance officers appointed in each of EADS’ four Divisions
as well as various Business Units are in charge of supporting
employees to conduct business ethically and in accordancewith the EADS Ethics and Compliance Programme. Chiefcompliance officers at the Divisions and Business Units mustensure that they have sufficient local resources to carry out theirroles effectively, and report both to the EADS Group CCO andto the head of the relevant Division or Business Unit.
At Group level, permanent compliance officers are appointed
to departments where the main compliance risks exist, andare empowered to issue compliance directives applicablethroughout the Group. For example, the Group International
Compliance Officer is in charge of developing and implementing

EADS’ Business Ethics Policy and Rules to prevent corruption.
The Group Export Compliance Officer seeks to ensure that themarketing activities of the Group comply with all relevant export
control rules and with the internal “sensitive countries” policy,
while the Group Procurement Compliance Officer supervises
compliance in the supply chain. In 2010, a fourth departmental
compliance officer was appointed in order to more effectively
address data privacy compliance risks in the Group.
In order to achieve the objectives set by the Chief Executive
Officer and discussed with the Audit Committee, the EADSGroup CCO has established a compliance “roadmap” based oninternational standards. The roadmap provides an overview ofcompliance activities such as:

tt the monitoring of ethics and compliance policies, including
periodic assessment and reporting of the main compliancerisks as part of the EADS ERM system;
tt communication and training activities across the Group;
tt functioning of the new alert system implemented in 2010,“OpenLine”, through which employees may raise ethical andcompliance concerns in strict confidentiality and without
fear of retaliation. Due to current regulatory requirements,
alerts posted on OpenLine may only be treated if they deal
with accounting, financial or corruption issues. The use of
OpenLine is limited to employees of all companies controlled
by the Group and located in France, Germany, Spain andthe UK. Taking into account EADS’ overall compliancestrategy, EADS will monitor the OpenLine system and willassess the possibility of extending its use to all employees
and broadening its scope to issues of a general andoperational nature.
In 2010, programme progress reports were presented twice tothe Board of Directors and Audit Committee.
In the future, EADS will continue to lead efforts to establish
consistent global standards for compliance in the aerospaceand defence industry, in particular business ethics. As suchstandards become more consistent globally with a more levelplaying field for all, EADS will seek to turn its commitment toethics and integrity into a sustainable competitive advantage.

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4.2 Interests of Directors and Principal
Executive Officers
4.2.1 Remuneration Granted to Directors
and Principal Executive Officers
4.2.1.1 GENERAL PRINCIPLES

4.2.1.2 DETAILED REMUNERATION POLICY

StrategyNon-executive Members of the Board

EADS’ remuneration strategy is to provide a remuneration that:

Each non-executive member of the Board receives an annual
fixed fee of € 80,000, as well as a fee for participation in Board
meetings of € 5,000 per meeting attended. The Chairman of theBoard receives an annual fixed fee of € 180,000 for carrying out
this role, as well as a fee for participation in Board meetings of€ 10,000 per meeting attended.

tt helps to attract, retain and motivate qualified executives;
tt is aligned with shareholders´ interest;
tt is performance-related to a significant extent;
tt is fair and transparent;
tt is competitive against the comparable market;
tt can be applied consistently throughout the Group.

BenchmarkThe remuneration policy is benchmarked regularly against thepractice of other global companies, using peer group data andgeneral industry data of consulting firms. The reference data
is a weighted average of French, German and UK information,in the home countries of EADS. The total target remunerationfor executives is targeted at the median level compared to thebenchmark data.

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The Chairmen of each of the Board Committees receive anadditional annual fixed fee of € 30,000. The members of eachof the Board Committees receive an additional annual fixed
fee of € 20,000 for each Committee Membership. Committee
Chairmanship and Committee Membership annual fees are
cumulative if the concerned non-executive Members of theBoard belong to two different Committees.
Non-executive Members of the Board are not entitled tovariable pay or grants under EADS’ long-term incentive plans.

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Chief Executive Officer
The Chief Executive Officer (the sole Executive member of the Board) does not receive fees for participation in Board meetings or
any dedicated compensation as member of the Board of Directors. Rather, the remuneration policy for the Chief Executive Officer(as well as the other members of the Executive Committee) is designed to balance short term operational performance with themid- and long term objectives of the Company and consists of the following main elements:

Remuneration element

Base salary

Annual variable
remuneration

Long term incentive plan
(performance units)
(1)
(2)
(3)
(4)
(5)
(6)

Main drivers

Reward market valueof job/position

Reward annual performance basedon achievement of company
performance measures andindividual/team objectives, including
financial and non-financial targets
and behaviours
Reward long term company
performance on financial targets

Performance measures% of total target remuneration/% of vesting

Individual performance

EADS CEO and Airbus CEO (2): 45% of
total target remuneration
Other members of the Executive
Committee: 50% of total
target remuneration

Collective part (50% of target variable
remuneration): EBIT (3) (50%), Cash(25%) and Capital Employed (25%)
achievement (4)Individual part (50% of target variable
remuneration): achievement of annual
individual objectives
The number of performance units which
will vest is based on 3 year absolute
average EPS (5) at EADS level

EADS CEO and Airbus CEO (2):55% of total target remuneration(range from 0% to 175%) (6)Other members of the
Executive Committee:
50% of total target remuneration(range from 0% to 175%) (6)Vested performance units will range
from 50% to 150% of initial grant (1)In case of absolute negative results during the performance period, the Board of Directors can decide to review the vesting of the performance units including the 50%
portion which is not subject to performance conditions (additional vesting condition).
Starting in 2011, the Airbus CEO´s base salary and annual variable remuneration will each constitute 50% of this total target renumeration as for all other EADS
Executive Committee Members, except for the EADS CEO.
EBIT: earnings before interest and taxes, pre-goodwill impairment and exceptionals.
Starting in 2011, the performance measures for the collective part of the annual variable remuneration will be EBIT (50%) and Cash (50%) only. Capital Employed will
no longer be used.
EPS: Earnings per Share.
Starting in 2011, the spread of the achievement level may vary between 0 and 200%.

In addition, the Chief Executive Officer (as well as the other members of the Executive Committee) is entitled to pension and otherbenefits as described below, including under employee share ownership plans in his capacity as qualifying employee (see “— 4.3.2
Employee Share Ownership Plans” and “— 4.3.3 Long-Term Incentive Plans).

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4.2.1.3 REMUNERATION OF THE MEMBERS OF THE BOARD OF DIRECTORSThe amounts of the various components constituting the compensation granted to the Chief Executive Officer and to NonExecutive Directors during 2010, together with additional information such as the number of performance units (see “— 4.3.3
Long-Term Incentive Plans”) and details of the pension benefits entitlements of the Chief Executive Officer, are set out in “Notes to
the Company Financial Statements — Note 11: Remuneration”.
They are summarised below as well:

Total remuneration and related compensation costs
The total remuneration and related compensation costs of the Members of the Board of Directors related to 2010 and 2009 can besummarised as follows:2010
Non Executive Members of the Board of Directors

2009

in €

in €

Fixum

1,170,000

1,075,000

Fees

520,000

455,000

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2010
Executive Members of the Board of Directors

Base Salary
Annual Variable Remuneration (related to reporting period including part paid by EADS N.V.)

2009

in €

in €

900,000

900,000

1,732,500(1,141,250,
waived at CEO’srequest)The cash remuneration of the Non Executive Members of the Board of Directors related to 2010 was as follows:
2010

Fixum* in €Fees in €Total in €Bodo Uebber

210,000

120,000

330,000

Rolf Bartke

100,000

50,000150,000

Dominique D’Hinnin

120,000

60,000180,000

Juan Manuel Eguiagaray Ucelay

80,00060,000140,000

Arnaud Lagardère

100,000

20,000120,000

Hermann-Josef Lamberti

130,000

45,000175,000

Lakshmi N. Mittal**

80,00040,000120,000

Sir John Parker

130,000

45,000175,000

Michel Pébereau

100,000

35,000135,000

Directors

Wilfried Porth
Total
*
**

120,000

45,000165,000

1,170,000

520,000

1,690,000

The fixum will be paid in 2011.
All fees will be paid in 2011.

The cash remuneration of the Executive member of the Board of Directors related to 2010 was as follows:2010

Base Salary in €Annual Variable Remuneration in € related to 2010Louis Gallois

900,000

1,732,500

For the first time since his appointment in 2006, the annual total
target remuneration of the Executive member of the Board of
Directors (CEO) will increase. This 10% increase from € 2,000,000
to € 2,200,000 (€ 990,000 Base Salary/€ 1,210,000 Annual Variable
Remuneration on target) will apply in 2011, subject to approval at
the next Annual Shareholders’ Meeting of the Company.

Given the improvement in the Group’s results and othermilestones achieved, the Board has recommended that under
the current circumstances, all Directors accept their remuneration
related to 2010. For the CEO, this includes the annual variable
remuneration to which he is entitled in respect of 2010.

Director

Long-term incentives
The table below gives an overview of the performance units granted to the Chief Executive Officer in 2010 pursuant to the LTIP:
Unit plan: number of performance units*

Louis Gallois*

Granted in 2010

Vesting dates

54,400

Vesting schedule is made up of 4 payments over 2 years:(a) 25% expected in May 2014;(b) 25% expected in November 2014;(c) 25% expected in May 2015;(d) 25% expected in November 2015.

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

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Pension benefits

Non-competition clause

The twelve 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 five years of service in the Executive
Committee of EADS at the age of 60 or 65.

A non-competition clause is included in the contract of the
Chief Executive Officer. This clause is applicable for a one-year
period, starting at the end of the mandate contract, and isrenewable for one year at the Company’s initiative.

These rights can gradually increase to 60% after a second
term, usually after ten years of service in the Executive
Committee. However, in order to reach this 60% replacement
ratio the respective member of the Executive Committee mustalso have 12 years of seniority within the Group.
These pension schemes have been implemented through collective
executive pension plans in France and Germany. These pension
promises have also separate rules e.g. for minimum length ofservice and other conditions to comply with national regulations.
For the Chief Executive Officer, the amount of the pension
defined benefit obligation (i.e. the book cash value) amounted
to € 2.3 million as of 31 December 2010, while the amount of
current service and interest cost related to his pension promise
accounted for the financial year 2010 represented an expenseof € 0.6 million. This obligation has been accrued in theConsolidated Financial Statements.

Termination indemnity
As part of his mandate contract, the Chief Executive Officer isentitled to a termination indemnity when the departure resultsfrom a decision by the Company in case of change in control orchange in the Company’s strategy. Payment of the terminationindemnity is also subject to performance conditions as fixed
and assessed by the Board of Directors. The terminationindemnity, if applicable, would amount to a maximum of
18 months of annual total target remuneration.
However this termination indemnity is not applicable, since theChief Executive Officer has reached the age of 65 and is able toretire immediately.
Apart from the Chief Executive Officer, no other Director who isin office is entitled to a termination indemnity.

The Chief Executive Officer will receive compensation based on
50% of the last target annual monthly salary in consideration of
the non-competition clause. The monthly salary is defined asbase salary and 1/12 of the annual performance bonus recently
paid.

Other benefits
The Chief Executive Officer is entitled to a company car. The
value of his company car as at 31 December 2010 is € 24,120(excluding VAT).

4.2.1.4 REMUNERATION OF THE MEMBERS
OF THE EXECUTIVE COMMITTEE
The members of the Executive Committee, including the Chief
Executive Officer, are entitled to receive for the year 2010
total remuneration on a full year basis of € 18,345,127. This
remuneration is divided for the EADS Chief Executive Officer
and Airbus Chief Executive Officer into a 45% fixed part and a
55% variable part on target and for the other members of the
Executive Committee into a 50% fixed part and a 50% variable
part on target.
The total remuneration paid by EADS and all its Group
companies to Mr Louis Gallois, Chief Executive Officer, during
the year 2010, was € 900,000 (this sum includes only thepayments of his January to December 2010 base salary and novariable pay for 2009, as he waived such variable pay in 2010).
The members of the Executive Committee including the Chief
Executive Officer receive the majority of their remuneration fromtheir relevant national Group entity (under the terms of theiremployment or mandate contract) and the remaining part fromEADS N.V (“NV compensation”, under the terms of the N.V.
letter of agreement).

4.2.2 Long-Term Incentives Granted to the Chief Executive Officer
See “— 4.3.3 Long-Term Incentive Plans”.

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4.2.3 Related Party Transactions
Article 2:146 of the Dutch Civil Code provides as follows:“Unless the Articles of association provide otherwise, acompany (naamloze vennootschap) shall be represented by
its Board of supervisory Directors in all matters in which it
has a conflict of interest with one or more of the members of
its Board of Directors. The shareholders’ meeting shall at all
times have powers to designate one or more persons for thispurpose”. In the case of EADS, the Articles of Association doprovide otherwise since they enable the Board of Directors tohave power to represent the Company in matters where theCompany has a conflict of interest with one or more Membersof the Board of Directors.
During the years 2008, 2009 and 2010, no agreement wasentered into by the Company with one of its Directors or principal
officers or a shareholder holding more than 5% of the voting

rights of the Company outside the ordinary course of businessand in conditions other than arm’s length conditions. See “Notes
to the Consolidated Financial Statements (IFRS) — Note 36:
Related party transactions” for the year ended 31 December
2010 and “Notes to the Consolidated Financial Statements(IFRS) — Note 36: Related party transactions” for the year ended
31 December 2009, as incorporated by reference herein.
For a description of the relationships between the Company
and its principal shareholders, see “General Description of theCompany and its Shareholders — 3.3.2 Relationships with
Principal Shareholders”. Other than the relationships between
the Company and its principal shareholders described therein,
there are no potential conflicts of interest between the duties
to the Company of the Directors and their respective privateinterests or other duties.

4.2.4 Loans and Guarantees Granted to Directors
EADS has not granted any loans to its Directors or members of the Executive Committee.

4.3 Employee Profit Sharing and Incentive Plans
4.3.1 Employee Profit Sharing and Incentive Agreements
EADS’ remuneration policy is strongly linked to the achievementof individual and Company objectives, both for each Divisionand for the overall Group. In 2010, a performance andrestricted unit plan was established for the senior managementof the Group (see “— 4.3.3 Long-Term Incentive Plans”), andemployees were offered 10 free shares within the context

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The success sharing schemes which are implemented at
EADS in France, Germany, Spain and the UK follow one set ofcommon rules of the Group, ensuring a consistent applicationin these four countries.

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4.3.2 Employee Share Ownership Plans
EADS supports employee share ownership. Since its creation, EADS has regularly offered qualifying employees the opportunity topurchase EADS shares on favourable terms through employee share ownership plans (“ESOPs”).
The following table summarises the main terms of the ESOPs conducted from 2000-2009:
Year

Price per shareNominal value per share

Number of shares issued

Date of issuance2000€ 15.30€1

11,769,259

21 September 2000

2001

€ 10.70€12,017,894

5 December 2001

2002

€ 8.86*/ € 7.93**€12,022,939

4 December 2002

2003

€ 12.48€1

1,686,682

5 December 2003

2004

€ 18

€1

2,017,822

3 December 20042005

€ 18.86€1

1,938,309

29 July 20052007

€ 19.62*/€ 17.16**€12,037,835

9 May 20072008

€ 12.79*/€ 11.70**€12,031,820

25 July 20082009

€ 10.76€1

1,358,936

18 December 2009***

Shares purchased within context of Group employee savings plan.
Shares purchased directly.

ESOP 2010

FUTURE ESOPSIn 2010, the normal ESOP plan was replaced through aworldwide 10 years EADS – Special Anniversary Free SharePlan 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
distributed out of treasury and therefore had no impact on theissued share capital.

EADS intends to implement an ESOP in 2011, subject toapproval by the Board of Directors. The 2011 ESOP is
expected to be a share matching plan, whereby the company
would match a certain number of directly acquired shareswith a grant of free shares. The total offering would be up
to approximately 3.2 million shares of the Company, i.e. up
to 0.39% of its issued share capital, open to all qualifying
employees.

This exceptional free share grant was implemented in order tocelebrate the initial public offering of EADS ten years ago and tostrengthen each employee’s sense of belonging to EADS.

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4.3.3 Long-Term Incentive Plans
At its 26 May 2000, 20 October 2000, 12 July 2001, 9 August
2002, 10 October 2003, 8 October 2004, 9 December 2005
and 18 December 2006 meetings, the Board of Directorsof the Company, using the authorisation given to it by theshareholders’ meetings of 24 May 2000, 10 May 2001, 6 May
2003, 11 May 2005, and 4 May 2006 approved the granting ofstock options for subscription of shares in the Company.

At its 18 December 2006 meeting, the Board of Directorsof the Company, using the authorisation given to it by theshareholders’ meeting of 4 May 2006 approved the granting of
performance shares and restricted shares in the Company.
At its 7 December 2007, 13 November 2008, 13 November
2009 and 10 November 2010 meetings, the Board of Directorsof the Company approved the granting of performance units
and restricted units in the Company.

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The principal characteristics of these options, performance and restricted shares and performance and restricted units as at
31 December 2010 are set out in the “Notes to the Consolidated Financial Statements (IFRS) — Note 36: Share-based payment”.
They are also set out in the table below:
First tranche

Second tranche

Date of shareholders’ meeting

24 May 2000

24 May 2000

Date of Board of Directors meeting (grant date)

26 May 2000

20 October 2000

5,324,884

240,000--

720,000

60,000

Number of options granted
Number of options outstanding
Options granted to Directors and officers
Total number of eligible employees

Exercise date

Expiry dateConversion right

850
34
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 specificprovisions contained in the Insider Trading Rules – see “General Descriptionof the Company and its Share Capital — 3.1.11 Disclosure of Holdings”).
8 July 2010

8 July 2010

One option for one share

One option for one share

Vested100%

100%

Exercise price€ 20.90€ 20.90

Exercise price conditions
Number of exercised options

110% of fair market value of the shares at the date of grant
2,892,020

188,000

Third tranche

Fourth tranche

Date of shareholders’ meeting

10 May 2001

10 May 2001

Date of Board of Directors meeting (grant date)

12 July 2001

9 August 2002

Number of options granted

8,524,250

7,276,700

Number of options outstanding

3,031,759

2,283,470

Options granted to:
Mr Philippe Camus

135,000

135,000

Mr Rainer Hertrich

135,000

135,000

the 10 employees having being granted the highest
number of options during the year 2001 (third tranche) and2002 (fourth tranche)

738,000

808,000uu
uuuu

Total number of eligible employees

Exercise date

Expiry dateConversion right
VestedExercise price
Exercise price conditions
Number of exercised options

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1,650
1,562
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 specificprovisions contained in the Insider Trading Rules – see “General Descriptionof the Company and its Share Capital — 3.1.11 Disclosure of Holdings”).
12 July 2011

8 August 2012

One option for one share

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

4,393,947

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Date of shareholders’ meeting

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Sixth tranche

6 May 2003

6 May 2003

10 October 2003

8 October 2004

Number of options granted

7,563,980

7,777,280

Number of options outstanding

4,238,953

5,597,026

Mr Philippe Camus

135,000

135,000

Mr Rainer Hertrich

135,000

135,000

the 10 employees having being granted the highest
number of options during the year 2003 (fifth tranche) and2004 (sixth tranche)

808,000

808,000

Date of Board of Directors meeting (grant date)

Options granted to:
uu
uu
uu

Total number of eligible employees

Exercise date

Expiry date

1,491
1,495
50% of options may be exercised after a period of two years and four weeks
from the 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 specificprovisions contained in the Insider Trading Rules – see “General Descriptionof the Company and its Share Capital — 3.1.11 Disclosure of Holdings”).
9 October 20137 October 2014

One option for one share

One option for one share

Vested100%

100% (1)

Exercise price€ 15.65€ 24.32

Conversion right

Exercise price conditions
Number of exercised options

110% of fair market value of the shares at the date of grant
2,726,403

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

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Seventh tranche

Date of shareholders’ meeting
Date of Board of Directors meeting
Number of options granted
Number of options outstanding

11 May 2005
9 December 2005
7,981,760
6,096,391 (1)Options granted to:
Mr Thomas Enders

135,000

Mr Noël Forgeard

135,000

the 10 employees having being granted the highest
number of options during the year 2005 (seventh tranche)

940,000uu
uuuu

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 anniversaryof the date of grant of the options (subject to specific provisions contained in the Insider
Trading Rules – see “General Description of the Company and its Share Capital— 3.1.11 Disclosure of Holdings”). As regards to the seventh tranche, part ofthe options granted to the top EADS Executives was 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(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.

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Eighth tranche

Date of shareholders’ meeting

4 May 2006

Date of Board of Directors meeting

18 December 2006
Stock option plan

Number of options granted

1,747,500

Number of options outstanding

1,650,500

Options granted to:
Mr Thomas Enders

67,500

Mr Louis Gallois
the 10 employees having being granted the highest
number of options during the year 2006 (eighth tranche)

67,500uu
uuuu

Total number of eligible beneficiaries

Date from which the options may be exercised

425,000
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 anniversaryof the date of grant of the options (subject to specific provisions contained in
the Insider Trading Rules – see “General Description of the Company
and its Share Capital — 3.1.11 Disclosure of Holdings”)

Date of expiration

16 December 2016

Conversion right

One option for one share

Vested50%€ 25.65

Exercise price
Exercise price conditions

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

Number of exercised options

0
Performance and restricted shares plan

Number of shares granted
Number of shares outstanding

Performance shares

Restricted shares

1,344,625

391,300--

Shares granted to:
Mr Thomas Enders

uu

Mr Louis Gallois
uuthe 10 employees having being granted the highest
number of shares during the year 2006 (eighth tranche)uu

Total number of eligible beneficiaries

Vesting date

Number of vested shares

16,875-

16,875-

137,500

28,2001,637
The performance and restricted shares will vest if the participant is still
employed by an EADS company and, in the case of performance shares,
upon achievement of mid-term business performance.
The vesting period will end at the date of publicationof the 2009 annual results, expected in March 2010.
Transfer of ownership made on 2nd of June 2010.
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Ninth tranche

Date of Board of Directors meeting

7 December 2007
Performance and restricted unit plan
Performance units

Restricted units

Number of units granted

1,693,940

506,060

Number of units outstanding

1,603,280

486,720Mr Louis Gallois

33,700-the 10 employees having being granted the highest
number of units during the year 2007 (ninth tranche)

239,900

43,500

Units granted to:uuuu

Total number of eligible beneficiaries

Vesting dates

Number of vested units

1,617
The performance and restricted units will vest if the participant is still employedby an EADS company at the respective vesting dates and,in the case of performance units, upon achievementof mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:
uu25% expected in May 2011;
uu25% expected in November 2011;
uu25% expected in May 2012;
uu25% expected in November 2012.
4,240

640

Tenth tranche

Date of Board of Directors meeting

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

2,138,700

781,960

40,000-304,000

68,200

Units granted to:
Mr Louis Gallois*
the 10 employees having being granted the highest
number of units during the year 2008 (tenth tranche)uuuu

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 2 years:
uu25% expected in May 2012;
uu25% expected in November 2012;
uu25% expected in May 2013;
uu25% expected in November 2013.
3,640

For more information in respect of units granted to the Chief Executive Officer, see “Notes to the Company Financial Statements — Note 11: Remuneration”.

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Eleventh tranche

Date of Board of Directors meeting

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

2,664,090

926,860

46,000-356,000

96,000

Units granted to:
Mr Louis Gallois*
the 10 employees having being granted the highest
number of units during the year 2009 (eleventh tranche)uuuu

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 caseof performance units, upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:
uu25% expected in May 2013;
uu25% expected in November 2013;
uu25% expected in May 2014;
uu25% expected in November 2014.
4,250

400

For more information in respect of units granted to the Chief Executive Officer, see “Notes to the Company Financial Statements — Note 11: Remuneration”.

Twelfth tranche

Date of Board of Directors meeting

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

2,890,140

977,320Mr Louis Gallois*

54,400-the 10 employees having being granted the highest
number of units during the year 2010 (twelfth tranche)

341,600

79,000

Units granted to:uuuu

Total number of eligible beneficiaries

Vesting dates

*

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 caseof performance units, upon achievement of mid-term business performance.
Vesting schedule is made up of 4 payments over 2 years:
uu25% expected in May 2014;
uu25% expected in November 2014;
uu25% expected in May 2015;
uu25% expected in November 2015.

For more information in respect of units granted to the Chief Executive Officer, see “Notes to the Company Financial Statements — Note 11: Remuneration”.

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The information in respect of stock options and performanceand restricted shares cancelled and exercised during the year
are set out in “Notes to the Consolidated Financial Statements(IFRS) — Note 36: Share-based payment”.

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For information on the transactions carried out by the Membersof the Board of Directors and the Executive Committee see
EADS’ website and/or the relevant stock exchange authorities’
website.

tt Shareholding in the Company of the Members of the Board of Directors
Member of the Board of Directors

Mr Louis Gallois

uu

Shareholding

15 ordinary shares
67,500 stock options*13,500 performance shares*

Mr Dominique d’Hinnin

61 ordinary shares

Mr Arnaud Lagardère

2 ordinary shares

uu
uu

*

See eighth tranche as set forth in the above table.

The other Members of the Board of Directors do not hold shares or other securities in the Company.

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Entity Responsible
for the Registration Document
5.1 Entity Responsible for the Registration Document

172

5.2 Statement of the Entity Responsible
for the Registration Document

172

5.3 Information Policy

173

5.4 Undertakings of the Company regarding Information

173

5.5 Significant Changes

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5.1 Entity Responsible for the Registration
Document
EADS

5.2 Statement of the Entity Responsible
for the Registration Document
The Company declares that, having taken all reasonable care to ensure that such is the case, the information contained in theRegistration Document is, to the best of the Company’s knowledge, in accordance with the facts and contains no omission likely toaffect its import.
EADS represented by:Louis Gallois
Chief Executive Officer

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5.3 Information Policy
Contact details for information:
Ms Nathalie Errard
Head of Investor Relations and Financial Communication
EADS
37, boulevard de Montmorency
75781 Paris Cedex 16 France
Telephone: +33 1 42 24 28 00
Fax: +33 1 42 24 28 40
E-mail: ir@eads.com

A website, www.eads.com, provides a wide range of
information on the Company, including the Board of Directors
Report. Additionally, for the life of this Registration Document,
copies of:tt the Articles of Association;
tt the Registration Document filed in English with, andapproved by, the AFM on 22 April 2009;
tt the Registration Document filed in English with, andapproved by, the AFM on 21 April 2010, andtt the Consolidated Financial Statements (IFRS) and theCompany Financial Statements of EADS for the years
ended 31 December 2008, 2009 and 2010, together withthe related Auditors’ reports, may be inspected at EADS’registered office at: European Aeronautic Defence andSpace Company EADS N.V., Mendelweg 30, 2333 CS
Leiden, the Netherlands, Seat (statutaire zetel) Amsterdam,
Tel:. + 31 (0)71 5245 600.
Special toll-free hotlines are available to shareholders inFrance (0 800 01 2001), Germany (00 800 00 02 2002) andSpain (00 800 00 02 2002). An e-mail box is dedicated toshareholders’ messages: ir@eads.com.

5.4 Undertakings of the Company regarding
Information
Given the fact that the shares of the Company are listed onEuronext Paris, on the regulierter Markt (in the sub-segment
Prime Standard) of the Frankfurt Stock Exchange and on the
Madrid, Bilbao, Barcelona and Valencia Stock Exchanges, theCompany is subject to certain laws and regulations applicablein France, Germany and Spain in relation to information, themain ones of which are summarised in “General Description of
the Company and its Share Capital — 3.1.3 Governing Laws
and Disclosures”.

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5.5 Significant Changes
As of the date of this registration document, there has been no significant change in EADS’ financial or trading position since
31 December 2010.

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