Delivering value ina challenging environment

Analyst Conference call - Amsterdam - September 20th, 2001• Delivering value in a challengingenvironment• H1 2001 Financials• Conclusions

Delivering value and managing challenges
Primary drivers of EADS■Solid financials■

Dynamic commercial policy■

Ready to handle the challenging environment■

Comprehensive industry-leading defense portfolio■

Ability to manage commercial aerospace cycles

A pro-active approachStrong Fundamentals
H1 2001 Actual

H1 2001

H1 2001(Airbus 100% consolidated)

Actual
vs H1 2000**
pro-forma

excl. AirbusUK
vs H1 2000**
pro-forma

Revenues€ 14 bn+ 33%+ 14%

EBIT *€

764 m+ 38%+ 18%

Free Cash Flow€

526 m(€ 168 m)

Net Income *€456 m(€ 115 m)

EPS *€

0.56(€ 0.14)

New orders€ 42.8 bn+ 78%

Total backlog€ 185.1 bn+ 56%+ 46%* pre-goodwill amortisation and exceptionals** EADS pro-forma, excluding Airbus UK in 2000

Delivering On-Track Performance

Profit & loss highlights
H1 2001€ million

Revenues

Pro forma H1 2000
in % ofrevenues

14,043€ million

in % ofrevenues

10,585Self-financed R&D

853

6.1%

594

5.6%

EBIT *

764

5.4%

553

5.2%

Operating income after
goodwill/exceptional

2,055

217

of which due to hedge accounting

(53)
(134)

(644)
(643)

Net income

1,657

(359)

Net income *456

(115)

Financial result* pre goodwill and exceptionals

Higher margin despite hefty R&D
Net result on track

Revenues and EBIT by division
H1 2001

Pro forma H1 2000

€ million

EBIT*
Revenues
Airbus**EBIT*
margin

Revenues

EBIT*

EBIT*
margin

9,982

797

8.0%

6,821

524

7.7%

195(21)(10.8%)

74(35)(47.3%)

Space

1,054

29

2.8%

1,084

25

2.3%

Defence &Civil Systems

1,358(128)( 9.4%)

1,068(50)(4.7%)

Aeronautics

2,020

85

4.2%

1,951

53

2.7%

Elimination &headquarters(566)

2(413)

36

EADS Total

14,043764

10,585553

Military
Transport Aircraft

5.4%

5.2%

* pre-goodwill and exceptionals** 100% consolidated from 2001

All divisions, but DCS, increased margins

Dynamic marketing policy leading tosuccess and future growth■

■

■

■

Airbus : 250 net orders worth € 39 bn in H1 2001; increased
market share to 68%
A380 : 67 customer commitments on which 48 firm orders worth € 16 bn
A400M : 9 European nations committed to this program: worth over€ 10 bn (EADS share) binding agreement expected by year-end
NH90 : Portugal purchases 10, Nordic countries purchase 52 contractsworth € 0.9 bn (excluding 17 options)■Tiger in Australia worth € 0.7 bn■

C-295 in Poland worth € 0.2 bn and Abu Dhabi selection■

DCS : SIR for French army (€ 230 m), EDSN Acropol multi-year contract(€ 200 m) …. € 1.3 bn of new orders in total

Sustained Commercial Achievements

Managing change to deliver value
Business Development■ Creation of Airbus SAS= €100 m additional
value creation per yearby 2004
■ Final shareholder

agreement for theestablishment of MBDA
■ Formation of ATR

Integrated:€ 15 m synergies peryear■ EDSN acquisition ofCOGENT

Operational milestones■ Strong $ secured through hedging

policy: 38.5 Bn $ hedged■ Value Creation projects

implemented and fully on track =>€ 60 m added value by 2001
■ Cost reduction plans initiated toadapt to the challengingenvironment■ Implementation of new metrics

based on CVA (Cash Value Added)■ Securing of A/A-1 rating from S&P

and of A2 rating from Moody’s

Management Delivers Strategic Groundworkfor Enhanced Operations

EADS Defence product portfolio:
Good fit with changing market demand
European Defence Group n°2 - Market Leader in key segments withan orderbook of € 18.5 bn representing more than 3 years of revenues

C4ISR
ASTRIUM:§ EW SATELLITES§ EO SATELLITES§ SATCOMAERONAUTIC:§ MISSION ACDCS:§INFO GATHERING UAV§SECURED COM.
§CRYPTOLOGY§C3I SYSTEMS§SAR SENSORS

Deterrence andPower projection

Survivability

LAUNCH VEHICLES:§ BALLISTIC MSL
MBDA:§ CRUISE MSL§ TACTICAL MSL
AERONAUTIC:§ FIGHTER AC§ MIL. HC§ MIL. TRANSPORTAND TANKER ACEADS TELECOM§ DEPLOYABLETELECOM
NETWORKSMISSILES:§ MISSILES AND AIR
DEFENCEEADS TELECOM§ SECUREDCOMMUNICATIONNETWORKDCS§ ELECTRONICWARFAREEADS is key player in all Defence missions

EADS commercial aircraft business■■■■

Record backlog (€ 158 bn) with a large baseof customers and a balanced regional breakdown
Underlying business growth secured by :long-term traffic growth replacement of obsolete
fleet, market preference for Airbus products
Strong barriers to entry
High visibility and stability
Profitable business

Fundamentals allow to go through the turbulenceManaging risk and opportunity;
operational flexibility : The Airbus Example• Subcontracting policy (38%-40% of total production costs) anddynamic make-or-buy• Internal Workforce flexibility : 15% flexibility by term contracts,
overtime, flex time,…
• Production cycles reduced from 18 to 9 months (A320 family)• Low fixed costs(< 20% of unit cost)• Further cost reduction plans initiated• Airbus SAS Integration
Optimise allocation of resources and workload,
Systematic monitoring and plan

• Non-cyclical Markets
Optimise phasing of defence programs (A400M, mission A/C…)

Sustain and improve margins are keys

• Delivering value in a challenging
environment• H1 2001 Financials• Conclusions

Development of net cash
€ million
H1 2001

pro-forma
H1 2000

Net cash position as of Dec. 31st2,143(946)

Change due to Airbus GIE consolidation(838)

Net cash position as of January 1st1,305(946)

Cash flow from operations*

1,220

791

Cash used for invest. activities

(694)

(959)

Free cash flow

526

(168)

Dividend payments

(404)

(31)

Others(118)

30

Net cash position as of June 30th

1,309

(1,115)* including working capital requirement reduction of € 50 m and € 132 m respectively

Strong cash flow generation

Balance sheet€ million
Jun. 2001

Jan.2001*Dec. 2000

Fixed Assets

27,427

26,926

20,894Current Assets

17,954

18,467

16,745

Deferred Tax Assets

5,008

3,922

3,151

Pre-paid Expenses

752758654

Total Assets

51,14150,073

41,444

Shareholders´ Equity

9,852

11,957

10,250Minority interest

791

1,152

221

Total provisions

13,827

9,611

8,684

Deferred Tax Liabilities & Income

4,526

4,672

4,042

Total Liabilities

22,14522,681

18,247

Total Shareholders´ Equity & Liabilities

51,14150,07341,444* Airbus 100% consolidated from January 1st 2001

Conclusions
■

■

■

■

■

Solid fundamentals : financials on track, robust andbalanced backlog, solid underlying long-term prospects
High visibility growth from defence products ascontracts in backlog are now in transition fromdevelopment to production
Flexible production capacity to adapt to market
demand and possible short-term crisis
Guidance for 2001 expected to be fulfilled with 15%
EBIT growth and 20% revenue growthManagement is immediately reacting to deliver our
10% EBIT margin target in 2004

EADS is delivering value in a challenging
environment

APPENDIX 1 : Income Statement
H1 2001€ million* excluding exceptional depreciation on fair value** after goodwill amortisation and exceptionals

Pro forma
H1 2000€m%€m%

14,043100

10,585100(11,159)(79)(8,341)(79)Gross margin pre- exceptionals

2,884

21

2,244

21

Selling expenses
General administrative expenses
Research & development costs
Other operating income
Other operating expenses
Amortization of goodwill
Exceptionals

(393)
(761)
(853)
169
(316)
(317)
1,642

(3)
(5)
(6)
1(2)
(2)
11(358)
(517)
(594)
132
(418)
(198)
(74)

(3)
(5)
(6)
1(4)
(2)
(0)

Operating income **

2,055

15217

2

Total financial result

(53)

(1)

(644)

(6)

2,002

14(427)

(4)

(359)
14(2)
073
(5)

10

1,657

12(359)

(3)

764

5553

51,25791,016

10Revenues
Cost of sales*

Income (loss) before income taxes
Income taxes
Minority interest

Net income
EBIT pre-goodwill & exceptionals
EBITDA pre-exceptionals

APPENDIX 2 :Net Income and EPS pre-goodwill andexceptionals€m
Net income (group share)

H1 2001

Pro forma
H1 2000

1,657(359)Goodwill amortisation
Exceptionals :Extraordinary Gain on Airbus SAS
Fair value adj. on fixed assets
Fair value adj. on inventories

317198(1,934)
127
165

074
0

Tax impact on exceptional fair value
Tax impact on non-operational(99)
223(28)0Net result *456(115)

EPS * (1)0.56(0.14)* pre-goodwill and exceptionals(1) average number of shares outstanding : 807,157,667

APPENDIX 3 :EBIT pre-goodwill and exceptionals
H1 2001

Pro forma
H1 2000

2,055

217

Income from investments

3464

Goodwill amortization
Exceptionals :Gain Airbus UK
Fair value adj. on fixed assets
Fair value adj. on inventories

317

198

(1,934)
127
165

074
0764

553

€m
Operating income

EBIT ** pre-goodwill and exceptionals

Strict policy on adjustments limited
to Goodwill and Fair value

APPENDIX 4 : Financial result breakdown(no more significant impact of macro hedging)H1 2000

Pro forma
H1 2000

0.85

0.95

Interest income (expense)

47

(65)

Income from investments

3464

Other financial result*

(134)

(643)

Total financial result

(53)

(644)

€ million

June 30 closing rate Euro versus $* mostly due to macro hedging

No more significant impact from hedge
accounting on net result

APPENDIX 5 : Balance sheet€ million
Jun. 2001

Jan. 2001*Dec. 2000

Fixed Assetsof which intangible assetsof which property, plant & equipmentof which financial assets
Current Assetsof which cash & equivalents,securitiesof which working capital assets
Deferred Tax Assets
Pre-paid Expenses
Total Assets

27,427
11,785
10,591
5,051
17,954
8,053
9,901
5,008
752
51,141

26,926
12,096
9,573
5,257
18,467
7,951
10,516
3,922
758
50,073

20,894
8,165
8,120
4,609
16,745
7,922
8,823
3,151
654
41,444

Shareholders´ Equityof which Marked-to-market micro-hedging(IAS39)
Minority interest
Total provisionsof which other accrualsof which pensions
Deferred Tax Liabilities & Income
Total Liabilitiesof which trade liabilitiesof which financial debt
of which other liabilities
Total Shareholders´ Equity & Liabilities

9,852(1,895)791
13,827
10,7103,117
4,526
22,145
4,435
6,744
10,966
51,141

11,957

10,250
0
221
8,684
5,698
2,986
4,042
18,247
4,268
5,779
8,200
41,444

1,152
9,611
6,625
2,986
4,672
22,681
4,907
6,617
11,15750,073* Airbus 100% consolidated from January 1st 2001

APPENDIX 6

AIC creation major impacts on financials■Additional Goodwill = € 3.9 bn(amortised over 20 years)■

Additional fair value adjustment = € 0.5 bn■

Additional value creation by 2004 = € 100 m per year■■

Extraordinary non-cash and non taxable profit= € 1.9 bn
Net cash injection from BAE Systems (in H2 2001)= € 253 m

APPENDIX 7

Equity reconciliation from Dec. 2000 to June 2001€m
H1 2001

Equity as of Dec. 31 2000

10,250Net Income

1,657

Dividends paid(404)Marked-to-market of
micro-hedging portfolio (IAS39) net of taxOthers

Equity as of June 30 2001

(1,895)2449,852

APPENDIX 8 :Goodwill and exceptionals
Amortisation charge€mValue as ofJun. 30 2001

Extraordinary profit

2000 H1 2001

amortisatione2001* e2002*
period0

1,934

1,9340Goodwill

11.667

(429)

(317)

(670)

(670)

20 yrsFair value on fixed assets

1,658

(176)

(127)

(200)

(200)

5-25 yrs

Fair value on inventories

153(483)

(165)

(300)

0(1,088)

1,325

764

(870)

Total goodwill& exceptionals (pre-tax)* rough estimates