Order Backlog
Year-end order backlog represents firm future revenues from contracts signed up to that date. EADS uses order backlog as a measure of commercial performance, and growth of EADS’ order backlog is an ongoing goal of Management. Only firm orders are included in calculating order backlog – for commercial aircraft, a firm order is defined as 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. Commitments under “umbrella” or “framework” agreements by governmental customers are not included in backlog until they are officially notified to EADS.
For civil market contracts, amounts of order backlog reflected in 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 the hedged portion of the flows, and at the year-end spot rate for the non-hedged portion of the flows). The amount of defence-related order backlog is equal to the contract values of the corresponding programs.
| Consolidated Backlog for the Years Ended December 31, 2003, 2002 and 2001 | ||||||
|---|---|---|---|---|---|---|
| Year Ended | Year Ended | Year Ended | ||||
| December 31,2003 | December 31,2002 | December 31,2001 | ||||
| Amount | Amount | Amount | ||||
| in billions | in billions | in billions | ||||
| of € | Percentage5 | of € | Percentage5 | of € | Percentage5 | |
| Backlog:1 | ||||||
| Airbus2 | 141.8 | 73 | 140.9 | 84 | 156.1 | 85 |
| Military Transport Aircraft | 20.0 | 11 | 0.6 | 0 | 1.3 | 1 |
| Aeronautics3 | 9.8 | 5 | 10.1 | 6 | 13.7 | 7 |
| Defence & Security Systems3 | 14.3 | 7 | 13.5 | 8 | 9.1 | 5 |
| Space4 | 7.9 | 4 | 3.9 | 2 | 3.8 | 2 |
| Total Divisional Backlog | 193.8 | 100 | 169.1 | 100 | 184 | 100 |
| Headquarters/Eliminations | (14.5) | (0.8) | (0.7) | |||
| Total | 179.3 | 168.3 | 183.3 | |||
- 1 Without options.
- 2 Based on catalogue prices.
- 3 In 2003, the Military Aircraft business unit was transferred from the Aeronautics Division to the DS Division, with a corresponding impact on the backlog of each division of € 3.2 billion. 2002 figures have been restated to be comparable with 2003.
- 4 Astrium consolidated at 100% in 2003; proportionally consolidated at 75% in 2002 and 2001.
- 5 Before headquarters/eliminations.
The € 11 billion increase for 2003 order backlog resulted mainly from high level of order intake (€ 61 billion), partially offset by the impact of the weakening U.S. dollar used for conversion. Significant contracts recorded in the backlog in 2003 include the A400M (€ 19.7 billion for 180 aircraft) and Paradigm (€ 3.6 billion) contracts. Airbus’ net order intake was 254 aircraft in 2003 (€ 31 billion). In 2003, Airbus received 34 new orders for the A380, bringing the total firm order backlog for the A380 to 129 aircraft. These increases were offset by net foreign currency adjustments to the Airbus backlog of € 19 billion, reflecting the year-end valuation of the non-hedged portion of its order book.
The change in eliminations from 2002 to 2003 mainly relates to the impact of the A400M program on 2003 backlog. Airbus included approximately 70% of the order value in its backlog to reflect its work share of the A400M program. The Military Transport Aircraft (“MTA”) Division’s order backlog included 100% of the value of the A400M order to reflect the Division’s prime-contractor responsibility over the program. The double-counting was therefore eliminated in EADS’ consolidated order backlog.
The decrease in order backlog from 2001 to 2002 was primarily a result of decreased net order intake at Airbus following the terrorist events of September 11, 2001, as well as the effects of the weakening U.S. dollar used for conversion.
Reflecting the results of Management’s efforts to increase revenues from the defence sector to approximately 30% of total revenues over the long term, backlog in the defence sector continues to grow, with Paradigm and the A400M contributing significantly to the 2003 increase.
The table below illustrates the proportion of defence and commercial backlog at the end of each of the past two years.
| Year Ended | Year Ended | |||
| December 31, 2003 | December 31, 2002 | |||
| Amount | Amount | |||
| in billions | in billions | |||
| of €2 | Percentage | of €2 | Percentage | |
| Backlog:1 | ||||
| Commercial Sector | 133 | 74 | 146 | 87 |
| Defence Sector | 46 | 26 | 22 | 13 |
| Total | 179 | 100 | 168 | 100 |
- 1 Without options.
- 2 After headquarters/eliminations.
