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. Following its early adoption of revised IAS 36, as from 1st January 2004, EADS tests goodwill for impairment at the end of each fiscal year, whether or not there is any indication of a triggering event. Generally, the discounted cash flow method is used to determine the value of the assets. The discounted cash flow method is sensitive to the selected discount rate and estimate of future cash flows by EADS’ management (“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 rate used by EADS is derived from the Group’s weighted average cost of capital, adjusted to reflect the riskiness of the business concerned. See “Notes to Consolidated Financial Statements (IFRS) — Note 2: Summary of significant accounting policies — Impairment of assets” and “Note 12: Intangible assets”.

The impairment of goodwill has an effect on profitability, as it is recorded in the line item “Other expenses” on EADS’ consolidated statement of income. No goodwill was impaired in 2005, 2004 or 2003.

See “EADS Results of Operations — Consolidated Amortisation of Goodwill” and “Notes to Consolidated Financial Statements (IFRS) — Note 12: Intangible assets” and “Note 33: Investment property”.