Since 2003, with the application of IAS 38 “Intangible Assets”, the EADS group (the “Group”) has assessed whether product-related development costs qualify for capitalisation as internally generated intangible assets. Criteria for capitalisation recognition are strictly applied. Consequently, all research and development costs not meeting the IAS 38 criteria are expensed as incurred in the consolidated statement of income.

Current and previous research and development programs have been reviewed to determine the extent to which expenses in the development phase of such programs potentially meet the recognition criteria of IAS 38. As a result of the transition to IAS 38 in 2003, EADS capitalised €4 million of product-related development costs incurred in 2003 as internally generated intangible assets. For 2004, an additional €165 million of product-related development costs were capitalised in accordance with IAS 38, including €152 million relating to the Airbus A380 programme. For 2005, an additional €293 million of product-related development costs were capitalised in the consolidated balance sheet in accordance with IAS 38, including an additional €259 million relating to the Airbus A380 programme.