For 2005, consolidated cost of sales increased to €27.5 billion from €25.5 billion for 2004. Gross margin remained relatively unchanged as compared to 2004 at 19.5%.

For 2004, consolidated cost of sales increased to €25.5 billion from €24.6 billion for 2003. Gross margin increased from 18.4% in 2003 to 19.6% in 2004, reflecting the effects of higher deliveries at Airbus and major restructuring activities at the Space Division in 2003.

For 2005, consolidated selling and administrative expenses increased slightly, from €2.1 billion for 2004 to €2.2 billion for 2005, primarily reflecting an overall increase in selling activities across most of EADS’ businesses.

For 2004, consolidated selling and administrative expenses decreased slightly, from €2.2 billion for 2003 to €2.1 billion for 2004, reflecting the results of cost awareness programs at the BUs and the ongoing effects from restructuring of EADS’ general and administrative activities.

For 2005, EADS’ consolidated research and development expenses remained unchanged as compared to 2004 at €2.1 billion. A380-related research and development (“R&D”) expense in the IFRS consolidated statement of income decreased from its peak of €1,082 million for 2003 to €813 million for 2005 (as compared to €983 million for 2004). On the whole, Airbus R&D expense recorded in the IFRS consolidated statement of income decreased by €75 million from 2004 levels. Other consolidated R&D expenses outside Airbus totalled €416 million — an increase of €24 million from 2004 resulting mainly from the development of (i) Eurocopter’s EC175 programme in China and (ii) Military Air Systems’ ISR business. These changes reflect in part the application of IAS 38 at EADS, which resulted in the capitalisation of an additional €293 million of R&D in 2005, of which €259 million related to Airbus for the A380. See “Critical Accounting Considerations, Policies and Estimates — Research and Development Expenses”.

For 2004, EADS’ consolidated research and development expenses decreased by 3%, to €2.1 billion for 2004 from €2.2 billion for 2003. The application of IAS 38 at EADS in 2004 resulted in the capitalisation of an additional €165 million of R&D, of which €152 million related to Airbus for the A380. Overall, Airbus R&D expense recorded in the IFRS consolidated statement of income decreased by €85 million from 2003 levels. Other non-Airbus consolidated R&D expenses totalled €392 million — an increase of approximately €20 million from 2003 resulting mainly from the EADS research centre.

Consolidated other income and other expense represent gains and losses on disposals of investments in fixed assets, income from rental properties and certain provisions.

For 2005, the net of other income and other expense was positive €69 million as compared to positive €137 million for 2004, primarily reflecting the non-recurrence of the €106 million release of a provision in the DS Division relating to the Thales Euromissiles litigation reported in consolidated other income for 2004.

For 2004, the net of other income and other expense was positive €137 million as compared to negative €(60) million for 2003, reflecting primarily the impact of the €106 million provision release in the DS Division included in consolidated other income for 2004.

As a result of EADS’ early adoption of IFRS 3 / IAS 36 revised, goodwill is no longer amortized on a regular basis as from 1st January 2004, but subject to annual impairment testing. Consolidated amortisation of goodwill for 2003 was €0.6 billion. No goodwill-related impairment charges were recorded for 2003, 2004 or 2005.

Consolidated share of profit from associates and other income (expense) from investments principally includes results from companies accounted for under the equity method and the results attributable to non-consolidated investments.

For 2005, EADS recorded €225 million in consolidated share of profit from associates and other income (expense) from investments as compared to €84 million for 2004. The €141 million increase primarily reflects the results of EADS’ equity investment in Dassault Aviation, including a €64 million positive catch-up in 2005 of 2004 income related to EADS’ investment in Dassault Aviation, versus a negative €(33) million catch-up in 2004.

For 2004, EADS recorded €84 million in consolidated share of profit from associates and other income (expense) from investments as compared to €186 million for 2003. The €102 million decrease primarily reflects a €(33) million negative catch-up in 2004 of 2003 income related to EADS’ investment in Dassault Aviation, versus a positive €77 million catch-up in 2003 of 2002 income related to EADS’ investment in Dassault Aviation in 2003.

As from 1st January 2005, Dassault Aviation is publishing its financial statements in accordance with IFRS. See “Notes to Consolidated Financial Statement (IFRS) — Note 9: Share of profit from associates and other income (expense) from investments”.

Consolidated interest result reflects the net of interest income and expenses arising from financial assets or liabilities.

For 2005, EADS reported a consolidated net interest expense of €155 million, as compared to €275 million of consolidated net interest expense for 2004. The improvement in consolidated net interest result primarily reflects the improving net cash position of EADS as well as the increased interest income from sales financing. See “Liquidity and Capital Resources — Consolidated Financial Liabilities”.

For 2004, EADS reported a consolidated net interest expense of €275 million, as compared to €203 million of consolidated net interest expense for 2003. In addition to higher interest charges for 2004 on European government refundable advances received, interest charges on financing for the Skynet5 / Paradigm programme in 2004 contributed to the increase in consolidated net interest expense. See “Liquidity and Capital Resources — Consolidated Financial Liabilities”.

For 2005, consolidated other financial result increased to negative €(22) million from negative €(55) million for 2004. This positive €33 million change primarily results from the €147 million positive effect in 2005 from valuation changes of U.S. Dollar-denominated cash balances on the Euro- or British Pound-denominated balance sheets of Group companies, which had generated negative other financial results in 2004. This positive factor was partially offset by a negative €(108) million effect from the mark-to-market valuation of “embedded derivatives”. “Embedded derivatives” are financial instruments that, for accounting purposes, are deemed to be embedded in U.S. Dollar-denominated purchase orders of equipment, where the U.S. Dollar is not conclusively the currency in which the price of the related equipment is routinely denominated in international commerce and is not the functional currency of the parties to the transaction.

For 2004, consolidated other financial result decreased to negative €(55) million from positive €148 million for 2003. This change primarily results from (i) the lower effect in 2004 from valuation changes of U.S. Dollar-denominated financial liabilities on the Euro- or British Pound-denominated balance sheets of Group companies, which had generated positive other financial results in prior periods; (ii) a negative €(10) million effect from the mark-to-market valuation of embedded derivatives and (iii) interest accrued on tax audit expenses in 2004.

In 2001, postponed deliveries of commercial aircraft related to the events of 11th September 2001 resulted in a mismatch between hedged positions and expected cash flows. A roll-over plan was carried out in 2002 and 2003 to rephase the maturities of the affected hedges with new delivery dates. The roll-over plan was completed as of 31st December 2003. Had this roll-over plan not been implemented, the affected hedges would have been deemed cancelled for accounting purposes. As the affected hedges had a negative mark-to-market value at the end of 2001, cancellation would have had a negative impact on consolidated other financial result. See “Critical Accounting Considerations, Policies and Estimates — Accounting for Hedged Foreign Exchange Transactions in the Financial Statements”.

The effective tax rate was 33% in 2005. See “Notes to Consolidated Financial Statements (IFRS) — Note 11: Income taxes”.

For 2005, consolidated minority interests were €34 million, as compared to €18 million for 2004, reflecting primarily the interests of Finmeccanica (€24 million) and DaimlerChrysler Luft – und Raumfahrt Holding AG (“DCLRH”) (€11 million) in the results of MBDA and EADS Germany GmbH, respectively. The 20% share of BAE Systems in Airbus’ net income was restated in accordance with the application of IAS 32 “Financial Instruments: Disclosure and Presentation”, resulting in a €185 million adjustment to minority interests in 2004. As from 1st January 2005, consolidated minority interests no longer includes BAE Systems’ 20% ownership in Airbus. See “Critical Accounting Considerations, Policies and Estimates — Scope of and Changes in Consolidation Perimeter” and “Notes to Consolidated Financial Statements (IFRS) — Note 2: Summary of significant accounting policies — IAS 32 Financial Instruments: Disclosure and Presentation”.

For 2004, consolidated minority interests were €18 million, as compared to €12 million for 2003, reflecting primarily the interests of Finmeccanica (€21 million) in the results of MBDA.

As a result of the factors discussed above, EADS recorded consolidated net income of €1,676 million for 2005 as compared to consolidated net income of €1,203 million for 2004 and a consolidated net income of €206 million for 2003.

In 2005, net income for 2004 and 2003 was restated to reflect the retrospective application of IAS 32 “Financial Instruments: Disclosure and Presentation” in respect of BAE Systems’ put option for its 20% stake in Airbus. Additionally, net income for 2004 was restated to reflect the retrospective application of IFRS 2 “Share-based Payments”, which required the recognition of an expense in respect of employee stock option plans.

The table below illustrates the adjustments made to 2003 and 2004 net income as a result of the application of the accounting principles described in the preceding paragraph.

Basic earnings per share increased by €0.61 per share, from €1.50 per share in 2004 (after the restatement of net income described above) to €2.11 per share in 2005. The number of outstanding shares at 31st December 2005 was 797,140,426. The denominator used to calculate EPS was 794,734,220 shares, reflecting the weighted average number of shares outstanding during the year. In 2003, EADS reported basic earnings per shares of €0.26 (after the restatement of net income described above).

Diluted earnings per share increased by €0.59 per share, from €1.50 per share in 2004 (after the restatement of net income described above) to €2.09 per share in 2005. The denominator used to calculate diluted EPS was 800,216,353, reflecting the weighted average number of shares outstanding during the year, adjusted to assume the conversion of all potential ordinary shares. In 2003, EADS reported diluted earnings per shares of €0.26 (after the restatement of net income described above). See “Notes to Consolidated Financial Statements (IFRS) — Note 20: Total equity” and “Note 35: Earnings per share”.