EADS holds several equity investments for industrial or strategic reasons, the business rationale for which may vary over the life of the investment. Equity investments are either accounted for using the equity method (associated companies), if EADS has the ability to exercise significant influence, or at fair value. If fair value is not readily determinable, the investment is measured at cost.

EADS’ principal investment in associates is Dassault Aviation. The net asset value of this investment was €2.0 billion at 31st December 2006. EADS believes that its exposure to the risk of unexpected material adverse changes in the value of Dassault Aviation and that of other associated companies is limited. For equity investments other than associates, which make up only a fraction of EADS’ total assets, EADS regards the risk of negative changes in fair value or impairments on these investments as non-significant.

Treasury shares held by EADS are not considered to be equity investments. Additionally, treasury shares are not regarded as being exposed to risk, as any change in value of treasury shares is recognised directly in equity only when sold to the market and never affects net income. Treasury shares are held to hedge the dilution risk arising from employee stock ownership plans and the exercise by employees of stock options.