Disposals and acquisitions of interests in various businesses can account, in part, for differences in EADS’ results of operations for one year as compared to another year.

Airbus: Airbus has been fully consolidated by EADS since 1^st January 2001, in light of the control EADS has exercised over the assets, liabilities and operations of Airbus since that date. BAE Systems held a 20% share in Airbus until October 2006, at which time the share was purchased by EADS.

BAE Systems held a put option with respect to its share in Airbus that was granted to it by EADS as part of the Airbus business combination in 2001. BAE Systems’ put option was exercisable at fair value and payable in cash or an equivalent amount of EADS shares. In light of these characteristics, revised IAS 32 (which EADS retrospectively applied as of 1^st January 2005) required EADS to account for the put option as a liability (“liability for puttable instruments”) in the Consolidated Balance Sheet, stated at fair value. (Before this change in accounting policy, EADS recorded BAE Systems’ stake in Airbus as minority interests within equity.)

Pursuant to revised IAS 32, dividend payments to BAE Systems were treated as partial repayments of the liability, thus reducing the liability for puttable instruments, without affecting minority interests. Other changes to the liability’s fair value were recorded as changes to the liability for puttable instruments and adjustments of goodwill, without any direct impact on the consolidated income statement. A corresponding restatement was made in 2005 to EADS’ 2004 consolidated net income and earnings per share to account for this change in accounting policy. At 31^st December 2005, the fair value of the liability for puttable instruments was assessed at €3.5 billion.

In June 2006, BAE Systems exercised its put option. An independent investment bank then determined the fair value of its 20% share in Airbus at €2.75 billion, a decrease of €750 million from the assessed value at 31^st December 2005. Dividend payments to BAE Systems in 2006 accounted for €129 million of the decrease, while most of the remaining portion of €621 million led to a corresponding reduction in Airbus’ goodwill (€613 million). Following payment of the €2.75 billion purchase price in cash by EADS in October 2006, the liability for puttable instruments was derecognised from the balance sheet.

MBDA: EADS and BAE Systems each hold a 37.5% stake in MBDA, with Finmeccanica holding the remaining 25%. In 2005 and 2006, EADS proportionally consolidated 50% of MBDA within the DS Division, with Finmeccanica’s holding reflected as a 12.5% minority interest. As of 1 January 2007, the percentage of the proportional consolidation of MBDA changed from 50% to 37.5%. In 2007, therefore, Finmeccanica’s holding is no longer reflected as a minority interest in EADS’ accounts. 2005 and 2006 consolidated figures have not been restated.
 

Acquisitions and Disposals

In January 2007, EADS increased its share in the Atlas Elektronik group from 40% to 49% in connection with the contribution in kind of EADS’ naval business to Atlas Elektronik. Atlas Elektronik is proportionately consolidated and the final determination of the difference between the purchase price and the acquired net assets then led to the recording of €42 million of goodwill.

On 10^th January 2007, EADS sold its remaining 60% stake in Sogerma Services, as well as its remaining stakes in Sogerma America Barfield B.C. (100%) and EADS Sogerma Tunisie (50.1%), as described above.

On 13^th October 2006, EADS acquired BAE Systems’ 20% minority share in Airbus after BAE Systems had exercised the put option it held on its Airbus stake in June 2006, as described above. Before the transaction, EADS already controlled Airbus and therefore fully consolidated this subsidiary.

On 3^rd August 2006, EADS acquired 40% of the shares of the Atlas Elektronik group, specialised in equipment and systems for naval forces. An initial estimate of the difference between the purchase price and the acquired net assets (not finally determined in 2006) led to the preliminary recording of €41 million of goodwill.

On 28^th February 2006, 81% of LFK GmbH and TDW GmbH, which had been fully consolidated by EADS, were sold to the European missile group MBDA, which EADS proportionally consolidates.

On 30^th November 2005, EADS sold TDA — Armements S.A.S. to Thales. TDA — Armements S.A.S. was proportionally consolidated at 50% through the end of November 2005.

On 2^nd September 2005, EADS acquired Nokia’s Professional Mobile Radio (PMR) activities (now known as EADS Secure Networks Oy) from Nokia.

On 28^th February 2005, EADS sold its enterprise telephony business, which comprised its civil telecommunication activities, to Aastra Technologies Limited.

See “Notes to Consolidated Financial Statements (IFRS) — Note 4: Acquisitions and disposals”.