Prior to 2006, EADS recognised in its Consolidated Financial Statements actuarial gains and losses on its retirement plans qualifying as defined benefit plans by applying the “corridor approach” of IAS 19. Under this approach, any amount of accumulated unrecognised actuarial net gains and losses that exceeded the greater of 10% of the present value of the defined benefit obligation and 10% of the fair value of plan assets was amortised through the consolidated income statement on a straight line basis over the expected average remaining working lives of the employees participating in the respective plan, i.e. 15 years for EADS, thereby affecting EBIT*. In 2006, EADS opted to apply the “equity approach” under revised IAS 19, pursuant to which actuarial gains and losses are recognised in full within equity (net of deferred taxes) during the period in which they occur, without affecting the consolidated income statement. The provision for retirement plans recorded on the balance sheet in turn covers the full amount of the defined benefit obligation net of plan assets, including accumulated actuarial net gains and losses.

As a result of the retrospective application of revised IAS 19, the provision for retirement plans in 2005 has been restated by €1,118 million, implying a restatement of €(695) million in total equity (net of deferred taxes), as set forth in the following table:

The 2006 change in accounting policy for the recognition of actuarial gains and losses from the corridor to the equity approach resulted in lower net periodic pension costs in 2006, leading to comparably higher EBIT* of €45 million and higher net income of €25 million (EBIT* impact: Airbus: €12 million; Eurocopter €7 million; Astrium €5 million; Defence €16 million; HQ €5 million).

For further information relating to provisions for retirement plans, see “Notes to Consolidated Financial Statements (IFRS) — Note 22b: Provisions for retirement plans”.