The merger of the operations of Aerospatiale-Matra (“ASM”), DaimlerChrysler Aerospace (“Dasa”) and Construcciones Aeronáuticas S.A. (“CASA”), leading to the creation of EADS in 2000, was recorded using the purchase method of accounting with ASM as the acquirer. Accordingly, the book value of certain assets and liabilities, mainly property, plant and equipment and inventories, was adjusted by an aggregate amount of €1.8 billion, net of income taxes, to allocate a portion of the respective fair market values of Dasa and CASA at the time of the merger (the “fair value adjustments”). These aggregate additions in value are generally being depreciated over four to fifteen years for fixed assets and amortised over approximately 24 months for inventories. In addition, in 2001 in connection with the formation of Airbus S.A.S., EADS adjusted the book value of Airbus fixed assets and inventories by an aggregate amount of €0.3 billion, net of income taxes, to reflect their fair market values. The fair value adjustments lead to a depreciation expense in the Consolidated Statements of Income classified within cost of sales. For management reporting purposes, EADS treats these depreciation charges as non-recurring items in EBIT* pre-goodwill impairment and exceptionals. See “Measurement of Management’s Performance — Use of EBIT*”.

In 2006, a tax audit of Dasa for the years 1994 until 1999 was finalised. Pursuant to the EADS shareholders’ agreement, the related tax expense was reimbursed by Daimler AG. As a result of this audit, goodwill and deferred tax assets were adjusted as of 31^st December 2006 with respective impacts in the DS division and at the Headquarters/Consolidation level of €52 million and €12 million, leading to both an other expense and a tax benefit of €64 million in the consolidated income statement for 2006. EADS has treated the charge as a non-recurring item in EBIT*. See “Measurement of Management’s Performance — Use of EBIT*”.