Consolidated Cost of Sales

For 2007, consolidated cost of sales was roughly stable, increasing from €34.7 billion for 2006 to €34.8 billion for 2007. The slight increase was primarily due to the higher number of aircraft deliveries and to charges relating to the A400M programme, A350 XWB programme and Power8 implementation (as described above), which were partially offset by decreased charges in respect of the A380 programme in 2007. Consolidated cost of sales also includes the amortisation of capitalised development costs pursuant to IAS 38, which amounted to €(46) million in 2007. Mainly as a result of the above stated items and a negative dollar effect at Airbus in respect of revenues, the gross margin decreased from 11.9% in 2006 to 11.0% in 2007.

For 2006, consolidated cost of sales increased by 26.1%, from €27.5 billion for 2005 to €34.7 billion for 2006. In addition to the higher sales activity that occurred in 2006, the increase was primarily due to cost overruns relating to the A380 programme and transition costs related to the A350 programme, as described above. Asset impairment charges and restructuring provisions recorded at EADS Sogerma also had a negative effect. Mainly as a result of the above stated items and negative dollar effect at Airbus in respect of revenues, the gross margin decreased from 19.5% in 2005 to 11.9% in 2006.

Consolidated Selling and Administrative Expenses

For 2007, consolidated selling and administrative expenses decreased by 4.2%, from €2.3 billion for 2006 to €2.2 billion for 2007, primarily reflecting lower expenses at the DS Division (perimeter effect relating to MBDA, business unit savings, etc.) and at EADS Sogerma (following the sale of its support and maintenance activities at the beginning of 2007). This decrease was partially offset by higher expenses at the Eurocopter Division and Astrium, primarily reflecting an overall increase in selling activities, and by restructuring expenses relating to Power8 implementation at Airbus.

For 2006, consolidated selling and administrative expenses increased slightly, from €2.2 billion for 2005 to €2.3 billion for 2006, primarily reflecting higher expenses at the DS Division (perimeter effect, higher restructuring expenses and Eurofighter marketing campaign costs), Eurocopter Division (higher marketing expenses) and Airbus (tanker campaign costs at EADS North America and expanding Airbus subsidiaries in Japan and the Middle East).

Consolidated Research and Development Expenses

For 2007, consolidated research and development (“R&D”) expenses increased by 6.1%, from €2.5 billion for 2006 to €2.6 billion for 2007. Most of the increase was attributable to higher expenses at Airbus, due to development on the A350 XWB and A330-200F. The DS Division recorded slightly lower R&D expenses in 2007, whereas the MTA Division, Eurocopter and Astrium recorded slightly higher expenses than in 2006. These changes also reflect the fact that in 2007 only €93 million of R&D qualified for capitalisation as an intangible asset under IAS 38, which was considerably less than the €411 million of R&D capitalised in 2006. See “Critical Accounting Considerations, Policies and Estimates — Research and Development Expenses”.

For 2006, consolidated R&D expenses increased by 18.5%, from €2.1 billion for 2005 to €2.5 billion for 2006. Most of the increase was attributable to higher expenses at Airbus, due to development on the former A350, and later in the year on the new A350 XWB. A380-related R&D expenses continued to decrease from their peak of €1,082 million in 2003 to €771 million in 2006 (as compared to €813 million in 2005), excluding continuing development costs. The MTA and DS Divisions recorded slightly lower R&D expenses in 2006, whereas Eurocopter and Astrium recorded slightly higher expenses than in 2005. These changes also reflect the capitalisation of €411 million of R&D in 2006 as an intangible asset under IAS 38, of which €335 million related to Airbus for the A380.

Consolidated Other Income and Other Expenses

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

For 2007, the net of other income and other expenses was positive €136 million as compared to positive €109 million for 2006. The increase was mainly attributable to the recording of lower overall expenses in 2007, as well as to gains on the sale of land and buildings in France and Germany.

For 2006, the net of other income and other expenses was positive €109 million as compared to positive €69 million for 2005. The increase was mainly attributable to capital gains of €127 million recorded in the DS Division primarily relating to the sale of LFK GmbH and TDW GmbH to MBDA during 2006.

Consolidated Share of Profit from Associates Accounted for under the Equity Method and Other Income from Investments

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

For 2007, EADS recorded €296 million in consolidated share of profit from associates accounted for under the equity method and other income from investments as compared to €189 million for 2006. The €107 million increase primarily reflects the results of EADS’ equity investment in Dassault Aviation, including a €17 million positive IFRS catch-up in 2007 (as compared to the absence of an IFRS catch-up in 2006), as well as a capital gain of €46 million from EADS’ sale of its 2.13% interest in Embraer. See “Notes to Consolidated Financial Statements (IFRS) — Note 9: Share of profit from associates accounted for under the equity method and other income from investments”.

For 2006, EADS recorded €189 million in consolidated share of profit from associates accounted for under the equity method and other income from investments as compared to €225 million for 2005. The €36 million decrease primarily relates to the results of EADS’ equity investment in Dassault Aviation, including the non-recurrence of a positive catch-up in income of €64 million recorded in 2005 relating to Dassault Aviation’s income of 2004.

Consolidated Interest Result

Consolidated interest result reflects the net of interest income and expenses arising from financial assets and liabilities, including interest expense on refundable advances provided by European governments to finance research and development activities.

For 2007, EADS reported a consolidated net interest expense of €(199) million, as compared to €(121) million of consolidated net interest expense for 2006. The deterioration is due primarily to a lower average net cash balance held during 2007 following the acquisition of BAE Systems’ 20% share in Airbus in October 2006, as well as the incurrence of higher interest expenses on European government refundable advances.

For 2006, EADS reported a consolidated net interest expense of €(121) million, as compared to €(155) million of consolidated net interest expense for 2005. The improvement is primarily due to more favourable interest rates.

Consolidated Other Financial Result

For 2007, consolidated other financial result deteriorated to €(538) million from €(123) million for 2006. This negative €(415) million change primarily results from (i) the €(202) million negative effect in 2007 from the unwinding of discounts on provisions recorded at Airbus, compared to a €(22) million negative effect in 2006, and (ii) a €(274) million negative effect in 2007 from valuation changes of U.S. dollar-denominated cash balances on the Euro-denominated balance sheets of Group companies, compared to a €(136) million negative effect in 2006, and (iii) a negative €(5) million effect from the mark-to-market valuation of “embedded derivatives”, compared to a positive €46 million effect in 2006. Such “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 any of the parties to the transaction. See “Notes to the Consolidated Financial Statements (IFRS) — Note 10: Total finance costs”.

For 2006, consolidated other financial result deteriorated to €(123) million from €(22) million for 2005. This negative €(101) million change primarily results from the €(136) million negative effect in 2006 from valuation changes of U.S. dollar-denominated cash balances on the Euro-denominated balance sheets of Group companies, which had generated a positive €147 million in other financial result in 2005. This negative factor was partially offset by a positive €46 million effect from the mark-to-market valuation of embedded derivatives.

Consolidated Income Taxes

For 2007, income taxes yielded a positive €333 million, compared to a positive €81 million in 2006. The increase was due to a taxable loss of €(770) million recorded in 2007, compared to taxable income of €34 million recorded in the previous year. See “Notes to the Consolidated Financial Statements (IFRS) — Note 11: Income taxes”.

For 2006, income taxes yielded a positive €81 million, compared to an expense of €(825) million in 2005. The change was due primarily to a significant reduction in tax expense during 2006, reflecting the Group’s reduced profit before income taxes, as well as a tax-free gain on the sale of LFK GmbH and TDW GmbH to MBDA in 2006. This decrease was partially offset by higher valuation allowances on deferred tax assets at Airbus.

Consolidated Minority Interests

For 2007, consolidated minority interests were €9 million, as compared to €16 million for 2006, reflecting primarily the interest of Daimler Luft — und Raumfahrt Holding AG (“DLRH”) in the results of Dornier GmbH. The decrease in minority interests for 2007 primarily relates to the change in the proportional consolidation of MBDA from 50% to 37.5% as of 1^st January 2007, as a result of which Finmeccanica’s 12.5% stake in MBDA is no longer reflected as a minority interest in EADS’ accounts. See “Scope of and Changes in Consolidation Perimeter”.

For 2006, consolidated minority interests were €16 million, as compared to €34 million for 2005, reflecting primarily the interests of Finmeccanica (€25 million) and DLRH (€15 million) in the results of MBDA and Dornier GmbH, respectively. The decrease in total minority interests for 2006 relates to a consolidation impact from the sale of LFK GmbH and TDW GmbH to MBDA, which amounted to €(27) million in 2006.

Consolidated Net Income (Loss) (Profit (loss) for the Period Attributable to Equity Holders of the Parent)

As a result of the factors discussed above, EADS recorded a consolidated net loss of €(446) million for 2007 as compared to consolidated net income of €99 million for 2006 and €1,676 million for 2005.

Earnings per Share (EPS)

Basic earnings per share decreased by €(0.68) per share, from €0.12 per share in 2006 to a loss of €(0.56) per share in 2007. The number of outstanding shares at 31^st December 2007 was 804,209,475. The denominator used to calculate EPS was 803,128,221 shares, reflecting the weighted average number of shares outstanding during the year. In 2005, EADS reported basic earnings per share of €2.11.

Diluted earnings per share decreased by €(0.67) per share, from €0.12 per share in 2006 to a loss of €(0.55) per share in 2007. The denominator used to calculate diluted EPS was 805,548,401, reflecting the weighted average number of shares outstanding during the year, adjusted to assume the conversion of all potential ordinary shares. In 2005, EADS reported diluted earnings per share of €2.09.

See “Notes to Consolidated Financial Statements (IFRS) — Note 20: Total equity” and “Note 35: Earnings per share”.