(13/07/2004) EADS specifies impact of Airbus GIE merger into Airbus SAS

. As a result of an accounting driven adjustment, EBIT* forecast for 2004 is increased by E 130 million to E 1.93 billion . Tax authorities agreement of April 2004 has enabled a simplification of the Airbus legal structure . Half-year 2004 results will be released as planned on 29 July Amsterdam, July 13, 2004 - EADS (European Aeronautic Defence and Space company, EAD) has now specified the impact of the Airbus GIE merger into Airbus SAS, which was completed following an agreement among European tax authorities. This triggers accounting consequences and leads to a positive net impact on the company's EBIT* of around E 130 million in 2004. As a result of this accounting adjustment, the EBIT* 2004 forecast of EADS has increased from E 1.8 billion to E 1.93 billion with no associated cash impact. On the occasion of the release of its first-quarter financial results on May 12, 2004, the company had announced that such an impact was to be expected. In 2002 a specific project was initiated at Airbus to merge Airbus GIE and Airbus SAS. This triggered complex consultations with fiscal authorities which had been successfully concluded with the official approval of the new setup by European tax authorities in April 2004. As a consequence, the Airbus GIE, a US-Dollar denominated entity, was merged in April 2004 within Airbus SAS, a Euro-denominated company, effective January 1st 2004. Airbus GIE was historically a US-Dollar entity, with books kept in US-Dollar that were translated into Euro at each closing with the translation difference recorded in equity (Currency Translation Adjustments, CTA). Due to the deterioration of the US-Dollar over the past periods, the Airbus GIE related CTA is a positive equity amount. Following the new setup, a different accounting treatment is applied to balance sheet items of the former Airbus GIE. From January 1, 2004, since all transactions occur in a Euro accounting environment, no additional CTA is generated. Specifically, customer PreDelivery-Payments (?PDP') received after that date are translated into Euro at the prevailing exchange rate of the date they are received and recognised into revenues upon aircraft delivery at that historical rate. In line with this accounting treatment and in compliance with International Accounting Standards (IAS 21), outstanding CTA which relates to aircraft to be delivered after January 1, 2004 will be released to the Profit & Loss Statement (P&L), while the remaining portion of the outstanding CTA will remain frozen in Equity. Compared to the 2004 targets disclosed in March 2004, the CTA-release generates additional revenues which are partly offset by additional costs of sales. The net impact is an EBIT* increase of around E 130 million in 2004. There is no cash effect. Under this treatment, EBIT* reflects more closely the profitability of individual deliveries throughout their contractual life, as it incorporates portions of revenues from PDP and costs at historical rates. * EADS uses EBIT pre-goodwill amortization and exceptionals as a key indicator of its economic performance. The term ?exceptionals' refers to income or expenses of a non-recurring nature, such as amortization expenses of fair value adjustments relating to the EADS merger, impairment losses, and dilution gains from the formation of Airbus S.A.S. and MBDA. It does not correspond to the definition of extraordinary items under IFRS. *** About EADS: EADS is a global leader in aerospace, defence and releated services. In 2003 EADS, generated revenues of E 30.1 billion. The EADS Group includes the aircraft manufacturer Airbus, the world's largest helicopter supplier Eurocopter and the joint venture MBDA, the second largest missile producer in the global market. EADS is the major partner in the Eurofighter consortium, is the prime contractor for the Ariane launcher, develops the A400M military transport aircraft and is the largest industrial partner for the European satellite navigation system Galileo. Safe Harbour Statement: Certain of the statements contained in this press release are not historical facts but rather are statements of future expectations and other forward-looking statements that are based on management' s beliefs. These statements reflect the EADS' views and assumptions as of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. When used in this press release, words such as ?anticipate', ?believe', ?estimate', ?expect', ?may', ?intend', ?plan to' and ?project' are intended to identify forward-looking statements. This forward looking information is based upon a number of assumptions including without limitation: assumption regarding demand, current and future markets for EADS' products and services, internal performance, customer financing, customer, supplier and s ubcontractor performance or contracts negotiations, favourable outcomes of certain pending sales campaigns. Forward looking statements are subject to uncertainty and actual future results and trends may differ materially depending on variety of factors including without limitation: general economic and labour conditions, including in particular economic conditions in Europe, North America and Asia, legal, financial and governmental risk related to international transactions, the cyclical nature of some of EADS' businesses, volatility of the market for certain products and services, product performance risks, collective bargaining labour disputes, factors that result in significant and prolonged disruption to air travel world wide, the outcome of political and legal processes, including uncertainty regarding government funding of rate and interest rate spread fluctuations between the Euro and the U.S. dollar and other currencies, legal proceeding and other economic, political and technological risk and uncertainties. Additional information regarding these factors is contained in the Company's ?document de référence' dated April 1, 2004. © CompanynewsGroup