EADS Continues to Deliver Strong Underlying Performance While Proactively Tackling Challenges

AMSTERDAM --- EADS delivered encouraging results for the first nine months of 2008, but is facing challenges in critical programmes.>> (.../...)>> The pressure on the A400M programme remains and we are conducting ambitious efforts to tackle both the industrial and commercial challenges in discussion with our customers and suppliers. EADS is more determined than ever to get this complex programme under control, EADS CEO Louis Gallois said.>> (.../...)>> In the A400M programme, the unavailability of a committed and reliable schedule for the propulsion system, which compounds unresolved issues with certain equipment supplies as well as equipment and systems integration, will lead to further delays. Due to the unavailability of a reliable schedule update in the A400M programme EADS must shift temporarily to the early stage contract accounting methodology and suspend the milestone accounting for this programme.>> EADS has started to discuss with its main customers to define next steps. Once a schedule update is achieved, EADS will resume the milestone accounting and further update the A400M charge, for which EUR 341 million have been recorded in the third quarter of 2008 and have burdened EBIT accordingly.>> (.../...)>> As the outcome of the A400M construction contract cannot be estimated reliably, EADS can currently not comply with all requirements to account for the contract under the estimate-at-completion accounting methodology. Consequently and in accordance with IAS 11 (Construction Contracts), EADS has suspended the application of estimate at completion methodology accounting (milestone accounting) and has then recognised contract costs incurred to date as an expense directly in the income statement as well as corresponding revenues as far as such contract costs incurred are expected to be recoverable under the early stage method of accounting.