EADS Delivers Solid Performance - Well Prepared for Further Challenges.Business Editors AMSTERDAM Amsterdam, city, Netherlands Amsterdam (ăm`stərdăm', Dutch ämstərdäm`), city (1994 pop. 724,096), constitutional capital and largest city of the Kingdom of the Netherlands, North Holland prov. , Netherlands--(BUSINESS WIRE)--March 10, 2003 EADS EADS European Aeronautic Defence and Space Company N.V. EADS Expeditionary Air Defense System (USMC) EADS Extended Air Defense Systems EADS Environmental Assessment Data System EADS Echelons Above Division Study (stock exchange symbol: EAD EAD Ensino A Distancia (Brazil) EAD Encoded Archival Description (DTD for SGML) EAD Employment Authorization Document (US INS) EAD Exposure At Default ) successfully masters the difficult market situation and is well on track for 2003. "We have prepared EADS to weather a possible further deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. of the business climate in 2003. Our ability to rapidly respond to changes in the business environment is proving a huge asset in the current circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or ", the EADS CEOs Philippe Camus and Rainer Hertrich Rainer Hertrich is one of the two current CEOs of EADS, and also head of the group's Aeronautics Division. He was born December 6th 1949 and studied business administration at the Technical University of Berlin and the University of Nuremberg after an apprenticeship at said when the company released its 2002 annual results on Monday Monday: see week. . In 2002, EADS achieved solid results in both its commercial and defence businesses and maintained its strong Operating Cash Flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. and Net Cash position. While the Airbus and Aeronautics aeronautics: see aerodynamics; airplane; aviation. Divisions were the main contributors to EADS' profitability, the Defence and Civil Systems Division achieved its planned turnaround Turnaround A situation where a company that has had poor performance for an extended period of time experiences a positive reversal. Notes: A speculator may profit from a turnaround if he or she accurately anticipates the improvement of a poorly performing company. , which was stronger than expected. EADS is the second largest global aerospace and defense company, incorporating leading brands like Airbus, Eurocopter, MBDA MBDA Minority Business Development Agency (US Department of Commerce) MBDA Michigan Broadband Development Authority MBDA Minnesota Band Directors Association MBDA Matra BAE Dynamics Alenia MBDA Magnolia Ballroom Dancers' Association , Eurofighter and Astrium. In 2002, EADS achieved an EBIT EBIT See: Earnings Before Interest and Taxes EBIT See earnings before interest and taxes (EBIT). (Earnings before interest and taxes In financial and business accounting, earnings before interest and taxes (EBIT) is a measure of a firm's profitability that excludes interest and income tax expenses.[1] EBIT = Operating Revenue – Operating Expenses + Non-operating Income , pre goodwill amortisation Noun 1. amortisation - the reduction of the value of an asset by prorating its cost over a period of years amortization reduction, step-down, diminution, decrease - the act of decreasing or reducing something 2. and exceptionals) of EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 1,426 million (2001: EUR 1,694 million), slightly above its target. Before Research and Development (R&D) costs, EADS slightly improved its EBIT margin from 11.5 % to 11.8 %, despite lower Airbus deliveries. R&D costs increased, as anticipated, to EUR 2.1 billion (2001: EUR 1.8 billion), particularly due to the A380 programme. CEOs: "2002 was a year of commercial success" "Despite the difficult environment, 2002 was another year of commercial and financial success. As in the previous year, we are proud to have again met or exceeded all our financial targets under these circumstances", the EADS CEOs, Philippe Camus and Rainer Hertrich, commented. "Looking forward, we have positioned EADS to master the new challenges ahead. We are continuously focusing on means to further improve management efficiency in order to generate cash and to reduce cost. In that respect, Divisions and Headquarters have all done their share in 2002", the CEOs said. "In addition, as ever we continue to pursue new order opportunities based on our superior product portfolio. This means that all the levers we can influence are perfectly under control. And once the commercial aviation markets recover, which we now expect at the earliest by the end of 2004, EADS with its increasingly balanced business portfolio will be extremely well positioned to take full advantage of opportunities across the full spectrum of the aerospace, defence and space industry." Net Cash position of EUR 1.2 billion at the end of 2002 is better than originally anticipated. Cash Flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses , which does not include customer financing, remained at EUR 2.7 billion. Free Cash Flow without aircraft financing amounted to EUR 0.6 billion, after high capital expenditures particularly for the A380 programme, confirming the company's ability to self-finance this programme. The EADS Chief Financial Officer, Hans Peter Ring, said: "In 2002, EADS was very successful in containing at $ 0.6 billion the increase in Airbus and ATR ATR Achilles tendon reflex, see Ankle reflex customer financing gross exposure, which was substantially lower than expected." For 2003, EADS' EBIT is completely hedged against currency fluctuations at an exchange rate of 1 EUR = 0.96$. For the years 2004 to 2006, and even beyond, EADS has high volumes of hedging in place at about 0.94$ to 0.95$, greatly limiting the impact of US-Dollar volatility on results. Dividend proposal of EUR 0.30 per share The EADS Board of Directors has proposed a dividend of EUR 0.30 per share for the business year 2002 (EUR 0.50 for 2001). This proposal will be submitted to the Shareholders' vote at the Annual General Meeting in Amsterdam on 6 May 2003. The EADS Chief Financial Officer, Hans Peter Ring, commented, "This proposal is consistent with our dividend policy to pay out about two percent of EADS' market capitalisation Noun 1. market capitalisation - an estimation of the value of a business that is obtained by multiplying the number of shares outstanding by the current price of a share market capitalization , based on an average 2002 share price of about EUR 14. The utmost focus of management at this time is to maintain the highest standard of financial discipline." Targets met or exceeded As reported on 10 February, EADS achieved 2002 revenues of EUR 29.9 billion (2001: EUR 30.8 billion), in line with its forecast. At EUR 31 billion, order intake demonstrates sustained demand for the company's commercial and defense products, thus further contributing to the order book. The strong order intake, which did not include the expected EUR 17.7 billion A400M programme, is strong evidence of EADS' resilience resilience (r  ·zilˑ·yens),n to market changes. The EADS order book remained strong at nearly EUR 170 billion, which represents more than five years of business and is still unparalleled in the global aerospace and defense industry. Its decrease, however, is mainly attributable to the revaluation Revaluation A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of the order book based on a weaker exchange rate of 1 EUR = 1.05$ at year-end, amounting to an adjustment of about EUR 14 billion. Net Income affected by exceptional items Net Income in both 2001 and 2002 was significantly affected by goodwill amortization and exceptional non-cash items. Net Income pre goodwill amortization and exceptionals was EUR 696 million in 2002, after EUR 809 million in 2001. Earnings per share pre goodwill and exceptionals reached EUR 0.87 (2001: EUR 1.00). Net Income after goodwill and exceptionals amounted to EUR -299 million. It was negatively impacted by goodwill depreciation of EUR 936 million, including an extraordinary (and not tax deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). ) depreciation of EUR 350 million resulting from impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. tests at the Space Division, reflecting further deterioration of the space markets. On the other hand, the 2001 figure of EUR 1,372 million was affected by positive exceptional items mainly resulting from the creation of the integrated Airbus SAS (1) (SAS Institute Inc., Cary, NC, www.sas.com) A software company that specializes in data warehousing and decision support software based on the SAS System. Founded in 1976, SAS is one of the world's largest privately held software companies. See SAS System. . Divisions: Strong turnaround in Defense and Civil Systems The Airbus Division EBIT (Earnings before interest and taxes, pre goodwill amortisation and exceptionals) was EUR 1,361 million, compared to EUR 1,655 million in 2001. R&D cost increased by EUR 257 million to reach EUR 1,682 million, mainly due to the A380 programme. Therefore, the EBIT margin pre-R&D increased from 15 % to 15.6 % despite lower deliveries. Reflecting unrelenting efforts to adapt to changing conditions, Airbus has set an additional cost saving target of EUR 1.5 billion by 2006 in order to protect its long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. profitability even at lower US$-exchange rates. Airbus delivered 303 aircraft in 2002, slightly ahead of its 300 target. The order backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. of 1,505 aircraft at year-end 2002 was ahead of the competition for the third year. Major successes were the orders by FedEx for 10 A380F Freighters and by the UK low-cost carrier A low-cost carrier or low-cost airline (also known as a no-frills or discount carrier / airline) is an airline that offers generally low fares in exchange for eliminating many traditional passenger services. Easyjet for 120 A319 aircraft, as well as winning back a number of significant customers such as KLM KLM Kaiserliche Marine (Enigma: Rising Tide game) KLM Koninklijke Luchtvaart Maatschappij (Royal Dutch Airlines) KLM Klub Langer Menschen (German: Tall Person Club) and South African Airways South African Airways (SAA) is South Africa's largest domestic and international airline company, with hubs in Cape Town and Johannesburg. It is also known in Afrikaans as Suid-Afrikaanse Lugdiens (SAL) . Overall in 2002, with a gross order intake of 300 aircraft, Airbus won a 54 % market share (both in terms of units and value). The Military Transport Aircraft Division recorded an EBIT loss of EUR -80 million (2001: EUR +1 million). The Division's result was impacted by an already reported one time charge from its investment as a subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor. When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. of the Dornier 728 programme of insolvent INSOLVENT. This word has several meanings. It signifies a person whose estate is not sufficient to pay his debts. Civ. Code of Louisiana, art. 1980.. A person is also said to be insolvent, who is under a present inability to answer, in the ordinary course of business, the responsibility Fairchild Dornier amounting to EUR -54 million, by the lost margin for this project and also by the delay of the EUR 17.7 billion A400M order (90 % EADS share), which is now expected for spring 2003. The Aeronautics Division EBIT amounted to EUR 261 million (2001: EUR 308 million). Eurocopter and Military Aircraft were the main profit contributors, with the other Business Units also performing successfully. However, the commercial aviation downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. impacted the civil maintenance and aero structure businesses of the division. Major defense programmes, such as Tiger (military helicopters Military helicopters are helicopters used by military forces. They can be found in a variety of roles in diffferent militaries of which the tactical airlift mission is the most common. ) and Eurofighter (combat aircraft) are now entering the delivery phase and will strongly contribute to future profitable growth. The Space Division recorded a negative EBIT of EUR -268 million (2001: EUR -222 million), due to high provisions made in the context of further deterioration of the space markets, mainly for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and investments depreciation, a satellite contract cancellation and losses on some programmes. The implementation of further restructuring at Space is now being facilitated by the full control of Astrium by EADS. The Space Division's management is now implementing a comprehensive restructuring programme, which targets an additional staff reduction estimated at about 1,700 personnel. This reduction will be in addition to the previous plan from last year of about 1,600 employees, currently under implementation mostly in 2003. Savings will be generated through adaptations to market demand, overhead reductions, implementation of integrated cross national centres of competence, industrial reorganisation Noun 1. reorganisation - the imposition of a new organization; organizing differently (often involving extensive and drastic changes); "a committee was appointed to oversee the reorganization of the curriculum"; "top officials were forced out in the cabinet and savings in procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. . The target is to achieve EBIT breakeven breakeven 1. The level of output or sales necessary to cover fixed expenses. Companies in industries that have high fixed costs and, consequently, high breakevens, such as automobile and steel manufacturing, are likely to exhibit large fluctuations by 2004. The Defence and Civil Systems Division realised a strong turnaround and achieved an EBIT of EUR 40 million (2001: EUR -79 million). Major contributions to this positive development came from the continuously positive results at MBDA and EADS Telecom and from the strong improvements at Systems & Defence Electronics and EADS/LFK, the German missile company. Further strong EBIT growth is expected as a result of continued restructuring and programmes entering the delivery phase such as Storm Shadow/Scalp EG and PAAMS/Aster. 2003 Outlook For 2003, the EADS management is setting prudent financial targets that preserve the company's flexibility to respond to market changes. In this uncertain environment, EADS will continue to favour profitability and cash control over market share gains. EADS presently anticipates 2003 EBIT in the same range as 2002, based on 300 deliveries by Airbus - currently backed by a higher order book - and taking into account the increase in R&D spending to peak levels in 2003. The EADS 2003 EBIT target also includes a considerable provision for a significant re-engineering of the Space business in order to achieve profitability during 2004. The Space Division 2003 expected EBIT represents a further deterioration compared to 2002 due to ongoing restructuring and programme contingencies Contingencies (ISSN 1048-9851) is the bimonthly magazine of the American Academy of Actuaries, providing a large and diverse readership with general interest and technical articles on a wide range of issues related to the actuarial profession. , and the first-time full consolidation of Astrium. These negative effects will be offset by the expected improved performance of the Divisions which are now ramping up defense programmes (Aeronautics, Defense and Civil Systems, and Military Transport Aircraft). Based on the current exchange rate (1 EUR = 1.10$), EADS expects to maintain 2003 revenues in the same range as 2002. Free Cash Flow before customer financing is anticipated to remain positive in 2003, reflecting the continued ability to self-finance the A380 programme. EADS' target for additional customer financing is lower in 2003 than last year's target, and EADS will continue with its restrictive practice restrictive practice Noun 1. a trading agreement against the public interest 2. a practice of a union or other group tending to limit the freedom of other workers or employers of keeping net additions at the lowest possible level. Highlights of the year 2002 In 2002, EADS again achieved major successes across its range of businesses: -- Airbus won a major contract from the low-cost carrier Easyjet for 120 A319s. -- Federal Express placed a firm order for ten A380-400F freighters (leading to a total of 95 firm orders for the A380 by the end of 2002). -- South African Airways ordered 41 Airbus aircraft to re-equip its entire fleet, and also KLM placed a new order. -- Airbus won a 54 % gross and 57 % net market share in terms of number of aircraft orders. -- EADS is a participant in the team selected to execute the US Coast Guard's Deepwater programme, with contributions from Defence and Civil Systems, Eurocopter and Military Transport Aircraft. -- Eurocopter won 60% of the world civilian and parapublic helicopter market. -- Rollout of the first series production Eurofighter combat aircraft. -- MBDA signed the Meteor missile contract (EADS share of EUR 0.9 billion at 50 %). -- EADS LFK signed EUR 485 million Taurus missile contract with Germany. -- UK MoD selected Paradigm as the preferred bidder for the Skynet 5 defence programme. -- Ariane won 11 of the year's 18 commercial launch contracts. -- Agreement reached to acquire 100 % of Astrium (acquisition of BAE Systems' 25 % stake finalised in January 2003). About EADS EADS is the world's second largest aerospace and defense leader, offering the widest array of products and services in the industry. With total annual revenues of nearly $30 billion, and annual defense revenues of $6 billion, EADS is a market leader in all sectors of the defense and aerospace market worldwide. EADS contributes over $6 billion to the U.S. economy annually, supports more than 100,000 U.S. jobs, and maintains subsidiary locations in 35 U.S. cities in 20 states and the District of Columbia District of Columbia, federal district (2000 pop. 572,059, a 5.7% decrease in population since the 1990 census), 69 sq mi (179 sq km), on the east bank of the Potomac River, coextensive with the city of Washington, D.C. (the capital of the United States). , as well as hundreds of suppliers across North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . To learn more, visit the EADS Web site at www.eads.net.
EADS - Figures for 2002
(Amounts in Euro)
EADS Group 2002 2001 Change
----------------------------------------------------------------------
Revenues, in millions 29,901 30,798 -3%
----------------------------------------------------------------------
EBITDA(1), in millions 3,031 3,213 -6%
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EBIT(2), in millions 1,426 1,694 -16%
----------------------------------------------------------------------
Research and Development costs(3), in
millions 2,096 1,841 +14%
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Net Income, in millions -299 1,372 -
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Net Income pre-goodwill amortization
and exceptionals, in millions 696 809(4) -14%
----------------------------------------------------------------------
Earnings Per Share (EPS)
pre-goodwill amortization and exceptionals 0.87 1.00 -0.13 EUR
----------------------------------------------------------------------
Net Cash position, in millions 1,224 1,533 -20%
----------------------------------------------------------------------
Dividend per share
0.30(5) 0.50 -0.20 EUR
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Order Intake, in millions 31,009 60,208 -48%
----------------------------------------------------------------------
Order Book, in millions 168,339 183,256 -8%
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Employees (at year-end) 103,967 102,967 +1%
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by Division EBIT(2) Revenues
------------------ ------------------
(Amounts in millions of Euro) 2002 2001 Change 2002 2001 Change
----------------------------- ------------------ ------------------
Airbus 1,361 1,655 -18% 19,512 20,549 -5%
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Military Transport Aircraft -80 1 - 524 547 -4%
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Aeronautics 261 308 -15% 5,304 5,065 +5%
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Space -268 -222 -21% 2,216 2,439 -9%
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Defence & Civil Systems 40 -79 - 3,306 3,345 -1%
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Headquarters Consolidation 112 31 - -961 -1,147 -
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Total 1,426 1,694 -16% 29,901 30,798 -3%
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by Division Order Intake Order Book
------------------ --------------------
(Amounts in millions of Euro) 2002 2001 Change 2002 2001 Change
---------------------------- ------------------ --------------------
Airbus(6) 19,712 50,279 -61% 140,996 156,075 -10%
----------------------------------------------------------------------
Military Transport Aircraft 403 993 -59% 633 1,320 -52%
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Aeronautics 5,099 5,315 -4% 13,458 13,722 -2%
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Space 2,145 1,333 +61% 3,895 3,796 +3%
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Defence & Civil Systems 4,410 3,081 +43% 10,110 9,094 +11%
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Headquarters Consolidation -760 -793 - -753 -751 -
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Total 31,009 60,208 -48% 168,339 183,256 -8%
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1) Earnings before interest, taxes, depreciation and amortization
2) Earnings before interest and taxes, pre-goodwill amortisation
and exceptionals
3) Reclassification of jigs and tools depreciation from R&D to
cost of sales EUR 205 million in 2001
4) the difference to the previously reported EUR 936 million
figure is due to a restatement of the 2001 figure caused by a
partial reallocation of exceptionals to minorities amounting to EUR
127 million
5) to be proposed to AGM on 6 May, 2003
6) Order Intake and Order Book based on gross prices
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