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2006* Farnborough Airshow   ApresentaçãO Financeira
 

2006* Farnborough Airshow ApresentaçãO Financeira

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    2006* Farnborough Airshow   ApresentaçãO Financeira 2006* Farnborough Airshow ApresentaçãO Financeira Presentation Transcript

    • 5th Annual Investors and Analysts Meeting November 18 & 19, 2004 São José dos Campos - Brazil Financial Antonio Luiz Pizarro Manso CFO
    • Forward Looking Statement This presentation includes forward-looking statements or statements about events or circumstances which have not occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things: general economic, political and business conditions, both in Brazil and in our market. The words “believes,” “may,” “will,” “estimates,” “continues,” “anticipates,” “intends,” “expects” and similar words are intended to identify forward-looking statements. We undertake no obligations to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Shareholder Base
    • Embraer Voting Capital Ordinary Shares: 242,544,448 33.78% 2% Individuals 20% 60% Controlling European Group Shareholders 7% Foreign Institutional Investors 11% Brazilian Institutional Investors 20% European Group 60% Controlling Shareholders Dassault 5.67% PREVI (Pension Fund) 20% Thales 5.67% SISTEL (Pension Fund) 20% EADS 5.67% Snecma 2.99% Cia. Bozano 20% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Preferred Shares Preferred Shares : 475,411,026 66.22% 2% 17% Individuals Controlling Shareholders 10% BNDES 3% Brazilian Institutional Investors 68% Foreign Investors THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Dividends 500 60% 404 421 400 49.8% 50% 327 43.3% 40% 300 36.1% 36.1% 228 195 30% 27.2% 200 20% 100 10% 0 0% 2000 2001 2002 2003 9M04 Dividends Pay Out Ratio R$ million THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Main Differences between Brazilian GAAP & US GAAP
    • Revenue Recognition – BR Gaap & US Gaap Commercial Airline & Corporate Segments Revenues are generally recognized as the deliveries are made Defense Defense segment operates in a business environment that differs from Commercial Airline and Corporate markets segments. The main characteristics are: Long-term contracts with customers to develop defense products based on each customer need Quantities and selling price are generally fixed at the beginning of the program Exposed to risks in the execution of the contract Given these characteristics, revenues are recognized under the long-term contract rules and uses the percentage-of-completion method. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Defense Revenue and Costs Defense contract accounting Long-term contract accounting requires management to estimate the total contract cost. These cost consist of designing, engineering, manufacturing and entry into service. Total estimated contract costs include: Raw material Supplier components Direct Labor, including engineering Manufacturing overhead Estimated total Price to percent of complete x price = be recognized to date Revenue to be - Revenue recognized = Current period Recognized to date in prior periods revenue THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Defense Revenue and Costs Defense contract accounting Contract monitoring and related adjustments: Review is made on a quartely basis As part of these reviews, additional revenues arising from change order requests and additional cost from over spending are identified and reflected in a revised contract margin. The effect of any revision is accounted for by way of a cumulative catch-up adjustment to margin Physical progress Percent of complete = Costs incurred to date Most recent estimate of total cost THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Translation Effects (R$ x US$) BRGAAP ü Up to 1995 non monetary items used to be indexed by the UFIR (restating to current purchasing power) ü There is no fuctional currency concept USGAAP ü Functional Currency is the US$ (SFAS 52) ü Non Monetary Assets and Liabilities are accounted in historical US$ THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • PP&E BRGAAP ü Assets revaluation at market value is allowed ü Interest capitalization was not foreseen up to 1996 USGAAP ü Interest capitalization over Long-term assets construction (SFAS 34) ü Capitalization of assets acquired through capital leases (SFAS 13) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Deferred Assets BRGAAP üCapitalization of expenses that will benefit future fiscal years üDeferral of pre-operation costs USGAAP üR&D accounted in the income statement üPre-operation costs are not deferred THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Capital & Operating Lease BRGAAP üCapital and operating lease are accounted as rent USGAAP üCapital and operating lease concept explained by SFAS 13 üAccounted as: Accounted as pre paid expenses Customers commercial financing Deferred income THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Derivatives BRGAAP ü No CVM or IBRACON specific rule ü Accounted by the accrual method USGAAP ü SFAS 133 in use since 2001 ü Gains and losses recognized during the period ü Fair value of derivatives is mandatory THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Deferred Income Taxes BRGAAP ü Differences between accounting and fiscal records USGAAP ü All BR GAAP and US GAAP accounting diferences are considered to calculate the deferred income tax 1999 (*) 2000 2001 2002 2003 9M04 No IOSE 27.9% (27.4%) (34.5%) (33.4%) (38.9%) (33.7%) Benefit BR GAAP With IOSE 27.9% (24.2%) (30.6%) (26.6%) (29.8%) (22.5%) Benefit US GAAP With Benefit (23.8%) (26.8%) (40.3%) (45.6%) 25.8% (25.7%) of IOSE IOSE = Interest on Shareholders’ Equity (*) 1999 no IOSE distribution THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • SPEs Some of the sales transactions are structured financings through which an SPE purchases the aircraft, pays the full purchase price on delivery or at the conclusion of the sales financing structure, and leases the related aircraft to the ultimate customer. BRGAAP ü New rule to be applied in 2005 USGAAP ü Accounted as collateralized accounts receivable and non-recourse and recourse debt. ü Consolidation of certain SPEs owned by third parties that lack the minimum amount of equity capital investment (“capital at risk”) as defined in the EITF Topic D-14 and EITF 90-15. ü Upon issuance of FIN 46 and FIN 46R, basic conditions requiring consolidation of such entities were maintained and therefore no significant effect is expected . Source: 20 F note 8 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Guarantees BRGAAP ü No specific rule available ü Disclosure under notes to consolidated financial statements is mandatory USGAAP ü Since 01/01/2003 guarantees given to third parties are measured at fair value and recognized on income (FIN 45) THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Reconciliation between BR & USGAAP Shareholders Equity (09/30/04) US$ Million 1.600 1.503 3 0 11 1.400 -4 121 3 1.327 1.200 -280 -1 -16 -13 1.000 800 600 400 200 - BR GAAP Translation PP&E Inventories Financial Deferred Derivatives Fin 45 Operacional Deferred Others USGAAP Effects Lease Assets (R&D) fair Value Lease Income Taxes Adjusments THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Reconciliation between BR & USGAAP Net Income (9M04) US$ Million 350 327 -55 22 -5 -4 -13 22 297 300 4 -9 5 -4 7 104 250 200 150 100 50 - BR GAAP Translation PP&E Inventories Financial Deferred Derivatives Fin 45 Operacional Deferred Others Exchanges USGAAP Effects Lease Assets fair Value Lease Income rate effect (R&D) Adjusments Taxes THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Off Balance Sheet Exposure
    • Off Balance Sheet Exposure Financial Guarantees Provided in the form of guarantees of lease payments, to mitigate default-related losses. These guarantees are mainly issued for the benefit of the customers financing agent. Exercised when customers do not meet their payment obligations during the term of the financing. Collateralized by the aircraft. Upon an event of default, the Company usually is the agent for the guaranteed party for the refurbishment and remarketing of the underlying aircraft. The Company may be entitled to a fee for such remarketing services. Typically a claim under the guarantee shall be made only upon surrender of the underlying aircraft for remarketing THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Off Balance Sheet Exposure Residual Value Guarantees (RVGs) Provide a third party with a specific guaranteed asset value at the end of financing agreement. In the event of a decrease in market value of the aircraft, the Company shall bear the difference between the specific guaranteed amount and the actual fair market value. In order to benefit from the guarantee, the guaranteed party has to make the aircraft to meet tight specific return conditions. Financial Guarantees & RVGs In the event both guarantees were issued for the same aircraft, the residual value guarantees can only be exercised if the financial guarantees have expired without having been triggered, and therefore, are mutually exclusive. THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Off Balance Sheet Exposure Provisioning of financial guarantees and RVGs In order to cover the exposure related to financial guarantees, a provision is recorded at the time of the delivery. Use of sophisticated models to measure the provision: External appraisals of expected aircraft value Credit ratings of the airlines companies Current and future market outlook Aircraft expected availability level in the market THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Off Balance Sheet Exposure The maximum potential payments represent the “worst-case scenario,” and do not necessarily reflect the expected results by the Company. Estimated proceeds from performance guarantees and underlying assets represent the anticipated values of assets the Company could liquidate or receive from other parties to offset its payments under guarantees. US$ million 2002 2003 Financial Guarantees 1,175 1,229 RVGs 624 627 Mutually Exclusive Exposure (362) (392) Provisions & Liabilities Recorded (14) (67) Off Balance Sheet Exposure 1,422 1,297 Estimated proceeds from performance guarantees and underlying assets 1,748 1,650 Source: 20 F note 34 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Off Balance Sheet Exposure Repurchase Options (Put Options) Provide the customer with the right to sell the aircraft back to the Company in the future, according to defined price rules. These put options may become exercisable at various times Can be exercised at the customer’s sole discretion. The put price per aircraft is less than the original sales price of the aircraft and less than management’s estimation for the future market value of the aircraft during the exercise period as assessed at the date of sale. Put obligations: As of December 2003: US$ 500 million As of today: ~ US$ 100 million THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Off Balance Sheet Exposure Trade in options Provide a customer with the right to trade-in existing aircraft upon the purchase of a new aircraft. The trade in price per aircraft is less than the original sales price of the aircraft and less than management’s estimation for the future market value of the relevant aircraft. 6 Commercial jets are subject to trade in Trade up options Provide that if and when the Company launches a new corporate jet model, this customer has the right to trade-up to the new model and has the right to sell the aircraft back to the Company in the future. The trade-up price is determined as a percentage of the original purchase price of the corporate jets. 11 Corporate jets are subject to trade up THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • 3rd. Quarter 2004 Financial Results Brazilian GAAP / US GAAP
    • Net Sales & Gross Margin R$ Million US$ Million BR GAAP US GAAP 36.2% 924 937 38.1% 35.3% 35.0% 36.8% 649 626 32.2% 439 33.2% 31.8% 3,034 2,734 32.3% 32.6% 1,929 1,816 1,296 3Q03 4Q03 1Q04 2Q04 3Q04 3Q03 4Q03 1Q04 2Q04 3Q04 Revenue Gross Margin THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Gross Margin Evolution BR GAAP US GAAP 44.6% 41.6% 39.6% 39.4% 37.7% 32.0% 31.1% 35.8% 32.8% 33.2% 32.0% 26.9% 28.3% 28.6% 26.9% 28.3% 160 161 36 36 160 161 131 131 96 101 96 101 60 70 70 60 32 32 1997 1998 1999 2000 2001 2002 2003 9M04 1997 1998 1999 2000 2001 2002 2003 9M04 EMBRAER 170 Jet Deliveries Gross Margin EMBRAER 170 Jets Deliveries Gross Margin THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Revenue Breakdown US GAAP & BR GAAP US GAAP & BR GAAP Sales per Segment Sales per Market 9M04 9M04 Brazil 7% Defense 11% Corporate 4% Commercial Airline Customer 78% Foreing Services & Others Market 7% 93% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • EBIT & Margin R$ Million US$ Million BR GAAP US GAAP 17.6% 18.4% 17.1% 16.9% 24.4% 14.1% 13.3% 13.6% 558 11.0% 153 462 11.3% 123 127 339 221 255 73 49 3Q03 4Q03 1Q04 2Q04 3Q04 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Net Income & Margin R$ Million US$ Million BR GAAP US GAAP 16.5% 14.5% 14.5% 12.6% 10.7% 12.1% 10.4% 8.7% 114 6.9% 382 397 103 80 280 68 4.4% 195 89 19 3Q03 4Q03 1Q04 2Q04 3Q04 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Working Capital US GAAP / Brazilian GAAP
    • Accounts Receivables R$ Million US$ Million BR GAAP US GAAP 2,821 981 2,052 703 1,292 1,457 970 465 472 356 3Q03 4Q03 1Q04 2Q04 3Q04 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Accounts Receivables US$ Million - US GAAP 95 189 886 157 194 166 514 271 315 190 3Q03 4Q03 1Q04 2Q04 3Q04 Commercial Airline Market Others Others = Defense + Customer Services THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Inventories R$ Million US$ Million BR GAAP US GAAP 4,155 3,647 3,823 1,390 3,328 3,346 1,258 1,231 1,111 1,158 3Q03 4Q03 1Q04 2Q04 3Q04 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Net Cash (Debt) R$ Million US$ Million BR GAAP US GAAP 944 304 642 629 222 220 516 178 (521) (178) 3Q03 4Q03 1Q04 2Q04 3Q04 3Q03 4Q03 1Q04 2Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Hedging Strategy
    • Hedging Strategy • Firm backlog of US$11.0 billion • 93% revenues in US$ • 83% of R&D & PP&E investments in R$ • 37% of total cash disbursements in R$ Main Objective of the Hedging Strategy Optimize the Natural Hedge of the Cash Flow THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Loans Breakdown Bank Debt - US$ 1,169.2 million September 30, 2004 Currency Breakdown Debt Maturity Local Currency 7% Long Term 63% Short Term 37% Foreign Currency 93% Considering Swap effects; from US$ and Yen to R$ Cost of Local Currency = 12.4 • Loan Average Maturity: 2 years and 11 months Cost of Foreing Currency = US$ variation + 3.9% p/a THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Balance Sheet US GAAP 79% 82% 84% 86% 86% 87% 88% 88% 21% 18% 16% 14% 14% 13% 12% 12% Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities 12/31/2003 03/31/2004 06/30/2004 09/31/2004 Other Currencies US$ THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Balance Sheet US GAAP Includes Derivatives 79% 82% 84% 86% 87% 88% 88% 89% 21% 18% 16% 14% 12% 12% 11% 13% Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities 12/31/2003 03/31/2004 06/30/2004 09/31/2004 Other Currencies US$ THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Sales Finance
    • ECA’s - Export Credit Agencies Aerospace Sector Support* US$ Billion 7 6.3 5.9 5.8 6 5.0 5 4.5 4.2 4 3.5 2.7 3.0 2.9 3 2.6 2.7 2.7 2.6 2.4 2.2 1.8 1.95 2 1.4 (a) 1.0 1 0.6 0.7 0 1998 1999 2000 2001 2002 2003 US-EXIM EU-ECA's EDC BNDES •US-EXIM & EU-ECA’s: commercial aircraft more than 70 seats (a) Direct and indirect disbursement •EDC commercial aircraft of 50-70-90 seats Source: US-Exim - Competitiveness Report 2001/2002 •BNDES: commercial aircraft 30-50 seats EDC Annual Report 2000/2001/2002/2003 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • ERJ 145 Family* and EMB-170 Financing Methods – YEAR 2004 Total Regional Jet delivered: 106 (through Sep/04) Total amount exported: US$ 2.05 Billion Total amount financed by BNDES: US$ 490 Million Market 76.1% BNDES 23.9% * Includes Corporate and Authority Transportation THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • ERJ 145 Family* and EMB-170 Financing Methods Total Regional Jet delivered: 847 (through Sep/04) Total amount exported: US$ 14.46 Billion Total amount financed by BNDES: US$ 6.42 Billion BNDES 44.4% Market 55.6% * Includes Corporate and Authority Transportation THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • ERJ Financing Methods Total RJ Aircraft Delivered: 847 (Sep 04) Cash 5% Finance Lease 5% Operating Lease 5% Tax Lease 46% Straight Financing Bridge 34% 3% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • ERJ Financing Methods Tax Lease UK Tax Japanese Tax Polish Tax Lease Lease Lease 9% 1% Single Investor 3% Lease 18% USLL 68% French Tax Lease 1% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • EETC
    • EETC – Annual volume of new issues Amount US$ Million 8,084 (1994~2004) 6,621 6,030 3,594 2,688 2,204 2,305 1,486 762 985 785 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Oct/04 Source: Citigroup – EETC Trading Observer – October 14, 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Aircraft Financing – EETC 2003 2003-ERJ1 Pass Through Trust Certificate Offering ü U$ 415 million total volume ü Standard&Poors BBB and Moody’s Ba3 ratings ü Priced at T + 347 bps with coupon of 7.875% ü Unwrapped Single Tranche transaction – first unwrapped transaction since October 2001 ü More than 3 times oversubscribed and spread over (75) different accounts ü Citigroup and Morgan Stanley as Joint Bookrunners ü Awarded “Deal of the Year” by Airfinance Journal for 2003 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Aircraft Financing – EETC 2004 2004-ERJ1 Pass Through Trust Certificate Offering ü U$ 174 million total volume üUnwrapped Single Tranche transaction ü Significant portion of aircraft pre-funded üPriced at T + 484 bps with coupon of 9.5% ü Standard&Poors BBB- and Moody’s Ba2 ratings ü Citigroup and Morgan Stanley as Joint Bookrunners with Citigroup acting as sole structuring agent THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Investments
    • PP&E and R&D – Cash Flow US$ million 200 180 158.6 PP&E 99.6 160 114.2 R&D 136 140 120 60.1 69.6 143.8 100 80 18.8 127.7 60 44.1 40 20 0 2000 2001 2002 2003 2004 E Does not include cash contribution from risk sharing partners THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Cash Contribution – Risk Sharing Partners US$ million 300 246 14 250 - 1 107 - 200 150 72 100 24 50 28 - Total 2001 2002 2003 2004E 2005E 2006E 2007/2010E THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Investments Forecast Defence investments are funded by their contracts and are not included in the R&D expenses, but in Cost of Sales and Services. US$ million 2005 2006 R&D Total 119 66 - Commercial Aviation 89 37 - Corporate Aviation 11 12 - Others 19 17 Defence 88 38 Productivity and PP&E 77 59 TOTAL 284 163 Does not include new programs THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Backlog 17.5 17.7 17.8 18.5 17.3 10.4 10.6 10.9 10.5 11.0 3Q03 4Q03 1Q04 2Q04 3Q04 Firm Orders Options US$ Billion THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.
    • Investor Relations Department Phone: (55 12) 3927 1216 investor.relations@embraer.com.br www.embraer.com.br