4. High Technology
The Virtual Reality Center
Provides visualization of the
aircraft structure and systems
during the project phase,
using 3D electronic models.
Reduces the development
cycle.
8. Qualified People
25% of the 11,048 employees, are engineers
PhD
Educational Levels 0,2% Graduate
29,3%
Post Graduate
High School 4,7%
64,5% Master
1,3%
9. Qualified People
More than US$ 60 million
invested in training and qualification
in the last 3 years.
21 24,5
18
1999 2000 2001
12. Global Business
Current Fleet of Regional Aircraft
ERJ Operators
Turboprop Operators
Europe
285 aircraft
40 customers
North America
920 aircraft Asia
35 customers Pacific
60 aircraft
20 customers
Latin America
& Caribbean Africa &
260 aircraft Middle East
85 customers 55 aircraft
10 customers
13. Global Business
Operations in Brazil, United States, Europe, Asia and Australia
USA UK
Weybridge
Dallas China
Nashville
Atlanta
France Beijing
Palm Beach Gardens Le Bourget
Fort Lauderdale
Singapore
Brazil Singapore
Gavião Peixoto
Botucatu
Australia
Melbourne
São José dos Campos
Eugênio de Melo
15. Cash Intensiveness
In the last 5 years the Company invested almost
US$ 1 billion in research & development and
productivity.
296
213
147
122
104
81
1996 1997 1998 1999 2000 2001
16. Cash Intensiveness
US$ 1.3 Billion Investments in the Next 5 Years
US$ millions 2002 2003 2004 2005 2006 2002-2006
Research &
Development 213 191 180 174 176 934
Comercial 138 105 61 34 27 365
Corporate 15 6 2 2 2 27
Defense 51 72 109 130 139 501
Others 9 8 8 8 8 41
PP&E 118 71 59 50 51 349
TOTAL 331 262 239 224 227 1,283
17. Cash intensiveness
Risk Sharing concept with partners allows the decrease in
development cycle and investment risk
Family launched in July 1999
Roll out in October 2001
First Flight in February 2002
31 months from launch
to first flight
18. Cash Intensiveness
In 2000 Embraer increased its global presence with
a US$ 446 million Global Offering:
Funds of US$ 244 in a Primary offering for the
EMBRAER 170/190 program
Company positioned in the international capital
markets
19. Cash Intensiveness
Nearly two-thirds of the EMBRAER 170/190 program
development costs borne by Risk-Sharing Partners
Development cost for the new EMBRAER 170 family program:
Cash Contribution from Risk Sharing Partners $ 260
Net Proceeds from IPO $ 240
Funds From Cash Flow $ 60
$ 560
Risk Sharing Partner Development Cost $ 290
Total Cost of the EMBRAER 170/190 Program $ 850
20. Cash Intensiveness
After Sept 11
Embraer supported some aircraft deliveries, which
increased the accounts receivables to US$ 672 million.
Inventories increased to US$ 1,022 million.
Representing a change in the net cash position to a net
debt position of US$ 23 million.
22. Cash Intensiveness
Actions have been taken and the expectations for the accounts
receivables and inventories are:
1,022 1,006
842 879
636
535 495
202 177
130 100
20
3Q01 4Q01 1Q02 E 2Q02 E
Inventories Receivable (Aircraft) Receivable (Spare Parts & Others)
26. Flexibility
To cope with the new scenario, Embraer adjusted its total
labor force and laid off 14% (1,800) of its employees.
Total of Employees
11,048
10,334
8,302
6,737
6,087
4,319 4,494
3,849
1994 1995 1996 1997 1998 1999 2000 2001
27. Flexibility
Flexibility incorporated into the production line allowed an
increase in efficiency and decrease in production lead time
Lead Time in Months
8,0
6,0 6,0
5,5
4,9 5,0
1996 1997 1998 1999 2000 2001
28. Flexibility
Embraer presents one of the highest "revenue per employee"
in the industry.
Revenue per employee
US$ thousand 307
242 247 254
172
101
1996 1997 1998 1999 2000 2001
31. US Regional Enplanements Increasing
Passenger U.S. Regional Airlines
Enplanements (Millions) % of Domestic Traffic
1,000 Regional
Major
800
600
400
200
14%
12%
3% 7%
0
1970 1985 2000 2010F
Source: RAA, FAA
32. Airline Market - USA
Domestic ATA
17% Regional RAA
13% 14%
9%
7% 6%
5% 5%
RPM Growth - Yr/Yr % Change
2% 2% 3%
1% 0%
-1% -1%
-3% -3% -2% -2%
-13%
-18%
-21%
-23%
-33%
Jan/01 Feb Mar Apr May Jun/01 Jul Aug Sep Oct Nov Dec/01
Source: Top Regionals, ATA
33. American Airlines Traffic
American Domestic
American Eagle
12%
10%
8%
5% 5%
RPM Growth (Yr/Yr % Change)
4%
-3%
-4%
-7%
-10% -10%
-11%
-13%
-15%
-22%
-23%
-27%
-36%
Jan- Sep Oct Nov Dec Year Jan Feb Mar
Aug/2001 2001 2001 2001 2001 2001 2002 2002 2002
Source: American Airlines
34. Continental Airlines Traffic
ExpressJet
Continental Domestic
23%
15% 14% 14% 14%
11%
RPM Growth (Yr/Yr % Change)
6%
4% 5%
-3%
-5%
-8%
-10% -11%
-13%
-17%
-22%
-32%
Jan- Sep Oct Nov Dec Year Jan Feb Mar
Aug/2001 2001 2001 2001 2001 2001 2002 2002 2002
Source: Continental Airlines
36. Airline Market - Europe
Intra-European
13%
Regional ERAA
9% 9%
7% 7% 7%
7% 6% 6%
RPK Growth - Yr/Yr % Change
6% 5% 6%
5% 4% 4% 4%
1% 1%
-3% -3%
-7%
-13% -14%
-15%
Jan/01 Feb Mar Apr May Jun/01 Jul Aug Sep Oct Nov Dec/01
Source: ERAA, AEA
37. Regional Jet Presence - USA
Jan 2002
Jan 1995
Source: Back OAG (ERJ 145/140/135, CRJ-100/200, 328Jet routes)
38. Regional Jet Presence - Europe
Jan 2002
Jan 1995
Source: Back OAG (ERJ-145/140/135, CRJ-100/200, 328Jet routes)
39. Capacity Management (After Sep 11th)
Parked aircraft
Delivery schedules re-negotiated, except for regional
jets (small unit of capacity)
Rightsizing capacity vs. demand: regional jets being
used in the USA to maintain presence in markets with
decreased demand
Focus on return to profitability in a low yield
environment (Cash Management)
40. Industry in Transition after Sep 11th
Rightsizing capacity vs. demand: Routes transfered to RJs
Jet Replacement
Turboprop Replacement
Source: Back OAG (American, Continental, Delta,
United, and US Airways)
41. Industry in Transition after Sep 11th
Rightsizing capacity vs. demand: Routes transferred to RJs
Source: Back OAG Air France, Alitalia and British Airways
48. Market Forecast 2002-2011
30 – 120 Seats: 4,085 Jets
Europe
960
24%
USA, Canada
& Caribbean
2,130 China
52% 275
7%
Asia
Africa & Pacific
Latin Middle East
America 245
130
345
3% 6%
8%
49. Industry Consolidation
Airbus Airbus
Boeing Boeing
McDonnell Douglas
ATR ATR
Jetstream AIR
Avro BAE / Avro
EMBRAER EMBRAER
Canadair
BRAD BRAD
De Havilland
Fokker
SAAB
Fairchild
Fairchild-Dornier
Dornier
61. Cycle to First Flight
June 1999 February 2002
EMBRAER 170
May 1998 August 2002
Competitor
T1 T2 T3 T4 T1
T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4 T1 T2 T3 T4
1998 1999 2000 2001 2002
Actual Planned
62. All prototypes ready in the 1st Sem. 02
Fatigue test set up
S/N 0001 S/N 0005
Fatigue tests
conclusion
S/N 0003
Roll Out 1st Flight Static tests
29 OCT 2001 19 FEB 2002 conclusion
Oct 01 Nov 01 Dec 01 Jan 02 Feb 02 Mar 02 Apr 02 May 02 Jun 02 Jul 02 Aug 02 Sep 02 Oct 02 Nov 02 Dec 02
S/N 0002
S/N 0006
S/N 0004
Static test set up
74. Net Sales & Gross Margin
US$ Million
3500 50%
2929
3000 2787
40%
41,6%
2500
28,6% 31,0%
28,3%
2000 30%
1500 1352 1844
20%
1000
10%
500
0 0%
1998 1999 2000 2001
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
75. Net Sales & Gross Margin/Quarterly
US$ Million
1500 50%
39,5%
1200 45,3% 44,3% 40%
31,3%
900 772 756 838 775 35,1% 30%
577
600 20%
300 10%
0 0%
4T00 1T01 2T01 3T01 4T01
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
76. Revenue Breakdown
Sales per Segment Sales per Market
Brazilian
Commercial Parts and Market
87% Services 2%
6%
Corporate
3%
Defense
4% Exports
98%
77. EBIT
US$ Million
1500 30%
28,0%
1250
18,6%
1000 17,6% 20%
820
14,7%
750
517
500 10%
324
199
250
0 0%
1998 1999 2000 2001
Includes Profit Sharing
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
78. EBIT/Quarterly
US$ Million
400 50%
40%
300 31,1% 31,2%
27,6%
261 30%
200 242 20,0%
17,8% 209
20%
100 137
115 10%
0 0%
4T00 1T01 2T01 3T01 4T01
Includes Profit Sharing
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
79. EBITDA
US$ Million
1200 35%
30,4%
1000 30%
891
21,1% 21,4% 21,5% 25%
800
599 20%
600
394 15%
400 285 10%
200 5%
0 0%
1998 1999 2000 2001
Includes Profit Sharing
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
80. EBITDA/Quarterly
US$ Million
400 50%
33,6% 33,4% 40%
300
30,5%
282 30%
259 22,2%
200 20,6% 231
20%
159
100 128
10%
0 0%
4T00 1T01 2T01 3T01 4T01
Includes Profit Sharing
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
81. Net Income
US$ Million
600 35%
468 30%
25%
400 353
20%
16,0%
227 12,7% 15%
200 114
12,3% 10%
8,4% 5%
0 0%
1998 1999 2000 2001
Includes Profit Sharing
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
82. Net Income/Quarterly
US$ Million
400 50%
40%
300
30%
200 19,7%
16,6% 17,6%
14,3% 12,8% 20%
148
100 128
108 99 114 10%
0 0%
4T00 1T01 2T01 3T01 4T01
US dollars amounts were obtained using the average rate of the
commercial dollar during each period
83. Debt Breakdown
Total Debt US$ 772.3 million
Foreign currency
95%
Short Term
68%
Brazilian currency
5%
Long Term
32%
84. Net Cash (Debt)
US$ Million
$1.000
$ 732
$500
$0
($ 23)
($500) ($ 329)
($ 415)
($1.000)
1998 1999 2000 2001
US dollars amounts were obtained using the final rate of the
commercial dollar during each period
85. Accounts Receivables
US$ Million
800
672
600
400 326
198
200 145
0
1998 1999 2000 2001
US dollars amounts were obtained using the final rate of the
commercial dollar during each period
86. Inventories
US$ Million
$1.200
$1.022
$800 $716
$564 $574
$400
$0
1998 1999 2000 2001
US dollars amounts were obtained using the final rate of the
commercial dollar during each period
