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5 th Annual Investors and Analysts Meeting November 18 & 19, 2004 São José dos Campos - Brazil Antonio Luiz Pizarro Manso CFO Financial

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  • 1. 5th Annual Investors and Analysts MeetingNovember 18 & 19, 2004So Jos dos Campos - Brazil Financial Antonio Luiz Pizarro MansoCFO

2. 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 EMBRAERS WRITTEN CONSENT. 3. Shareholder Base 4. Embraer Voting CapitalOrdinary Shares: 242,544,44833.78%2% Individuals 20% 60% Controlling European GroupShareholders7% ForeignInstitutional Investors11%Brazilian Institutional Investors 20% European Group60% Controlling Shareholders Dassault 5.67% PREVI (Pension Fund)20% Thales 5.67%SISTEL (Pension Fund) 20% EADS 5.67% Snecma 2.99% Cia. Bozano20%THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 5. Preferred Shares Preferred Shares : 475,411,02666.22% 2%17%IndividualsControlling Shareholders10% BNDES 3% BrazilianInstitutional Investors 68% Foreign Investors THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 6. Dividends 50060% 404 421 400 49.8%50% 327 43.3%40% 300 36.1% 36.1%228195 30%27.2% 20020% 10010%0 0%2000 2001 2002 20039M04 DividendsPay Out Ratio R$ millionTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 7. Main Differences betweenBrazilian GAAP& US GAAP 8. 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 EMBRAERS WRITTEN CONSENT. 9. 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 dateRevenue to be -Revenue recognized= Current periodRecognized to date in prior periods revenue THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 10. 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 progressPercent of complete =Costs incurred to dateMost recent estimate of total costTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 11. Translation Effects (R$ x US$)BRGAAP Up to 1995 non monetary items used to be indexed by theUFIR (restating to current purchasing power) There is no fuctional currency conceptUSGAAP Functional Currency is the US$ (SFAS 52) Non Monetary Assets and Liabilities are accounted in historicalUS$THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 12. PP&EBRGAAP Assets revaluation at market value is allowed Interest capitalization was not foreseen up to 1996USGAAP Interest capitalization over Long-term assets construction (SFAS 34) 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 EMBRAERS WRITTEN CONSENT. 13. Deferred AssetsBRGAAPCapitalization of expenses that will benefit future fiscal yearsDeferral of pre-operation costsUSGAAPR&D accounted in the income statementPre-operation costs are not deferredTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 14. Capital & Operating LeaseBRGAAPCapital and operating lease are accounted as rentUSGAAPCapital and operating lease concept explained by SFAS 13Accounted as: Accounted as pre paid expenses Customers commercial financing Deferred incomeTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 15. Derivatives BRGAAP No CVM or IBRACON specific rule Accounted by the accrual method USGAAP SFAS 133 in use since 2001 Gains and losses recognized during the period Fair value of derivatives is mandatory THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 16. Deferred Income TaxesBRGAAP Differences between accounting and fiscal recordsUSGAAP All BR GAAP and US GAAP accounting diferences are consideredto calculate the deferred income tax 1999 (*)2000 2001 200220039M04 No IOSE 27.9%(27.4%) (34.5%) (33.4%)(38.9%)(33.7%) BenefitBR GAAP With IOSE 27.9%(24.2%) (30.6%) (26.6%)(29.8%)(22.5%)BenefitUS 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 EMBRAERS WRITTEN CONSENT. 17. SPEsSome of the sales transactions are structured financings throughwhich an SPE purchases the aircraft, pays the full purchase priceon delivery or at the conclusion of the sales financing structure,and leases the related aircraft to the ultimate customer. BRGAAP New rule to be applied in 2005 USGAAP Accounted as collateralized accounts receivable and non-recourse and recourse debt. 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. 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 8THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 18. Guarantees BRGAAP No specific rule available Disclosure under notes to consolidated financial statements is mandatory USGAAP 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 EMBRAERS WRITTEN CONSENT. 19. Reconciliation between BR & USGAAP Shareholders Equity(09/30/04) US$ Million1.6001.503 3 0111.400 -4 1213 1.3271.200-280-1 -16-131.000 800 600 400 200-BR GAAP Translation PP&E Inventories FinancialDeferredDerivativesFin 45Operacional DeferredOthersUSGAAPEffects Lease Assets (R&D) fair ValueLeaseIncome Taxes AdjusmentsTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 20. Reconciliation between BR & USGAAP Net Income (9M04)US$ Million350 327 -55 22 -5-4-13 22 2973004 -95 -4710425020015010050- BR GAAP Translation PP&E Inventories FinancialDeferred Derivatives Fin 45 OperacionalDeferred OthersExchanges USGAAP Effects Lease Assetsfair ValueLease Incomerate effect(R&D)Adjusments Taxes THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 21. Off Balance SheetExposure 22. Off Balance Sheet ExposureFinancial 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 remarketingTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 23. Off Balance Sheet Exposure Residual Value Guarantees (RVGs)Provide a third party with a specific guaranteed asset value at the endof financing agreement.In the event of a decrease in market value of the aircraft, the Companyshall bear the difference between the specific guaranteed amount andthe actual fair market value.In order to benefit from the guarantee, the guaranteed party has to makethe aircraft to meet tight specific return conditions. Financial Guarantees & RVGsIn the event both guarantees were issued for the same aircraft,the residual value guarantees can only be exercised if the financialguarantees 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 EMBRAERS WRITTEN CONSENT. 24. 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 valueCredit ratings of the airlines companiesCurrent and future market outlookAircraft expected availability level in the marketTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 25. 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$ million2002 2003 Financial Guarantees 1,1751,229 RVGs624 627 Mutually Exclusive Exposure(362) (392) Provisions & Liabilities Recorded (14) (67) Off Balance Sheet Exposure 1,4221,297 Estimated proceeds from performance guarantees and underlying assets 1,7481,650 Source: 20 F note 34THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 26. 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 customers sole discretion. The put price per aircraft is less than the original sales price of the aircraft and less than managements 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 EMBRAERS WRITTEN CONSENT. 27. 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 managements 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 upTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 28. 3rd. Quarter 2004Financial ResultsBrazilian GAAP / US GAAP 29. Net Sales & Gross MarginR$ Million US$ MillionBR GAAP US GAAP 36.2%924 93738.1%35.3% 35.0%36.8% 649626 32.2%43933.2% 31.8%3,034 2,734 32.3%32.6% 1,9291,816 1,296 3Q034Q03 1Q042Q04 3Q043Q03 4Q03 1Q04 2Q04 3Q04 RevenueGross Margin THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 30. Gross Margin Evolution BR GAAP US GAAP44.6%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%160161 36 36160 161 131131 96 101 96 10160 70 7060 32 32 1997 1998 1999 2000 20012002 20039M04 199719981999 200020012002 20039M04 EMBRAER 170Jet DeliveriesGross MarginEMBRAER 170 Jets DeliveriesGross MarginTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 31. Revenue BreakdownUS GAAP & BR GAAPUS GAAP & BR GAAP Sales per SegmentSales per Market 9M049M04 Brazil7%Defense 11%Corporate 4%CommercialAirline Customer 78% Foreing Services &Others Market7%93%THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 32. EBIT & MarginR$ Million US$ MillionBR GAAP US GAAP 17.6%18.4%17.1%16.9%24.4% 14.1%13.3%13.6% 558 11.0% 153 46211.3%123 127 339221 25573 493Q034Q031Q042Q04 3Q043Q034Q03 1Q042Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 33. Net Income & Margin R$ MillionUS$ Million BR GAAPUS GAAP 16.5% 14.5%14.5%12.6% 10.7%12.1% 10.4%8.7% 1146.9% 382 397103 80 280 68 4.4% 195 89193Q03 4Q03 1Q04 2Q04 3Q04 3Q034Q031Q04 2Q043Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 34. Working CapitalUS GAAP /Brazilian GAAP 35. Accounts Receivables R$ MillionUS$ Million BR GAAPUS GAAP 2,8219812,052 7031,292 1,457 970 465472 356 3Q034Q03 1Q042Q043Q04 3Q03 4Q03 1Q042Q04 3Q04 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 36. Accounts Receivables US$ Million - US GAAP95189 886 157194166 514271315190 3Q03 4Q03 1Q04 2Q043Q04Commercial Airline MarketOthersOthers = Defense + Customer Services THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 37. Inventories R$ Million US$ Million BR GAAP US GAAP 4,1553,647 3,823 1,390 3,3283,3461,2581,231 1,1111,158 3Q03 4Q031Q042Q04 3Q043Q03 4Q03 1Q04 2Q043Q04THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 38. Net Cash (Debt)R$ MillionUS$ MillionBR GAAPUS GAAP 944304 642 629222 220516 178(521)(178)3Q03 4Q03 1Q04 2Q043Q04 3Q034Q031Q042Q043Q04THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 39. HedgingStrategy 40. 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$Main Objective of the Hedging Strategy Optimize the Natural Hedge of the Cash Flow THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 41. Loans BreakdownBank Debt - US$ 1,169.2 millionSeptember 30, 2004 Currency BreakdownDebt Maturity LocalCurrency7% Long Term63% Short Term37%ForeignCurrency93%Considering Swap effects; from US$ and Yen to R$Cost of Local Currency = 12.4 Loan Average Maturity: 2 years and 11 monthsCost of Foreing Currency = US$ variation + 3.9% p/a THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 42. Balance SheetUS GAAP79%82% 84% 86% 86% 87% 88% 88%21%18% 16% 14% 14% 13% 12% 12%Assets Liabilities AssetsLiabilities AssetsLiabilities AssetsLiabilities12/31/2003 03/31/200406/30/200409/31/2004Other CurrenciesUS$THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 43. Balance Sheet US GAAP Includes Derivatives79%82%84% 86% 87% 88%88% 89%21%18%16% 14% 12%12% 11% 13%Assets Liabilities AssetsLiabilitiesAssetsLiabilities AssetsLiabilities12/31/2003 03/31/2004 06/30/200409/31/2004 Other Currencies US$THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 44. Sales Finance 45. ECAs - Export Credit AgenciesAerospace Sector Support* US$ Billion7 6.3 5.9 5.86 5.054.5 4.24 3.5 2.73.02.932.62.72.72.62.42.2 1.81.952 1.4 (a) 1.010.6 0.70 199819992000 200120022003 US-EXIMEU-ECAs EDCBNDESUS-EXIM & EU-ECAs: commercial aircraft more than 70 seats(a) Direct and indirect disbursementEDC commercial aircraft of 50-70-90 seatsSource: US-Exim - Competitiveness Report 2001/2002BNDES: commercial aircraft 30-50 seatsEDC Annual Report 2000/2001/2002/2003THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 46. ERJ 145 Family* and EMB-170Financing Methods YEAR 2004Total Regional Jet delivered: 106 (through Sep/04)Total amount exported: US$ 2.05 BillionTotal amount financed by BNDES: US$ 490 MillionMarket76.1%BNDES 23.9% * Includes Corporate and Authority TransportationTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 47. ERJ 145 Family* and EMB-170Financing MethodsTotal Regional Jet delivered: 847 (through Sep/04)Total amount exported: US$ 14.46 BillionTotal amount financed by BNDES: US$ 6.42 Billion BNDES 44.4% Market 55.6% * Includes Corporate and Authority TransportationTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 48. ERJ Financing MethodsTotal RJ Aircraft Delivered: 847 (Sep 04) Cash5%Finance Lease 5%Operating Lease5%Tax Lease46%Straight Financing Bridge 34%3%THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 49. ERJ Financing MethodsTax LeaseUK TaxJapanese Tax Polish TaxLeaseLeaseLease 9% 1%Single Investor 3%Lease 18% USLL 68%French TaxLease 1% THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 50. EETC 51. EETC Annual volume of new issuesAmount US$ Million 8,084(1994~2004)6,621 6,030 3,594 2,688 2,204 2,3051,486762 985 7851994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Oct/04Source: Citigroup EETC Trading Observer October 14, 2004 THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 52. Aircraft Financing EETC 20032003-ERJ1 Pass Through Trust Certificate Offering U$ 415 million total volume Standard&Poors BBB and Moodys Ba3ratings Priced at T + 347 bps with coupon of 7.875% Unwrapped Single Tranche transaction firstunwrapped transaction since October 2001 More than 3 times oversubscribed and spreadover (75) different accounts Citigroup and Morgan Stanley as JointBookrunners Awarded Deal of the Year by AirfinanceJournal for 2003THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 53. Aircraft Financing EETC 20042004-ERJ1 Pass Through Trust Certificate Offering U$ 174 million total volumeUnwrapped Single Tranche transaction Significant portion of aircraft pre-fundedPriced at T + 484 bps with coupon of 9.5% Standard&Poors BBB- and Moodys Ba2ratings Citigroup and Morgan Stanley as JointBookrunners with Citigroup acting as solestructuring agentTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 54. Investments 55. PP&E and R&D Cash Flow US$ million 200 180 158.6PP&E 99.6 160 114.2R&D 136 140 120 60.169.6143.8 1008018.8127.76044.14020 0200020012002 2003 2004 E Does not include cash contribution from risk sharing partnersTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 56. Cash Contribution Risk Sharing Partners US$ million30024614250 - 1 107 -200150 721002450 28-Total2001 2002 20032004E 2005E2006E 2007/2010E THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 57. 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 20052006R&D Total 119 66- Commercial Aviation89 37- Corporate Aviation 11 12- Others 19 17Defence88 38Productivity and PP&E77 59TOTAL 284 163 Does not include new programsTHE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 58. Backlog 17.5 17.7 17.8 18.517.310.4 10.6 10.9 10.5 11.0 3Q034Q031Q04 2Q04 3Q04Firm OrdersOptions US$ Billion THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAERS WRITTEN CONSENT. 59. Investor Relations DepartmentPhone: (55 12) 3927 [email protected] www.embraer.com.br