farnborough airshow - apresentação financeira

59
5 th Annual Investors and Analysts Meeting November 18 & 19, 2004 São José dos Campos - Brazil Antonio Luiz Pizarro Manso CFO Financial

Upload: embraer-ri

Post on 05-Dec-2014

574 views

Category:

Documents


6 download

DESCRIPTION

 

TRANSCRIPT

Page 1: Farnborough Airshow - Apresentação Financeira

5th Annual Investors and Analysts MeetingNovember 18 & 19, 2004

São José dos Campos - Brazil

Antonio Luiz Pizarro MansoCFO

Financial

Page 2: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

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.

Page 3: Farnborough Airshow - Apresentação Financeira

ShareholderBase

Page 4: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Embraer Voting Capital

20% European Group

7%Foreign

Institutional Investors

11%Brazilian

Institutional Investors

60% Controlling Shareholders

Ordinary Shares: 242,544,448 33.78%

2% Individuals

60% Controlling Shareholders

PREVI (Pension Fund) 20%

SISTEL (Pension Fund) 20%

Cia. Bozano 20%

20% European Group Dassault 5.67%Thales 5.67%EADS 5.67%Snecma 2.99%

Page 5: Farnborough Airshow - Apresentação Financeira

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%

68% Foreign Investors

17% Controlling Shareholders

10%BNDES

3% BrazilianInstitutional Investors

2%

Individuals

Page 6: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Dividends

228

404

327

195

42149.8%

36.1%

27.2%

36.1%43.3%

0

100

200

300

400

500

2000 2001 2002 2003 9M040%

10%

20%

30%

40%

50%

60%

Dividends Pay Out Ratio

R$ million

Page 7: Farnborough Airshow - Apresentação Financeira

Main Differences between

Brazilian GAAP &

US GAAP

Page 8: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Revenue Recognition – BR Gaap & US GaapCommercial 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 needQuantities and selling price are generally fixed at the beginning of the programExposed 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.

Page 9: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Defense Revenue and CostsDefense contract accounting

Long-term contract accounting requires management to estimate the total contract cost. These cost consist of designing, engineering, manufacturing and entryinto service.

Total estimated contract costs include:Raw materialSupplier componentsDirect Labor, including engineeringManufacturing overhead

Estimated total Price topercent of complete x price = be recognized to date

Revenue to be - Revenue recognized = Current periodRecognized to date in prior periods revenue

Page 10: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Defense Revenue and CostsDefense contract accounting

Contract monitoring and related adjustments:

Review is made on a quartely basis

As part of these reviews, additional revenues arising from changeorder requests and additional cost from over spending are identifiedand reflected in a revised contract margin.

The effect of any revision is accounted for by way of a cumulativecatch-up adjustment to margin

Physical progress

Percent of complete = Costs incurred to dateMost recent estimate of total cost

Page 11: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

BRGAAPü 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

USGAAPü Functional Currency is the US$ (SFAS 52)ü Non Monetary Assets and Liabilities are accounted in historical

US$

Translation Effects (R$ x US$)

Page 12: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

BRGAAPü Assets revaluation at market value is allowedü Interest capitalization was not foreseen up to 1996

USGAAPü Interest capitalization over Long-term assets construction (SFAS 34)ü Capitalization of assets acquired through capital leases (SFAS 13)

PP&E

Page 13: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

BRGAAPüCapitalization of expenses that will benefit future fiscal yearsüDeferral of pre-operation costs

USGAAPüR&D accounted in the income statementüPre-operation costs are not deferred

Deferred Assets

Page 14: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

BRGAAPüCapital and operating lease are accounted as rent

USGAAPüCapital and operating lease concept explained by SFAS 13üAccounted as:

Accounted as pre paid expensesCustomers commercial financingDeferred income

Capital & Operating Lease

Page 15: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

BRGAAPüNo CVM or IBRACON specific ruleüAccounted by the accrual method

USGAAPüSFAS 133 in use since 2001üGains and losses recognized during the

periodüFair value of derivatives is mandatory

Derivatives

Page 16: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

BRGAAPü Differences between accounting and fiscal records

USGAAPü All BR GAAP and US GAAP accounting diferences are considered

to calculate the deferred income tax

Deferred Income Taxes

With Benefitof IOSE

With IOSE Benefit

No IOSE Benefit

(33.7%)(38.9%)(33.4%)(34.5%)(27.4%)27.9%

(22.5%)(29.8%)(26.6%)(30.6%)(24.2%)27.9%BR GAAP

(45.6%)

2002

25.8%

2003

(25.7%)(40.3%)(26.8%)(23.8%)US GAAP

9M04200120001999 (*)

IOSE = Interest on Shareholders’ Equity(*) 1999 no IOSE distribution

Page 17: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Some of the sales transactions are structured financings throughwhich 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.

BRGAAPü New rule to be applied in 2005

USGAAPü 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 .

SPEs

Source: 20 F note 8

Page 18: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

BRGAAPü No specific rule availableü Disclosure under notes to consolidated financial

statements is mandatory

USGAAPü Since 01/01/2003 guarantees given to third parties

are measured at fair value and recognized on income(FIN 45)

Guarantees

Page 19: Farnborough Airshow - Apresentação Financeira

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

1.3271.503

-280

3121

-13 -16 - 1

-4

113 0

-

200

400

600

800

1.000

1.200

1.400

1.600

BR GAAP TranslationEffects

PP&E Inventories FinancialLease

DeferredAssets (R&D)

Derivativesfair Value

Fin 45 OperacionalLease

Adjusments

DeferredIncome Taxes

Others USGAAP

Shareholders Equity(09/30/04)US$ Million

Page 20: Farnborough Airshow - Apresentação Financeira

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

327297

-55

-4

-5 -4 -13 -9 47

22 225

-

50

100

150

200

250

300

350

BR GAAP TranslationEffects

PP&E Inventories FinancialLease

DeferredAssets(R&D)

Derivativesfair Value

Fin 45 OperacionalLease

Adjusments

DeferredIncomeTaxes

Others Exchangesrate effect

USGAAP

104

Page 21: Farnborough Airshow - Apresentação Financeira

Off Balance Sheet Exposure

Page 22: Farnborough Airshow - Apresentação Financeira

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

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

Page 23: Farnborough Airshow - Apresentação Financeira

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 financialguarantees have expired without having been triggered, and therefore, are mutually exclusive.

Page 24: Farnborough Airshow - Apresentação Financeira

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 valueCredit ratings of the airlines companiesCurrent and future market outlookAircraft expected availability level in the market

Page 25: Farnborough Airshow - Apresentação Financeira

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

(67)(14)Provisions & Liabilities Recorded

(392)(362)Mutually Exclusive Exposure

1,2971,422Off Balance Sheet Exposure

1,6501,748Estimated proceeds from performance guarantees and underlying assets

627624RVGs

1,2291,175Financial Guarantees

20032002US$ million

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.

Source: 20 F note 34

Page 26: Farnborough Airshow - Apresentação Financeira

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

Page 27: Farnborough Airshow - Apresentação Financeira

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

Page 28: Farnborough Airshow - Apresentação Financeira

3rd. Quarter 2004 Financial Results

Brazilian GAAP / US GAAP

Page 29: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

US$ MillionUS GAAP

Net Sales & Gross Margin

R$ MillionBR GAAP

439

649 626

924 93738.1%

36.8%

32.3% 32.6%33.2%

3Q03 4Q03 1Q04 2Q04 3Q04

Revenue Gross Margin

1,2961,929 1,816

3,0342,734

35.3%36.2%

31.8%

35.0%

32.2%

3Q03 4Q03 1Q04 2Q04 3Q04

Page 30: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Gross Margin Evolution

7032

6096

160 161131

101

36

26.9% 28.3%32.0%

39.6% 39.4% 37.7%32.8%

32.0%

1997 1998 1999 2000 2001 2002 2003 9M04

EMBRAER 170 Jets Deliveries Gross Margin

7032

6096

160 161131

101

36

26.9% 28.3% 28.6%

41.6%44.6%

35.8% 33.2%31.1%

1997 1998 1999 2000 2001 2002 2003 9M04

EMBRAER 170 Jet Deliveries Gross Margin

US GAAPBR GAAP

Page 31: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

US GAAP & BR GAAP

Sales per Segment9M04

Revenue Breakdown

US GAAP & BR GAAP

Sales per Market9M04

Foreing Market

93%

Brazil7%

Commercial Airline

78%

Corporate 4%

Customer Services &

Others7%

Defense 11%

Page 32: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

US$ MillionUS GAAP

EBIT & Margin

R$ MillionBR GAAP

221

339255

558462

17.1% 17.6%

14.1%

18.4%16.9%

3Q03 4Q03 1Q04 2Q04 3Q04

4973

153123 12711.3%

11.0%

24.4%

13.3% 13.6%

3Q03 4Q03 1Q04 2Q04 3Q04

Page 33: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

US$ MillionUS GAAP

Net Income & Margin

R$ MillionBR GAAP

89

280195

382 3976.9%

14.5%

10.7%

12.6%

14.5%

3Q03 4Q03 1Q04 2Q04 3Q04

19

68

10380

114

4.4%

10.4%

16.5%

8.7%

12.1%

3Q03 4Q03 1Q04 2Q04 3Q04

Page 34: Farnborough Airshow - Apresentação Financeira

Working Capital

US GAAP / Brazilian GAAP

Page 35: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Accounts Receivables

US$ MillionUS GAAP

R$ MillionBR GAAP

981

472

703

465 356

3Q03 4Q03 1Q04 2Q04 3Q04

2,821

9701,292 1,457

2,052

3Q03 4Q03 1Q04 2Q04 3Q04

Page 36: Farnborough Airshow - Apresentação Financeira

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

886

190 271 315514

95

166194 157

189

3Q03 4Q03 1Q04 2Q04 3Q04

Commercial Airline Market Others

Others = Defense + Customer Services

Page 37: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Inventories

US$ MillionUS GAAP

R$ MillionBR GAAP

1,111 1,158 1,258 1,2311,390

3Q03 4Q03 1Q04 2Q04 3Q04

3,328 3,346 3,647 3,8234,155

3Q03 4Q03 1Q04 2Q04 3Q04

Page 38: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Net Cash (Debt)

US$ MillionUS GAAP

R$ MillionBR GAAP

(178)

222 178

304220

3Q03 4Q03 1Q04 2Q04 3Q04

(521)

642 516

944

629

3Q03 4Q03 1Q04 2Q04 3Q04

Page 39: Farnborough Airshow - Apresentação Financeira

Hedging Strategy

Page 40: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

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

Page 41: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Bank Debt - US$ 1,169.2 million

September 30, 2004

Loans Breakdown

Debt MaturityCurrency Breakdown

Considering Swap effects; from US$ and Yen to R$Cost of Local Currency = 12.4Cost of Foreing Currency = US$ variation + 3.9% p/a

• Loan Average Maturity: 2 years and 11 months

Local Currency

7%

Foreign Currency

93%

Short Term37%

Long Term63%

Page 42: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Balance Sheet

21% 13% 18% 12% 16% 12% 14% 14%

79% 87% 82% 88% 84% 88% 86% 86%

Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities

12/31/2003 03/31/2004 06/30/2004 09/31/2004

Other Currencies US$

US GAAP

Page 43: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Balance Sheet

21% 12% 18% 12% 16% 11% 14% 13%

79% 88% 82% 88% 84% 89% 86% 87%

Assets Liabilities Assets Liabilities Assets Liabilities Assets Liabilities

12/31/2003 03/31/2004 06/30/2004 09/31/2004

Other Currencies US$

US GAAPIncludes Derivatives

Page 44: Farnborough Airshow - Apresentação Financeira

Sales Finance

Page 45: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Aerospace Sector Support*

ECA’s - Export Credit Agencies

•US-EXIM & EU-ECA’s: commercial aircraft more than 70 seats•EDC commercial aircraft of 50-70-90 seats•BNDES: commercial aircraft 30-50 seats

US$ Billion

Source: US-Exim - Competitiveness Report 2001/2002EDC Annual Report 2000/2001/2002/2003

4.5

5.0

2.9

3.5

6.3

2.6

5.8

2.7

4.2

2.7 2.7

5.9

2.4

3.0

2.2

2.6

1.8

1.01.4

0.6 0.7

1.95(a)

0

1

2

3

4

5

6

7

1998 1999 2000 2001 2002 2003

US-EXIM EU-ECA's EDC BNDES

(a) Direct and indirect disbursement

Page 46: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Market 76.1%

BNDES 23.9%

Total Regional Jet delivered: 106 (through Sep/04)Total amount exported: US$ 2.05 BillionTotal amount financed by BNDES: US$ 490 Million

ERJ 145 Family* and EMB-170 Financing Methods – YEAR 2004

* Includes Corporate and Authority Transportation

Page 47: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Market 55.6%

BNDES 44.4%

Total Regional Jet delivered: 847 (through Sep/04)Total amount exported: US$ 14.46 BillionTotal amount financed by BNDES: US$ 6.42 Billion

ERJ 145 Family* and EMB-170 Financing Methods

* Includes Corporate and Authority Transportation

Page 48: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Total RJ Aircraft Delivered: 847 (Sep 04)

ERJ Financing Methods

Bridge3%

Straight Financing

34%

Finance Lease5%

Tax Lease46%

Operating Lease5%

Cash5%

Page 49: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Tax Lease

ERJ Financing Methods

Polish TaxLease

3%

UK Tax Lease

9%

Japanese TaxLease

1%Single Investor

Lease18%

French TaxLease

1%

USLL68%

Page 50: Farnborough Airshow - Apresentação Financeira

EETC

Page 51: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

(1994~2004)

EETC – Annual volume of new issues

Amount US$ Million

762 9851,486

2,688

3,594

6,0306,621

8,084

2,204 2,305

785

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004Oct/04

Source: Citigroup – EETC Trading Observer – October 14, 2004

Page 52: Farnborough Airshow - Apresentação Financeira

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 AirfinanceJournal for 2003

Page 53: Farnborough Airshow - Apresentação Financeira

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

Page 54: Farnborough Airshow - Apresentação Financeira

Investments

Page 55: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

US$ million

136

44.1127.7

143.8

114.2

60.1

158.699.6

69.6

18.8

0

20

40

60

80

100

120

140

160

180

200

2000 2001 2002 2003 2004 E

PP&E

R&D

PP&E and R&D – Cash Flow

Does not include cash contribution from risk sharing partners

Page 56: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

US$ million

Cash Contribution – Risk Sharing Partners

--

246 141 107

72

24

28

-

50

100

150

200

250

300

Total 2001 2002 2003 2004E 2005E 2006E 2007/2010E

Page 57: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Investments Forecast

R&D Total

- Commercial Aviation

- Corporate Aviation

- Others

Defence

20062005

119

89

11

19

88

66

37

12

17

38

Productivity and PP&E 77 59

TOTAL 284 163

US$ million

Defence investments are funded by their contracts and are not included in the R&D expenses, but in Cost of Sales andServices.

Does not include new programs

Page 58: Farnborough Airshow - Apresentação Financeira

THE INFORMATION CONTAINED HEREIN IS THE PROPERTY OF EMBRAER AND SHALL NOT BE COPIED OR USED WITHOUT EMBRAER’S WRITTEN CONSENT.

Backlog

10.4 10.6 10.9 10.5 11.0

17.3 17.5 17.7 17.8 18.5

3Q03 4Q03 1Q04 2Q04 3Q04

Firm Orders Options

US$ Billion

Page 59: Farnborough Airshow - Apresentação Financeira

Investor RelationsDepartment

Phone: (55 12) 3927 [email protected]

www.embraer.com.br