[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S/A
RESULTS FOR THE THIRD QUARTER OF 2002 IN US GAAP
The company's operational and financial information is presented, except where
otherwise indicated, on a consolidated basis in United States dollars (US$) in
accordance with US GAAP. In order to better understand the Company's operating
performance, we are also presenting at the end of this release certain
information in accordance with the Brazilian Corporate Law ("Brazilian GAAP").
Sao Jose dos Campos, November 13, 2002 - Embraer (BOVESPA: EMBR3, EMBR4) (NYSE:
ERJ), one of the leading commercial aircraft manufacturers in the world,
registered in the first nine months of 2002 net sales of US$ 1,727.6 million,
EBITDA of US$ 367.8 million and net income of US$ 145.2 million, equivalent to
diluted earnings per ADS of US$ 0.8599. The order backlog totaled US$ 22.6
billion, US$ 9.6 billion in firm orders and US$ 13.0 million in options.
3rd Quarter Highlights
o Net sales for the 3rd Quarter of 2002 (3Q02) were US$ 580.6 million,
1.5% lower than the sales of US$ 589.7 million in the 2nd quarter of
2002 (2Q02).
o EBITDA - Income from operations plus depreciation and amortization in
3Q02 were US$ 125.2 million, 6.6% lower than the US$ 134.1 million in
2Q02. The EBITDA margin in 3Q02 was 21.6%, compared with 22.7% in
2Q02.
o Net income in 3Q02 was US$ 40.6 million, equivalent to diluted
earnings per ADS of US$ 0.2340.
o A total of 30 jets were delivered in the 3rd quarter: 28 jets to the
commercial market and 2 Legacy.
o On July 24, 2002, Embraer delivered the first three aircraft to the
Brazilian Air Force that will be used in the Amazon Surveillance
System (SIVAM). This delivery was comprised of two EMB 145 SA (AEW&C -
Airborne Early Warning and Control) and one EMB 145 RS - Remote
Sensing. In total, the Brazilian Air Force is expected to receive
eight aircraft up to the third quarter of 2003, including five EMB145
SA and three EMB 145 RS.
o On July 5, 2002 and on August 30, 2002, the Legacy business jet was
granted certification from the European Joint Aviation Authorities
(JAA) and from the US Federal Aviation Administration (FAA).
o On September 3, 2002, the ERJ 145 XR, an extra long-range version of
the ERJ 145 family, was granted certification from the Brazilian
Centro Tecnico Aerospacial (CTA). This new version received
certification from the FAA on October 22, 2002.
o On September 11, 2002, Embraer was selected, for the second
consecutive year, to be a part of the Dow Jones Sustainability Index
(DJSI). The Dow Jones Global Index is composed of the 2,500 largest
companies, which are ranked based on their social, environmental and
economic performance. Embraer was one of the 310 companies selected
and was named the global leader in the aerospace sector.
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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The consolidated financial statements have been prepared in accordance with US
GAAP, which differs significantly in certain respects from the Brazilian
accounting principles applied by the Company in its statutory financial
statements prepared in accordance with Brazilian corporate legislation
("Brazilian corporate law").
In previous years, as permitted, the Company presented its consolidated
financial statements in accordance with generally accepted accounting principles
in Brazil ("Brazilian GAAP"), stated in Brazilian reais (R$), using the
price-level accounting methodology prescribed by the Brazilian Federal
Accountancy Council, which differs in certain respects from US GAAP and
Brazilian corporate law. Previously, amounts of net income and shareholders'
equity under Brazilian GAAP were reconciled to those that would have been
reported under US GAAP.
Starting January 1, 2001, the Company began presenting its consolidated
financial statements in accordance with US GAAP, stated in U.S. dollars (US$),
as it believes that such a presentation is more meaningful to the public. The
Company exports more than 97% of its products and operates in an industry that
uses the U.S. dollar as its primary currency of reference. The Board of
Directors and management have historically considered the U.S. dollar as the
Company's functional currency. Accordingly, the Company's management has
concluded that the Company's functional currency is and will continue to be the
U.S. dollar.
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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The following is a comparative analysis of the selected financial data of
Embraer's consolidated statement of income for the three months ending June 30,
2002 (2Q02), for the three months ending September 30, 2001 and 2002 (3Q01 and
3Q02) and for the nine months ending September 30, 2001 and 2002 (9M01 and
9M02).
Please note that effective January 01, 2002, the Company changed the
classification of certain items previously classified as Cost of Sales and
Services and R&D. These expenses relate primarily to information technology,
various kinds of support and training & education. The Company believes that
such expenses are more appropriately classified as General & Administrative
expenses and Other Net Operating Expenses. All previously reported amounts have
been restated to reflect these reclassification. The effect was a
reclassification of US$ 20.8 million from Cost of Sales and Services to SG&A for
the first nine months of 2001 and US$ 7.2 million for the three months ended on
September 30, 2001 and of US$ 5.9 million from R&D to Other Operating Expenses
for the first nine months ended on September, 2001 and US$ 1.9 million for the
three months ended on September, 2001. The effects of this reclassification did
not impact net income or EBITDA.
Income Statement Three months ended Three months ended September 30 Nine months ended September 30
Unaudited June 30, 2002 2001 2002 2001 2002
In US$ millions, except % and earnings per ADS
Net Sales 589.7 743.4 580.6 2,309.8 1,727.6
Gross Profit 231.4 291.2 228.1 916.3 681.8
Gross Margin (%) 39.2 39.2 39.3 39.7 39.5
Operating Expenses (77.7) (89.4) (86.5) (275.9) (242.1)
Research and development (29.9) (29.7) (26.4) (79.5) (97.6)
Employee profit sharing (4.3) 2.5 (4.2) (22.9) (15.0)
Income from operations 119.5 174.6 111.0 538.0 327.1
Operating margin (%) 20.3 23.5 19.1 23.3 18.9
Depreciation and Amortization 14.6 11.5 14.2 31.8 40.7
EBITDA 134.1 186.1 125.2 569.8 367.8
EBITDA margin (%) 22.7 25.0 21.6 24.7 21.3
Interest income, net 18.1 29.0 14.7 73.4 34.8
Financial transaction loss, net (58.8) (92.6) (19.8) (191.8) (79.9)
Other non-operating income (expense) net (0.7) (0.3) (0.3) (4.0) (0.9)
Income before income taxes 78.1 110.7 105.6 415.6 281.1
Provision for income taxes (41.0) (55.2) (64.7) (180.8) (135.1)
Minority interest (0.3) (1.0) (0.3) (1.3) (0.8)
Cumulative effect of accounting change -- -- -- 5.4
Net income 36.8 54.5 40.6 238.9 145.2
Net margin (%) 6.2 7.3 7.0 10.3 8.4
Earnings per ADS - basic 0.2142 0.3643 0.2356 1.6969 0.8671
Earnings per ADS - diluted 0.2123 0.3641 0.2340 1.6017 0.8599
Net Sales, Cost of Sales & Services and Gross Margin
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The net sales for 3Q02 totaled US$ 580.6 million, or 21.9% lower than the 3Q01
net sales of US$ 743.4 million. Net sales in the first nine months of 2002
totaled US$ 1,727.6 million, 25.2% lower than the US$ 2,309.8 million registered
in the same period of 2001. The decrease in Embraer's net sales during the
period is primarily a consequence of the reduction in aircraft deliveries to the
regional market since September 2001.
28 jets were delivered to the regional market in 3Q02, of which 18 were ERJ 145
and 10 were ERJ 140. In addition to the deliveries to the regional market, one
Executive Legacy aircraft was delivered to the corporate market and another to
the government for transportation. 41 jets from the ERJ 135/140/145 family and
one EMB 120 were delivered in 3Q01.
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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Deliveries Nine months of
By Sector 3Q01 4Q01 1Q02 2Q02 3Q02 2001 2002
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Commercial
ERJ 135 7 2 1 - - 25 1
ERJ 145 22 15 18 18 18 89 54
ERJ 140 8 14 10 10 10 8 30
EMB 120 1 - - - - 2 -
Defense
EMB 135 4 2 - - - 5 -
Legacy - - - - 1 - 1
EMB 145 - 1 1 - 3 - 4
Corporate
Legacy - - - 2 1 - 3
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Total 42 34 30 30 33 129 93
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Net sales in 3Q02 were 1.5% lower than the net sales of US$ 589.7 million in
2Q02. 30 aircraft were delivered in 3Q02, the same number of aircraft as the
quarter ending June 30, 2002.
In addition to the deliveries of jets, net sales include revenues from customer
services & other related business and sales to the defense market. In 3Q02 the
commercial aviation sector represented 83.4%, defense aviation 6.5%, corporate
aviation 3.3% and customer services & other related business 6.8% of total net
sales.
The 1.5% difference can be attributed to slightly different pricing composite in
the commercial aviation, variations of defense and corporate sales related to
the change in deliveries of Legacys and the effect of the Real devaluation on
customer services and other related businesses sales made in Reais, in Brazil.
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Net sales Three months ended Three months ended September 30,
by sector June 30, 2002 2001 2002
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US$ % US$ % US$ %
Commercial Aviation 491.9 83.4 627.5 84.4 484.1 83.4
Defense Aviation 15.9 2.7 31.4 4.2 37.9 6.5
Corporate Aviation 38.0 6.4 43.0 5.8 19.1 3.3
Customer Services
and other related business 43.9 7.4 41.5 5.6 39.5 6.8
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Total 589.7 100.0 743.4 100.0 580.6 100.0
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Cost of sales and services was US$ 352.5 million in 3Q02, 22.0% below the US$
452.2 million recorded in the same quarter of the prior year. The gross margin
was 39.3% in 3Q02, compared with 39.2% recorded in 3Q01.
In the first nine months of 2002, the gross profit was US$ 681.8 million, 25.6%
lower than the US$ 916.3 million for the nine months ended September 30, 2001.
The gross
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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margin for the nine months ended September 30, 2002 was slightly lower to 39.5%
from 39.7% in the same period of last year.
Administrative and Selling Expenses
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Administrative and selling expenses were US$ 75.2 million in 3Q02, or 7.9% lower
than the US$ 81.7 million recorded in 3Q01.
Selling expenses decreased 19.4% from US$ 55.2 million in 3Q01 to US$ 44.5
million in the same period of 2002. The reduction in selling expenses is related
to the decrease in aircraft deliveries since September 2001, as these expenses
also include the pre-sales and after-sales support for the ERJ 135/140/145
regional jet family. A provision for incurred but not yet reported (IBNR) losses
for the financial guarantees provided by Embraer to its customers in the amount
of US$ 3.4 million are also included in this line item. (See "recent events").
General & Administrative expenses in 3Q02 increased 15.9% from US$26.5 million
in 3Q01 to US$30.8 million in 3Q02. The main variations were attributable to
insurance (US$ 1.0 million) and third party services related to the Engineering
Especialization Program (US$ 2.0 million).
Other Operating Expense, net
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Embraer recorded other net operating expenses of US$ 11.4 million in 3Q02, in
comparison to the US$ 7.7 million registered in 3Q01. In 3Q02, this amount
includes pre-operating expenses of US$ 0.7 million related to the e-market place
- - AEROChain(R), US$ 1.1 million attributed to the new Gaviao Peixoto Plant, US$
1.0 million attributed to expenses of discontinued programs and US$5.5 million
related to Education, training and professional development. In 3Q01, this
amount included US$ 1.9 million on Education, training and professional
development and US$ 4.7 million in restructuring cost.
Research and Development (R&D)
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In 3Q02 US$ 26.4 million was invested in the research and development of new
products and in the maintenance and improvement of existing products, compared
with US$ 29.7 million invested in 3Q01 and US$ 29.9 million in 2Q02. The largest
portion of the R&D cost is denominated in R$, therefore the decrease in this
expense is primarily related to the 36.9% devaluation of the Real against the
US$ that occurred during this period. A positive impact of US$ 1.0 million,
refers to the recognition as a reduction of expenses of the contribution from
suppliers related to R&D, as the Company met certain project milestones related
to the development of the Embraer 170 family.
Employee Profit Sharing
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Employee Profit Sharing is subject to meeting operational goals established at
the beginning of the year and is based on dividends distributions during the
year to shareholders. Employee profit sharing totaled US$ 4.2 million in 3Q02.
Income from Operations
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In 3Q02 income from operations, including equity in income from affiliates and
stock compensation expense, was US$ 111.0 million, which was lower than the
income from operations of US$174.6 million for 3Q01, and lower than the income
from operations of US$ 119.5 million for 2Q02. Embraer achieved operating
margins of 19.1% in 3Q02, 23.5% in 3Q01 and 20.3% in 2Q02.
During the first nine months of 2002 income from operations totaled US$ 327.1
million, lower than the US$ 538.0 million for the equivalent period of 2001.
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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EBITDA
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3Q02 EBITDA (net income from operations plus depreciation and amortization) was
US$ 125.2 million, resulting in a margin of 21.6% on net sales compared with
EBITDA of US$ 186.1 million and a margin of 25.0% in 3Q01. The EBITDA for the
nine months ended September 30, 2002 was US$ 367.8 million, with a margin of
21.3%, compared with US$ 569.8 million and a margin of 24.7% in the equivalent
period of 2001.
EBITDA in 3Q02 was 6.6% lower than the amount for 2Q02 of US$ 134.1 million, and
the EBITDA margin was 110 basis points lower than the 22.7% margin in 2Q02.
Interest Income, net
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In 3Q02 Embraer recorded net interest income of US$ 14.7 million, as compared to
US$ 29.0 million in 3Q01, which is a result of lower average balances of cash
and cash equivalents since the events of September 11, 2001 (see "Financial
Management").
Financial Transaction Loss, net
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Embraer uses the dollar as the functional currency for US GAAP, and the
variations in this account refer mainly to the remeasurement of monetary assets
and liabilities denominated in other currencies that are adjusted to the dollar
at the end of each period. This remeasurement resulted in an expense of US$ 19.8
million in 3Q02 compared to an expense of US$ 92.6 million in 3Q01. This result
is attributed to the devaluation of the real against the dollar in 3Q02, which
was partially offset by the hedging operations that the company executed during
this quarter.
Provision for Income Taxes
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Income tax and social contribution tax are calculated based on income as
determined under the Brazilian law method of accounting, adjusted for certain
temporary differences arising from the adjustments to US GAAP. However certain
adjustments to US GAAP, such as the adoption of the US dollar as the functional
currency, result in permanent differences, which impact the computation of the
effective tax rate.
In 3Q02, Embraer recorded a total provision of US$ 64.7 million for income tax
and social contribution, which represents an effective tax rate according to US
GAAP of 61.3%. Of this amount, US$ 19.8 million or 18.7% is primarily related to
losses arising from the remeasurement of Real-denominated monetary assets and
liabilities which are not deducted from income for purposes of calculating
Brazilian tax.
In 3Q01, US$ 55.2 million was provisioned representing an effective rate of
49.9%.
Net Income
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Embraer's net income in 3Q02 of US$ 40.6 million (equivalent to US$ 0.2340 per
diluted ADS) was lower than the net income of US$54.5 million in 3Q01.
(equivalent to US$ 0.3641 per diluted ADS). Net income as a percentage of net
sales in 3Q02 was 7.0%, compared with the 7.3% in 3Q01.
In the first nine months of 2002, net income was US$ 145.2 million, or 8.4% of
net sales, while net income for the same period of 2001 was US$ 238.9 million,
or 10.3% of net sales.
Financial Management
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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As of September 30, 2002 Embraer's cash and cash equivalents were US$ 760.1
million. On the same date indebtedness totaled US$ 542.9 million. Therefore the
Company had a net cash position (cash and cash equivalents minus bank debt) of
US$217.2 million.
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Balance Sheet As of June 30, As of September 30,
And Other Data 2002 2001 2002
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In US$ million - unaudited
US$ US$ US$
Cash and cash equivalents 892.3 883.8 760.1
Trade accounts receivable 174.7 716.7 245.3
Collateralized accounts receivable 310.9 313.8 311.0
Inventories 991.7 938.2 946.3
Total assets 3,345.4 3,524.2 3,367.5
Bank debt 532.6 755.3 542.9
Non recourse debt 310.9 313.8 311.0
Total liabilities 2,315.4 2,571.9 2,316.5
Net cash (debt) 359.7 128.5 217.2
Shareholders' equity 1,030.0 952.3 1,051.0
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Indebtedness
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During the last year the company extended its indebtedness profile and as a
result of this extension, on September 30, 2002, 54.5% of Embraer's total
indebtedness is long-term financing, compared with 40.5% at the end of 2Q02 and
31.7% on December 31,2001.
Embraer has decided to partially convert its Japanese yen and US dollar
denominated debt to R$-related interbank interest rates (CDI). Therefore, out of
the total US dollar and other currency indebtedness of US$ 520.0 million, 51.9%,
or US$ 269.7 million is indexed in R$. When considering the effect of these
hedges, out of the total company indebtedness of US$ 542.9 million, 46.1% or US$
250.3 million primarily refers to US$ borrowing with a weighted average cost of
5.0% per annum. The remaining US$ 292.6 million, equivalent to 53.9% of the
total debt, is financed in Brazilian currency at an average weighted interest
rate of 15.5% per annum, equivalent to 86.8% of the CDI.
Cash
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Of the total cash and cash equivalents balance of US$ 760.1 million, 68.0% is
comprised of investments in R$ and the remaining 32.0% primarily in US dollars.
The Embraer cash investment strategy is based on prospects of future
investments, which are mostly denominated in R$.
Accounts Receivable and Inventories
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Since September 2001, Embraer has supported the delivery of aircraft to certain
clients that were concluding their financing agreements. This support has caused
our accounts receivables to be more volatile, compared to its historical track.
On September 30, 2002, there was a balance of US$200.6 million in the short term
in comparison to the US$133.3 million, as of June 30, 2002 and is related to six
aircraft pending completion of their financing arrangements.
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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Inventories decreased US$ 45.4 million between September 30 and June 30 of 2002.
This decrease was related to ERJ145 family inventory reductions, partially
offset by the development of the EMBRAER 170, which currently has six prototypes
carrying out the flight certification campaign.
Non-Recourse Debt & Collateralized Accounts Receivable
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Some of Embraer's sales transactions are structured financings through which an
Special Purpose Entity (SPE) purchases aircraft from Embraer, pays Embraer the
full purchase price on delivery and then leases the related aircraft to the
ultimate customer. The SPE is formed by a third party financial institution to
facilitate their financing of an aircraft purchase and the credit risk and the
management responsibility associated with the SPE remain with such financial
institution. Under U.S. GAAP, sales transactions made through a SPE must be
consolidated if the equity contribution of independent third parties is less
than 3% of the fair value of the SPE's assets, as discussed in EITF 90-15. Some
of the SPEs through which Embraer sells aircraft were formed without any equity
contribution and, therefore, must be consolidated. Under Brazilian GAAP, since
Embraer does not guarantee these transactions nor finance its customers, these
SPEs are not consolidated in the company's financial statements.
The effect of consolidating these SPE's resulted in an additional amount of non-
recourse debt in June 30, 2002 and September 30, 2002 of US$310.9 million and
US$ 311.0 million, respectively, and an additional amount of collateralized
accounts receivable in the same amounts. The impact on the consolidated
statements of income and cash flows were not material as the terms of the
underlying lease and the debt are substantially the same. The non-recourse debt
is collateralized in favor of the financial institution by accounts receivable
and by the financed aircraft.
Investments in Productivity
Productivity and Improvements in Industrial Capacity
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During the first nine months of 2002, US$ 115.1 million was invested in
improving the Company's industrial capacity, including improvements and
modernization of industrial and engineering processes, machinery and equipment.
Supplementary Information according to Corporate Law (Brazilian GAAP)
Today Embraer also disclosed the 3Q02 results in accordance with corporate law
method of accounting (Brazilian GAAP), which according to Brazilian legislation
must be used as a basis for calculating the distribution of dividends and
interest on equity, income tax and social contribution. We present below
selected consolidated results in accordance with corporate law and in Reais
(R$).
Net revenues in 3Q02 totaled R$ 1,976.2 million and gross profit returned was R$
975.7 million, with a gross margin of 49.4%. The operating profit for the period
(including employee profit-sharing) totaled R$ 628.2 million, with an operating
margin of 31.8%. The EBITDA for the period was R$ 675.9 and the EBITDA margin
34.2%. Pre-tax income was R$ 213.8 million (10.8% of net revenues). Income tax
and social contribution totaled R$ 24.6 million, representing an effective tax
rate of 11.5%. Net income for the period totaled R$ 187.8 million (9.5% of net
revenues).
New Orders and Backlog
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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Commercial Aviation Market
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At the end of 3Q02, orders for commercial aircraft totaled 989, comprising a
firm order backlog of commercial products with a balance of 402 aircraft to be
delivered, which reflects a healthy demand for the Company's current models and
new products. The total of options were 555 units resulting in a total of 1,544
aircraft ordered since the initiation of the ERJ jet family program.
ERJ 135/140/145 Jet Family
The family of 37, 44 and 50 seat regional jets comprises the ERJ 135/140/145
models respectively. The commonality ratio, of approximately 96%, between
models, enables the same ground support equipment to be used by customers
operating the aircraft, as well as the same pilot certification and standardized
maintenance procedures, providing customers with significant operating and
maintenance efficiencies.
The extra long-range version of the highly successful ERJ 145 regional jet
family, ERJ 145 XR, was granted its certificate of airworthiness by the
CTA-Centro Tecnico Aeroespacial (Aerospace Technical Center) on September 3,
2002. Federal Aviation Administration (FAA) certification for the aircraft was
granted on October 22, 2002, for US operation.
The ERJ 145 XR has 99% commonality of structure, parts and systems with the
other aircraft in the ERJ 145/135/140 family. It also features the latest
improvements introduced to the ERJ 145/135/140 family as a result of the
operational experience gained in more than four years of airline operations
worldwide. Enhanced performance capability of the ERJ 145 XR includes a 2,000
nautical mile range, maximum takeoff weight of 53,130 pounds, and improved, twin
Rolls-Royce AE3007A1E engines with an additional 7% of take-off thrust.
The launch customer of the ERJ 145 XR, ExpressJet Airlines (formerly Continental
Express), already received 8 aircraft immediately after certification.
ExpressJet will take delivery of the first 18 aircraft this year and will begin
service with the new model in early November. ExpressJet holds a total of 104
firm orders and 100 purchase options for the ERJ 145 XR. Currently the carrier
operates 30 ERJ 135 and 140 ERJ 145.
At the end of the 3rd quarter of 2002 the order backlog for the ERJ 135/140/145
family for the regional market totaled 877 firm orders, of which 587 have been
delivered, and 353 options. These amounts include cancellations from an African
customer, which occurred during this quarter.
The New Family of EMBRAER 170/190 Jets
The 70 seat capacity EMBRAER 170, and the 98 and 108 seat capacity EMBRAER 190
and 195 were launched in June of 1999. Also the 78 seat capacity EMBRAER 175 was
officially launched on October 29, 2001 during the rollout ceremony of the
EMBRAER 170.
Six pre-series EMBRAER 170 aircraft are taking part in an aggressive development
and certification program. The first EMBRAER 170 recorded its maiden flight on
February 19 of this year, only 32 months after the official launching of the
EMBRAER 170/190 program in June of 1999. Less than five months later another
four aircraft have made their maiden flights. The development and certification
program is being developed using six test aircraft and two structural test rigs.
Embraer envisions the
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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certification of the aircraft by the end of 2Q03, followed by delivery of the
first aircraft to the launch customer SWISS, from Switzerland.
Even before the maiden flight of the EMBRAER 170 prototype, Embraer had already
accumulated 112 firm orders and 202 purchase options for this new jet family,
ordered by important international airlines and leasing operators.
Corporate Aviation Market
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The Legacy is a corporate jet developed based on the successful ERJ 135 regional
jet platform. Launched on July 26, 2000 at the Farnborough Air Show in England,
the Legacy is available in executive, corporate and authority transport
versions. The Legacy received official certification from the CTA - Centro
Tecnico Aeroespacial (Aerospace Technical Center) on December 10, 2001, on July
5, 2002 from the Joint Aviation Authorities (JAA) and on August 23, 2002 from
the Federal Aviation Administration (FAA).
During 3Q02, Embraer received two new firm orders for the Legacy from two US
customers.
The Corporate Aviation order backlog reached a total of 164 aircraft at
September 30, 2002, consisting of 73 firm orders and 91 options, of which 10
aircraft have been delivered.
Aircraft Ordered during the Period:
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Firm
Orders 3Q01 4Q01 1Q02 2Q02 3Q02
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Commercial
ERJ 135/140 22 8 - 15 -
ERJ 145 1 - - 7 -
EMBRAER 170 2 - - - -
Corporate & Defense
Legacy/EMB 135 13 25 - 1 2
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Total 38 33 - 23 2
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Defense Market
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On June 24, 2002 the Brazilian Civil Aviation Authority issued Supplemental Type
Certificates (STC) for the R-99A and R-99B aircraft manufactured by Embraer for
the Brazilian Air Force (FAB). Both models are part of the Amazon Surveillance
System (SIVAM) project.
One month after certification of these aircraft, Embraer delivered the first
three aircraft that will be part of the Sivam, to FAB. The aircraft, two EMB 145
SA (AEW&C - Airborne Early Warning and Control) and one EMB 145 RS (Remote
Sensing) models are part of a total order of eight aircraft to be delivered up
to the third quarter of 2003 for the SIVAM Program, of which five will be EMB
145 SA and three will be EMB 145 RS type.
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[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
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The aircraft from Embraer are a fundamental part of the SIVAM Program that will
provide precision surveillance and monitoring of some 5.2 million square
kilometers of the Amazon. The EMB 145 SA, dubbed the R 99-A by FAB, will be
responsible for performing air surveillance missions and monitoring air traffic,
even aircraft flying at very low altitudes. It is equipped with the
state-of-the-art Ericsson Erieye Radar.
The EMB 145 RS, called the R 99-B by FAB, will perform data collection on the
ground characteristics and this information will benefit the areas of bio mass
analysis and exploitation, providing full monitoring of any ground and river
movement within the Amazon. Its sophisticated array of sensors, including a
modern SAR (Synthetic Aperture Radar), Multi-Spectral Scanner and Forward
Looking Infra Red, allows for perfect and complete monitoring, even under the
dense vegetation of the forest.
In addition to the surveillance aircraft, SIVAM will also employ the ALX
turboprop, a lightweight training and attack aircraft. One of the advantages of
the new model, based on the Tucano, is that, even without its own radar system,
it can be monitored by the EMB 145 AEW&C and allows these turboprops to
intercept unauthorized aircraft. The FAB has already ordered 76 Super Tucano
aircraft, and has options to purchase an additional 33. Embraer will begin
delivery of the ALX to FAB at the end of 2003.
Backlog
- -------
The Embraer firm order backlog at the end of the 3rd Quarter of 2002 was US$ 9.6
billion, which together with options, reached US$ 22.6 billion. The following
chart shows the order backlog at the end of each quarter:
[OBJECT OMITTED]
Firm orders in backlog
US$ billion
3Q01 4Q01 1Q02 2Q02 3Q02
- --------------------------------------------------------------------
Firm order backlog 11.2 10.7 10.3 10.1 9.6
Options 12.7 12.7 12.8 13.7 13.0
- --------------------------------------------------------------------
Total 23.9 23.4 23.1 23.8 22.6
Investor Relations
In 3Q02, the Embraer preferred stock depreciated by 13.3%, reaching a value per
share of R$ 13.00 on September 30, 2002. During the same period the average
daily volume traded on the Sao Paulo Stock Exchange (BOVESPA) was R$ 9.7
million. The common stock depreciated by 15.3% in the quarter, and closed the
quarter with a value of R$ 11.75 per share and an average daily trading volume
of R$ 2.2 million. In the same period the Ibovespa index fell by 22.6%.
The ADSs trading on the New York Stock Exchange (NYSE) fell by 37.8% during the
quarter and were quoted at US$ 13.3 per ADS at the end of the quarter. The
average
- --------------------------------------------------------------------------------
11
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
daily trading volume for the period totaled 315 thousand ADSs,
equivalent to a financial volume of US$ 5.5 million. In the same period, the Dow
Jones index fell by 17.9%
The Board of Directors of the company approved the distribution of interest on
shareholders' equity for the 3rd quarter totaling R$ 66.3 million.
- --------------------------------------------------------------------------------------------------------
Dividends & Interest on Date of Total Value per share in R$
Shareholders' Equity (In thousands)
In 2002 Distribution R$ Common Preferred
- --------------------------------------------------------------------------------------------------------
Interest - 1st Quarter 03/19/02 58,910 0.07777 0.08554
Interest - 2nd Quarter 06/14/02 59,530 0.07859 0.08644
Interest - 3rd Quarter 09/13/02 66,300 0.08740 0.09613
- --------------------------------------------------------------------------------------------------------
TOTAL - 184,740 0.24376 0.26811
- --------------------------------------------------------------------------------------------------------
Recent Events
ERJ 145 XR Certification:
- -------------------------
Please see new orders and Backlog - ERJ 135/140/145 Jet Family.
New ERJs to be Flown for Delta Connection on Florida Routes
- -----------------------------------------------------------
On October 22, 2002, Embraer delivered to Chautauqua Airlines the first ERJ 145
aircraft from a firm order of 22 jets (fifteen ERJ 135s and seven ERJ 145s)
ordered in June 2002. The event took place at Embraer's headquarters in Sao Jose
dos Campos, Brazil. This delivery was a result of the agreement between Delta
Air Lines and Chautauqua Airlines, in which Chautauqua will fly ERJs in Florida
under the Delta Connection brand.
Financial Support for Sales
- ---------------------------
According to existing sales contracts, Embraer may have to repurchase a number
of our aircraft. The price per aircraft of any required repurchase is less than
the original purchase price of the aircraft. However, in some cases, the price
per aircraft is higher than our current estimate of the market value of the
relevant aircraft type in future years (based on internal and external aircraft
valuations, including information developed from the sales of similar aircraft
in the secondary market). If we are required to repurchase all of the relevant
aircraft under our repurchase obligation, which covers the period from 2003 to
2007, we could be required to pay up to approximately US$500 million for these
aircraft. Based on our current estimates and these third-party appraisals, we
believe that we could sell most repurchased aircraft in the market for a price
at least equal to the repurchase price.
- --------------------------------------------------------------------------------
12
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
At September 30, 2002, approximately 4.2% of our firm orders for regional jets,
including aircraft that have already been delivered, were subject to trade-in
options. These options provide that the repurchase price can be applied to the
price of an upgraded model or any of our other aircraft. The repurchase price is
determined in the manner discussed above for regional jets and as a percentage
of original purchase price for our corporate jets. Based on the Company's
current estimates and third-party appraisals, management believes that any
potential aircraft accepted under trade-in could be sold in the market without
material gain or loss.
The Company has also guaranteed directly or indirectly a minimum residual value
for some of its aircraft, including aircraft that have already been delivered.
These guarantees run in favor of certain customers or providers of financing to
customers. In accordance with the Company policy and based on third-party
appraisals, this guaranteed minimum residual value does not exceed the appraisal
value of each aircraft delivered on the date of sale. The value of the guarantee
typically ranges from 18% to 25% of the sales price in the 10th to 15th year
after the year of delivery. In light of the volatility the of the airline
industry and resulting impact on the credit risk of airlines and our current
estimate of future market value of aircraft, the Company recorded a provision of
US$3.4 million to cover its current estimated exposure of the financial
guarantees related to the aircraft delivered through September 30, 2002. The
Company may be required to add to this provision as we reassess our estimated
exposure on a quarterly basis.
Faced with the current economic climate in the airline industry and a
deterioration in the credit risks of airlines, Embraer has created two dedicated
and specialized teams: one to manage its exposure under these various repurchase
and guarantee obligations and the other to manage any repurchased aircraft and
provide financial assistance to potential buyers of these aircraft.
Each of these specialized teams will operate under newly created subsidiaries.
Embraer Spain Holding Co. SL - ESH was incorporated in Spain, which in turn
formed ECC Investment Switzerland, AG and ECC Leasing Co., Ltd. ECC Investment
then formed ECC Insurance and Financial Co. Ltd, a captive insurance company
that insures Embraer's obligations under its repurchase, trade-in and residual
guarantee obligations.
For additional information please contact:
Embraer - Empresa Brasileira de Aeronautica S/A
Anna Cecilia Bettencourt
(55 12) 3927 1216
acecilia@embraer.com.br
- -----------------------
Gustavo Poppe
(55 12) 3927 1106
gustavo.poppe@embraer.com.br
Milene Petrelluzzi
(12) 3927 3054
milene.petrelluzzi@embraer.com.br
- ---------------------------------
- --------------------------------------------------------------------------------
13
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This document 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;
expectations of trends in the industry; our investment plans; our capacity to
develop and deliver products on the previously agreed dates; and existing and
future government regulations.
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 press release might not occur. Our actual
results could differ substantially from those anticipated in our forward-looking
statements.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
14
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S.dollars)
A S S E T S
as of June 30 as of September 30
------------------------------------
2002 2002
------------------------------------
Unaudited Unaudited
CURRENT ASSETS
Cash and cash equivalents 892,254 760,076
Trade accounts receivable 133,306 200,562
Collateralized accounts receivable 17,266 21,853
Inventories 991,739 946,325
Deferred income tax assets 82,122 80,280
Other current assets 179,455 191,586
------------------------------------
Total Current Assets 2,296,142 2,200,682
------------------------------------
NONCURRENT ASSETS:
Trade accounts receivable 41,404 44,772
Collateralized accounts receivable 293,619 289,119
Customer and commercial financing 43,170 48,239
Inventories 16,552 16,289
Property, plant and equipment, net 411,716 436,790
Investments 4,448 4,642
Deferred income taxes 84,271 62,105
Other noncurrent assets 154,031 264,873
------------------------------------
Total noncurrent assets 1,049,211 1,166,829
------------------------------------
TOTAL ASSETS 3,345,353 3,367,511
------------------------------------
- --------------------------------------------------------------------------------
15
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S.dollars)
LIABILITIES AND SHAREHOLDERS' EQUITY
as of June 30 as of September 30
------------------------------------
2002 2002
------------------------------------
Unaudited Unaudited
CURRENT LIABILITIES
Loans 317,165 246,779
Capital lease obligation 8,395 8,145
Non recourse debt 17,266 21,853
Accounts payable to suppliers 273,838 306,588
Customer advances 366,192 342,235
Other accounts payable and accrued
liabilities 250,996 262,975
Taxes and social charges payable 164,696 141,431
Accrued taxes on income 17,468 25,294
Accrued dividends 19,006 7,281
------------------------------------
Total Current Liabilities 1,435,022 1,362,581
------------------------------------
LONG-TERM LIABILITIES
Loans 215,441 296,129
Capital lease obligation 5,974 5,804
Non recourse debt 293,619 289,119
Customer advances 96,678 100,205
Contribution from suppliers 232,605 233,965
Taxes and social charges payable 16,904 11,868
Other accounts payable and accrued
liabilities 11,624 9,213
------------------------------------
Total long-term liabilities 872,845 946,303
------------------------------------
------------------------------------
MINORITY INTEREST 7,499 7,647
------------------------------------
SHAREHOLDERS' EQUITY:
Statutory capital:
Common 207,014 207,014
Preferred 683,238 683,399
Additional paid-in capital 8,353 8,353
Legal reserve 59,162 59,162
Retained earnings (restricted) 80,002 103,581
Other accumulated comprehensive income (7,782) (10,529)
------------------------------------
Total shareholders' equity 1,029,987 1,050,980
------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,345,353 3,367,511
------------------------------------
- --------------------------------------------------------------------------------
16
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A
-----------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
In thousands of U.S. dollars, except share and per share data
-------------------------------------------------------------
Three months ended on Nine months ended on
September 30, September 30,
---------------------------------------------------------------
2001 2002 2001 2002
Unaudited Unaudited
GROSS SALES:
Domestic market 16,559 11,930 46,636 44,873
Foreign market 727,273 576,786 2,297,191 1,701,944
Sales deductions (429) (8,116) (34,033) (19,204)
---------------------------------------------------------------
NET SALES 743,403 580,600 2,309,794 1,727,613
---------------------------------------------------------------
Cost of sales and services (452,189) (352,461) (1,393,451) (1,045,823)
---------------------------------------------------------------
Gross Profit 291,214 228,139 916,343 681,790
---------------------------------------------------------------
Operating expenses
Selling expenses (55,164) (44,480) (166,514) (134,004)
Research and development (29,698) (26,411) (79,516) (97,532)
General and administrative (26,515) (30,750) (86,609) (88,143)
Employee profit sharing 2,526 (4,231) (22,888) (15,025)
Stock compensation -- -- (1,074) --
Other operating expense, net (7,722) (11,417) (21,911) (20,234)
Equity in income from affiliates 18 193 178 280
---------------------------------------------------------------
Income From Operations 174,659 111,043 538,009 327,132
---------------------------------------------------------------
Interest income, net 29,032 14,669 73,403 34,828
Financial transaction loss, net (92,616) (19,779) (191,818) (79,936)
Other non-operating income (expense), net (344) (319) (3,995) (873)
---------------------------------------------------------------
Income Before Income Taxes 110,731 105,614 415,599 281,151
---------------------------------------------------------------
Provision for income taxes (55,193) (64,727) (180,793) (135,118)
---------------------------------------------------------------
Income Before Minority Interest 55,538 40,887 234,806 146,033
---------------------------------------------------------------
Minority interest (967) (286) (1,307) (850)
---------------------------------------------------------------
Income Before Cumulative Effect
of Accounting Change 54,571 40,601 233,499 145,183
---------------------------------------------------------------
CUMULATIVE EFFECT OF ACCOUNTING CHANGE,
NET OF TAX -- -- 5,440 --
---------------------------------------------------------------
Net Income 54,571 40,601 238,939 145,183
---------------------------------------------------------------
EARNINGS PER SHARE
Basic
Common 0.08 0.05 0.39 0.20
Preferred 0.09 0.06 0.42 0.22
Diluted
Common 0.08 0.05 0.36 0.20
Preferred 0.09 0.06 0.40 0.21
WEIGHT AVERAGE SHARES
(thousands of shares)
Basic
Common 242,544 242,544 242,544 242,544
Preferred 378,768 468,915 342,753 449,250
Diluted
Common 242,544 242,544 242,544 242,544
Preferred 385,996 473,557 377,783 454,893
- --------------------------------------------------------------------------------
17
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A
-----------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
In thousands of U.S. dollars
----------------------------
Three months ended on Nine months ended on
September 30, September 30,
----------------------------------------------------------
2001 2002 2001 2002
Operating Activities Unaudited Unaudited
Net Income 54,571 40,601 238,939 145,183
Adjustments to reconcile net
income to net cash
provided by (used in) operating activities:
Depredation and amortization 11,515 14,135 31,798 40,676
Provision for doubtful accounts 2,467 (192) 3,151 1,108
Provision for inventorv obsolescence 2,034 15,288 14,244 5,994
Deffered income and social contribution tax 19,054 24,009 57,034 41,511
Cumulative effect of accounting change (5,440) -- (5,440) --
Gain/loss on the disposition of assets (576) 368 (175) 3,685
Stock compensation -- -- 1,074 --
Equity in income from affiliates (18) (193) (178) (280)
Accrued interest recorded in loans 8,661 8,228 23,195 38,822
Minority interests 967 286 1,307 850
Other 7,144 (2,747) 5,711 (8,671)
Changes in assets and liabilities
Trade accounts receivable (365,099) (70,432) (537,101) 386,380
Inventories (128,141) 30,389 (355,225) 69,187
Other assets (8,922) (89,170) (7,387) (172,604)
Accounts payable to suppliers (7,954) 32,750 188,083 40,995
Other accounts payable and accrued liabilities (21,359) 10,090 (18,523) (35,312)
Accrued taxes on income (14,653) 7,826 (8,157) (23,084)
Customers advances 6,257 (20,430) 77,111 (49,420)
Contribution from suppliers 6,883 1,360 14,509 90,350
Taxes and social charges payable (30) (20,129) 5,374 11,513
Minority Participation (166) (137) (1,603) (1,372)
--------- ------- --------- -------
Net cash provided by (used in) operating activities (432,805) (18,100) (272,259) 585,511
Investing Activities
Purchase of property, plant and equipment (43,873) (39,639) (115,444) (115,075)
Proceeds from the sale of property, plant and equipment 136 63 521 405
Proceeds from the sale of minority interest of subsidiary 5 -- -- --
Customer and commercial financing - net additions 1,078 (5,069) 4,853 (19,567)
Guaranteed deposits and compulsory loans (19,183) (33,891) (32,341) (37,370)
--------- ------- --------- -------
Net cash used in investing activities (61,837) (78,536) (142,411) (171,607)
Financing Activities
Repayment of loans (235,728) (171,773) (909,846) (764,181)
Proceeds from borrowings 423,846 174,691 1,187,979 500,613
Proceeds from the issuance of shares -- 161 1,323 514
Dividends paid (71,252) (28,747) (160,935) (121,436)
Payments of refinanced taxes (83) (8,172) (1,476) (11,882)
Payments of debentures -- -- (1,554) --
Payments on capital lease obligations (2,008) (1,702) (6,244) (6,758)
--------- ------- --------- -------
Net cash provided (used) by financing activities 114,775 (35,542) 109,247 (403,130)
--------- ------- --------- -------
Net increase (decrease) in cash and equivalents (379,867) (132,178) (305,422) 10,774
Cash and cash equivalents at beginning of period 1,263,676 892,254 1,189,231 749,302
--------- ------- --------- -------
Cash and cash equivalents at end of period 883,809 760,076 883,809 760,076
========= ======= ========= =======
- --------------------------------------------------------------------------------
18
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A
-----------------------------------------------
BACKLOG AS OF SEPTEMBER 30, 2002
--------------------------------
- - ERJ 145:
- ----------------------------------------------------------------------------------------------------
Customer Country Firm Option Deliveries Firm Order
Backlog
- ----------------------------------------------------------------------------------------------------
Air Caraibes Guadalupe 2 0 2 0
- ----------------------------------------------------------------------------------------------------
Air Moldova Moldavia 0 2 0 0
- ----------------------------------------------------------------------------------------------------
Alitalia Italy 14 7 9 5
- ----------------------------------------------------------------------------------------------------
American Eagle USA 56 17 56 0
- ----------------------------------------------------------------------------------------------------
Axon Airlines Greece 3 0 3 0
- ----------------------------------------------------------------------------------------------------
British Midland UK 11 5 9 2
- ----------------------------------------------------------------------------------------------------
British Regional UK 23 3 23 0
- ----------------------------------------------------------------------------------------------------
Brymon UK 7 14 7 0
- ----------------------------------------------------------------------------------------------------
Cirrus Germany 1 0 1 0
- ----------------------------------------------------------------------------------------------------
Continental Express USA 245 100 141 104
- ----------------------------------------------------------------------------------------------------
Swiss Switzerland 25 15 25 0
- ----------------------------------------------------------------------------------------------------
ERA Spain 2 0 2 0
- ----------------------------------------------------------------------------------------------------
KLM Exel Netherlands 2 2 2 0
- ----------------------------------------------------------------------------------------------------
LOT Poland 16 0 14 2
- ----------------------------------------------------------------------------------------------------
Luxair Luxembourg 9 2 9 0
- ----------------------------------------------------------------------------------------------------
Mesa USA 36 45 32 4
- ----------------------------------------------------------------------------------------------------
Portugalia Portugal 8 0 8 0
- ----------------------------------------------------------------------------------------------------
Proteus France 18 8 11 7
- ----------------------------------------------------------------------------------------------------
Regional Airlines France 17 0 14 3
- ----------------------------------------------------------------------------------------------------
Rheintalflug Austria 4 4 3 1
- ----------------------------------------------------------------------------------------------------
Rio-Sul Brazil 16 0 16 0
- ----------------------------------------------------------------------------------------------------
Sichuan Airlines China 5 0 5 0
- ----------------------------------------------------------------------------------------------------
Skyways AB Sweden 4 11 4 0
- ----------------------------------------------------------------------------------------------------
Trans States USA 12 0 12 0
- ----------------------------------------------------------------------------------------------------
Wexford USA 45 67 38 7
- ----------------------------------------------------------------------------------------------------
Total 581 302 446 135
- ----------------------------------------------------------------------------------------------------
- - ERJ 135:
- ----------------------------------------------------------------------------------------------------
Customer Country Firm Option Deliveries Firm Order
Backlog
- ----------------------------------------------------------------------------------------------------
American Eagle USA 40 0 40 0
- ----------------------------------------------------------------------------------------------------
British Midland UK 4 0 2 2
- ----------------------------------------------------------------------------------------------------
City Air Sweden 2 1 2 0
- ----------------------------------------------------------------------------------------------------
Continental Express USA 30 0 30 0
- ----------------------------------------------------------------------------------------------------
Pan Europeenne France 1 0 1 0
- ----------------------------------------------------------------------------------------------------
Proteus France 6 0 6 0
- ----------------------------------------------------------------------------------------------------
Regional Airlines France 3 0 3 0
- ----------------------------------------------------------------------------------------------------
Regional Air Lines Morocco 1 5 0 1
- ----------------------------------------------------------------------------------------------------
SA Airlink South Africa 20 0 5 15
- ----------------------------------------------------------------------------------------------------
Wexford USA 15 0 0 15
- ----------------------------------------------------------------------------------------------------
TOTAL 122 6 89 33
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
19
[EMBRAER LOGO] 3rd Quarter 2002 Earnings Release - US GAAP
- --------------------------------------------------------------------------------
- - ERJ 140:
- ----------------------------------------------------------------------------------------------------
Customer Country Firm Option Deliveries Firm Order
Backlog
- ----------------------------------------------------------------------------------------------------
American Eagle USA 139 25 37 102
- ----------------------------------------------------------------------------------------------------
Midwest Express USA 20 20 0 20
- ----------------------------------------------------------------------------------------------------
Wexford USA 15 0 15 0
- ----------------------------------------------------------------------------------------------------
TOTAL 174 45 52 122
- ----------------------------------------------------------------------------------------------------
- - EMBRAER 170:
- ----------------------------------------------------------------------------------------------------
Customer Country Firm Option Deliveries Firm Order
Backlog
- ----------------------------------------------------------------------------------------------------
Swiss Switzerland 30 50 0 30
- ----------------------------------------------------------------------------------------------------
GECAS USA 50 78 0 50
- ----------------------------------------------------------------------------------------------------
Air Caraibes Guadalupe 2 2 0 2
- ----------------------------------------------------------------------------------------------------
Total 82 130 0 82
- ----------------------------------------------------------------------------------------------------
- - EMBRAER 195:
- ----------------------------------------------------------------------------------------------------
Customer Country Firm Option Deliveries Firm Order
Backlog
- ----------------------------------------------------------------------------------------------------
Swiss Switzerland 30 50 0 30
- ----------------------------------------------------------------------------------------------------
GECAS USA 0 22 0 0
- ----------------------------------------------------------------------------------------------------
Total 30 72 0 30
- ----------------------------------------------------------------------------------------------------
Legacy Executive:
- ----------------------------------------------------------------------------------------------------
Customer Country Firm Option Deliveries Firm Order
Backlog
- ----------------------------------------------------------------------------------------------------
SWIFT USA 24 25 0 24
- ----------------------------------------------------------------------------------------------------
Undisclosed USA 17 10 3 14
- ----------------------------------------------------------------------------------------------------
TOTAL 41 35 3 38
- ----------------------------------------------------------------------------------------------------
Legacy Shuttle & EMB 135 - Corporate Market:
- ----------------------------------------------------------------------------------------------------
Customer Country Firm Option Deliveries Firm Order
Backlog
- ----------------------------------------------------------------------------------------------------
Undisclosed USA 6 6 6 0
- ----------------------------------------------------------------------------------------------------
Conoco USA 1 0 1 0
- ----------------------------------------------------------------------------------------------------
Indigo USA 25 50 0 25
- ----------------------------------------------------------------------------------------------------
TOTAL 32 56 7 25
- ----------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
20