[GRAPHIC OMITTED]
US GAAP
Common Shares
- -------------
Bovespa: EMBR3
Preferred Shares
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Bovespa: EMBR4
NYSE: ERJ
1 ADS = 4 Pref. shares
www.embraer.com
EMBRAER INVESTOR RELATIONS
Anna Cecilia Bettencourt
Gustavo Poppe
Milene Petrelluzzi
Paulo Ferreira
Phone: 55 12 3927 1216
mercapit@embraer.com.br
EMBRAER
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EMPRESA BRASILEIRA DE AERONAUTICA S/A
REPORTS FOURTH QUARTER AND FULL YEAR OF 2002
EARNINGS RELEASE
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. The financial data presented in this document
for the year ended December 31, 2001 are derived from our financial statements
audited by Deloitte Touche Tohmatsu and the financial information for the 4th
quarter 2001 and 2002 as well as for the year ended December 2002 are unaudited.
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, March 26, 2003 - Embraer (BOVESPA: EMBR3, EMBR4) (NYSE:
ERJ), one of the leading commercial aircraft manufacturers in the world,
registered in FY2002 net sales of US$2,525.8 million and net income of US$222.6
million, equivalent to diluted earnings per ADS of US$1.3095. The order backlog
as of December 31, 2002 totaled US$22.2 billion, US$9.0 billion in firm orders
and US$13.2 billion in options, not considering the effect of SWISS contract
changes announced March 25, 2003. (See recent developments).
2002 In Perspective
The terrorist attacks in the United States on September 11, 2001 have resulted
in a high level of uncertainty for the worldwide airline industry. Many airlines
faced immediate declines in airline travel, credit downgrades and liquidity
concerns. In addition, the global economy has experienced significant volatility
and weakness. In response to these events, many airlines, reduced their flight
schedules for the long-term, announced significant lay-offs, rescheduled
aircraft deliveries and, in some cases, have filed for bankruptcy protection.
We believe one of our major strengths is the flexibility of our production
processes and our operating structure, including our risk-sharing partnerships,
which are designed to minimize fixed costs, allowing us to increase or decrease
our production in response to market demand without significantly impacting our
margins. We believe this flexibility has enabled us to strengthen our
relationships with our customers and positions us well for the future.
During 2002, 131 aircraft were delivered, 82 ERJ 145, 36 ERJ 140 and 3 ERJ 135
jets in the commercial aviation segment, 7 Legacy Executive jets and 1 Legacy
Shuttle in the corporate aviation segment, as well as one 1 EMB 135 and 1 EMB
145 for the defence market and government support operations.
Despite the unfavourable industry and macro-economic conditions, Embraer kept
its strategy on course for the future, its corporate trajectory based and
founded on confidence in its core skills and capabilities, on partnerships with
clients and suppliers and on expanding the company's global presence. Over the
past few years, the company has maintained a high level of investment in
technology, developing new products, improving industrial production efficiency
and productivity, as well as motivating its highly-qualified employees.
1
First flight of the As a result of new product development, 19 February
EMBRAER 170 on 2002 saw the maiden flight of the EMBRAER 170
February 19, 2002. prototype. From the initial design stage, the
development and building of the EMBRAER 170 took only
28 months, with participation by hundreds of Embraer's
engineers and technicians, together with 16
risk-sharing partners and 22 other main equipment and
component suppliers. The design not only uses new
concepts, such as a double bubble fuselage, which
offers greater space and comfort for passengers, but
also fly-by-wire technology, whose primary electric
commands are generated by computer.
In the defence segment, Embraer delivered to the
Brazilian Air force (FAB) the first five aircraft that
form part of the Amazon Surveillance System (SIVAM).
Four EMB 145 SA aircraft are to be used in the Airborne
Early Warning System and Control and 1 EMB 145 RS is to
be used for Remote Monitoring.
Embraer has continued to expand its global presence and
has shown its determination to win new markets. On 2
December 2002 Embraer signed a joint venture agreement
with the Chinese companies Harbin Aircraft Industry
Group Co. and Hafei Aviation Industry Co. Ltd., both
subsidiaries of the China Aviation Industry Corporation
II - AVIC II. The joint venture, 51% owned by Embraer,
was established to build a plant in the city of Harbin
- in the Northeast of China -for the final assembly,
sale and after-sales support of the ERJ 145 jet family
in the Chinese market. This joint venture company has
been named Harbin Embraer Aircraft Industry Company,
Ltd.
In addition, with the aim of establishing a maintenance
and service base to cater to the growing fleet of
regional aircraft in the North American market, Embraer
acquired from Reliance Aerotech Inc. the operational
assets of Celsius Aerotech Inc., located in Nashville -
Tennessee, and began operating this Service Center in
March.
At the end of another fiscal year, the company managed
to maintain relative economic and financial stability
in its industry and provide an adequate return on
investment to shareholders. Embraer reaffirms its
central philosophy of keeping its goals strongly
aligned to those of its customers, providing high
quality customer satisfaction and creating shareholder
value and value for its employees and the aviation
market as a whole.
Organizational To this end, in the beginning of 2003 the company
restructuring to completed an organizational restructuring, which aims
improve customer to make Embraer's presence in relation to the market
satisfaction. and its clients more direct and more efficient,
particularly in terms of its customers' cost/benefit
analysis. Under this new structure, Commercial Aviation
and Corporate Aviation were consolidated into Civil
Aviation and Client Services activity has been
incorporated into the main business areas - the newly
formed Civil Aviation, and Defence Aviation.
Furthermore, these business areas also incorporate the
engineering support functions for the company's
products. The fundamental objective of this new
structure is to reinforce the chain of command with
integrated action, seeking to increase the speed at
which customer demands are met and consequently
improving customer satisfaction levels at all stages.
We believe the trend in the commercial aviation market
will be the transition from larger to smaller aircraft
equipped with modern technology, as routes are
rationalized and operational efficiency is improved.
Embraer's new jet family fits ideally with this trend,
adding to its already very successful ERJ 145 family
with its EMBRAER 170/190 family in the 70 to 108-seat
category.
2
4th Quarter 2002 Highlights
o Net sales for the 4Q02 were US$ 798.2 million, 37.5%
higher than the sales of US$ 580.6 million in the 3Q02.
o Net income in 4Q02 was US$ 77.4 million, equivalent to
diluted earnings per ADS of US$ 0.4463.
o A total of 41 jets were delivered in 4Q02: 36 jets to
the Commercial Aviation market and 5 Legacy to the
Corporate Aviation market.
o On October 22, 2002, the 2,000 nautical-mile-range ERJ
145 XR was certified by FAA. The initial deliveries to
ExpressJet Airlines started after that.
o In December 2002, Embraer announced the joint-venture
in China with AVIC II, China Aviation Industry Corp.
II, for the production of ERJ145 family aircraft.
Embraer owns 51% of the JV, named Harbin Embraer
Aircraft Industry Company Ltd..
o On December 19, 2002, Embraer announced the delivery of
two ERJ 145 to PB Air, the first Embraer regional jet
operating regular commercial routes in southeast Asia.
3
The following is a comparative analysis of the selected
financial data of Embraer's consolidated statement of
income for the three months ending December 31, 2001
and 2002 (4Q01 and 4Q02) and for the Fiscal Years
ending December 31, 2001 and 2002 (FY2001 and FY2002).
Reclassification of Please note that effective January 01, 2002, the
US$30.5 million Company changed the classification of certain items
from Cost of Sales previously classified as Cost of Sales and Services.
and Services to These expenses relate primarily to information
SG&A expenses and technology, various kinds of support and training &
US$14.1 million education. The Company believes that such expenses are
from Other more appropriately classified as General &
Operating Administrative expenses. All previously reported
Expenses, net to amounts have been restated to reflect this
R&D. reclassification. The effect was a reclassification of
US$ 30.5 million from Cost of Sales and Services to
SG&A in FY2001 and US$ 9.7 million for the three months
ended on December 31, 2001. The effects of this
reclassification did not impact net income.
To provide a better visibility regarding the research
and development related contributions that we receive
from certain of our suppliers, we decided, effective as
of January 01, 2002 to include certain amounts received
as contribution from suppliers in R&D expenses, which
had previously been classified as Other Operating
Expenses, net. As a result, for FY2001 and the three
months ended December 31, 2001, we reclassified US$14.1
million, of contributions received from suppliers, from
Other Operating Expenses, net to R&D expenses. This
reclassification caused R&D Expense to decrease from
US$113.7 in FY2001 to US$99.6 million in FY 2002 and
from US$34.2 million in the three months ended December
31, 2001 to US$20.1 million in the three months ended
December 31, 2001.
Three months ended Year ended
Income Statement December 31, December 31,
--------------------------------------------------------------
2001 2002 2001 2002
- -----------------------------------------------------------------------------------------------------------------
US$ US$ US$ US$
In US$ millions, except % and earnings per ADS
Net Sales 617.2 798.2 2,927.0 2,525.8
Gross Profit 241.5 312.3 1,157.8 994.1
Gross Margin (%) 39.1 39.1 39.6 39.4
Operating Expenses (87.2) (113.8) (363.1) (341.1)
Research and development (20.1) (45.8) (99.6) (158.6)
Employee profit sharing (20.9) (10.2) (43.7) (25.2)
Income from operations 113.4 142.4 651.4 469.6
Operating margin (%) 18.4 17.9 22.3 18.6
Depreciation and
Amortization 14.6 14.9 46.4 55.6
Interest income (expenses), net (4.4) (4.0) 69.0 30.8
Financial transaction gain (loss), net 21.6 (6.1) (170.2) (86.0)
Other non-operating income (expense) net (4.4) (0.5) (8.4) (1.4)
Income before income taxes 126.2 131.9 541.8 413.0
Provision for income taxes (37.6) (53.4) (218.4) (188.5)
Minority interest 0.9 (1.1) (0.4) (1.9)
Cumulative effect of accounting change - - 5.4 -
Net income 89.5 77.4 328.4 222.6
Net margin (%) 14.5 9.7 11.2 8.8
Earnings per ADS - basic (1) 0.5399 0.4487 2.1104 1.3192
Earnings per ADS - diluted (1) 0.5397 0.4463 2.0130 1.3095
- --------------------
(1) Note: Earnings per ADS already reflects the 14.21% stock dividend in
preferred shares of March 2002.
Deliveries, Net Sales and Gross Margin
ERJ145 XR sales In 2002, 131 aircraft were delivered in comparison to
and growth in 161 in 2001. Net sales in FY2002 totaled US$ 2,525.8
Corporate Aviation million, 13.7% lower than the US$ 2,927.0 million
offsets downturn in recorded in 2001. The decrease in Embraer's net sales
Commercial during the period is primarily a consequence of the
Aviation. reduction in aircraft deliveries to the regional market
since
4
September 2001. However, a better sales mix in the
commercial aviation segment, with the delivery of 18
ERJ 145 XR - a 2,000 nm-range-version of the ERJ 145,
the 99.6% growth in corporate aviation revenues,
following the initial deliveries of the Executive and
Shuttle versions of the Legacy and sustained Defence
revenues, helped partially offset the downturn in
commercial aviation.
Net sales for 4Q02 totaled US$ 798.2 million, 29.3%
higher than the 4Q01 net sales of US$ 617.2 million.
During 4Q02, 36 jets were delivered to the regional
market, of which 28 were ERJ 145, six ERJ 140 and two
ERJ 135. In addition to the deliveries to the regional
market, four Executive and one Shuttle Legacy aircraft
were delivered to the corporate market. In 4Q01, 31
jets from the ERJ 135/140/145 family and three aircraft
for governmental transportation were delivered.
Jet Deliveries 3rd Quarter 4th Quarter Full Year
Per Market 2001 2002 2001 2002 2001 2002
- --------------------------------------------------------------------------------
Commercial
ERJ 135 7 - 2 2 27 3
ERJ 145 22 18 15 28 104 82
ERJ 140 8 10 14 6 22 36
Defence
EMB 135 1 - - - 2 -
Legacy - 1 - - - 1
EMB 145 - - 1 - 1 1
Corporate
EMB 135 3 - 2 - 5 -
Legacy / Shuttle - 1 - 5 - 8
Total 41 30 34 41 161 131
Corporate In 2002, net sales in Commercial Aviation were 83.6% of
Aviation sales in total sales, as compared to 87.2% in 2001. This
2002 reached reduction is in line with our strategy of revenue
US$144.9 million diversification and also reflects the reduction in
sales in the commercial aviation segment. Corporate
Aviation net sales grew by 99.6% in 2002, reaching
US$144.9 million, as the initial deliveries of the
Legacy followed the certification by CTA, JAA and FAA,
and represented 5.7% of total sales, compared to 2.5%
in 2001. The 2002 Defence net sales of US$127.3 million
were 2.7% above the FY2001 level, growing from 4.2% to
5.0% of total sales. Net sales include revenues from
customer services & other related business, which
dropped by 19.4% in 2002, mainly due to the effect of
the devaluation of the R$ in R$-based sales, and was
reduced from 6.1% to 5.7% of total sales. In 4Q02 the
commercial aviation sector represented 80.7%, defence
aviation 5.0%, corporate aviation 11.0% and customer
services & other related business 3.3% of total net
sales.
Net Revenues Three months ended December 31 Year ended December 31,
Per Segment 2001 2002 2001 2002
- ---------------------------------------------------------------------------------------------------
US$ % US$ % US$ % US$ %
In Millions
- ----------------------------------------------------------------------------------------------------
5
Commercial Aviation 512.5 83.0 644.3 80.7 2,552.5 87.2 2,110.4 83.6
Defence Aviation 31.9 5.2 40.0 5.0 124.0 4.2 127.3 5.0
Corporate Aviation 29.6 4.8 87.8 11.0 72.6 2.5 144.9 5.7
Customer Services and other 43.2 7.0 26.2 3.3 177.9 6.1 143.3 5.7
related businesses
Total 617.2 100.0 798.3 100.0 2,927.0 100.0 2,525.9 100.0
In 2002, gross profit was US$ 994.1 million, 14.1%
lower than the US$ 1,157.8 million in FY 2001, mainly
due to the reduction in commercial aircraft deliveries.
Despite the Gross margin in FY 2002 was relatively stable at 39.4%,
decrease in compared to 39.6% in FY 2001, despite the decrease in
deliveries, Gross aircraft deliveries.
Margin was
stable at 39.4%. Gross margin in 4Q02 was also relatively stable when
compared to the margin during 4Q01.
SG&A Expenses
In 2002, SG&A expenses were down to US$320.7 million
from US$332.8 million during 2001. This reduction
reflects the effect of the R$-devaluation on
R$-denominated expenses, offset by a US$15.0 million
provision for financial guarantees, which began to be
incurred in 3Q02, and by an increase of US$11.6 million
in product guarantees.
In 4Q02, SG&A Expenses reached US$98.5 million,
compared to US$ 79.7 million in 4Q01. This increase
also primarily reflects the US$ 11.2 million provision
for financial guarantees and the increase of US$ 13.5
million in product guarantees.
Other Operating Expense, net
Other Operating Expense, decreased to US$20.4 million
in 2002 from US$29.5 million in 2001. This decrease is
mainly attributed to a non-recurring US$4.5 million
expense related to restructuring costs after September
11 and US$2.7 million reduction in product
modification. Please see R&D comments below.
Research and Development (R&D)
R&D expenses In FY2002, R&D expense was US$ 158.6 million an
reached increase from US$99.6 million in FY2001. This increase
US$158.6 was mainly related to the development of the EMBRAER
million. 170/190 family and also to the certification of the
Executive and Shuttle version of the Legacy and of the
ERJ 145 XR.
In 4Q02, R&D reached US$45.8 million as compared to
US$ 20.1 million in 4Q01, as the development of the
larger versions of the EMBRAER 170/190 family are
advancing.
The R&D expenses during 2003 and 2004 are estimated to
be US$167.0 million in 2003 and US$187.0 million in
2004, with the following breakdown:
US$ MM 2003 2004
--------------------------------
Total R&D 167 187
Commercial 126 72
Corporate 14 3
Others 27 112
To provide a better visibility, we reclassified US$14.1
million related to Contribution from Suppliers, from
Other Operating Expenses, net to R&D expenses.
Therefore the amount reported in FY2001 of US$113.7
million was restated to US$99.6 million.
Employee Profit Sharing
6
Employee Profit Sharing is subject to meeting
operational goals established at the beginning of the
year and is based on dividends distributions during the
year to shareholders. Employee profit sharing was
reduced to US$ 25.2 million in FY2002 from US$43.7
million in FY2001, reflecting the lower net income and
the devaluation of the Real. In 4Q02, this amounted to
US$ 10.2 million compared to US$ 20.9 million
registered in 4Q01.
Income from Operations
In FY2002, income from operations, including equity in
income from affiliates and stock compensation expense
and employee profit-sharing, was down to US$ 469.6
million from US$651.4 million in FY2001. Embraer
achieved operating margins of 18.6% in FY2002, in
comparison to 22.3% in FY2001.
In 4Q02, income from operations reached US$142.4
million, with a margin of 17.9% in comparison to
US$113.4 million and margin of 18.4% in 4Q01.
Interest Income (Expense), net
In FY2002, Interest Income (Expense), net was reduced
to US$30.8 million from US$69.0 million in FY2001, as a
result of the higher average balance of the net cash
position during 2001 and of the effect of the R$
devaluation on R$-denominated interest income. In 4Q02,
Embraer recorded net interest expense of US$ 4.0
million, due to the reduction in net cash balance and
the appreciation of the R$ during 4Q02, at the same
level as the net interest expense of US$4.4 million
registered in 4Q01 (see "Financial Management").
Financial Transaction Gain (Loss), net
Net Financial Embraer uses the dollar as the functional currency for
Transaction Loss US GAAP, and the variations in this item refer mainly
reduced in to the remeasurement of monetary assets and liabilities
FY2002, due to denominated in other currencies that are adjusted to
the increase of the the dollar at the end of each period. This item is also
fair market value influenced by the net result of hedges that are marked
of the hedges. to market. Net Financial Transaction Loss in FY2002 was
US$86.0 million, 49.5% lower than the US$170.2 million
registered in FY2001, despite the higher devaluation of
the Real in 2002, due to the increase of the fair
market value of the hedges.
During 4Q02, net Financial Transaction Loss reached US$
6.1 million, due to the appreciation of the Real and
the decrease during the quarter of the fair market
value of hedges, as compared to a net Financial
Transaction Gain of US$21.6 million during 4Q01.
Provision for Income Taxes
Our provision for income taxes decreased from US$218.4
million in FY2001 to US$188.5 million in FY2002 mainly
due to lower taxable profits under the Brazilian
Corporate Law financial statements. Our effective tax
rate in 2002 was 45.6% as compared to 40.3% in 2001, as
further compared to a statutory tax rate in each year
of 34%. The difference between the statutory rate and
the effective rates is due to differences in income
before income taxes under U.S. GAAP and the taxable
income calculated under the Brazilian Corporate Law.
In 4Q02, Embraer recorded a total provision of US$ 53.4
million for income taxes, which represents an effective
tax rate according to US GAAP of 40.5%, compared to
US$37.6 million during 4Q01, with an effective tax rate
of 29.8%.
Net Income
7
In FY2002, net income was US$ 222.6 million (equivalent
to US$1.3095 per diluted ADS), or 8.8% of net sales,
while net income for FY2001 was US$ 328.4 million
(equivalent to US$ 2.0130 per diluted ADS), or 11.2% of
net sales.
Embraer's net income in 4Q02 of US$ 77.4 million
(equivalent to US$ 0.4463 per diluted ADS) was lower
than the net income of US$89.5 million in 4Q01
(equivalent to US$ 0.5397 per diluted ADS). Net income
as a percentage of net sales in 4Q02 was 9.7%, compared
with the 14.5% in 4Q01.
Basic and diluted earning per ADS for the 4Q01 and FY01
have been restated to reflect the 14.21% stock dividend
in preferred shares that occurred in March 2002.
Financial Management
As of December 31, 2002 Embraer`s cash and cash
equivalents were US$ 656.8 million. On the same date
indebtedness totaled US$ 552.6 million. Therefore the
Company had a net cash position (cash and cash
equivalents minus bank debt) of US$ 104.2 million.
Balance Sheet and Nine Months Ended Year Ended December Year Ended December
Other Data September 30, 2002 31, 2001 31, 2002
-----------------------------------------------------------------------------------------------
In US$ million
-----------------------------------------------------------------------------------------------
Cash and cash
equivalents 760.1 749.3 656.8
Accounts receivable 245.3 632.8 610.6
Collateralized accounts
receivable 311.0 322.3 288.9
Inventories 962.6 1,037.8 880.3
Total assets 3,367.5 3,560.8 3,632.5
Bank debt 542.9 771.7 552.6
Non recourse debt 311.0 322.3 288.9
Total liabilities 2,316.5 2,540.4 2,542.3
Net cash (debt) 217.2 (22.4) 104.2
Shareholders' equity 1,051.0 1,020.4 1,090.2
Indebtedness
Long-term During the last year the company extended its
indebtedness indebtedness profile and as a result, on December 31,
reached 55.8% on 2002, 55.8% of Embraer`s total indebtedness is
Dec. 31, 2002. long-term financing, compared with 31.7% on December
31,2001.
Embraer also decided to partially convert its Japanese
yen and US dollar denominated debt to R$-related
interbank interest rates (CDI). Therefore, out of the
total US dollar and other currency indebtedness of US$
528.5 million, 51.5%, or US$ 272.4 million is indexed
in R$. When considering the effect of these hedges, out
of the total company indebtedness of US$ 552.6 million,
42.1% or US$ 232.5 million primarily refers to US$
borrowing with a weighted average cost of 5.2% per
annum. The remaining US$ 320.1 million, equivalent to
57.9% of the total debt, is financed in Brazilian
currency at a weighted average interest rate of 17.2%
per annum, equivalent to 83.1% of the CDI.
Cash
Of the total cash and cash equivalents balance of
US$656.8 million, 57.3% is comprised of investments in
R$ and the remaining 42.7% primarily in US dollars. The
Embraer cash investment strategy is based on prospects
of future investments, which are mostly denominated in
R$.
Accounts Receivable and Inventories
Since September 2001, Embraer has supported the
delivery of aircraft to certain customers that were
concluding their financing agreements. This support has
caused
8
its accounts receivables in the recent quarters to be
more volatile, compared to its historical trends. On
December 31, 2002, there was a balance of US$ 610.6
million in short-term accounts receivable in comparison
to US$ 200.6 million, as of September 30, 2002, and US$
596.8 million as of December 31, 2001, related to
aircraft delivered whose financing arrangements are in
the process of being finalized. As of December 31, 2002
approximately 64% of the short-term accounts receivable
are related to financing already approved by the BNDES
which the disbursement is expected for the first half
of 2003 and the remaining 26% its financing structure
is being negotiated and finalized.
Short-term inventories decreased US$ 81.5 million
between December 31, 2002 and September 30, 2002. This
decrease was related to ERJ145 family inventory
reductions, partially offset by the inventories for the
EMBRAER 170 development, which currently has six
prototypes carrying out the flight certification
campaign and to the increase in deliveries during the
4Q02.
Non-Recourse Debt & Collateralized Accounts Receivable
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 December 31,
2002 and September 30, 2002 of US$288.9 million and
US$311.0 million, respectively, and an additional
amount of collateralized accounts receivable in the
same amounts. The impact on the consolidated statements
of income and cash flows were not material as the terms
of the underlying lease and the debt are substantially
the same. The non-recourse debt is collateralized in
favor of the financial institution by accounts
receivable and by the financed aircraft.
Capital Expenditures
Productivity and Improvements in Industrial Efficiency
& Others
In FY2002, US$ 151.8 million was invested in improving
the Company's industrial efficiency, including
improvements and modernization of industrial and
engineering processes, machinery and equipment. This
figure also includes US$16.9 million related to three
EMB120 which were added to the portfolio of ECC Leasing
Co. Ltd.
Embraer anticipates spending in property, plant and
equipment (PP&E) approximately US$ 58 million in 2003
and an additional US$ 44 million in 2004.
Supplementary Information according to Corporate Law
(Brazilian GAAP)
Today Embraer also reported the FY2002 and 4Q02
earnings 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 shareholders' equity, income tax and social
contribution.
9
We present below selected consolidated results in
accordance with corporate law and in Reais (R$).
Net revenues in FY2002 totaled R$ 7,748.1 million and
gross profit returned was R$ 3,454.4 million, with a
gross margin of 44.6%. The operating profit for the
period (including employee profit-sharing) totaled R$
2,167.4 million, with an operating margin of 28.0%. The
EBITDA for the period was R$ 2,358.7 million and the
EBITDA margin 30.4%. Pre-tax income was R$ 1,616.2
million (20.9% of net revenues). Income tax and social
contribution totaled R$ 430.3 million, representing an
effective tax rate of 26.6%. Net income for the period
totaled R$ 1,179.2 million (15.2% of net revenues).
New Orders and Backlog
Commercial Aviation Market
The aviation market as a whole is an industry in a
transition phase, undergoing a sharp change in
direction, both in terms of routes and fleet
management.
Embraer estimates that by 2010, the average number of
seats for aircraft will be 56 in the US and 75 in
Europe. The strong demand for aircraft in the 70 to
150-seater range, combined with the company's advanced
perception of this market trend, has led Embraer to
develop a range of new jets, consisting of four
commercial jets with the capacity to transport between
70 and 108 passengers. It is in this segment that
Embraer envisages opportunities, particularly in the
US, where there are some two hundred and fifty
100-seater aircraft aged between 21 and 35 years, 64%
of which are between 31 and 35 years old, demonstrating
the significant potential for their replacement with
faster and more modern aircraft such as the EMBRAER 190
and 195.
With the two jet families, the ERJ 145 and EMBRAER
170/190, Embraer offers its customers and end-users
excellent products, ideally suited to the new scenario
in the world of aviation.
Embraer estimates in the aviation market a global
demand for 30 to 120-seater jets at 8,610 units from
2003 to 2022, total orders amounting to some US$ 180
billion, as shown below.
Global Deliveries by Segment
Seats 2003-2012 2013-2022 2003-2022
----------------------------------------------------
30-60 1,745 1,765 3,510
61-90 1,175 1,415 2,590
91-120 1,090 1,420 2,510
Total 4,010 4,600 8,610
Embraer estimates that the demand for these aircraft
types would be as follows: 56% In North and Central
America, 21% in Europe, 7% in Latin America, 7% in
China, 6% in Asia and the Pacific region and 3% in the
Middle East.
Embraer's market share, based on the sales accumulated,
in the 30 to 60-seater segment is 45% and in the 61 to
90-seater segment, still in a growth phase, 26%.
o Commercial Aviation Products
The family of regional jets for the transport of 37, 44
and 50 passengers consists of the ERJ 135/140/145
models. In the six years since the delivery of the
first ERJ 145 jets, a new milestone was recorded in the
history of Embraer with the delivery, in May 2002, of
the 600th regional jet to the airline SWISS, receiving
its 25th ERJ 145.
10
The ERJ 145 XR - a 50-passenger jet with an extra long
range, 29% more than the previous version, complements
the ERJ 145 jet family. The modifications, principally
to the winglets (wing points) guarantee a range of up
to 2000 nautical miles (3,600 km) and a maximum cruise
speed of Mach 0.8 (460 knots or 852 km/h).
The ERJ 145 XR in September was certified by the
Technical Centre for Aerospace (CTA) and by the Federal
Aviation Administration (FAA) in October.
The EMBRAER 170 is the most complex and sophisticated
programme yet developed by the company and represents
wider spread of risk through the use of partnerships,
leading-edge technology employed in the product, which
includes fly-by-wire navigation systems, innovative
development and production methods, tooling and project
management employed.
The EMBRAER 170 is the first model of a new jet family
currently under development which include the EMBRAER
175, for 78 passengers, the EMBRAER 190, for 98
passengers, and the EMBRAER 195, with a seating
capacity for 108 passengers. During 2002, six EMBRAER
170 aircraft were produced, which are being used in the
flight-testing and certification programs, and sales
demonstrations.
o Order Book-Commercial Aviation
Embraer's backlog for the commercial aviation segment
at Dec.31, 2002 with US$ 18.5 billion worth of orders
on the books (US$ 7.1 billion in firm orders and US$
11.4 billion in options). This demand corresponds to
the delivery of 934 aircraft, 374 firm orders and 560
options, and does not consider the effect of SWISS
contract changes announced March 25, 2003. (See recent
See "Recent developments).
Developments" for
information on the In December 2002, the Commercial Aviation segment
SWISS contract showed the following order picture in the company's
changes. portfolio:
Family Total Deliveries Firm Options
Orders Orders
-----------------------------------------------------------------------------
Commercial Aviation 1,557 623 374 560
ERJ 145 1,231 623 256 352
EMBRAER 170/190 326 - 118 208
Corporate Aviation Market
We estimate that our share of the super mid-size and
large corporate jet market, expected to account for the
sales of 259 jets a year for the next ten years, is
10%, in other words, some 26 jets a year, 259 units in
total over the period analysed.
o Corporate Aviation Products
The Legacy Executive is a twin-engine jet in the super
mid-size class, based on the same platform as the very
successful ERJ 135 regional jet. The main modifications
to the ERJ 135 platform were: the inclusion of
winglets, reinforcement of the fuselage structure,
additional fuel tanks in the lower fuselage and baggage
compartment, and more powerful engines.
Legacy has the largest cabin in its class, a cruising
speed of Mach 0.8, a range of up to 3,100 nautical
miles (5,741 km) without refuelling stops, transporting
8 to 13 passengers.
The Legacy Executive was certified by the Technical
Centre for Aerospace (CTA), the Brazilian authority for
airworthiness certification, in December 2001.
Subsequently, in July 2002 it received certification
from the Joint Aviation Authorities (JAA), the European
body for airworthiness certification and in September
of the
11
same year received Type Certification from the US
Federal Aviation Administration (FAA), the US aviation
authority.
o Corporate Aviation Order Book
At the end of 2002, backlog for the Corporate Aviation
division amounted to US$ 2.4 billion. This amount
corresponds to 150 aircraft - 58 are firm orders and 92
are options.
Total Deliveries Firm Options
Orders Orders
-----------------------------------------------------------------------------
Corporate Aviation 165 15 58 92
Legacy Executive 77 7 34 36
Legacy Shuttle 75 1 24 50
EMB 135 13 7 - 6
o Aircraft Ordered in the Period
In July 2002, Embraer announced an order for the Indian
company Jet Airways, for US$ 260 million, for which the
contract is being finalized. The signified the first
important sale to the Asian jet market of the new
EMBRAER 170/190 jet family. During the year there were
a number of new sales campaigns which added another 40
firm orders to the order book, 30 firm orders for the
ERJ 145 jet family and six firm orders for the EMBRAER
170. In the Corporate Aviation segment, Embraer
announced four new firm orders in 2002.
Firm Orders 3rd Quarter 4th Quarter Fiscal Year
2001 2002 2001 2002 2001 2002
-----------------------------------------------------------------------------
Commercial
ERJ 135/140 22 - 8 - 38 15
ERJ 145 1 6 - 2 3 15
EMBRAER 170 2 - - 6 2 6
Corporate & Defence
Legacy/Shuttle/EMB 135 13 2 25 1 43 4
Total 38 8 33 9 86 40
Defence Market
In this segment, the Company's strategy is to offer its
clients an integrated vision of the market with
products for different missions: intelligence,
surveillance and recognition, with the EMB 145 AEW&C,
MP/ASW and RS; combat aircraft, with the AL-X - Super
Tucano, AMX and F5BR; aircraft used for authority
transportation, such as the EMB 135/145, Legacy and EMB
120 - Brasilia and, as well, training products such as
the AL-X - Super Tucano, AMX-T, among other training
systems.
Five aircraft were
delivered to the
Brazilian Air Force
as part of the
SIVAM program
12
In the year, Embraer delivered five aircraft to the
Brazilian Air Force (FAB) as part of the SIVAM program.
These were four EMB 145 AEW&C SA aircraft and one EMB
145 RS. To complete the contract, one EMB 145 SA and
two EMB 145 RS still remain to be delivered.
The EMB 145 SA aircraft, will perform aerial
surveillance and the EMB 145 RS will monitor the soil
and rivers of Amazonia, providing cartographic data for
the research and analysis of biomass. Its sophisticated
radar system allows full and complete monitoring, even
below the vast and dense forest vegetation.
The order book for the Defence segment at the end of
the year amounted to firm orders of US$ 1.0 billion.
And taking options into account, totalled US$ 1.3
billion.
Backlog
The Embraer firm order backlog at the end of the 4Q02
was US$ 9.0 billion, which together with options,
reached US$ 22.2 billion, not considering the effect to
the changes in the SWISS contract announced on March
25, 2003 (See recent developments). The following chart
shows the order backlog at the end of each year.
Backlog
US$ billion
4Q01 1Q02 2Q02 3Q02 4Q02
------------------------------------------------------------------
Firm order backlog 10.7 10.3 10.1 9.6 9.0
Options 12.7 12.8 13.7 13.0 13.2
Total 23.4 23.1 23.8 22.6 22.2
Investor Relations
In 4Q02 the price of preferred shares of Embraer
increased 7.7% to a share price of R$14.0 on the Sao
Paulo stock exchange (Bovespa) as of December 31, 2002.
In this period, the average daily turnover on the
Bovespa was R$ 9.4 million. The common shares
appreciated 8.9% in the quarter, ending the period at
R$ 12.80 per share with an average daily turnover of R$
1.8 million. In the same period the Bovespa Index
appreciated by 30.7%.
The ADSs, traded on the New York Stock Exchange (NYSE),
appreciated by 19.6% - ending the quarter at US$15.90.
Each ADS represents 4 preferred shares. The average
daily trading volume in the period was 284,000 ADSs,
with an average daily turnover of US$ 4.2 million. In
the same period, the Dow Jones index appreciated by
9.9%.
The shares of Embraer, common (EMBR3) and preferred
(EMBR4), at the end of the quarter represented 0.774%
and 2.662%, of the Bovespa Index respectively.
In the fourth quarter, the Board of Directors approved
the distribution of Interest on Shareholders' Equity
(IOE) of R$ 142.4 million.
Dividends and IOE in Date Total Amount per share
2002 in R$
-----------------------------------------------------------------------------------------------
Approval R$ '000 ON PN
IOE - 1st. Quarter 03/19/02 58,910 0.07777 0.08554
IOE - 2nd. Quarter 06/14/02 59,530 0.07859 0.08644
IOE - 3rd. Quarter 09/13/02 66,300 0.08740 0.09613
13
IOE - 4th. Quarter 12/13/02 142,424 0.18750 0.20620
TOTAL - 327,164 0.43126 0.47431
The total amount of R$ 72.5 million of Interest on
Shareholders' Equity approved in 4Q02 includes the
payment of years 1998 and 1999.
Recent Events
During 2003, Embraer adjusted its delivery guidance in
two occasions, the first to reflect the Express Jet
Reprogramming and the second to give effect to the
SWISS renegotiation. Embraer's aircraft delivery
guidance decreased from its original 145 and 155 in
2003 and 2004 respectively to 132 and 136 for the same
period.
LOT deal
Embraer announced on January 10 that the Supervisory
Board of LOT Polish Airlines confirmed its decision to
acquire 06 EMBRAER 170 with options for additional 11
aircraft, that can be converted into the EMBRAER 190
and 195 models. Deliveries are expected to begin in
early 2004. Final contract negotiations are expected to
take place in the near future.
As released, this order involves the negotiation of
trade-in, as of 2006, of three ERJ 145 currently
operated by LOT and, in case the options are exercised,
there will be trade-in of up to three other ERJ 145,
depending on the number of options exercised.
ExpressJet Reprogramming
Embraer, on February 12, 2003, announced that
ExpressJet Airlines (NYSE: XJT), due to the economic
uncertainties and the adverse market conditions faced
by airlines, requested a revision of the deliveries of
Embraer regional jets originally scheduled to take
place during the years 2003-2005. As a result, a
revision in the original delivery schedule was agreed
upon, subject to the execution of satisfactory
definitive agreements and the approval of the Board of
Directors of Continental.
The reprogramming of deliveries to ExpressJet of ERJ
145 XR aircraft redistributes the same number of
aircraft originally agreed upon, thus establishing a
new schedule for the years 2003, 2004, 2005 and 2006.
According to the new schedule, Embraer will deliver to
ExpressJet 36 aircraft instead of 48 in 2003 and 21
aircraft instead of 36 in 2004. In 2005, the revision
will increase the amount of deliveries to 21 instead of
two, with the remaining eight units to be delivered in
2006. The schedule change would become effective in the
third quarter of this year.
At that time, Embraer revised its delivery forecast for
the years 2003 and 2004 to 136 and 140 aircraft
respectively.
Swiss Renegotiation
Embraer announced on March 25, that an agreement has
been reached with Swiss International Air Lines,
regarding its ongoing short-haul fleet renewal program.
In light of the generally unfavorable economic
situation, and the carrier's current condition in
particular, SWISS is reducing its firm orders for
EMBRAER 170 and EMBRAER 195 aircraft to 30 aircraft, 15
of each model, from an original total of 60.
The EMBRAER 170 shall enter service at SWISS in August
2004, with four aircraft delivered, followed by eight
aircraft in 2005. Deliveries of the EMBRAER 195 will
start in 2006. The number of options for both models is
also being reduced to 20, from 100 aircraft.
As a result of the new agreement with SWISS, Embraer's
firm backlog as of December 31, 2002 would be US $ 8.3
billion, while its total backlog, including options,
New delivery schedule would amount US$ 19.5 billion.
of 132 and 136 aircraft
in 2003 and 2004.
14
The EMBRAER 170/190 development program is otherwise
proceeding as planned, with the EMBRAER 170 expected to
be certified in the second quarter of 2003, in order to
allow deliveries to Alitalia and GECAS.
In light of this agreement with SWISS, Embraer now
forecasts deliveries for the years 2003 and 2004 at 132
and 136 aircraft, respectively.
15
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
-------------------------------------------------------
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 statements included in this release regarding our
competitive position and market share in, and the
market size of, the commercial, regional and defense
aircraft markets and the growth in the regional and
corporate jet markets, are based upon a combination of
independent industry publications,reports of government
agencies and other published industry sources, as well
as our own estimates. Our internal estimates are based
on our management's knowledge and experience in the
markets in which we operate.
Our estimates have been based on information obtained
from our customers,suppliers, trade and business
organizations and other contacts in the markets in
which we operate. However, this information may prove
to be inaccurate because of the method by which we
obtained some of the data for our estimates or because
this information cannot always be verified with
complete certainty due to the limits on the
availability and reliability of raw data, the voluntary
nature of the data gathering process and other
limitations and uncertainties inherent in data
gathering. As a result, you should be aware that
market, ranking and other similar data included in this
release, and estimates and beliefs based on that data,
may not be reliable and we can not guarantee the
accuracy or completeness of such information.
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.
-------------------------------------------------------
16
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED STATEMENTS OF INCOME
In thousands of U.S. dollars except per share data
For the three months ended For the years ended
December 31, December 31,
-------------------------- ----------------------------
2001 2002 2001 2002
Unaudited Audited Unaudited
GROSS SALES:
Domestic market 16,066 13,469 62,702 58,342
Foreign market 605,745 791,369 2,902,936 2,493,313
Sales deductions (4,610) (6,651) (38,643) (25,855)
--------- --------- ---------- -----------
NET SALES 617,201 798,187 2,926,995 2,525,800
--------- --------- ---------- -----------
Cost of sales and services (375,783) (485,897) (1,769,234) (1,531,720)
--------- --------- ---------- -----------
Gross Profit 241,418 312,290 1,157,761 994,080
--------- --------- ---------- -----------
Operating expenses
Selling expenses (45,543) (77,009) (212,057) (211,013)
Research and development (20,050) (45,772) (99,566) (158,617)
General and administrative (34,178) (21,530) (120,787) (109,673)
Employee profit sharing (20,858) (10,197) (43,746) (25,222)
Stock compensation - - (1,074) -
Other operating expense, net (7,552) (15,460) (29,463) (20,381)
Equity in income (loss) from affiliates 132 108 310 388
--------- --------- ---------- -----------
Income From Operations 113,369 142,430 651,378 469,562
--------- --------- ---------- -----------
Interest income, net (4,360) (4,031) 69,043 30,797
Financial transaction loss, net 21,640 (6,052) (170,178) (85,988)
Other non-operating income (expense), net (4,431) (521) (8,426) (1,394)
--------- --------- ---------- -----------
Income Before Income Taxes 126,218 131,826 541,817 412,977
--------- --------- ---------- -----------
Provision for income taxes (37,601) (53,384) (218,394) (188,502)
--------- --------- ---------- -----------
Income Before Minority Interest 88,617 78,442 323,423 224,475
--------- --------- ---------- -----------
Minority interest 884 (1,033) (423) (1,883)
--------- --------- ---------- -----------
Income Before Cumulative Effect 89,501 77,409 323,000 222,592
Of Accounting Change
========= ========= ========== ===========
CUMULATIVE EFFECT OF ACCOUNTING CHANGE, - - 5,440 -
NET OF TAX
--------- --------- ---------- -----------
Net Income 89,501 77,409 328,440 222,592
========= ========= ========== ===========
EARNINGS PER SHARE (1)
Basic
Common 0.12 0.10 0.48 0.30
Preferred 0.13 0.11 0.53 0.33
Diluted
Common 0.12 0.10 0.46 0.30
Preferred 0.13 0.11 0.50 0.33
WEIGHTED AVERAGE SHARES (thousands of shares) (1)
Basic
Common 242,544 242,544 242,544 242,544
Preferred 442,588 469,527 402,035 454,414
Diluted
Common 242,544 242,544 242,544 242,544
Preferred 447,480 473,254 433,386 459,420
Earning Per Share - ADS Basic (US$) 0.5399 0.4487 2.1104 1.3192
Earnings Per Share - ADS DILUTED (US$) 0.5397 0.4463 2.0130 1.3095
(1) Restated to give effect to the stock dividend of 14.21% in preferred shares
that occurred in March 2002
17
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED BALANCE SHEETS
In thousands of U.S. dollars
ASSETS
As of September 30 As of December 31
------------------------------- ------------------------------------
2001 2002 2001 2002
----------- ------------ ------------- ---------------
Unaudited Audited Unaudited
CURRENT ASSETS
Cash and cash equivalents 883,809 760,076 749,302 656,822
Trade accounts receivable 660,037 200,562 596,801 610,583
Inventories 938,180 946,325 1,015,081 864,800
Deferred income tax assets 86,471 80,280 98,756 90,014
Collateralized accounts receivable 11,441 21,853 16,315 20,233
Other current assets 69,731 191,586 89,093 222,032
----------- ------------ ------------- ---------------
Total Current Assets 2,649,669 2,200,682 2,565,348 2,464,484
----------- ------------ ------------- ---------------
NONCURRENT ASSETS:
Marketable security - - - 23,263
Trade accounts receivable 56,720 44,772 36,021 -
Collateralized accounts receivable 302,368 289,119 306,033 268,683
Inventories 18,993 16,289 22,714 15,518
Property, plant and equipment, net 338,265 436,790 366,481 453,167
Investments 4,224 4,642 4,362 4,745
Deferred income taxes 81,723 62,105 85,139 72,827
Other noncurrent assets 72,282 313,112 174,689 329,775
----------- ------------ ------------- ---------------
Total noncurrent assets 874,575 1,166,829 995,439 1,167,978
----------- ------------ ------------- ---------------
TOTAL ASSETS 3,524,244 3,367,511 3,560,787 3,632,462
=========== ============ ============= ===============
18
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED BALANCE SHEETS
In thousands of U.S. dollars
LIABILITIES AND SHAREHOLDERS' EQUITY
As of September 30 As of December 31
----------------------- -------------------------
2001 2002 2001 2002
----------------------- -------------------------
Unaudited Audited Unaudited
CURRENT LIABILITIES
Loans 616,125 246,779 526,550 244,526
Accounts payable to suppliers 454,975 306,588 265,593 323,115
Customer advances 373,262 342,235 385,265 409,258
Contingency 80,196 134,805 117,374 188,900
Other accounts payable and accrued liabilities 323,355 332,174 393,081 427,495
--------- --------- --------- ---------
Total Current Liabilities 1,847,913 1,362,581 1,687,863 1,593,294
--------- --------- --------- ---------
LONG-TERM LIABILITIES
Loans 139,160 296,129 245,186 308,111
Customer advances 78,187 100,205 106,594 95,625
Contribution from suppliers 156,179 233,965 143,615 235,445
Other accounts payable and accrued liabilities 343,050 316,004 337,872 289,267
Contingency 11,131 12,314
--------- --------- --------- ---------
Total long-term liabilities 716,576 946,303 844,398 940,762
--------- --------- --------- ---------
MINORITY INTEREST 7,452 7,647 8,170 8,226
--------- --------- --------- ---------
SHAREHOLDERS' EQUITY: 952,303 1,050,980 1,020,356 1,090,180
--------- --------- --------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,524,244 3,367,511 3,560,787 3,632,462
========= ========= ========= =========
19
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands of U.S. Dollars
For the three months ended For the years ended
December 31, December 31,
-------------------------- ----------------------------
2001 2002 2001 2002
Unaudited Audited Unaudited
Operating Activities
Net Income 89,501 77,409 328,440 222,592
Adjustments to reconcile net income to net cash
provided by(used in) operating activities:
Depreciation and amortization 14,619 14,926 46,417 55,602
Provision for doubtful accounts 3,787 (599) 6,938 509
Provision for inventory obsolescence (1,276) 14,980 12,968 20,974
Deffered income and social contribution tax (15,701) (20,457) 41,333 21,054
Cumulative translations adjustments - - (5,440) -
Loss on the disposition of assets 1,141 (2,566) 966 1,119
Stock compensation - - 1,074 -
Equity in (income) loss from affiliates (132) (108) (310) (388)
Accrued interest recorded in loans (19,464) (16,111) 3,731 22,712
Minority interests (884) 1,034 423 1,883
Other (15,062) 2,832 (9,351) (5,839)
Changes in assets and liabilities
Marketable securities - (23,263) - (23,263)
Trade accounts receivable 80,148 (364,650) (456,953) 21,730
Inventories (79,346) 73,526 (434,571) 142,713
Other assets (52,405) (12,217) (59,792) (184,821)
Accounts payable to suppliers (189,382) 16,527 (1,299) 57,522
Other accounts payable and accrued liabilities 52,209 15,893 31,803 (14,162)
Accrued taxes on income 16,626 42,708 8,469 19,624
Customers advances 40,410 62,445 117,521 13,025
Contribution from suppliers (12,564) 1,480 1,945 91,830
Taxes and social charges payable 1,774 9,390 (3,399) 9,348
Contingency 46,565 47,625 57,441 53,924
Minority Participation 1,603 1,372 - -
------------ ----------- --------- ----------
Net cash provided by (used in) operating activities (37,833) (57,824) (311,646) 527,688
Investing Activities
Purchase of property, plant and equipment (28,384) (36,752) (143,828) (151,827)
Proceeds from the sale of property, plant and equipment (521) 385 - 790
Customer and commercial financing - net additions (18,588) (13,684) (13,735) (33,251)
Guaranteed deposits and compulsory loans (66,336) 849 (98,677) (36,521)
------------ ----------- --------- ----------
Net cash used in investing activities (113,829) (49,202) (256,240) (220,809)
Financing Activities
Repayment of loans (270,755) (339,667) (1,180,601) (1,103,848)
Proceeds from borrowings 307,140 367,433 1,495,119 868,046
Proceeds from the issuance of shares 438 694 1,761 1,208
Dividends paid (18,556) (12,985) (179,491) (134,421)
Payments of refinanced taxes (142) (8,670) (1,618) (20,552)
Payments on capital lease obligations (969) (3,034) (7,213) (9,792)
------------ ----------- --------- ----------
Net cash provided (used) by financing activities 17,156 3,771 127,957 (399,359)
------------ ----------- --------- ----------
Net increase (decrease) in cash and equivalents (134,506) (103,254) (439,929) (92,480)
Cash and cash equivalents at beginning of year 883,808 760,076 1,189,231 749,302
------------ ----------- --------- ----------
Cash and cash equivalents at end of year 749,302 656,822 749,302 656,822
============ =========== ========= ==========
20
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
BACKLOG AS OF DECEMBER 31, 2002
- - ERJ 145:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Orders Options Deliveries Firm Order
Backlog
- ---------------------------------------------------------------------------------------------------------------
Air Caraibes Guadaloupe 2 0 2 0
Air Moldova Moldova 0 2 0 0
Alitalia Italy 14 7 11 3
American Eagle USA 56 17 56 0
Axon Airlines Greece 3 0 3 0
British Midland United Kingdom 11 5 9 2
British Regional United Kingdom 23 3 23 0
Brymon United Kingdom 7 14 7 0
Cirrus Germany 1 0 1 0
Continental Express USA 245 100 159 86
ERA Spain 2 0 2 0
GECAS USA 2 0 2 0
KLM Exel Holland 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 7 13 5
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
Swiss Switzerland 25 15 25 0
Trans States USA 12 0 12 0
Wexford USA 45 67 42 3
Total 583 301 474 109
- - ERJ 135:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Orders Options Deliveries Firm Order
Backlog
- ---------------------------------------------------------------------------------------------------------------
American Eagle USA 40 0 40 0
British Midland United Kingdom 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 2 13
TOTAL 122 6 91 31
21
- - ERJ 140:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Orders Options Deliveries Firm Order
Backlog
- ---------------------------------------------------------------------------------------------------------------
American Eagle USA 139 25 43 96
Midwest Express USA 20 20 0 20
Wexford USA 15 0 15 0
TOTAL 174 45 58 116
- - EMBRAER 170:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Orders Options Deliveries Firm Order
Backlog
- ---------------------------------------------------------------------------------------------------------------
Air Caraibes Guadaloupe 2 2 0 2
Alitalia Italy 6 6 0 6
GECAS USA 50 78 0 50
Swiss Switzerland 30 50 0 30
Total 88 136 0 88
- - EMBRAER 195:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Orders Options Deliveries Firm Order
Backlog
- ---------------------------------------------------------------------------------------------------------------
GECAS USA 0 22 0 0
Swiss Switzerland 30 50 0 30
Total 30 72 0 30
Legacy Executive:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Orders Options Deliveries Firm Order
Backlog
- ---------------------------------------------------------------------------------------------------------------
SWIFT USA 24 25 2 22
Undisclosed USA 17 11 5 12
TOTAL 41 36 7 34
Legacy Shuttle and EMB 135 - Corporate Market:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Orders Options Deliveries Firm Order
Backlog
- ---------------------------------------------------------------------------------------------------------------
Conoco USA 1 0 1 0
Indigo USA 25 50 1 24
Undisclosed USA 6 6 6 0
TOTAL 32 56 8 24
22