EXHIBIT 99.2
[GRAPHIC OMITTED]
US GAAP
Common Shares
- -------------
Bovespa: EMBR3
Preferred Shares
- ----------------
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 LOGO] [GRAPHIC OMITTED]
EMPRESA BRASILEIRA DE AERONAUTICA S/A
REPORTS FIRST QUARTER 2003 EARNINGS RELEASE 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. The financial data presented in this document for the
quarters ended March 31, 2003, December 31, 2002 and March 31, 2002 are derived
from our unaudited financial statements. 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
Method for the same period ("Brazilian GAAP").
Sao Jose dos Campos, May 13, 2003 - Embraer (BOVESPA: EMBR3, EMBR4) (NYSE: ERJ),
one of the leading commercial aircraft manufacturers in the world, registered in
1Q03 net sales of US$488.8 million and net income of US$43.9 million, equivalent
to diluted earnings per ADS of US$0.2535. The order backlog as of March 31, 2003
totaled US$19.2 billion, US$7.9 billion in firm orders and US$11.3 billion in
options.
1st Quarter 2003 Highlights
o Net sales for the 1Q03 were US$ 488.8 million, 12.3% lower than the sales
of US$ 557.3 million in the 1Q02.
o Net income in 1Q03 was US$ 43.9 million, equivalent to diluted earnings per
ADS of US$0.2535.
o A total of 23 jets were delivered in 1Q03: 22 jets to the Commercial
Aviation market and one Legacy to the Corporate Aviation market.
o Embraer announced on January 10 that LOT Polish Airlines confirmed its
decision to acquire 10 EMBRAER 170 with options for an additional 11
aircraft that can be converted into the EMBRAER 190 and 195 models.
o Embraer announced on February 12 that ExpressJet Airlines requested a
revision of the deliveries originally scheduled to take place during the
years 2003-2005.
o On March 25, Embraer announced that SWISS reduced its firm orders for
EMBRAER 170 and EMBRAER 195 aircraft to 30 aircraft, 15 of each model, from
an original total of 60. The number of options for both models was also
reduced to 20, from 100 aircraft.
o Embraer forecasts deliveries of 132 aircraft for 2003 and 136 aircraft for
2004. The above-mentioned forecast already includes the delivery
rescheduling for ExpressJet and the contractual renegotiation with SWISS.
1
The following is a comparative analysis of the selected
financial data of Embraer's consolidated statement of income
for the three months ending March 31, 2003 and 2002 (1Q03
and 1Q02) and December 31, 2002 (4Q02).
- ------------------------------------------- -------------------------------- ------------------------------------
Three months ended Three months ended
Income Statement December 31, 2002 March 31, March 31,
Unaudited 2002 2002 2003
- ------------------------------------------- -------------------------------- ------------------ ---------------
US$ US$ US$
In US$ millions, except % and earnings per ADS
Net Sales 798.2 557.3 488.0
Gross Profit 312.3 222.3 194.1
Gross Margin (%) 39.1 39.9 39.7
Operating Expenses (113.8) (78.0) (75.5)
Research and development (45.8) (41.2) (35.5)
Employee profit sharing (10.2) (6.5) (0.1)
Income from operations 142.5 96.6 83.0
Operating margin (%) 17.9 17.3 17.0
Interest income, net (4.0) 2.1 (27.0)
Financial transaction loss, net (6.1) (1.3) 0.3
Other non-operating income (expense) net (0.5) 0.1 1.4
Income before income taxes 131.9 97.5 57.7
Provision for income taxes (53.4) (29.4) (13.2)
Minority interest (1.1) (0.4) (0.6)
Cumulative effect of accounting change - - -
Net income 77.4 67.7 43.9
Net margin (%) 9.7 12.1 9.0
Earnings per ADS - basic 0.4487 0.4294 0.2545
Earnings per ADS - diluted 0.4463 0.4284 0.2535
- -------------------------------------------------------------------------------------------------------------------
23 aircraft were Deliveries, Net Sales and Gross Margin
delivered during --------------------------------------
1Q03.
During the 1Q03, 23 aircraft were delivered in comparison to
30 in 1Q02. Net sales in 1Q03 totaled US$ 488.8 million,
12.3% lower than the US$ 557.3 million recorded in 1Q02. 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,
partially compensated for by the better sales mix, which
included 12 ERJ145XR and one Legacy.
2
- ---------------------------- --------------------------------------------------
Planes Delivered 4th Quarter 1st Quarter
by Sector 2002 2002 2003
- ---------------------------- ------------------- -------------- --------------
Commercial
ERJ 135 2 1 3
ERJ 145 28 18 15
ERJ 140 6 10 4
EMB 120 0 0 0
Defense
EMB 135 0 0 0
EMB 145 0 1 0
Legacy 0 0 0
Corporate
Legacy / Shuttle 5 0 1
EMB 135 0 0 0
- --------------------------------------------------------------------------------
Total 41 30 23
- --------------------------------------------------------------------------------
In 1Q03, Commercial Aviation accounted for 79.6% of total
sales, as compared to 87.9% in 1Q02. This reduction is in
line with company's strategy of revenue diversification and
also reflects the reduction of 20.6% in sales in the
Commercial Aviation segment. Corporate Aviation represented
3.1% of net sales, Customer Services represented 5.9% of net
sales and Defense reached 11.3% of net sales, with a 64.8%
growth in comparison with 1Q02. This growth can be
attributed to the revenues recognition related to the
Intelligence, Surveillance & Reconnaissance programs for
Greece (EMB 145 AEW&C) and Mexico (EMB 145 MP and EMB 145
AEW&C).
- --------------------------- ---------------------------- --------------------------------------
Net sales Three months ending Three months ending March 31,
by sector December 2002 2002 2003
- --------------------------- ---------------------------- ------------------ ----------------
US$ % US$ % US$ %
Commercial Aviation 644.3 80.7 490.1 87.9 389.3 79.6
Defense Aviation 40.0 5.0 33.5 6.0 55.2 11.3
Corporate Aviation 87.8 11.0 - - 15.3 3.1
Customer Services and other
related businesses 26.2 3.3 33.7 6.0 29.0 5.9
- ------------------------------------------------------------------------------------------------------
Total 798.3 100.0 557.3 100.0 488.8 100.0
- ------------------------------------------------------------------------------------------------------
Defense reached In 1Q03, gross profit was US$ 194.1 million, 12.7% lower
11.3% of net than the US$ 222.3 million in 1Q02, mainly due to the
sales. reduction in commercial aircraft deliveries. Gross margin in
1Q03, however was relatively stable at 39.7%, compared to
39.9% in 1Q02, despite the decrease in aircraft deliveries.
SG&A Expenses
-------------
In 1Q03, SG&A expenses were down to US$69.9 million from
US$75.6 million during 1Q02. This reduction reflects the
effect of the R$-devaluation on R$-denominated expenses
partially, offset by a US$11.4 million provision for
financial guarantees. Also, in 1Q03 customer training
represented a revenue of US$5.1 million, due to a reversion
of a previously made provision due to revision of contract
training obligations, which in the 1Q02 represented an
expense of US$7.2 million.
3
Other Operating Expense, net
----------------------------
Other Operating Expense, increased to US$5.3 million in 1Q03
from US$2.4 million in 1Q02. This is mainly attributable to
a US$2.0 million increase in internal training and
professional development expenses.
Research and Development (R&D)
------------------------------
In 1Q03, R&D expense was reduced to US$ 35.5 million from
US$41.2 million in 1Q02. This decrease was mainly related to
the effect of the R$ devaluation on R$-denominated expenses.
Employee Profit Sharing
-----------------------
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$0.1 million in
1Q03 from US$6.5 million in 1Q02, as there was no
distribution of dividends or interest on equity during the
quarter at Embraer.
Operating Income from Operations
margins were ----------------------
stable, at 17.2%,
despite the In 1Q03, income from operations was down to US$ 83.0 million
reduction in net from US$96.6 million in 1Q02. Operating margins were stable
sales. at 17.0% in 1Q03, in comparison to 17.3% in 1Q02, despite
the reduction in net sales.
Interest Income (Expense), net
------------------------------
In 1Q03, Interest Income (Expense), net decreased to an
expense of US$27.0 million from an income of US$2.1 million
in 1Q02, as a result of the recognition of US$23.6 million
in losses as the Real appreciated and the Company, due to
the effect of the hedging transactions and the increase in
working capital needs, had net liabilities in R$ of US$
256.3 million (see "Financial Management"). The marking to
market of the hedging transactions were reclassified to this
line item from Financial Transaction Gain (Loss), net.
Financial Transaction Gain (Loss), net
--------------------------------------
Embraer uses the dollar as the functional currency for US
GAAP, and the variations in this item 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. Net Financial Transaction Gain (Loss) in
1Q03 represented an income of US$0.3 million, in comparison
to an expense of US$1.3 million registered in 1Q02, as the
Real appreciated during this quarter.
Provision for Provision for Income Taxes
income taxes --------------------------
was positively
affected by the Our provision for income taxes decreased from US$29.4
Real appreciation. million in 1Q02 to US$13.2 million in 1Q03 mainly due to
lower taxable income under the Brazilian Corporate Law
financial statements and to the effect of the Real
appreciation on our R$-denominated tax credits. Our
effective tax rate in 1Q03 was 22.9% as compared to 30.2% in
1Q02, as further compared to a statutory tax rate in each
year of 34%. The reduction in the effective tax rate was
mainly related to the effect of the Real appreciation on our
R$-denominated tax credits.
Net Income
----------
In 1Q03, net income was US$ 43.9 million (equivalent to
US$0.25347 per diluted ADS), or 9.0% of net sales, while net
income for 1Q02 was US$ 67.7 million (equivalent to
US$0.42839 per diluted ADS), or 12.1% of net sales.
Financial Management
4
As of March 31, 2003, Embraer's cash and cash equivalents
were US$ 493.8 million. On the same date, indebtedness
totaled US$ 705.4 million. Therefore the Company had a net
debt position (loans minus cash and cash equivalents) of US$
211.6 million.
Net Debt
position in
US$211.6 million
as of March 31,
2003.
------------------------------ -------------------------- ------------------ ---------------
Balance Sheet and
Other Data as of December 31, as of March 31
Unaudited - US$ million 2002 2002 2003
------------------------------ -------------------------- ------------------ ---------------
US$ US$ US$
Cash and cash equivalents 656.8 633.1 493.8
Accounts receivable 610.6 706.5 826.4
Collateralized accounts receivable 288.9 318.9 285.9
Inventories 880.3 1,010.1 1,020.8
Total assets 3,632.5 3,509.7 3,755.4
Loans 552.6 594.3 705.4
Non recourse debt 228.9 318.9 285.9
Total liabilities 2,542.3 2,494.8 2,620.2
Net cash (debt) 104.2 38.8 (211.6)
Shareholders' equity 1,090.2 1,014.9 1,135.2
------------------------------ -------------------------- ------------------ ---------------
Note: Net cash (debt) is Loans minus Cash and cash equivalents.
Loans
-----
During this quarter, the Company increased its loans with
trade-related financing, which are mainly short-term, and as
a result, on March 31, 2003, 47.9% of Embraer`s total loans
was long-term financing, compared with 55.8% on December
31,2002.
Embraer partially converted its Japanese yen and US dollar
denominated debt to R$-related interbank interest rates
(CDI). Therefore, out of the total US dollar and other
currency loans of US$ 681.5 million, 65.3%, or US$ 445.0
million, is indexed in R$. When considering the effect of
these hedges, out of the total company loans of US$ 705.4
million, 33.5% or US$ 236.5 million primarily refers to US$
borrowing with a weighted average cost of 5.2% per annum.
The remaining US$ 468.9 million, equivalent to 66.5% of the
total loans, is financed in Brazilian currency at a weighted
average interest rate of 21.7% per annum, equivalent to
82.6% of the CDI.
Cash
----
Of the total cash and cash equivalents balance of US$493.8
million, 43.1% is comprised of investments in R$ and the
remaining 56.9% primarily in US dollars. The Embraer cash
investment strategy is based on prospects of future
investments, which are mostly denominated in R$.
Accounts Receivable and Inventories
-----------------------------------
Since September 2001, Embraer has supported the delivery of
aircraft to certain customers that were concluding their
financing agreements. This support has caused its accounts
receivable in the recent quarters to be more volatile,
compared to its historical trends. On March 31, 2003, there
was a balance of US$ 826.4 million in accounts receivable,
in comparison to US$ 610.6 million as of December 31, 2002,
and US$ 706.5 million as of March 31, 2002, related to
aircraft delivered whose financing arrangements are in the
process of being finalized. As of March 31, 2003,
approximately 71% of the short-term accounts receivable are
related to financing already approved by the BNDES and 21%
are financing structures in negotiation. The disbursement of
the receivables is expected to be initiated during the
second quarter.
Short-term inventories increased US$ 140.5 million between
December 31, 2002 and March 31, 2003. This increase was
related to the EMBRAER 170 development, which currently has
six prototypes carrying out the flight certification
campaign, the initial production of the EMBRAER 175 first
prototype, the initial serial production of the EMBRAER 170
and the increase in production of the Legacies which demand
a longer period for interior finishing.
5
Capital Expenditures
Productivity and Improvements in Industrial Efficiency &
Others
------------------------------------------------------------
In 1Q03, US$15.7 million was invested in improving the
Company's industrial efficiency, including improvements and
modernization of industrial and engineering processes,
machinery and equipment.
Supplementary Information according to Corporate Law
(Brazilian GAAP)
------------------------------------------------------------
Today Embraer also reported the 1Q03 earnings results in
accordance with corporate law method of accounting
(Brazilian GAAP), which according to Brazilian legislation
must be used as a basis for calculating the distribution of
dividends and interest on shareholders' equity, income tax
and social contribution. Below is presented a selected
consolidated results in accordance with corporate law and in
Reais (R$).
Net revenues in 1Q03 totaled R$ 1,695.1 million and gross
profit reached R$ 668.2 million, with a gross margin of
39.4%. The operating profit for the period (including
employee profit-sharing) totaled R$ 399.9 million, with an
operating margin of 23.6%. The EBITDA for the period was R$
435.3 million and the EBITDA margin 25.7%. Pre-tax income
was R$ 318.6 million (18.8% of net revenues). Income tax and
social contribution totaled R$ 119.3 million, representing
an effective tax rate of 37.5%. Net income for the period
totaled R$ 197.4 million (11.6% of net revenues).
Order Book and Backlog
Civil Aviation
--------------
o Commercial Aviation Order Book
In February ExpressJet Airlines requested a revision of the
deliveries originally scheduled to take place during the
years 2003-2005. 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
Also during the 1Q03, Embraer announced that SWISS reduced
its firm orders for EMBRAER 170 and EMBRAER 195 aircraft to
30 aircraft, 15 of each model, from an original total of 60.
The number of options for both models was also reduced to
20, from 100 aircraft. 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.
Embraer forecasts deliveries of 132 aircraft for 2003 and
136 aircraft for 2004. The above-mentioned forecast already
includes the delivery rescheduling for ExpressJet and the
contractual renegotiation with SWISS.
Embraer's total backlog for the commercial aviation segment
on March 31, 2003 was US$ 15.5 billion (US$ 6.0 billion in
firm orders and US$ 9.5 billion in options). This amount
corresponds to 802 aircraft, including 322 firm orders and
480 options.
Commercial
Aviation Order
Book stands at
US15.5 billion. As of March 31, 2003, the Commercial Aviation order book was
as follows:
- --------------------------------------------------------------------------------
Family Total Deliveries Firm Options
Orders Orders
- --------------------------------------------------------------------------------
Commercial Aviation 1,447 645 322 480
ERJ 145 1,231 645 234 352
6
EMBRAER 170/190 216 - 88 128
- --------------------------------------------------------------------------------
o Corporate Aviation Order Book
As of March 31, 2003, the total backlog for the Corporate
Aviation division amounted to US$ 2.4 billion, which
corresponds to 150 aircraft, including 58 firm orders and 92
options, with the following breakdown:
- -------------------------------------------------------------------------------
Family Total Deliveries Firm Options
Orders Orders
- -------------------------------------------------------------------------------
Corporate Aviation 166 16 58 92
Legacy Executive 76 7 33 36
Legacy Shuttle 75 2 23 50
EMB 135 15 7 2 6
- -------------------------------------------------------------------------------
Two EMB135 for the Corporate Market were ordered during
1Q02.
Defense Market
--------------
The order book for the Defense segment at the end of the
first quarter amounted to firm orders of US$ 1.0 billion.
Taking options into account, this amount totalled US$ 1.3
billion.
Backlog
-------
The Embraer firm order backlog at the end of the 1Q03 was
US$ 7.9 billion, which together with options, reached US$
19.2 billion. The following chart shows the order backlog as
of at the end of the last five quarters.
1Q02 2Q02 3Q02 4Q02 1Q03
----------------------------------------------------------------
Firm order backlog 10.3 10.1 9.6 9.0 7.9
Options 12.8 13.7 13.0 13.2 11.3
Dividends and Interest on Equity
In 1Q03, no Dividends or Interest on Equity were
distributed.
Recent Developments
LOT deal
--------
7
On April 18, 2003 Embraer and LOT Polish Airlines have
signed the final agreement for the acquisition of ten
EMBRAER 170s. The contract also includes options for
additional eleven aircraft, with a possible conversion into
the EMBRAER 190 or EMBRAER 195 types. First delivery is
scheduled to take place in early 2004. The net impact on the
firm order backlog will amount to six aircraft, since four
will be leased from GE Capital Aviation Services ("GECAS").
These four aircraft already appear in the current order book
under the agreement with GECAS. The 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 ERJ 145,
depending on the number of options exercised.
At the same occasion Embraer and LOT announced that they
have signed a two year agreement, appointing the carrier an
authorized service center for both base and line maintenance
for the ERJ 145 aircraft type, effective immediately. This
agreement is part of the manufacturer's intention to extend
its already strong MRO network within Europe. LOT is now
entitled to provide full base and line maintenance, through
its service center at Warsaw International Airport in
Poland, to support both its own Embraer fleet and also to
become an alternative base for other ERJ operators.
US Airways Order
----------------
Embraer announced on May 12, 2003 an order from US Airways
for 85 EMBRAER 170 airliners with deliveries starting later
this year. The airline also took options on 50 additional
EMBRAER 170s and 140 ERJ 145s. The total value of the firm
contract at list price is US $ 2.1 billion, with a potential
value of more than US $ 6.2 billion, if options are
converted.
US Airways is the first carrier in North America to order
the new EMBRAER 170, the first member of a new family of
Embraer aircraft designed to tap the gap between 50-seat
regional jets and larger jets with more than 120 seats.
Under the agreement, US Airways will take 55 aircraft from
Embraer and 30 from General Electric Capital Aviation
Services (GECAS), which had ordered 50 EMBRAER 170s in 2000.
US Airways will take its first EMBRAER 170 in November 2003.
Conference Call Information
---------------------------
Embraer cordially invites you to participate in a conference
call to review its First Quarter 2003 Results in US GAAP, to
be held on Wednesday, May 14, 2003 at 10:00 a.m. Eastern
Standard Time.
Please dial:
US Participants: 800 473 6123
International Participants: (1-973) 582 2706
Security Access Code: Embraer
The conference call will also be broadcasted live over the
internet on www.embraer.com and www.prnewswire.com.br
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
8
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 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.
------------------------------------------------------------
9
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
ASSETS
As of December 31 as of March 31
------------------------------- ------------------------------------
2001 2002 2002 2003
----------- ------------ ------------- ---------------
Audited Unaudited Unaudited Unaudited
CURRENT ASSETS
Cash and cash equivalents 749,302 656,822 633,127 493,769
Trade accounts receivable 596,801 610,583 706,498 826,355
Collateralized accounts receivable 16,315 20,233 18,319 21,677
Inventories 1,015,081 864,800 995,441 1,005,264
Deferred income tax assets 98,756 90,014 95,914 94,198
Other current assets 89,093 222,032 58,937 174,775
----------- ------------ ----------- -------------
Total Current Assets 2,565,348 2,464,484 2,508,236 2,616,038
----------- ------------ ----------- -------------
NONCURRENT ASSETS:
Held to maturity investments 35,651 23,263 31,655 23,853
Collateralized accounts receivable 306,033 268,683 300,547 264,257
Inventories 22,714 15,518 14,689 15,495
Property, plant and equipment, net 366,481 436,716 397,745 437,628
Investments 4,362 4,745 4,448 4,820
Deferred income taxes 85,139 72,827 89,057 62,985
Other noncurrent assets 175,059 346,226 163,343 330,294
----------- ------------ ----------- -------------
Total noncurrent assets 995,439 1,167,978 1,001,484 1,139,332
----------- ------------ ----------- -------------
TOTAL ASSETS 3,560,787 3,632,462 3,509,720 3,755,370
=========== ============ =========== =============
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED BALANCE SHEETS
(in thousands of U.S. dollars)
LIABILITIES AND SHAREHOLDERS' EQUITY
As of December 31 as of March 31
------------------------------- ----------------------------------
2001 2002 2002 2003
----------- ------------ ------------- ---------------
Audited Unaudited Unaudited Unaudited
CURRENT LIABILITIES
Loans 526,550 244,526 365,261 367,614
Accounts payable to suppliers 265,593 323,115 272,145 322,987
Customer advances 385,265 409,258 373,567 392,082
Other accounts payable and accrued liabilities 506,060 611,151 575,600 551,110
Contingency 4,395 5,244 4,518 8,606
----------- ------------ ----------- -------------
Total Current Liabilities 1,687,863 1,593,294 1,591,091 1,642,399
----------- ------------ ----------- -------------
LONG-TERM LIABILITIES
Loans 245,186 308,111 228,983 337,842
Customer advances 106,594 95,625 97,994 92,804
Contribution from suppliers 143,615 235,445 227,445 236,152
Other accounts payable and accrued liabilities 338,236 292,488 330,478 291,445
Contingency 10,767 9,093 10,518 9,968
----------- ------------ ----------- -------------
Total long-term liabilities 844,398 940,762 895,418 968,211
----------- ------------ ----------- -------------
MINORITY INTEREST 8,170 8,226 8,344 9,556
----------- ------------ ----------- -------------
SHAREHOLDERS' EQUITY: 1,020,356 1,090,108 1,014,867 1,135,204
----------- ------------ ----------- -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3,560,787 3,632,462 3,509,720 3,755,370
=========== ============ =========== =============
10
thiss
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED STATEMENTS OF INCOME
In thousands of U.S. dollars except per share data
1st Quarter
------------------------
2002 2003
GROSS SALES:
Domestic market 15,421 21,180
Foreign market 555,206 470,952
Sales deductions (13,301) (3,338)
--------- ---------
NET SALES 557,326 488,794
--------- ---------
Cost of sales and services (335,045) (294,701)
--------- ---------
Gross Profit 222,281 194,093
--------- ---------
Operating expenses
Selling expenses (49,004) (45,162)
Research and development (41,229) (35,502)
General and administrative (26,635) (24,756)
Employee profit sharing (6,489) (137)
Other operating expense, net (2,383) (5,595)
Equity in income from affiliates 87 75
--------- ---------
Income From Operations 96,628 83,016
--------- ---------
Interest income, net 2,036 (26,989)
Financial transaction gain (loss), net (1,310) 287
Other non-operating income, net 106 1,430
--------- ---------
Income Before Income Taxes 97,460 57,744
--------- ---------
Provision for income taxes (29,388) (13,196)
--------- ---------
Income Before Minority Interest 68,072 44,548
--------- ---------
Minority interest (374) (596)
--------- ---------
Net Income 67,698 43,952
========= =========
EARNINGS PER SHARE
Basic
Common 0.10 0.06
Preferred 0.11 0.06
Diluted
Common 0.10 0.06
Preferred 0.11 0.06
WEIGHTED AVERAGE SHARES (thousands of shares)
Basic
Common 242,544 242,544
Preferred 410,198 470,430
Diluted
Common 242,544 242,544
Preferred 411,627 473,123
Earning Per Share - ADS Basic (US$) 0.4294 0.2545
Earnings Per Share - ADS DILUTED (US$) 0.4284 0.2535
11
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
March 31, March 31,
2001 2002
---------------------------
Unaudited Unaudited
Operating Activities
Net Income 67,698 43,952
Adjustments to reconcile net income to net cash
provided by(used in) operating activities:
Depreciation and amortization 11,872 15,333
Provision for (reversal of) doubtful accounts (57) 516
Provision for (reversal of) inventory obsolescence (9,294) 2,399
Deffered income and social contribution tax (1,076) 5,658
Cumulative translations adjustments (4,793) 1,072
Loss (Gains) on the disposition of assets 179 (1,305)
Equity in income from affiliates (86) (75)
Accrued interest recorded in loans 8,961 7,183
Minority interests (201) 596
------------ -----------
73,203 75,329
Changes in assets and liabilities: 56,056 (322,328)
------------ -----------
Net cash provided by (used in) operating activities 129,259 (246,999)
Investing Activities
Purchase of property, plant and equipment (43,316) (15,607)
Proceeds from the sale of property, plant and equipment 1 1,559
Customer and commercial financing - net additions 8,023 (11,014)
Guaranteed deposits and compulsory loans 7,505 (570)
------------ -----------
Net cash used in investing activities (27,787) (25,632)
Financing Activities
Repayment of loans (321,144) (136,694)
Proceeds from borrowings 132,272 284,307
Dividends paid (24,469) (35,750)
Payments of refinanced taxes (1,517) (403)
Payments on capital lease obligations (2,789) (1,882)
------------ -----------
Net cash provided (used) by financing activities (217,647) 109,578
------------ -----------
Net decrease in cash and equivalents (116,175) (163,053)
Cash and cash equivalents at beginning of year 749,302 656,822
------------ -----------
Cash and cash equivalents at end of year 633,127 493,769
============ ===========
12
EMBRAER - EMPRESA BRASILEIRA DE AERONAUTICA S.A.
BACKLOG AS OF MARCH 31, 2003
- - ERJ 145:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Options Deliveries Firm Order
Orders 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 245 100 171 74
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 45 0
Total 583 301 489 94
- ---------------------------------------------------------------------------------------------------------------
- - ERJ 135:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Options Deliveries Firm Order
Orders 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 5 10
TOTAL 122 6 94 28
- ---------------------------------------------------------------------------------------------------------------
13
- - ERJ 140:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Options Deliveries Firm Order
Orders Backlog
- ---------------------------------------------------------------------------------------------------------------
American Eagle USA 139 25 47 92
Midwest Express USA 20 20 0 20
Wexford USA 15 0 15 0
TOTAL 174 45 62 112
- ---------------------------------------------------------------------------------------------------------------
- - EMBRAER 170:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Options Deliveries Firm Order
Orders Backlog
- ---------------------------------------------------------------------------------------------------------------
Air Caraibes Guadaloupe 2 2 0 2
Alitalia Italy 6 6 0 6
GECAS USA 50 78 0 50
Swiss Switzerland 15 10 0 15
Total 73 96 0 73
- ---------------------------------------------------------------------------------------------------------------
- - EMBRAER 195:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Options Deliveries Firm Order
Orders Backlog
- ---------------------------------------------------------------------------------------------------------------
GECAS USA 0 22 0 0
Swiss Switzerland 15 10 0 15
Total 15 32 0 15
- ---------------------------------------------------------------------------------------------------------------
Legacy Executive:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Options Deliveries Firm Order
Orders Backlog
- ---------------------------------------------------------------------------------------------------------------
SWIFT USA 24 25 2 22
Undisclosed - 16 11 5 11
TOTAL 40 36 7 33
- ---------------------------------------------------------------------------------------------------------------
Legacy Shuttle and EMB 135 - Corporate Market:
- ---------------------------------------------------------------------------------------------------------------
Client Country Firm Options Deliveries Firm Order
Orders Backlog
- ---------------------------------------------------------------------------------------------------------------
Conoco USA 1 0 1 0
Indigo USA 25 50 2 23
Undisclosed - 8 6 6 2
TOTAL 34 56 9 25
- ---------------------------------------------------------------------------------------------------------------
14