2. Capital Reorganization
• Financing the expansion
programs through the equity
capital markets
• Creation of an acquisition
currency for potential
expansions
• The increase in liquidity and
better market perception of the
Company
• The improvement in corporate
governance and transparency,
in addition to the listing in the
“Novo Mercado”,
3. Embraer Capital Structure
Ordinary Shares: 738,699,207
BOZANO
GROUP 11.1%
PREVI
OTHERS NYSE (PENSION
41.3% FUND) 16.4%
SISTEL
(PENSION
FUND) 7.4%
BNDESPAR
OTHERS 6.3%
BOVESPA
17.8%
Sharholders with more than 5% participation
October, 2006
5. Corporate Governance
• Active Board of Directors & Permanent Fiscal Board acting as
an Audit Commitee.
• Board of Directors Composition:
Eight representatives elected by all Shareholders;
Two representatives indicated by the Employees;
One governament representative.
6. Corporate Governance
Audit Comitee – Conselho Fiscal
• Composed of five members including one financial expert
• Elected in a annual general shareholders’ meeting
• Makes financial reporting recommendations to management and the
board
• Responsible for handling whistleblower complains
• Oversees the relationship between managers and external auditors
11. Off Balance Sheet Exposure
The maximum potential payments represent the “worst-case scenario,” and do not
necessarily reflect the expected results by the Company.
Estimated proceeds from performance guarantees and underlying assets represent
the anticipated values of assets the Company could liquidate or receive from other
parties to offset its payments under guarantees. Source: 20 F note 34
US$ million 2005 June 30
2006
Maximum Financial Guarantees 1,768 1,721
RVGs 878 906
Mutually Exclusive Exposure* (415) (418)
Provisions & Liabilities Recorded (54) (53)
Off Balance Sheet Exposure 2,177 2,156
Estimated proceeds from performance 2,127 2,209
guarantees and underlying assets
*The residual value guarantees can only be exercised if the financial guarantees have expired without
having been triggered and therefore have not been combined to calculate the maximum exposure
12. Off Balance Sheet Exposure
Trade-in options
Provide a customer with the right to trade-in existing aircraft upon the purchase of a new
aircraft.
The trade in price per aircraft is less than the original sales price of the aircraft and less
than management’s estimation for the future market value of the relevant aircraft.
6 Commercial jets are subject to trade-in
Of the total 914 firm orders and 133 options signed for the ERJ 145 family since 1996,
only 7 were trade-ins of EMB 120s (Brasilia).
Of the total 543 firm orders and 421 options signed for the EMBRAER 170/190 family
since 1999, only 6 included trade-in options.
14. ECC Leasing
Asset Management is responsible for all administration and technical issues
related to Embraer’s portfolio of pre-owned aircraft.
ECC Leasing Company Ltd (ECC Leasing) was
incorporated in Dublin (Ireland) on September 19th, 2002.
Main Responsibilities
• Manage Embraer’s pre-owned aircraft assets
• Vehicle for remarketing pre-owned aircraft resulting from
trade-in/up supporting new aircraft sales
• Manage remarketing obligations assumed by Embraer before
lenders or leasing companies
• Search for potential airlines on the market to acquire or lease the
aircraft from ECC Leasing’s portfolio
• Main focus on activities that involve Embraer products
• Manage activities of appraisal, acquisition, maintenance, leasing
and remarketing of pre-owned aircraft
15. Asset Management Remarketing Activities
5 ex-Rio Sul ERJ 145 7 ex-Rio Sul ERJ 145 1 ex-Rio Sul ERJ 145
Leased to Aerolitoral ( Mexico) Sold to FAB ( Brazil ) Sold to DPF ( Brazil )
2005 2005 2005
7 ex-Rio Sul EMB 120 2 ex-Rio Sul ERJ 145 1 EMB 120
Sold to FAB ( Brazil ) In advanced negotiation In advanced negotiation
2005 with potential customer with potential customer
16. Asset Management Remarketing Activities
2 EMBRAER 170 Pre-Series 2 ex-LOT ERJ 145 1 ex-LOT ERJ 145
Leased to Paramount ( India ) Leased to BMI ( England ) Leased to Lagunair (Spain )
2005/2006 2006 2006
1 EMB 120 2 ex-LOT ERJ 145
Sold to CVRD ( Brazil ) Leased to Satena ( Colombia )
2006 2006
17. Asset Management Remarketing Activities
1 EMBRAER 170 Pre-Series 1 EMB 170 Pre serie 2 Legacy
Leased to Satena ( Colombia ) Leased to Air Caraïbes Sold to FAB ( Brazil )
2006 (Guadeloupe) 2006
2006
19. Parked Aircraft - World
Jet Aircraft (Western Built)
(as of Sep 05, 2006)
Seat Segment Number % of
600 30 - 60 61 - 90 91 - 120 Seg Manuf. of Parked % Fleet
Aircraft Parked
Boeing 149 53% 12%
Douglas 86 30% 28%
500 Fokker 29 10% 11%
91-120
BAe 19 7% 15%
Airbus 0 0% 0%
Number of Aircraft
400 Embraer 0 0% 0%
Total 283 100% 15%
BAe 52 51% 25%
300 Fokker 45 45% 30%
61-90
Douglas 2 2% 8%
Bombardier 2 2% 1%
200 Embraer 0 0% 0%
Total 101 100% 12%
Bombardier 82 71% 8%
30-60
100 Fairchild 30 26% 32%
Embraer 4 3% 0%
Total 116 100% 6%
0
95
96
97
98
99
00
01
02
03
04
05
6
t/0
19
19
19
19
19
20
20
20
20
20
20
se
Source: BACK (Operator Category: Scheduled Airline, Non Scheduled, Leasing and Financial Institution)
20. ERJ 145 LR
Year over Year Residual Value Curve
New Aircraft – Uninflated Values 2005 & 2006 Values
20
18
16
14
12
US$Million
10
8
6
4
2
0
r1 r2 r3 r4 r5 r6 r7 r8 r9 r1
0
r1
1
r1
2
r1
3
r1
4
r1
5
r1
6
y ea y ea y ea y ea y ea y ea y ea y ea y ea ea ea ea ea ea ea ea
y y y y y y y
2nd half 2005 2nd half 2006
21. EMBRAER 170 LR
Year over Year Residual Value Curve
New Aircraft – Uninflated Values 2005 & 2006 Values
30
25
20
US$Million
15
10
5
0
r1 r2 r3 r4 r5 r6 r7 r8 r9 0 1 2 3 4 5 6
ea ea ea ea ea ea ea ea ea r1 r1 r1 r1 r1 r1 r1
y y y y y y y y y y ea y ea y ea y ea y ea y ea y ea
2nd half 2005 2nd half 2006
22. EMBRAER 190 AR
Year over Year Residual Value Curve
New Aircraft – Uninflated Values 2005 & 2006 Values
35
30
25
20
US$Million
15
10
5
0
1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6
ar ar ar ar ar ar ar ar ar r1 r1 r1 r1 r1 r1 r1
ye ye ye ye ye ye ye ye ye ye
a
ye
a
ye
a
ye
a
ye
a
ye
a
ye
a
2nd half 2005 2nd half 2006
26. Financing Source Forecast
Forecasted FY 2006 to FY 2008 financing to commercial aviation:
BNDES
20%
Capital MKT
5%
Banks &
Leasing Co
* Commercial Aircraft Forecast
27. Diversification of Financing Sources -
USA
We obtained positive results in contacting banks and investors, searching
new mechanisms and sources for financing our customers. Among them,
we shall emphasize:
Alexander Hamilton Debis Air Finance MetLife Capital
Alliance Capital Fifty Third Bank Mitsui
American State Bank Finova Nation City
Ameritech Credit Corp. Fleet Bank Phillip Morris
Attransco GATX South Trust
Bank First Teachers Insurance
Bank of America ICX Corp. The Cit Group
Bell Atlantic Integra Transamerica
BNY Capital Funding Jefferson Pilot Life Travellers Insurance
Chrysler Capital Corp. John Hancock Wachovia Bank
Comerica JP Morgan Chase Zions Credit Corp
28. Diversification of Financing Sources
Rest of World
Banco Austria Austria
Barclays United Kingdom
BCI Italy
Bell Atlantic United States
BNP France
CALL United Kingdom
Citibank New York - London - Asia
Coronation Ireland
Credit Lyonnais France
Deustch Bank Germany
Die Nationale Investeringsbank Netherlands
Hamburgische Landesbank Germany
HSH Nord Bank AG Germany
Ingepar France
Landesbank Sachsen Girozentrale Germany
Lloyds Bank PLC United Kingdom
Natexis France
Norddeutsche Landesbank Girozentrale Germany
Royal Bank Leasing Ltd. United Kingdom
Standard Chartered United Kingdom
Transasian Air Australia
34. Net Revenue by Segment
9M06 9M05
Customer Customer
Services and Services and
Others 15% ExecutiveOthers 10%
Aviation 6%
Commercial
Executive Defense and
Aviation 67%
Aviation 13% Government
12%
Defense and
Government
6% Commercial
Aviation 72%
35. Net Revenues and Gross Margin – US GAAP
US$ million
39.4%
39.6% 37.7%
34.1%
30.2%
28.4%
3,830
3,441
2,927 2,723
2,526
2,144
2001 2002 2003 2004 2005 9M06
Net Revenue Gross Margin
37. Income from Operations- US GAAP
US$ Million
22.3%
18.6% 15.8%
651 13.2%
12.3%
544
505
470
8.0%
265
218
2001 2002 2003 2004 2005 9M06
Income from Operations Margin
38. Income from Operations – BR GAAP
R$ million
28,0% 28,0%
18,9%
16,8%
2.167
1.928 8,6%
1.714 6,9%
1.243
787
414
2001 2002 2003 2004 2005 9M 06
Luc ro Oper ac ional Margem Oper ac ional
39. Net Income – US GAAP
US$ Million
1 1 .1 % 1 1 .6 %
1 1 .2 %
9 .8 %
8 .8 %
446
6 .3 % 380
328
266
223
136
2001 2002 2003 2004 2005 9 M0 6
Ne t In c o me Ne t Ma r g in
40. Net Income – BR GAAP
R$ million
16%
15%
13%
9%
8%
7%
1.179 1.281
1.101
587 709
406
2001 2002 2003 2004 2005 9M06
lucro líquido Margem
41. Effective Tax Rate
BR GAAP
Differences between accounting and fiscal records
US GAAP
All BR GAAP and US GAAP accounting differences are considered
to calculate the deferred income tax
Effective Tax Rates
2001 2002 2003 2004 2005 9M06
BR GAAP 30,6% 26,6% 29,8% 20,8% 19,7% 25,9%
US GAAP 40.3% 45.6% 25.8% 22.7% 8.4% 18.0%
42. Effective Tax Rate – 9M06
US GAAP BR GAAP
US$ THOUSANDS R$ THOUSANDS
Income Before taxes 329,958 565,197
Nominal expense 34% tax rate 112,186 192,167
Permanent additions 5,742 35,675
Permanent exclusions (1,679) (18,369)
Interest on Shareholders Equity (34%) (32,041) (70,304)
Other items (24,753) 7,061
Total expenses 59,455 146,230
Effective tax rate 18.0% 25.9%
44. Accounts Receivable Breakdown
US GAAP BR GAAP
US$ Million
R$ million
488
100 136 140 32
1,085
233 294 302 70
351 346 332 368 823
302 754 719 797
577
3Q05 4Q05 1Q06 2Q06 3Q06 3T05 4T05 1T06 2T06 3T06
Oth e rs C o m m e rcia l Airlin e Ma rke t
45. Aircraft Financing Support
US GAAP BR GAAP
US$ Million
R$ million
488 278 229 651
174 1,085 497
378
164 357
136 140 233 294 302
100
32 70
3Q05 4Q05 1Q06 2Q06 3Q06 3T05 4T05 1T06 2T06 3T06
A c c o u n t s R e c e i v a b le s
C o s
u
t m e r
a n d C o m m e r
c a
i l
F n
i a n c n
i g
u
C o s tu m e r a n d C o m m e r c ia l
F in a n c in g
46. Inventories
US GAAP
BR GAAP
US$ Million R$ Million
1,886
4,417
1,601 1,648 1,639
1,511
4,115
4,053
3,967 3,971
3Q05 4Q05 1Q06 2Q06 3Q06 3T05 4T05 1T06 2T06 3T06
47. Net Cash (Debt) Position
US GAAP BR GAAP
US$ Million R$ Million
527 507
1,102
360
302
657 1,139
843
97
216
3T05 4T05 1T06 2T06 3T06
3Q05 4Q05 1Q06 2Q06 3Q06
48. Loans
Total Debt of US$ 1,599.8 Million
Brazilian
Currency
25%
Short Term
Long Term
48%
52% Foreign
Currency
75%
• Average cost in R$ = 8.5 % p/a Loans Average Maturity: 1 year and
• Average cost in US$ =7.2 % p/a 11 months
49. Loans Maturity
US$ million
76 0
1,6 0 0 13 1
2 76
18 8
201
44
Total Short- 2007 2008 2009 2010 2011
term
50. Emissão de Bond
Tombstone Sumário dos termos
Tombstone Sumário dos termos
Emissor: Embraer Overseas Limited
20 de outubro de 2006
Guarantidor: Empresa Brasileira de Aeronáutica S.A.
Principal: US$ 400 milhões
Formato: 144 A/ Reg S com Registration Rights
Ratings: Baa3/BBB- (Moody/S&P)
Vencimento: 24 de Janeiro de 2017
Coupon: 6,375%
Yield: 6,466%
US$400.000.000 Spread sobre UST: 168 bps
Preço: 99,289%
6,375% Bonds com Vencimento em 2017
Joint Bookrunners: J.P. Morgan Securities Inc. e
Citigroup
53. Research & Development
Forecast
Previous New
US$ Million 2007 2007 2008
Commercial Aviation 54 51 22
Executive Aviation 87 127 90
Technology Development 47 59 61
TOTAL 188 237 173
Defense & Government 21 32 48
Defense & Government R&D are funded by their contracts and are included as Cost of sales and services
54. PP&E
Previous New
US$ Million 2007 2007 2008
Productivity 77 77 52
Production Ramp Up - 104 36
Customer Services - 13 29
TOTAL 77 194 117
55. Contributions from Risk
Sharing Partners
US$ Million
246 14
1
108
-
55
42
17
20
Total
2001
2002
2003
2004
2005
2006E
2007E
2008/2010E
