CS First Boston & Aviation WeekAerospace & Defense Finance Conference
May 2002
Foward Looking
This presentation includes forward-looking statements or statements about events or circumstances which have not occurred. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business and our future financial performance. These forward-looking statements are subject to risks, uncertainties and assumptions.
The words “believes,” “may,” “will,” “estimates,” “continues,” “anticipates,” “intends,”“expects” and similar words are intended to identify forward-looking statements. We undertake no obligations to update publicly or revise any forward-looking statements because of new information, future events or other factors, In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this presentation might not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements.
EmbraerHighlights
Fourth largest commercial aircraft manufacturer in the world, with leading aerospace products and technology
Premier global customer base - strong market share
Strong global partners
Outstanding financial performance
Largest exporter in Brazil in 1999, 2000 & 2001
Company Highlights
Commercial Market
As of March 31, 2002:
865 firm orders and 359 options
531 aircraft delivered since ’96
ERJ 135/140/145 Jet Family
37, 44 and 50-seat jet family
96% commonality between aircraft
ERJ 145 Family Orderbook
March/2002
334
160
142
32
FirmBacklog
5311,224359865Total
410837267570ERJ 145
3221945174ERJ 140
8916847121ERJ 135
DeliveriesTotalOptionsFirm
Commercial Market
EMBRAER 170/175/190/195 Jet Family
70,78, 98 and 108-seat jet family
112 firm orders and 202 options on January 31, 2002
Nearly two-thirds of development costs borne by risk sharing partners
Deliveries scheduled to begin in 2Q03 with EMBRAER 170
314202112Total
1027230EMBRAER 190
21213082EMBRAER 170
TotalOptionsFirm
EMBRAER 170/190 Family Orderbook
March/2002
Corporate Market - Legacy
VersionsExecutiveCorporate ShuttleTransport for Authorities
Corporate Jet based on the ERJ 135 Launched in July 2000
Legacy Orderbook
Current as of Mar 2002
66
-
25
41
FirmBacklog
71679473Total
783767EMB 135/145
-755025Legacy Shuttle
-793841Legacy Executive
DeliveriesTotalOptionsFirm
Defense Market
SUPER TUCANO
EMB 145 AEW&C
AMX / AMX-T
EMB 145 RS
F-5 BR
EMB 145 MP/ASW
EMB 120KLEGACY/ EMB 135/140/145
EmbraerBusiness
Embraer Business
The aerospace businessis supported by 5 pillars High Technology
Qualified People
Global Business
Flexibility
Cash Intensiveness
HighTechnology
High Technology
The Virtual Reality Center
Provides visualization of the aircraft structure and systems during the project phase, using 3D electronic models
Reduces the development cycle
Digital Mock-Up EMBRAER 170
High Technology
High Technology
Digital Mock-Up ERJ 145
QualifiedPeople
High School64,5%
PhD0,2% Graduate
29,3%
Post Graduate4,7%
Master1,3%
Qualified People
Educational Levels
25% of the 11,048 employees, are engineers
Qualified People
More than US$ 60 millioninvested in training and qualificationin the last 3 years.
21 24,518
1999 2000 2001
GlobalBusiness
Global Business
Civil & Defense Aircraft flying in 58 countries in 5 continents.
Global Business
Current Fleet of Regional Aircraft
Latin America& Caribbean260 aircraft85 customers
Africa & Middle East55 aircraft10 customers
AsiaPacific60 aircraft20 customers
Europe285 aircraft40 customers
North America920 aircraft35 customers
Turboprop Operators
ERJ Operators
Global Business
Operations in Brazil, United States, Europe, Asia and Australia
BrazilGavião Peixoto
BotucatuSão José dos Campos
Eugênio de Melo
USADallas
NashvilleAtlanta
Palm Beach GardensFort Lauderdale
FranceLe Bourget
UKWeybridge
ChinaBeijing
AustraliaMelbourne
SingaporeSingapore
CashIntensiveness
Cash Intensiveness
In the last 5 years the Company invested almost US$ 1 billion in research & development and productivity.
10481
122147
213
296
1996 1997 1998 1999 2000 2001
US$ 1.3 Billion Investments in the Next 5 Years
Cash Intensiveness
1,283227224239262331TOTAL
34951505971118PP&E
36527
50141
272
1398
342
1308
612
1098
1056
728
1381551
9
ComercialCorporateDefenseOthers
934176174180191213Research &Development
2002-200620062005200420032002US$ millions
Cash intensiveness
Family launched in July 1999Roll out in October 2001First Flight in February 2002
31 months from launchto first flight
Risk Sharing concept with partners allows the decrease in development cycle and investment risk
Cash Intensiveness
In 2000 & 2001 Embraer increased its global presence in the International Capital Markets:
July 2000: US$ 446 Million in Primary & Secondary Offerings
June 2001: US$ 750 Million in a Secondary Offering
Flexibility
Flexibility
Embraer has the agility and flexibility to adjust its production in accordance with market demand.
ERJ 135/145Deliveries
Flexibility
New Delivery Forecast
4
32
59
96
160 161
135145
1996 1997 1998 1999 2000 2001 2002 2003
Flexibility
To cope with the new scenario, Embraer adjusted its total labor force and laid off 14% (1,800) of its employees.
6,087
4,319 3,8494,494
6,7378,302
10,33411,048
1994 1995 1996 1997 1998 1999 2000 2001
Total of Employees
Flexibility
Flexibility incorporated into the production line allowed an increase in efficiency and decrease in production lead time
Lead Time in Months
8.0
6.0 6.05.5
4.9 5.0
1996 1997 1998 1999 2000 2001
Flexibility
Embraer presents one of the highest "revenue per employee" in the industry.
101
172
242 247
307
254
1996 1997 1998 1999 2000 2001
Revenue per employeeUS$ thousand
FinancialResults US GAAP
US$23.1 billion in total orders,
including US$ 10.3 billion in firm orders
150% 36,7%Annual Growth 56,1% 78,1% (6,1)%
Backlog
$3,0$6,4
$11,4 $10,7 $10,3
$11,3
$12,7 $12,7 $12,8
$1,2 $4,1$0,0
$5,0
$10,0
$15,0
$20,0
$25,0
$30,0
1996 2000199919981997 2001 1Q02
(3,7)%
Net Sales
756
1.344
2.7572.922
1.841
-
500
1.000
1.500
2.000
2.500
3.000
3.500
1997 1998 1999 2000 2001
US$ Million
Gross Profit & Margin
206
374
1.127
862
595
38,6%
27,2% 27,8%
32,3%31,3%
-
250
500
750
1.000
1.250
1.500
1997 1998 1999 2000 200110%
20%
30%
40%
US$ Million
EBITDA & Margin
US$ Million
71
193
493
396
698
9,3%
14,3%
21,5%
17,9%
23,9%
-
200
400
600
800
1.000
1.200
1997 1998 1999 2000 20010%
10%
20%
30%
Net Income & Net Margin
US$ Million
145
328
233
321
3
11,2%11,6%12,7%
10,8%
-
100
200
300
400
500
600
1997 1998 1999 2000 20010%
5%
10%
15%