second quarter 2003 results in us gaap

2nd Quarter 2003Financial Results

US GAAPAugust 14, 2003

Figures in US GAAP

Forward Looking Statement

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, including, among other things: general economic, political and business conditions, both in Brazil and in our market. 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 releasemight not occur. Our actual results could differ substantially from those anticipated in our forward-looking statements.

Figures in US GAAP

Second Quarter Highlights• Real (R$) appreciation against US Dollar (US$):

ü Negative impact on Gross Margin

ü Contribution to a higher R&D expense

ü Non-realized $85MM loss on swap transactions

• Successive Trade Accounts Receivables collection postponments:

ü Short-term debt and financial expenses increase

ü Mismatched real-denominated assets and liabilities

US$ 4.9 MM Net Income

Figures in US GAAP

Second Quarter Highlights• 4 new orders for the EMBRAER 170/190 new jet family:

ü US Airways - 85 firm orders for the EMBRAER 170

ü JetBlue Airways - 100 firm orders for the EMBRAER 190

ü LOT - 10 firm orders for the EMBRAER 170

ü Undisclosed - 10 firm orders for the EMBRAER 190

• Intention of establishing an industrial facility in Jacksonville:

ü It will be used to supply aircraft for the US defense and national security markets

• EMBRAER 175 first flight took place successfully in June.

• Embraer revised the total number of jets to be delivered:

ü In 2003 – from 132 to 110

ü In 2004 – from 136 to 160

• 23 Legacy Shuttle from Indigo excluded from backlog.

Figures in US GAAP

206

79

106

21

Firm

Backlog

6701361485876Total

5021015434581E RJ 145

6821945174ERJ 140

1001276121ERJ 135

DeliveriesTotalOptionsFirm

Orders

ERJ145 Family Orderbook

June / 2003

Figures in US GAAP

EMBRAER 170/190 Family Orderbook

230120110EMBRAER 190

553309244Total

473215EMBRAER 195

276157119EMBRAER 170

TotalOptionsFirm Orders

June / 2003

Figures in US GAAP

Backlog

US$ billion

10.37.99.0

10.711.4

6.44.13.0

1.2

16.8

11.3

13.212.712.7

11.3

0

5

10

15

20

25

30

1996 1997 1998 1999 2000 2001 2002 1Q03 2Q03

Options

Fi rm Orders

1.23.0

4.1

17.7

24.123.4

22.2

19.2

27.1

Income StatementHighlights

Figures in US GAAP

Jet Deliveries

Units

23

28

41

303030

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

Figures in US GAAP

US$ Exchange Rate Volatility

1 %

2 0 %

3 7 %

-9%-5%

-14%

1T02 2T02 3T02 4T02 1T03 2T03

Final Rate

Figures in US GAAP

US$ Million

Net Sales & Gross Margin

798

489567

557

581590

36.5%

39.9% 39.2% 39.3% 39.1%39.7%

0

250

500

750

1 0 0 0

1 Q 0 2 2 Q 0 2 3 Q 0 2 4 Q 0 2 1 Q 0 3 2 Q 0 3

3 0 %

4 0 %

Figures in US GAAP

US$ Million - 2Q03

Cost of Goods Sold

2.7%9.4%

87.9%

Material Labor Others

Figures in US GAAP

Sales per Segment

First Half 2003

Sales per Market

First Half 2003

Revenue Breakdown

Customer

Serviçes

6 %

Corporate

9 %

Defense

9 %

Comerc ia l

76%

Foreing

Market

97%

Brazil

3%

Figures in US GAAP

US$ Million

SG&A and Others Expenses

Note: SG&A includes Profit Sharing and does not include R&D

8576

91

124

7686

15.1%15.5%15.5%15.7%

13.0%

15.2%

-

30

60

90

120

150

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

0%

3%

6%

9%

12%

15%

18%

SG&A and Others SG&A , Others (% of Net Sales)

Figures in US GAAP

US$ Million

R&D

41

35

26

46

36

51

9.1%

7.3%

4.5%

6.0%

7.4%

5.8%

-

20

40

60

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

0%

2%

4%

6%

8%

10%

R&D R&D (% of Net Sales)

Figures in US GAAP

US$ Million

Income from Operations

142

83 70119 11197

12.3%

17.0%17.9%

19.1%20.3%

17.3%

0

2 0 0

4 0 0

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

10%

15%

20%

25%

Figures in US GAAP

Net Income & Margin

77

44

5

4137

68

12.2%

6.2%7.0%

9.7%9.0%

0.9%0

50

100

150

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

0%

5%

10%

15%

US$ Million

Figures in US GAAP

Net Income 1Q03 x 2Q03

- -

44

(1)

78 ( 66)

(26)

(83)

58 5

1Q03 NET SALES COGS operating

expense

Financial

transaction

Non-

operating

Taxes 2Q03

Balance SheetHighlights

Figures in US GAAP

Trade Accounts Receivable

US$ Million

7 0 7

2 4 73 2 6

7 3 6

9 1 3

7 9 0

1 Q 0 2 2 Q 0 2 3 Q 0 2 4 Q 0 2 1 Q 0 3 2 Q 0 3

Note: In the short-term

Figures in US GAAP

Trade Accounts Receivable

US$ Million

548 511

213

232

287

147

143

243

44

27

47

4Q02 1Q03 2Q03

BNDES BNDES negot iat ion Market Others

736

913

790

Figures in US GAAP

Inventories

995 992

946

865

1013 1005

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

US$ Million

Figures in US GAAP

Inventories by program

81 82 75 74

775 749707

575659

613

67 8097

110

141 196

72 8167

105

128 130

75 77

995 992946

1,0131,005

865

0

200

400

600

800

1000

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

Others E R J 1 4 5 F a m i l y / L e g a c y E M B R A E R 1 7 0 / 1 9 0 D e f e n s e

Figures in US GAAP

Net Cash (Debt)

US$ Million

39

360

217

104

(212)

43

1Q02 2Q02 3Q02 4Q02 1Q03 2Q03

Figures in US GAAP

Bank Debt - US$ 825.4 million

June 30, 2003

Loans Breakdown

Debt MaturityCurrency Breakdown

• Considering Currency Swaps• Average R$ debt cost : 19.5% p.a. (74.8% of CDI)• Average US$ debt cost: 5.5% p.a.

• Loan Average Maturity: 2 years and 7 months

Long

Term

39%

Short

Term

61%

US$

42%

R$

58%

Balance SheetCurrencyExposure

Figures in US GAAP

Balance Sheet by currency

16% 12% 11% 11% 15% 14%

74%88%

79%89% 85% 87%

10%10%

Assets Liabilities Assets Liabilities Assets Liabilities

12/31/2002 03/31/2003 06/30/2003

R $ US$ (BNDES) US$

Without swap

Figures in US GAAP

Balance Sheet by currency

16%23%

11%26%

15%26%

74% 77% 79% 74%85%

74%

10%10%

Assets Liabilities Assets Liabilities Assets Liabilities

12/31/2002 03/31/2003 06/30/2003

R $ US$ (BNDES) US$

With swap