1. April 12, 2006
6th U.S. Analyst and
Investor Meeting
Maurício Botelho
President & CEO
2. 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 presentation might not occur. Our
actual results could differ substantially from those anticipated in our forward-looking
statements.
4. Worldwide Defense Procurement
Procurement by Region - 2005-2012
Total 2005 -2012 : US$ 1,5 trillion
0.0
50.0
100.0
150.0
200.0
250.0
2005 2006 2007 2008 2009 2010 2011 2012
US$billion
Australasia
Asia Pacific
Latin America
Africa
Middle East
East Europe
West Europe
North America
Source: Frost & Sullivan 2004
Average
growth of
2.6% between
2005-2012
5. US Military expenditures
Source: Congressional Research Service
* Iraq and Afghanistan operations not included 2006 US Dollars
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
Personnel 107.2 108.9 108.6 108.6 108.9 109.1 109.1
Operations & Maintenance 139.9 147.8 150.5 153.4 155.5 155.7 156.2
Acquisitions 79.7 78.0 89.7 97.3 98.9 102.4 106.9
Research & Development 70.2 69.4 65.4 63.8 68.0 63.3 53.8
Others 12.4 15.2 18.2 17.5 16.5 15.3 17.5
Total 409.5 419.3 432.5 440.6 447.8 445.7 443.5
US Department of Defense Budget * (US$ Billion)
US Department of Defense Budget Acquisitions and P&D
(US$ billion)
130
140
150
160
170
FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011
6. US ISR Market
US ISR Market Growth Trend (US$ billion)
Source : Frost & Sullivan, 2003
US$
billion
2000 2002 2004 2006 2008 2010 2012 2014
60
50
40
30
20
10
Between 2005 and 2010 ISR systems will increase participation from 22%
to 27% of total acquision and R&D spending of the U.S. DoD budget
7. Defense Market Evolving Scenario
! Restricted Budgetary scenario
! Different military threats prompt to warfare
transformation
! Changing force structure
! Knowledge based, full- spectrum operations
! Reduction of human exposure to threat situations
Information
Superiority
Armed Forces
Transformation
8. Defense Market Trends
!Information Superiority
! Shorter reaction times and shorter sensor to shooter cycles.
! Network centric approach instead of platform centric.
! Expansion of ISTAR (Intelligence, Surveillance, Target Acquisition
and Reconnaissance Systems
! Expansion of advanced communication and network based systems
!Armed Forces Transformation
! Higher mobility and flexibility
! Multi-forces integration
! Faster command cycles
12. Super Tucano
! High-performance evolution of the
proven EMB 312 Tucano
! State-of-the-art systems and
advanced avionics
! Optimized for basic, advanced
training and operational applications
in hostile environments
! Can operate from unprepared
runways, during day or night
! The only aircraft in its class capable
of employing diversified conventional
and smart weapons.
15. EMB 145 AEW&C
! The EMB 145 AEW&C (Airborne Early Warning & Control) is the most
advanced Airborne Early Warning & Control System in operation today.
! It is fitted with an advanced electronic scanning radar capable of detecting air
targets at long distances while controling the airspace
16. EMB 145 RS/AGS
! An advanced asset capable of providing real-time imagery and electronic
intelligence over ground objectives
! It features an advanced Synthetic Aperture Radar (SAR), for day or night,
and all-weather radar imagery of the ground over large areas, plus other
sophisticated sensors
17. P-99
! New generation Maritime Patrol and Anti-Submarine Warfare aircraft
! Features maritime and ground surveillance radar, Electro-Optics, Acoustics
and Electronic Surveillance sensors
18. Brazilian Air Force
Amazon Surveillance System
• R-99A - EMB 145 AEW&C - Airborne Early Warning & Control
• R-99B - EMB 145 RS - Remote Sensing and Ground Surveillance.
22. Main Benefits to the Company
• Financing of the Company’s expansion programs through the equity capital markets and the
use of convertible instruments
• The current capital structure does not allow the Company to issue new shares without
additional capital injection by the current controlling shareholders which for different
reasons is unfeasible , thus limiting the Company’s flexibility for financing its growth in
the equity capital markets
• Creation of an acquisition currency for potential expansions in the international markets
• The enhancement of the Company’s valuation multiples and increase in liquidity in both
the domestic and international markets would allow for potential expansion through
acquisitions
• The increase in liquidity and better market perception of the Company would reflect positively
on its share price in the stock exchange
• The improvement in Company’s corporate governance and transparency, in addition to
the possible listing in the “Novo Mercado”, could create additional demand for the stock
from institutional investors including the local pension funds
23. MechanismMechanism DescriptionDescription
• The maximum allowed votes per shareholder or group of shareholders acting
as one, including brokers acting on behalf of one or more ADS holders, limited
to 5% of the total shares of the Company
• The mechanism above will affect only the shareholders’ political rights (e.g.,
voting rights), not being applicable to economic rights
Number of valid votes per
shareholder or group of shareholders
acting in a concerted manner limited
to 5% of the total shares of the
Company
• Shareholders who acquire or become holders of more than 35% of the
Company’s capital would be required to launch a delisting tender offer, under
conditions established in Embraer´s bylaws, and Brazilian laws
• The tender offer is conditioned upon the Brazilian Government authorization,
subject to suspension of voting rights
• Percentage ownership must be disclosed whenever a shareholder reaches a
5% threshold and every 5% increment thereafter
• The total number of foreign votes limited to 40% (forty percent) of total valid
votes in each General Shareholders` Meeting, corresponding to 2/3 of total
votes of Brazilian Shareholders
• The CFO will monitor the Company’s ownership and the compliance of the
shareholders` protection mechanisms to disclose potential violations of the
company’s bylaws
Mandatory delisting tender offer
Voting rights limitation to foreign
shareholders
Mandatory ownership disclosure
Monitoring Committee to follow
changes in ownership
Shareholders Protection Mechanisms
24. New Capital Structure
738.611.820 Common (Voting) Shares
* Includes Bozano Company and Bozano Holdings
** Includes Dassault Aviation, EADS, Safran and Thales
BOZANO GROUP* 11.1%
PREVI (PENSION FUND)
16.4%
SISTEL (PENSION FUND)
7.4%
BNDESPAR 6.3%
BRAZILIAN
GOVERNMENT 0.3%
OTHERS BOVESPA
11.7%
OTHERS NYSE 39.3%
EUROPEAN GROUP**
7.5%
