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Brazil’s Embraer Delivers 108 Jets and Earns US$ 195 Million Net Income

Emb 190 from Brazil's Embraer Brazilian aircraft maker Embraer, the world's leading manufacturer of commercial jets up to 120 seats and the world's fourth largest civilian airplane maker, announced this Friday, November 9, that it had net sales of US$ 1,428.5 million in the third quarter of 2007 (3Q07), and net income of US$ 194.9 million, equivalent to diluted earnings per ADS (American Depository Share) of US$ 1.0507.

Embraer delivered 47 jets during the third quarter, achieving its programmed aircraft production for the period by delivering 38 jets to the commercial aviation segment and nine Legacy 600 jets to the executive aviation segment.

During 3Q07, the company also delivered one turbo-prop EMB 120 Brasí­lia to the Defense and Government segment for the government of Angola. In total, Embraer delivered 108 jets in the first nine months of the year.

In the beginning of 3Q07, Embraer started an internal plan to improve its entrepreneurial excellence and optimize its processes called "Programa de Excelência Empresarial Embraer" (P3E).

During 3Q07 the company achieved the production of 13 jets per month of the EMBRAER 170/190 family, and keeps moving towards its goal of producing 14 jets of that family per month by the end of the year. Due to that production capacity, the company maintains its delivery forecast of 165 to 170 jets in 2007.

During 3Q07, Embraer executed a contract for the sale of 20 E-Jets to Air France / KLM group. Executive jet sales maintained the sales performance observed since the beginning of the year for all aircraft offered by the company.

The Phenom 100 and Phenom 300 have achieved great market acceptance, surpassing 500 firm orders, as of September 30, 2007. The first experimental Phenom 100 aircraft maiden flight took place during the third quarter and reached an important step in the development process of the program.

At the end of 3Q07, Embraer's firm order backlog had reached a record high of US$ 17.2 billion. A total of 47 jets were delivered during 3Q07 representing an increase of 11 and 17 aircraft compared to deliveries in 2Q07 and 3Q06, respectively.

During the quarter ended September 30, 2007, the company delivered 38 jets to the Commercial Aviation segment, nine Legacy 600 jets to the Executive Aviation segment, and one EMB 120 turboprop to the Defense and Government segment, to the Angolan Government.

Net sales increased 28.7% and 62.9%, from US$ 1,110.0 million and US$ 876.9 million in 2Q07 and 3Q06 respectively to US$ 1,428.5 million in 3Q07, mainly due to the higher number of deliveries.

During 3Q07, operating expenses totaled US$ 80.5 million, compared to US$ 177.4 million for the same period in 2006.

Sales expenses totaled US$ 86.7 million in 3Q07, representing an increase of 5.9% compared to US$ 81.9 million in 3Q06, mainly due to an increase in the sales efforts for the products offered by the company in the Executive Aviation segment.

General and administrative expenses totaled US$ 59.9 million in 3Q07, representing a 7.6% increase compared to US$ 55.7 million in 3Q06 mainly due to an 11.7% appreciation of the Real / U.S. dollar exchange rate in the comparison between periods.

Due to the progress in the development of the Phenom family, R&D expenses totaled US$ 54.3 million in 3Q07, representing an increase of 36.5%, compared to the same period in 2006.

In addition to the investments in R&D, Embraer also focuses on the development of new technologies and materials for future implementation of its projects. Those investments related to new programs and to the competitiveness of the company, totaled US$ 7.1 million in 3Q07.

Other operating income net totaled US$ 141.5 million in 3Q07 compared to US$ 13.8 million in 3Q06, due to a favorable decision to the company in regard to a tax dispute over the calculation basis of the Brazilian COFINS tax, resulting in the reversal of a provision in the amount of US$ 156.6 million in 3Q07.

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