Indicate by check mark whether the registrant files or will file annual reports under cover of Form
20-F
or Form
40-F:
With respect to the unaudited financial information of Embraer S.A. for the three-month and nine-month periods
ended September 30, 2017, PricewaterhouseCoopers Auditores Independentes reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their separate report dated
November 17, 2017, appearing below, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light
of the limited nature of the review procedures applied. PricewaterhouseCoopers Auditores Independentes is not subject to the liability provisions of Section 11 of the Securities Act of 1933 for their report on the unaudited financial
information because that report is not a report or a part of the registration statement prepared or certified by PricewaterhouseCoopers Auditores Independentes within the meaning of Sections 7 and 11 of the Act.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
Embraer S.A. (Embraer or the Company) is a publicly-held company
incorporated under the laws of the Federative Republic of Brazil (Brazil) with headquarters in São José dos Campos, State of São Paulo. The corporate purpose of the Company is:
|
(i)
|
To design, build and market aircraft and aerospace materials and related accessories, components and equipment, according to the highest standards of technology and quality;
|
|
(ii)
|
To perform and carry out technical activities related to the manufacturing and servicing of aerospace materials;
|
|
(iii)
|
To contribute to the training of technical personnel as necessary for the aerospace industry;
|
|
(iv)
|
To engage in and provide services for other technological, manufacturing and business activities in connection with the aerospace industry;
|
|
(v)
|
To design, build and trade in equipment, materials, systems, software, accessories and components for the defense, security and power industries, as well as perform and carry out technical activities related to the
manufacturing and servicing thereof, in accordance with the highest technological and quality standards; and
|
|
(vi)
|
To conduct other technological, manufacturing, trading and services activities related to the defense, security and power industries.
|
The Companys shares are listed on the enhanced corporate governance segment of the Stock Exchange in Brazil (BM&FBOVESPA), known as the
New Market (Novo Mercado). Embraer also has American Depositary Shares (evidenced by American Depositary ReceiptsADRs) which are registered with the Securities and Exchange Commission (SEC) and are listed on the New
York Stock Exchange (NYSE). The Company has no controlling group and its capital is comprised entirely of common shares.
2.
|
Presentation of the Financial Statements and Accounting Practices
|
2.1
|
Presentation and preparation of the financial statements
|
These condensed consolidated interim financial
statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the Groups most recent annual consolidated financial statements as of and for the year ended December 31, 2016
(the most recent annual consolidated financial statements). They do not include all the information required for a complete set of financial statements prepared in conformity with International Financial Reporting Standards (IFRS).
However, selected explanatory notes are included to explain events and transactions that are significant in accordance with managements judgement to an understanding of the changes in the Companys financial position and performance since
the most recent annual consolidated financial statements as of and for the year ended December 31, 2016.
2.1.1
|
Basis of preparation
|
These condensed consolidated interim financial statements have been prepared under
the historical cost convention as modified by
available-for-sale
financial assets, other assets and financial liabilities (including derivative instruments).
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management of the Company to exercise its
judgment in the process of applying the Companys accounting policies. These condensed consolidated interim financial statements include accounting estimates for certain assets, liabilities and other transactions.
10
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
The areas which involve a higher degree of judgment or complexity, or assumptions and
estimates significant to the condensed consolidated interim financial statements are consistent with those described in the consolidated financial statements as at and for the year ended December 31, 2016 (not included herein).
The actual results may differ from these estimates and assumptions.
The results of operations for the three and nine-month period ended September 30, 2017 are not necessarily indicative of the results to be expected for
the fiscal year to be ended December 31, 2017.
The condensed consolidated interim financial statements include the balances of the
September 30, 2017 financial statements of the Company and all subsidiaries directly or indirectly controlled by Embraer, special purpose entities (SPEs) controlled by the Company, exclusive investment funds (FIE) and participation investment
funds (FIP). Jointly controlled entities (joint ventures) are not consolidated and are presented as Investments and accounted for by the equity method. The Company recognizes assets, liabilities, revenues and expenses accounting to the entity share
in the assets, liabilities, revenues and expenses of the joint operation.
All accounts and balances arising from transactions between consolidated
entities are eliminated.
2.2
|
Summary of significant accounting policies
|
There were no significant changes in the Companys
accounting policies from those disclosed in the financial statements of December 31, 2016.
3.
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Cash and banks
|
|
|
396.9
|
|
|
|
389.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
396.9
|
|
|
|
389.0
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
|
|
|
|
|
|
|
Private securities (i)
|
|
|
201.5
|
|
|
|
420.8
|
|
Fixed deposits (ii)
|
|
|
174.1
|
|
|
|
431.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375.6
|
|
|
|
852.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
772.5
|
|
|
|
1,241.5
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Investment in Bank Deposit Certificates CDBs and Repurchase AgreementsREPO issued by Brazilian financial institutions, with original maturities of 90 days or less, for which there are no penalties on
remuneration if the Company decides to terminate the transaction before the original maturity date.
|
(ii)
|
Fixed term deposits in US Dollars with original maturities of 90 days or less.
|
11
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
|
|
Assets measured at
fair value through
profit or loss
|
|
|
Held to
maturity
|
|
|
Available
for sale
|
|
|
Total
|
|
|
Assets measured at
fair value through
profit or loss
|
|
|
Held to
maturity
|
|
|
Available
for sale
|
|
|
Total
|
|
Financial Instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private securities (i)
|
|
|
644.7
|
|
|
|
|
|
|
|
|
|
|
|
644.7
|
|
|
|
712.6
|
|
|
|
|
|
|
|
|
|
|
|
712.6
|
|
Structured Notes (ii)
|
|
|
|
|
|
|
862.0
|
|
|
|
|
|
|
|
862.0
|
|
|
|
|
|
|
|
103.4
|
|
|
|
|
|
|
|
103.4
|
|
Fixed Deposits (iii)
|
|
|
818.4
|
|
|
|
439.6
|
|
|
|
|
|
|
|
1,258.0
|
|
|
|
354.5
|
|
|
|
620.9
|
|
|
|
|
|
|
|
975.4
|
|
Other (iv)
|
|
|
0.2
|
|
|
|
8.4
|
|
|
|
38.3
|
|
|
|
46.9
|
|
|
|
0.2
|
|
|
|
117.1
|
|
|
|
35.0
|
|
|
|
152.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,463.3
|
|
|
|
1,310.0
|
|
|
|
38.3
|
|
|
|
2,811.6
|
|
|
|
1,067.3
|
|
|
|
841.4
|
|
|
|
35.0
|
|
|
|
1,943.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
1,463.3
|
|
|
|
919.3
|
|
|
|
38.3
|
|
|
|
2,420.9
|
|
|
|
1,067.3
|
|
|
|
673.2
|
|
|
|
35.0
|
|
|
|
1,775.5
|
|
Non-current
|
|
|
|
|
|
|
390.7
|
|
|
|
|
|
|
|
390.7
|
|
|
|
|
|
|
|
168.2
|
|
|
|
|
|
|
|
168.2
|
|
(i)
|
Private securities includes CDBs ,Repurchase Agreements REPO and other deposits without early redemption issued by Brazilian financial institutions, with original maturities higher than 90 days, for which there
are penalties on remuneration if the Company decides to terminate the transaction before the original maturity date.
|
(ii)
|
Structured Notes issued by financial institutions in accordance with the Financial Management Policy. Includes a total of US$ 220.6 starting in 2004 and maturing in up to 14 years for application in Credit Default Swap
CDS.
|
(iii)
|
Fixed deposits in US Dollars, including Certificate Deposits and Time Deposits, with original maturities higher than 90 days.
|
(iv)
|
ClaimsThe Available for sale category refers to the credit right received in the bankruptcy filing of Republic Airways (Note 14. Financial Guarantees and Residual Value Guarantees).
|
The weighted average interest rates at September 30, 2017 for cash equivalents and financial investments in
reais
and in U.S. dollars were 11.22%
p.a. and 1.70% p.a. (14.21% p.a. and 1.87% p.a. at December 31, 2016), respectively.
5.
|
Derivative financial instruments
|
Derivative financial instruments are contracted to protect the
Companys operations from exchange and interest rate fluctuations and are not used for speculation.
As of September 30, 2017, the Company had
derivative financial instruments such as swap and option to purchase interest rate, currency put and call options and
Non-Deliverable
Forwards (NDF).
The Company enters into swaps contracts to exchange a floating rate loan to a fixed rate loan or to exchange cash flows in U.S. dollars to cash flows in
reais
, or vice versa and to exchange Euros for U.S. dollars or vice versa according to the need to protect the transactions according to the valuation of the Company. The fair value of these instruments is measured at the future flow,
determined by applying the contractual rates up to maturity and discounted to present value on the date of the consolidated financial statements at the current market rates.
Cash flow hedges are contracted to protect highly probable cash flows denominated in
reais
related to salaries and health plan expenses against
exchange rate variations. The financial instrument normally used by the Company for this type of transaction is the
zero-cost
collar, which consists of buying put options and selling call options contracted
with the same counterparty and with zero net premium. The fair value of these instruments is determined in accordance with the observable market pricing model (through market information providers) and widely used by market players to measure
similar instruments. When the U.S. dollar closing rate is between the put and call exercise values, the fair value reflects the extrinsic value of the option, i.e., the value that is directly connected to the time remaining to maturity. The
projected cash flows will affect the income statement according to the accrual period.
Non-Deliverable
Forwards
are contracted to protect the Company against the risk of fluctuations in exchange rates. The fair value is determined in accordance with the observable market pricing model.
As of September 30, 2017, the Company did not have any derivative contracts subject to margin calls.
12
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purpose
|
|
Risk
|
|
|
Counterparty
|
|
|
Settlement
date
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Recourse and non-recourse debt (i)
|
|
|
Interest rate
|
|
|
|
Natixis
|
|
|
|
2022
|
|
|
|
1.4
|
|
|
|
1.9
|
|
Export financing (ii)
|
|
|
Interest rate
|
|
|
|
Votorantim
|
|
|
|
2017
|
|
|
|
0.3
|
|
|
|
|
|
Acquisition of property, plant and equipment (iii)
|
|
|
Interest rate
|
|
|
|
Compass Bank
|
|
|
|
2024
|
|
|
|
(0.3
|
)
|
|
|
(0.3
|
)
|
Brazilian Real expenses (iv)
|
|
|
Exchange rate
|
|
|
|
Citibank
|
|
|
|
2018
|
|
|
|
4.1
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
BofaMLynch
|
|
|
|
2018
|
|
|
|
3.2
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
Santander
|
|
|
|
2018
|
|
|
|
4.4
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
BNP
|
|
|
|
2018
|
|
|
|
3.1
|
|
|
|
|
|
Export financing (v)
|
|
|
Interest rate
|
|
|
|
Bradesco
|
|
|
|
2018
|
|
|
|
4.3
|
|
|
|
3.5
|
|
|
|
|
|
|
|
|
Votorantim
|
|
|
|
2018
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
BofaMLynch
|
|
|
|
2017
|
|
|
|
5.5
|
|
|
|
4.9
|
|
|
|
|
|
|
|
|
Santander
|
|
|
|
2018
|
|
|
|
5.7
|
|
|
|
3.9
|
|
Project Development (v)
|
|
|
Interest rate
|
|
|
|
Itau BBA
|
|
|
|
2023
|
|
|
|
0.4
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
Votorantim
|
|
|
|
2022
|
|
|
|
0.6
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
BofaMLynch
|
|
|
|
2023
|
|
|
|
0.8
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
Santander
|
|
|
|
2022
|
|
|
|
3.2
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
HSBC
|
|
|
|
2022
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
Société Générale
|
|
|
|
2022
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Safra
|
|
|
|
2022
|
|
|
|
0.3
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
Morgan Stanley S/A
|
|
|
|
2023
|
|
|
|
3.4
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
Bradesco
|
|
|
|
2022
|
|
|
|
0.8
|
|
|
|
0.6
|
|
Investments (vi)
|
|
|
Interest rate
|
|
|
|
Bradesco
|
|
|
|
2018
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Santader
|
|
|
|
2018
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
BNP
|
|
|
|
2018
|
|
|
|
(0.1
|
)
|
|
|
|
|
Export financing (vii)
|
|
|
Exchange rate and interest rate
|
|
|
|
Santander
|
|
|
|
2018
|
|
|
|
(0.2
|
)
|
|
|
(0.3
|
)
|
Export financing (viii)
|
|
|
Exchange rate
|
|
|
|
Santander Totta
|
|
|
|
2017
|
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
BNP
|
|
|
|
2017
|
|
|
|
0.4
|
|
|
|
|
|
Export financing (ix)
|
|
|
Interest rate
|
|
|
|
Itau BBA
|
|
|
|
2017
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41.0
|
|
|
|
23.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Derivative financial instruments (swaps), which converted the amount of R$ 44.2 million, equivalent to US$ 13.9 for recourse and
non-recourse
debt, from an average fixed
interest rate of 8.41% p.a., into a floating rate equivalent to LIBOR 6 month + 1.14% p.a.;
|
(ii)
|
Derivative financial instruments (swaps) that converted an export modality debt of R$ 112.0 million, equivalent to US$ 35.4, from an average fixed interest rate of 8.00% p.a. to an average rate weighted floating
rate equivalent to 68.35% p.a. of the CDI (Interbank Deposit Certificate);
|
(iii)
|
Derivative financial instruments (swaps), relating to a transaction of R$ 12.0 million, equivalent to US$ 3.8 which converted funding transactions subject to LIBOR 1 month + 2.44% p.a. floating interest rate to a
fixed interest rate of 5.23% p.a.;
|
(iv)
|
Zero-cost collar derivative financial instruments, designated as cash flow hedges, of US$ 72.3 equivalent to R$ 245.8 million, through a purchase of a put option with an exercise price of R$ 3.40 and sales of CALL
with an average weighted exercise price of R$ 3.7591 for the year 2017 and the amount of US$ 249.9 equivalent to R$ 829.9 million, through purchase PUT with an exercise price of R$ 3.32 and sales of CALL with exercise price of R$ 3.7520 for
2018;
|
(v)
|
Derivative financial instruments (interest swaps), designated as hedge accounting of interest, of R$ 2,058.4 million, equivalent to US$ 649.8, of the Export and Project Development debt lines, subject to a weighted
average fixed interest rate of 6.21% p.a. to a weighted average floating rate equivalent to 43.81% of the CDI (Interbank Deposit Certificate).
|
(vi)
|
Derivative financial instruments (interest swaps) designated as hedge accounting of interest, which converted the amount of R$ 287.9 million, equivalent to US$ 90.9, of investments with a fixed weighted average
interest rate of 10.6% p.a. for a floating weighted average rate equivalent to 101.87% of the CDI (Interbank Deposit Certificate).
|
(vii)
|
Derivative financial instruments (swaps), in the amount of US$ 2.9, equivalent to R$ 9.4 million related to the exchange of currency from the U.S. dollar to the
real
and a fixed rate of 4.65% p.a. to a
floating rate equivalent to 129.50% of the CDI (Interbank Deposit Certificate).
|
(viii)
|
Derivative financial instruments
(Non-Deliverable
Forwards), amounting to US$ 38.3 equivalent to R$141.5 million, relating to U.S. dollar to Euro and EURO to U.S dollar
currency exchanges.
|
13
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
At September 30, 2017, the fair value of derivative financial instruments was
presented in the Statement of Financial Position as follows:
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Assets
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
41.8
|
|
|
|
21.0
|
|
Non-current
|
|
|
8.6
|
|
|
|
11.1
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
(9.3
|
)
|
|
|
(8.4
|
)
|
Non-current
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
41.0
|
|
|
|
23.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Raw materials
|
|
|
805.0
|
|
|
|
952.9
|
|
Work-in-process
|
|
|
828.4
|
|
|
|
713.9
|
|
Spare parts
|
|
|
404.7
|
|
|
|
391.1
|
|
Finished goods (i)
|
|
|
171.9
|
|
|
|
156.0
|
|
Used aircraft available for sale (ii)
|
|
|
121.8
|
|
|
|
207.7
|
|
Inventory in transit
|
|
|
81.0
|
|
|
|
67.9
|
|
Held by third parties
|
|
|
118.5
|
|
|
|
77.5
|
|
Consumption materials
|
|
|
47.7
|
|
|
|
46.9
|
|
Advances to suppliers
|
|
|
31.4
|
|
|
|
40.5
|
|
Loss on adjustment to realizable value (iii)
|
|
|
(15.4
|
)
|
|
|
(19.9
|
)
|
Loss due to obsolescence (iv)
|
|
|
(151.7
|
)
|
|
|
(138.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
2,443.3
|
|
|
|
2,496.4
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The following aircraft were held in the finished products inventory:
|
|
|
|
At September 30, 2017: one EMBRAER 175, one EMBRAER 195, three Phenom 100, three Phenom 300, three Legacy 450, two Legacy 500, one Super Tucano and four Ipanema; and
|
|
|
|
At December 31, 2016: one EMBRAER 195, two Legacy 450, two Legacy 500, four Phenom 100, three Phenom 300, one Lineage, one Super Tucano and two Ipanema.
|
Of the total aircraft inventories at September 30, 2017, one EMBRAER 175, one EMBRAER 195, one Legacy 450, one Phenom 100 and two Ipanemas,
had been delivered by Novemberr 11, 2017.
(ii)
|
The following used aircraft were held in inventory as available for sale:
|
|
|
|
At September 30, 2017: four EMBRAER 140, one Legacy 500, two Lineage, one Phenom 100, one Boeing BBJ 737; and
|
|
|
|
At December 31, 2016: nine EMBRAER 140, one EMBRAER 145, two Legacy 500, one Legacy 450, four Phenom 300, two Lineage, one Ipanema, one Gulfstream G350, one Boeing BBJ 737, two Cessna 560XL.
|
(iii)
|
For aircraft in inventory, an analysis is made, if the book value is greater than the market value, the difference is recognized as a market value adjustment to the aircraft.
|
(iv)
|
A provision was recorded for items without activity for over two years and with no planned use in the production program, as well as to cover expected losses from excess inventories or obsolete work in process, except
for inventories of spare parts, for which the provision is based on technical obsolescence of items without activity for over two years.
|
14
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
(i)
|
Wholly owned subsidiaries and special purpose entities
|
Subsidiaries and structured entities that the
Company directly or indirectly has control, as of September 30, 2017, which are disclosed in the consolidated financial statements as of and for the year ended December 31, 2016, are consolidated into the Embraer group.
There are no contractual or legal restrictions on the Companys access to assets or settlement of liabilities of the wholly owned subsidiaries of the
group.
There are inherent risks to the operations of these entities and the most significant are described below:
|
|
|
Economic Risks: potential losses from fluctuations in market conditions (price of products, exchange rate and interest);
|
|
|
|
Operational risk: potential losses resulting from the emergence of new technologies or failure of current processes;
|
|
|
|
Credit risk: potential losses that might occur if a third party (customer) becomes unable to meet its obligations; and
|
|
|
|
Liquidity risk: financial inability to meet financial obligations.
|
(ii)
|
Subsidiaries with participation of
non-controlling
shareholders
|
Non-controlling
shareholders have interests in the group entities listed below, however, based on contractual
agreements and analysis of the applicable accounting standards, the Company has control and therefore has the right to consolidate the following entities:
|
|
|
|
|
|
|
|
|
|
|
Entity
|
|
Country
|
|
Participation
Embraer Group
|
|
|
Participation
noncontrolling
|
|
OGMA - Indústria Aeronática de Portugal S.A.
|
|
Portugal
|
|
|
65.0
|
%
|
|
|
35.0
|
%
|
Harbin Embraer Aircraft Industry Company Ltd.
|
|
China
|
|
|
51.0
|
%
|
|
|
49.0
|
%
|
Embraer CAE Training Services Ltd.
|
|
United Kingdom
|
|
|
51.0
|
%
|
|
|
49.0
|
%
|
Visiona Tecnologia Espacial S.A.
|
|
Brazil
|
|
|
51.0
|
%
|
|
|
49.0
|
%
|
Embraer CAE Training Services
|
|
United States of America
|
|
|
51.0
|
%
|
|
|
49.0
|
%
|
EZ Air Interior Limited
|
|
Ireland
|
|
|
50.0
|
%
|
|
|
50.0
|
%
|
Bradar Aerolevantamento Ltda
|
|
Brazil
|
|
|
25.0
|
%
|
|
|
75.0
|
%
|
Although the Embraer group holds 51.0% of the entities Harbin Embraer Aircraft Industry Company Ltd., Embraer CAE Training
Services Ltd., Visiona Tecnologia Espacial S.A., and Embraer CAE Training Services, the powers described in the contractual agreements show that the Board of Directors is mainly comprised of Embraer representatives and the Embraer Group directs the
principal operating activities of the entity.
An agreement with Bradar Aerolevantamento Ltda. assigns to Embraer an irrevocable option to purchase all
the shares of the
non-controlling
interests. This option is exercisable at any time and can be transferred to any person, which determines the control of Bradar Aerolevantamento by the Embraer group, despite
holding only 25% of its capital.
15
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
The financial position of the group entities that have
non-controlling
interests is summarized below:
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Cash and cash equivalents
|
|
|
44.8
|
|
|
|
69.2
|
|
Current assets
|
|
|
243.4
|
|
|
|
208.7
|
|
Non current assets
|
|
|
140.4
|
|
|
|
115.6
|
|
Current liabilities
|
|
|
101.0
|
|
|
|
90.7
|
|
Non current liabilities
|
|
|
11.7
|
|
|
|
8.5
|
|
Noncontrolling interest
|
|
|
111.8
|
|
|
|
92.4
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
09.30.2016
|
|
Revenue
|
|
|
182.8
|
|
|
|
253.4
|
|
Net income for the year
|
|
|
30.4
|
|
|
|
6.8
|
|
Group subsidiaries with
non-controlling
interests are subject to the same risks as the
wholly owned subsidiaries.
(iii)
|
Jointly controlled entity
|
EZ Air Interior Limited is a joint operation between Embraer group and Zodiac
Aerospace and shares with the other members the joint management of the relevant activities of the entities.
The Company accounts for the assets,
liabilities, revenues and expenses relating to its involvement in the joint operations in accordance with the rights and obligations assigned to Embraer.
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Cash and cash equivalents
|
|
|
4.0
|
|
|
|
1.4
|
|
Current assets
|
|
|
31.0
|
|
|
|
27.7
|
|
Non current assets
|
|
|
6.4
|
|
|
|
5.4
|
|
Current liabilities
|
|
|
52.1
|
|
|
|
24.6
|
|
Non current liabilities
|
|
|
4.4
|
|
|
|
25.4
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
09.30.2016
|
|
Revenue
|
|
|
33.8
|
|
|
|
40.6
|
|
Net loss for the year
|
|
|
(2.2
|
)
|
|
|
(3.7
|
)
|
8.1
|
Related party transactions
|
The table below summarizes balances and transactions with related parties
outside the group and refers mainly to:
|
|
|
assets: (i) accounts receivable for spare parts, aircraft sales and product development, under conditions agreed between the parties, considering the volumes, risks involved and corporate policies (ii) mutual
loans to subsidiaries abroad with interest rates compatible with those used by the Company on acquiring resources in foreign currencies (iii) balances of financial investments; and (iv) bank deposits;
|
|
|
|
liabilities: (i) purchase of aircraft components and spare parts, under conditions agreed between the parties, considering the volumes, risks involved and corporate policies (ii) advances received on account
of sales contracts, according to contractual agreements; (iii) commission for sale of aircraft and spare parts (iv) financing for research and product development at market rates for this kind of financing (v) loans and financing; and
(vi) mutual loan contracts with the subsidiaries abroad with interest rates equivalent to those used by the Company to acquire similar funding (vii) export financing; and
|
16
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
amounts in profit or loss: (i) purchases and sales of aircraft, components and spare parts and development of products for the defense and security market; (ii) financial income from financial investments and
mutual loans; (iii) supplementary pension plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
|
Current
|
|
|
Non-current
|
|
|
Financial
Results
|
|
|
Operating
Results
|
|
|
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
|
|
Banco do Brasil S.A.
|
|
|
128.5
|
|
|
|
11.3
|
|
|
|
330.4
|
|
|
|
425.1
|
|
|
|
(0.3
|
)
|
|
|
|
|
Banco Nacional de Desenvolvimento Econômico e Social BNDES
|
|
|
|
|
|
|
99.4
|
|
|
|
|
|
|
|
249.3
|
|
|
|
(11.7
|
)
|
|
|
|
|
Caixa Econômica Federal
|
|
|
93.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.6
|
|
|
|
|
|
Brazilian Air Force
|
|
|
289.1
|
|
|
|
43.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(49.1
|
)
|
Marinha do Brasil
|
|
|
35.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.0
|
)
|
Embraer Prev Sociedade de Previdência Complementar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17.0
|
)
|
Empresa Portuguesa de Defesa EMPORDEF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.9
|
|
|
|
|
|
|
|
|
|
Brazilian Army
|
|
|
|
|
|
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.9
|
|
Financiadora de Estudo e Projetos FINEP
|
|
|
|
|
|
|
22.5
|
|
|
|
|
|
|
|
230.9
|
|
|
|
(2.1
|
)
|
|
|
|
|
Telecomunicações Brasileiras S.A. Telebrás
|
|
|
|
|
|
|
3.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
546.7
|
|
|
|
185.0
|
|
|
|
330.4
|
|
|
|
912.2
|
|
|
|
(5.5
|
)
|
|
|
(34.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2016
|
|
|
|
Current
|
|
|
Non-current
|
|
|
Financial
Results
|
|
|
Operating
Results
|
|
|
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
|
|
Banco do Brasil S.A.
|
|
|
64.3
|
|
|
|
0.3
|
|
|
|
332.2
|
|
|
|
413.3
|
|
|
|
(2.8
|
)
|
|
|
|
|
Banco Nacional de Desenvolvimento Econômico e Social BNDES
|
|
|
|
|
|
|
161.4
|
|
|
|
|
|
|
|
311.5
|
|
|
|
(18.6
|
)
|
|
|
|
|
Brazilian Air Force
|
|
|
263.5
|
|
|
|
84.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.6
|
|
Marinha do Brasil
|
|
|
34.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.7
|
)
|
Caixa Econômica Federal
|
|
|
153.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.5
|
|
|
|
|
|
Embraer Prev Sociedade de Previdência Complementar
|
|
|
|
|
|
|
0.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(23.2
|
)
|
Empresa Portuguesa de Defesa EMPORDEF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.5
|
|
|
|
|
|
|
|
|
|
Brazilian Army
|
|
|
|
|
|
|
16.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.0
|
|
Financiadora de Estudo e Projetos FINEP
|
|
|
|
|
|
|
16.8
|
|
|
|
|
|
|
|
64.7
|
|
|
|
(2.9
|
)
|
|
|
|
|
Telecomunicações Brasileiras S.A. Telebrás
|
|
|
|
|
|
|
148.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
515.6
|
|
|
|
428.8
|
|
|
|
332.2
|
|
|
|
795.0
|
|
|
|
4.2
|
|
|
|
2.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2016
|
|
|
|
Financial Results
|
|
|
Operating Results
|
|
Banco do Brasil S.A.
|
|
|
(3.2
|
)
|
|
|
|
|
Banco Nacional de Desenvolvimento Econômico e Social BNDES
|
|
|
(14.4
|
)
|
|
|
|
|
Brazilian Air Force
|
|
|
|
|
|
|
(8.1
|
)
|
Marinha do Brasil
|
|
|
|
|
|
|
(2.7
|
)
|
Caixa Econômica Federal
|
|
|
22.5
|
|
|
|
|
|
Embraer Prev Sociedade de Previdência Complementar
|
|
|
|
|
|
|
(17.4
|
)
|
Brazilian Army
|
|
|
|
|
|
|
2.3
|
|
Financiadora de Estudo e Projetos FINEP
|
|
|
(2.0
|
)
|
|
|
|
|
Telecomunicações Brasileiras S.A. Telebrás
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
2.9
|
|
|
|
(26.6
|
)
|
|
|
|
|
|
|
|
|
|
17
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
8.2
|
Brazilian Federal Government relationship
|
Through its direct and indirect interests and ownership of
common shares denominated golden share, the Brazilian Federal Government is a significant shareholder. At September 30, 2017, in addition to its golden share, the Brazilian Federal Government held an indirect stake of
5.37% in the Companys capital through BNDESPAR, a wholly-owned subsidiary of the Banco Nacional do Desenvolvimento Econômico e Social
- BNDES (the Brazilian Development Bank, or BNDES), which, in turn, is controlled by
the Brazilian Federal Government. Consequently, transactions between Embraer and the Brazilian Federal Government or its agencies meet the definition of related party transactions.
The Brazilian government plays a key role in the Companys business activities, including as:
|
|
|
a major customer for defense products (through the Brazilian Air Force, Brazilian Army and Marinha do Brasil);
|
|
|
|
a source of research and development financing through technology development institutions such as FINEP and the BNDES;
|
|
|
|
an export credit agency (through the BNDES); and
|
|
|
|
a source of short-term and long-term financing and a provider of asset management and commercial banking services (through Banco do Brasil).
|
|
|
|
Caixa Econômica Federal, an entity controlled by the Federal Government, which in turn has the Golden Share and also has indirect participation by BNDESPAR.
|
|
|
|
Through Visiona Tecnologia Espacial S.A., which is associated by Telecomunicações Brasileiras S.A.Telebrás.
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
09.30.2016
|
|
Short-term benefits (i)
|
|
|
8.7
|
|
|
|
7.8
|
|
Share based payment
|
|
|
3.6
|
|
|
|
(2.7
|
)
|
Labor contract termination
|
|
|
0.5
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.8
|
|
|
|
5.4
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Includes wages, salaries, profit sharing, bonuses and indemnities.
|
Key Management includes members of the
statutory Board of Directors and Executive Directors.
9.
|
Property, Plant and Equipment
|
The movement of significant additions, disposals, impairment or
reclassifications of property, plant and equipment for the nine-month period ended September 30, 2017 are described below:
|
|
|
|
|
|
|
|
|
|
|
Weighted average
depreciation rate (%)
|
|
Class of assets
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Buildings and improvements
|
|
|
4.2
|
%
|
|
|
4.6
|
%
|
Installations
|
|
|
5.9
|
%
|
|
|
7.6
|
%
|
Machinery and equipment
|
|
|
13.4
|
%
|
|
|
13.5
|
%
|
Furniture and fixtures
|
|
|
11.8
|
%
|
|
|
12.7
|
%
|
Vehicles
|
|
|
27.7
|
%
|
|
|
23.4
|
%
|
Aircraft
|
|
|
16.6
|
%
|
|
|
15.2
|
%
|
Computers and peripherals
|
|
|
33.7
|
%
|
|
|
30.3
|
%
|
Tooling
|
|
|
16.6
|
%
|
|
|
14.9
|
%
|
Other assets
|
|
|
1.2
|
%
|
|
|
0.2
|
%
|
Exchange pool program assets
|
|
|
3.9
|
%
|
|
|
5.0
|
%
|
18
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
Buildings and
improvements
|
|
|
Installations
|
|
|
Machinery
and
equipment
|
|
|
Furniture
and
fixtures
|
|
|
Vehicles
|
|
|
Aircraft (i)
|
|
|
Computers
and
peripherals
|
|
|
Tooling
|
|
|
Other
assets
|
|
|
Exchange
pool
program
assets
|
|
|
Construction
in progress
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
11.0
|
|
|
|
657.1
|
|
|
|
156.1
|
|
|
|
909.8
|
|
|
|
74.1
|
|
|
|
16.8
|
|
|
|
316.7
|
|
|
|
179.3
|
|
|
|
587.8
|
|
|
|
29.4
|
|
|
|
669.7
|
|
|
|
116.4
|
|
|
|
3,724.2
|
|
Additions
|
|
|
|
|
|
|
3.3
|
|
|
|
|
|
|
|
23.7
|
|
|
|
2.0
|
|
|
|
0.2
|
|
|
|
14.4
|
|
|
|
5.1
|
|
|
|
20.6
|
|
|
|
7.5
|
|
|
|
35.8
|
|
|
|
48.6
|
|
|
|
161.2
|
|
Disposals
|
|
|
|
|
|
|
(7.9
|
)
|
|
|
|
|
|
|
(7.9
|
)
|
|
|
(1.0
|
)
|
|
|
(0.7
|
)
|
|
|
(8.1
|
)
|
|
|
(0.5
|
)
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
(29.5
|
)
|
|
|
|
|
|
|
(56.6
|
)
|
Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.4
|
)
|
Reclassifications*
|
|
|
|
|
|
|
51.3
|
|
|
|
4.8
|
|
|
|
21.3
|
|
|
|
(13
|
)
|
|
|
0.4
|
|
|
|
(62.6
|
)
|
|
|
(0.3
|
)
|
|
|
3.7
|
|
|
|
(12.1
|
)
|
|
|
(18.8
|
)
|
|
|
(67.8
|
)
|
|
|
(81.4
|
)
|
Interest on capitalized assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.4
|
)
|
|
|
(2.4
|
)
|
Translation adjustments
|
|
|
|
|
|
|
2.8
|
|
|
|
0.4
|
|
|
|
10.7
|
|
|
|
0.5
|
|
|
|
0.4
|
|
|
|
|
|
|
|
1.1
|
|
|
|
0.2
|
|
|
|
|
|
|
|
10.9
|
|
|
|
0.7
|
|
|
|
27.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
11.0
|
|
|
|
706.6
|
|
|
|
161.3
|
|
|
|
957.6
|
|
|
|
74.3
|
|
|
|
17.1
|
|
|
|
250.0
|
|
|
|
184.7
|
|
|
|
611.3
|
|
|
|
24.8
|
|
|
|
668.1
|
|
|
|
95.5
|
|
|
|
3,762.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
|
|
|
|
(191.3
|
)
|
|
|
(101.4
|
)
|
|
|
(445.1
|
)
|
|
|
(40.0
|
)
|
|
|
(12.7
|
)
|
|
|
(153.9
|
)
|
|
|
(136.2
|
)
|
|
|
(278.9
|
)
|
|
|
(9.4
|
)
|
|
|
(201.1
|
)
|
|
|
|
|
|
|
(1,570.0
|
)
|
Depreciation
|
|
|
|
|
|
|
(14.8
|
)
|
|
|
(2.4
|
)
|
|
|
(46.6
|
)
|
|
|
(3.0
|
)
|
|
|
(0.9
|
)
|
|
|
(20.2
|
)
|
|
|
(10.8
|
)
|
|
|
(38.4
|
)
|
|
|
(0.2
|
)
|
|
|
(13.6
|
)
|
|
|
|
|
|
|
(150.9
|
)
|
Disposals
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
6.1
|
|
|
|
0.5
|
|
|
|
0.6
|
|
|
|
6.9
|
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
|
|
|
|
7.3
|
|
|
|
|
|
|
|
26.1
|
|
Reclassifications*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
|
|
63.2
|
|
|
|
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
63.2
|
|
Translation adjustments
|
|
|
|
|
|
|
(0.9
|
)
|
|
|
(0.1
|
)
|
|
|
(8.1
|
)
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
5.4
|
|
|
|
|
|
|
|
(5.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
|
|
|
|
(203.0
|
)
|
|
|
(103.9
|
)
|
|
|
(493.7
|
)
|
|
|
(42.9
|
)
|
|
|
(13.1
|
)
|
|
|
(104.0
|
)
|
|
|
(147.3
|
)
|
|
|
(317.2
|
)
|
|
|
(9.9
|
)
|
|
|
(202.0
|
)
|
|
|
|
|
|
|
(1,637.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
11.0
|
|
|
|
465.8
|
|
|
|
54.7
|
|
|
|
464.7
|
|
|
|
34.1
|
|
|
|
4.1
|
|
|
|
162.8
|
|
|
|
43.1
|
|
|
|
308.9
|
|
|
|
20.0
|
|
|
|
468.6
|
|
|
|
116.4
|
|
|
|
2,154.2
|
|
At September 30, 2017
|
|
|
11.0
|
|
|
|
503.6
|
|
|
|
57.4
|
|
|
|
463.9
|
|
|
|
31.4
|
|
|
|
4.0
|
|
|
|
146.0
|
|
|
|
37.4
|
|
|
|
294.1
|
|
|
|
14.9
|
|
|
|
466.1
|
|
|
|
95.5
|
|
|
|
2,125.3
|
|
19
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Land
|
|
|
Buildings and
improvements
|
|
|
Installations
|
|
|
Machinery
and
equipment
|
|
|
Furniture
and
fixtures
|
|
|
Vehicles
|
|
|
Aircraft (i)
|
|
|
Computers and
peripherals
|
|
|
Tooling
|
|
|
Other
assets
|
|
|
Exchange
pool
program
assets
|
|
|
Construction
in progress
|
|
|
Total
|
|
Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
11.0
|
|
|
|
616.5
|
|
|
|
151.8
|
|
|
|
853.3
|
|
|
|
70.5
|
|
|
|
17.0
|
|
|
|
323.5
|
|
|
|
163.2
|
|
|
|
533.5
|
|
|
|
22.8
|
|
|
|
622.6
|
|
|
|
75.8
|
|
|
|
3,461.5
|
|
Additions
|
|
|
|
|
|
|
0.6
|
|
|
|
|
|
|
|
54.8
|
|
|
|
4.0
|
|
|
|
0.7
|
|
|
|
137.4
|
|
|
|
17.3
|
|
|
|
54.6
|
|
|
|
8.6
|
|
|
|
65.5
|
|
|
|
91.7
|
|
|
|
435.2
|
|
Disposals
|
|
|
|
|
|
|
(9.3
|
)
|
|
|
(0.2
|
)
|
|
|
(7.6
|
)
|
|
|
(2.3
|
)
|
|
|
(0.9
|
)
|
|
|
(17.8
|
)
|
|
|
(3.0
|
)
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
(15.1
|
)
|
|
|
(7.1
|
)
|
|
|
(64.2
|
)
|
Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27.0
|
)
|
Impairment (ii)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(64.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(64.9
|
)
|
Reclassifications*
|
|
|
|
|
|
|
49.9
|
|
|
|
4.4
|
|
|
|
10.2
|
|
|
|
1.9
|
|
|
|
0.2
|
|
|
|
(34.7
|
)
|
|
|
1.7
|
|
|
|
0.9
|
|
|
|
(2.0
|
)
|
|
|
1.2
|
|
|
|
(59.8
|
)
|
|
|
(26.1
|
)
|
Interest on capitalized assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.1
|
|
|
|
16.1
|
|
Translation adjustments
|
|
|
|
|
|
|
(0.6
|
)
|
|
|
0.1
|
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
(4.5
|
)
|
|
|
(0.3
|
)
|
|
|
(6.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
11.0
|
|
|
|
657.1
|
|
|
|
156.1
|
|
|
|
909.8
|
|
|
|
74.1
|
|
|
|
16.8
|
|
|
|
316.7
|
|
|
|
179.3
|
|
|
|
587.8
|
|
|
|
29.4
|
|
|
|
669.7
|
|
|
|
116.4
|
|
|
|
3,724.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
|
|
|
|
(180.8
|
)
|
|
|
(97.2
|
)
|
|
|
(389.5
|
)
|
|
|
(37.9
|
)
|
|
|
(12.5
|
)
|
|
|
(156.4
|
)
|
|
|
(128.7
|
)
|
|
|
(233.4
|
)
|
|
|
(9.4
|
)
|
|
|
(188.3
|
)
|
|
|
|
|
|
|
(1,434.1
|
)
|
Depreciation
|
|
|
|
|
|
|
(20.0
|
)
|
|
|
(4.2
|
)
|
|
|
(62.7
|
)
|
|
|
(4.1
|
)
|
|
|
(1.1
|
)
|
|
|
(25.4
|
)
|
|
|
(10.4
|
)
|
|
|
(44.7
|
)
|
|
|
|
|
|
|
(21.9
|
)
|
|
|
|
|
|
|
(194.5
|
)
|
Disposals
|
|
|
|
|
|
|
9.2
|
|
|
|
|
|
|
|
4.9
|
|
|
|
1.9
|
|
|
|
0.8
|
|
|
|
15.5
|
|
|
|
2.9
|
|
|
|
0.5
|
|
|
|
|
|
|
|
6.0
|
|
|
|
|
|
|
|
41.7
|
|
Reclassifications*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.8
|
|
|
|
|
|
|
|
|
|
|
|
8.6
|
|
|
|
(0.1
|
)
|
|
|
(1.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.7
|
|
Translation adjustments
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
0.4
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
3.8
|
|
|
|
0.1
|
|
|
|
0.3
|
|
|
|
|
|
|
|
3.1
|
|
|
|
|
|
|
|
8.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
|
|
|
|
(191.3
|
)
|
|
|
(101.4
|
)
|
|
|
(445.1
|
)
|
|
|
(40.0
|
)
|
|
|
(12.7
|
)
|
|
|
(153.9
|
)
|
|
|
(136.2
|
)
|
|
|
(278.9
|
)
|
|
|
(9.4
|
)
|
|
|
(201.1
|
)
|
|
|
|
|
|
|
(1,570.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
11.0
|
|
|
|
435.7
|
|
|
|
54.6
|
|
|
|
463.8
|
|
|
|
32.6
|
|
|
|
4.5
|
|
|
|
167.1
|
|
|
|
34.5
|
|
|
|
300.1
|
|
|
|
13.4
|
|
|
|
434.3
|
|
|
|
75.8
|
|
|
|
2,027.4
|
|
At December 31, 2016
|
|
|
11.0
|
|
|
|
465.8
|
|
|
|
54.7
|
|
|
|
464.7
|
|
|
|
34.1
|
|
|
|
4.1
|
|
|
|
162.8
|
|
|
|
43.1
|
|
|
|
308.9
|
|
|
|
20.0
|
|
|
|
468.6
|
|
|
|
116.4
|
|
|
|
2,154.2
|
|
*
|
Non-cash
transactions. On aircraft and exchange pool program assets the amount refers to aircraft and items transferred to the inventory. In September
2017, 17 ERJ 145 aircraft were transferred to inventory in order to be sold, after a
part-out
procedure.
|
(i)
|
The aircraft are used for testing, shuttle and operating leases and are adjusted to the fair value, when applicable. The following aircraft are held:
|
|
|
|
September 30, 2017: nine ERJ 135, 26 ERJ 145, six EMBRAER 170, one EMBRAER 190, one Legacy 450, one Legacy 500, one Phenom 300, two EMBRAER 120, one 690B; and
|
|
|
|
December 31, 2016: 23 ERJ 135, 28 ERJ 145, six EMBRAER 170, three EMBRAER 190, one EMBRAER 120, and one 690B.
|
(ii)
|
Because of the Chapter 11 filing by Republic Airways Holding (Note 14), the Company has received part of the aircraft referring to the negotiation of the financial guarantees from which losses were recognized. At the
moment these aircraft were acquired these losses were reclassified to the property, plant and equipment asset.
|
20
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
Internally developed intangible assets relate to expenditure incurred in developing
new aircraft, including support services, production labor, materials and direct labor allocated to the construction of aircraft prototypes or significant components, and also the use of advanced technologies to make the aircraft lighter, quieter,
more comfortable and energy-efficient and to reduce emissions, in addition to speeding up design and manufacture, while optimizing the use of resources.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internally developed
|
|
|
Acquired from third party
|
|
|
|
Commercial
|
|
|
Executive
|
|
|
Defense and
Security
|
|
|
Other
|
|
|
Development
|
|
|
Software
|
|
|
Goodwill
|
|
|
Other
|
|
|
Total
|
|
Intangible cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
1,515.1
|
|
|
|
1,320.3
|
|
|
|
30.8
|
|
|
|
51.8
|
|
|
|
13.5
|
|
|
|
311.4
|
|
|
|
21.0
|
|
|
|
32.8
|
|
|
|
3,296.7
|
|
Additions
|
|
|
236.1
|
|
|
|
52.0
|
|
|
|
2.8
|
|
|
|
2.5
|
|
|
|
1.9
|
|
|
|
44.1
|
|
|
|
|
|
|
|
6.0
|
|
|
|
345.4
|
|
Contributions from suppliers
|
|
|
(86.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(86.0
|
)
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.5
|
)
|
Reclassifications
|
|
|
(3.6
|
)
|
|
|
3.6
|
|
|
|
(0.3
|
)
|
|
|
(48.5
|
)
|
|
|
|
|
|
|
50.5
|
|
|
|
|
|
|
|
(1.8
|
)
|
|
|
(0.1
|
)
|
Interest on capitalized assets
|
|
|
8.5
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.2
|
|
Translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
1,670.1
|
|
|
|
1,379.6
|
|
|
|
33.3
|
|
|
|
5.8
|
|
|
|
13.9
|
|
|
|
406.0
|
|
|
|
21.5
|
|
|
|
37.0
|
|
|
|
3,567.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
(992.4
|
)
|
|
|
(424.9
|
)
|
|
|
(25.6
|
)
|
|
|
|
|
|
|
(5.7
|
)
|
|
|
(179.8
|
)
|
|
|
|
|
|
|
(3.7
|
)
|
|
|
(1,632.1
|
)
|
Amortization
|
|
|
(46.1
|
)
|
|
|
(27.1
|
)
|
|
|
(1.2
|
)
|
|
|
(0.1
|
)
|
|
|
(1.2
|
)
|
|
|
(17.6
|
)
|
|
|
|
|
|
|
(0.8
|
)
|
|
|
(94.1
|
)
|
Amortization of contribution from suppliers
|
|
|
10.9
|
|
|
|
6.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.3
|
|
Reclassifications
|
|
|
4.5
|
|
|
|
(4.3
|
)
|
|
|
0.3
|
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.5
|
|
|
|
|
|
Interest on capitalized assets
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
(1,023.1
|
)
|
|
|
(450.3
|
)
|
|
|
(26.5
|
)
|
|
|
(1.1
|
)
|
|
|
(6.9
|
)
|
|
|
(197.4
|
)
|
|
|
|
|
|
|
(4.0
|
)
|
|
|
(1,709.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
522.7
|
|
|
|
895.4
|
|
|
|
5.2
|
|
|
|
51.8
|
|
|
|
7.8
|
|
|
|
131.6
|
|
|
|
21.0
|
|
|
|
29.1
|
|
|
|
1,664.6
|
|
At September 30, 2017
|
|
|
647.0
|
|
|
|
929.3
|
|
|
|
6.8
|
|
|
|
4.7
|
|
|
|
7.0
|
|
|
|
208.6
|
|
|
|
21.5
|
|
|
|
33.0
|
|
|
|
1,857.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internally developed
|
|
|
Acquired from third party
|
|
|
|
Commercial
|
|
|
Executive
|
|
|
Defense and
Security
|
|
|
Other
|
|
|
Development
|
|
|
Software
|
|
|
Goodwill
|
|
|
Other
|
|
|
Total
|
|
Intangible cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
1,276.1
|
|
|
|
1,248.9
|
|
|
|
25.6
|
|
|
|
36.1
|
|
|
|
10.1
|
|
|
|
263.3
|
|
|
|
16.4
|
|
|
|
24.0
|
|
|
|
2,900.5
|
|
Additions
|
|
|
351.1
|
|
|
|
65.4
|
|
|
|
5.2
|
|
|
|
15.7
|
|
|
|
10.7
|
|
|
|
48.1
|
|
|
|
|
|
|
|
8.8
|
|
|
|
505.0
|
|
Contributions from suppliers
|
|
|
(123.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(123.9
|
)
|
Reclassifications
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7.3
|
)
|
Interest on capitalized assets
|
|
|
11.8
|
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.8
|
|
Translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
|
|
|
|
|
|
4.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
1,515.1
|
|
|
|
1,320.3
|
|
|
|
30.8
|
|
|
|
51.8
|
|
|
|
13.5
|
|
|
|
311.4
|
|
|
|
21.0
|
|
|
|
32.8
|
|
|
|
3,296.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
(923.6
|
)
|
|
|
(377.1
|
)
|
|
|
(25.6
|
)
|
|
|
|
|
|
|
(4.6
|
)
|
|
|
(160.9
|
)
|
|
|
|
|
|
|
(3.3
|
)
|
|
|
(1,495.1
|
)
|
Amortization
|
|
|
(92.0
|
)
|
|
|
(61.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(1.1
|
)
|
|
|
(18.9
|
)
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
(173.9
|
)
|
Amortization of contribution from suppliers
|
|
|
23.2
|
|
|
|
15.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
38.3
|
|
Interest on capitalized assets
|
|
|
|
|
|
|
(1.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
(992.4
|
)
|
|
|
(424.9
|
)
|
|
|
(25.6
|
)
|
|
|
|
|
|
|
(5.7
|
)
|
|
|
(179.8
|
)
|
|
|
|
|
|
|
(3.7
|
)
|
|
|
(1,632.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
352.5
|
|
|
|
871.8
|
|
|
|
|
|
|
|
36.1
|
|
|
|
5.5
|
|
|
|
102.4
|
|
|
|
16.4
|
|
|
|
20.7
|
|
|
|
1,405.4
|
|
At December 31, 2016
|
|
|
522.7
|
|
|
|
895.4
|
|
|
|
5.2
|
|
|
|
51.8
|
|
|
|
7.8
|
|
|
|
131.6
|
|
|
|
21.0
|
|
|
|
29.1
|
|
|
|
1,664.6
|
|
21
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency
|
|
|
Contractual
interest rate %
|
|
|
Effective
interest rate %
|
|
|
Maturity
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Other currencies:
|
|
|
US$
|
|
|
|
5.05% to 6.38%
|
|
|
|
5.05% to 7.42%
|
|
|
|
2027
|
|
|
|
3,034.7
|
|
|
|
2,402.5
|
|
Working capital
|
|
|
US$
|
|
|
|
1.25% to 4.59%
|
|
|
|
1.25% to 4.59%
|
|
|
|
2027
|
|
|
|
121.9
|
|
|
|
213.1
|
|
|
|
|
US$
|
|
|
|
Libor 6M + 1.35% a 2.60%
|
|
|
|
Libor 6M + 1.35% a 2.60%
|
|
|
|
2027
|
|
|
|
118.1
|
|
|
|
18.0
|
|
|
|
|
US$
|
|
|
|
Libor 3M + 2.25%
|
|
|
|
Libor 3M + 2.25%
|
|
|
|
2026
|
|
|
|
218.3
|
|
|
|
212.7
|
|
|
|
|
Euro
|
|
|
|
1.00% a 3.37%
|
|
|
|
1.00% a 3.37%
|
|
|
|
2020
|
|
|
|
16.5
|
|
|
|
16.4
|
|
Advances on foreign exchange contracts
|
|
|
US$
|
|
|
|
2.40% a 4.65%
|
|
|
|
2.40% a 4.65%
|
|
|
|
2017
|
|
|
|
3.0
|
|
|
|
3.80
|
|
Property, plant and equipment
|
|
|
US$
US$
|
|
|
|
2.13%
Libor 1M + 2.44%
|
|
|
|
2.13%
Libor 1M + 2.44%
|
|
|
|
2030
2035
|
|
|
|
58.7
|
|
|
|
60.4
|
|
Finance leasing
|
|
|
US$
|
|
|
|
Libor 6M + 3.40%
|
|
|
|
Libor 6M + 3.40%
|
|
|
|
2017
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,571.2
|
|
|
|
2,927.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In local currency: Export Financing
|
|
|
R$
|
|
|
|
5.50% a 8.00%
|
|
|
|
5.50% a 8.00%
|
|
|
|
2017
|
|
|
|
|
|
|
|
30.9
|
|
Project development
|
|
|
R$
|
|
|
|
3.50% a 5.50%
TJLP + 1.92% a 5.00%
|
|
|
|
3.50% a 5.50%
TJLP + 1.92% a 5.00%
|
|
|
|
2023
2022
|
|
|
|
447.7
|
|
|
|
505.0
|
|
Credit Note for Exportation
|
|
|
R$
|
|
|
|
8.0% a 11.00%
|
|
|
|
8.0% a 11.00%
|
|
|
|
2022
|
|
|
|
288.0
|
|
|
|
297.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
735.7
|
|
|
|
832.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,306.9
|
|
|
|
3,759.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
289.0
|
|
|
|
510.3
|
|
Non-current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,017.9
|
|
|
|
3,249.6
|
|
In October 2009, Embraer Overseas Limited issued US$ 500.0 in guaranteed notes at 6.375% p.a., due on January 15, 2020.
The operation is fully and unconditionally guaranteed by the Parent Company.
Between August and September 2013, through its subsidiary Embraer Overseas
Limited, Embraer made an offer to exchange existing bonds maturing in 2017 (settled in January 2017) and 2020 for New Notes maturing in 2023. In the case of bonds maturing in 2017, the exchange offer resulted in US$ 146.4 of the
aggregate principal of existing notes and US$ 337.2 of the aggregate principal of the 2020 Notes, representing approximately 54.95% of the Notes exchanged. The total of the exchange offer, taking into account the effects of the exchange price on the
negotiations and the total New Notes issued closed at approximately US$ 540.5 in principal at a rate of 5.696%, maturing on September 16, 2023.
The
separate financial statements of Embraer Overseas Limited are not provided, because the issuer is a wholly-owned finance subsidiary of the Company and the Company fully and unconditionally guarantees the securities. There are no significant
restrictions on the ability of the Parent Company to obtain funds from its subsidiaries by dividend or loan.
On June 15, 2012, Embraer raised funds
by issuing guaranteed notes, maturing on June 15, 2022, through an overseas offer of US$ 500 at a rate of 5.15% p.a.
On February 2013, Embraer
contracted loans of R$ 712.0 million, equivalent to US$ 224.7, in the form of Export Credit Notes for the purpose of investing in export activities and the production of goods for export, at a fixed rate of 5.50% p.a. At September 30, 2017
the amount still outstanding was R$ 135.4 million, equivalent to US$ 42.7 million.
On August 2013, Embraer contracted financing totaling
approximately R$ 303.9 million; equivalent to US$ 95.9, at a rate fixed 3.50% p.a., from the Financier of Studies and Projects (
Financiadora de Estudos e Projetos FINEP
) for use in the research and new product development program.
22
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
On June 2015, the Company´s wholly-owned finance subsidiary Embraer Netherlands
Finance B.V, issued US$ 1 billion in Guaranteed Notes at 5.05% p.a., due on June 15, 2025, in an offering subsequently registered with the SEC. This operation is fully and unconditionally guaranteed by Embraer.
The separate financial statements of Embraer Netherlands Finance B.V are not provided, because the issuer is a wholly-owned finance subsidiary of the Company
and the Company fully and unconditionally guarantees the securities. There are no significant restrictions on the ability of the Parent Company to obtain funds from its subsidiaries by dividend or loan.
In December 2015, Embraer SA contracted loans of R$ 685 million, equivalent to US$ 216.2, at a weighted average rate of 10.96% p.a., in the form of
Export Credit Notes in order to invest in export and production of goods for export.
In August 2016, Embraer Portugal SA, a subsidiary of the Company
obtained a loan in an amount of US$ 200, equivalent to R$ 633.6 million for working capital and acquisition of fixed assets at a rate of 3.068% p.a. This operation is fully and unconditionally guaranteed by the Parent
On February 2017, the Company´s wholly-owned finance subsidiary Embraer Netherlands Finance B.V, issued US$ 750 million in Guaranteed Notes at
5.40% p.a., due on February 01, 2027, in an offering subsequently registered with the SEC. This operation is fully and unconditionally guaranteed by the Parent Company.
The separate financial statements of Embraer Netherlands Finance B.V are not provided, because the issuer is a wholly-owned finance subsidiary of the Company
and the Company fully and unconditionally guarantees the securities. There are no significant restrictions on the ability of the Parent Company to obtain funds from its subsidiaries by dividend or loan.
At September 30, 2017, the maturities of the long-term financing agreements are as follows:
|
|
|
|
|
Year
|
|
|
|
2018
|
|
|
196.2
|
|
2019
|
|
|
163.9
|
|
2020
|
|
|
273.1
|
|
2021
|
|
|
340.4
|
|
After 2021
|
|
|
3,044.3
|
|
|
|
|
|
|
|
|
|
4,017.9
|
|
|
|
|
|
|
Total debt is denominated in the following currencies:
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Loans
|
|
|
|
|
|
|
|
|
US dollar
|
|
|
3,554.7
|
|
|
|
2,910.6
|
|
Brazilian Real
|
|
|
735.7
|
|
|
|
832.9
|
|
Euro
|
|
|
16.5
|
|
|
|
16.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,306.9
|
|
|
|
3,759.9
|
|
|
|
|
|
|
|
|
|
|
11.2
|
Interest and guarantees
|
At September 30, 2017, loans denominated in US dollars (81.8% of the
total) are mainly subject to fixed interest rates. The weighted average rate was 5.13% p.a. (5.12% p.a. at December 31, 2016).
23
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
At September 30, 2017, loans denominated in
reais
(17.8% of the total) are
subject to fixed interest rates or interest based on the Brazilian Long-term Interest Rate (TJLP). The weighted average rate at September 30, 2017 was 4.45% p.a. (5.00% p.a. at December 31, 2016).
At September 30, 2017, loans denominated in Euros (0.4% of the total) were predominantly subject to fixed charges and weighted average rate of 1.79% pa
(1.48% pa at December 31, 2016).
Real estate, machinery, equipment, commercial pledges and bank guarantees totaling US$ 481.3 as at
September 30, 2017 (US$ 490.9 at December 31, 2016) were provided as collateral for loans.
The long-term financing agreements are subject to restrictive clauses, consistent
with usual market practices, which establish control over the degree of leverage through the ratio of total consolidated indebtedness/EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization, as defined), as well as limits for debt
service cover based on EBITDA/net financial expense. Agreements also include customary restrictions on the creation of new encumbrances on assets, significant changes in control of the Company and sale of assets.
As at September 30, 2017, the Company was in compliance with all the restrictive clauses.
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Provisions related to payroll (i)
|
|
|
140.2
|
|
|
|
113.7
|
|
Other accounts payable (ii)
|
|
|
112.5
|
|
|
|
90.7
|
|
Provision employee profit sharing
|
|
|
37.4
|
|
|
|
43.6
|
|
Accounts payable for penalties (iii)
|
|
|
18.2
|
|
|
|
58.2
|
|
Long-term incentive (iv)
|
|
|
13.6
|
|
|
|
4.2
|
|
Contractual obligations (v)
|
|
|
11.3
|
|
|
|
53.5
|
|
Commissions
|
|
|
10.5
|
|
|
|
23.9
|
|
Insurance
|
|
|
4.8
|
|
|
|
4.8
|
|
Brazilian air force
|
|
|
1.8
|
|
|
|
2.6
|
|
Security deposit
|
|
|
|
|
|
|
0.9
|
|
Accrued materials
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
350.3
|
|
|
|
396.4
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Refers to employee vacation related obligations recorded in our financial statements.
|
(ii)
|
Represents a provision for expenses already incurred as of the date of the balance sheet and for which payments are made during the following month.
|
(iii)
|
Refers to outstanding amounts payable as part of the definitive agreements finalized by the Company on October 24, 2016 with the U.S. Department of Justice, or DOJ, and the U.S. Securities and Exchange Commission,
or the SEC, for the settlement of criminal and civil violations of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or FCPA.
|
(iv)
|
Refers to the Long-Term Incentive (ILP) granted to Company employees in the form of phantom shares, as described in Note 18 [Share-based Remuneration].
|
(v)
|
Substantially shows amounts recorded regarding maintenance costs of aircraft leased through operating leases and contractually agreed upon commitments for the sale of new aircraft or the expiration of residual financial
guarantees
|
As the tax basis for the majority of the Companys assets and liabilities is
maintained in
reais
and the accounting basis is measured in US dollars (functional currency), the fluctuations in the exchange rate significantly impacted the tax basis and, in turn, the deferred income tax expense (benefit).
Based on the expectation of future taxable income, the Company recorded deferred tax assets based on tax losses carryforwards.
24
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
Credits relating to temporary differences on
non-deductible
provisions, represented by labor contingencies, provisions and disputed taxes will be realized as such proceedings are concluded.
13.1
|
Deferred income tax and social contribution
|
The components of deferred tax assets and liabilities are
as follows:
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Temporarily non-deductible provisions
|
|
|
(160.6
|
)
|
|
|
(102.7
|
)
|
Tax loss carryforwards
|
|
|
35.1
|
|
|
|
28.3
|
|
Functional currency effect of the non monetary assets (i)
|
|
|
(159.7
|
)
|
|
|
(201.0
|
)
|
Gains not realized from sales of Parent Company to subsidiairies
|
|
|
17.0
|
|
|
|
16.4
|
|
Effect of differences by fixed asset
|
|
|
(25.8
|
)
|
|
|
(31.1
|
)
|
Differences between basis: account x tax (ii)
|
|
|
28.7
|
|
|
|
30.2
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities), net
|
|
|
(265.3
|
)
|
|
|
(259.9
|
)
|
|
|
|
|
|
|
|
|
|
Total deferred tax asset
|
|
|
4.0
|
|
|
|
3.4
|
|
Total deferred tax liability
|
|
|
(269.3
|
)
|
|
|
(263.3
|
)
|
(i)
|
Refers to deferred income tax calculated on differences related to
non-monetary
assets that are remeasured from the local currency into the functional currency using historical
exchange rates and that result from changes in exchange rates.
|
(ii)
|
Refers to miscellaneous temporary differences (e.g.
non-deductible
expenses).
|
The changes in deferred income tax that affected profit or loss were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From the
statement of
income
|
|
|
Other
comprehensive
income
|
|
|
Total
|
|
At December 31,2015
|
|
|
(429.9
|
)
|
|
|
17.1
|
|
|
|
(412.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily non-deductible provisions
|
|
|
(99.9
|
)
|
|
|
|
|
|
|
(99.9
|
)
|
Tax loss carryforwards
|
|
|
7.8
|
|
|
|
|
|
|
|
7.8
|
|
Functional currency effect of the non monetary assets
|
|
|
206.1
|
|
|
|
|
|
|
|
206.1
|
|
Provision Gain not realized at sales from Controlling company to subsidiairies
|
|
|
(3.5
|
)
|
|
|
|
|
|
|
(3.5
|
)
|
Effect of differences by fixed asset
|
|
|
4.9
|
|
|
|
|
|
|
|
4.9
|
|
Differences between basis: account x tax
|
|
|
31.1
|
|
|
|
6.4
|
|
|
|
37.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,2016
|
|
|
(283.4
|
)
|
|
|
23.5
|
|
|
|
(259.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily non-deductible provisions
|
|
|
(57.9
|
)
|
|
|
|
|
|
|
(57.9
|
)
|
Tax loss carryforwards
|
|
|
6.8
|
|
|
|
|
|
|
|
6.8
|
|
Functional currency effect of the non monetary assets
|
|
|
41.3
|
|
|
|
|
|
|
|
41.3
|
|
Gains not realized from sales of Parent Company to subsidiairies
|
|
|
0.6
|
|
|
|
|
|
|
|
0.6
|
|
Effect of differences by fixed asset
|
|
|
5.3
|
|
|
|
|
|
|
|
5.3
|
|
Differences between basis: account x tax
|
|
|
(2.3
|
)
|
|
|
0.8
|
|
|
|
(15
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
(289.6
|
)
|
|
|
24.3
|
|
|
|
(265.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
13.2
|
Reconciliation of income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
09.30.2016
|
|
Profit before taxation
|
|
|
252.8
|
|
|
|
92.6
|
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution expense at the nominal Brazilian enacted tax rate -
34%
|
|
|
(86.0
|
)
|
|
|
31.5
|
|
|
|
|
|
|
|
|
|
|
Tax on profits of overseas subsidiaries
|
|
|
(3.3
|
)
|
|
|
(0.1
|
)
|
Functional currency effect of the non monetary assets
|
|
|
41.3
|
|
|
|
202.0
|
|
Research and development tax incentives
|
|
|
21.3
|
|
|
|
27.4
|
|
Interest on own capital
|
|
|
9.4
|
|
|
|
7.3
|
|
Fiscal credits (recognized and non recognized)
|
|
|
(20.1
|
)
|
|
|
(72.3
|
)
|
Tax rate diference
|
|
|
11.4
|
|
|
|
11.2
|
|
Other difference between IFRS and fiscal basis
|
|
|
(13.4
|
)
|
|
|
(77.9
|
)
|
Nondeductible expenses
|
|
|
|
|
|
|
|
|
Other
|
|
|
11.8
|
|
|
|
(64.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
58.4
|
|
|
|
33.1
|
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution income (expense) benefit as reported
|
|
|
(27.6
|
)
|
|
|
64.6
|
|
|
|
|
|
|
|
|
|
|
Current income tax and social contribution (expense) benefit as reported
|
|
|
(21.4
|
)
|
|
|
(108.3
|
)
|
Deferred income tax and social contribution income (expense) benefit as reported
|
|
|
(6.2
|
)
|
|
|
172.9
|
|
The effective tax rate for the period ended September 30, 2017 was 10.9% as compared to 69.8% at September 30, 2016.
14.
|
Financial Guarantees and Residual Value Guarantees
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Financial guarantee of residual value
|
|
|
108.4
|
|
|
|
122.2
|
|
Accounts payable (i)
|
|
|
32.1
|
|
|
|
65.9
|
|
Financial guarantee
|
|
|
18.7
|
|
|
|
22.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
159.2
|
|
|
|
210.8
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
20.0
|
|
|
|
49.7
|
|
Non-current portion
|
|
|
139.2
|
|
|
|
161.1
|
|
26
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
The movement on the financial guarantees and residual guarantees is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
guarantee
|
|
|
Financial
guarantee of
residual value
|
|
|
Accounts
payable (i)
|
|
|
Additional
provision (i)
|
|
|
Total
|
|
At December 31, 2015
|
|
|
40.1
|
|
|
|
94.7
|
|
|
|
57.4
|
|
|
|
100.9
|
|
|
|
293.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
0.1
|
|
|
|
|
|
|
|
11.9
|
|
|
|
|
|
|
|
12.0
|
|
Interest Additions
|
|
|
|
|
|
|
|
|
|
|
1.7
|
|
|
|
|
|
|
|
1.7
|
|
Disposals
|
|
|
(6.6
|
)
|
|
|
|
|
|
|
(95.6
|
)
|
|
|
|
|
|
|
(102.2
|
)
|
Reversals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.4
|
)
|
|
|
(10.4
|
)
|
Reclassifications (ii)
|
|
|
|
|
|
|
|
|
|
|
90.5
|
|
|
|
(90.5
|
)
|
|
|
|
|
Market value
|
|
|
|
|
|
|
27.5
|
|
|
|
|
|
|
|
|
|
|
|
27.5
|
|
Guarantee amortization
|
|
|
(10.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
22.7
|
|
|
|
122.2
|
|
|
|
65.9
|
|
|
|
|
|
|
|
210.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
1.2
|
|
|
|
|
|
|
|
2.0
|
|
|
|
|
|
|
|
3.2
|
|
Interest Additions
|
|
|
|
|
|
|
|
|
|
|
1.7
|
|
|
|
|
|
|
|
1.7
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
(37.5
|
)
|
|
|
|
|
|
|
(37.5
|
)
|
Market value
|
|
|
|
|
|
|
(13.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(13.8
|
)
|
Guarantee amortization
|
|
|
(5.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
18.7
|
|
|
|
108.4
|
|
|
|
32.1
|
|
|
|
|
|
|
|
159.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Accounts payable and additional provision:
|
|
|
|
Republic Airways HoldingRefers to liabilities assumed on the acquisition of Republic Airways aircraft as a result of the bankruptcy filing (Chapter 11) of the client occurred in February 2016, which is partially
concluded. As of September 30, 2017, the obligation assumed in Accounts payable was US$ 32.1 (December 31, 2016, was US$ 41.6).
|
(ii)
|
Refers to the transfers of financial guarantees held between provisions and accounts payable due to formalization by parties of the exercise of such guarantees.
|
15.
|
Provisions and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Product warranties (i)
|
|
|
92.0
|
|
|
|
94.1
|
|
Post retirement benefits
|
|
|
50.7
|
|
|
|
46.0
|
|
Provisions for labor, taxes and civil (ii)
|
|
|
48.5
|
|
|
|
93.1
|
|
Taxes
|
|
|
41.3
|
|
|
|
28.5
|
|
Environmental provision
|
|
|
2.5
|
|
|
|
1.0
|
|
Voluntary redundancy scheme (iii)
|
|
|
|
|
|
|
25.3
|
|
Other
|
|
|
24.5
|
|
|
|
26.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
259.5
|
|
|
|
314.8
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Recorded to cover product-related expenditure, including warranties and contractual obligations to implement improvements to aircraft delivered in order to meet performance targets.
|
(ii)
|
Provisions for labor, tax or civil contingencies, as shown in the table below Note 15.1.1.
|
(iii)
|
In 2016 The Company announced a Voluntary Redundancy Scheme (VRS) in which the Company and its subsidiaries ELEB Equipamento Ltda. and Embraer GPX Ltda. There were 1,650 employees interested in adhere to the program, of
which 1,643 were approved by the Company. The provisioned amounts correspond to
non-recurring
incremental expenses specifically related to the plan. There are still employees who joined the plan to be shut
down.
|
27
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
Change in provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
warranties
|
|
|
Provisions
Labor,
Taxes and
Civil
|
|
|
Post
retirement
benefits
|
|
|
Taxes
|
|
|
Voluntary
redundancy
scheme
|
|
|
Environment
provision
|
|
|
Other
|
|
|
Total
|
|
At December 31, 2015
|
|
|
95.7
|
|
|
|
49.9
|
|
|
|
26.8
|
|
|
|
16.9
|
|
|
|
|
|
|
|
1.7
|
|
|
|
13.6
|
|
|
|
204.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
51.9
|
|
|
|
43.3
|
|
|
|
11.2
|
|
|
|
12.0
|
|
|
|
118.0
|
|
|
|
1.0
|
|
|
|
17.0
|
|
|
|
254.4
|
|
Interest
|
|
|
|
|
|
|
4.3
|
|
|
|
3.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.6
|
|
Used/payments
|
|
|
(31.7
|
)
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
|
|
|
|
(77.0
|
)
|
|
|
|
|
|
|
(2.0
|
)
|
|
|
(113.4
|
)
|
Reversals
|
|
|
(20.6
|
)
|
|
|
(5.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(15.0
|
)
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
(43.1
|
)
|
Translation adjustments
|
|
|
(1.2
|
)
|
|
|
3.8
|
|
|
|
4.7
|
|
|
|
(0.4
|
)
|
|
|
(0.7
|
)
|
|
|
0.3
|
|
|
|
(1.8
|
)
|
|
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
94.1
|
|
|
|
93.1
|
|
|
|
46.0
|
|
|
|
28.5
|
|
|
|
25.3
|
|
|
|
1.0
|
|
|
|
26.8
|
|
|
|
314.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
23.7
|
|
|
|
6.0
|
|
|
|
|
|
|
|
13.0
|
|
|
|
8.0
|
|
|
|
3.0
|
|
|
|
11.0
|
|
|
|
64.7
|
|
Interest
|
|
|
|
|
|
|
12.1
|
|
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.5
|
|
Used/payments
|
|
|
(19.6
|
)
|
|
|
(63.5
|
)
|
|
|
|
|
|
|
|
|
|
|
(32.0
|
)
|
|
|
|
|
|
|
(15.0
|
)
|
|
|
(130.1
|
)
|
Reversals
|
|
|
(6.2
|
)
|
|
|
(2.2
|
)
|
|
|
|
|
|
|
|
|
|
|
(1.0
|
)
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
(10.4
|
)
|
Translation adjustments
|
|
|
|
|
|
|
3.0
|
|
|
|
1.3
|
|
|
|
(0.2
|
)
|
|
|
(0.3
|
)
|
|
|
(0.5
|
)
|
|
|
1.7
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
92.0
|
|
|
|
48.5
|
|
|
|
50.7
|
|
|
|
41.3
|
|
|
|
(0.0
|
)
|
|
|
2.5
|
|
|
|
24.5
|
|
|
|
259.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.1.1
|
Labor, tax and civil provisions
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Tax related
|
|
|
|
|
|
|
|
|
IRPJ (i)
|
|
|
7.2
|
|
|
|
37.4
|
|
PIS and COFINS (ii)
|
|
|
7.0
|
|
|
|
10.2
|
|
Social security contributions (iii)
|
|
|
2.9
|
|
|
|
8.8
|
|
Import taxes (iv)
|
|
|
1.0
|
|
|
|
2.0
|
|
ICMS (v)
|
|
|
|
|
|
|
4.6
|
|
FUNDAF
|
|
|
|
|
|
|
3.9
|
|
Others
|
|
|
0.4
|
|
|
|
1.8
|
|
|
|
|
18.5
|
|
|
|
68.7
|
|
Labor related
|
|
|
|
|
|
|
|
|
Plurimas 461/1379 (vi)
|
|
|
11.5
|
|
|
|
10.1
|
|
Reintegration (vii)
|
|
|
5.2
|
|
|
|
3.5
|
|
Indemnity (viii)
|
|
|
2.1
|
|
|
|
1.5
|
|
Third parties
|
|
|
0.7
|
|
|
|
0.6
|
|
Others
|
|
|
10.3
|
|
|
|
8.3
|
|
|
|
|
29.8
|
|
|
|
24.0
|
|
Civil related
|
|
|
|
|
|
|
|
|
Indemnity (ix)
|
|
|
0.2
|
|
|
|
0.4
|
|
|
|
|
0.2
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
48.5
|
|
|
|
93.1
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
21.4
|
|
|
|
22.6
|
|
Non-current portion
|
|
|
27.1
|
|
|
|
70.5
|
|
(i)
|
Payment of tax assessment in 6 installments with the Tax Regularization Special Payment Program (PERT). It refers to administrative discussion related to the tax assessment notice regarding the accounting
and recognition of indemnification in the Administrative Council of Tax Appeals, regarding the requirement of Income tax (IRPJ) and Social Contribution (CSLL).
|
(ii)
|
Payment of part of tax assessment in 6 installments with the Tax Regularization Special Payment Program (PERT). It refers to administrative discussion related to Social Integration Program (PIS) and Social
Security Financing Contribution (COFINS) -credits calculated- in certain operations.
|
(iii)
|
The Company was notified by the authorities for failing to withhold social security contributions from service providers. These lawsuits are at the second court level.
|
(iv)
|
Deficiency and Penalty Notices issued against the Company involving the drawback regime, which discusses possible differences in relation to the tax classification of certain products and is in the analysis stage of
Federal Supreme CourtSTJ (
Supremo Tribunal de Justiça
).
|
(v)
|
The Company is contesting in the administrative sphere the Deficiency and Penalty Notice (
Auto de Infração e Imposição de MultaAIIM
) issued by the State of São Paulo for
the collection of ICMS
(Imposto sobre Circulação de Mercadorias e Serviços
) on telecommunication services, on the understanding that the services to which the AIIM refers are not subject to ICMS. There has been no
decision to date in respect of the Companys motion to deny. The Company fully paid the amount through the PEPSpecial Program of installments of the State Treasury,
|
(vi)
|
Refers to claims for backdated salary rise and productivity payments, brought by former employees.
|
(vii)
|
Suits brought by former employees claiming reinstatement with the Company for various reasons.
|
(viii)
|
Indemnity claims in connection with alleged work-related accidents, pain and suffering, etc.
|
(ix)
|
Other indemnity claims brought by parties that had some kind of legal relationship with the Company.
|
28
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
The tax, labor and civil provisions are recorded in accordance with the Companys
accounting policy (see note 2.2.24 of the December 31, 2016 consolidated financial statements), and the amounts shown here represent the estimated amounts that the Companys legal department and its external counsel expect the Company to
have to disburse to settle the lawsuits.
15.2
|
Contingent liabilities
|
Contingent liabilities are amounts classified as possible losses following the
Companys accounting policy and based on, the opinion of the Companys legal department and, where applicable, supported by the Companys external counsel. When the contingent liabilities arises from the same set of circumstances as
an existing provision, the type of the corresponding provision is indicated at the end of the description. The main Companys contingent liabilities are listed below:
|
|
|
The Company has contingent liabilities amounting to US$ 28.2 at September 30, 2017 related to labor suits (US$ 16.9 on December 31, 2016).
|
|
|
|
In October 2016, the Company finalized definitive agreements with the United States and Brazilian authorities for the resolution of allegations for
non-compliance
with
anti-corruption laws in the US and certain Brazilian laws (Note 20). Related proceedings and other developments are ongoing and could result in additional fines that may be substantial and possibly other sanctions and adverse consequences, which may
be substantial. The Company believes that there is no adequate basis for estimating accruals or quantifying possible contingencies related to these matters.
|
|
|
|
In August 2016, a putative securities class action was filed in a U.S. court against the Company and certain of its former and current executives, asserting claims in connection with allegedly false and misleading
statements and omissions concerning the FCPA investigation and related matters. In October 2016, a federal Court in New York appointed a lead plaintiff and a leading counsel for the putative class action. In December 2016, the lead plaintiff filed
an amended complaint. The amended complaint seeks to bring claims on behalf of all persons and entities who purchased or otherwise acquired Embraer securities during the period from January 11, 2012 through and including November 28, 2016
asserting violations of the U.S. federal securities laws relating to the internal investigations described above and related issues (Note 20 above). Following a schedule set by the Court, on June 28, 2017, the Company filed a motion to dismiss,
seeking a dismissal of the claims. At this time, the motion is pending before the court, and the Company believes that there is no adequate basis for estimating provisions related to this matter.
|
16.
|
Financial Instruments
|
16.1
|
Financial instruments by category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
|
Note
|
|
|
Loans and
receivables
|
|
|
Measured at fair
value through
profit or loss
|
|
|
Available
for sale
|
|
|
Investments
held to
maturity
|
|
|
Liabilities
measured at
amortised cost
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
3
|
|
|
|
|
|
|
|
772.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
772.5
|
|
Financial investments
|
|
|
4
|
|
|
|
|
|
|
|
1,463.3
|
|
|
|
38.3
|
|
|
|
1,310.0
|
|
|
|
|
|
|
|
2,811.6
|
|
Collateralized accounts receivable
|
|
|
|
|
|
|
300.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300.4
|
|
Trade accounts receivable, net
|
|
|
|
|
|
|
708.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
708.3
|
|
Customer and commercial financing
|
|
|
|
|
|
|
17.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.0
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
50.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,025.7
|
|
|
|
2,286.2
|
|
|
|
38.3
|
|
|
|
1,310.0
|
|
|
|
|
|
|
|
4,660.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
11
|
|
|
|
|
|
|
|
827.4
|
|
|
|
|
|
|
|
|
|
|
|
3,479.5
|
|
|
|
4,306.9
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
|
|
|
|
13.6
|
|
|
|
|
|
|
|
|
|
|
|
1,504.4
|
|
|
|
1,518.0
|
|
Financial guarantee of residual value
|
|
|
14
|
|
|
|
|
|
|
|
108.4
|
|
|
|
|
|
|
|
|
|
|
|
50.8
|
|
|
|
159.2
|
|
Financing lease
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
9.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
958.8
|
|
|
|
|
|
|
|
|
|
|
|
5,034.7
|
|
|
|
5,993.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2016
|
|
|
|
Note
|
|
|
Loans and
receivables
|
|
|
Measured at fair
value through
profit or loss
|
|
|
Available
for
sale
|
|
|
Investments
held to
maturity
|
|
|
Liabilities
measured at
amortised cost
|
|
|
Total
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
3
|
|
|
|
|
|
|
|
1,241.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,241.5
|
|
Financial investments
|
|
|
4
|
|
|
|
|
|
|
|
1,067.3
|
|
|
|
35.0
|
|
|
|
841.4
|
|
|
|
|
|
|
|
1,943.7
|
|
Collateralized accounts receivable
|
|
|
|
|
|
|
323.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323.3
|
|
Trade accounts receivable, net
|
|
|
|
|
|
|
665.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
665.4
|
|
Customer and commercial financing
|
|
|
|
|
|
|
37.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37.4
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,026.1
|
|
|
|
2,340.9
|
|
|
|
35.0
|
|
|
|
841.4
|
|
|
|
|
|
|
|
4,243.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
11
|
|
|
|
|
|
|
|
804.2
|
|
|
|
|
|
|
|
|
|
|
|
2,955.6
|
|
|
|
3,759.8
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
1,718.2
|
|
|
|
1,722.4
|
|
Financial guarantee of residual value
|
|
|
14
|
|
|
|
|
|
|
|
122.2
|
|
|
|
|
|
|
|
|
|
|
|
88.6
|
|
|
|
210.8
|
|
Financing lease
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
939.0
|
|
|
|
|
|
|
|
|
|
|
|
4,762.5
|
|
|
|
5,701.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16.2
|
Fair value of financial instruments
|
The fair value of the Companys financial assets and
liabilities was determined using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to generate estimates of fair values. Consequently, the estimates
presented below are not necessarily indicative of the amounts that might be realized in a current market exchange. The use of different assumptions and/or methodologies could have a material effect on the estimated realizable values.
The following methods were used to estimate the fair value of each category of financial instrument for which it is possible to estimate the fair value.
The carrying amounts of cash, financial investments, accounts receivable, other financial assets and current liabilities are approximately their fair values.
The fair value of securities held to maturity is estimated by the discounted cash flow methodology. The fair value of
non-current
loans is based on the value of the contractual cash flows. The discount rate
used, when applicable, is based on the future market yield curve for the cash flows of each liability.
The Company considers fair value to be
the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants
would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. The Company primarily applies the market approach for recurring fair value measurements and endeavors to
utilize the best available information. Accordingly, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the
observable inputs. A fair value hierarchy is used to prioritize the inputs used to measure fair value. The three Levels of the fair value hierarchy are as follows:
|
|
|
Level 1
quoted prices are available in active markets for identical assets or liabilities at the reporting period. Active markets are those in which transactions for the asset or liability occur in
sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives and listed equities.
|
30
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
Level 2
pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. However, they can be directly or
indirectly observable at the statement of financial position date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider
various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these
assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category
include
non-exchange
traded derivatives such as swaps or
over-the-counter
forwards and options.
|
|
|
|
Level 3
pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in Managements
best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments and includes in Level 3 all of those whose fair value is based on significant unobservable inputs.
|
The following table lists the Companys financial assets and liabilities by level within the fair value hierarchy. The Companys assessment of the
significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
Note
|
|
|
Fair value of financial
instruments measured at fair
value through profit or loss
|
|
|
Total
|
|
|
Fair value
of the other
financial
instruments
|
|
|
Fair
value
|
|
|
Book
value
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
3
|
|
|
|
396.9
|
|
|
|
375.6
|
|
|
|
|
|
|
|
772.5
|
|
|
|
|
|
|
|
772.5
|
|
|
|
772.5
|
|
Financial investments
|
|
|
4
|
|
|
|
0.2
|
|
|
|
1,463.0
|
|
|
|
|
|
|
|
1,463.2
|
|
|
|
1,348.3
|
|
|
|
2,811.6
|
|
|
|
2,811.6
|
|
Collateralized accounts receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300.4
|
|
|
|
300.4
|
|
|
|
300.4
|
|
Trade accounts receivable, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
708.3
|
|
|
|
708.3
|
|
|
|
708.3
|
|
Customer and commercial financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.0
|
|
|
|
17.0
|
|
|
|
17.0
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
50.4
|
|
|
|
|
|
|
|
50.4
|
|
|
|
|
|
|
|
50.4
|
|
|
|
50.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
397.1
|
|
|
|
1,889.0
|
|
|
|
|
|
|
|
2,286.1
|
|
|
|
2,374.0
|
|
|
|
4,660.2
|
|
|
|
4,660.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
11
|
|
|
|
|
|
|
|
827.3
|
|
|
|
|
|
|
|
827.3
|
|
|
|
3,479.5
|
|
|
|
4,594.2
|
|
|
|
4,306.9
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
13.6
|
|
|
|
|
|
|
|
|
|
|
|
13.6
|
|
|
|
1,504.4
|
|
|
|
1,518.0
|
|
|
|
1,518.0
|
|
Financial guarantee and of residual value
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
108.4
|
|
|
|
108.4
|
|
|
|
50.9
|
|
|
|
159.3
|
|
|
|
159.2
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
9.3
|
|
|
|
|
|
|
|
9.3
|
|
|
|
|
|
|
|
9.3
|
|
|
|
9.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13.6
|
|
|
|
836.6
|
|
|
|
108.4
|
|
|
|
958.6
|
|
|
|
5,034.8
|
|
|
|
6,280.8
|
|
|
|
5,993.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2016
|
|
|
|
Note
|
|
|
Fair value of financial
instruments measured at fair
value through profit or loss
|
|
|
Total
|
|
|
Fair value
of the other
financial
instruments
|
|
|
Fair
value
|
|
|
Book
value
|
|
|
|
|
|
|
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
3
|
|
|
|
389.0
|
|
|
|
852.5
|
|
|
|
|
|
|
|
1,241.5
|
|
|
|
|
|
|
|
1,241.5
|
|
|
|
1,241.5
|
|
Financial investments
|
|
|
4
|
|
|
|
0.2
|
|
|
|
1,067.0
|
|
|
|
|
|
|
|
1,067.2
|
|
|
|
876.5
|
|
|
|
1,943.7
|
|
|
|
1,943.7
|
|
Collateralized accounts receivable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
323.3
|
|
|
|
323.3
|
|
|
|
323.3
|
|
Trade accounts receivable, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
665.4
|
|
|
|
665.4
|
|
|
|
665.4
|
|
Customer and commercial financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
37.4
|
|
|
|
37.4
|
|
|
|
37.4
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
32.1
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
389.2
|
|
|
|
1,951.6
|
|
|
|
|
|
|
|
2,340.8
|
|
|
|
1,902.6
|
|
|
|
4,243.4
|
|
|
|
4,243.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
11
|
|
|
|
|
|
|
|
804.2
|
|
|
|
|
|
|
|
804.2
|
|
|
|
2,955.6
|
|
|
|
4,104.5
|
|
|
|
3,759.8
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
1,718.2
|
|
|
|
1,722.4
|
|
|
|
1,722.4
|
|
Financial guarantee and of residual value
|
|
|
14
|
|
|
|
|
|
|
|
|
|
|
|
122.2
|
|
|
|
122.2
|
|
|
|
88.6
|
|
|
|
210.8
|
|
|
|
210.8
|
|
Capital lease
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Derivative financial instruments
|
|
|
5
|
|
|
|
|
|
|
|
8.4
|
|
|
|
|
|
|
|
8.4
|
|
|
|
|
|
|
|
8.4
|
|
|
|
8.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.2
|
|
|
|
812.6
|
|
|
|
122.2
|
|
|
|
939.0
|
|
|
|
4,762.5
|
|
|
|
6,046.2
|
|
|
|
5,701.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of liabilities
measurement using
significant unobservable
inputs (level 3)
|
|
At December 31, 2015
|
|
|
94.7
|
|
|
|
|
|
|
Market value
|
|
|
27.5
|
|
|
|
|
|
|
At December 31, 2016
|
|
|
122.2
|
|
|
|
|
|
|
Market value
|
|
|
(13.8
|
)
|
|
|
|
|
|
At September 30, 2017
|
|
|
108.4
|
|
|
|
|
|
|
16.3
|
Financial risk management policy
|
The Company has and follows a risk management policy, which involves
the diversification of transactions and counterparties, with the objective of mapping the risks related to the financial transactions, as well as the operational directives related to these financial transactions. The policy provides for regular
monitoring and management of the nature and general situation of the financial risks in order to assess the results and the financial impact on cash flows. The credit limits and risk rating of the counterparties are also reviewed periodically.
The Companys risk management policy is part of the financial management policy established by the Executive Directors and approved by to the Board of
Directors, and provides for monitoring by a Financial Management Committee. Under this policy, the market risks are mitigated when there is no counterparty in the Companys operations and when it is considered necessary to support the corporate
strategy. The Companys internal control procedures provide for consolidated monitoring and supervision of the financial results and of the impact on cash flows.
The Financial Management Committee assists the Financial Department in examining and reviewing information in relation to the economic scenario and its
potential impact on the Companys operations, including significant risk management policies, procedures and practices.
32
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
The financial risk management policy includes the use of derivative financial
instruments to mitigate the effects of interest rate fluctuations and to reduce the exposure to exchange rate risk. The use of these instruments for speculative purposes is forbidden.
16.3.1 Capital risk management
The Company
uses capital management to ensure the continuity of its investment program and offer a return to its shareholders and benefits to its stakeholders and to maintain an optimized capital structure in order to reduce costs.
The Company may review its dividends payment policy, pay back capital to the shareholders, issue new shares or sell assets in order to maintain or adjust its
capital structure (to reduce indebtedness, for instance).
Liquidity and the leverage level are constantly monitored in order to mitigate refinance risk
and to maximize the return to the shareholders. The ratio between the liquidity and the return to the shareholders may be changed pursuant to the assessment of the Board of Directors.
The Companys capital management may be modified to adjust to changes in the economic scenario or strategic repositioning of the Company.
At September 30, 2017, cash and cash equivalents and financial investments was lower than the Companys loans and financing by US$ 722.8 and at
December 31, 2016 cash and cash equivalents and financial investments was lower than the Companys loans and financing by US$ 574.7.
Of the
total loans and financing as of September 30, 2017, 6.7% was short-term (13.6% at December 31, 2016) and the weighted average term was equivalent to 6.1 years (5.3 years at December 31, 2016). The Companys own capital accounted
for 34.7% of the total liabilities at September 30, 2017 and 33.8% at December 31, 2016.
16.3.2 Credit risk
Credit risk is the risk of a transaction negotiated between counterparties not meeting an obligation established in a financial instrument, or in negotiation
of sales to customers, leading to a financial loss. The Company is exposed to credit risk in its operational activities, cash held in banks and other investments in financial instruments held in financial institutions.
The credit risk of cash and financial investments, which is
managed by the Companys Financial Department, is in compliance with the risk management policy. The credit limit of counterparties is reviewed on a daily basis in order to minimize concentration of risks and mitigate financial losses due to
the bankruptcy of a counterparty. The Financial Management Committee assists the Financial Department in examining and reviewing operations with counterparties.
The Company may incur losses on amounts receivable from sales of
spare parts and services and customer credit ratings are analyzed continuously in order to reduce this risk. The Company may also be subject to credit risk on accounts receivable from aircraft sales until the financing structure has been completed.
To minimize this credit risk, the Company operates with financial institutions to facilitate structuring of the financing.
To cover
possible losses on doubtful accounts, the Company has recorded an allowance considered sufficient by management to cover expected losses on realization of the receivables.
The following tables present the credit risk classification of the respective counterparty of the financial investment (including cash) and other financial
assets held by the Company.
33
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
a)
|
Credit risk for counterparty with external assessment
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Cash and cash equivalents
|
|
|
772.5
|
|
|
|
1,241.5
|
|
Financial investments
|
|
|
2,811.6
|
|
|
|
1,943.7
|
|
Derivative financial instruments
|
|
|
50.4
|
|
|
|
32.1
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,634.5
|
|
|
|
3,217.3
|
|
|
|
|
|
|
|
|
|
|
Based on externai appraisal:
|
|
|
|
|
|
|
|
|
AAA
|
|
|
58.2
|
|
|
|
46.5
|
|
AA
|
|
|
1,311.1
|
|
|
|
1,165.1
|
|
A
|
|
|
1,651.5
|
|
|
|
1,478.4
|
|
BBB
|
|
|
562.7
|
|
|
|
481.6
|
|
BB
|
|
|
4.0
|
|
|
|
10.4
|
|
N/A
|
|
|
47.0
|
|
|
|
35.3
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,634.5
|
|
|
|
3,217.3
|
|
|
|
|
|
|
|
|
|
|
N/A Not available: no observable input to credit assessment
b)
|
Credit risk for counterparties without external evaluation
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Collateralized accounts receivable
|
|
|
300.4
|
|
|
|
323.3
|
|
Trade accounts receivable, net
|
|
|
708.3
|
|
|
|
665.4
|
|
Customer and commercial financing
|
|
|
17.0
|
|
|
|
37.4
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,025.7
|
|
|
|
1,026.1
|
|
|
|
|
|
|
|
|
|
|
Based on internal appraisal:
|
|
|
|
|
|
|
|
|
Group 1
|
|
|
3.3
|
|
|
|
2.1
|
|
Group 2
|
|
|
91.2
|
|
|
|
149.5
|
|
Group 3
|
|
|
931.2
|
|
|
|
874.5
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,025.7
|
|
|
|
1,026.1
|
|
|
|
|
|
|
|
|
|
|
Group 1 : New customers (less than one year)
|
|
|
|
|
|
|
|
|
Group 2 : Customers (more than one year) impaired
|
|
|
|
|
|
|
|
|
Group 3 : Customers (more than one year) not impaired
|
|
|
|
|
|
|
|
|
16.3.3 Liquidity risk
This is the risk of the Company not having sufficient liquid funds to honor its financial commitments as a result of a mismatch of terms or volumes of
estimated receipts and payments.
Projections and assumptions are established to manage the liquidity of cash in U.S. dollars and
reais
, in
accordance with the financial management policy, based on contracts for future disbursements and receipts, and monitored daily by the Company. Accordingly, possible mismatches are detected well in advance allowing the Company to adopt mitigation
measures to reduce risks and financial cost.
34
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
The following table provides additional information related to authorization of
undiscounted contractual obligations and commercial commitments and their respective maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Flow
|
|
|
Less than one
year
|
|
|
One to three
years
|
|
|
Three to five
years
|
|
|
More than
five years
|
|
At September 30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
5,561.1
|
|
|
|
442.8
|
|
|
|
994.1
|
|
|
|
1,220.6
|
|
|
|
2,903.6
|
|
Suppliers
|
|
|
786.3
|
|
|
|
786.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse and non recourse debt
|
|
|
381.4
|
|
|
|
26.9
|
|
|
|
333.5
|
|
|
|
10.6
|
|
|
|
10.4
|
|
Financial guarantees
|
|
|
159.2
|
|
|
|
20.0
|
|
|
|
47.5
|
|
|
|
31.0
|
|
|
|
60.7
|
|
Other liabilities
|
|
|
267.4
|
|
|
|
0.7
|
|
|
|
46.5
|
|
|
|
113.6
|
|
|
|
106.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,155.4
|
|
|
|
1,276.7
|
|
|
|
1,421.6
|
|
|
|
1,375.8
|
|
|
|
3,081.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31,2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
4,759.4
|
|
|
|
1,058.3
|
|
|
|
696.5
|
|
|
|
1,136.1
|
|
|
|
1,868.5
|
|
Suppliers
|
|
|
952.1
|
|
|
|
952.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse and non recourse debt
|
|
|
373.9
|
|
|
|
22.9
|
|
|
|
342.0
|
|
|
|
7.2
|
|
|
|
1.8
|
|
Financial guarantees
|
|
|
210.8
|
|
|
|
49.7
|
|
|
|
36.4
|
|
|
|
27.5
|
|
|
|
97.2
|
|
Other liabilities
|
|
|
309.8
|
|
|
|
8.0
|
|
|
|
89.3
|
|
|
|
161.0
|
|
|
|
51.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,606.0
|
|
|
|
2,091.0
|
|
|
|
1,164.2
|
|
|
|
1,331.8
|
|
|
|
2,019.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table above shows the outstanding principal and interest if applicable at the maturity dates. In the case of the fixed
rate liabilities, interest expense was calculated based on the rate established in each debt contract. Interest expense on floating rate liabilities was calculated based on a market forecast for each period (e.g. LIBOR 6m12m).
16.3.4 Market risk
This risk arises from the possibility of the Company incurring losses on account of
interest rate fluctuations that increase the financial expense of liabilities subject to floating interest rates, reducing the income on assets subject to floating rates and / or fluctuations in fair value when calculating the price of assets or
liabilities marked to market at fixed rates.
The lines of the Financial Statements most affected by interest risks are:
|
|
|
Cash, cash equivalents and financial investmentsCompany policy for managing the risk of fluctuations in interest rates on financial investments is to measure market risk by the
Value-At-RiskVAR
methodology, analyzing a variety of risk factors that might affect the return on the investments. The financial income determined in the period already reflects the effects of marking
the assets in the Brazilian and foreign investment portfolios to market.
|
|
|
|
Loans and financingthe Company uses derivative contracts to hedge against the risk of fluctuations in interest rates on certain transactions, and continuously monitors market interest rates to evaluate the
potential need to contract new derivative transactions to protect against the risk of volatility in these rates.
|
35
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
At September 30, 2017, the Companys cash, cash equivalents, financial
investments and loans and financing were indexed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without derivative effect
|
|
Pre-fixed
|
|
|
Post-fixed
|
|
|
T otal
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Cash, cash equivalents and financial investments
|
|
|
2,785.2
|
|
|
|
77.71%
|
|
|
|
798.9
|
|
|
|
22.29%
|
|
|
|
3,584.1
|
|
|
|
100.00%
|
|
Loans and financing
|
|
|
4,008.9
|
|
|
|
93.08%
|
|
|
|
298.0
|
|
|
|
6.92%
|
|
|
|
4,306.9
|
|
|
|
100.00%
|
|
With
derivative effect
|
|
Pre-fixed
|
|
|
Post-fixed
|
|
|
T otal
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Cash, cash equivalents and financial investments
|
|
|
2,691.0
|
|
|
|
75.08%
|
|
|
|
893.1
|
|
|
|
24.92%
|
|
|
|
3,584.1
|
|
|
|
100.00%
|
|
Loans and financing
|
|
|
3,193.6
|
|
|
|
74.15%
|
|
|
|
1,113.3
|
|
|
|
25.85%
|
|
|
|
4,306.9
|
|
|
|
100.00%
|
|
At September 30, 2017, the Companys cash equivalents and post -fixed financing were indexed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Cash equivalents and financial investments
|
|
|
798.9
|
|
|
|
100.00%
|
|
|
|
893.1
|
|
|
|
100.00%
|
|
CDI
|
|
|
752.2
|
|
|
|
94.15%
|
|
|
|
846.4
|
|
|
|
94.77%
|
|
Libor
|
|
|
46.7
|
|
|
|
5.85%
|
|
|
|
46.7
|
|
|
|
5.23%
|
|
Loans and financing
|
|
|
298.0
|
|
|
|
100.00%
|
|
|
|
1,113.3
|
|
|
|
100.00%
|
|
TJLP
|
|
|
9.2
|
|
|
|
3.09%
|
|
|
|
9.2
|
|
|
|
0.83%
|
|
Libor
|
|
|
288.8
|
|
|
|
96.91%
|
|
|
|
285.5
|
|
|
|
25.64%
|
|
CDI
|
|
|
|
|
|
|
0.00%
|
|
|
|
818.6
|
|
|
|
73.53%
|
|
b)
|
Foreign exchange rate risk
|
The Company and the majority of its subsidiaries functional currency is the
US dollar.
Consequently, the Companys operations which are most exposed to foreign exchange gains/losses are those denominated in
reais
(labor costs, court lawsuits, local expenses, financial investments and loans and financing) as well as investments in subsidiaries in currencies other than the US dollar.
Company policy for protection against foreign exchange risks on assets and liabilities is mainly based on seeking to maintain a balance between assets and
liabilities indexed in each currency and daily management of foreign currency purchases and sales to ensure that, on realization of the transactions contracted, this natural hedge will occur. This policy minimizes the effect of exchange rate changes
on assets and liabilities already contracted, but does not protect against the risk of fluctuations in future results due to the appreciation or depreciation of the
real
that can, when measured in U.S. dollars, show an increase or reduction
of the share of costs denominated in
reais.
Under certain market conditions, the Company may protect itself against potential future mismatches of
expenses and revenues denominated in foreign currency, to minimize the effects of future exchange variations on the Companys profit or loss.
Efforts to minimize the foreign exchange risk for rights and liabilities denominated in currencies other than the functional currency may involve transactions
with derivatives, such as swaps, exchange options and
Non-Deliverable
Forwards (NDF) (Note 5).
36
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
On September 30, 2017, the Company had financial assets and liabilities denominated
by several currencies on the amounts described below without the effect of derivative transactions:
|
|
|
|
|
|
|
|
|
|
|
Without the effect of
derivative transactions
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Loans and financing
|
|
|
|
|
|
|
|
|
Brazilian reais
|
|
|
735.7
|
|
|
|
832.9
|
|
U.S. dollars
|
|
|
3,554.7
|
|
|
|
2,910.6
|
|
Euro
|
|
|
16.5
|
|
|
|
16.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,306.9
|
|
|
|
3,759.9
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
|
|
|
|
|
|
Brazilian reais
|
|
|
70.0
|
|
|
|
91.9
|
|
U.S. dollars
|
|
|
639.8
|
|
|
|
783.2
|
|
Euro
|
|
|
75.3
|
|
|
|
75.3
|
|
Other currencies
|
|
|
1.2
|
|
|
|
1.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
786.3
|
|
|
|
952.1
|
|
|
|
|
|
|
|
|
|
|
Total (1)
|
|
|
5,093.2
|
|
|
|
4,712.0
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and financial investments
|
|
|
|
|
|
|
|
|
Brazilian reais
|
|
|
862.1
|
|
|
|
1,180.0
|
|
U.S. dollars
|
|
|
2,592.5
|
|
|
|
1,833.4
|
|
Euro
|
|
|
94.8
|
|
|
|
127.1
|
|
Other currencies
|
|
|
34.7
|
|
|
|
44.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,584.1
|
|
|
|
3,185.2
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable:
|
|
|
|
|
|
|
|
|
Brazilian reais
|
|
|
136.4
|
|
|
|
69.6
|
|
U.S. dollars
|
|
|
454.4
|
|
|
|
527.7
|
|
Euro
|
|
|
111.7
|
|
|
|
68.0
|
|
Other currencies
|
|
|
5.8
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
708.3
|
|
|
|
665.4
|
|
|
|
|
|
|
|
|
|
|
Total (2)
|
|
|
4,292.4
|
|
|
|
3,850.6
|
|
|
|
|
|
|
|
|
|
|
Net exposure (1 - 2):
|
|
|
|
|
|
|
|
|
Brazilian reais
|
|
|
(192.8
|
)
|
|
|
(324.8
|
)
|
U.S. dollars
|
|
|
1,147.6
|
|
|
|
1,332.7
|
|
Euro
|
|
|
(114.7
|
)
|
|
|
(103.4
|
)
|
Other currencies
|
|
|
(39.3
|
)
|
|
|
(43.1
|
)
|
The Company has other financial assets and liabilities that are also influenced by foreign exchange variations that are not
included in the table above. They are used to minimize exposure in the currencies presented.
16.4
|
Sensitivity analysis
|
In order to present positive and negative variations of 25% and 50% in the risk
variable considered, a sensitivity analysis of the financial instruments, including derivatives, is presented below describing the effects on the monetary and foreign exchange variations on the financial income and expense determined on the balances
recorded at September 30, 2017, in the event of the occurrence of such variations in the risk component.
37
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
However, statistical simplifications were made in isolating the variability of the risk
factors in question. Consequently, the following estimates do not necessarily represent the amounts that might be determined in future financial statements. The use of different hypotheses and/or methodologies could have a material effect on the
estimates presented below.
16.4.1 Methodology
Assuming that the balances remain constant, the Company calculates the interest and exchange variation differential for each of the projected scenarios.
Evaluation of the amounts exposed to interest rate risk considers only the risks for the financial statement. Operations subject to prefixed interest rates
were not included. The probable scenario is based on the Companys estimates for each of the variables indicated, and positive and negative variations of 25% and 50% were applied to the rates in force as of the reporting date.
In the sensitivity analysis of derivative contracts, positive and negative variations of 25% and 50% were applied to the market yield curve (BM&FBOVESPA)
as of the reporting date.
16.4.2 Interest risk factor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk factor
|
|
Amounts
exposed at
09.30.2017
|
|
|
Additional variations in book balances (*)
|
|
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Cash equivalents and financial investments
|
|
CDI
|
|
|
752.2
|
|
|
|
(34.3
|
)
|
|
|
(20.9
|
)
|
|
|
(7.4
|
)
|
|
|
6.0
|
|
|
|
19.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
CDI
|
|
|
752.2
|
|
|
|
(34.3
|
)
|
|
|
(20.9
|
)
|
|
|
(7.4
|
)
|
|
|
6.0
|
|
|
|
19.4
|
|
Cash equivalents and financial investments
|
|
LIBOR
|
|
|
46.7
|
|
|
|
(0.4
|
)
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
0.1
|
|
|
|
0.2
|
|
Loans and financing
|
|
LIBOR
|
|
|
288.8
|
|
|
|
2.4
|
|
|
|
1.4
|
|
|
|
0.4
|
|
|
|
(0.6
|
)
|
|
|
(1.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
LIBOR
|
|
|
(242.1
|
)
|
|
|
2.0
|
|
|
|
1.2
|
|
|
|
0.3
|
|
|
|
(0.5
|
)
|
|
|
(1.3
|
)
|
Loans and financing
|
|
TJLP
|
|
|
9.2
|
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
TJLP
|
|
|
(9.2
|
)
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
(0.3
|
)
|
Rates considered
|
|
CDI
|
|
|
8.14%
|
|
|
|
3.58%
|
|
|
|
5.36%
|
|
|
|
7.15%
|
|
|
|
8.94%
|
|
|
|
10.73%
|
|
Rates considered
|
|
LIBOR
|
|
|
1.51%
|
|
|
|
0.68%
|
|
|
|
1.02%
|
|
|
|
1.36%
|
|
|
|
1.70%
|
|
|
|
2.04%
|
|
Rates considered
|
|
TJLP
|
|
|
7.00%
|
|
|
|
3.50%
|
|
|
|
5.25%
|
|
|
|
7.00%
|
|
|
|
8.75%
|
|
|
|
10.50%
|
|
(*)
|
The positive and negative variations of 25% and 50% were applied on the rates in effect at 09.30.2017
|
16.4.3 Foreign exchange risk factor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk
factor
|
|
|
Amounts
exposed at
09.30.2017
|
|
|
Additional variations in book balances (*)
|
|
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Assets
|
|
|
|
|
|
|
1,302.6
|
|
|
|
655.0
|
|
|
|
331.2
|
|
|
|
7.4
|
|
|
|
(316.4
|
)
|
|
|
(640.3
|
)
|
Cash, cash equivalents and financial investments
|
|
|
BRL
|
|
|
|
862.1
|
|
|
|
433.5
|
|
|
|
219.2
|
|
|
|
4.9
|
|
|
|
(209.4
|
)
|
|
|
(423.8
|
)
|
Other assets
|
|
|
BRL
|
|
|
|
440.5
|
|
|
|
221.5
|
|
|
|
112.0
|
|
|
|
2.5
|
|
|
|
(107.0
|
)
|
|
|
(216.5
|
)
|
Liabilities
|
|
|
|
|
|
|
(1,272.3
|
)
|
|
|
(639.8
|
)
|
|
|
(323.5
|
)
|
|
|
(7.2
|
)
|
|
|
309.0
|
|
|
|
625.3
|
|
Loans and financing
|
|
|
BRL
|
|
|
|
(735.7
|
)
|
|
|
(370.0
|
)
|
|
|
(187.1
|
)
|
|
|
(4.2
|
)
|
|
|
178.7
|
|
|
|
361.6
|
|
Other liabilities
|
|
|
BRL
|
|
|
|
(536.6
|
)
|
|
|
(269.8
|
)
|
|
|
(136.4
|
)
|
|
|
(3.0
|
)
|
|
|
130.3
|
|
|
|
263.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
|
|
|
|
|
2,574.9
|
|
|
|
15.2
|
|
|
|
7.7
|
|
|
|
0.2
|
|
|
|
(7.4
|
)
|
|
|
(15.0
|
)
|
Exchange rate considered
|
|
|
|
|
|
|
3.1680
|
|
|
|
1.5750
|
|
|
|
2.3625
|
|
|
|
3.1500
|
|
|
|
3.9375
|
|
|
|
4.7250
|
|
(*)
|
The positive and negative variations of 25% and 50% were applied on the rates in effect at 09.30.2017
|
38
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
16.4.4 Derivative contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Risk factor
|
|
Amounts
exposed at
09.30.2017
|
|
|
Additional variations in book balances (*)
|
|
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Interest swap
|
|
LIBOR
|
|
|
1.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
Interest swap - fair value hedge
|
|
CDI
|
|
|
25.9
|
|
|
|
17.9
|
|
|
|
8.7
|
|
|
|
(4.0
|
)
|
|
|
(8.1
|
)
|
|
|
(15.8
|
)
|
Interest swap
|
|
CDI
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.2
|
)
|
Hedge designated as cash flow
|
|
US$/R$
|
|
|
14.8
|
|
|
|
152.3
|
|
|
|
72.8
|
|
|
|
(14.8
|
)
|
|
|
(54.5
|
)
|
|
|
(126.8
|
)
|
Hedge designated as cash flow
|
|
LIBOR
|
|
|
(0.2
|
)
|
|
|
(121.5
|
)
|
|
|
(110.5
|
)
|
|
|
(104.7
|
)
|
|
|
(89.8
|
)
|
|
|
(65.9
|
)
|
Foreign Exchange option
|
|
EUR/US$
|
|
|
0.4
|
|
|
|
6,058.3
|
|
|
|
3,037.5
|
|
|
|
16.8
|
|
|
|
(3,004.0
|
)
|
|
|
(6,024.7
|
)
|
Exchange Rate Swap + Interest - Designated as Fair Value Hedge
|
|
CDI
|
|
|
(0.2
|
)
|
|
|
(0.4
|
)
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
0.1
|
|
|
|
0.3
|
|
Interest Rate Swap - Financial investment
|
|
|
|
|
(1.0
|
)
|
|
|
(1.6
|
)
|
|
|
(0.8
|
)
|
|
|
0.4
|
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
41.1
|
|
|
|
6,105.3
|
|
|
|
3,007.7
|
|
|
|
(106.5
|
)
|
|
|
(3,156.5
|
)
|
|
|
(6,232.4
|
)
|
Rate considered
|
|
LIBOR
|
|
|
1.51%
|
|
|
|
0.68%
|
|
|
|
1.02%
|
|
|
|
1.36%
|
|
|
|
1.70%
|
|
|
|
2.04%
|
|
Rate considered
|
|
CDI
|
|
|
8.14%
|
|
|
|
3.58%
|
|
|
|
5.36%
|
|
|
|
7.15%
|
|
|
|
8.94%
|
|
|
|
10.73%
|
|
Rate considered
|
|
US$/R$
|
|
|
3.1680
|
|
|
|
1.5750
|
|
|
|
2.3625
|
|
|
|
3.1500
|
|
|
|
3.9375
|
|
|
|
4.7250
|
|
Rate considered
|
|
LIBOR
|
|
|
1.1806
|
|
|
|
0.5900
|
|
|
|
0.8850
|
|
|
|
1.1800
|
|
|
|
1.4750
|
|
|
|
1.7700
|
|
(*)
|
The positive and negative variations of 25% and 50% were applied on the rates in effect at 09.30.2017
|
16.4.5 Residual Value Guarantees
The residual
value guarantees are reported in a manner similar to financial derivative instruments.
Based on residual value guarantee contracts in force, the Company
ascertains any changes in values based on third party appraisals. The probable scenario is based on the Companys expectation of recording the provisions on a statistical basis, and the positive and negative variations of 25% and 50% have been
applied to the third party appraisals at the balance sheet date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts
exposed at
09.30.2017
|
|
|
Additional variations in book balances
|
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Financial guarantee of residual value
|
|
|
108.4
|
|
|
|
(131.0
|
)
|
|
|
(110.2
|
)
|
|
|
(0.9
|
)
|
|
|
77.6
|
|
|
|
86.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
108.4
|
|
|
|
(131.0
|
)
|
|
|
(110.2
|
)
|
|
|
(0.9
|
)
|
|
|
77.6
|
|
|
|
86.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If a provision is considered insufficient to cover the probable execution of the guarantees, it is increased to adjust it to
the Companys exposure at the reporting period.
The authorized capital is divided into 1,000,000,000 common shares. The Companys
subscribed and paid up capital at September 30, 2017 was US$ 1,438.0 and was comprised of 740,465,044 common shares, without par value, of which 7,600,935 shares were held in Treasury.
17.2
|
Brazilian Government Golden Share
|
The Federal Government holds one golden share with the
same voting rights as other holders of common shares but which grants it certain additional rights as established in article 9 of the Embraers bylaws.
39
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
Common shares acquired by using the resources from the reserve for investments and
working capital. This operation occurred in accordance with the rules approved by the Board of Directors on meeting held in December 7, 2007 and corresponds to 7,600,935 common shares and US$ 53.2 as of September 30, 2017. These shares
lose voting and economic rights during the period in which they are held in Treasury, its movement is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
Quantity
|
|
|
Share value (USD)
|
|
|
Net income of uses
|
|
In the beggining of the year
|
|
|
49.1
|
|
|
|
5,906,120
|
|
|
|
8.31
|
|
|
|
|
|
Used for stock options plan (i)
|
|
|
(10.9
|
)
|
|
|
(1,305,185
|
)
|
|
|
8.35
|
|
|
|
5.7
|
|
Repurchase of shares in the period (ii)
|
|
|
15.0
|
|
|
|
3,000,000
|
|
|
|
5.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
53.2
|
|
|
|
7,600,935
|
|
|
|
7.00
|
|
|
|
5.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The beneficiaries of the shares used in the share-based compensation plan include the Statutory Board of Directors, Executive Directors and certain employees.
|
(ii)
|
Refers to repurchases of shares with the objective of supporting the Long Term Incentive (LTI) plan for the Phantom shares plan. The repurchase was done according to rules approved by the Board of Directors,
and the lowest and highest prices per share were US$ 4.6 and US$ 5.5 respectively
|
At September 30, 2017, the market
value of the shares held in Treasury was US$ 42.9 (December 31, 2016US$ 25.9).
17.4
|
Investment subsidy reserve
|
This reserve was formed pursuant to article
195-A
of Brazilian Corporate Law (as amended by Law 11,638, of 2007) and corresponds to the appropriation of the portion of retained earnings derived from government subsidies received by the Company, which
cannot be distributed to shareholders in the form of dividends, recognized in the statements of income in the same line of the depreciation of assets to which the subsidy refers.
These subsidies are not included in the calculation of the minimum mandatory dividends.
17.5
|
Interest on own capital
|
Interest on own capital is allocated to dividends and approved by the Statutory
Board of Directors as follows:
|
|
|
In meeting held on March 08, 2017, the Statutory Board of Directors approved the distribution of interest on own capital for the first quarter of 2017 in the amount of US$ 9.3, corresponding to US$ 0.01 per share.
Payment of interest on own capital is subject to withholding tax at 15%. The payment was made on April 13, 2017.
|
|
|
|
In meeting held on June 02, 2017, the Statutory Board of Directors approved the distribution of interest on own capital for the second quarter of 2017 in the amount of US$ 8.9, corresponding to US$ 0.01 per share. The
interest on own capital payment is subject to 15% of income tax. The payment was made on July 13, 2017.
|
|
|
|
In meeting held on September 06, 2017, the Statutory Board of Directors approved the distribution of interest on own capital for the third quarter of 2017 in the amount of US$ 9.3, corresponding to US$ 0.01 per share.
The interest on own capital payment is subject to 15% of income tax. The payment was made on October 09, 2017.
|
Interest on own capital
approved or paid during the interim periods is treated as an advance on the mandatory dividends and is adjusted in the last quarter of the year to total a 25% participation in the companys results in accordance with the bylaws.
40
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
18.
|
Share-based compensation
|
In February 2014, the Board of Directors approved the revision of the
Executive Remuneration Policy (ERP), applicable to all executive officers and other Company executives. The elements of executive compensation include the Long Term Incentive (LTI) main objectives of which are (i) to maintain and attract highly
qualified personnel for the Company, (ii) assure people that can contribute to improving the Companys performance of the right to participate in the results of their contribution, (iii) in addition to ensuring the continuity of the
Companys management by aligning the interests of executives with those of shareholders. The Company currently has two LTI modes: stock options and virtual shares.
Program for the granting of stock options, for the executives of the Company or its
subsidiaries, who may exercise their right in two ways: grants awarded at 2011: I) 20% after 1 year, II) 30% after 2 years and III) 50% after 3 years; and grants awarded at 2012: I) 33% after 3 years, II) 33% after 4 years and III) 34% after 5
years, all in relation to the grant date of each option.
The exercise price of each option is set on the grant date at the weighted average stock option
price of the last sixty trading days, and may be adjusted by up to 30% to offset any speculation. The participant will have a maximum exercise period of five years for option granted to 2011 and seven years for the others, starting from the grant
date.
The grants awarded are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
in thousands of options
|
|
|
|
|
|
|
|
|
Grants
|
|
|
Exercised
|
|
|
Canceled (i)
|
|
|
Outstanding
|
|
|
Exercible
|
|
|
Weighted
average
exercise
Price (R$)
|
|
|
Weighted
average
exercise
Price (US$)
|
|
Grants on January 23, 2012
|
|
|
4,860,000
|
|
|
|
(2,834,080
|
)
|
|
|
(1,009,100
|
)
|
|
|
1,016,820
|
|
|
|
1,016,820
|
|
|
|
11.50
|
|
|
|
6.56
|
|
Grants on March 20, 2013
|
|
|
4,494,000
|
|
|
|
(683,985
|
)
|
|
|
(1,248,870
|
)
|
|
|
2,561,145
|
|
|
|
1,554,405
|
|
|
|
15.71
|
|
|
|
7.91
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
9,354,000
|
|
|
|
(3,518,065
|
)
|
|
|
(2,257,970
|
)
|
|
|
3,577,965
|
|
|
|
2,571,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The cancellations refer to shares granted to executives or employees who no longer work for the Company. Additionally, on April 16, 2014, there was a cancellation of the grants awarded to members of the Board of
Directors, with payment of compensation to plan participants.
|
Is based on the granting of virtual shares to directors and managers and the main
objective is to attract and keep in the Company and its subsidiaries, highly qualified staff to ensure continuity of management and align the interests of directors and key personnel of the Company and controlled entities to those of the
Companys shareholders.
The value of the LTI will be converted at the average price of the Companys shares considering the last 30 trading
days by determining the quantity of virtual shares allocated to each participant, divided into two classes, with 50% in the form of restricted virtual shares and 50% in the form of virtual performance shares.
The Company will pay the LTI by converting the quantity of virtual shares into
reais
at the average quoted price (weighted by trading volume) of the
Companys shares in the last 10 trading days, as follows:
|
|
|
restricted virtual shares: (i) 33% on the third anniversary of the grant date; (ii) 33% on the fourth anniversary of the grant date, and (iii) 34% on the fifth anniversary of the grant date; and
|
|
|
|
In August 2017, it was approved a change in the virtual performance share calculation. The virtual performance share granted in 2015, 2016 and 2017 will be paid in 2020 while those granted in 2018 will be paid in 2021.
The amounts payable will be based on the cost reduction internal target and no longer will be based on the EVA indicator.
|
The amounts
resulting from conversion of virtual shares will be added to the amounts equivalent to dividends and interest on own capital effectively paid by the Company during the vesting period.
41
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
The fair value of virtual shares is determined based on the average price (weighted by
trading volume) of the Companys shares
(EMBR3-R$)
for the last 10 trading days prior to the close of the period, applied to the number of virtual shares assigned to each participant in proportion to the
vesting period.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of virtual
stock
|
|
|
Grant value
|
|
|
Amount of virtual
stock (i)
|
|
|
Fair value of
shares (R$)
|
|
Grants on February 25, 2014
|
|
|
1,570,698
|
|
|
|
30.4
|
|
|
|
320,855
|
|
|
|
5,895,464
|
|
Grants on March 03, 2015
|
|
|
1,237,090
|
|
|
|
30.2
|
|
|
|
447,437
|
|
|
|
8,221,313
|
|
Grants on March 10, 2016
|
|
|
1,095,720
|
|
|
|
31.1
|
|
|
|
345,576
|
|
|
|
6,349,704
|
|
Grants on June 09, 2016
|
|
|
55,994
|
|
|
|
1.1
|
|
|
|
19,352
|
|
|
|
355,583
|
|
Grants on August 25, 2016
|
|
|
70,978
|
|
|
|
1.1
|
|
|
|
23,728
|
|
|
|
435,983
|
|
Grants on August 24, 2017
|
|
|
1,925,926
|
|
|
|
30.5
|
|
|
|
333,573
|
|
|
|
6,129,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2017
|
|
|
5,956,406
|
|
|
|
124.4
|
|
|
|
1,490,521
|
|
|
|
27,387,201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Performance shares until September 30, 2017 considering the plans vesting period.
|
Basic earnings per common share is computed by dividing net income for the year by the weighted
average number of shares outstanding during the period, excluding shares acquired by the Company and held in Treasury.
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
09.30.2016
|
|
Net income attributable to owners of Embraer
|
|
|
211.6
|
|
|
|
(29.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
211.6
|
|
|
|
(29.2
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (in thousands)
|
|
|
735,549
|
|
|
|
729,505
|
|
Basic earnings per share U.S. dollars
|
|
|
0.2877
|
|
|
|
(0.0400
|
)
|
Diluted earnings per share are calculated by adjusting the weighted average number of common
shares outstanding to assume conversion of all potentially dilutive shares. The Company has only one category of potentially dilutive shares, with options to purchase shares, for which a calculation is made to determine the number of shares that
could be acquired at fair value (determined as the average market price of the Companys share), based on the monetary value of subscription rights attached options to purchase shares in circulation. The number of shares calculated as described
above is compared with the number of shares issued, assuming the exercise of share purchase options.
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
09.30.2016
|
|
Net income attributable to owners of Embraer
|
|
|
211.6
|
|
|
|
(29.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
211.6
|
|
|
|
(29.2
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares (in thousands)
|
|
|
735,549
|
|
|
|
729,505
|
|
Dilution for the issuance of stock options (in thousands) (i)
|
|
|
577
|
|
|
|
1,946
|
|
Weighted average number of shares (in thousands) diluted
|
|
|
736,126
|
|
|
|
731,451
|
|
Diluted earnings per share U.S. dollars
|
|
|
0.2875
|
|
|
|
(0.0399
|
)
|
(i)
|
Refers to the effect of potentially dilutive shares for September 30, 2017.
|
At September 30, 2017,
there were no anti-dilutive effects.
42
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
20.
|
Other operating income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
06.30.2016
|
|
Contractual fines revenue (i)
|
|
|
10.1
|
|
|
|
2.5
|
|
Financial guarantee (ii)
|
|
|
9.6
|
|
|
|
3.5
|
|
Other sales
|
|
|
7.8
|
|
|
|
6.1
|
|
Royalties
|
|
|
7.6
|
|
|
|
7.9
|
|
Contractual fines (iii)
|
|
|
5.9
|
|
|
|
(6.0
|
)
|
Recovery of expenses
|
|
|
5.1
|
|
|
|
6.2
|
|
Reversal of tax provisions
|
|
|
4.4
|
|
|
|
|
|
Gain on disposal of assets (iv)
|
|
|
1.4
|
|
|
|
(1.9
|
)
|
Product modifications
|
|
|
(0.9
|
)
|
|
|
(1.3
|
)
|
Aircraft maintenance and flights costs fleet
|
|
|
(2.0
|
)
|
|
|
(2.3
|
)
|
Pre operating expenses
|
|
|
(2.7
|
)
|
|
|
(3.4
|
)
|
Environmental provision
|
|
|
(3.0
|
)
|
|
|
(1.0
|
)
|
Flight safety standards
|
|
|
(3.6
|
)
|
|
|
(3.4
|
)
|
Provision for contingencies
|
|
|
(5.1
|
)
|
|
|
(0.7
|
)
|
Restructuring expenses (v)
|
|
|
(6.4
|
)
|
|
|
(123.3
|
)
|
Provision for penalties (vi)
|
|
|
(7.0
|
)
|
|
|
(200.0
|
)
|
Training and development
|
|
|
(7.1
|
)
|
|
|
(8.3
|
)
|
Expenses system project
|
|
|
(17.4
|
)
|
|
|
(9.2
|
)
|
Corporate projects
|
|
|
(17.9
|
)
|
|
|
(14.1
|
)
|
Taxes on other outputs
|
|
|
(18.9
|
)
|
|
|
(25.9
|
)
|
Assets devaluation (vii)
|
|
|
(24.4
|
)
|
|
|
(54.6
|
)
|
Others
|
|
|
(6.7
|
)
|
|
|
(34.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
(71.2
|
)
|
|
|
(463.7
|
)
|
|
|
|
|
|
|
|
|
|
(i)
|
Substantially fines charged to customers for cancellation of sales contracts, mainly in the executive segment, in accordance with the contract terms.
|
(ii)
|
As of September 30, 2017 it refers to the remeasurement of unsecured claims received in December 2016 for their conversion into shares. On September 30, 2016, it refers to the adjustment of the estimate of the
provisions of financial guarantees as a result of the progress of the negotiations with the client Republic Airways Holding.
|
(iii)
|
Refers to contractual penalties to be paid to customers and suppliers due to failure to comply with contractual conditions. Substantially refers to the reversal of a fine previously provisioned in the Defense segment.
|
(iv)
|
Refers to the sale of items recognized in property, plant and equipment as part of the repairable parts pool program and the monetization operation of leased aircraft assets
|
(v)
|
Refers to amounts provisioned to meet the Companys obligations related to the voluntary redundancy scheme Note 15.1.
|
(vi)
|
On September 30, 2016, refers to the provision for penalties recognized by the Company
|
(vii)
|
Impairment of assets related to certain aircraft held in fixed assets and devaluation of the residual value related to assets attached to structured operations recorded in collateralized accounts receivable.
|
21.
|
Responsibilities and Commitments
|
The Company has offered 16
trade-in
aircraft options.
Trade-in
transactions are directly tied to contractual obligations with the customer and the purchase of new aircraft. The exercise of the
trade-in
option is dependent on the customer complying with all the contractual clauses. These options establish that the price of the asset given in payment may be put towards the purchase price of a new and more
up-to-date
aircraft model produced by the Company. The Company continuously monitors all
trade-in
commitments in order to anticipate
any adverse economic impact.
The operating leases refer to buildings, machinery, vehicles and computer equipment. At
September 30, 2017, the amounts recognized totaled US$ 8.6, at September 30, 2016 US$ 12.3. These leases expire at various dates through 2038.
43
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
At September 30, 2017, the Company has operating leases with payments scheduled as
follows:
|
|
|
|
|
Year
|
|
|
|
2017
|
|
|
3.3
|
|
2018
|
|
|
7.2
|
|
2019
|
|
|
5.2
|
|
After 2019
|
|
|
33.1
|
|
|
|
|
|
|
Total
|
|
|
48.8
|
|
|
|
|
|
|
21.3
|
Financial Guarantees
|
The table below provides quantitative data on the Companys financial
guarantees provided to third parties. The maximum potential payments (off balance sheet exposure) represent the worst-case scenario and do not necessarily reflect the results expected 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.
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
12.31.2016
|
|
Maximum financial guarantees
|
|
|
136.2
|
|
|
|
191.2
|
|
Maximum residual value guarantees
|
|
|
267.4
|
|
|
|
286.1
|
|
Mutually exclusive exposure (i)
|
|
|
(29.0
|
)
|
|
|
(32.1
|
)
|
Provisions and liabilities recorded
|
|
|
(127.1
|
)
|
|
|
(144.9
|
)
|
|
|
|
|
|
|
|
|
|
Off-balance sheet exposure
|
|
|
247.5
|
|
|
|
300.3
|
|
|
|
|
|
|
|
|
|
|
Estimated proceeds from financial guarantees and underlying assets
|
|
|
329.1
|
|
|
|
504.4
|
|
|
|
|
|
|
|
|
|
|
(i)
|
When an underlying asset is covered by mutually exclusive financial and residual value guarantees, the residual value guarantee may only be exercised if the financial guarantee has expired without having been exercised.
On the other hand, if the financial guarantee is exercised, the residual value guarantee is automatically terminated.
|
This exposure is
reduced by the fact that, to benefit from the guarantee, the counterparty must ensure that the aircraft complies with rigid conditions for its return.
22.
|
Supplemental Cash Flow information
|
22.1
|
Payments made during the period and transactions not affecting cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
09.30.2017
|
|
|
09.30.2016
|
|
Payments made during the period:
|
|
|
|
|
|
|
|
|
Interest
|
|
|
120.1
|
|
|
|
111.5
|
|
Income tax and social contribution
|
|
|
23.4
|
|
|
|
137.5
|
|
Non-cash financing and investing transactions
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment, with transfer to pool parts inventory
|
|
|
|
|
|
|
9.2
|
|
Additions to property, plant and equipment, with transfer to financial guarantees
|
|
|
|
|
|
|
20.1
|
|
Write off on Property, Plant and Equipment by transfer to pool parts inventory
|
|
|
(18.9
|
)
|
|
|
|
|
Disposals property, plant and equipment for providing for the sale of inventory
|
|
|
(62.9
|
)
|
|
|
(29.6
|
)
|
Management defined the Companys operating segments based on the reports used
for strategic decision reviewed by the chief operating decision-maker. There was no change in the segments presented regarding those disclosed in the consolidated financial statements of December 31, 2016 and for the period of
September 30, 2016.
44
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
Statement of income data by operating segment for the nine-month ended
September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense
and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Total
reportable
Segments
|
|
|
Unallocated
|
|
|
Total
|
|
Revenue
|
|
|
2,571.1
|
|
|
|
679.9
|
|
|
|
832.2
|
|
|
|
23.1
|
|
|
|
4,106.3
|
|
|
|
|
|
|
|
4,106.3
|
|
Cost of sales and services
|
|
|
(1,978.5
|
)
|
|
|
(649.5
|
)
|
|
|
(739.5
|
)
|
|
|
(18.8
|
)
|
|
|
(3,386.3
|
)
|
|
|
|
|
|
|
(3,386.3
|
)
|
Gross profit
|
|
|
592.6
|
|
|
|
30.4
|
|
|
|
92.7
|
|
|
|
4.3
|
|
|
|
720.0
|
|
|
|
|
|
|
|
720.0
|
|
Gross profit %
|
|
|
23.0%
|
|
|
|
4.5%
|
|
|
|
11.1%
|
|
|
|
18.6%
|
|
|
|
17.5%
|
|
|
|
|
|
|
|
17.5%
|
|
Operating income (expense)
|
|
|
(214.8
|
)
|
|
|
(66.9
|
)
|
|
|
(155.6
|
)
|
|
|
(6.7
|
)
|
|
|
(444.0
|
)
|
|
|
(13.4
|
)
|
|
|
(457.4
|
)
|
Operating profit before financial income (expense)
|
|
|
377.8
|
|
|
|
(36.5
|
)
|
|
|
(62.9
|
)
|
|
|
(2.4
|
)
|
|
|
276.0
|
|
|
|
(13.4
|
)
|
|
|
262.6
|
|
Financial income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14.5
|
)
|
|
|
(14.5
|
)
|
Foreign exchange gain (loss), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.7
|
|
|
|
4.7
|
|
Profit before taxes on income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252.8
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(27.6
|
)
|
|
|
(27.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
225.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by geographic area for the ninemonth period ended September 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense
and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Total
|
|
North America
|
|
|
1,711.0
|
|
|
|
81.5
|
|
|
|
608.5
|
|
|
|
17.2
|
|
|
|
2,418.2
|
|
Europe
|
|
|
262.6
|
|
|
|
102.6
|
|
|
|
110.7
|
|
|
|
|
|
|
|
475.9
|
|
Asia Pacific
|
|
|
457.0
|
|
|
|
7.6
|
|
|
|
91.1
|
|
|
|
|
|
|
|
555.7
|
|
Latin America, except Brazil
|
|
|
18.3
|
|
|
|
13.0
|
|
|
|
4.7
|
|
|
|
|
|
|
|
36.0
|
|
Brazil
|
|
|
44.0
|
|
|
|
455.1
|
|
|
|
14.3
|
|
|
|
5.9
|
|
|
|
519.3
|
|
Other
|
|
|
78.2
|
|
|
|
20.1
|
|
|
|
2.9
|
|
|
|
|
|
|
|
101.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,571.1
|
|
|
|
679.9
|
|
|
|
832.2
|
|
|
|
23.1
|
|
|
|
4,106.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
45
Embraer S.A.
Notes to the Condensed Consolidated Interim Financial Statements
In millions of U.S. dollars, unless otherwise stated
(Unaudited)
Statement of income data by operating segment for the nine-month ended
September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense
and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Total
reportable
Segments
|
|
|
Unallocated
|
|
|
Total
|
|
Revenue
|
|
|
2,495.2
|
|
|
|
614.2
|
|
|
|
1,061.1
|
|
|
|
19.2
|
|
|
|
4,189.7
|
|
|
|
|
|
|
|
4,189.7
|
|
Cost of sales and Services
|
|
|
(1,919.9
|
)
|
|
|
(521.5
|
)
|
|
|
(905.6
|
)
|
|
|
(13.1
|
)
|
|
|
(3,360.1
|
)
|
|
|
|
|
|
|
(3,360.1
|
)
|
Gross profit
|
|
|
575.3
|
|
|
|
92.7
|
|
|
|
155.5
|
|
|
|
6.1
|
|
|
|
829.6
|
|
|
|
|
|
|
|
829.6
|
|
Gross profit %
|
|
|
23.1%
|
|
|
|
15.1%
|
|
|
|
14.7%
|
|
|
|
31.8%
|
|
|
|
19.8%
|
|
|
|
|
|
|
|
19.8%
|
|
Operating income (expense)
|
|
|
(295.4
|
)
|
|
|
(83.6
|
)
|
|
|
(193.6
|
)
|
|
|
(4.1
|
)
|
|
|
(576.7
|
)
|
|
|
(323.5
|
)
|
|
|
(900.2
|
)
|
Operating profit before financial income (expense)
|
|
|
279.9
|
|
|
|
9.1
|
|
|
|
(38.1
|
)
|
|
|
2.0
|
|
|
|
252.9
|
|
|
|
(323.5
|
)
|
|
|
(70.6
|
)
|
Financial income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(16.5
|
)
|
|
|
(16.5
|
)
|
Foreign exchange gain (loss), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5.5
|
)
|
|
|
(5.5
|
)
|
Loss before taxes on income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(92.6
|
)
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
64.6
|
|
|
|
64.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by geographic area for the ninemonth ended September 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense
and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Total
|
|
North America
|
|
|
1,737.4
|
|
|
|
148.2
|
|
|
|
696.0
|
|
|
|
16.1
|
|
|
|
2,597.7
|
|
Europe
|
|
|
170.7
|
|
|
|
76.8
|
|
|
|
156.7
|
|
|
|
0.6
|
|
|
|
404.8
|
|
Asia Pacific
|
|
|
433.2
|
|
|
|
21.5
|
|
|
|
112.7
|
|
|
|
|
|
|
|
567.4
|
|
Latin America, except Brazil
|
|
|
81.6
|
|
|
|
11.2
|
|
|
|
67.6
|
|
|
|
|
|
|
|
160.4
|
|
Brazil
|
|
|
45.9
|
|
|
|
341.9
|
|
|
|
25.4
|
|
|
|
2.5
|
|
|
|
415.7
|
|
Other
|
|
|
26.4
|
|
|
|
14.6
|
|
|
|
2.7
|
|
|
|
|
|
|
|
43.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2,495.2
|
|
|
|
614.2
|
|
|
|
1,061.1
|
|
|
|
19.2
|
|
|
|
4,189.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* * *
46
November 17, 2017
Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Commissioners:
We are aware that our report dated November 17, 2017 on our review of condensed consolidated interim financial information of Embraer S.A. for the
three-month and nine-month periods ended September 30, 2017 included in the Companys Form
6-K
is incorporated by reference in its Registration Statement on Form
F-3
(File
No. 333-195376)
dated June 26, 2014.
Very truly
yours,
/s/ PricewaterhouseCoopers
Auditores Independentes
47