20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 20-F

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2013

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-15102

EMBRAER S.A.

(Exact name of Registrant as specified in its charter)

EMBRAER Inc.

(Translation of Registrant’s name into English)

Federative Republic of Brazil

(Jurisdiction of incorporation)

Avenida Brigadeiro Faria Lima, 2170

12227-901 São José dos Campos, São Paulo, Brazil

(Address of principal executive offices)

Luciano Rodrigues Fróes

Head of Investor Relations

(55) 12 3927 4404

investor.relations@embraer.com

Investor relations department, (55) 12 3927 4404, investor.relations@embraer.com.br

(Name, Telephone, E-mail and/or facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act

Title of each class:	Name of each exchange on which registered
Common shares, without par value (represented by, and traded only in the form of, American Depositary Shares (evidenced by American Depositary Receipts), with each American Depositary Share representing four common shares)	New York Stock Exchange
US$500,000,000 5.150% Notes due 2022 of Embraer S.A.	New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act

None.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act

Title of each class

US$400,000,000 6.375% Guaranteed Notes due 2017 of Embraer Overseas Ltd.

Guaranteed by Embraer S.A.

US$500,000,000 6.375% Guaranteed Notes due 2020 of Embraer Overseas Ltd. Guaranteed by Embraer S.A.

Number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2013:

740,465,044 common shares, without par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  x    No  ¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨     No  x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer  x	Accelerated Filer  ¨	Non-accelerated filer  ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP  ¨	International Financial Reporting Standards as issued by the International Accounting Standards Board  x	Other  ¨

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17  ¨ Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

TABLE OF CONTENTS

Part I
		Page
ITEM  1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS		4
ITEM  2.	OFFER STATISTICS AND EXPECTED TIMETABLE		4
ITEM  3.	KEY INFORMATION		4
3A.	Selected Financial Data		4
3B.	Capitalization and Indebtedness		8
3C.	Reasons for the Offer and Use of Proceeds		8
3D.	Risk Factors		8
ITEM  4.	INFORMATION ON THE COMPANY		19
4A.	Unresolved Staff Comments		19
4B.	History and Development of the Company		19
4C.	Business Overview		24
4D.	Organizational Structure		47
4E.	Property, Plant and Equipment		47
ITEM  5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS		52
5A.	Operating Results		53
5B.	Liquidity and Capital Resources		71
5C.	Research and Development, Patents and Licenses, etc.		76
5D.	Trend Information		78
5E.	Off-Balance Sheet Arrangements		82
5F.	Tabular Disclosure of Contractual Obligations		85
5G.	Safe Harbor		86
ITEM  6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES		86
6A.	Directors and Senior Management		86
6B.	Compensation		92
6C.	Board Practices		94
6D.	Employees		96
6E.	Share Ownership		96
ITEM  7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS		97
7A.	Major Shareholders		97
7B.	Related Party Transactions		98
7C.	Interests of Experts and Counsel		99
ITEM  8.	FINANCIAL INFORMATION		99
8A.	Consolidated Statements and Other Financial Information		99
8B.	Significant Changes		104
ITEM  9.	THE OFFER AND LISTING		104
9A.	Offer and Listing Details		104
9B.	Plan of Distribution		106
9C.	Markets		106
9D.	Selling Shareholders		109
9E.	Dilution		109
9F.	Expenses of the Issue		109
ITEM  10.	ADDITIONAL INFORMATION		109
10A.	Share Capital		109
10B.	Memorandum and Articles of Association		109
10C.	Material Contracts		122
10D.	Exchange Controls		122
10E.	Taxation		123
10F.	Dividends and Paying Agents		129
10G.	Statements by Experts		129

i

10H.	Documents on Display	129
10I.	Subsidiary Information	130
ITEM  11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	130
ITEM  12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	133
12A.	Debt Securities	133
12B.	Warrants and Rights	133
12C.	Other Securities	134
12D.	American Depositary Shares	134
Part II
ITEM  13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	135
ITEM  14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	135
ITEM  15.	CONTROLS AND PROCEDURES	135
ITEM  16.A	AUDIT COMMITTEE FINANCIAL EXPERT	136
ITEM  16.B	CODE OF ETHICS	136
ITEM  16.C	PRINCIPAL ACCOUNTANT FEES AND SERVICES	137
ITEM  16.D	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	137
ITEM  16.E	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	137
ITEM  16.F	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	138
ITEM  16.G	CORPORATE GOVERNANCE	138
ITEM  16.H	MINE SAFETY DISCLOSURE	141
Part III
ITEM  17.	FINANCIAL STATEMENTS	141
ITEM  18.	FINANCIAL STATEMENTS	141
ITEM  19.	EXHIBITS	141

ii

INTRODUCTION

In this annual report, “Embraer,” “we,” “us,” “our” or the “Company” refer to Embraer S.A. All references herein to the “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil. All references to “US$,” “dollars” or “U.S. dollars” are to United States dollars.

Presentation of Financial and Other Data

Financial Data

Our audited consolidated financial statements at December 31, 2013 and 2012 and for each of the years ended December 31, 2013, 2012 and 2011 are included in this annual report.

Our consolidated financial statements have been prepared in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or IASB.

After analyzing our operations and businesses with regard to the applicability of International Accounting Standards, or IAS, 21 – “The Effects of Changes in Foreign Exchange Rates,” particularly in relation to the factors involved in determining our functional currency, management concluded that our functional currency is the U.S. dollar. This conclusion was based on an analysis of the following factors, as set forth in IAS 21: (1) the currency that mainly influences the sale prices of our goods and services, (2) the currency of the countries whose competitive forces mainly determine the sale prices of our goods and services, (3) the currency that mainly influences prices of raw materials and other costs involved in providing our goods and services, (4) the currency in which the funds for financial operations are principally obtained, and (5) the currency in which revenue from operations is usually received. Items included in the financial statements of each of our subsidiaries are measured using the currency of the primary economic environment in which such subsidiary operates. Our audited consolidated financial statements included elsewhere in this annual report are presented in U.S. dollars, which is our presentation currency. Our financial statements and financial data presented herein and prepared in accordance with IFRS do not reflect the effects of inflation.

In our 2013, 2012 and 2011 consolidated financial statements, gains or losses resulting from the remeasurement of the monetary items and from foreign currency transactions have been reported in the consolidated statement of income as a single line item.

For certain purposes, such as providing reports to our Brazilian shareholders, filing financial statements with the Comissão de Valores Mobiliários (Brazilian securities commission), or CVM, and determining dividend payments and other distributions and tax liabilities in Brazil, we have prepared, and will continue to be required to prepare, financial statements in accordance with Law No. 6,404 of December 15, 1976, as amended, or the Brazilian Corporate Law. Effective 2008, significant changes were introduced to the accounting aspects of the Brazilian Corporate Law by Law 11,638 of December 28, 2007. In addition, in 2008 certain changes to the accounting principles in Brazil, as well as other changes to the accounting practices adopted in Brazil, or Brazilian GAAP, were introduced by the Comitê de Pronunciamentos Contábeis (Brazilian Accounting Standards Setting Board), and became effective in 2010. These changes to the accounting aspects of the Brazilian Corporate Law and Brazilian GAAP impacted our parent company financial statements as of and for the years ended December 31, 2013, 2012 and 2011 and the basis of our distribution of minimum mandatory dividends. Other than that, such changes had no effect on our consolidated financial statements prepared in accordance with IFRS that are included elsewhere in this annual report.

Because we list our common shares on the Novo Mercado segment of the BM&FBOVESPA S.A.–Bolsa de Valores, Mercadorias e Futuros de São Paulo, or São Paulo Stock Exchange, as of January 2009 we have been required to translate our quarterly and annual financial statements into English. Foreign private issuers are not subject to the quarterly reporting requirements of Exchange Act Rules 13a-13 and 15d-13. Accordingly, foreign private issuers that file annual reports on Form 20-F are only required to promptly furnish, in a Form 6-K, material information such as in a press release that is (1) distributed to stockholders or filed with a national exchange, if made public by that exchange, or (2) required by its domestic laws to be made public.

1

Other Data and Backlog

In this annual report:

• some of the financial data reflects the effect of rounding;

• aircraft ranges are indicated in nautical miles;

• one nautical mile is equal to approximately 1.15 ordinary or “statute” miles, or approximately 1.85 kilometers;

• aircraft speeds are indicated in nautical miles per hour, or knots, or in Mach, which is a measure of the speed of sound;

• the term “regional jet” refers to narrow body jet aircraft with 30-60 passenger seats;

• the term “mid-capacity jet” refers to jet aircraft with 70-120 passenger seats - all of our regional and mid-capacity jet aircraft are sold in the commercial aviation segment;

• the term “commercial aircraft,” as it applies to Embraer, refers to our regional jets and mid-capacity jets;

• the terms “entry-level jet” and “light jet” refer to executive jets that carry from six to eight passengers and up to nine passengers, respectively, that are designed for short take-off distances;

• the term “ultra-large jet” refers to executive jets that have longer range and over-sized cabin space and carry, on average, 19 passengers; and

• the term “executive jets,” as it applies to Embraer, refers to our aircraft sold to companies, including fractional ownership companies, charter companies and air-taxi companies and high net-worth individuals.

We calculate the value of our backlog by considering all firm orders that have not yet been delivered. A firm order is a firm commitment from a customer, represented by a signed contract and customarily accompanied by a down payment, for which we have reserved a place on one of our production lines. Every time we refer to our backlog in this annual report, we make reference only to firm orders and not to options. We also include the number of aircraft sold by our Defense & Security segment to state-owned airlines in our commercial aircraft backlog.

Special Note Regarding Forward-Looking Statements

This annual report includes forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act, principally in Items 3 through 5 and Item 11 of this annual report. We have based these forward-looking statements largely on our current expectations and projections about future events and industry and financial trends affecting our business. These forward-looking statements are subject to risks, uncertainties and assumptions, including, among other things:

• general economic, political and business conditions, both in Brazil and in our other markets;

• changes in competitive conditions and in the general level of demand for our products;

• management’s expectations and estimates concerning our future financial performance, financing plans and programs, and the effects of competition;

• the effects of customers canceling, modifying and/or rescheduling contractual orders;

2

• the effect of changing priorities or reductions in the Brazilian federal government or international government defense budgets on our revenues;

• continued successful development and marketing of the EMBRAER 170/190 jet family, our line of executive jets (including the Phenom 100, Phenom 300, Lineage 1000, Legacy 450 and Legacy 500) and our defense aircraft;

• our level of indebtedness;

• anticipated trends in our industry, including but not limited to the continuation of long-term trends in passenger traffic and revenue yields in the airline industry;

• our short- and long-term outlook for the 30-120 seat commercial airline market;

• our expenditure plans;

• inflation and fluctuations in exchange rates;

• the impact of volatile fuel prices and the airline industry’s response;

• our ability to develop and deliver our products on a timely basis;

• availability of sales financing for our existing and potential customers;

• existing and future governmental regulation;

• our relationship with our workforce; and

• other risk factors, such as those set forth under “Item 3D. Key Information—Risk Factors.”

The words “believe,” “may,” “will,” “forecast,” “estimate,” “plan,” “continue,” “anticipate,” “intend,” “expect” and similar words herein are intended to identify forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this annual report might not occur. Our actual results and performance could differ substantially from those anticipated in our forward-looking statements. As a result of various factors such as those risks described in “Item 3D. Key Information—Risk Factors,” undue reliance should not be placed on these forward-looking statements.

3

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

3A. Selected Financial Data

The following table presents our selected financial data which has been derived from our consolidated audited financial statements prepared in accordance with IFRS as issued by the IASB and other data as of and for the years ended December 31, 2013, 2012, 2011, 2010 and 2009. The data for the years ended December 31, 2013 and 2012 is derived from our consolidated financial statements, which were audited by KPMG Auditores Independentes, an independent registered public accounting firm, as stated in their report included in this annual report. The data for the years ended December 31, 2011, 2010 and 2009 was audited by PricewaterhouseCoopers Auditores Independentes, an independent registered public accounting firm. You should read this selected financial data in conjunction with our audited consolidated financial statements and related notes thereto included elsewhere in this annual report.

	Year ended December 31,
Consolidated Statements of Income Data	2013			2012 Restated			2011 Restated			2010(1)			2009(1)
	(in US$ millions)
Revenue		6,235.0			6,167.0			5,790.9			5,364.1			5,497.8
Cost of sales and services		(4,818.9	)		(4,676.6	)		(4,488.1	)		(4,338.1	)		(4,428.4	)
Gross profit		1,416.1			1,490.4			1,302.8			1,026.0			1,069.4
Operating income (expense)
Administrative		(210.5	)		(279.2	)		(261.3	)		(197.5	)		(191.3	)
Selling		(454.4	)		(480.4	)		(418.6	)		(374.1	)		(304.6	)
Research		(74.7	)		(77.3	)		(85.3	)		(72.1	)		(55.6	)
Other operating (expense) income, net		36.9			(42.8	)		(219.7	)		9.4			(138.5	)
Equity in losses of associates		—			1.2			0.3			—			—
Operating profit before financial income (expense)		713.4			611.9			318.2			391.7			379.4
Financial income (expense), net		(96.4	)		(6.8	)		(90.5	)		17.5			10.2
Foreign exchange gain (loss), net		(14.6	)		8.7			20.1			(1.1	)		(68.8	)
Profit before taxes on income		602.4			613.8			247.8			408.1			320.8
Income tax (expense) benefit		(256.4	)		(265.2	)		(127.4	)		(62.7	)		158.1
Net income		346.0			348.6			120.4			345.4			478.9
Attributable to:
Owners of Embraer		342.0			347.8			111.6			330.2			465.2
Noncontrolling interest		4.0			0.8			8.8			15.2			13.7
	Year ended December 31,
Earnings per Share – Basic	2013			2012 Restated			2011 Restated			2010(1)			2009(1)
	(in US$, except for share data)
Net income attributable to owners of Embraer		342.0			347.8			111.6			330.2			465.2
Weighted average number of shares (in thousands)		729,001			725,023			723,667			723,665			723,665
Basic earnings per share – U.S. dollars		0.4691			0.4797			0.1542			0.4563			0.6428

4

	Year ended December 31,
Earnings per Share – Diluted	2013			2012 Restated			2011 Restated			2010(1)			2009(1)
	(in US$, except for share data)
Net income attributable to owners of Embraer		342.0			347.8			111.6			330.2			465.2
Weighted average number of shares (in thousands) – diluted		729,001			725,023			723,667			723,665			723,665
Dilution – issuance of stock options (in thousands)		4.795			2.708			1.18			354			—
Weighted average number of shares (in thousands)		733,796			727,731			724,847			724,019			723,665
Diluted earnings per share		0.4661			0.4780			0.1540			0.4562			0.6428
	At December 31,
Consolidated Statement of Financial Position Data	2013			2012 Restated			2011 Restated			2010(1)			2009(1)
	(in US$ millions)
Cash and cash equivalents		1,683.7			1,797.0			1,347.8			1,393.1			1,592.4
Financial investments		939.9			578.2			753.6			733.5			953.8
Other current assets		3,144.2			2,983.5			3,062.5			2,856.2			3,096.5
Property, plant and equipment		1,993.3			1,738.4			1,450.4			1,201.0			1,101.3
Intangible assets		1,109.1			958.8			808.3			716.3			725.5
Other long-term assets		1,272.3			1,425.0			1,426.1			1,490.9			1,420.0
Total assets		10,142.5			9,480.9			8,848.7			8,391.0			8,889.5
Short-term loans and financing		79.3			336.3			251.8			72.6			592.4
Other current payables		2,813.4			2,452.4			2,586.6			2,316.1			2,158.2
Long-term loans and financing		2,115.0			1,730.2			1,406.3			1,362.2			1,465.9
Other long-term liabilities		1,502.6			1,611.7			1,486.2			1,508.6			1,790.0
Company shareholders’ equity		3,533.3			3,258.3			3,007.3			3,028.4			2,792.7
Noncontrolling interest		98.9			92.0			110.5			103.1			90.3
Total shareholders’ equity		3,632.2			3,350.3			3,117.8			3,131.5			2,883.0
Total liabilities and shareholders’ equity		10,142.5			9,480.9			8,848.7			8,391.0			8,889.5
	Year ended December 31,
Other Consolidated Financial Data	2013			2012 Restated			2011 Restated			2010(1)			2009(1)
	(in US$ millions)
Net cash generated by operating activities		564.6			693.0			480.1			873.8			3.6
Net cash used in investing activities		(764.0	)		(617.3	)		(602.0	)		(288.3	)		(378.0	)
Net cash generated by (used in) financing activities		192.5			422.3			96.4			(802.2	)		(23.9	)
Depreciation and amortization		290.6			278.8			238.8			219.2			229.3

(1) No restatement of financial information was made because there were no changes generated in the period by the retrospective application of new accounting rules which came into effect as of 2013.

5

	At and for the year ended December 31,
	2013		2012		2011		2010			2009
Other Data:
Aircraft delivered during period:
To the Commercial Aviation Market
ERJ 145		—		—		2		6			7
EMBRAER 170		4		1		1		9/2	(1)		22
EMBRAER 175		24		20		10		8			11
EMBRAER 190		45		62		68		58			62
EMBRAER 195		17		23		24		17			20
To the Defense & Security Market
Legacy 600		—		—		—		1			—
Phenom 100		—		—		—		—			4
EMB 135		—		—		—		1			1
EMBRAER 170		—		—		—		—			—
EMBRAER 190		—		—		—		—			2
EMB 145 AEW&C/RS/MP				2		—		—			—
EMB 312 Tucano/AL-X/ Super Tucano		6		14		—		—			26
To the Executive Jets Market
Legacy 600/650		23		19		13		10			18
EMBRAER 145/170/190 Shuttle		2		1		—		3			3
Phenom 100		30		29		41		100			93
Phenom 300		60		48		42		26			1
Lineage 1000		4		2		3		5			3
To the General Aviation Market
Light Propeller Aircraft		60		62		54		40			34
Total delivered		275		283		258		286			304
Aircraft in backlog at the end of period:
In the Commercial Aviation Market
ERJ 145		—		—		—		2			8
EMBRAER 170		1		10		6		10			17
EMBRAER 175		188		35		46		40			15
EMBRAER 190		73		109		162		157			185
EMBRAER 195		17		31		35		41			40
EMBRAER 170 - E2		100
EMBRAER 175 - E2		25
EMBRAER 190 - E2		25
In the Defense & Security Market
EMB 145 AEW&C/RS/MP		1		1		3		3			3
EMB 312 Tucano/EMB 314/EP Super Tucano		12		18		24		16			57
LAS		20
E99		5
EMB 135		—		—		—		—			1
Legacy 600/Phenom 100		—		—		—		—			—
EMBRAER 170/ EMBRAER 190		—		—		—		—			—
In the Executive Jets Market
Legacy 450/500/600/650/Phenom 100/300/Lineage 1000/EMBRAER 170/190 Shuttle		208		272		421		551			737
In the General Aviation Market
Light Propeller Aircraft		—		—		—		—			—
Total backlog (in aircraft)		675		476		697		820			1,063
Total backlog (in millions)	US$	18,205.5	US$	12,462.2	US$	15,441.2	US$	15,543.2		US$	16,634.8

(1) Figures appearing after a forward slash (/) refer to aircraft delivered under operating leases.

6

Exchange Rates

Prior to March 4, 2005, there were two principal legal foreign exchange markets in Brazil:

• the commercial rate exchange market, and

• the floating rate exchange market.

Most trade and financial foreign exchange transactions were carried out on the commercial rate exchange market. These included the purchase or sale of shares or payment of dividends or interest with respect to shares. Foreign currencies could be purchased only in the commercial exchange market through a Brazilian bank authorized to buy and sell currency in these markets. In both markets, rates were freely negotiated.

Resolution No. 3,265 by the Conselho Monetário Nacional (National Monetary Council), or CMN, dated March 4, 2005, consolidated the foreign exchange markets into one single foreign exchange market, effective as of March 14, 2005. All foreign exchange transactions are now carried out through institutions authorized to operate in the consolidated market and are subject to registration with the electronic registration system of the Central Bank of Brazil, or Central Bank. Foreign exchange rates continue to be freely negotiated, but may be influenced by Central Bank intervention.

Since 1999, the Central Bank has allowed the real/U.S. dollar exchange rate to float freely, and during that period, the real/U.S. dollar exchange rate has fluctuated considerably. In the past, the Central Bank has intervened occasionally to control unstable movements in foreign exchange rates. We cannot predict whether the Central Bank or the Brazilian federal government will continue to let the real float freely or will intervene in the exchange rate market through a currency band system or otherwise. The real may depreciate or appreciate against the U.S. dollar substantially in the future. See “Item 3D. Key Information—Risk Factors—Risks Relating to Brazil.”

The following table sets forth the selling exchange rate, expressed in reais per U.S. dollar, for the periods indicated:

	Exchange Rate of Reais to US$1.00
Year ended December 31,	Low		High		Average(1)		Period-end
2009		1.7024		2.4218		1.9957		1.7412
2010		1.6554		1.8811		1.7601		1.6662
2011		1.5345		1.9016		1.6709		1.8758
2012		1.7024		2.1121		1.9588		2.0435
2013		1.9528		2.4457		2.1741		2.3426

	Exchange Rate of Reais to US$1.00
Month/period ended	Low		High		Average(2)		Period-end
October 31, 2013		2.1611		2.2123		2.1886		2.2026
November 30, 2013		2.2426		2.3362		2.2954		2.3249
December 31, 2013		2.3102		2.3817		2.3455		2.3426
January 31, 2014		2.3335		2.4397		2.3822		2.4263
February 28, 2014		2.3334		2.4238		2.3837		2.3334

Source: Central Bank.

(1) Represents the average of the exchange rates on the last day of each month during the relevant periods.

(2) Represents the average of the exchange rates during the relevant periods.

We will pay any cash dividends and make any other cash distributions with respect to the common shares in reais. Accordingly, exchange rate fluctuations may affect the U.S. dollar amounts received by the holders of American Depositary Shares, or ADSs, upon the conversion into U.S. dollars by the depositary of our ADS program of such distributions for payment to holders of ADSs. Fluctuations in the exchange rate between the real and the U.S. dollar may also affect the U.S. dollar equivalent of the real price of our common shares on the São Paulo Stock Exchange.

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3B. Capitalization and Indebtedness

Not applicable.

3C. Reasons for the Offer and Use of Proceeds

Not applicable.

3D. Risk Factors

Risks Relating to Embraer

A downturn in commercial aviation may reduce our sales and revenue, and, consequently, our profitability, in any given year.

We expect that a substantial portion of our sales in the near future will be derived from sales of commercial aircraft, particularly the EMBRAER 170/190 jet family. Historically, the market for commercial aircraft has been cyclical due to a variety of factors that are both external and internal to the air travel industry, including general economic conditions.

Although the U.S. and world economies have recovered gradually from 2008 crisis, airlines continued to face decreased passenger yields due to increased competition, escalating costs, credit downgrades, liquidity concerns and bankruptcy.

Economic downturns in our industry may reduce air travel demand and corporate and personal spending, which may negatively impact our product lines. Additional impacts of such downturns on the air transport industry have included a decrease in orders of executive jets and a decrease in the volume of financing available to our customers for aircraft purchases, particularly in the Commercial Aviation and Executive Jets segments (see “Item 4C. Information on The Company—Business Overview—Aircraft Financing Arrangements”). A continued downturn in general economic conditions could result in further reductions in air travel and decreased orders from our customers for our aircraft. Our customers could also defer or cancel their purchases of our aircraft. We cannot predict the magnitude or duration of the impact that the above events will have on the air transport industry as a whole and on our business in particular.

In February 2009, we laid off approximately 20% of our labor force as part of our efforts to reposition Embraer in view of the global economic downturn. The cost of these layoffs was US$61.3 million. In addition, we also experienced aggregate cancellations of 60 aircraft orders by several of our customers. For more information on aircraft cancellations, see “Item 3D. —Our aircraft sales are subject to cancellation provisions that may reduce our cash flow”.

We cannot assure you that material cancellations will not occur in the future or that our other businesses will not be affected. Material cancellations, delays or decreases in the number of aircraft delivered in any year in the future would likely reduce our revenue and backlog.

We depend on key customers and key suppliers, the loss of any of which could harm our business.

Commercial aircraft. As of December 31, 2013, 88% of our firm orders in backlog for the EMBRAER 170/190 jet family were from the airlines Skywest, American, United, Republic, JetBlue and Flybe, and the leasing companies ILFC and Aldus. We believe that we will continue to depend on a select number of key customers, the loss of any one of which could reduce our sales and reduce our market share. Fewer sales could reduce our profitability.

Increasingly, the commercial airline industry is seeking to reduce costs and increase efficiency, and is experiencing a consolidation process through mergers and acquisitions and alliances through code-sharing arrangements. Although it is expected that such consolidations and alliances may result in the creation of more stable and competitive airlines, they may also have the effect of reducing the number of existing and potential customers and, possibly, the number of aircraft purchases.

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Defense aircraft. The Força Aérea Brasileira, or Brazilian Air Force, is our largest customer of defense aircraft products. Revenue from sales to the Brazilian federal government accounted for more than 71% of our Defense & Security revenue for the year ended December 31, 2013. A decrease in defense spending by the Brazilian federal government due to defense spending cuts, general budgetary constraints or other factors that are out of our control could decrease our Defense & Security revenue. We cannot assure you that the Brazilian federal government will continue to purchase aircraft or services from us in the future at the same rate or at all.

Key suppliers. Our risk-sharing partners develop and manufacture significant portions of our aircraft, including the engines, hydraulic components, avionics, interior and parts of the fuselage and tail. Once risk-sharing partners have been selected and program development and aircraft production have begun, it is difficult to substitute these partners. In some cases, the aircraft are designed specifically to accommodate a particular component, such as the engine, which cannot be substituted by another manufacturer without significant delays and expense. This dependence of ours on these key suppliers makes us susceptible to the risks of performance, product quality and financial condition of these risk-sharing partners.

We cannot assure you that we will not experience significant delays in obtaining key equipment in our manufacturing process in the future. A large amount of the equipment employed by the aircraft industry is subject to export control regulations and, as such, deliveries are dependent on suppliers having secured the applicable export licenses. Although we work closely with, and monitor the production process of, our risk-sharing partners and major suppliers, the failure of our risk-sharing partners and other major suppliers to meet our performance specifications, quality standards or delivery schedules or to comply with regulatory requirements (including export control requirements) could affect our ability to deliver new aircraft to customers in a timely manner.

Our aircraft sales are subject to cancellation provisions that may reduce our cash flow.

A portion of our aircraft firm orders is subject to significant contingencies before delivery. Prior to delivery, some of our purchase contracts may be terminated, or all or a portion of a particular firm order may be canceled, for different reasons, including:

• extended delays in delivering aircraft or failure to obtain certification of the aircraft or otherwise meet performance milestones and other requirements;

• failure of a customer to honor its aircraft purchases; or

• production rate shortfalls.

Our customers may also reschedule deliveries or cancel orders, particularly during an economic downturn. In 2013, we had revenue of US$40.8 million related to contractual fines charged from customers due to contract cancellations, compared to contractual fine charges of US$41.7 million in 2012 and US$67.1 million in 2011. Material cancellations, delays or decreases in the number of aircraft delivered in any year in the future would likely reduce our sales and revenue, and, consequently, our profitability, for that year. A substantial number of cancellations or extensions of delivery schedules could reduce our sales and revenue for a given year, which in turn would reduce our cash flow and backlog.

Some of our aircraft sales may be subject to financial and residual value guarantees and trade-in options that may require us to make significant cash disbursements in the future.

We have in the past guaranteed, and may in the future guarantee, the financial performance of a portion of the financing for, and the residual value of, some of our aircraft that have already been delivered. Financial guarantees are provided to financing parties to support a portion of the payment obligations of purchasers of our aircraft under their financing arrangements to mitigate default-related losses. These guarantees are collateralized by the financed aircraft.

Residual value guarantees typically ensure that, 15 years after the aircraft delivery date, the relevant aircraft will have a residual market value equal to a percentage of the original sale price. More recently, residual value guarantees have been issued to ensure a residual market value 10 years after the aircraft delivery date. Most of our residual value guarantees are subject to a limitation (a “cap”) and, therefore, on average, our residual value

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guarantee exposure is limited to 17% of the original sale price. In the event of an exercise by a purchaser of its residual value guarantee, we will bear the difference, if any, between the guaranteed residual value and the market value of the aircraft at the time of exercise.

Assuming all customers who are supported by off-balance sheet financial guarantees defaulted on their aircraft financing arrangements, and also assuming we were required to pay the full aggregate amount of outstanding financial and residual value guarantees and were unable to remarket any of the aircraft to offset our obligations, our maximum exposure would have been US$810.7 million (or, subtracting provisions and liabilities already recorded in the amount of US$155.3 million as reflected in Note 25 to our audited consolidated financial statements, US$655.4 million) under these guarantees as of December 31, 2013. As a result, we would be obligated to make substantial payments that may not be recoverable through proceeds from aircraft sales or leases, particularly if in the future we are not able to remarket any of the aircraft to offset our obligations or financing defaults occur with respect to a significant portion of our aircraft. The value of the underlying aircraft is more likely to decrease and third parties are more likely to default during economic downturns. For further discussion see our exposure to these guarantees in Note 37 to our audited consolidated financial statements.

In addition, we sometimes provide trade-in options to our customers in purchase agreements for new aircraft. These options provide customers with the right to trade in existing Embraer aircraft upon the purchase and acceptance of a new aircraft. We had one trade-in option outstanding in 2011, which was cancelled in 2012, before it was exercised. In 2013, we accepted 15 aircraft, with a total value of US$118.1 million, for trade-in pursuant to trade-in options signed in 2012, with respect to 7 aircraft and 2013, with respect to 16 aircraft. As a result, we are currently subject to trade-in options relating to 8 aircraft, as a result of trade-ins tied to contractual obligations with customers and to their taking delivery of certain new aircraft. In addition, other aircraft may become subject to trade-in due to new sales agreements. The trade-in price is determined based on the new aircraft sold, as well as other factors, including a market value assessment performed by independent third party appraisers. We may be required to accept trade-ins at prices that are above the market price of the aircraft, which would result in financial loss for us when we remarket the aircraft.

We continuously re-evaluate our risk related to financial guarantees and trade-in obligations based on a number of factors, including the estimated future market value of our aircraft based on third-party appraisals, information on similar aircraft remarketing in the secondary market and the credit rating of the customers. In this respect, based on our risk assessment of Mesa’s Chapter 11 filing, in 2009 we reserved US$74.4 million of collateral in the form of cash deposited in escrow in recognition of estimated losses that at the time we had classified as probable with respect to financial guarantees extended by us in connection with sales of our aircraft to Mesa.

In 2011, we made a total net provision of US$362.8 million related to exposure from financial guarantees and residual value guarantee obligations. Of this amount, US$107.4 million was accounted for under financial (expenses) income, net, and, therefore, did not impact our operating margin. The remaining US$255.4 million was accounted for under other operating income (expenses), net, and, therefore, impacted our operating margin for the year. In 2013 and 2012, we made additional provisions of US$6.7 million and of US$6.0 million, respectively, which are accounted for under operating income (expense), net. In the fourth quarter of 2013, a total of US$180.7 million positively impacted operating results, recognized in the other operating (expense) income, net account. The US$180.7 million comprised a provision reversal of US$109.3 million, coupled with a US$71.4 million payment reversal, which we had already made on these financial guarantees.

Any future unexpected decrease in the market value of the aircraft covered by trade-in rights or financial guarantees would decrease our ability to recover the amounts payable to satisfy our obligations and cause us to incur additional charges to income. If we are required to pay amounts related to such guarantees, we may not have sufficient cash or other financial resources available to do so and may need to seek financing to fund these payments. We cannot assure you that the then-prevailing market conditions would allow us to resell or lease the underlying aircraft at its anticipated fair value or in a timely manner. Consequently, honoring our financial guarantee or trade-in obligations could require us to make significant cash disbursements in a given year, which, in turn, would reduce our cash flow in that year.

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Any decrease in Brazilian federal government-sponsored customer financing, or increase in government-sponsored financing that benefits our competitors, may decrease the cost-competitiveness of our aircraft.

Traditionally, aircraft original equipment manufacturers, or OEMs, from time to time, have received support from governments through governmental export credit agencies, or ECAs, in order to offer competitive financing conditions to their customers, especially in periods of credit tightening from the traditional lending market. After the “credit crunch” in 2008, the participation of ECAs grew in importance, playing a crucial role in the aviation industry.

In the past, much of this official government support was alleged to constitute unofficial subsidies causing market distortions, which gave rise to disputes among governments at the World Trade Organization, or WTO. Since 2007, an agreement known as the Aircraft Sector Understanding, or ASU, developed by the Organization for Economic Co-operation and Development, or OECD, has provided guidelines for the predictable, consistent and transparent use of government-supported export financing for the sale or lease of aircraft, in order to establish a “level-playing field.” ECAs from signatory countries are required to offer terms and conditions no more favorable than those contained in the ASU’s base financial agreement when financing sales of aircraft that compete with those produced by the OEMs of their respective countries. The effect of the agreement is to encourage aircraft purchasers to focus on the price and quality of aircraft products offered by OEMs rather than on the financial packages offered by their respective governments.

The Brazilian ECA, Banco Nacional de Desenvolvimento Econômico e Social (Brazilian Social and Economic Development Bank), or BNDES, together with the Brazilian National Treasury Export Guarantee Fund, offer financing and export credit insurance to our customers under terms and conditions required by the ASU. Any reduction or restriction to the Brazilian export financing program, and any increase in our customers’ financing costs for participation in this program, above those provided in the ASU’s base financial agreement, may cause the cost-competitiveness of our aircraft to decline. Other external factors may also impact our competitiveness in the market, including, but not limited to, aircraft OEMs from countries which are not signatories to the ASU agreement offering attractive financing packages, or any new government subsidies supporting any of our major competitors.

The Brazilian federal government may reduce funds available to our customers under government-sponsored financing programs.

From 2004 through 2013, approximately 20% of the total value of our Commercial Aviation export deliveries was subject to financing support by the BNDES and the Export Guarantee Fund (Fundo de Garantia à Exportação), or FGE, a special fund linked to the Ministry of Finance and managed by the BNDES to foster exports. We cannot ensure that the Brazilian federal government will continue to provide sufficient funding for the financing of our aircraft or that other sources of funding will be available to our customers. The loss or significant reduction of funds available to our customers, without an adequate substitute, could lead to fewer deliveries and result in lower profitability for us.

We may face a number of challenges resulting from the development of new products and the possible pursuit of strategic growth opportunities.

As we continue to develop new products, we may need to reallocate existing resources and coordinate with new suppliers and risk-sharing partners. From time to time, there is significant competition within the aviation industry for skilled personnel in general and engineers in particular. To the extent such competition reoccurs, we may be unable to recruit and retain the necessary number of highly skilled engineers and other personnel we require. Failure to coordinate our resources in a timely manner or to attract and retain skilled personnel could slow down our development efforts and cause delays in production and deliveries of our aircraft, which would delay recognition of revenue.

We may pursue strategic growth opportunities, including joint ventures, acquisitions or other transactions, to expand our business or enhance our products and technology. We may face a number of challenges, including difficulties in identifying appropriate candidates, assimilating their operations and personnel and maintaining internal standards and controls, as well as the diversion of our management’s focus from our ongoing business. We cannot assure you that we will be able to meet these challenges or that our business will not face disruptions.

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We may be required to refund cash contributions in connection with the production or development of our aircraft if certain milestones for our aircraft are not reached.

We have arrangements with our risk-sharing partners, pursuant to which they have contributed to us, in cash over the years, a total of US$737.0 million since the beginning of the development of the EMBRAER 170/190, Phenom 100/300 Legacy 450/500 jet families and the E2 jet family through December 31, 2013. A portion of these cash contributions would have to be refunded by us to the risk-sharing partners if we had failed to fulfill certain agreed-upon milestones. The full amount of these cash contributions had become nonrefundable during 2013, as we had met all the required milestones.

Although, currently, no cash contributions from our risk-sharing partners are refundable, in the future we may enter into similar arrangements, and if we are unable to meet certain milestones agreed upon with our risk-sharing partners, we may be required to refund cash contributions for which we have not established provisions.

We face significant international competition, which may adversely affect our market share.

The worldwide commercial aircraft manufacturing industry is highly competitive. Along with Boeing, Airbus and Bombardier, all large international companies, we are one of the leading manufacturers of commercial aircraft (i.e., regional and mid-capacity aircraft) in the world. Certain of these competitors may have greater financial, marketing and other resources than we have. Although we have attained a significant share of the market for our commercial aircraft products, we cannot assure you that we will be able to maintain our current market share. Our ability to maintain our market share and remain competitive in the commercial aircraft manufacturing market over the long term requires continued enhancement of our products’ technology and performance. Our primary competitor in the regional and mid-capacity jet markets is Bombardier Inc., a Canadian company, which has significant technological capabilities and financial and marketing resources and, in some instances, benefits from government-sponsored product development subsidies. Additionally, Chinese, Russian and Japanese companies are also developing mid-capacity jets and already have firm orders in backlog.

As a relatively new entrant to the business jet market, we face significant competition from companies with longer operating histories and established reputations in this industry. Also, some of our competitors in the business jet market may reach the market with their product before we do, allowing them to establish a customer base and frustrating our efforts to gain greater market share. We cannot assure you that we will continue to increase our market share in the business jet market segment, or that we will not experience a reduction in our current market share in this segment.

We may have to make significant payments as a result of unfavorable outcomes of pending challenges to various taxes and payroll charges.

We have challenged the constitutionality of certain Brazilian taxes and payroll charges, as well as modifications and increases in the rates and basis of calculation of such taxes and charges. Interest on the total amount of these unpaid taxes and payroll charges accrues monthly based on the Selic rate, the principal lending rate of the Central Bank, and we make an accrual as part of the financial expenses, net item in our statements of income.

As of December 31, 2013, there was a US$232.0 million provision recorded as a liability on our statement of financial position in connection with litigation contingencies that we classify as probable losses. We are awaiting a final decision in these proceedings. We cannot assure you that we will prevail in these proceedings or that we will not have to pay significant amounts, including interest, to the Brazilian federal government in the future as a result of these proceedings.

We may be required to pay substantial fines and/or to incur other sanctions as a result of an inquiry by the U.S. Securities and Exchange Commission, or SEC, and U.S. Department of Justice, or DOJ, concerning the possibility of non-compliance with the U.S. Foreign Corrupt Practices Act.

We received a subpoena from the SEC and associated inquiries from the DOJ into the possibility of non-compliance with the U.S. Foreign Corrupt Practices Act, or FCPA, in September 2010, which inquired about certain operations concerning sales of aircraft abroad. The internal investigation and related government inquiries concerning these matters remain ongoing and we, with the support of our outside counsel, have concluded that it is

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still not possible to estimate the duration, scope or results of the internal investigation or related inquiries by relevant authorities. In the event that the authorities take action against us with respect to these or any related matters that may arise in the future, or we enter into an agreement to settle such matters, we may be required to pay substantial fines and/or to incur other sanctions or liabilities. See “Item 8A. – Consolidated Statements and Other Financial Information—Legal Proceedings.”

Our business, financial condition and results of operations could suffer as a result of current or future regulatory proceedings and/or litigation.

We are subject to risks relating to legal, governmental and regulatory proceedings and/or investigations to which we are currently a party or to which we may become a party in the future. Such proceedings and/or investigations involve, among other things, non-compliance with labor and tax regulations and/or alleged or suspected violations of applicable laws. For additional information with respect to specific proceedings see “Item 8A. – Consolidated Statements and Other Financial Information - Legal Proceedings.” Under certain circumstances we either record a provision for risks arising from legal disputes and proceedings or report possible contingent liabilities, as per Notes 23 and 26 to our audited consolidated financial statements. There can be no assurance that the results of these or any other proceedings and/or investigations will not materially harm our business or reputation. In addition, each of these risks may have a material adverse effect on our financial condition or results of operations, and our provisions for legal proceedings-related losses may not be sufficient to cover our ultimate losses or expenditures.

Risks Relating to the Commercial Airline Industry

Scope clause restrictions in airline pilot contracts may limit demand for regional and mid-capacity jets in the U.S. market.

A key limiting factor in demand for regional and mid-capacity jets is the existence of scope clauses contained in airline pilot contracts. These scope clauses are union-negotiated restrictions on the number and/or size of regional and mid-capacity jets that a particular carrier may operate. Current scope clause restrictions, which are more prevalent in the United States, include restrictions on the number of seats, weight of aircraft and number of 76 seat commercial jet aircraft in an airline’s fleet operated by regional carriers. As a result, our opportunities for near-term growth in the U.S. regional jet market in the 76 seat jet category may be limited. The continuation or further tightening of scope clauses could also lead some of our customers who have purchased options to acquire our regional and mid-capacity jets not to exercise those options. We cannot assure you that current restrictions will be lessened, or will not be expanded, including by amending these scope clauses to cover larger-sized commercial aircraft. Furthermore, although scope clauses are less prevalent outside the United States, we cannot assure you that scope clauses will not become more prevalent or restrictive, or that some other form of restriction will not take effect, in Europe or in other markets.

We are subject to stringent certification and regulatory requirements, which may adversely affect us.

Our civil aviation products are subject to regulation in Brazil and in each jurisdiction where our customers are located. The aviation authority in Brazil, known as the Agência Nacional de Aviação Civil - ANAC (National Civil Aviation Agency), or Brazilian Aviation Authority, as well as authorities in other countries in which our customers are located, most notably the U.S. Federal Aviation Administration, or the FAA, and the European Aviation Safety Agency, or the EASA, must certify our civil aviation products before we can deliver them to our customers in those regions. We cannot assure you that we will be able to obtain certification of our aircraft on a timely basis or at all. In addition, complying with the requirements of regulatory authorities can be both expensive and time-consuming. If we fail to obtain a required certification from an aviation authority for any of our aircraft, that aviation authority can prohibit the use of that aircraft within its jurisdiction until certification has been obtained. Changes in government regulations and certification procedures could also delay our start of production as well as entry of a new product into a new market. Despite our continuous efforts to strictly observe and comply with all aviation certification and other regulatory requirements, we cannot predict how future laws or changes in the interpretation, administration or enforcement of such laws will affect us. We may be required to spend significantly more money to comply with these laws or to respond to these changes.

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We and our customers are also subject to extensive Brazilian federal, state and local and foreign environmental protection laws and regulations concerning matters such as discharge and emission of substances into the environment, the disposal of hazardous wastes, the remediation and abatement of contaminants and other activities affecting the environment. We currently have several ongoing comprehensive programs to reduce the effects of our operations on the environment. For more information, see “Item 4E. Information on the Company—Property, Plant and Equipment.” Changes to current environmental regulations may demand that we spend additional amounts to enhance our environmental compliance programs. In addition, environmental regulations, such as those requiring the reduction of greenhouse gas emissions, are becoming one of the main drivers of airline fleet decisions, potentially causing our customers to change their purchasing plans or requiring us to make additional capital investments to adapt to new requirements.

The various products manufactured and sold by us must also comply with relevant health and safety and substances and preparations related laws and regulations in the jurisdictions in which we operate. Although we seek to ensure that our products meet the highest quality standards, increasingly stringent and complex laws and regulations, new scientific discoveries, delivery of defective products or the obligation to notify or provide regulatory authorities or others with required information (such as under the EU regulation known as “REACH,” which addresses the production and use of chemical substances) may force us to adapt, redesign, redevelop, recertify and/or eliminate products from the markets in which we operate. Seizures of non-compliant products may be required, and we may incur administrative, civil or criminal penalties. In the event of an accident or other serious incident involving a product, we may be required to conduct investigations and undertake remedial activities.

Any catastrophic events involving our aircraft could adversely affect our reputation and future sales of our aircraft, as well as the market price of the common shares and the ADSs.

We believe that our reputation and the safety record of our aircraft are important selling points for our products. However, the safe operation of our aircraft depends to a significant degree on a number of factors largely outside our control, including our customers’ proper maintenance and repair of our aircraft and pilot skill. The occurrence of one or more catastrophic events involving one of our aircraft could adversely affect our reputation and future sales, as well as the market price of our common shares and the ADSs.

Risks Relating to Brazil

Brazilian political and economic conditions have a direct impact on our business and the trading price of our common shares and ADSs.

The Brazilian federal government has frequently intervened in the Brazilian economy and occasionally has made drastic changes in policy and regulations. The Brazilian federal government’s actions to control inflation and effect other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. Our business, financial condition, results of operations and the trading price of the common shares and the ADSs may be adversely affected by changes in policy or regulations at the federal, state or municipal level involving or affecting factors such as:

• interest rates;

• monetary policies;

• exchange controls and restrictions on remittances abroad (such as those that were imposed in 1989 and early 1990);

• currency fluctuations;

• inflation;

• liquidity of domestic capital and lending markets;

• tax policies; and

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• other political, diplomatic, social and economic developments in or affecting Brazil.

Uncertainty over whether the Brazilian federal government will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and securities issued abroad by Brazilian companies. These and other future developments in the Brazilian economy and governmental policies may adversely affect us and our business and results of operations and may adversely affect the trading price of our common shares and ADSs.

Inflation and government efforts to combat inflation may contribute significantly to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and, consequently, may adversely affect the market value of our common shares and ADSs.

Brazil experienced extremely high rates of inflation during the decade of the 1980s and in the early part of the 1990s. Since 1994, Brazil’s inflation has been under control. More recently, Brazil’s annual rate of inflation was 4.3%, 5.9%, 6.5%,5.8% and 5.9%, from 2009 through 2013, respectively, as measured by the Índice Nacional de Preços ao Consumidor Amplo (National Consumer Price Index), or IPCA. Although inflation rates in Brazil are under control to a certain extent, there continues to be some inflationary pressure as a result of the strong expansion of the Brazilian economy in recent years. Among the effects of such inflationary pressure, labor costs have risen. More recently, the Brazilian government has taken certain fiscal actions in order to keep inflation under control.

Future Brazilian federal government actions, including interest rate decreases, intervention in the foreign exchange market and actions to adjust or fix value of the real may trigger increases in inflation. If Brazil experiences high inflation again in the future, our operating expenses and borrowing costs may increase, our operating and net margins may decrease and, if investor confidence decreases, the price of our common shares and ADSs may fall.

Exchange rate instability may adversely affect our financial condition and results of operations and the market price of our common shares and ADSs.

Although most of our revenue and debt is U.S. dollar-denominated, the relationship of the real to the value of the U.S. dollar, and the rate of depreciation of the real relative to the prevailing rate of inflation, may adversely affect us.

As a result of inflationary pressures, among other factors, the Brazilian currency has devalued periodically during the last four decades. Throughout this period, the Brazilian federal government has implemented various economic plans and utilized a number of exchange rate policies, including sudden devaluations, periodic mini-devaluations during which the frequency of adjustments has ranged from daily to monthly, floating exchange rate systems, exchange controls and dual exchange rate markets. Although over long periods depreciation of the Brazilian currency generally has correlated with the rate of inflation in Brazil, devaluation over shorter periods has resulted in significant fluctuations in the exchange rate between the Brazilian currency and the U.S. dollar and other currencies.

For example, in 2002, the real to U.S. dollar exchange rate increased by 52.3% due in part to political uncertainty surrounding the Brazilian presidential elections and the global economic slowdown. Although the R$ to US$ exchange rate decreased by 18.2%, 8.1%, 11.8%, 8.7%, and 17.2% in 2003, 2004, 2005, 2006, and 2007, respectively, in 2008 it appreciated by 31.9%, mainly as a result of the global economic crisis. In 2009 and 2010, the real to U.S. dollar exchange rate decreased by 25.5% and 4.3%, respectively, mainly as the effects of the global economic crisis on the Brazilian economy appeared to be less severe than in other parts of the world. In 2013 and 2012, such rate increased by 14.6% and 8.9%, respectively. No assurance can be given that the real will not appreciate or depreciate significantly against the U.S. dollar in the future. See “Item 3A.—Exchange Rates.”

Historically, depreciations in the real relative to the U.S. dollar have also created additional inflationary pressures in Brazil by generally increasing the price of imported products and requiring recessionary government policies to curb aggregate demand. On the other hand, appreciation of the real against the U.S. dollar may lead to a deterioration of the current account and the balance of payments, as well as dampen export-driven growth. Depreciations generally curtail access to foreign financial markets and may prompt government intervention, including recessionary governmental policies. Depreciations of the real relative to the U.S. dollar would also reduce the U.S. dollar value of distributions and dividends on our ADSs and may also reduce the market value of our common shares and ADSs.

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Appreciation of the real against the U.S. dollar may also have an adverse impact on the competitiveness of our products, as approximately 25% of our total costs are incurred and denominated in reais. Therefore, appreciations of the real against the U.S. dollar or other currencies increase the costs of our products when measured in U.S. dollars, and may result in a decrease in our margins.

In addition, because taxes on income are largely determined and paid in reais based on our Brazilian tax books, the income tax expense (benefit) line item of our statements of income, which has the U.S. dollar as our functional currency, is significantly impacted by appreciations of the real relative to the U.S. dollar to the extent we must record deferred taxes resulting from exchange rate fluctuations on the reported basis of our nonmonetary assets (principally property, plant and equipment and intangible assets).

Economic developments and investor perceptions of risk in other countries, including both in developed or emerging market economies, may adversely affect the trading price of Brazilian securities, including our common shares and ADSs.

The market value of securities of Brazilian issuers is affected in varying degrees by economic and market conditions in other countries, including in developed countries, such as the United States and certain European countries, and in emerging market countries. Although economic conditions in such countries may differ significantly from economic conditions in Brazil, the reaction of investors to developments in these other countries may have an adverse effect on the market value of securities of Brazilian issuers. For example, the 2008 global economic crisis has had an impact on many economies and capital markets around the world. This crisis was evidenced by instability in the value of securities and capital markets, stock and credit market volatility, instability of most currencies, unavailability of credit, higher interest rates, a widespread reduction in demand, a general economic slowdown and other factors that could adversely affect our financial condition and diminish investors’ interest in securities of Brazilian issuers, including ours. Future crises in other countries could adversely affect the trading price of our common shares and ADSs, diminish investor interest in securities of Brazilian issuers, including our common shares and ADSs, and make it more difficult for us to access the capital markets and finance our operations on acceptable terms or at all.

Risks Relating to Our Common Shares and ADSs

If holders of our ADSs exchange the ADSs for common shares, they risk losing the ability to remit foreign currency abroad and Brazilian tax advantages.

The Brazilian custodian for the common shares has obtained an electronic certificate of registration from the Central Bank permitting it to remit foreign currency abroad for payments of dividends and other distributions relating to the common shares or upon the disposition of the common shares. If holders of ADSs decide to exchange their ADSs for the underlying common shares, they will be entitled to continue to rely on the custodian’s electronic certificate of registration for five business days from the date of exchange. Thereafter, such holders of ADSs may not be able to obtain and remit foreign currency abroad upon the disposition of, or distributions relating to, the common shares unless they obtain their own electronic certificate of registration or register their investment in the common shares pursuant to Resolution No. 2,689, which entitles certain foreign investors to buy and sell securities on the São Paulo Stock Exchange. Holders who do not qualify under Resolution No. 2,689 will generally be subject to less favorable tax treatment on gains with respect to the common shares. If holders of ADSs attempt to obtain their own electronic certificate of registration, they may incur expenses or suffer delays in the application process, which could delay their ability to receive dividends or distributions relating to the common shares or delay the return of their capital in a timely manner. In addition, we cannot assure you that the custodian’s electronic certificate of registration or any certificate of foreign capital registration obtained by a holder of ADSs will not be affected by future legislative or other regulatory changes, or that additional restrictions applicable to such holder, to the disposition of the underlying common shares or to the repatriation of the proceeds from such disposition, will not be imposed in the future.

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The Brazilian federal government has veto power over our change of control, name, trademark or corporate purpose and over the creation or alteration of our Defense & Security programs, and its interests could conflict with the interests of the holders of our common shares or ADSs.

The Brazilian federal government holds one share of a special class of our common stock called a “golden share,” which carries veto power over our change of control, name, trademark or corporate purpose and over the creation or alteration of our Defense & Security programs (whether or not the Brazilian federal government participates in such programs). For example, in 2010, we changed our corporate name to Embraer S.A. and altered our bylaws to allow us to enter the defense and security market, which required the approval of the Brazilian federal government. The Brazilian federal government may veto transactions that may be in the interest of the holders of our common shares or ADSs. We cannot assure you that we will be able to obtain approvals from the Brazilian federal government in the future to effect important corporate changes, such as those carried out in 2010, or other important corporate changes that may be required in the future.

Our bylaws contain provisions that could discourage our acquisition or prevent or delay transactions that you may favor.

Our bylaws contain provisions that have the effect of avoiding the concentration of our common shares in the hands of a small group of investors so as to promote the dispersed ownership of such shares. These provisions require any shareholder or group of shareholders that acquires or becomes the holder of (1) 35% or more of the total shares issued by us or (2) other rights over shares issued by us that represent more than 35% of our capital, to submit to the Brazilian federal government a request for making a public tender offer to purchase all of our shares on the terms specified in our bylaws. If the request is approved, such shareholder or group of shareholders must commence the public tender offer to purchase all of our shares within 60 days of the date of approval. If the request is refused, such shareholder or group of shareholders must sell all of such shareholder’s shares that exceed the 35% limit within 30 days, so that the holding of such shareholder or group of shareholders falls below 35% of our capital stock. These provisions may have anti-takeover effects and may discourage, delay or prevent a merger or acquisition, including transactions in which our shareholders might otherwise receive a premium for their common shares and ADSs. These provisions can only be altered or overridden with the approval of our Board of Directors and our shareholders in a shareholders’ meeting convened for this purpose and, with the consent of the Brazilian federal government, as holder of the golden share.

The absence of a single, controlling shareholder or group of controlling shareholders may render us susceptible to shareholder disputes or other unanticipated developments.

The absence of a single, controlling shareholder or group of controlling shareholders may create difficulties for our shareholders to approve certain transactions, because, among other things, the minimum quorum required by law for the approval of certain matters may not be reached. We and our shareholders may not be afforded the same protections provided by the Brazilian Corporate Law against abusive measures taken by other shareholders and, as a result, may not be compensated for any losses incurred. Any sudden and unexpected changes in our management team, changes in our corporate policies or strategic direction, takeover attempts or any disputes among shareholders regarding their respective rights may adversely affect our business and results of operations.

Our bylaws contain provisions that limit the voting rights of certain shareholders including non-Brazilian shareholders.

Our bylaws contain provisions that limit the rights of a shareholder or group of shareholders, including brokers acting on behalf of one or more holders of ADSs, to exercise voting rights in respect of more than 5% of the outstanding shares of our capital stock at any general meeting of shareholders. See “Item 10B. Additional Information—Memorandum and Articles of Association—Description of Capital Stock—Voting Rights of Shares—Limitations on the Voting Rights of Certain Holders of Common Shares.”

Our bylaws also contain provisions that limit the right of non-Brazilian shareholders to exercise voting rights in respect of more than two-thirds of the voting rights that may be exercised by Brazilian shareholders present at any general meeting of shareholders. This limitation will effectively prevent our takeover by non-Brazilian shareholders and limit the ability of non-Brazilian shareholders to effect control over us. See “Item 10B. Additional Information—Memorandum and Articles of Association—Description of Capital Stock—Voting Rights of Shares—Limitations on the Voting Rights of Non-Brazilian Shareholders.”

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Holders of ADSs may not be able to exercise their voting rights.

Holders of ADSs may only exercise their voting rights with respect to the underlying common shares in accordance with the provisions of the deposit agreement governing our ADSs. Under the deposit agreement, ADS holders must vote the common shares underlying their ADSs by giving voting instructions to the depositary. Upon receipt of the voting instructions from the ADS holder, the depositary will vote the underlying common shares in accordance with these instructions. Otherwise, ADS holders will not be able to exercise their right to vote unless they surrender the ADS for cancellation in exchange for the common shares. Pursuant to our bylaws, the first call for a shareholders’ meeting must be published at least 30 days in advance of the meeting, the second call must be published at least 15 days in advance of the meeting, and the third call, if necessary, must be published at least 8 days in advance of the meeting. When a shareholders’ meeting is convened, holders of ADSs may not receive sufficient advance notice to surrender the ADSs in exchange for the underlying common shares to allow them to vote with respect to any specific matter. In addition, the depositary has no obligation to notify ADS holders of an upcoming vote or distribute voting cards and related materials to ADS holders, unless we specifically instruct the depositary to do so. If we ask the depositary to seek voting instructions from ADS holders, the depositary will notify ADS holders of the upcoming vote and will arrange to deliver proxy cards to such holders. We cannot ensure that ADS holders will receive proxy cards in time to allow them to instruct the depositary to vote the shares underlying their ADSs. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for an untimely solicitation of voting instructions. As a result, holders of ADSs may not be able to fully exercise their voting rights.

The relative illiquidity and volatility of the Brazilian securities markets may substantially limit the ability of holders of our common shares or the ADSs to sell the common shares underlying ADSs at the price and time they desire.

Investing in securities, such as the common shares or the ADSs, of issuers from emerging market countries, including Brazil, involves a higher degree of risk than investing in securities of issuers from more developed countries.

The Brazilian securities markets are substantially smaller, less liquid, more concentrated and more volatile than major securities markets in the United States and other jurisdictions, and are not as highly regulated or supervised as some other markets. The relatively small market capitalization and illiquidity of the Brazilian equity markets may substantially limit the ability of holders of our common shares or ADSs to sell the common shares or the ADSs at the price and time desired.

There is also significantly greater concentration in the Brazilian securities markets than in major securities markets in the United States. See “Item 9C. The Offer and Listing—Markets—Trading on the São Paulo Stock Exchange.”

The sale of a substantial number of common shares, or the belief that this may occur, could decrease the trading price of the common shares and the ADSs; holders of our common shares and/or ADSs may not be able to sell their securities at or above the price they paid for them.

Sales of a substantial number of common shares, or the belief that this may occur, could decrease the trading price of our common shares and ADSs. As a consequence of sales by existing shareholders, the market price of the common shares and, by extension, the ADSs may decrease significantly. As a result, the holders of the ADSs and/or common shares may not be able to sell their securities at or above the price they paid for them.

Holders of our ADSs might be unable to exercise preemptive rights with respect to the common shares.

Holders of our ADSs may not be able to exercise the preemptive rights relating to the common shares underlying their ADSs unless a registration statement under the Securities Act is effective with respect to those rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement with respect to the shares or other securities relating to these preemptive rights, and we

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cannot assure holders of our ADSs that we will file any such registration statement. Unless we file a registration statement or an exemption from registration applies, holders of our ADSs may receive only the net proceeds from the sale of their preemptive rights by the depositary or, if the preemptive rights cannot be sold, the rights will be allowed to lapse.

Judgments of Brazilian courts with respect to our common shares will be payable only in reais.

If proceedings are brought in the courts of Brazil seeking to enforce our obligations in respect of the common shares, we will not be required to discharge our obligations in a currency other than reais. Under Brazilian exchange control limitations, an obligation in Brazil to pay amounts denominated in a currency other than reais may only be satisfied in Brazilian currency at the exchange rate, as determined by the Central Bank, in effect on the date the judgment is obtained, and such amounts are then adjusted to reflect exchange rate variations through the effective payment date. The then prevailing exchange rate may not afford non-Brazilian investors with full compensation for any claim arising out of or related to our obligations under the common shares or the ADSs.

ITEM 4. INFORMATION ON THE COMPANY

4A. Unresolved Staff Comments

We have no unresolved staff comments.

4B. History and Development of the Company

Overview

Embraer S.A. is a joint stock company duly incorporated under the laws of Brazil with an indefinite term of duration. Originally formed in 1969 by the Brazilian federal government, we were privatized in 1994. In connection with our privatization, we were transformed into a publicly-held corporation, and we are subject to the provisions of the Brazilian Corporate Law. Our principal executive offices are located at Avenida Brigadeiro Faria Lima, 2170, 12227-901 São José dos Campos, São Paulo State, Brazil. Our telephone number is 55-12-3927-4404. Our agent for service of process in the United States is National Registered Agents, Inc., with offices at 875 Avenue of the Americas, Suite 501, New York, New York 10001.

We have grown from a government-controlled company established to develop and produce aircraft for the Brazilian Air Force into a publicly-held company that produces aircraft for commercial and executive aviation and for defense and security purposes.

As part of our evolution, we have obtained, developed and enhanced our engineering and technological capabilities through our own development of products for the Brazilian Air Force and through joint product development with foreign companies on specific projects. We have applied these capabilities that we gained from our defense business to develop our Commercial Aviation business.

Our first regional aircraft was the Bandeirante, a 19-passenger twin-engine non-pressurized turboprop aircraft initially designed to service the transport needs of the Brazilian Air Force. This aircraft was certified in 1973. The Bandeirante was followed by the EMB 120 Brasília, which was certified in 1985 and is a high performance, pressurized turboprop commercial aircraft seating up to 30 passengers that was designed to serve the longer routes and higher passenger traffic of the growing regional aircraft market. Drawing upon the design of the EMB 120 Brasília and the jet technology acquired in our development of the AM-X, a jet strike bomber for the Brazilian Air Force, we developed the ERJ 145 regional jet family, our first jet product for commercial use. This family comprises three aircraft, which seat up to 37, 44 and 50 passengers. The first member of the ERJ 145 family, the ERJ 145, was certified in 1996. We have expanded our jet product line with the development of the EMBRAER 170/190 jet family, which has the capacity to seat between 70 and 118 passengers and was designed to serve the aircraft market’s trend towards larger, higher volume and longer range jets. The first member of this family, the EMBRAER 170, was certified in February 2004, and its derivatives, the EMBRAER 175 and the EMBRAER 190, were certified in December 2004 and August 2005, respectively. The certification of the EMBRAER 195 was granted in June 2006. In June 2013, Embraer launched the second generation of its E-Jets family of commercial aircraft, the E-Jets E2, comprising three new airplanes, the E175-E2, E190-E2 and E195-E2. The E190-E2 is expected to enter service

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in the first half of 2018. The E195-E2 is slated to enter service in 2019 and the E175-E2 in 2020. We are also marketing and selling the Legacy 450, Legacy 500 and Legacy 600, a line of executive jets in the mid-light, mid-size and super mid-size categories, and the Phenom 100, Phenom 300 and Lineage 1000, which are positioned in the entry-level, light and ultra-large categories, respectively. In addition, in 2009 we presented the new Legacy 650, a large executive jet that will be positioned in our executive jet portfolio between the Legacy 600 and the Lineage 1000. In the defense and security market, we offer a line of intelligence, surveillance and reconnaissance aircraft based on the ERJ 145 regional jet platform, services, systems and solutions, ground radar, transportation of authorities, tactical military transport and aerial refueling (KC-390), basic and advanced training and light attack aircraft (Super Tucano), unmanned aerial systems (UAS), and geostationary defense and communications satellites.

On November 19, 2010, our shareholders approved a change to our corporate name from Embraer – Empresa Brasileira de Aeronáutica S.A. to Embraer S.A., as well as the addition of capabilities and the broadening of the scope of our defense business unit to allow such business unit to manufacture and trade equipment, materials, systems, software, accessories and components for the defense, security and energy industries, as well as to perform technical activities and services related to these areas. As a result, our bylaws were amended to reflect the addition of these activities to our corporate purposes.

Strategic Alliances and Growth Opportunities

We intend to review strategic growth opportunities, which may include joint ventures and acquisitions, and other strategic transactions, as well as enhance our existing relationships with significant world players in the aerospace and defense and security industries, including any members of the groups or companies below.

Strategic Alliances

European Aerospace and Defense Group

On November 5, 1999, a group consisting of (1) Aerospatiale Matra, currently known as European Aeronautic, Defense and Space Company N.V., or EADS, (2) Dassault Aviation, (3) Thomson-CSF, currently referred to by its trade name Thales^TM, and (4) Société Nationale d’Étude et de Construction de Moteurs d’Aviation, or Safran, all of which we refer to collectively as the European Aerospace and Defense Group, purchased 20% of our outstanding common stock from our existing common shareholders at that time. Most of the common stock purchased by the European Aerospace and Defense Group was owned by our former controlling shareholders.

Because the members of the European Aerospace and Defense Group were, at the time, considered by our former controlling shareholders to be strategic partners of Embraer, they were granted the right, as a group, to appoint two members to our Board of Directors. However, as a result of the termination of the shareholders’ agreement among our former controlling shareholders as part of our 2006 corporate reorganization, the European Aerospace and Defense Group no longer has the right to appoint members to our Board of Directors, other than pursuant to the general right provided for in the Brazilian Corporate Law. In addition, under Brazilian law the European Aerospace and Defense Group is no longer recognized as a group for voting purposes nor considered to be a strategic shareholder of Embraer. Thales^TM sold all of its shares in October 2006, and EADS sold all of its shares in a secondary offering in February 2007.

AEL Sistemas

In April 2011, we and AEL Sistemas, a subsidiary of the Israeli company Elbit Systems Ltd., announced the execution of a strategic agreement with the purpose of evaluating joint exploration prospects for unmanned aerial systems (UAS), including the potential creation of a company to explore this segment with a majority participation of our Defense & Security business unit.

Boeing

In April 2012, we entered into a cooperation agreement with Boeing, in which we agreed to pursue several areas of cooperation, including commercial aircraft features that enhance safety and efficiency, research and technology and sustainable aviation biofuels.

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In June 2012, we and Boeing announced the execution of a cooperation agreement with the purpose of joining our sales efforts on the KC-390 aircraft program. Under this agreement, Boeing and Embraer will share specific technical knowledge and evaluate markets for medium-lift military transport opportunities.

In July 2012, we and Boeing announced at the Farnborough Airshow the execution of another cooperation agreement that further enhances the collaboration between the two companies. This agreement also brings additional capabilities to Embraer’s A-29 Super Tucano through new weapons integration developments to meet future customer requirements.

In December 2012, we and Boeing announced the Runway Situation Awareness Tools project, which will provide a shared set of tools to customers of both companies and reduce runway excursions. This new project strengthens the collaboration between two of the world’s largest aerospace companies.

At the Paris Air Show in June, 2013, we announced a partnership with Boeing to market and sell the KC-390 medium-airlift aircraft. Under the agreement, Boeing is the lead for KC-390 sales, support and training opportunities in the U.S., United Kingdom and select Middle Eastern markets. Embraer will manufacture the aircraft and collaborate on sales, support and training.

Joint Ventures

HEAI

In December 2002, we formed HEAI, a joint venture company with Harbin Aircraft Industry (Group) Co., Ltd. and Hafei Aviation Industry Co., Ltd., both subsidiaries of AVIC, to provide for the manufacture, sale and after-sale support of the ERJ 145 regional jet family. We own 51% of the equity of HEAI. We have granted HEAI a license for the exclusive rights to produce, sell and provide support for the ERJ 145 regional jet family in the Chinese markets, and we contributed US$12.4 million in cash, tooling and inventory to the joint venture. Our joint venture partners have contributed the land use rights in Harbin, China, and contributed US$10.8 million in cash and facilities to the joint venture. The roll-out of the first ERJ 145 manufactured by the joint venture occurred in December 2003, and the joint venture entered into its first sales contract for six aircraft with China Southern Airlines in February 2004. In October 2007, the 1,000^th jet of the ERJ 145 family was delivered by Harbin Embraer Aircraft Industry Co. Ltd.

In April 2011, we entered into a framework agreement with AVIC for the implementation of a Legacy 600/650 production line in China, using the infrastructure, financial resources and workforce of HEAI. This industrial cooperation program will focus on the production of the Legacy 600/650 family in China, which is to replace the discontinued ERJ 145 family, and aims to serve the growing demand of the Chinese executive aviation market. In 2013, we initially produced one Legacy 600/650 jet in China, and have plans to increase capacity in the future.

CAE

In October 2006, we entered into an agreement with the Canadian company CAE Inc., or CAE, to form a global training joint venture. The partnership provides comprehensive entitlement training and post-entitlement training for pilots, maintenance technicians and dispatch personnel for Phenom 100 entry-level jets and Phenom 300 light jets. This training program was first offered at CAE SimuFlite in Dallas, Texas, following the commencement of operation of the Phenom 100 in 2008, and expanded to Burgess Hill in the U.K. in 2009 and Guarulhos in 2012.

Liebherr Aerospace

In July 2008, we acquired a 40% interest owned by Liebherr Aerospace SAS, or Liebherr, in ELEB–Equipamentos Ltda., or ELEB, a 60%/40% joint venture that we formed with Liebherr in 1999, for US$20.0 million, making us the sole equity holder of ELEB. ELEB is an aerospace system and component manufacturer and its main products include landing gear systems, hydraulics and electro-mechanical sub-assemblies, such as actuators, valves, accumulators and pylons.

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Bradar

In May 2011, we executed a US$25.7 million agreement to purchase a 90% stake in the capital stock of the radar business of OrbiSat da Amazônia Indústria e Aerolevantamento S.A., or Bradar, a Brazilian company that created a radar business in 2002 to develop state-of-the-art technology for air, sea and land remote sensing and aerial surveillance. This was the first acquisition made by the Defense & Security business unit. As a result of this transaction, the company was renamed Orbisat Indústria e Aerolevantamento S.A. and then, in early 2013, renamed Orbisat Indústria S.A. A subsidiary named Orbisat Aerolevantamento Ltda. was also established. In late 2013, the company announced the adoption of the new brand “Bradar” and the names Bradar Indústria S.A. and Bradar Aerolevantamento Ltda., which are still pending finalization on December 31, 2013. Bradar also announced contracts valued at approximately US$25 million in the areas of radar and remote sensing services.

Atech

In April 2011, we announced the acquisition of US$23.3 million of 50% of the capital stock of Atech Negócios em Tecnologias S.A., or Atech, with the purpose of increasing our capacity for developing products and services in the area of Command, Control, Communications, Computer and Intelligence, or C4I, systems and improving our capabilities of providing integrated systems for the defense and security, command and control, air defense and air traffic control markets. In September 2013, Embraer Defense & Security signed a contract to acquire the remaining 50% of the shares of Atech and is now the only shareholder of Atech.

AEL & Harpia

In April 2011, Embraer’s Defense & Security business unit and AEL Sistemas S.A., or AEL, a subsidiary of the Israeli company Elbit Systems Ltd., announced the execution of a strategic agreement for the evaluation of joint exploration of unmanned aerial systems, including the potential creation of a company with majority participation of Embraer’s Defense & Security business unit to work in the segment.

In September 2011, Embraer’s Defense & Security department and AEL formalized this partnership and created a new company, Harpia Sistemas S.A., or Harpia, to focus on the unmanned aerial systems market. We hold 51% of Harpia’s capital, and AEL holds the remaining 49%. Harpia’s activities will involve marketing, development, systems integration, manufacture, sales, and after-sale support for unmanned aerial systems, as well as simulators and the modernization of avionics systems. We aim to provide broader solutions for complex systems, with a view to increasing the market share of Brazilian-made products in the national defense and security market. As a part of this partnership, and for the purpose of participating in the process of transferring technology to Brazil, we acquired 25% of AEL’s capital for R$5.0 million.

In February, 2013, Embraer Defense & Security and AEL announced the acquisition by Avibras Air and Naval Division, Inc., or Avibras, of shares of Harpia to jointly develop the market for unmanned aircraft systems in Brazil. As a result, Avibras will hold a 9% stake of the company, whereas AEL will hold 40%. Embraer Defense & Security will remain the majority shareholder, with 51%.

Visiona Tecnologia Espacial S.A.

In November 2011, Embraer and Telecomunicações Brasileiras S.A., or Telebras, announced the signing of a memorandum of understanding for the purpose of forming a company, of which Embraer will hold a 51% stake and Telebras 49%, to work with the Brazilian federal government to meet the needs of Brazil’s plan for satellite development, including the National Broadband Program and strategic governmental communications.

In May 2012, we and Telebras signed the Shareholders’ Agreement and the Bylaws to form Visiona Tecnologia Espacial S.A., or Visiona, with the initial goal of acting in a Brazilian geostationary satellite program, with “whole system” integration, including the space segment, the service launch and ground segments. This is a key step for our entry into the space segment, specifically the satellite sector.

Visiona’s head offices will be located in the Technological Park of the city of São José dos Campos, São Paulo, Brazil, where it also intends to establish a Space Technology Development Center, working in partnership with Brazil’s most relevant aerospace educational and research organizations, and accelerating the capabilities of the Brazilian space industry.

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In November 2012, the operation and constitution of Visiona Tecnologia Espacial S.A. was approved by the Administrative Council of Economic Defense, or CADE, without restrictions.

In November 2013, Visiona was selected by Telebras to be the integrator of the SGDC system that, once delivered, will be operated by Telebras and the Brazilian Ministry of Defense. In December, Visiona signed a contract with Thales Alenia Space France and Arianespace, which have agreed to furnish a satellite and to launch it, respectively.

Savis Tecnologia e Sistemas S.A.

In November 2012, the Brazilian Army signed a contract for the implementation of Phase I of the Sisfron program (Sistema Integrado de Monitoramento de Fronteiras) with a consortium, or the Tepro consortium, composed of two companies, Savis Tecnologia e Sistemas S.A. and OrbiSat Indústria e Aerolevantamento S.A., both controlled by Embraer Defense & Security. Sisfron is the Integrated Border Surveillance System the Brazilian Army is developing on the Western borders of Brazil. This contract is worth R$839 million (approximately US$404 million).

Sisfron’s first phase will include the monitoring of approximately 650 kilometers of land border, covering the border between the Brazilian State of Mato Grosso do Sul, an area that falls under the responsibility of the Brazilian Western Military Command (Comando Militar do Oeste). The subsystems to be developed during this first phase are under the responsibility of the Fourth Mechanized Cavalry Brigade, in Dourados, the Brazilian Western Military Command’s headquarters, in Campo Grande, and the Brazilian Army’s High Command, in Brasília (Federal District). Sisfron has as its main objective the surveillance and protection of Brazilian land borders stretching 16,886 kilometers dividing 11 Brazilian states and 10 neighboring countries, encompassing 27% of the nation’s territory.

In May 2013, the Tepro consortium concluded its selection of the primary suppliers of the electromagnetic signal sensor, tactical communications, optronics, and infrastructure systems. In June 2013, it concluded the selection of the main suppliers for all subsystems of Sisfron’s first phase.

Capital Expenditures (Property, Plant and Equipment and Development)

We include our investments in both development and property, plant and equipment as part of our capital expenditures.

As part of our transition to IFRS, in 2010 we have started to capitalize our expenditures related to product development projects as non-current intangible assets on our statement of financial position when it is probable that the relevant projects will generate future benefits, taking into account their commercial and technological feasibility and availability of technological and financial resources and only if their cost can be reliably measured. We amortize such assets in the form of charges to cost of sales and services on our statements of income, based on the total estimated number of aircraft to be delivered for each new product development project. We also capitalize expenditures related to property, plant and equipment as non-current assets on our statement of financial position and depreciate such assets in the form of charges to cost of sales and services on our statements of income. For information on how we amortize our intangible assets and depreciate our property, plant and equipment, see “Item 5A. Operating and Financial Review and Prospects—Operating Results—Principal Operating Data and Components of Our Statement of Income—Cost of Sales and Services.”

Most of our development expenditures are associated with the development of new products either for the Commercial Aviation or Executive Jets segments. Development expenditures totaled US$230.6 million in 2013, US$209.3 million in 2012, US$121.3 million in 2011 and US$62.8 million in 2010, net of used cash contributions from risk-sharing partners, which totaled US$51.8 million in 2013, US$1.0 million in 2012, US$85.8 million in 2011 and US$99.4 million in 2010. Development expenditures for 2013 remained stable in comparison to 2012, mainly due to consistent expenditures related to Executive Jets programs, and the increase in development expenditures in 2011 relative to 2010 is mainly attributable to the Executive Jets business as well.

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The increase in cash contributions from risk-sharing partners in 2013 relative to 2012 is mainly due to the E-Jets E2 family, which commenced development in 2013. The significant decrease in cash contributions from risk-sharing partners in 2012 relative to 2011 is mainly due to the lack of contractual milestones that were set to take place in 2012. The decrease in cash contributions from risk-sharing partners in 2011 relative to 2010 is mainly due to the contribution schedule agreed with our risk sharing partners. See “Item 5C. Operating and Financial Review and Prospects—Research.”

Our main ongoing project is the development of the E-Jets E2 family, comprising three new airplanes, the E175-E2, E190-E2, and E195-E2. We estimate our total investment in this project will be R$1.7 billion through 2020. Our investment in the Legacy 450/500 executive jets is estimated at US$750.0 million and is expected to be invested through 2015, in property, plant and equipment and development for the Legacy 450/500 programs, which were launched by us in April 2008. The Legacy 500 executive jet is expected to enter into service in the first half of 2014, and the Legacy 450 is expected to enter service one year after the Legacy 500.

Our total disbursements in capital expenditures related to property, plant and equipment (excluding spare parts for pool programs and aircraft under lease or available for lease) were US$294.3 million in 2013, US$207.9 million in 2012 and US$162.2 million in 2011. These investments are related mainly to (1) construction of new facilities and (2) improvements and modifications to our plants and production facilities for the production of new aircraft models.

In 2014, we expect to invest approximately US$650 million in capital expenditures for research, product development and property, plant and equipment. Of this amount, approximately US$400 million will be invested in our research and product development activities, exclusive of contributions of risk-sharing partners, and US$250 million will be invested in property, plant and equipment. The US$250 million capital expenditures to be disbursed in connection with property, plant and equipment are primarily related to (1) improvements to our existing facilities, (2) E-Jets E2 family, and (3) the construction of two plants in Evora, Portugal, which was started in July 2008.

We expect to invest approximately 80% of our budgeted US$650 million capital expenditures for 2014 in Brazil, most of which will be invested in research and development activities. The remaining 20% of our capital expenditures will be invested abroad, mainly on property, plant and equipment at our new industrial facilities in the city of Evora, Portugal.

Our capital expenditures are generally financed by funds provided by operations, borrowings under our credit arrangements, cash contributions from risk-sharing partners, advance payments from customers and, to a lesser extent, capital increases to meet these needs. See “Item 5B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Overview” and “Item 5C. Operating and Financial Review and Prospects—Research.”

We incur few development expenditures for defense and security programs, as those are primarily funded by the Brazilian federal government and other government customers under long-term development contracts.

4C. Business Overview

We are one of the leading manufacturers of commercial aircraft (i.e., regional and mid-capacity jets) in the world, based on 2013 revenue arising from sales of commercial aircraft, and have a global customer base. Our focus is achieving customer satisfaction with a range of products and services addressing the commercial airline, executive jet and defense and security markets. Our Commercial Aviation business, including aviation-related services, accounted for 53% of our revenue in 2013. We are the leading supplier of defense aircraft to the Brazilian Air Force, based on number of aircraft sold, and we have sold aircraft to armed forces in Europe, Asia, the United States and Latin America. Our Defense & Security business, including aviation related services, accounted for 19.2% of our revenue in 2013. We have developed a line of executive jets based on one of our regional jet platforms and launched new executive jets in the entry-level, light, ultra-large and mid-light/mid-size categories: the Phenom 100/300 family, the Lineage 1000 and the Legacy 450/500 family, respectively. Our Executive Jets business, including aviation related services, accounted for 26.4% of our revenue in 2013. Providing high quality customer support is a key element of our customer focus and is critical to our ability to maintain long-term customer relationships. Other related businesses accounted for 1.4% of our revenue in 2013. For the year ended December 31, 2013, we generated revenue of US$6,235 million, of which approximately 78% was U.S. dollar-denominated. At December 31, 2013, we had a total firm order backlog of US$18.2 billion, which included 429 firm orders for commercial aircraft.

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Our Strengths

We believe that our primary strengths are:

Leading Commercial Aircraft Manufacturer with a Global Customer Base. Based on the number of aircraft sold, we are a leading manufacturer of jets up to 130 seats, with a strong global customer base. More than 85 airlines from over 50 countries are flying our commercial jet aircraft on the five continents of the world. Our customers include some of the largest and most significant regional and low-cost airlines and commercial carriers in the world.

Aircraft Design; Cost and Operating Efficiency. We conceive, develop and manufacture aircraft to provide our customers with reduced operating, maintenance and training costs due to the similarity and efficiency in design and the commonality of parts within a jet family. These similarities enable us to significantly reduce our design, development and production costs and pass these savings along to our customers in our sales price. These similarities also reduce the development time of our aircraft.

Strategic Risk-Sharing Partners. With respect to our commercial and executive aircraft, we developed strategic relationships with key risk-sharing partners. These risk-sharing partners develop and manufacture significant portions of the systems and components of our aircraft and contribute their own funds to develop these systems and components, thereby reducing our development expenses. These risk-sharing partners also fund a portion of our development expenses through direct contributions of cash or materials. We believe that these strategic relationships enable us to lower our development expenses and risks, improve our operating efficiency, enhance the quality of our products and reduce the number of our suppliers, thereby providing us with flexibility of our production process.

Funded Development of Defense Products. Historically, development expenditures related to defense aircraft have been funded in large part by certain of our customers, which in this business segment includes the governments of different countries. These customers have had an important role in our engineering and industrial development. In addition, we use well-proven platforms developed for the commercial aviation segment as a solution for certain defense products. We also sell to other military forces the proven defense products developed for the air forces of certain countries.

Flexibility of Production to Meet Market Demands. We believe the flexibility of our production processes and our operating structure, including our risk-sharing partnerships, allow us to increase or decrease our production in response to market demand.

Experienced and Highly Skilled Workforce. Our employees are experienced and highly skilled. As of December 31, 2013, engineers comprised 29.1% of our workforce. Due to the high level of knowledge and skill of our employees, and our continuous training programs, we are able to efficiently pursue new programs and provide our customers with differentiated technical expertise and guidance.

Continued Focus on Customer Satisfaction and Services. We strongly believe that a long-term relationship with our customer base is essential to our growth strategy. Providing an appropriate services portfolio for different market segments and fleet ages is a key element of our customer focus and an important tool for maintaining long-term relationships with our customers and product competitiveness.

As the number of our aircraft in operation continues to grow, we have further increased our commitment to providing our customers with an appropriate level of after-sale support, including technical assistance, training, maintenance, spare parts and other related services. This is evidenced, for example, by the worldwide expansion of our customer support facilities and our service centers network.

We own and operate several service centers, located in various parts of the world. In addition, our customers can rely on dozens of authorized third-party centers located worldwide to meet their maintenance needs. For further information on our support and services network, see “—Services and Support.”

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Business Strategies

With a view to continue growing our business and increasing our profitability, we intend to continue to offer our customers cost-effective, high quality, and reliable aircraft and services. The key elements of our strategy are the following:

Continuing to Market Our Commercial Aircraft. We are fully committed to continuing to market our jets up to 130 seats (ERJ 145 family and the E-Jets family). As of December 31, 2013, we had approximately 700 units of the ERJ 145 jet family and 1,000 units of the EMBRAER 170/190 jet family in activity and service. We believe that market opportunities exist for the EMBRAER 170/190 jet family with regional airlines that are seeking to expand their fleet, as well as increase their penetration in higher density markets and add longer routes. We also believe that the EMBRAER 170/190 jet family will have opportunities with mainline and low-cost airlines that are right-sizing their fleets in order to adjust capacity to explore low to mid-density markets. As of December 31, 2013, we were leaders in the segment of jets up to 130 seats in terms of number of aircraft sold. Additionally, we believe that our commercial aircraft will provide us with significant opportunities to increase our competitiveness by offering a full range of jets up to 130 seats to our customers.

Strengthening Our Position in the Executive Jet Market. We believe that the executive jet market provides us with significant growth opportunities. We expect to offer products in all executive jet categories, from the entry-level to the ultra large. We have developed the Legacy 600, a super mid-size jet, the Phenom 100, an entry-level jet, the Phenom 300, a light jet, and the Lineage 1000, an ultra large jet, and are developing the Legacy 450 and the Legacy 500 in the mid-light and mid-size categories, respectively. In addition, in 2010 we made the first delivery of the Legacy 650, a large executive jet, which is positioned in our executive jet portfolio between the Legacy 600 and the Lineage 1000. We have endeavored to understand and respond to market and customer needs, in an effort to continuously improve the product and customer support for our executive jets.

Continue to Pursue Market Niche Opportunities in the Defense and Security Market. We currently offer products for transportation, training, light-attack, intelligence, surveillance and reconnaissance. Since our products offer multi-mission capabilities at a competitive price and are designed to be operated in any environment at low operating costs, we believe our products meet the needs of governments in countering present threats which are a global concern, such as terrorism, drug dealing and weapon smuggling.

Continued Focus on Customer Satisfaction and Support. We believe that our focus on customer satisfaction is fundamental to our entrepreneurial success and our business strategy. Providing high quality customer support and services is a key element of our customer focus and it is critical to our ability to maintain long-term relationships with our customers and keep our products competitive in the market. As the number of our aircraft in operation continues to grow, and our Executive Jets business expands, we have further increased our commitment to providing our customers with an appropriate level of after-sale support, including technical assistance, training, maintenance, spare parts and other related services. This is evidenced, for example, by the expansion of our customer support and services base.

We own and operate several service centers, located in various parts of the world. In addition, our customers can rely on dozens of authorized third-party centers located around the world to comply with their maintenance needs. For further information on our support and services network, see “—Services and Support.”

Continue to Motivate Our Employees and Improve Our Production Processes and Managerial Practices. We are constantly seeking to exceed our customers’ expectations. In order to achieve this goal, we must, on a daily basis, continuously seek to implement the most efficient production processes and best managerial practices. Because the success of our products and services is ultimately a combination of the contribution of our employees and the production processes we have developed over the years, we recognize that we must continue to motivate our employees and refine our production processes. To that effect, we have implemented, and intend to further develop, corporate programs based on a “lean manufacturing” philosophy, such as the Embraer Enterprise Excellence Program, that are designed to strengthen our internal culture of excellence and improve the efficiency of our operations.

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Commercial Aviation Business

We design, develop and manufacture a variety of commercial aircraft. Our Commercial Aviation business is our primary business, accounting for 53% of our revenue for the year ended December 31, 2013.

Products

We developed the ERJ 145 family, our 37-50-passenger twin jet-powered regional aircraft, introduced in 1996, to address the growing demand among regional airlines for medium-range, jet-powered aircraft. We are continuing to develop the EMBRAER 170/190 jet family, our 70-130 seat platform, to serve the trend in the commercial airline market toward larger, faster and longer range jets and to further diversify our strength in the jet market. We continue to monitor and analyze market trends, customer requirements and aircraft demand to guide our product development according to market needs.

ERJ 145 Regional Jet Family

The ERJ 145 is a twin jet-powered regional aircraft accommodating up to 50 passengers. This jet was developed in response to the increasing demand from the regional airline industry for an aircraft that offered more speed and comfort than a turboprop. The ERJ 145 was certified by the Brazilian Aviation Authority in November 1996, the FAA in December 1996, the European Aviation Authority in April 1997, the Australian Aviation Authority in June 1998 and the Civil Aviation Administration of China, or CAAC, in December 2000. We began delivering the ERJ 145 in December 1996. In September 2007, we delivered our 1,000^th ERJ 145 aircraft, manufactured by Harbin Embraer Aircraft Industry Co. Ltd., to the HNA Group.

The development of the ERJ 145 aircraft was partially based on the EMB 120 Brasilia and has approximately 30% commonality in terms of parts and components with that aircraft, including the nose section and cabin. The ERJ 145 has a maximum cruising speed of Mach.78, or 450 knots, and a maximum fully loaded range of 1,200 nautical miles in its standard version. The ERJ 145 is equipped with engines built by Rolls-Royce Allison. In addition, the ERJ 145 is equipped with sophisticated flight instruments, such as engine-indication instruments, crew-alert systems and digital flight control systems produced by Honeywell.

The ERJ 145 is also available in a long-range, or LR, version, and, in response to customer requests, we have developed an extra-long-range, or XR, version of the aircraft. The ERJ 145 LR features a larger fuel tank, more powerful engines and greater range than the standard version. The ERJ 145 LR, which was certified by the Brazilian Aviation Authority, the FAA and the European Aviation Authority in 1998, and by the CAAC in November 2000, uses more powerful engines than the standard version, allowing the fully loaded aircraft to operate on routes of up to 1,550 nautical miles. The ERJ 145 XR features a new and updated turbofan engine, increased capacity fuel tanks and winglets. The ERJ 145 XR, which was certified by the Brazilian Aviation Authority in August 2002 and by the FAA in October 2002, offers a maximum, fully loaded range of 2,000 nautical miles and enhanced operational capabilities for hot weather and high altitudes. Deliveries of the ERJ 145 LR began in February 1998, and deliveries of the ERJ 145 XR began in October 2002.

The ERJ 135 is a 37-seat regional jet based on the same design as the ERJ 145. The ERJ 135 has approximately 96% commonality in terms of parts and components with the ERJ 145, resulting in reduced spare-parts requirements and permitting the utilization of the same ground support equipment for customers that use both aircraft. The ERJ 135 was certified by the Brazilian Aviation Authority in June 1999, by the FAA in July 1999 and by the European aviation authority in October 1999. Deliveries of the ERJ 135 began in July 1999.

The ERJ 135 has a maximum operating speed of Mach .78, or 450 knots, and a maximum fully loaded range of 1,300 nautical miles in its standard version. The ERJ 135 uses the same engines, sophisticated flight instruments, digital flight control systems and body design as the ERJ 145. The ERJ 135’s fuselage is 11.6 feet shorter than the ERJ 145’s. The ERJ 135 is also available in a LR version, with maximum fully loaded range of l,750 nautical miles. The LR version received certification simultaneously with the standard version and began deliveries in August 1999.

We developed the ERJ 140 in response to customer requests. The ERJ 140 is a 44-seat regional jet based on the same design as the ERJ 135 and is manufactured on the same production line as the ERJ 145 and ERJ 135. The ERJ 140 has approximately 96% commonality with the ERJ 145 and ERJ 135, providing our customers with

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significant maintenance and operational benefits. The ERJ 140 was certified by the Brazilian Aviation Authority in June 2001 and by the FAA in July 2001. The ERJ 140 has a maximum fully loaded range of 1,250 nautical miles in its standard version. The ERJ 140 is available in LR version, with maximum fully loaded range of 1,650 nautical miles. We began delivering the ERJ 140 in August 2001.

The ERJ 145 regional jet family allows for standardized pilot certification and maintenance procedures.

EMBRAER 170/190 Jet Family

The EMBRAER 170/190 jet family provides our customers with a choice of four aircraft in the mid-capacity passenger range. The EMBRAER 170 is a 70-78 seat jet and the EMBRAER 175 is a 78-88 seat jet, while the EMBRAER 190 is a 98-114 seat jet and the EMBRAER 195 is a 108-124 seat jet.

The EMBRAER 170 was certified by the Brazilian Aviation Authority, the FAA, the Joint aviation authority of Europe (the former advisory organization that made certification recommendations to non-EU national authorities), or JAA, the EASA and the aviation authority of Poland in February 2004, and deliveries of the EMBRAER 170 began in March 2004. The EMBRAER 175 was certified by the Brazilian Aviation Authority in December 2004, by the EASA in January 2005, by TCCA, the Canadian certification authority, in July 2005 and by the FAA in August 2006. The EMBRAER 190 was certified by the Brazilian Aviation Authority in August 2005, by the FAA in September 2005 and by the EASA in June 2006. The EMBRAER 195 was certified by the Brazilian Aviation Authority in June 2006, by the EASA in July 2006 and by the FAA in June 2007.

We designed the EMBRAER 170/190 jet family to maximize the benefits of commonality. Aircraft in the family share approximately 86% of the same components. The high level of commonality in this jet family lowered our development expenses and shortened our development period. We believe that this commonality leads to significant savings to our customers in the form of easier training, less expensive parts and maintenance and lower operational costs. Due to differences in size and weight, the EMBRAER 170/190 jet family does not share the same wing design. This new mid-capacity jet family has engines fixed under its main wings—a design intended to enhance power, improve fuel economy and minimize turnaround times. All of the aircraft models of this family are powered by engines manufactured by General Electric and contain state-of-the-art avionics manufactured by Honeywell.

The EMBRAER 170/190 jet family’s principal features are:

• Performance. All four jets in the EMBRAER 170/190 jet family have a maximum cruising speed of Mach .82. The EMBRAER 170 and the EMBRAER 175 have maximum fully loaded ranges of 1,800 and 1,700 nautical miles, respectively, and each is available in the long-range version, with maximum fully loaded ranges of 2,100 and 2,000 nautical miles, respectively. The EMBRAER 190 and EMBRAER 195 have maximum fully loaded ranges of 1,800 and 1,500 nautical miles, respectively, and each is available in the long-range version with maximum fully loaded ranges of 2,400 and 2,200 nautical miles, respectively.

• Ground servicing. The underwing engine design and the existence of four doors, two in the front and two in the back, provide for enhanced accessibility and efficiency of ground services.

• Cabin and cargo space. We have enhanced passenger safety and comfort in the EMBRAER 170/190 jet family. The aircraft’s “double-bubble” design enables a four-abreast cabin, a wide aisle, greater interior space and headroom and a larger baggage compartment than the existing mid-capacity jets of our competitors, including those mid-capacity jets that are in the development stage.

In June 2013, Embraer launched the second generation of its E-Jets family of commercial aircraft, named the E-Jets E2, comprising three new airplanes, the E175-E2, E190-E2, and E195-E2. The E190-E2 is expected to enter service in the first half of 2018. The E195-E2 is slated to enter service in 2019 and the E175-E2 in 2020. Embraer estimates its total investments in the new E-Jets E2 models to be US$1.7 billion over the next eight years.

The launch of the E2 builds on our vision to offer leading-edge commercial jets with a capacity right-sized for 70 to 130 seats, seamless mainline comfort, and performance for flexible and efficient utilization by regional,

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low-cost, and network carriers. Our strategy is to offer all the benefits of a clean-sheet design, but with the reliability of a mature platform and commonality with current generation E-Jets. We have continually invested in the E-Jets program, so that our customers can stay competitive with aircraft that have the lowest operating costs and the highest passenger appeal, today and in the future.

In a typical single-class layout, the E175-E2 was extended by one seat row, compared to the current generation E175, and will seat up to 88 passengers, while the E190-E2 is the same size as the E190, of up to 106 seats. The E195-E2, compared to the current E195, has grown by three seat rows and will accommodate up to 132 seats.

EMB 120 Brasilia

The EMB 120 Brasilia is a pressurized twin wing-mounted turboprop aircraft that accommodates up to 30 passengers. The EMB 120 Brasilia was developed in response to the commercial airline industry’s demand for a high-speed and fuel-efficient 30-seat regional aircraft. The EMB 120 Brasilia was certified by the FAA in May 1985 and by the Brazilian Aviation Authority in July 1985. Since its introduction in 1985, we have delivered 352 EMB 120 Brasilias for the regional market and six EMB 120 Brasilias for the defense and security market.

Customers

We have a diverse, global customer base, mainly in the commercial airline market in Europe, the Middle East, Africa, Asia (particularly China) and the Americas. Our major customers for commercial aircraft include some of the largest regional, low-cost and mainline airlines in the world. As of December 31, 2013, our largest customers, by aircraft in service, were Express Jet, American Eagle, Republic, Azul, Tianjin – HNA, JetBlue, Aeromexico, HOP! – Air France, Air Canada, Lufthansa, Trans States, LOT, KLM Cityhopper, Flybe, Austral – Aerolineas Argentinas, Kenya Airways, China Southern, US Airways, Virgin Australia, Saudia, JAL and COPA.

For a discussion of these significant customer relationships, see “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—We depend on key customers and key suppliers, the loss of any of which could harm our business.”

We generally sell our commercial aircraft pursuant to contracts with our customers on a fixed-price basis, adjusted by an escalation formula that reflects, in part, inflation in the United States. These contracts generally include an option for our customers to purchase additional aircraft for a fixed price option, subject to adjustment based on the same escalation formula. In addition, our contracts include a product support package to cover the entry into service of our aircraft, as well as a general warranty for such aircraft. Other provisions for specific aircraft performance and design requirements are negotiated with our customers. Finally, some of our contracts contain cancellation provisions and trade-in options and financial and residual value guarantees. See “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—Some of our aircraft sales may be subject to financial and residual value guarantees and trade-in options that may require us to make significant cash disbursements in the future” for a more detailed discussion of these provisions.

Sales and Marketing

Our current marketing strategy is based upon our assessment of the worldwide commercial airline market and our assessment of the current and future needs of our customers. We actively market our aircraft to international airlines and regional affiliates of major global airlines through our regional offices in the United States, Europe and Asia. Our success depends, to a significant extent, on our ability to discern our customers’ needs, including needs for customer service and product support, and to fill those needs in a timely and efficient manner while maintaining the high quality of our products. Our market and airline analysts focus on the long-term trends of the market, competitive analysis, product-enhancement planning and airline analysis. In terms of direct marketing to our customers, we rely heavily on the media, as well as participating in air shows and other cost-effective events that enhance customer awareness and brand recognition. We have regional sales offices in Villepinte, France; Fort Lauderdale, Florida, U.S.A.; Beijing, China; and Singapore.

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Production, New Orders and Options

Prior to starting production or development of a new project, we secure letters of intent representing future orders for a significant number of aircraft. We typically begin taking orders and building a backlog two years before we begin producing a new aircraft model, aiming to receive a significant number of orders before we deliver the initial aircraft. Once an order is taken, we reserve a place for that order on the production line, ensuring that we will maintain production sufficient to meet demand. Once a place is reserved on the production line, we are able to give customers delivery dates for their orders.

We include an order in backlog once we have received a firm commitment, represented by a signed contract. Our backlog excludes options and letters of intent for which definitive contracts have not been executed. For the sales of our commercial aircraft, we customarily receive a deposit upon signing of the purchase agreement and progress payments in the amount of 5% of the sales price of the aircraft 18 months before scheduled delivery, another 5% twelve months before scheduled delivery and another 5% six months before scheduled delivery. For the EMBRAER 170/190 jet family, we receive an additional 5% progress payment 24 months before scheduled delivery. We typically receive the remaining amount of the sales price upon delivery of the aircraft. The deposits and the progress payments are for the most part nonrefundable in the event orders are cancelled.

Our options generally provide our customers the right to purchase an aircraft in the future at a fixed price and on a specified delivery date, subject to escalation provisions, under a purchase agreement. Once a customer decides to exercise an option, we account for it as a firm order. Occasionally, we have extended the exercise date for our options and renegotiated the delivery schedule of firm orders, as well as allowed customers to convert their firm orders or options for one aircraft into firm orders or options for another aircraft within the same commercial aircraft family.

Services and Support – Commercial Aircraft

We are working on further developing our portfolio of services for our Commercial Aviation customers, which comprises the following areas:

• Field Support, which provides conveniently accessible on-site or remote assistance for all operational and technical issues in order to maximize customer performance;

• Technical Support, which serves technical needs through analytics, engineering expertise, and real-time fleet monitoring;

• Flight Operations, which supports the efficiency and safety of airline operations through tailored solutions, consulting, supervision, and training resources;

• Aircraft Modification, which provides total execution and coordination of system upgrades for improved fleet performance and cabin modifications for enhanced onboard amenities;

• Materials, which ensures availability and economy in parts and materials management for both scheduled and unscheduled maintenance;

• Maintenance, which provides optimized maintenance solutions based on best practices for efficiency, safety, and effectiveness;

• Training, which prepares crew, maintenance technicians, and operations personnel for the highest levels of competence; and

• eSolutions, which deploys the internet as the core communication channel for 24/7 collaboration and information exchange.

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We have a worldwide presence, with five regional units strategically positioned around the globe in order to provide us with greater agility in understanding the needs and desires of our customers, respecting the cultural diversity of the different regions where our customers are based. Our regional units are located as follows:

• Fort Lauderdale, Florida, U.S.A., which supports our customers in North America;

• Villepinte, France, which supports our customers in Europe, Africa and the Middle East;

• Singapore, which supports our customers in the Asia Pacific region;

• Beijing, China, which supports our customers in China; and

• São José dos Campos, Brazil, which supports our customers in Latin America.

All units mentioned above have the following infrastructure:

• a spare parts distribution center;

• technical and material field support teams with field engineers and customer account managers;

• warranty and repair administration offices; and

• services sales managers.

Our headquarters in São José dos Campos also offers the following services:

• Customer Care Center (CCC) providing an integrated solution of technical and spare parts support available 24 hours a day, seven days a week;

• spare parts planning and material engineering;

• technical support;

• flight operations support;

• maintenance support engineering;

• MRO Network strategy and policy;

• business development;

• technical publications development; and

• other customer maintenance training (such as a mechanic training program offered through major training providers worldwide).

In addition, we also have spare parts distribution centers in Louisville, Kentucky and Dubai, UAE.

Beyond parts fulfillment and simple rental plans, we also provide innovative programs for material planning, logistics, and acquisitions, such as:

• Fleet-Hour Pool Program;

• Parts Consignment Program;

• Embraer Collaborative Inventory Plan (ECIP);

• Embraer Parts Exchange Program (EPEP); and

• Customer Stock Optimization.

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We also own and operate MRO facilities to support commercial, executive and defense aircraft around the world, including in:

• Nashville, Tennessee, where we have an Embraer Aircraft Maintenance Services (EAMS);

• Alverca, Portugal, which we refer to as OGMA and began to operate in March 2005;

• Gavião Peixoto, in the State of São Paulo, Brazil, where we have a dedicated service center for defense customers; and

• São José dos Campos, in the State of São Paulo, Brazil.

The Embraer network of authorized service centers that support our Commercial Aviation aircraft fleet is also expanding with our recent additions of third-party repair stations. As of December 31, 2013, these centers are:

• TAP Maintenance & Engineering, in Porto Alegre, in the State of Rio Grande do Sul, Brazil;

• FlyBe Aviation Services, in Exeter, United Kingdom;

• Tianjin Airlines, in Tianjin, China;

• HOP REGIONAL Maintenance Services, in Clermont-Ferrand, France;

• Atlantic Air Industries (AAI), in Toulouse, France, with a subsidiary in Casablanca, Morocco;

• LOTAMS – LOT Aircraft Maintenance Services, in Warsaw, Poland;

• John Holland Aviation Services, in Melbourne, Australia;

• STAECO, in Ji’nan, China;

• Egyptair Maintenance & Engineering, in Cairo, Egypt; and

• LLC NORD-TECHNIK, in Arkhangelsk, Russia.

It is Embraer’s intention to continue providing our customers with high quality customer support by expanding our presence worldwide, both through our own operations and through agreements with established and reputable authorized service centers.

We constantly monitor customer satisfaction levels and keep open communication channels with them in order to understand customer needs and define the most appropriate actions for the continuous improvement of our customer support. To do so, we make use of the following tools and forums:

• a customer satisfaction assessment performed bi-monthly, which aims to develop action plans to allow us to provide effective responses to our clients;

• a customer support satisfaction survey performed every other year in order to identify the competitive position of EMBRAER;

• specific action plans and commitments with each customer, known as Customer Integrated Action Plans;

• teamwork and systematic identification and integrated action plans to solve problems affecting us, our suppliers and customers;

• periodic dedicated meetings at the customer’s headquarters;

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• Embraer Operators’ Conferences that take place yearly in the various regions of the world where we have customer operators;

• a maintenance cost workshop that occurs yearly, where operators share best maintenance practices and discuss cost reduction initiatives;

• events organized by customers, including the Operators’ Maintenance Forum and the European Customer Community Conference;

• interactive forums for discussions in the web portal FlyEmbraer, to foster the exchange of experiences among customers and Embraer; and

• an internal program named EECE (Embraer Excellence in Customer Experience), aiming to address changes in the Services & Support area of the Commercial Aviation division, in order to elevate the performance of the Commercial Aviation business, covering contemporary and future market needs, with the purpose of obtaining the highest levels of customer experience in the commercial aviation industry.

Competition

We generally face competition from major manufacturers in the international aircraft market. Each category of our products faces competition of a different nature and generally from different companies. Some of our competitors have greater financial, marketing and other resources than we do.

50–seat category

The main competitors of the ERJ 145 regional jet family are:

• the CRJ-100/200/440 (in October 2005, Bombardier announced its plans to stop manufacturing the CRJ-100/200/440 aircraft);

• the ATR-42, a 50-seat turboprop manufactured by ATR, a joint project of Italy’s Alenia Aeronautica and EADS; and

• the Q-300, a 50-seat turboprop manufactured by Bombardier, the production of which Bombardier discontinued in May 2009.

Given the success of our regional jet family, the maturity of this market segment and the significant entry barriers in this segment, due mainly to the high development expenses of a new model and the extensive and time-consuming development cycle of a new jet, we believe that we are well-positioned to maintain our market share in the 30-60–seat category with our ERJ 145 regional jet family.

70-130–seat categories

We currently face our strongest competition against the following aircraft in these categories:

• ATR-72, a 64-seat turboprop produced by ATR;

• Q-400, a 72-seat turboprop produced by Bombardier;

• CRJ-700, CRJ-900 and CRJ-1000, 70-seat, 85-seat and 98-seat regional jets, respectively, produced by Bombardier;

• A318, a 100-plus-seat jet produced by Airbus;

• 737-600, a 100-plus-seat jet produced by Boeing; and

• SSJ100, a 95-seat regional jet produced by Sukhoi.

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We expect new developments in this market segment from current and new competitors, including:

• Bombardier’s CSeries jet launched in 2008, which seats 110 to 130 passengers, and is expected to enter into service by 2015;

• COMAC’s ARJ21, with the 90-seat regional jet version officially scheduled to enter into service in 2014; and

• Mitsubishi Heavy Industries’ MRJ, a 75- to 92-seat regional jet launched in March 2008, which is expected to enter into service by 2016.

The key competitive factors in the markets in which we participate include design and technological strength, aircraft operational costs, price of aircraft, including financing costs, customer service and manufacturing efficiency. We believe that we will be able to compete favorably on the basis of our aircraft performance, efficiency, low operating costs, product development experience, global customer base, market acceptance, cabin design and aircraft price.

Defense and Security Business

In 2011, Embraer added capabilities and broadened the scope of its corporate unit dedicated to the defense and security market. The creation of the new Embraer Defense & Security unit is an important step towards consolidating Embraer as a key supplier of defense and security solutions for the Brazilian federal government, as well as other governments worldwide.

We conceive, design, develop, manufacture and support a wide range of integrated solutions for the defense and security market. Our products include training/light attack aircraft, aerial surveillance platforms, military transport aircraft, government transport aircraft and Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance systems, or C4ISR systems. We offer a complete portfolio of customer services, ranging from maintenance and material solutions to complete Contractor Logistic Support programs. We have positioned ourselves to play a major role in projects focused on border surveillance and security for the upcoming major sporting events in Brazil.

As of December 31, 2013, we had sold more than 1,350 defense aircraft, including government transport aircraft, to more than 40 armed forces and operators worldwide. We are also the leading supplier of defense aircraft to the Brazilian Air Force based on the total number of aircraft in its fleet. Our defense and security business accounted for 19.2% of our revenue for the year ended December 31, 2013.

Products

C4ISR Systems

Embraer has developed three cost-effective, reliable and flexible special-mission aircraft based on the ERJ 145 regional aircraft platform: the EMB 145 Airborne Early Warning and Control, or AEW&C, the EMB 145 Multi Intel and the EMB 145 Maritime Patrol, or MP. Since its first delivery, a total of 18 such aircraft have been manufactured for the Brazilian, Mexican, Greek and Indian Air Forces.

We believe the EMB 145 AEW&C is the most advanced and affordable Airborne Early Warning and Control aircraft available in the market. It combines Embraer’s reliable and cost-effective ERJ 145 regional airplane platform with a unique, high-performance, multi-mode active phased-array AEW radar, a powerful C4I system and a comprehensive set of support systems such as self-protection and communications, including data links. The EMB 145 AEW&C is operational in the Brazilian, Mexican, Greek and Indian Air Forces. In 2008 we executed a contract with the Indian Air Force to sell them three units of our EMB 145 AEW&C aircraft. In 2012, we delivered two of the three EMB 145 AEW&C aircraft ordered by the Indian government. These deliveries represent an important milestone in the program, which continues on track. The remaining aircraft is currently being assembled in accordance with the delivery schedule for this contract.

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The EMB 145 Multi Intel, also known as the EMB 145 Remote Sensing/Airborne Ground Surveillance, or RS/AGS, aircraft is designed to accomplish electronic and reconnaissance missions. It features state-of-the-art sensors for Image Intelligence (IMINT), Signal Intelligence (SIGINT), and Measurement and Signature Intelligence (MASINT), and is capable of providing real-time imagery and signals intelligence over ground objectives. It is equipped with extensive sensor suites ranging from high-performance synthetic aperture radar to electro-optical sensors, and includes communications and electronic exploitation systems capable of gathering complete intelligence information. The EMB 145 Multi Intel is currently operational in the Brazilian Air Force.

The EMB 145 MP aircraft is designed to address coastal and blue-water threats. The EMB 145 MP is designed to carry out maritime patrol by using maritime and ground surveillance radar and electro-optical sensors, as well as dedicated communications and surveillance equipment. In the ASW configuration, the EMB 145 MP is designed to carry out anti-submarine warfare missions. The EMB 145 MP is operational in the Mexican Air Force.

Embraer also develops and integrates state-of-the-art C4ISR systems for defense customers that require accurate information on a real-time basis. Our C4ISR systems operate in all three of our EMB aircraft. The information provided by C4ISR systems seeks to give top defense organizations the capability to collect, process and disseminate an uninterrupted flow of accurate and timely data that enables them to make better decisions and act faster and more effectively. We believe that the entry of Embraer in the C4ISR systems sector is made possible by Embraer’s technical understanding of several key topics such as knowledge management, visualization technologies, decision-making tools and concept-development methodologies. One practical example of Embraer’s contributions to the C4ISR field is the definition and development of a datalink protocol delivered to the Brazilian Air Force in 2009.

Training and Light Attack – Super Tucano

The Super Tucano, designated as A-29 by the Brazilian Air Force, is a single-engine, multipurpose, military turboprop that combines effective training and operational capabilities with low acquisition and operating costs. It is an evolution of the EMB-312 Tucano, a prior trainer aircraft with a proven track record, of which 620 units were sold to 15 air forces around the world.

It offers solutions for basic to advanced weapons training, such as in-flight virtual training. It also offers operational capabilities required for border surveillance, close air support operations and counterinsurgency (COIN), missions. It offers avionics comparable to those of fourth generation fighter jets, ejection seats, an onboard oxygen-generating system and outstanding external load capability.

The Super Tucano is used for advanced pilot training and for surveillance operations in the Amazon region of Brazil in connection with the Brazilian federal government’s Sistema de Vigilância da Amazônia (System for the Surveillance of the Amazon), or SIVAM, program.

The Super Tucano is still one of the highlights of our Defense & Security business unit due to its versatility, its excellent performance for training and operational missions and its competitive pricing, together with its low operating and maintenance costs. In 2012, we signed an agreement with Boeing that will add capabilities to the A-29 Super Tucano by the integration of weapons that meet the future demand of our customers. The Super Tucano currently has 210 firm orders, out of which 178 aircraft have already been delivered.

During 2013, six Super Tucanos were delivered to the National Air Force of Angola.

In February 2013, the A-29 Super Tucano was selected by the United States Air Force, or USAF, for its Light Air Support, or LAS program, with a firm order for 20 aircraft. The aircraft will be supplied in partnership with Sierra Nevada Corporation, the prime contractor, and will be used to conduct advanced flight training, aerial reconnaissance, and light air support operations.

Military Transport – KC-390

In April 2009, Embraer signed the KC-390 development contract with the Brazilian Air Force. This new jet will meet the needs of the Brazilian Air Force, and will be in compliance with the new National Defense Strategy.

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The first flight of the KC-390 prototype is expected to occur in 2014 and initial deliveries are expected for 2016. Development expenditures associated with the KC-390 will be borne by the Brazilian Air Force.

The KC-390 development program is ongoing and on schedule. In 2011, the selection of key suppliers and partners was completed and the joint definition phase, during which the specific configuration of the KC-390 was more clearly defined, began. Main suppliers include:

• International Aero Engines (IAE), for the propulsion system;

• Rockwell Collins International, which will supply the basic avionics systems;

• DRS Defense Solutions, for the cargo handling and aerial delivery system (CHS/ADS);

• ELEB, an Embraer industrial unit, which will develop and manufacture the landing gears and hydraulic reservoirs;

• Aeroletronica (AEL), for the mission computers, head-up displays, self protection systems, enhanced vision system and the directed infrared countermeasures system (DIRCM);

• Liebherr Aerospace, which will supply the environmental and cabin pressure control systems;

• BAE Systems, for the flight controls electronics and the pilots’ sidesticks;

• UTAS (formerly Goodrich Corp.), for the primary flight controls actuators, air data system and a number of other components; and

• Esterline Control Systems, for the autothrottle system and other cockpit inceptors, except for the sidesticks.

Industrial partnerships on the KC-390 airframe include Aero Vodochody, in the Czech Republic, FAdeA, in Argentina, and Embraer’s subsidiary OGMA – Indústria Aeronáutica de Portugal and EEA – Empresa de Engenharia Aeronáutica, in Portugal.

In 2012, we signed a cooperation agreement with Boeing Defense, Space and Security for the KC-390 program. The agreement provides for the sharing of expertise and joint evaluation of specific markets where sales strategies can be established for medium-sized military transport aircraft. This agreement allows the KC-390 to have penetration in markets not previously considered in the original business plan of the aircraft.

In March 2013, Embraer successfully completed the Critical Design Review (CDR) phase of the KC-390 with the Brazilian Air Force. One month later, the commercial campaign for the new aircraft was formally launched.

This marked an important milestone in the cooperative program between Embraer and the Brazilian Air Force. The technical aspects and design solutions which have been adopted for the structure and the systems of the aircraft, along with its main components and interfaces, demonstrate that the project has achieved its goal for this phase.

The KC-390 program already has letters of intent for 60 aircraft orders: 28 aircraft for the Brazilian Air Force, 6 for the Argentinean Air Force, 12 for the Colombian Air Force, 6 for the Chilean Air Force, 2 for the Czech Republic Air Force and 6 for the Portuguese Air Force.

This twin jet transport will be equipped with an aft ramp to allow loading and unloading of a wide range of cargo, including armored vehicles, and it will be able to air launch paratroops and cargo.

The KC-390 can be refueled in flight and also be used for in-flight or on-ground refueling of other aircraft. The cargo bay will allow configurations for medical evacuation (MEDEVAC) missions, search and rescue (SAR) and forest firefighting missions. The technical advances of the KC-390 include full closed loop fly-by-wire technology, which lessens pilots’ work load, increases safety and helps to optimize mission performance.

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Government Transport Aircraft

We are marketing our wide line of commercial and executive jets, as well as derivatives of these airplanes, to Defense & Security customers. For example, in 2008, we delivered one Legacy 600 to the Ecuadorian government, and in 2009 we delivered two modified versions of the EMBRAER 190 commercial aircraft to the Brazilian Air Force to serve as the presidential aircraft. These aircraft have a spacious and comfortable cabin, including space for meetings and a private area for the Brazilian president. In 2009, Embraer also delivered two ERJ 135s to the Thai Armed Forces for VIP transport and four Phenom 100s to the Pakistani Air Force. In 2010, two other aircraft for the transportation of authorities were delivered: an ERJ 135 to the Thai Navy and a Legacy 600 to the government of Panama.

In addition to these governments, our base of customers operating Embraer jets for the transportation of authorities includes Belgium, Greece, Colombia, Angola, Nigeria and India.

Modernization Programs

We offer military aircraft modernization services and we currently have five ongoing programs under contract, four with the Brazilian Armed Forces and one with the Colombian Air Force. The first program, known as F-5BR, which signed in 2000, is focused on performing structural and electronics upgrades for 46 F-5 fighter jets. As the prime contractor, we are responsible for integrating the multi-mode radar, the advanced navigation and attack systems, and the enhanced self-protection systems into the existing aircraft platform. In 2012, we delivered the two remaining modernized F-5 fighter jets under this program. In continuation of this contract, in the beginning of 2011 we signed a contract with the Brazilian Air Force to modernize 11 additional F-5 fighters’ jets and to supply 1 more flight simulator for these fighters. The first delivery of this second group of upgraded jets is scheduled for 2014.

The second program with the Brazilian Air Force, known as the A-1M modernization program, focuses on modernizing the AMX. The goal of this modernization project is to keep the fleet of 43 AMX jets on active duty for another 20 years. In June 2012, in a ceremony held in our Gavião Peixoto facility, the first A-1M made its first flight. In September, 2013, Embraer Defense & Security delivered the first A-1M fighter jet to the Brazilian Air Force.

By the end of 2013, 25 aircraft were already in our facilities: 2 flight test prototypes and 23 serial production AMXs in different phases of the revitalization and modernization processes.

The third modernization program is to upgrade 12 A-4 Skyhawk (AF-1 Brazilian Navy Designation) aircraft of the Brazilian Navy with a view to incorporating new technology for these aircraft, including new avionics, radars, power production and autonomous oxygen generating systems. We reached an important milestone at the end of 2011 with the completion of the project configuration phase. This modernization program is on track, and in 2012 we tested the embedded software of the avionics RIG and material was made available for initiating the modernization of the first test prototype. The first flight was performed in August, 2013. First deliveries will begin in 2014.

In January, 2013, Embraer Defense & Security and the Brazilian Air Force signed a contract to modernize five EMB 145 AEW&C (Airborne Early Warning and Control). The contract provides for the updating of electronic warfare systems, command and control systems, electronic countermeasures and air surveillance radar. The contract also provides for six mission planning and analysis stations that will be employed in the training and improvement of crews.

In January, 2011, Embraer Defense & Security signed a contract for modernizing 14 EMB 312 Tucano training aircraft of the Colombian Air Force (FAC). This program includes the installation of state-of-the-art digital avionics and the substitution of their wings and landing gear.

Services and Support – Defense & Security

Our Defense & Security customer service portfolio involves Material Support, Training, Field Support, Technical Support and MRO–Maintenance, Repair and Overhaul.

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Our Customer Support and Services department provides the support and services required by our customers for aircraft operational success, ensuring readiness and sustained mission capability. The provision of world-class support and services to our customers is essential to our business strategy and the maintenance of enduring relationships with customers.

In 2013, our sales efforts resulted in a contract for logistics support for the fleet of 92 A29 Super Tucano family aircraft operated by the Brazilian Air Force. The contract, for up to R$252 million, including R$29 million of additional services, covers a wide range of services, aimed at increasing the availability of aircraft for required missions.

Competition

Our military aircraft face rigorous competition from various manufacturers from different countries in each market segment.

The Super Tucano competes in the basic/advanced training market with the Pilatus PC-9M (basic) and the PC-21 (advanced) aircraft from Switzerland, the Beechcraft T-6A/B (basic/advanced) from the U.S., and the Korea Aerospace Industries’ KT-1 (basic). In the Light Attack market, the Super Tucano competes with the Beechcraft AT-6 and Korea Aerospace Industries’ KO-1.

In the special mission aircraft market, which includes Airborne Early Warning & Control, Remote Sensing, Airborne Ground Surveillance, Maritime Patrol, Anti-Surface Warfare and Multi-mission Aircraft, there are several platforms with a wide range of sensor combinations that compete with our products: the Bombardier Global Express, Boeing 737, Northrop Grumman E-2C/D Hawkeye, Gulfstream G550, SAAB 2000, Alenia ATR 42 and 72, EADS CASA CN-235 and C-295, and the Bombardier Dash 8, among others.

In the military transport segment, our competitors include the Lockheed Martin C-130, the Airbus A400M, the Alenia C-27J and the CASA C-295.

Executive Aviation Business

We refer to our executive aviation business segment as “Executive Jets.” We developed a line of executive jets: the Legacy 600, a super mid-size jet, followed by the Phenom 100, an entry-level jet, and the Phenom 300, a light jet. The Lineage 1000, an ultra-large jet, was added as the largest executive jet in our executive jet portfolio and, during 2008, we launched the Legacy 450 and Legacy 500, a mid-light and a mid-size jet, respectively, that we believe will establish our executive jet portfolio as one of the most comprehensive of the executive aviation industry. The Legacy 500 and 450 development program continues on track, with more than 650 employees fully engaged in these projects, and the first delivery of the Legacy 500 is planned for the first half of 2014, while the first delivery of the Legacy 450 is planned for one year later. In 2009, we presented the new Legacy 650, a large executive jet that is positioned in our executive jet portfolio between the Legacy 600 and the Lineage 1000.

We market our executive jets to companies, including fractional ownership companies, charter and air-taxi companies, and high-net-worth individuals. Our Executive Jets segment accounted for 26.4% of our revenue for the year ended December 31, 2013, resulting from the delivery of 30 Phenom 100 jets, 60 Phenom 300 jets, 25 Legacy 600/650 jets and 4 Lineage 1000 jets. On December 31, 2013, our firm orders in backlog for our executive jets totaled US$2.4 billion.

The Legacy 600 shares important qualities with our regional jet platform. However, although the Legacy 600 has some of the same components of our airliners, such as the ERJ 135, the Legacy 600’s interior, fuel tank, controller and indication systems and its winglets differ from those of our airliners. The executive version of the Legacy 600 was certified by the Brazilian aviation authority in December 2001, by the JAA in July 2002 and by the FAA in August 2002.

In May 2005, we launched the Phenom 100 and Phenom 300, which are executive jets in the entry-level and light jet categories, respectively. The Phenom 300 carries up to nine people and has a larger fuselage and wingspan and longer range than the Phenom 100. It is powered by Pratt & Whitney Canada’s PW535E engine and has entered into service in the second half of 2009. The Phenom 100 jet carries from six to eight people and is powered by Pratt & Whitney Canada’s PW617F engine. In the second half of 2008, the Phenom 100 entered into service.

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In May 2006, we launched the Lineage 1000, an ultra-large executive jet based on the EMBRAER 190 commercial jet platform. The Lineage 1000 is configured to accommodate up to 19 people in a total cabin volume of 4,085 cubic feet (115.7 cubic meters), and is powered by GE CF34-10E7 engines. The Lineage 1000 entered into service in the first half of 2009.

In April 2008, we formally launched two new programs in the medium jet categories, namely the mid-light Legacy 450 jet, with a 2,300 nautical mile range, and the mid-size Legacy 500 jet, with a 3,000 nautical mile range. Both programs were approved by our Board of Directors in March 2008. The Legacy 450/500 jets are positioned in our executive jets portfolio between the Phenom 300 and the Legacy 600.

In October 2009, we presented the Legacy 650 jet during a press conference at the 62nd Annual Meeting and Convention of the National Business Aviation Association in Orlando, Florida. The Legacy 650 is a large category jet based on the successful platform of the super mid-size Legacy 600, having a longer range for up to 14 passengers. The Legacy 650 may fly up to 3,900 nautical miles nonstop with four passengers or 3,800 nautical miles with eight passengers, which is approximately 500 nautical miles more than the Legacy 600’s range.

The Legacy 600 and the Legacy 650 compete with aircraft produced by Dassault Aviation, Bombardier, Gulfstream and Hawker Beechcraft. Phenom 100 and Phenom 300 competitors in the entry-level and light jet categories include Cessna and Bombardier. Boeing and Airbus are the main competitors for the Lineage 1000 ultra-large jet.

We include an executive jet order in backlog once we have received a firm commitment, represented by a signed contract. We customarily receive a deposit at the time of order, progress payments totaling 15% to 30% of the aircraft price, and the full payment of the balance is due upon delivery. We generally receive between US$10,000 and US$200,000 for each option to purchase an executive jet.

Services and Support – Executive Jets

We expect to enhance customer support and services offered to the Executive Jets segment. In this respect, we have added four wholly-owned service centers since 2007, in Fort Lauderdale, Florida; Mesa, Arizona; Le Bourget, France; and Bradley, Connecticut, and we are revamping the authorized service center network for executive jets. At the end of 2013, we had 66 service centers to support our executive jet fleet. In 2006, we entered into an agreement with CAE to form a global training joint venture, to provide comprehensive pilot and ground crew training to customers of the Phenom 100 entry-level jet and Phenom 300 light jet aircraft. The initial training program has started to be offered at CAE SimuFlite in Dallas, Texas, as the Phenom 100 started to operate in 2008, and expanded to Burgess Hill in the U.K. in 2009. In 2012, a new training center was opened in Guarulhos, Brazil, in order to support the growing fleet of Phenom jets in the region. This joint venture provides entitlement training and post-entitlement training for pilots, maintenance technicians and dispatch personnel. We also plan to continue to invest in parts inventory and logistics worldwide as our executive aircraft fleet continues to grow. In 2012, we implemented a mobile rescue support service in the United States and in Brazil, with fully equipped trucks and vans. We also implemented a spare parts distribution center in Las Vegas in order to better support the executive jet customers on the west coast of the United States.

We have further developed our customer support and services structure to enhance our customers’ satisfaction in operating our executive jets, and to measure this satisfaction, we take a yearly customer experience survey of the Executive Jet customers, aimed at the development of action plans that will allow us to provide effective responses to our clients.

In August 2013, our Executive Jets product support was once more ranked in second place in the business aviation industry, according to a survey by Aviation International News magazine. The magazine noted the consistent results from its 2012 survey, gauged from positive responses of customers who recognize our work in providing excellent customer support and services.

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Once more, our three service centers in the United States have received the FAA Diamond award, a certificate of excellence related to maintenance technician training, for the third time.

In 2013, we completed the certification of approximately four new authorized service centers worldwide.

We have signed memoranda of understanding with 17 service centers around the world for the Legacy 450/500 entry to service, and the agreements will be finalized before the aircraft enters service in 2014.

During 2013, FlightSafety International was selected as the training provider for the Legacy 450/500 and by year end the first Full Flight Simulator was already built and is scheduled to be certified before the aircraft entry to service in 2014.

In the area of technological innovation, we launched the eTechPubs app for iPad, which offers all technical manual information for the Phenom 100/300 and Legacy 600/650 jets operators.

In the last quarter of 2013, we celebrated the opening of our Executive Jets Service Center in Sorocaba, complementing our São José dos Campos facility, Brazil, with expanded operations and capacity for a larger hangar.

In 2009, we announced our new Customer Support Contact Center dedicated to our executive jets and offering complete and timely assistance for their operational, technical and maintenance needs. This Customer Support Contact Center is based at Embraer’s headquarters, in São José dos Campos. Its priority is to minimize downtime, from the customer’s first contact to the final solution, by quickly and efficiently applying appropriate resources to critical needs, thus assuring that customers have expert assistance anywhere in the world.

We held 14 face-to-face meetings with customer groups during 2013, including the Embraer Executive Operators Conferences, or EEOCs, and dedicated mini-conferences with our fleet operators.

Other Related Businesses

We provide structural parts and mechanical and hydraulic systems to Sikorsky Corporation for its production of helicopters. We also manufacture general aviation propeller aircraft, such as crop dusters, also known as light aircraft. Our Other Related Businesses accounted for 1.4% of our revenue for the year ended December 31, 2013.

Subcontracting

We provide subcontracting services to Sikorsky Corporation in connection with the development and manufacture of the landing gear, fuel system and fuel tanks for the S-92 Helibus helicopter. We also act as a risk-sharing partner to Sikorsky. These contracts expire in 2015.

General Aviation Aircraft

We build general aviation propeller aircraft. These aircraft include a six-passenger aircraft that is produced only on demand for use by corporations and by air-taxi companies. We have delivered a total of 2,326 of these aircraft, and the last delivery of this type of aircraft was in 2000. We also developed a crop duster aircraft pursuant to specifications of the Brazilian Ministry of Agriculture. These aircraft are produced only on demand. Through December 31, 2013, we had delivered a total of 1,315 of these aircraft, including 60 in 2013.

Aircraft Operating Lease Activities

In order to provide better financial support to our commercial activities, as well as to manage and reduce financial risks related to the marketing of aircraft, we created, in September 2002, ECC Leasing.

The mission of ECC Leasing is to manage and remarket Embraer’s aircraft portfolio, which as a result of contractual obligations, may be acquired by us as trade-in transactions. We also provide re-marketing services to third parties looking to sell their Embraer manufactured aircraft.

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We have successfully completed sales campaigns for new aircraft, where the acceptance of trade-in aircraft as part of payment was allowed. We have also generated additional revenues through the sale and lease of aircraft received as trade-ins. Furthermore, leasing operations involving EMBRAER 170, EMBRAER 175 and EMBRAER 190 pre-series aircraft contributed to the current results. Since its establishment in 2002, ECC Leasing and one other Embraer wholly-owned subsidiary managed a portfolio composed of 168 aircraft, of which 26 are under operating leases, 54 are available or under lease/sale negotiations, 4 are performing flight tests at Embraer, and 84 were sold to airlines, corporations and government entities in North America, South America, Asia and Europe.

All sale and leasing transactions were executed based on market rates, thereby helping to sustain the present and future values of our products. In addition, we continue to actively work with third parties to facilitate the placement of their aircraft.

The continued improvement in financial performance is directly related to ECC Leasing’s ability to re-market aircraft in its existing portfolio with similar conditions as those currently in place, as well as to sell aircraft to operators, leasing companies and/or financial institutions, at values close to market rates and without any guarantee from Embraer.

Furthermore, we believe the results of ECC Leasing will be largely dependent on market conditions, aircraft availability levels and the demand for regional jets in the 37 to 50 seat category. Although new markets such as Eastern Europe and Latin America are important, the risks related to operator’s credit and asset repossession will continue to require an adequate financial evaluation by Embraer.

As more pre-owned aircraft begin to trade in the market, Embraer and ECC Leasing are working together to create the Embraer Lifetime Programme to better support our customers. The program will allow customers of our pre-owned and new aircraft to select from a wide array of services, including, among other things, training, spare parts, technical support, engine programs, technical representation, maintenance and overhaul coverage. Customers who enroll in this program will pay us periodic fees, so that we can provide them with scheduled and unscheduled maintenance, support and repair services, among other things. We believe this program represents an innovative approach, which offers our customers an attractive combination of pre-owned aircraft backed by Embraer’s comprehensive support package. The program will allow us to continuously improve the level of support we offer to our pre-owned aircraft customers.

Markets

The following table sets forth our revenue by line of business and geographic region of the end users of our aircraft for the periods indicated:

	Year ended December 31,
	2013		2012 Restated		2011 Restated		2010(1)		2009(1)
	(in US$ millions)
Commercial Aviation
North America		1,089.4		875.3		739.1		347.3		796.8
Latin America (except Brazil)		457.9		144.6		540.3		426.7		157.9
Asia Pacific		546.3		920.8		1,041.5		773.4		815.8
Brazil		103.5		46.0		294.9		230.0		282.8
Europe		916.4		1,510.8		1,013.8		1,374.1		1,463.8
Others		193.5		257.9		121.6		106.4		268.6
Total		3,307.0		3,755.4		3,751.2		3,257.9		3,785.7

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	Year ended December 31,
	2013		2012 Restated		2011 Restated		2010(1)		2009(1)
	(in US$ millions)
Executive Jets
North America		632.2		505.9		360.8		293.6		326.0
Latin America (except Brazil)		6.3		43.3		83.9		123.5		47.7
Asia Pacific		336.6		327.4		155.0		294.7		240.7
Brazil		357.7		136.8		210.5		211.5		80.8
Europe		290.6		254.6		281.1		241.2		186.9
Others		21.1		24.0		27.5		45.0		54.8
Total		1,644.5		1,292.0		1,118.8		1,209.5		936.9
Defense & Security
North America		26.4		20.0		27.6		24.1		14.3
Latin America (except Brazil)		16.3		21.7		15.6		276.9		185.3
Asia Pacific		71.0		79.5		145.2		123.0		78.6
Brazil		848.5		648.5		446.2		221.9		216.2
Europe		166.9		178.4		175.9		129.7		158.2
Others		67.8		97.1		29.4		46.2		25.2
Total		1,196.9		1,045.2		839.9		821.8		677.8
Other Related Businesses
North America		59.7		47.4		55.5		52.9		43.9
Latin America (except Brazil)		—		0.4		—		0.3		0.6
Asia Pacific		—		—		—		2.5		17.2
Brazil		26.9		26.6		25.5		17.1		10.2
Europe		—		—		—		1.6		21.7
Others		—		—		—		0.5		3.8
Total		86.6		74.4		81.0		74.9		97.4

(1) No restatement of financial information was made because there were no changes generated in the period by the retrospective application of new accounting rules which came into effect as of 2013.

Suppliers and Components; Risk-Sharing Arrangements

We do not manufacture all of the parts and components used in the production of our aircraft. More than 80% of the production costs of our aircraft consist of materials and equipment purchased from our risk-sharing partners and other major suppliers. Risk-sharing arrangements with suppliers of key components enable us to focus on our core business: design, development, manufacture and sale of aircraft and systems for the Commercial Aviation, Executive Jets, and Defense & Security segments. Risk-sharing arrangements are those in which suppliers are responsible for the design, development and manufacture of major components or systems of our aircraft, such as wings, tail or fuselage. Our risk-sharing partners, therefore, must invest their own money in development and share the risk and success of our products with us.

In our Commercial Aviation and Executive Jets businesses, we rely on risk-sharing partners to supply vital components of our aircraft, such as the engines, hydraulic components, avionics, interior and parts of the fuselage and portions of the tail. We select suppliers on the basis of, among other factors, technical performance and quality of their products, production capacity, prior relationship and financial condition. We have had continuing relationships with most of our major suppliers since production of the Bandeirante aircraft began in 1975.

In addition, we have entered into purchase agreements with our major suppliers, which cover our requirements for five to ten years of production. These contracts contain pricing formulas that take into consideration the various factors that affect the business of our suppliers, and help us mitigate the effects of price volatility (which in some cases can be significant) of the materials, parts and components that are required for our

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operating activities. We are not obligated to purchase a minimum amount of materials annually under any of these supply contracts. Our ongoing supplier relationships depend on cooperation, performance and the maintenance of competitive pricing. Once we select our risk-sharing partners, and program development and aircraft production begins, it is difficult to substitute these partners. In some cases, our aircraft are designed specifically to accommodate a particular component, such as the engines, which cannot be substituted by another manufacturer without significant delay and expense. This dependence makes us susceptible to the performance, quality and financial condition of these risk-sharing partners. See “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—We depend on key customers and key suppliers, the loss of any of which could harm our business.”

ERJ 145 Regional Jet Family

Risk-sharing partners. We entered into risk-sharing arrangements with the following four suppliers in connection with the development and production of the ERJ 145 regional jet family:

• Aernnova Aerospace S.A., or Aernnova, a Spanish company owned by Iberdrola S.A., a European power utility, and Banco Bilbao Vizcaya, a large Spanish financial institution, supplies the wings, engine nacelles and main landing-gear doors;

• Sonaca S.A.—Société Nationale de Constructions Aerospatiales, a Belgian company, supplies portions of the central and rear fuselages, the service, main and baggage doors and engine pylons;

• ENAER—Empresa Nacional de Aeronáutica, a Chilean company, supplies the vertical fin, horizontal stabilizers and elevators; and

• C&D Aerospace, Inc., a U.S. company, supplies the cabin and cargo compartment interiors.

Our risk-sharing partners generally receive payment for supplied components within three to five months after delivery of the components to us. The partnering relationship with these suppliers results in lower production costs and higher product quality for the ERJ 145 regional jet family. In addition, our line of executive jets benefits from the risk-sharing arrangements with Aernnova, Sonaca and ENAER. The interior of the Legacy 600 executive jet is provided by The Nordam Group, Inc., Duncan Aviation Inc. and us.

Other major suppliers. We have also entered into other agreements with numerous European, American, Canadian and Brazilian suppliers to provide key components for a number of our products, including the ERJ 145 regional jet family. These supply arrangements cover systems and components such as engines, avionics, landing gear and flight control systems. Our major suppliers include, among other companies, Rolls-Royce Allison, Parker Hannifin Corp., or Parker, BF Goodrich Co., United Technologies Corp. – Hamilton Sundstrand Division, Honeywell, Rosemount Aerospace and Alcoa Inc.

EMBRAER 170/190 Jet Family

We are continuing to improve the EMBRAER 170/190 jet family, together with risk-sharing partners that supply key systems for the aircraft. Our supplier arrangements for the EMBRAER 170/190 jet family differ from the ERJ 145 regional jet family in that we use fewer suppliers. In the EMBRAER 170/190 jet family, each risk-sharing partner is responsible for the development and production of aircraft systems, such as the landing gear, the hydraulic system and the flight control system, rather than individual components, and fewer components are supplied by companies that are not risk-sharing partners. The assumption of responsibility for systems by our risk-sharing partners lowers our capital expenditures, which thereby decreases our development risks and increases our operating efficiency by reducing the number of suppliers per product and cutting production costs. It also shortens development and production time. The primary risk-sharing partners for the EMBRAER 170/190 jet family are General Electric (CF34-8E/l0E turbofan engines and nacelles), Honeywell (avionics), Liebherr (landing gear), Hamilton Sundstrand (auxiliary power unit, electrical systems and air management system), Sonaca (wing slats), Aernnova (rear fuselage, vertical and horizontal tail surfaces), Latecoere (fuselage sections), C&D Aerospace (aircraft interior) and Grimes Aerospace Company (exterior and cockpit lighting).

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In addition, some of the risk-sharing partners for the EMBRAER 170/190 jet family have assumed a broader role in other aspects of the program by providing sales financing and residual guarantees, rather than simply supplying us with aircraft components.

To prepare for the expected production increase for the EMBRAER 190 and EMBRAER 195 aircraft, on June 1, 2006, we entered into an agreement with KHI and KAB, under which they transferred to us assets required for the final assembly of the wings of the EMBRAER 190 and EMBRAER 195 aircraft and paid us compensation of US$57 million. As a result, we began assembling the wings of the EMBRAER 190 and EMBRAER 195 aircraft. KHI will continue producing the wing control surfaces and the main landing gear doors for these aircraft. However, our agreement with KHI and KAB does not cover the production of parts for the EMBRAER 170 and EMBRAER 175 aircraft.

The application of advanced technologies for engines, wings, and avionics distinguishes the E-Jets E2 by providing airlines with maximum efficiency gains, while maintaining commonality with current E-Jets. New aerodynamic advancements, high-aspect ratios, distinctively shaped wings, improved systems and avionics, including fourth generation full fly-by-wire flight controls, and Pratt & Whitney’s PurePowerTM Geared Turbofan high by-pass ratio engines (PW1700G on the E175-E2, PW1900G on the E190-E2 and E195-E2) are expected to result in double-digit reductions in fuel consumption, emissions, noise and maintenance costs, and increased aircraft availability. Cockpit commonality with current generation E-Jets was a key driver in the design of the E-Jets E2, in order to promote a smooth transition for pilots who will fly the E2. Honeywell’s Primus Epic™ 2 advanced integrated avionics system with large landscape displays and advanced graphics capabilities, and Honeywell’s Next Generation Flight Management System (NGFMS), already in development with current-generation E-Jets, will provide exceptional pilot situational awareness and flexibility for continuous innovation on the flight deck.

Known for its comfortable and roomy cabins, with no middle seats, the E-Jets passenger experience will be further enhanced in the E2 generation. The U.K. design firm Priestmangoode was contracted to develop the aircraft cabin jointly with Embraer. The interiors will establish a new benchmark in cabin design, improve the passenger experience, and deliver a more comfortable and improved environment, tailored to passengers’ needs, while maximizing airlines’ operational efficiency.

Other suppliers and partners for the E-Jets E2 have been announced: Liebherr (control systems for flaps and slats), Moog (fly-by-wire), Rockwell Collins (horizontal stabilizer control system), UTC Aerospace Systems (wheels, brakes, APU, electrical system), Intertechnique (engine and APU fuel feed, pressure refueling, fuel transfer, fuel tank inerting and ventilation, and fuel gauging and control), Crane Aerospace & Electronics (electronic control module for landing gear, brake control systems and proximity sensors), Triumph (fuselage segments, rudder and elevators) and Aernnova Aerospace (vertical and horizontal stabilizers).

Executive Jets

The risk-sharing partners for the Legacy 600 and the Lineage 1000 are the same as those for our ERJ 145 jet family and EMBRAER 170/190 jet family, respectively. The main risk-sharing partners for the Legacy 450/500 jet family are Honeywell and Rockwell Collins, and the main risk-sharing partners for the Legacy 650 include Rolls-Royce and Honeywell. The risk-sharing partners for the Phenom 100 and Phenom 300 jets are Pratt & Whitney Canada, the supplier of the engines, Garmin, the supplier of the avionic systems, and Eaton Corporation, the supplier of hydraulic systems.

Cash contributions for the production of the EMBRAER 170/190 and Phenom 100/300 jet families and the development of the Legacy 450/500 jet families and the development of the E2 jet family

We have arrangements with our risk-sharing partners pursuant to which they have contributed to us, in cash, a total of US$737.0 million through December 31, 2013, for the production of the EMBRAER 170/190 and Phenom 100/300 jet families, the development of the Legacy 450/500 jet families and the development of E2 jet family. Such contributions are recorded as a reduction of intangible assets. We believe that these financial commitments are a strong endorsement of our aircraft design and our ability to execute our business plan. A portion of these cash contributions would have to be refunded by us to the risk-sharing partners if we had failed to fulfill certain agreed-upon milestones. We generally do not need to refund these contributions as a result of insufficient market demand. The amount of US$737.0 million of these cash contributions had become nonrefundable through December 31, 2013,

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as we had fulfilled all developmental milestones. The Phenom 100 and the Phenom 300 were certified in 2008 and 2009, respectively. The Legacy 500 executive jet is expected to enter into service in early 2014, and the Legacy 450 is expected to enter service one year after the Legacy 500.

Services and Support

In 2011, we decided to allocate the revenues and profits of the Aviation Services Business to the principal business segments: Commercial Aviation, Executive Jets and Defense & Security. The operating leases previously allocated to other business were also aggregated to the business units. This change was made to report the results of operations of the business segments in accordance with the manner in which we have managed them as of 2011. Amounts related to the Aviation Services Business from previous periods were reclassified for comparison purposes. The amounts that are not directly recorded to the principal business segments are allocated based on the criteria deemed appropriate by our management.

We provide after-sales customer support and services for the fleet of our commercial, executive and defense customers. Activities in this segment include sales, inventory pooling programs, MRO services, customer training and other product support services.

Aviation services revenue is expected to continue to grow as the number of our aircraft in service increases. Our customers require aircraft manufacturers and their suppliers to maintain adequate spare parts and ground support equipment inventories for a period of ten years after the production of the last aircraft of the same type, or until fewer than five aircraft are operated in scheduled commercial air transport service. We also established pooling programs that allow customers to exchange used parts for new or refurbished parts, such as our POOL – Flight Hour Program (for Commercial Aviation and Defense & Security customers), and total support programs like our EEC – Embraer Executive Care, a total care program that includes parts exchange and complete service and maintenance packages.

Customer satisfaction is critical to our success. Our goal is to best serve our customers and, with this goal in mind, we are constantly seeking to support our customers and develop services for the enhancement of airline operations, the optimization of operating costs and the maximization of aircraft availability.

Aircraft Financing Arrangements

We generally do not provide long-term financing directly to our customers. Instead, we assist our customers in obtaining financing arrangements from different sources, including ECAs, capital providers such as leasing companies, commercial banks and capital markets. In addition, we have been working together with customers and banks to develop new sources of funds, especially from nontraditional financing sources. We are also looking for long-term relationships and expect to broaden the alternatives available to support our clients’ financing needs.

Airlines may sometimes require short-term bridge financing prior to arranging long-term debt financing because, for the airlines, a quick delivery of the aircraft may be crucial to access the markets, and long-term funding may not be available for them at the time of delivery. On a case-by-case basis, we have provided interim financing, at market rates, to customers who already have their financing arrangement structured or who are in the process of negotiating such arrangements.

We expect that ECAs will continue to play an important role in aircraft financing in 2014, helping fulfill the financing needs of the commercial aviation industry as a whole. The Brazilian ECA Program provides Embraer’s customers with direct financing and export credit insurance (or a combination of both) on financial terms and conditions which comply with the Aircraft Sector Understanding of the OECD. In 2013, approximately 43% of our Commercial Aviation deliveries were supported by the BNDES-exim Program. Brazilian official support only accounted for 20% of the total deliveries for the EJets program since its launch in 2004.

See “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—A downturn in commercial aviation may reduce our sales and revenue, and, consequently, our profitability, in any given year” and “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—The Brazilian federal government may reduce funds available to our customers under government-sponsored financing programs.”

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Government Regulation and Aircraft Certification

We are subject to regulation by regulatory aviation agencies, both in Brazil and abroad. These agencies principally regulate the type design of aircraft, their manufacturing and operation. Besides certification in Brazil, we must obtain certification in each jurisdiction in which our aircraft operate commercially. The certifying authority in Brazil is the Agência Nacional de Aviação Civil (National Civil Aviation Agency), or Brazilian Aviation Authority, a special organization with the status of a regulatory agency under the Civil Aviation Secretary of the Presidency of the Federative Republic of Brazil, which supervises and certifies aircraft, aircraft parts, manufacturers and operations. We are also subject to the regulation of aviation authorities in other countries, including the FAA in the United States and the EASA for the European Union. Once an aircraft is certified by the Brazilian National Civil Aviation Agency, and validated by the FAA and/or the EASA, some authorities, such as those in Australia and Mexico, may opt to ratify the product certification instead of running a full domestic validation process. Other countries, such as Canada, require compliance with their own specific national requirements before certification. Some countries simply validate and complement original certification of the Brazilian National Civil Aviation Agency or of the FAA or the EASA, in accordance with their own rules. The Brazilian National Civil Aviation Agency has a bilateral certification agreement with the FAA and European Union. This cooperation among regulatory authorities leads to faster certification.

Aircraft certification is a continuous process. The Brazilian Aviation Authority must approve any change in the design of any of our aircraft. Significant changes to aircraft design may require a separate validation/certification by other authorities as specified in their regulations and bilateral agreements. Changes in aircraft certification requirements do not require a new certification or a new validation of a previously certified aircraft, but significant safety improvements may otherwise be required by the authorities acting through operational rules or airworthiness directives.

The certification history of our aircraft is as follows:

• The ERJ 145 was certified by the Brazilian Aviation Authority in November 1996, the FAA in December 1996 and the European Aviation Authority in May 1997.

• The ERJ 145 XR version was certified by the Brazilian Aviation Authority in August 2002 and the FAA in October 2002.

• The ERJ 135 was certified by the Brazilian Aviation Authority in June 1999, the FAA in July 1999 and the European aviation authority in November 1999.

• The ERJ 140 was certified by the Brazilian Aviation Authority in June 2001 and the FAA in July 2001.

• The Legacy 600 executive jet was certified by the Brazilian Aviation Authority in December 2001, the JAA in August 2002 and the FAA in August 2002.

• The Legacy 650 executive jet was certified by the Brazilian Aviation Authority in August 2010, by the EASA in September 2010, by the FAA in February 2011.

• The EMBRAER 170 was certified by the Brazilian Aviation Authority, the FAA, the EASA in February 2004.

• The EMBRAER 175 was certified by the Brazilian Aviation Authority in December 2004, the EASA in January 2005 and the FAA in August 2006.

• The EMBRAER 190 was certified by the Brazilian Aviation Authority in August 2005, the FAA in September 2005 and the EASA in June 2006.

• The EMBRAER 195 was certified by the Brazilian Aviation Authority in June 2006, the EASA in July 2006 and the FAA in June 2007.

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• The Phenom 100 entry level executive jet was certified by the Brazilian Aviation Authority and the FAA in December 2008, the EASA in April 2009, the Civil Aviation Authority of the Philippines, or CAAP, in October 2009 and by the Ukraine in October 2011.

• The Phenom 300 was certified by the Brazilian Aviation Authority and FAA in December 2009, and the EASA in April 2010

• The Lineage 1000 executive jet was certified by the Brazilian Aviation Authority in October 2007, the FAA in November 2007, and the EASA in November 2007.

Seasonality

No material portion of our business is considered to be seasonal in any material respect.

4D. Organizational Structure

Our operations are conducted by Embraer S.A. as the controlling and principal operating company. We have a number of direct and indirect subsidiaries, none of which is considered significant. A complete list of our subsidiaries is filed as Exhibit 8.1 to this annual report.

4E. Property, Plant and Equipment

We own our headquarters and plant, located in São José dos Campos. Significant portions of our facilities in São José dos Campos are subject to mortgages held by the BNDES – Banco Nacional de Desenvolvimento Econômico e Social. We lease, own or have the right to use the following properties:

Location	Purpose	Approximate Square Footage	Owned/Leased	Lease Expiration
São José dos Campos, SP, Brazil	Headquarters, principal assembly facility and support center	5,902,102	Owned	—
São José dos Campos, SP, Brazil (Eugênio de Mello)	Assembly facility	3,658,884	Owned	—
Botucatu, SP, Brazil	Assembly facility	222,000	Owned	—
Harbin, China	Assembly facility	258,067	Owned(1)	—
Gavião Peixoto, SP, Brazil	Testing and assembly facilities	191,648,512	N/A(2)	—
Alverca, Portugal	Aircraft maintenance and support center	417,000	Leased	2035
São Paulo, SP, Brazil	Administrative offices	12,056	Leased	2018
São Paulo, SP, Brazil	Administrative offices	5,705	Leased	2014
Fort Lauderdale, Florida	Support center	91,500	Leased	2030
Nashville, Tennessee	Aircraft maintenance and support center	316,128	Leased	2018 (renewable through 2028)
Le Bourget, France	Aircraft maintenance and support center	33,500	Leased	2016
Farnborough, UK	Representative office for EMEA executive aviation	2,225	Leased(3)	2013
Villepinte, France	Representative offices and support center	70,202	Leased	2014

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Location	Purpose	Approximate Square Footage	Owned/Leased	Lease Expiration
Dubai	Bureau for Executive Aviation	100	Leased	2014
Beijing, China	Representative offices	3,444	Leased	2017
Singapore	Representative offices and support center	5,910	Leased	2016
Mesa, Arizona	Aircraft maintenance and support center	46,500	Land is leased. Buildings are leasehold improvements owned by Embraer	2026 (renewable through 2036)
Windsor-Locks, Connecticut	Aircraft maintenance and support center	46,500	Land is leased. Buildings are leasehold improvements owned by Embraer	2026 (renewable through 2038)
Fort Lauderdale, Florida	Aircraft maintenance and support center	54,000	Land is leased. Buildings are leasehold improvements owned by Embraer	2030 (renewable through 2035)
Melbourne, Florida	Assembly facility	181,000	Land is leased. Buildings are leasehold improvements owned by Embraer	2038 (renewable through 2058)
Dallas, Texas	Training center for pilots and aircraft maintenance personnel	8,564	Leased	2022
Burgess Hill, UK	Training center for pilots and aircraft maintenance personnel	8,500	Leased	2022
Evora, Portugal	Manufacturing facility for metallic aeronautical structures	964,511	Owned	—
Evora, Portugal	Manufacturing facility for aeronautical structures in composite	1,519,832	Owned	—
Dublin, Ireland	Administrative offices	220	Leased	2016
Amsterdam, Holland	Management of Embraer’s investment abroad	121	Leased	2016
São José dos Campos, SP, Brazil	Headquarters, principal assembly facility and support center – Affiliated Company Bradar	11,535	Leased	2014
Campinas, SP, Brazil	Development Center and Offices – Affiliated Company Bradar	17,165	Leased	2014
São José dos Campos, SP, Brazil	Offices (engineering & systems development) – Affiliated Company Harpia	3,875	Leased	2015

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Location	Purpose	Approximate Square Footage	Owned/Leased	Lease Expiration
São Paulo, SP, Brazil	Headquarters administrative, sales office and operations – Affiliated Company Atech	24,466	Leased	2014 & 2015
São José dos Campos, SP, Brazil	Operational Office – Affiliated Company Atech	2,766	Leased	2014
Brasilia, Brazil	Sales office – Affiliated Company Atech	678	Leased	2015
São José dos Campos, SP, Brazil	Administrative and Engineering Offices – Affiliated Visiona	7,255	Leased	2016
Campinas, SP, Brazil	Administrative and Engineering Office – Affiliated Company (SAVIS)	6,164	Leased	2014 and 2016
Sorocaba, SP, Brazil	Aircraft maintenance and support center	215,278	Leased	2039
Belo Horizonte, Brazil	Engineering and Technology Center	7,535	Leased	2020
Chihuahua, Mexico	Manufacturing Facility – Affiliated Company EZ Air Interior Limited	157,315	Leased	2016
Dublin, Ireland	Administrative Office – Affiliated Company EZ Air Interior Limited	183	Leased	2014
Jacksonville, Florida	Assembly facility	167,920	Leased	2023
Brasília, DF, Brazil	Representative offices and support center	6,048	Leased	2015

(1) The land is owned pursuant to a land use rights certificate.

(2) We currently have a temporary authorization from the State of São Paulo to use the land and expect to receive a concession for the land as soon as legal formalities are satisfied. The facilities are owned by Embraer.

(3) Lease renewal currently under negotiation.

In 2008, we announced construction of a new 150,000 square foot state-of-the-art facility that will house a final assembly line – the first Embraer final assembly line in the U.S. – at the Melbourne International Airport in Melbourne, Florida. It will be capable of producing both the Phenom 100 and the Phenom 300 executive jet models, and includes a paint shop and a delivery and customer design center. This production facility was inaugurated in 2011, and the delivery and customer design center commenced operations in 2011.

In 2008, we also announced plans for implementing two new industrial units dedicated to manufacturing complex airframe structures, one focused on metallic assemblies and the other on composites, both of which are to be located in the city of Evora, Portugal. On September 21, 2012, we launched the operations of these industrial units, and the first deliveries occurred in November of the same year.

For a discussion of our capital expenditures relating to property, plant and equipment, see “Item 4B.—History and Development of the Company—Capital Expenditures (Property, Plant and Equipment and Development).”

Production

The manufacture of an aircraft consists of three principal stages: production of primary parts, assembly of major components and final assembly. Primary parts include metal sheets and plates (produced from die-cast molds, stretch forming or various chemical treatments), parts produced using computerized and non-computerized machines,

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and prefabricated parts. The primary parts are then assembled, or mated, with one another to produce the aircraft’s major components, which are in turn joined to create the aircraft’s basic structure. In the final assembly stage, the aircraft’s various operating systems (such as wiring and electronics) are installed into the structure and tested.

Production facilities for our commercial, executive and defense aircraft are located in São José dos Campos in the State of São Paulo, Brazil. We reduced the production time of aircraft in the ERJ 145 family from eight months in 1996 to 3.1 months in 2004. From December 31, 1999 to December 31, 2000, we increased our production from 12 to 16 ERJ 145 family aircraft per month. At March 31, 2001, our production rate was 16 aircraft per month. In response to decreased market demand after the September 11, 2001 terrorist attacks and the related global economic slowdown, we decreased our production to 11 aircraft per month and, in 2005, decreased it further to nine aircraft per month.

Production time for our EMBRAER 170 aircraft has been reduced from approximately seven months at the beginning of its production in March 2004 to approximately four months at the end of 2005. We have the flexibility to increase production in the future in response to increased demand. We achieved the production rate of 14 aircraft per month at the end of 2008 for the EMBRAER 170/190 jet family, due to the reorganization of some industrial processes, and the implementation of a third shift in our workforce. In addition, in June 2006, we entered into an agreement with KHI and KAB, pursuant to which we began assembling the wings of the EMBRAER 190 and EMBRAER 195 aircraft in order to meet demand for these types of aircraft. See “Item 4C.—Business Overview—Commercial Aviation Business—Products—EMBRAER 170/190 Jet Family.”

To accommodate our production of the ERJ 145 regional jet family and our EMBRAER 170/190 jet family, as well as any production of our executive jets, we have expanded our production facilities and acquired new facilities and will continue to coordinate with our risk-sharing partners to accommodate any future production needs. We built a new facility in Gavião Peixoto, in the State of São Paulo, Brazil, to enhance our flight-testing capabilities and provide a final assembly line for our defense aircraft and of our executive jets. This facility has been operational since November 2002 and consists of a test runway and other features to handle the assembly of our defense programs, an MRO facility, and the Phenom’s production hangar in Gavião Peixoto. We are also conducting our flight tests for the EMBRAER 170/190 jet family and have a fully operational executive jet interior factory at Gavião Peixoto. In September 2000, we purchased a new facility in São José dos Campos in the State of São Paulo, Brazil, where we currently manufacture small parts and components for our aircraft. Our China joint venture has constructed a production facility for the ERJ 145 jet family in Harbin, China.

In July 2009, in line with the initiatives of the Business Efficiency Front (Frente Eficiência Empresarial) linked to P3E, we inaugurated the final assembly line of EJets with an approximately 60% reduction in the final assembly cycle time. In addition to this initiative, we transferred the assembly line of Phenom 100 and Phenom 300 from the plant located in Gavião Peixoto to the plant located in São José dos Campos, São Paulo. In 2012, the 100th Phenom 300 aircraft was manufactured in the plant located in Gavião Peixoto.

As part of the international expansion of our manufacturing activities, we have opened three new units abroad in recent years. In June 2011, the newest assembly plant of the Phenom 100 and Phenom 300 executive aircraft was opened in Melbourne, Florida, being fully operational by the end of 2012. On September 21, 2012, we opened two plants in Évora, Portugal, one for the manufacture and assembly of metal components and one for the manufacture and assembly of components in composite material. The start-up of these plants occurred as planned, and they made their first deliveries in November of the same year.

EZ Air Interior Limited, our joint venture with Zodiac Aerospace for the production in Mexican factories of interior parts for our Commercial Aviation Segment, began production and shipping of parts to Brazil in 2013. EZ Air Interiors is organized in Ireland.

In April 2013, the first building for the KC-390 program was completed in our Botucatu unit. The building will be used for structural assembly. The construction of an assembly hangar in our Gavião Peixoto unit is currently underway.

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Environmental Matters

Most environmental regulation in Brazil is established at the state rather than at the federal or municipal level, with environmental authorities in most states granting operating permits to individual facilities rather than through general regulations. We have all material permits required to operate our business. The terms of these operating permits are reviewed every year and, as of December 31, 2013, we were in compliance with our permits. In addition, we adhere internally to international ISO 14000 environmental standards. Our Integrated Development of Environmentally Sustainable Products (DIPAS) and Design for Environment (DfE) programs aim to incorporate environmental requirements into product development throughout the various stages of production. In addition, Embraer continues to enhance its production processes through the efficient use of natural resources and minimization of waste in its plants. With the goal of taking these activities to a more strategic level, Embraer also launched the Embraer Eco-Efficiency program in 2012, which is focused on seeking eco-efficiency in production. In 2013, 2012, 2011, 2010 and 2009 we invested US$3.3 million, US$4.0 million, US$5.0 million, US$4.1 million and US$2.5 million, respectively, in environmental projects, and we expect to spend approximately US$3.4 million on environmental projects in 2014 for the modification of existing facilities relating to environmental compliance and improvements.

We seek to anticipate and address future environmental challenges as part of our commitment to reconciling environmental responsibility with economic success. For example, our Environmental and Occupational Health and Safety Management System – SIG-MASSQ was established in 2002 to organize our processes based on ISO 14001 and OHSAS 18001.

ISO 14001 is an internationally recognized standard of environmental management system efficiency for businesses and organizations. We encourage not only the environmental certification of our operations but also the development of a full life cycle orientation for products and services, as this remains the most cost-efficient and practical way to effectively reduce environmental impacts. Certified environmental management systems have been progressively implemented across our manufacturing sites, and over 91% of our employees operate under an ISO 14001. The site and product life cycle orientation of the environmental management system attempts to create economic value by reducing environmental costs and exposure at each stage of the product life, from design to operations to end of life.

The implementation of further innovative and eco-efficient technologies and processes is a key factor in ensuring our sustainability, increasing the attractiveness of our products and our overall competitiveness. We continuously pursue eco-efficiency by seeking “green” business opportunities, mitigating the environmental impact of our activities and products throughout their life cycle, developing breakthrough technologies, products and services and, more generally, integrating environment into our business. We also believe that environmental requirements, such as reduction of greenhouse gas emissions, are becoming one of the main drivers of airline fleet decisions and will influence future aircraft developments.

The European REACH (Registration, Evaluation and Authorization of Chemicals) regulation (EU No. 2007/1906) came into force on June 1, 2007. REACH aims at improving the protection of human health and the environment through closer regulation of chemical use by industry; it replaces the pre-existing EU regulatory framework on chemicals. REACH introduces a range of new obligations over a period of 11 years which are intended to reduce the risks of harm that the 30,000 most frequently used chemicals may cause. The regulation will also bring about the phased withdrawal from use of some of the substances that are considered to be of very high concern for human health and the environment.

The regulation requires that any company which produces, imports, uses or places substances, preparations or other items on the EU market be responsible for ensuring that the item complies with REACH. We are affected by the regulation because our products can be exported, not only to the countries of the EU, but also to all countries in which compliance with REACH is required. Embraer has not suffered any penalties in connection with REACH.

Over the past few years, we have been substituting substances used in our production processes with those which are less harmful to the environment and our employees. In this context, various materials have been replaced in accordance with the restrictions imposed by REACH. In addition, we are studying the feasibility of replacing more substances which are widely used in the aviation industry but which also have usage restrictions under REACH. We also participate in working groups, such as IAEG (International Aerospace Environmental Group) and

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AIA (Aerospace Industries Association), with other firms in the aviation industry to develop solutions for complying with REACH and other environmental laws, and we are working with our supply chain on several initiatives to avoid supply chain disruptions and provide support to customers, including the REACH questionnaire on the Risk Assessment of Suppliers. In summary, we are working to fulfill our responsibilities under REACH.

In addition, certain developments in current or proposed carbon emission reduction laws and regulations could in the future indirectly affect our business and results. In 2010, the International Civil Aviation Organization, through its Environmental Protection Committee, began to develop carbon emission standards for airplanes. The study of these standards is being carried out concurrently with the implementation of local or regional regulations aimed at limiting carbon emissions, such as those adopted by the European Union, with its emissions market (EU ETS – European Union Emissions Trading System). This system establishes goals for emissions reduction by aviation companies. Depending on the compensatory payments and limits imposed, as well as on the cost of carbon equivalents, regulations of this nature may impact the growth potential of the air transportation industry as a whole, due to: (1) the internalization of carbon emission-related costs by air transportation companies, which would reduce their profit margins and, consequently, cut down the demand for new aircraft; or (2) higher prices of air tickets, charged by air transportation companies in an attempt to pass emission-related costs along to their passengers, who would in turn seek alternative means of transportation, reducing the demand for air travel and, as a consequence, causing aircraft sales to decline. The effects of either scenario would likely be a decrease in demand for new aircraft in the affected markets, thereby negatively affecting our results.

For information on how climate change may affect our commercial aircraft segment, see “Item 5A. Operating and Financial Review and Prospects—Operating Results—Current Conditions and Future Trends in the Commercial Airline Industry and Executive Jet Market—Commercial Aircraft.”

Insurance

We insure all of our plants and equipment for loss and replacement. We also carry insurance to cover all potential damages to our own fleet of aircraft, including those occurring during commercial and demonstration flights. In addition, we maintain a comprehensive aviation products liability policy, which covers damage arising out of the manufacture, distribution, sale and servicing of our aircraft and parts. We also carry natural disaster and business interruption insurance covering property damage and the related loss of gross income, as defined in the policy, and additional expenses, such as those incurred by us to offset the loss of production and delivery of aircraft due to partial or total interruption of our business because of material losses caused by an accident. We consider the amounts of our insurance coverage to be typical for a company of our size and adequate to meet all foreseeable risks associated with our operations.

We also maintain officers’ and directors’ liability insurance in the total amount of US$100 million. This insurance covers our officers and directors for liabilities resulting from wrongful acts, including any act or omission committed or attempted by any officer or director acting in his or her capacity as officer or director or any matter claimed against an officer or director solely by reason of his or her serving in such capacity.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This discussion should be read in conjunction with our audited consolidated financial statements and notes thereto and other financial information included elsewhere in this annual report. This annual report contains forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including, without limitation, those set forth in “Item 3D. Key Information—Risk Factors” and the matters set forth in this annual report generally.

Except as otherwise indicated, all consolidated financial information in this annual report has been prepared in accordance with IFRS as issued by IASB and presented in U.S. dollars, while, for local purposes, our consolidated financial statements are also prepared in IFRS but are presented in reais. For certain purposes, such as providing reports to our shareholders located in Brazil, filing financial statements with the CVM, and determining dividend payments and other distributions and tax liabilities in Brazil, we have prepared and will continue to be required to prepare parent company financial statements in accordance with Brazilian GAAP, presented in reais.

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5A. Operating Results

Current Conditions and Future Trends in the Commercial Airline Industry and Executive Jet Market

The following discussion is based largely upon our current expectations about future events, and trends affecting our business, actual results for our industry and performance could differ substantially. See “Introduction—Special Note Regarding Forward-Looking Statements.” For factors which could affect our industry in the future and our own future performance, see “Item 3D. Key Information—Risk Factors.”

Commercial Aircraft

The fundamental drivers of air travel growth are economic growth with improved per capita income distribution, globalization, increased commercial trade and liberalization of air traffic rights between countries, all of which tend to generate more propensity to travel. As the air transportation industry continues its recovery from the 2008 financial crisis, selected world regions lead the return to growth and appear likely to emerge as economic powerhouses. According to the International Air Transport Association, or IATA, global air travel demand, measured by revenue passenger kilometers, continues to trend upward, with 5.2% growth in the January to October 2013 period. The pace of growth in air travel accelerated slightly in the middle of the year, consistent with positive developments in business confidence and better performance of major advanced economies. International air travel rose by 5.3% and domestic by 4.8%, with airlines in all regions seeing growth. The demand environment for air travel continues to improve, suggesting the strong growth seen in October should be at least maintained through the end of the year. Business confidence is rising and emerging economies, particularly in Asia, are accelerating after a mid-year slowdown. Positive indicators for international trade should also support business travel growth, which generates significant revenue for airlines.

The performance of Asia Pacific airlines has improved, in part due to better performance of major advanced economies, but there has also been resilience in domestic demand in smaller Asian economies like Korea and Malaysia. International trade volumes in emerging Asia rebounded in September, a turnaround from significant declines mid-year, which should support business travel related to internationally trading industries.

In Europe, modest economic improvements and rising consumer and business confidence have provided a stronger demand base for international air travel. The Eurozone stopped contracting in the second quarter of 2013 and maintained a modest economic recovery in the second half of 2013. Indicators of business and consumer confidence do suggest that there was further growth in the Eurozone through the end of 2013, albeit at a weak pace, which should help sustain demand for air transport.

Middle Eastern carriers experienced the strongest rate of increase in demand for international travel measured by revenue passenger kilometers, with growth of 12% in the period from January to November of 2013, according to IATA. Airlines in the region have benefited from strong growth in business-related premium travel throughout the year, particularly to developing markets like Africa. Continued increases in export orders suggest that business travel related to internationally trading industries will continue to grow. Solid performance of key economies like Saudi Arabia and the United Arab Emirates has also supported strong expansion in both business and leisure travel to other regions, such as Europe.

Growth in demand for international travel was also strong in Latin America, up 8.2% in the period from January to November of 2013, compared to 2012, according to IATA, buoyed by solid trade growth and business related travel. While tax breaks and investment incentives are doing little to boost growth in the Brazilian economy, other economies like Colombia, Peru and Chile are expanding strongly and supporting demand for international air travel. Markets like North and Latin America have recorded robust growth during 2013, for both business and leisure travel, supported by growth in the aforementioned economies.

Recent indicators in North America have suggested a more supportive business environment, with consumer confidence and business activity showing improvement throughout the third quarter of 2013. International travel demand for airlines in the region increased by 2.8% in the period from January to November 2013, according to IATA.

Domestic air travel growth continues to show significant variation across markets. The Chinese and

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Russian markets recorded some of the strongest increases, up 12% and 10.1%, respectively, in the January to October 2013 period. While in China growth in domestic air travel is consistent with robust economic activity, growth in Russia’s air travel market continues despite indicators showing a slowdown in economic activity, with weakness in consumer demand and trade activity.

Indian domestic air travel was up 4.6%, with growth rates experiencing substantial volatility in 2013. Brazil’s weaker domestic demand, coupled with capacity reductions, resulted in growth of just 0.2% in domestic air travel. Domestic air travel in advanced economies showed mixed results. Japan’s market continues to show strong growth, supported by sustained increases in business activity and trade growth. In the United States, growth of 2.8% in October 2013 was a solid result compared to expansion of 1.7% during the year, suggesting reduced impact on domestic air travel demand from the U.S. government shutdown. Demand for air travel in Australia has been contained by weaker domestic demand and earlier sluggishness in growth of major trade partners like China. Despite interest rate cuts, the Australian economy remains broadly sluggish, with rising unemployment and fragile business and consumer confidence tainting the performance outlook for the coming year.

IATA projects the global commercial airline industry to generate net post-tax profits of $12.9 billion in 2013 and $19.7 billion, or 2.6% of revenues, in 2014, an upward revision from previous projections due to lower jet fuel prices and improvements to industry structure and efficiency. The outlook for revenues is unchanged but its composition is different, with stronger passenger markets but weaker cargo. A downward revision in the outlook for costs reflects reduced projected increases in crude oil prices and projected slower growth in capacity, reflecting the changes in industry structure and an accompanying focus on improving the efficiency and the utilization of aircraft. The fortunes of the commercial airline industry are closely linked to the strength of global economic development. After the post-recession 2010 peak, economic activity slowed in both 2011 and 2012. Airline industry profits fell in both years, after their 2010 peak. The improvement in financial performance during 2013 was in part due to the upturn in economic growth, first signaled by rising business confidence in the fourth quarter of 2012 and then followed by a slow but significant upturn in industrial production and world trade growth.

We project that from 2013 to 2032, world air travel demand, measured by revenue passenger kilometers, should tend to grow by an average of 4.8% per year. We expect the Middle East and China to lead growth in air travel in the next 20 years, with an average annual rate of around 7.0%, and Latin America with 6.4%. We expect Asia, Africa and the Commonwealth of Independent States demand to grow by around 5.5% per year, and North America and Europe to grow by around 3% and 4% per year, respectively. However, economic downturns, fuel price increases, natural disasters and credit shortages might impair the ability of commercial airlines, including certain of our customers, to finance aircraft acquisitions (see “Item 4C. Information on the Company—Business Overview—Aircraft Financing Arrangements”).

In North America, the main airlines’ strategies have been focused on cost reductions, increased productivity and consolidation aiming at improved operational and financial efficiency. Focusing on profitability and not on capacity increases will position airlines to sustain better financial results and stability through business cycles. Regional airlines continue to provide essential hub feeder and capacity adjustments to mainline airlines.

In Europe, the revenue environment will remain under pressure due gradual Eurozone economic recovery. Regional airlines are supporting mainline airlines’ adjustments of capacity and frequency of services as part of their structural cost reduction and improvement programs. Mobility is vital for the intra-European market as Europeans continue to enjoy the freedom to travel that came with air transport liberalization in 1987. European airlines are still adapting to a more dynamic competitive environment and facing many issues such as challenges with labor, increased charges and fees (regulatory, airport and environmental), and the restructuring of businesses to exploit emerging opportunities. In Eastern European countries, we expect more opportunities due to an improved economic environment and maturing markets.

Latin America’s relevance is increasing in the global economy and geopolitics due to macroeconomic reforms promoted over the past decade. A growing middle class is demanding different services, such as discretionary expenditures in air travel, and airlines are introducing more fuel-efficient and right-sized aircraft to expand intra-regional aviation. As the region becomes more integrated, there will be opportunities for jets up to 130 seats to increase network connectivity and expand services to low to mid-density cities.

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In the Asia Pacific region, economic prosperity, combined with robust population growth, economic decentralization, rapid rates of urbanization and regional air service liberalization, tend to support increased air travel demand. The role of regional aviation in Asia Pacific/China is related to national integration, providing access to smaller communities in countries like Australia, China and Indonesia. Liberalization policies in some sub-regions tend to encourage the development of intra-regional air transport, which may generate major opportunities for regional aviation in the coming years.

Middle Eastern carriers have become global players, driven by the emergence of global hubs with high frequency flights connecting long-haul East-West passengers. Intra-Middle Eastern flights have increased significantly in the past years with the acquisition of smaller aircraft to feed international hubs and cover underserved markets.

In Africa, regional integration and growing foreign direct investment are fostering regional aviation. Challenges in infrastructure, lack of financing and a highly regulated environment are being addressed, albeit at a slow pace. As a result of regional liberalization, some airlines are introducing new aircraft to develop their intra-regional network.

The air transport industry in the Commonwealth of Independent States is diverse, consisting of aged fleets belonging to several small, state-owned airlines. In Russia, import taxes represent a significant barrier for airlines that intend to renew their fleet with Western aircraft. Airline consolidation is in progress in the region and is focused on the improvement of air transport system efficiency. Opportunities for regional aviation rely on the replacement of the old and inefficient fleet of the former Soviet Union.

We estimate a global demand for around 6,400 jets in the 70- to 130-seat-category over the next 20 years. This segment has an important role in aviation, providing flexibility to airlines to deal with market volatility, feeding main hubs, complementing larger aircraft operation, as well as allowing airlines to efficiently explore low to mid-density markets.

The 70- to 130-seat capacity category has been providing much needed flexibility and efficiency improvements to airlines by right-sizing larger jets, replacing aging aircraft, developing new markets, expanding from smaller regional jets and supporting the natural growth of regional airlines on high-demand routes operated by smaller jets.

Executive Aircraft

Market Overview

Due to the global economic weakness that has affected the executive aviation market since mid-2008, this segment has registered one of the most severe reductions in global sales in its history, surpassing the impacts caused by the recession of the 1980s and the September 2001 terrorist attacks. The lack of investor confidence, the risk perception of European economies and the economic slowdown in emerging markets make it less likely that a surge in demand will occur in the short-term, thus taking longer for demand to achieve pre-2008 levels.

Despite the positive recent performance of demand growth drivers such as the increase in the number and wealth of high net worth individuals and corporate profits, we believe that corporations will continue to be more reluctant to spend on travel alternatives, at least in the short-term.

This scenario has prevented a more solid growth momentum for business jets sales. The industry’s output level in 2013 was 677 jets, representing an increase of 2.1% over 2012. In terms of revenues, the business jet industry increased 19.5% in 2013 due to a better product mix. Over the next 10 years, market forecast indicates that 9,250 aircraft will be delivered, totaling US$250 billion in the period.

We estimate a compound annual growth rate for the executive jet industry from 2014 to 2023 of 4.3% in terms of both revenue and units delivered.

In early 2013, the General Aviation Manufacturers Association reported that the industry delivered 663 business jets during 2012 (6% less than 2011), equivalent to US$17.1 billion (2% less than 2011). The expectation for 2013 is that deliveries will be equivalent in terms of units, but there will be a slight increase in terms of revenues, due to a greater share of heavy jets in the delivered product mix.

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During the global economic crisis which began in 2008, investors were fearful of poor performance by economies around the globe. Initially, the U.S. economy was the primary concern, followed by the economic contagion in Europe, both of which contributed to a significant reduction in global economic growth. The resilient economic performance of the Asia Pacific countries, especially China, and certain Latin American countries, especially Brazil, helped avoid a deeper global economic crisis. Now, five years later, economic growth in the emerging markets is slowing while the U.S. economy is showing signs of an imminent recovery and there is positive economic news and increased investment in Europe.

We expect that over the next 10 years, the regional distribution of business jet deliveries will be as follows:

• The North American market will continue to be the largest by far, representing 49% and 47% of the world market’s volume and revenue, respectively. These figures are well below the 64% participation of the region in the current world fleet and are a function of the growth of markets in other regions rather than an actual reduction in its market size.

• The European, Middle Eastern and African markets will generate 25% of world deliveries in terms of units and 28% in terms of revenues. These figures are lower than last year’s forecast and reflect the weakness of the European economies.

• Latin America, Asia Pacific and China will together represent 26% of world deliveries in terms of units and generate 25% of the world’s total business jet market revenue.

Our Executive Aircraft

Overview

We continued to make solid progress throughout 2013, achieving important milestones in each program of our product portfolio and advancing in the development of our integrated solutions for the executive aviation market.

Since launching the Phenom 100, Phenom 300 and Lineage 1000, we have continued to evaluate and explore opportunities in the executive aviation market. In April 2008, we formally launched the mid-light jet Legacy 450 and the mid-size jet Legacy 500. The Legacy 450/500 jets will be positioned in our executive jets portfolio between the Phenom 300 and the Legacy 600. In 2010, we delivered the first Legacy 650, a large executive jet that is positioned in our executive jet portfolio between the Legacy 600 and the Lineage 1000.

Although the business jet market has not yet recovered from the 2008 economic crisis that began in 2008, the Embraer executive jet fleet in service has experienced a compound annual growth rate of 37% since then. In 2013 we delivered a total of 119 units, 20% more than 2012. Of these, 90 were small jets, representing an increase of 17% over 2012, and 29 were large jets, 32% more than last year. As Embraer continues to introduce new products in the executive jet market, we expect the total number of deliveries in this segment to continue to increase in upcoming years.

Legacy 600 and Legacy 650

In October 2009, we presented the new Legacy 650 jet during a press conference at the 62nd Annual Meeting and Convention of the National Business Aviation Association, in Orlando, Florida. The large executive jet category Legacy 650 is based on the successful platform of the super mid-size Legacy 600, having a longer range for up to 14 passengers. The Legacy 650 can fly up to 3,900 nautical miles nonstop with four passengers, or 3,800 nautical miles with eight passengers, which is approximately 500 nautical miles farther than the Legacy 600.

We have introduced several new and innovative features in the Legacy 650. In January 2013, the Hurun Report named the Legacy 650 as the Large-Size Business Jet Star Performer in Ninth Hurun Best-of the-Best Awards Ceremony in Shanghai, China.

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In March 2013, the full flight simulator for the Embraer Executive Jets Legacy 650, built in a partnership with FlightSafety, was qualified to Level D by the FAA, ANAC and EASA.

An important milestone for the Embraer AVIC partnership and for the history of Chinese executive aviation industry occurred in August 2013, with the maiden flight of the first Legacy 650 large executive jet assembled in China.

Although demand from Europe and the Middle East, traditional Legacy 600/650 markets, has decreased in 2013, our deliveries of these products increased in the period. Asia Pacific, China, Brazil and the Commonwealth of Independent States were the main destinations for Embraer heavy jets during 2013.

Legacy 600 and 650 deliveries increased from 17 units in 2012 to 25 units in 2013, with a fleet of more than 230 jets in service in 33 countries.

Legacy 450 and Legacy 500

An estimated US$850 million is expected to be invested overall in fixed assets, research and development for the new Legacy 500 and Legacy 450 models. The Legacy 500 executive jet is expected to enter into service in 2014, and the Legacy 450 is expected to enter into service one year after the Legacy 500. We believe that these two aircraft programs will help strengthen our position in the market and establish our portfolio as one of the most comprehensive of the executive aviation industry.

We have four Legacy 500 prototypes in a flight test campaign. The prototypes have already completed more than 900 flight hours on different certification tests. The development of the mid-light jet Legacy 450 is proceeding as scheduled in its flight test campaign, with the first flight occurring in December 2013.

The Legacy 450 and Legacy 500 jets will be equipped with full fly-by-wire (FBW) technology, which will establish them as pioneers in their respective categories. The following new enhancements for Legacy 450 and Legacy 500 were announced in October 2013:

• The range of the Legacy 450 has been increased to 2,500 nautical miles, with four passengers; 200 nautical miles farther than its initial specification.

• The Legacy 450 fuselage has been extended to provide more cabin space.

• New interior designs for the Legacy 450 and Legacy 500 have been announced.

• The Rockwell Collins’ HGS-3500, the first-ever Head-up Guidance System (HGS) for mid-light and mid-size business jets, and the new multi-spectral EVS-3000 enhanced vision system were retested for the Legacy 450 and Legacy 500 program.

Also in October 2013, the world renowned actor and philanthropist Jackie Chan selected Legacy 500 as his business jet and became the first customer of the Legacy 500 executive jet in China.

Phenom 100 and Phenom 300

The first units of the Phenom 100, an entry level jet, were delivered in 2008 and the first unit of the Phenom 300, a light jet, was delivered in 2009. Five years after the first delivery, we delivered the 400th jet of the Phenom series, in June 2013.

In May 2013, NetJets^®, the worldwide leader in the jet fractional ownership business, received its first Phenom 300, entitled “Signature SeriesTM”. In the same month, the Federal Aviation Administration – FAA certified the Phenom 300’s assembly facility in Melbourne, Florida. The first aircraft manufactured in that facility had already been delivered at the end of March.

Once again, Robb Report magazine named Phenom 100 and Phenom 300 as the “Best of the Best” for 2013, in their respective categories. This is the third consecutive year that both Phenom 100 and Phenom 300 receive the award. The Phenom 100 had also been awarded in the 2008 and 2010 editions.

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In 2014, the Phenom 100 will be renamed the Phenom 100E and will include new features such as multi-function spoilers, 11 new interior collections and new optional items including a refreshment center, stowage space monuments and premium seats.

By the end of 2013, the Phenom 100 fleet was composed of more than 290 aircraft distributed in 24 countries and the Phenom 300 fleet was composed of more than 170 jets distributed in 23 countries.

Lineage 1000

Lineage 1000 deliveries began in 2009 and in April 2013 the ultra-large jet reached 10,000 flown hours.

In October 2013 we announced the Lineage 1000E during the NBAA Business Aviation Convention & Exhibition. This jet features an array of enhancements that deliver an extended range, enhanced interior features and functionalities, including latest generation in-flight entertainment, enhanced cockpit options and a distinctive exterior design.

By the end of 2013, the Lineage 1000 fleet was composed of more than 20 units distributed in 11 countries.

Brazilian Economic Environment

Despite recent signs of mild economic recovery, the global economic slowdown, including the events negatively affecting the commercial and executive airline industry and the U.S., has adversely affected the global and Brazilian economies and securities markets, and has resulted in:

• increased volatility in the market price of securities;

• significant decline in corporate earnings estimates;

• substantial losses in important industries, including the air transport and insurance industries; and

• significant erosion of consumer confidence.

As discussed below, any uncertainty surrounding the U.S., Brazilian and global economies could result in the Brazilian federal government changing existing laws or regulations or imposing new ones, and/or the Central Bank changing base interest rates, which could adversely affect our operations.

The Brazilian federal government has frequently intervened in the Brazilian economy and occasionally made drastic changes in policy and regulations. The Brazilian federal government’s actions to control inflation and affect other policies and regulations have often involved, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. For example, the Brazilian federal government has the authority, when a serious imbalance in Brazil’s balance of payments occurs, to impose restrictions on the remittance to foreign investors of the proceeds of their investments in Brazil and on the conversion of Brazilian currency into foreign currencies. Changes in Brazil’s monetary, credit, tariff and other policies could adversely affect our business, as could inflation, currency and interest-rate fluctuations, social instability and other political, economic or diplomatic developments in Brazil, as well as the Brazilian federal government’s response to such developments.

Rapid changes in Brazilian political and economic conditions that have occurred and may occur in the future will require a continued assessment of the risks associated with our activities and the adjustment of our business and operating strategy accordingly. Future developments in Brazilian federal government policies, including changes in the current policy and incentives adopted for financing the export of Brazilian goods, or in the Brazilian economy, over which we have no control, may have a material adverse effect on our business.

Brazilian economic conditions may also be negatively affected by economic and political conditions elsewhere, particularly in other Latin American and emerging-market countries. Although economic conditions in such countries may differ significantly from economic conditions in Brazil, the reaction of investors to developments in such countries may have an adverse effect on the market value of securities of Brazilian issuers. For example, the recent uncertainty in the economies of U.S. and other OECD countries has caused a retraction of

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credit on a worldwide basis, significant volatility in the international capital markets (including Brazil) and diminished investor interest in securities of Brazilian issuers, including ours. Crises in other emerging-market countries also have at times significantly affected the availability of credit in the Brazilian economy and resulted in considerable outflows of funds and declines in the amount of foreign currency invested in Brazil.

In 2008, Brazil’s GDP increased by 4.8% and the real exchange rate decreased by 31.9% against the U.S. dollar, to R$2.3370 per US$1.00 at December 31, 2008. Inflation in 2008, as measured by the IPCA, was 5.90% and the average CDI interest rate was 12.0% in the same period.

In 2009, the Brazilian economy demonstrated resilience to the economic crisis in comparison with certain other countries. Several macroeconomic indicators improved during the year, and despite the deceleration of GDP growth for 2009, the Central Bank reported in its Focus Report published on January 8, 2010 its expectation of only a small decrease in Brazilian GDP of 0.3% in 2009. In addition, solid macroeconomic conditions and greater economic stability allowed the Central Bank to return to the strategy of reducing interest rates, with the effective cumulative SELIC rate reaching 8.75% by the end of July 2009, its lowest historical level. Similarly, the real strengthened and appreciated by 25.5% against the U.S. dollar during 2009. According to the Central Bank, international reserves remained above US$200 billion throughout the year (US$238 billion as of December 31, 2009), which represented a significant increase relative to the end of 2008.

In 2010, the Brazilian GDP increased by 7.5%. The real continued its appreciation trend of 2009, having advanced 4.3% against the U.S. dollar. Brazilian international reserves were higher in 2010 than in 2009, having increased to US$288.6 billion as of December 31, 2010 from US$239.1 billion as of December 31, 2009.

In 2011, Brazil’s GDP increased by 2.7%. The real appreciated against the U.S. dollar in the first several months of 2011, but began to depreciate in August of 2011, reaching R$1.88 per US$1.00 on December 31, 2011, representing a 12.6% depreciation against the U.S. dollar. The Brazilian economy was characterized by continued inflation during the year 2011, but fears of a global economic slowdown prompted the Central Bank to begin reducing the SELIC rate near the end of the period. The SELIC rate was at 11.0% on December 31, 2011. Inflation in 2011, as measured by the IPCA, was 6.50% and the CDI average was 9.3% in the same period.

In 2012, Brazil’s GDP increased by 0.9%. The real depreciated against the U.S. dollar, reaching R$2.04 per US$1.00 on December 31, 2012, representing an 8.9% depreciation against the U.S. dollar. The Central Bank further reduced the SELIC rate to 7.25% on December 31, 2012. Inflation in 2012, as measured by the IPCA, was 5.8% and the CDI average was 8.4% in the same period.

In 2013, Brazil’s GDP increased by 2.3%. The real depreciated against the U.S. dollar, reaching R$2.34 per US$1.00 on December 31, 2013, representing a 14.6% depreciation against the U.S. dollar. The Central Bank further increased the SELIC rate to 10.0% on December 31, 2013. Inflation in 2013, as measured by the IPCA, was 5.9% and the CDI average was 8.1% in the same period.

According to the Focus report published by the Central Bank on January 10, 2014, positive growth of 2.0% is estimated for Brazilian GDP in 2014, and an inflation rate of 6.0% is expected for the same year.

Effects of Inflation and Currency Exchange Fluctuations

Until the adoption of the Real Plan in 1994, Brazil had for many years experienced very high, and generally unpredictable, rates of inflation and steady devaluation of its currency relative to the U.S. dollar. The following table sets forth, for the periods shown, more recent rates of inflation in Brazil, as measured by the IPCA and published annually by the Instituto Brasileiro de Geografia e Estatística — IBGE, and the fluctuation of the real against the U.S. dollar as measured by comparing the daily exchange rates published by the Central Bank on the last day of each period:

	2013			2012			2011			2010			2009
Inflation (National Consumer Price Index)		5.9	%		5.8	%		6.5	%		5.91	%		4.31	%
Exchange Rate Variation (R$/US$)		(14.6	)%		(8.9	)%		(12.6	)%		4.3	%		25.5	%

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Inflation and exchange-rate variations have had, and may continue to have, substantial effects on our financial condition and results of operations. Inflation and exchange-rate variations affect our monetary assets and liabilities denominated in reais. The value of such assets and liabilities as expressed in U.S. dollars declines when the real devalues against the U.S. dollar and increases when the real appreciates. In periods of devaluation of the real, we report (a) a remeasurement loss on real-denominated monetary assets and (b) a remeasurement gain on real-denominated monetary liabilities.

Critical Accounting Estimates

The preparation of the financial statements in conformity with IFRS requires management to make estimates and adopt assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the fair value of financial instruments and guarantees on the statement of financial position dates and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from such estimates.

In order to provide an understanding of how management forms its judgments about future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, the estimates and assumptions that may cause a risk of material adjustment to the carrying amounts of assets and liabilities are addressed below:

Sales and Other Operating Revenues

We recognize revenues from sales made by the Commercial Aviation, Executive Jets, and Defense & Security businesses when benefits and risk of ownership are transferred to customers, which, in the case of aircraft, occurs when delivery is made, and, in the case of aviation services, when the service is rendered.

We also recognize rental revenue for leased aircraft, classified as operating leases, on a straight-line basis over the lease term and, when presenting information by operating segment, rental revenue is recorded in its respective operating segment.

In the Defense & Security segment, a significant portion of revenue is derived from long-term development contracts with the Brazilian and foreign governments accounted for using the percentage of completion method. These contracts contain provisions for price escalation based on a mix of indices related to raw material and labor cost. From time to time, we reassess the expected margins of certain long-term contracts, adjusting revenue recognition based upon projected remaining costs to completion. Use of the percentage of completion method requires us to estimate the total costs to be incurred in connection with the contracts. Were the total costs to be incurred to be 10% below management’s estimates, the amount of revenue recognized in the year 2013 would increase by US$195.6 million, and if the total costs were to be 10% above the estimate, the amount of revenue recognized would decrease by US$210.5 million.

Revenue under exchange pool programs is recognized monthly over the contract term and consists partly of a fixed fee and partly of a variable fee directly related to aircraft flying hours.

We enter into transactions that represent multiple-element arrangements, such as training, technical assistance, spare parts and other concessions, which are included in the aircraft purchase price. Multiple-element arrangements are assessed to determine whether they can be separated into more than one unit of accounting when all of the following criteria are met:

• the delivered item has value to the client on a stand-alone basis; and

• there is objective and reliable evidence of the fair value of the undelivered item.

If these criteria are not met, the arrangement is accounted for as a single unit of accounting, which results in revenue being deferred until the earlier of when such criteria are met or when the last completed element is delivered. If these criteria are met for each element and there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative fair value.

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Product Warranties

Generally, aircraft sales are accompanied by a standard warranty for systems, accessories, equipment, parts and software manufactured by us and/or by our risk-sharing partners and suppliers. We recognize warranty expenses, as cost of sales and services, at the time of sale based on the estimated warranty costs anticipated to be incurred. These estimates are based on a number of factors, including historical warranty claims and cost experience, the type and duration of the warranty coverage, volume and mix of aircraft sold and in service and warranty coverage available from the related suppliers. Actual product warranty costs may have different patterns from past experience, mainly when a new family of aircraft enters service, which could require us to increase the product warranty reserve. The warranty period is three years for spare parts and five years for components that are a part of the aircraft when sold.

Financial Guarantees

We may offer financial guarantees related to aircraft sold. The guarantee is granted at fair value at the time of delivery of the aircraft when it is supported by a financing agreement. The guarantee is recorded as a reduction in sales and an increase in deferred revenue. The deferred revenue is amortized to the income statement over the period of the guarantee. We evaluate the creditworthiness of the obligor at aircraft delivery and disclose our maximum exposure under the guarantee as a contingent liability in Note 37. We monitor the obligor’s credit worthiness periodically. In the event of an official restructuring or default, a provision is recognized when it is more likely than not that payment will be made and the amount can be estimated reliably.

Residual Value Guarantees

We may offer residual value guarantees related to sold aircraft. At the time of the offering, the guarantees are evaluated based on the fair value of the aircraft and are reviewed and updated quarterly to reflect depreciation in value. The future fair value of aircraft is estimated using assessments of third parties, including information obtained from the sale or lease of similar aircraft in the secondary market.

Residual Interests in Aircraft

In structured financing arrangements, an entity purchases an aircraft from us, pays the full purchase price on delivery or at the conclusion of the sales financing structure and leases the aircraft to the ultimate customer. A third-party financial institution facilitates the financing of the aircraft, and a portion of the credit risk remains with that third party.

Although we have no equity investee interests, we control special purpose entity, or SPE, operations or take a majority share of their risks and rewards. When we no longer hold control, the assets and liabilities related to the aircraft are deconsolidated from our statement of financial position.

We principally evaluate our control over an SPE based on a qualitative assessment. This includes a review of the SPE’s capital structure, contractual relationships and terms, nature of the SPE’s operations and purpose, nature of the SPE’s interests issued, and our interests in the entity which either creates or absorbs variability. We evaluate the design of the SPE and the related risks that the entity and the variable interest holders are exposed to in evaluating consolidation. In several cases, when it is unclear from a qualitative standpoint if we have control over an SPE, we use a quantitative analysis to calculate the probability-weighted expected losses and probability-weighted expected residual returns using cash flow and statistical risk measurement modeling.

Impairment

Non-current assets held for use are subject to impairment assessment if facts and circumstances indicate that their carrying value is no longer recoverable based upon the higher of their discounted future cash flows and their net realizable value. Our cash-generating units (CGUs) have been defined and are reviewed annually, in accordance with the aircraft families/platforms and other business conducted by us and our subsidiaries. The corporate assets and those that are included in more than one CGU are allocated in proportion to the income attributed to each such asset. The goodwill pertaining to an asset is allocated to the asset’s respective CGU or, if applicable, to a group of CGUs.

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In this case, the goodwill is assessed for impairment on a corporate basis, i.e., for the consolidated financial statements, taking into account the synergies between the companies that comprise each CGU. However, any adjustments made are proportional and affect all the companies in a particular CGU. The net carrying value of the underlying assets is adjusted if the net realizable value is less than the net carrying value.

A number of assumptions are used to determine the expected discounted cash flows, including the forecasts of future cash flows, based on the best estimate of future sales and operating costs, which depends primarily on existing firm orders, expected future orders, contracts with suppliers and general market conditions.

Changes in these forecasts could significantly change the amount of an impairment loss, if any. If the discount rate used to discount the cash flows of all CGUs to present value were 10% lower or 10% higher compared to the rate used by management, adjustments for non-recovery of assets would still not need to have been made.

Fair Value of Financial Instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. We use our judgment to select a variety of methods using assumptions that are mainly based on market conditions existing at the end of each reporting period.

Income Taxes

We are subject to income taxes in multiple jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. We also recognize liabilities based on estimates of whether additional taxes will be due. When the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Because the majority of our tax basis is in reais and its functional currency is the dollar, the income tax expense line item is highly sensitive to the effects of changes in exchange rates, particularly from changes in non-monetary assets.

Had the real devalued or appreciated by 10% against the dollar in relation to the actual exchange rate as of December 31, 2013, the deferred income tax expense would have been higher or lower by approximately US$115.3 million.

Principal Operating Data and Components of Our Statement of Income

Operating Data

The following chart sets forth statistical data for our deliveries and backlog of our aircraft at the end of the respective periods. Deliveries consist of aircraft that have been delivered to customers and for which the corresponding revenue has been recognized. Our backlog consists of all firm orders that have not yet been delivered. A firm order is a contractual commitment from a customer, customarily accompanied by a down payment, for which we have reserved a place on one of our production lines. See “Item 5D.—Trend Information” for certain information on our firm orders and options.

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	At and for the year ended December 31,
	2013		2012		2011		2010		2009
Commercial Aviation
Deliveries		90		106		105		100		122
ERJ 145		—		—		2		6		7
EMBRAER 170(1)		4		1		1		9/2		22
EMBRAER 175		24		20		10		8		11
EMBRAER 190		45		62		68		58		62
EMBRAER 195		17		23		24		17		20
Defense & Security(2)
Deliveries		—		—		—		2		7
Executive Jets
Deliveries		119		99		99		144		115
Other Operating Information Total Backlog (in millions)	US$	18,205.5	US$	12,462.2	US$	15,441.2	US$	15,543.2	US$	16,634.8

(1) Figures appearing after a forward slash (/) refer to aircraft delivered under operating leases.

(2) Includes only aircraft delivered to state-owned airlines and for government transportation and, therefore, excludes deliveries of Tucano family aircraft, as such aircraft are not for transportation purposes.

Revenue

We generate revenue primarily from sales of commercial and executive aircraft products. We also generate revenue from the sale of defense aircraft and systems. Of total revenues, 77.2% are generated through aircraft sales. Revenue arising from the sale of commercial and executive aircraft is denominated in U.S. dollars. In 2013, total Defense & Security revenue included 59% of revenue denominated in foreign currency, predominantly in U.S. dollars, and 41% denominated in Brazilian reais. In addition, we generate revenue from our aviation services which include after-sales support (including the sale of spare parts, maintenance and repair, training and other product support services). Finally, we generate revenue from our Other Related Businesses, which include single-source supply of structural parts and mechanical and hydraulic systems to other aircraft manufacturers, and general aviation propeller aircraft, such as crop dusters, which are also referred to as light aircraft.

We generally recognize revenue for the sale of our commercial and executive aircraft when the aircraft is delivered to the customer. We customarily receive a deposit upon signing of the purchase agreement for the sale of our commercial aircraft and progress payments in the amount of 5% of the sales price of the aircraft 18 months, 12 months and six months before scheduled delivery. We receive a 5% deposit upon signing of a purchase agreement for our executive aircraft and an additional deposit of 30% to 50% of the purchase price prior to delivery, depending on the specific terms of the purchase agreement and the aircraft sold. For the EMBRAER 170/190 jet family, we receive an additional 5% progress payment 24 months before scheduled delivery. We typically receive the remaining amount of the sales price upon delivery. Payments in advance of delivery are recorded under advances from customers as a liability on our statement of financial position and, when we deliver the aircraft, these payments are recorded against trade account receivables of such aircraft. See “Item 5A.—Operating Results—Critical Accounting Estimates—Sales and Other Operating Revenues.”

Our sales contracts with our customers typically include adjustments to the purchase price of the aircraft based on an escalation formula which is based on a mix of indices related to raw material and labor costs. The deposits, progress payments and option payments are nonrefundable for the most part. Once a customer decides to exercise an option, we account for it as a firm order, and we begin to receive progress payments and recognize revenue upon delivery as discussed above.

We recognize revenue from the sale of our defense aircraft, including the research and development for specific programs, in accordance with the percentage of completion method. Certain contracts contain provisions for the redetermination of price based upon future economic conditions. Our defense customers continue to provide customer advances, which are converted into revenue as we fulfill pre-determined stages of completion of the project, such as conception, development and design, and engineering, systems integration and customization. These installments are nonrefundable for the most part.

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Cost of Sales and Services

Cost of sales and services consists of the cost of the aircraft, spare parts and services rendered, comprising:

• Raw materials. Substantially all materials costs are covered by contracts with suppliers. Prices under these contracts are generally adjusted based on an escalation formula which reflects, in part, inflation in the United States.

• Labor. These costs are primarily real-denominated.

• Depreciation. Property, plant and equipment are depreciated over their useful lives, ranging from five to 48 years, on a straight-line basis. On average, property, plant and equipment are depreciated over 16 years. Depreciation of aircraft under operating leases is recorded in cost of sales and services from the beginning of the lease term using the straight-line method over the estimated useful life and considering a residual value at the end of the lease term.

• Amortization. Internally-generated intangible assets are amortized in accordance with the estimated sales of the series of aircraft. Intangible assets acquired from third parties are amortized on straight-line bases over the estimated useful lives of the assets.

In accordance with the accounting standard for contingencies, we accrue a liability for the obligations associated with product warranties at the aircraft delivery date, which is estimated based on historical experience and recorded in cost of sales and services.

We enter into transactions that represent multiple-element arrangements, such as training, technical assistance, spare parts and other concessions. These costs are recognized when the product or service is provided to the customer.

Recent Developments

Backlog

Overview

We continue to implement improvements to our industrial processes, reaffirming the commitment made to our shareholders, customers and suppliers. We currently maintain our estimates to deliver 92 to 97 commercial aircraft, 80 to 90 light executive jets and 25 to 30 large executive jets during 2014.

Results of Operations

The following table presents statement of income data by business segment for the periods indicated:

	Year ended December 31,
	2013			2012 Restated			2011 Restated			2010(1)			2009(1)
	(in US$ millions)
Revenue
Commercial aviation		3,307.0			3,755.4			3,751.2			3,257.9			3,785.7
Executive jets		1,644.5			1,292.0			1,118.8			1,209.5			936.9
Defense & Security		1,196.9			1,045.2			839.9			821.8			677.8
Other related businesses		86.6			74.4			81.0			74.9			97.4
Total		6,235.0			6,167.0			5,790.9			5,364.1			5,497.8
Cost of sales and services
Commercial aviation		(2,532.6	)		(2,809.3	)		(2,921.8	)		(2,680.8	)		(3,072.2	)
Executive jets		(1,284.7	)		(1,035.8	)		(888.8	)		(987.3	)		(750.8	)
Defense & Security		(951.2	)		(785.5	)		(636.8	)		(599.5	)		(520.1	)

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	Year ended December 31,
	2013			2012 Restated			2011 Restated			2010(1)			2009(1)
	(in US$ millions)
Other related businesses		(50.4	)		(46.0	)		(40.7	)		(70.5	)		(85.3	)
Total		(4,818.9	)		(4,676.6	)		(4,488.1	)		(4,338.1	)		(4,428.4	)
Gross profit
Commercial aviation		774.4			946.1			829.4			577.1			713.5
Executive jets		359.8			256.2			230.0			222.2			186.1
Defense & Security		245.7			259.7			203.1			222.3			157.7
Other related businesses		36.2			28.4			40.3			4.4			12.1
Total		1,416.1			1,490.4			1,302.8			1,026.0			1,069.4
Operating expenses
Commercial aviation		(272.3	)		(507.7	)		(672.3	)		(345.3	)		(400.0	)
Executive jets		(262.8	)		(216.7	)		(174.8	)		(142.3	)		(172.9	)
Defense & Security		(154.1	)		(144.9	)		(121.1	)		(115.6	)		(89.6	)
Other related businesses		(13.5	)		(9.2	)		(16.4	)		(31.1	)		(27.5	)
Total		(702.7	)		(878.5	)		(984.6	)		(634.3	)		(690.0	)
Operating profit before finance income (expense)		713.4			611.9			318.2			391.7			379.4

(1) No restatement of financial information was made because there were no changes generated in the period by the retrospective application of new accounting rules which came into effect as of 2013.

The following table sets forth statement of income information, and such information as a percentage of our revenue, for the periods indicated:

	Year ended December 31,
	2013					2012 Restated					2011 Restated					2010(1)					2009(1)
	(in US$ millions, except percentages)
Consolidated Statements of Income
Revenue		6,235.0		100	%		6,167.0		100	%		5,790.9		100	%		5,364.1		100	%		5,497.8		100	%
Cost of sales and services		(4,818.9	)	77.3			(4,676.6	)	75.8			(4,488.1	)	77.5			(4,338.1	)	80.9			(4,428.4	)	80.5
Gross profit		1,416.1		22.7			1,490.4		24.2			1,302.8		22.5			1,026.0		19.1			1,069.4		19.5
Operating income (expense)
Administrative		(210.5	)	3.4			(279.2	)	4.5			(261.3	)	4.5			(197.5	)	3.7			(191.3	)	3.5
Selling		(454.4	)	7.3			(480.4	)	7.8			(418.6	)	7.2			(374.1	)	7			(304.6	)	5.5
Research		(74.7	)	1.2			(77.3	)	1.3			(85.3	)	1.5			(72.1	)	1.3			(55.6	)	1
Other operating income (expense), net		36.9		0.6			(42.8	)	0.7			(219.7	)	3.8			9.4		0.2			(138.5	)	2.5
Equity in losses of associates		—		—			1.2		—			0.3		0.0			—		—			—		—
Operating profit before financial income (expense)		713.4		11.4			611.9		9.9			318.2		5.5			391.7		7.3			379.4		6.9
Financial expenses, net		(96.4	)	1.5			(6.8	)	0.1			(90.5	)	1.6			17.5		0.3			10.2		0.2
Foreign exchange gain (loss), net		(14.6	)	0.2			8.7		0.1			20.1		0.3			(1.1	)	—			(68.8	)	1.3
Profit before taxes on income		602.4		9.6			613.8		10.0			247.8		4.3			408.1		7.6			320.8		5.8
Income taxes expense (benefit)		(256.4	)	4.1			(265.2	)	4.3			(127.4	)	2.2			(62.7	)	1.2			158.1		2.9
Net income		346.0		5.5			348.6		5.7			120.4		2.1			345.4		6.4			478.9		8.7
Attributable to:
Owners of Embraer		342.0		5.5			347.8		5.6			111.6		1.9			330.2		6.2			465.2		8.5
Noncontrolling interest		4.0		0.1			0.8		0.0			8.8		0.2			15.2		0.2			13.7		0.2

(1) No restatement of financial information was made because there were no changes generated in the period by the retrospective application of new accounting rules which came into effect as of 2013.

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2013 Compared with 2012

Revenue

Revenue increased 1.1% to US$6,235.0 million in 2013, from US$6,167.0 million in 2012. Revenue in the Commercial Aviation segment declined 11.9% to US$3,307.0 million in 2013, from US$3,755.4 million in 2012. Executive Jets revenues increased 27.3% to US$1,644.5 million in 2013, from US$1,292.0 million in 2012. Defense and Security revenues increased by 14.5% to US$1,196.9 million in 2013, from US$1,045.2 million in 2012. Other Related Businesses segment revenues increased 16.4% to US$86.6 million in 2013, from US$74.4 million in 2012.

Commercial Aviation revenues declined in 2013, principally due to a lower level of deliveries in the year compared to 2012, representing a decrease of 15.1%. In 2013, the Commercial Aviation segment delivered 90 commercial aircraft compared to 106 aircraft in 2012, with a slightly less favorable product mix in the year, as a result of a higher proportion of smaller E170 and E175 jets delivered relative to E190 and E195 models.

The increase in Executive Jets segment revenues in 2013 is largely driven by an increase in the number of executive jets delivered during the year, as compared to 2012. During 2013, we delivered 119 executive jets (90 light jets and 29 large jets) compared to deliveries of 99 executive jets (77 light jets and 22 large jets) in 2012, an increase of 20.2%. In addition, we had a slightly more positive mix of large jet deliveries in the year (24.4% in 2013, compared to 22.2% in 2012).

Defense & Security segment revenues are accounted for under the percentage-of-completion method, and we continued to execute under our contracts with the Brazilian federal government, specifically the KC-390 development program as well as the Integrated Border Monitoring System (SISFRON). In addition, deliveries of the Super Tucano to militaries around the world and ongoing modernization programs with the Brazilian federal government continued apace, helping to drive revenue growth of 14.5% to US$1,196.9 million, compared to US$1,045.2 million in 2012.

Cost of Sales and Services

Cost of sales and services increased 3.0% to US$4,818.9 million in 2013, from US$4,676.6 million in 2012. The 3.0% increase in cost of sales was higher than the 1.1% growth in revenues in 2013, thus driving an increase in cost of sales and services as a percentage of revenue, to 77.3% in 2013 compared to 75.8% in 2012. This increase in cost of sales and services is mainly a result of a less favorable product and services mix in 2013, combined with inflation in direct labor costs, partially offset by ongoing efforts to improve productivity and efficiency, the appreciation of the dollar against the real, and the stimulus packages implemented in Brazil.

Cost of sales and services in the Commercial Aviation segment decreased 9.8%, to US$2,532.6 million in 2013, from US$2,809.3 million in 2012. The decrease in cost of sales and services was lower than the 11.9% decrease in revenues in this segment due to a less favorable product and services mix, coupled with lower operating leverage on a decline of commercial aircraft deliveries in 2013. These impacts were only partially offset by the appreciation of the dollar against the real, ongoing efforts to improve productivity, and the stimulus packages implemented in Brazil. Gross margin in the Commercial Aviation segment declined from 25.2% in 2012 to 23.4% in 2013.

Cost of sales and services in the Executive Jets segment increased 24.0% to US$1,284.7 million in 2013 from US$1,035.8 million in 2012. The increase in cost of sales and services in this segment increased less than the 27.3% increase in revenues in 2013, representing a shift to a more favorable product mix as we delivered more large planes and benefitted from the appreciation of the dollar against the real, as well as stimulus packages implemented in Brazil and our efforts to improve productivity and efficiency.

Cost of sales and services in the Defense & Security segment increased by 21.1% to US$951.2 million in 2013, from US$785.5 million in 2012. The increase in cost of sales and services was higher than the 14.5% increase in revenues in 2013, driven primarily by a less favorable revenue and product mix delivered in 2013, as well as higher costs related to certain contracts in this segment.

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Cost of sales and services in Other Related Businesses increased 9.6% to US$50.4 million in 2013, from US$46.0 million in 2012, while revenues for this segment increased 16.4% in 2013.

Gross Profit

As a result of the aforementioned factors, our gross profit decreased 5.0%, to US$1,416.1 million in 2013 from US$1,490.4 million in 2012. Our gross margin also fell from 24.2% in 2012 to 22.7% in 2013.

Operating Income (Expense)

As further discussed below, operating expense decreased 20.0%, to US$702.7 million in 2013, from US$878.5 million in 2012. Operating expense as a percentage of revenues decreased to 11.3% in 2013 from 14.2% in 2012.

Administrative. Administrative expenses decreased 24.6%, to US$210.5 million in 2013, from US$279.2 million in 2012, due to the appreciation of the dollar against the real, as well as the stimulus packages implemented in Brazil.

Selling. Selling expenses decreased 5.4% to US$454.4 million in 2013, compared to US$480.4 million in 2012. The decline in selling expenses is due to reductions in the Defense & Security segment, government fiscal benefits and the appreciation of the dollar against the real.

Research. Research expenses declined 3.4% to US$74.7 million in 2013, from US$77.3 million in 2012. The decrease in this expense is primarily explained by the launch of the E2 second generation E-Jets program, in which program costs are now capitalized to intangible assets instead of recognized as research expenses, following approval by our Board of Directors of the economic viability of the program.

Other operating (expense) income, net. Other operating (expense) income, net improved from an expense of US$42.8 million in 2012 to income of US$36.9 million in 2013. The expense in 2012 is mainly due to the expense of US$37.4 million in renegotiated financing arrangement expenses in connection with the restructuring of Chautauqua Airlines, Inc., an airline operator controlled by Republic Airways Holdings.

The change in income from 2012 to 2013 was due to a variety of non-recurring factors. In 2011, as a result of the bankruptcy filing of AMR Corporation, or AMR, the parent company of our customer American Airlines, we provisioned a total of US$317.5 million to our results in the fourth quarter to account for expected expenses related to obligations from financial guarantees and residual value guarantees for the fleet of 216 ERJ 145 family aircraft operated by AMR. Of the US$317.5 million provision related to the AMR bankruptcy process, US$241.9 million was provisioned under other operating (expense) income, net. As a consequence of the more favorable final outcome of the AMR bankruptcy process in the last quarter of 2013, since the initial provisions made in the fourth quarter of 2011, we incurred total expenses of approximately US$43 million related to the financial guarantees for AMR (including the purchase of 39 ERJ 145 family aircraft). As a consequence of this outcome, in the fourth quarter of 2013 a total of US$180.7 million positively impacted operating results, recognized in the other operating (expense) income, net account. The US$180.7 million was comprised of a provision reversal of US$109.3 million coupled with a US$71.4 million payment reversal, which we had already made on these financial guarantees. In the fourth quarter of 2013, we also recognized a US$33.7 million expense related to deferred revenues, attached to a total of US$199 million of financial guarantee obligations which remain for 163 aircraft of the original AMR ERJ 145 family fleet that have been added back to our off-balance sheet exposure. Therefore, the net effect in the fourth quarter of reversals and expenses related to the AMR financial guarantees is US$147.0 million (US$180.7 million less US$33.7 million).

Also, in 2013, the Brazilian federal government initiated a multi-industry effort, known as Programa de Recuperação Fiscal (Fiscal Recovery Program), or Refis, to resolve various open tax debt negotiations with a number of companies. As part of this initiative, the Brazilian federal government offers favorable terms to companies that choose to voluntarily enroll in the program and settle their tax debts. In the last three months of 2013,

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we opted to enroll in this program in order to take advantage of the opportunity to resolve our related tax negotiations with the government. Consequently, we recorded a provision of US$36.9 million in the other operating (expense) income, net account. We do not anticipate that additional provisions will be made relating to this item.

Equity in loss of associates. Equity in loss of associates decreased from positive US$1.2 million in 2012 to zero in 2013.

Operating Profit Before Financial Income (Expense)

As a result of the aforementioned factors, our consolidated operating profit increased 16.6% to US$713.4 million in 2013, from US$611.9 million in 2012. Our operating margin increased to 11.4% in 2013 from 9.9% in 2012.

As mentioned above regarding cost of sales and services and operating income (expense), the operating profit by segment for 2013 for the Commercial Aviation, Executive Jets, Defense & Security and Other Related Businesses segments was US$502.1 million, US$97.0 million, US$91.6 million, and US$22.7 million, respectively. In 2012, the operating profit for these segments was US$438.4 million, US$39.5 million, US$114.8 million, and US$19.2 million, respectively. See Note 39 to our audited consolidated financial statements for operating profit by segment.

Financial income (expense), net

Financial expense, net increased from US$6.8 million in 2012 to US$96.4 million in 2013, due to a combination of non-recurring and recurring factors. In 2011, as a result of the AMR bankruptcy filing, we provisioned a total of US$317.5 million to our fourth quarter results to account for expected expenses related to obligations for financial guarantees and residual value guarantees, as explained above. Of the US$317.5 million provision related to this bankruptcy process in the fourth quarter of 2011, US$75.6 million was recognized in financial income (expense), net, as this amount was related to residual value guarantees. This amount was not reversed in the fourth quarter of 2013, as we took the opportunity to reduce our total exposure by buying back US$98 million in residual value guarantees related to a portion of the AMR fleet of ERJ 145 family aircraft. Considering that since the original provision in the fourth quarter of 2011, as a result of ongoing revisions of residual value projections observed by independent aircraft appraisers, we reversed US$17.1 million of this original provision, in the fourth quarter of 2013 an additional non-recurring expense of US$40 million was accounted for in financial income (expense), net to complete all required provisions for these residual value guarantees. As a result, we no longer have any outstanding residual value guarantee exposure related to the AMR fleet of ERJ 145 family aircraft.

In addition, we also recognized an expense of US$7.9 million in financial income (expense), net related to the accrued interest on the tax obligations related to the Refis program, explained in greater detail under “—Operating Income (Expense).”

Foreign exchange gain (loss), net

Foreign exchange gain (loss), net changed to a loss of US$14.6 million in 2013 from a gain of US$8.7 million in 2012, reflecting net foreign exchange rate changes on monetary assets and liabilities denominated in other currencies which are translated into our functional currency, the U.S. dollar.

Profit Before Taxes on Income

As a result of the aforementioned factors, profit before taxes on income decreased 1.9% to US$602.4 million in 2013 from US$613.8 million in 2012.

Income tax benefit (expense)

Income taxes represented an expense of US$256.4 million in 2013, compared to an expense of US$265.2 million in 2012. Income taxes declined principally due to lower profit before taxes on income in 2013 as compared to 2012.

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Our effective tax rate was relatively stable in 2013 as compared 2012, at 42.6% compared to 43.2%, respectively, declining slightly due to the slightly lower profit before taxes in 2013.

Net Income

As a consequence of the aforementioned factors, our consolidated net income after taxes decreased 0.7% to US$346.0 million in 2013, from US$348.6 million in 2012. As a percent of revenue, net income after taxes was 5.5% in 2013 compared to 5.7% in 2012.

2012 Compared with 2011

Revenue

Revenue increased 6.5%, to US$6,167.0 million in 2012, from US$5,790.9 million in 2011. Revenue in the Commercial Aviation segment increased slightly, by 1.1%, to US$3,755.4 million in 2012, from US$3,751.2 million in 2011. Executive Jets revenues increased 15.5%, to US$1,292.0 million in 2012, from US$1,118.8 million in 2011. Defense & Security revenues increased by 24.4%, to US$1,045.2 million in 2012, from US$839.9 million in 2011. Other Related Businesses revenues decreased 8.1%, to US$74.4 million in 2012, from US$81.0 million in 2011.

Commercial Aviation revenues remained stable primarily as a consequence of a similar number of aircraft deliveries, as well as a similar product and service mix in 2012. We delivered 106 commercial aircraft in 2012 as compared to 105 aircraft in 2011, an increase of one commercial aircraft, or 1.0%.

The increase in Executive Jets revenues is mainly driven by changes in product mix between small and large jets, which resulted in a reduction of 7.2% in deliveries of small executive jets and an increase of 37.5% in deliveries of large executive jets in 2012, totaling 99 executive jets in 2012 (including 19 Legacy 600/650, 29 Phenom 100, 48 Phenom 300, 2 Lineage 1000 and 1 Embraer 190 Shuttle) compared to 99 in 2011 (including 13 Legacy 600/650, 41 Phenom 100, 42 Phenom 300, 2 Lineage 1000 and 1 Embraer 190 Shuttle).

Defense and Security revenues are accounted for using the percentage-of-completion method and increased 24.4%, to US$1,045.2 million in 2012, from US$839.9 million in 2011, primarily as a result of growth in deliveries of the Super Tucano and the evolution of the development of the KC-390.

Cost of Sales and Services

Cost of sales and services increased 4.2%, to US$4,676.6 million in 2012, from US$4,488.1 million in 2011. This increase in cost of sales of 4.2% was less than the 6.5% increase in revenue in 2012. Cost of sales and services as a percentage of revenue decreased to 75.8% in 2012, from 77.5% in 2011. This reduction in cost of sales and services is a result of a more favorable product and revenue mix in 2012, our ongoing efforts to improve efficiency and productivity, the appreciation of the dollar against the real, as well as the stimulus packages implemented in Brazil.

Cost of sales and services in the Commercial Aviation segment decreased 3.9%, to US$2,809.3 million in 2012, from US$2,921.8 million in 2011, due to a more favorable product and revenue mix in 2012, our ongoing efforts to improve efficiency and productivity, the appreciation of the dollar against the real, as well as the stimulus packages implemented in Brazil, compared to a slight increase of 1.1% in revenues for the Commercial Aviation segment.

Cost of sales and services in the Executive Jets segment increased by 16.5%, to US$1,035.8 million in 2012, from US$888.8 million in 2011, in line with the 15.5% increase in revenues for this segment. Most of our costs relating to sales and services in the Executive Jets segment are variable, considering that the majority of costs are related to aircraft parts and components, such as engines and avionics, the prices of which increased in 2012.

Cost of sales and services in the Defense and Security segment increased by 23.4% to US$785.5 million in 2012, from US$636.8 million in 2011, while revenues in this segment increased by 24.4%. This increase comes primarily as a result of the different revenue and product mix delivered in this segment during 2012.

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Cost of sales and services in Other Related Businesses increased 13.0%, to US$46.0 million in 2012, from US$40.7 million in 2011, while revenues for this segment decreased 8.1%.

Gross Profit

As a result of the foregoing factors, our gross profit increased 14.4%, to US$1,490.4 million in 2012, from US$1,302.8 million in 2011. Our gross margin also increased to 24.2% in 2012 from 22.5% in 2011.

Operating Income (Expense)

As further discussed below, operating expense decreased 10.8%, to US$878.5 million in 2012, from US$984.6 million in 2011. Operating expenses as a percentage of revenue decreased to 14.2% in 2012 from 17.0% in 2011.

Administrative. Administrative expenses increased 6.9%, to US$279.2 million in 2012, from US$261.3 million in 2011, primarily as a result of the increase of approximately 10% in Brazilian labor expenses, which were partially offset by the appreciation of the dollar against the real, as well as the stimulus packages implemented in Brazil.

Selling. Selling expenses increased 14.8%, to US$480.4 million in 2012, from US$418.6 million in 2011. This increase was mainly due to Embraer’s efforts to take advantage of market improvements to generate sales, and as our worldwide fleet continued to grow through 2012, particularly in the executive aviation market, our customer support infrastructure was increased to support such fleet growth. Additionally, selling expenses were affected by the increase in revenues and product mix in 2012.

Research. Research expenses decreased 9.4%, to US$77.3 million in 2012, from US$85.3 million in 2011. This decrease is mainly explained by the reduced level of research activity related to the development of the second generation of E-Jets aircraft.

Other operating (expense) income, net. Other operating expense, net decreased to net other operating expense of US$42.8 million in 2012 from net other operating expense of US$219.7 million in 2011. This expense in 2012 is mainly due to the expense of US$37.4 million in renegotiated financing arrangement expenses in connection with the restructuring of Chautauqua Airlines Inc., an airline operator controlled by Republic Airways Holdings. This expense for Chautauqua was lower than the provision of financial guarantees obligation made for AMR in 2011, which totaled US$241.9 million.

Equity in loss of associates. Equity in loss of associates improved, at positive US$1.2 million in 2012, from US$0.3 million in 2011.

Operating Profit Before Financial Income (Expense)

As a result of the foregoing factors, our consolidated operating profit increased 92.3%, to US$611.9 million in 2012, from US$318.2 million in 2011. Our operating margin increased to 9.9% in 2012 from 5.5% in 2011.

As mentioned above regarding cost of sales and services and operating income (expense), the operating profit by segment for 2012 for the Commercial Aviation, Executive Jets, Defense and Security and Other Related Businesses segments was US$438.4 million, US$39.5 million, US$114.8 million and US$19.2 million, respectively. In 2011, the operating profits for these segments was US$157.1 million, US$55.2 million, US$82.0 million and US$23.9 million, respectively. See Note 39 to our audited consolidated financial statements for operating profit by segment.

Financial income (expense), net

Financial expense, net, decreased by 92.5% to a net financial expense of US$6.8 million in 2012, compared to net financial expense of US$90.5 million in 2011, primarily due to the absence of US$75.6 million of non-recurring expenses in connection with the provision of residual value guarantee obligations for the AMR Corporation, which was recorded in 2011, and a reversal of US$35.4 million in 2012 resulting from there being no observed impact on the value of regional aircraft in the secondary market, as we had predicted when we made the initial provision in 2011.

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Foreign exchange gain (loss), net

Foreign exchange gain, net decreased to US$8.7 million in 2012 from a net foreign exchange gain of US$20.1 million in 2011, reflecting net foreign exchange rate changes on monetary assets and liabilities denominated in other currencies which are translated into our functional currency, the U.S. dollar.

Profit Before Taxes on Income

As a result of the foregoing factors, profit before taxes on income increased 147.7%, to US$613.8 million in 2012, from US$247.8 million in 2011.

Income tax benefit (expense)

Income taxes represented an expense of US$265.2 million in 2012, compared to an expense of US$127.4 million in 2011, mainly as a result of the effects of foreign exchange changes on our nonmonetary assets.

Our effective tax rate decreased to 43.2% in 2012, compared to an effective tax rate of 51.4% of our profit before taxes on income in 2011, due to higher income before taxes in 2012 as well as the tax on profits of our overseas subsidiaries. In 2012, the impact of the exchange rate variation on the unrealized tax base of non-monetary assets (inventory, property, plant and equipment and intangible assets) at year-end was lower when compared to 2011.

Net Income

As a result of the foregoing factors, our net income after taxes increased 189.5% to US$348.6 million in 2012 from US$120.4 million in 2011. As a percent of revenue, net income after taxes increased to 5.7% in 2012 from 2.1% in 2011.

Accounting Pronouncements Not Yet Adopted

For a description of recently issued accounting pronouncements, see Note 4 to our consolidated financial statements contained in “Item 18. Financial Statements.” We prepared our consolidated financial statements as of and for the year ended December 31, 2013 in accordance with IFRS, as issued by the IASB.

5B. Liquidity and Capital Resources

Overview

Our liquidity needs arise principally from research, capital expenditures, principal and interest payments on our debt, working capital requirements and distributions to shareholders. We generally rely on funds provided by operations, borrowings under our credit arrangements, cash contributions from risk-sharing partners, advance payments from customers and, to a lesser extent, issuance of debt and equity securities in the capital markets in order to meet these needs. For further information, see “Item 4C. Information on the Company—Business Overview—Suppliers and Components; Risk-Sharing Arrangements” and “Item 4C. Information on the Company—Business Overview—Commercial Aviation Business—Production, New Orders and Options” and “—Credit Facilities and Lines of Credit.”

As of the date of this annual report, we believe that our traditional sources of funds are sufficient to meet our foreseeable working capital requirements, including to (1) continue to improve the EMBRAER 170/190 jet family, the Phenom 100, the Phenom 300 and the Lineage 1000 executive jets, (2) further develop our new Legacy 450/500 executive jets, (3) further develop the E2 jet family, (4) make other planned capital expenditures and (5) pay dividends and interest on shareholders’ equity. At this point, our access to liquidity sources has not been materially impacted by the current credit environment, and we do not expect that such access will be materially impacted in the near future. However, there can be no assurance that our traditional sources of funds, or that the cost or availability of our credit facilities or future borrowing sources, will not be materially impacted by the ongoing market disruptions.

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Our customers may reschedule deliveries, fail to exercise options or cancel firm orders as a result of the economic downturn and the financial volatility in the commercial airline industry. In addition, our risk-sharing partners’ cash contributions are refundable under certain limited circumstances and we may need to find replacement sources of capital.

Net Cash Generated by Operating Activities and Working Capital

2013

In 2013, net cash generated by operating activities was US$564.6 million, compared to net cash generated by operating activities of US$693.0 million in 2012. The decrease in the inflow of cash generated by operating activities in 2013 is primarily a result of financial investments we made, which are short-term investments with maturity greater than three months that we expect to use in our regular operations, and the reversal of financial guarantees, which were significantly higher in 2013 compared to 2012.

We had working capital of US$2,875.1 million at December 31, 2013 and US$2,570 million at December 31, 2012. Our working capital increased in 2013 primarily as a result of an increase in our financial investments and a decrease in our short-term loans and financing.

2012

In 2012, net cash generated by operating activities was US$693 million, compared to net cash generated by operating activities of US$480.1 million in 2011. The increase in the inflow of cash generated by operating activities in 2012 is primarily a result of higher net income in 2012 and relatively consistent balances of current asset and current liability accounts in 2011 and 2012.

We had working capital of US$2,570 million at December 31, 2012 and US$2,325.5 million at December 31, 2011. Our working capital increased in 2012 as a result of an increase in cash flow from operating activities in 2012.

2011

In 2011, net cash generated by operating activities was US$480.1 million, compared to net cash generated by operating activities of US$873.8 million in 2010. The decrease in the inflow of cash generated by operating activities in 2011 is primarily a result of lower net income and changes in financial assets of US$124.3 million.

We had working capital of US$2,325.5 million at December 31, 2011 and US$2,594.1 million at December 31, 2010. Our working capital needs decreased in 2011, as a result of an increase in loans and financing coupled with an increase in non-recourse and recourse debt.

Net Cash Used in Investing Activities

2013

In 2013, net cash used in investing activities was US$764.0 million, compared to net cash used in investing activities of US$617.3 million in 2012.

Net cash used in investing activities in 2013 increased as a result of higher additions to intangibles and property, plant and equipment when compared to 2012. We also spent US$17.3 million in the acquisition of all the non-controlling interests in our subsidiary Atech Negócios em Tecnologia S.A. in Brazil and in 2012 we spent US$17.4 million in the acquisition of a non-controlling interest in our subsidiary Airholding SGPS S.A. in Portugal. See Note 14.1 to our audited consolidated financial statements.

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2012

In 2012, net cash used in investing activities was US$617.3 million, compared to net cash used in investing activities of US$602.0 million in 2011.

Net cash used in investing activities remained fairly constant between 2011 and 2012, primarily as a result of consistent investment in capital expenditure and product development during the two years.

2011

In 2011, net cash used in investing activities was US$602.0 million, compared to net cash used in investing activities of US$288.3 million in 2010.

We experienced an outflow of cash to investing activities in 2011, mainly as a result of an increase in investments in intangible assets and property, plant and equipment.

Net Cash Generated by Financing Activities and Total Debt

2013

In 2013, net cash generated by financing activities was US$192.5 million, compared to net cash generated by financing activities of US$422.3 million in 2012. During 2013, we raised new financings of US$890.8 million compared to new borrowings of US$1,692.6 million in 2012. Furthermore, we also repaid US$650.2 million of our indebtedness in 2013 compared to debt repayments in the aggregate amount of US$1,225.3 million in 2012. In 2013, we distributed US$71.4 million in interest on shareholders’ equity or dividends compared to US$59.5 million in 2012. In 2013, like in 2012, we did not spend any amounts in connection with share buyback programs.

At December 31, 2013, we had total debt of US$2,194.3 million under our financing arrangements described below, 96.4% of which was long-term debt and 3.6% of which consisted of short-term debt. In comparison, we had total debt of US$2,066.5million at December 31, 2012, consisting of 83.7% of long-term debt and 16.3% of which consisted of short-term debt. Our total debt increased in 2013 in comparison with 2012.

2012

In 2012, net cash generated by financing activities was US$422.3 million, compared to net cash used in financing activities of US$96.4 million in 2011. During 2012, we raised new financings of US$1,692.6 million compared to new borrowings of US$2,362.5 million in 2011. Furthermore, we also repaid US$1,225.3 million of our indebtedness in 2012 compared to debt repayments in the aggregate amount of US$2,082.7 million in 2011. In 2012, we distributed US$59.5 million in interest on shareholders’ equity or dividends compared to US$183.4 million in 2011. In 2012, like in 2011, we did not spend any amounts in connection with share buyback programs.

At December 31, 2012, we had total debt of US$2,066.5 million under our financing arrangements described below, 83.7% of which was long-term debt and 16.3% of which consisted of short-term debt. In comparison, we had total debt of US$1,658.1 million at December 31, 2011, consisting of 84.8% of long-term debt and 15.2% of which consisted of short-term debt. Our total debt increased in 2012 in comparison with 2011, largely due to the issuance of US$500 million of bonds in June 2012.

2011

In 2011, net cash generated by financing activities was US$96.4 million, compared to net cash used in financing activities of US$802.2 million in 2010. During 2011, we raised new financings of US$2,362.5 million compared to new borrowings of US$942.8 million in 2010. Furthermore, we also repaid US$2,082.7 million of our indebtedness in 2011 compared to debt repayments in the aggregate amount of US$1,583.4 million in 2010. In 2011, we distributed US$183.4 million in interest on shareholders’ equity or dividends compared to US$161.6 million in 2010. In 2011, like in 2010, we did not spend any amounts in connection with share buyback programs.

At December 31, 2011, we had total debt of US$1,658.1 million under our financing arrangements described below, 84.8% of which was long-term debt and 15.2% of which consisted of short-term debt. In

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comparison, we had total debt of US$1,434.8 million at December 31, 2010, consisting of 94.9% of long-term debt. Our total debt increased in 2011 in comparison with 2010, largely due to an increase in expenditures related to research and product development coupled with capital expenditures.

Credit Facilities and Lines of Credit

Long-term Facilities

In October 2006, our wholly owned finance subsidiary, Embraer Overseas Limited, or Embraer Overseas, issued US$400 million 6.375% guaranteed notes due 2017 and, as of December 31, 2013, US$238.0 million was outstanding (US$6.5 million in the short-term), including principal and accrued interest. Interest will be paid semiannually. The notes are unconditionally guaranteed by us. The notes have been listed on the Luxembourg Stock Exchange. On March 30, 2007, we and Embraer Overseas commenced an exchange offer to exchange the notes for new notes registered with the SEC. The exchange offer was successfully completed as of May 18, 2007 and, as a consequence, US$376.3 million or approximately 95% of the notes were registered. The indenture under which the notes were issued contains customary covenants and restrictions such as limitation on liens, consolidation, merger or transfer of assets. By December 31, 2013, Embraer had repurchased and canceled 19,908 (5.0%) of these bonds, totaling US$15.2 million, with a face value of US$19.9 million. These bonds were purchased by Embraer Overseas through open market transactions. As described below, in September 2013 we completed an exchange offer in which US$146.4 million in principal amount of our guaranteed notes due 2017 were exchanged for our guaranteed notes due 2023.

In November 2006, December 2007 and October 2008, we entered into certain credit facilities in the aggregate amount of US$60.0 million with the FINEP to support the research and development expenses of the Phenom 100 and Phenom 300 aircraft, which were totally disbursed in 2008. The facility bears interest at TJLP plus 5.0% per annum and is fully secured by a pledge of certain machines and equipment and by a bank standby letter of credit. The credit facility is repayable from December 2008 to September 2015. As of December 31, 2013, we had outstanding US$6.1 million under our credit facilities with the FINEP, of which US$3.5 million is due in the short-term, including principal and accrued interest. The FINEP credit facilities are denominated in reais, and amounts appearing herein have been converted into U.S. dollars, our functional currency, for purposes of preparing our IFRS consolidated financial statements.

In October 2009, Embraer Overseas issued US$500 million 6.375% guaranteed notes due 2020 and, as of December 31, 2013, US$162.5 million was outstanding (US$2.4 million in the short-term), including principal and accrued interest. Interest will be paid semiannually. The notes are unconditionally guaranteed by us. As described below, in September 2013 we completed an exchange offer in which US$337.2 million in principal amount of our guaranteed notes due 2020 were exchanged for our guaranteed notes due 2023. In connection with the exchange offer, we received the requisite consents from holders of our guaranteed notes due 2020 to eliminate substantially all the restrictive covenants, certain events of default and related provisions contained in the indenture under which the notes were issued, and we delisted our guaranteed notes due 2020 from the New York Stock Exchange.

In March 2011, we entered into certain credit facilities with the FINEP in the aggregate amount of US$58.1 million, to support the research and development expenses of the Legacy 500 aircraft, all of which were totally disbursed in 2011. The facility bears interest at 3.5% per annum and is fully secured by a pledge of certain machines and equipment and by a bank standby letter of credit. The credit facility is repayable from May 2013 to April 2018. As of December 31, 2013, we had US$34.8 million outstanding under our credit facilities with the FINEP, of which US$8.1 million is due in the short-term, including principal and accrued interest. The FINEP credit facilities are denominated in reais, and amounts appearing herein have been converted into U.S. dollars, our functional currency, for purposes of preparing our IFRS consolidated financial statements.

In March 2011, we entered into certain credit facilities with the BNDES in the aggregate amount of US$227.6 million, to support the research and development expenses of the Legacy 500 aircraft, including conceptual study and project and development, which were partially disbursed in 2012. The facility bears interest at TJLP plus 1.92% and 3.5% to 4.5% per annum and is fully secured by a pledge of certain machines and equipment and by a bank standby letter of credit. The credit facility is repayable from May 2013 to April 2018. As of December 31, 2013, we had US$165.2 million outstanding under our credit facilities with the BNDES, of which US$38.4 million is due in the short-term, including principal and accrued interest. The BNDES credit facilities are denominated in reais, and amounts appearing herein have been converted into U.S. dollars, our functional currency, for purposes of preparing our IFRS consolidated financial statements.

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In March 2012, we signed a contract for a non-reimbursable revolving credit line with four financial institutions of the Brazilian market in the total aggregate amount of R$1 billion, equivalent to US$489 million, with maturity on March 8, 2015. Each institution committed R$250 million, and we may disburse up to the total amount between March 9, 2012 and February 7, 2015. This working capital credit facility will bear interest on the disbursed outstanding principal amount at a rate per annum equal to the CDI (Brazilian federal government rate) plus 1.30% per annum. The maintenance costs will be included in our financial results.

In June 2012, we issued US$500 million 5.150% notes due 2022 and, as of December 31, 2013, US$498.9 million was outstanding (US$1.1 million in the short-term), including principal and accrued interest. Interest will be paid semiannually. The notes are our unsecured and unsubordinated obligations. The notes have been registered with the SEC and listed on the New York Stock Exchange. The indenture under which the notes were issued contains customary covenants and restrictions such as limitation on liens, consolidation, merger or transfer of assets.

In February 2013, we signed contracts in the form of export credit notes with five Brazilian financial institutions in the total aggregate amount of R$712.0 million, equivalent to US$303.9 million, maturing in February 2016. This facility bears interest at 5.5% per annum. As of December 31, 2013, we had US$294.7 million total outstanding, of which US$1.4 million is due in the short-term, including principal and accrued interest. The export credit notes are denominated in reais, and amounts appearing herein have been converted into U.S. dollars, our functional currency, for purposes of preparing our IFRS financial statements.

In March and April 2013, we signed credit agreements in the form of BNDES pre-shipment export credit lines (BNDES PSI – Subprograma Exportação de Pré-embarque) with four Brazilian financial institutions in the total aggregate amount of R$200.0 million, equivalent to US$85.4 million, with maturity in March and April of 2016. These facilities bear interest at 5.5% per annum. As of December 31, 2013, we had US$86.2 million total outstanding, of which US$0.8 million is due in the short-term, including principal and accrued interest. This facilities are denominated in reais, and amounts appearing herein have been converted into U.S. dollars, our functional currency, for purposes of preparing our IFRS financial statements.

In August 2013, we signed a credit facility with the FINEP in the amount of R$303.9 million, equivalent to US$129.8 million, to support the research and development expenses of the Legacy 450 aircraft, of which US$26.8 million were disbursed in 2013. The facility bears interest at 3.5% per annum and is fully secured by a bank guarantee. The final maturity is in September 2023. As of December 31, 2013, we had US$26.8 million outstanding under this credit facility with the FINEP, of which US$0.05 million is due in the short-term, including principal and accrued interest. The FINEP credit facilities are denominated in reais, and amounts appearing herein have been converted into U.S. dollars, our functional currency, for purposes of preparing our IFRS financial statements.

In September 2013, we completed an exchange offer in which US$146.4 million in principal amount of our guaranteed notes with maturity in 2017 and US$337.2 million in principal amount of our guaranteed notes with maturity in 2020 were exchanged for approximately US$540.5 million in principal amount of notes issued by Embraer Overseas, with maturity in 2023. The notes due in 2023 are unconditionally guaranteed by us and were issued pursuant to exemptions from SEC registration pursuant to Regulation S and Rule 144A under the Securities Act. The notes due in 2023 are subject to a registration rights agreement, pursuant to which we have agreed to exchange the notes within 270 days of their issuance for notes with the same terms and conditions which are registered with the SEC. As of December 31, 2013, a total of US$490.0 million under our notes due 2023 was outstanding, of which US$8.9 million was due in the short-term, including principal and accrued interest.

We may from time to time seek to retire or purchase our outstanding debt, including our guaranteed notes due 2017, 2020, 2022 and 2023, through cash purchases and/or exchanges for other securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material, and notes repurchased may be cancelled or resold, but will only be resold in compliance with applicable requirements or exemptions under the relevant securities laws.

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In December 2013, we signed a contract with BNDES to support project development in the total aggregate amount of R$1.4 billion, equivalent to US$598 million. As of December 31, 2013 there was no amount disbursed under this contract.

We have various other long-term loans and credit agreements with aggregate outstanding borrowings of US$190.4 million at December 31, 2013. See Note 20 to our audited consolidated financial statements for further information on these financing arrangements.

Some of our long-term financing agreements include customary covenants and restrictions, including those that require us to maintain: (1) a maximum leverage ratio, calculated as net debt to earnings before interest, taxes, depreciation and amortization, or EBITDA, of 3.5:1 and (2) a minimum net debt service coverage ratio, calculated as EBITDA to financial expenses, of 2.25:1. Other restrictions included in our long-term financings include negative pledge covenants and restrictions on significant changes in control, sales of substantially all of our assets, dividend payments during events of default and certain transactions with our affiliates. As of December 31, 2013, we were in compliance with all restrictive covenants contained in our financing agreements.

At December 31, 2013, US$331.6 million of our total debt was secured by a combination of mortgages on certain of our real estate, liens on certain of our machinery and equipment and by a bank standby letter of credit.

Short-term Facilities

We have various short-term loans and credit agreements with aggregate outstanding borrowings of US$0.1 million at December 31, 2013. See Note 20to our audited consolidated financial statements for further information on our short-term financing arrangements.

5C. Research and Development, Patents and Licenses, etc.

We incur research expenses related to the creation of new technologies that may be applied to our aircraft in the future. Such expenses are not associated with any particular aircraft and include the implementation of quality assurance initiatives, improvements to the productivity of production lines and studies to determine the latest developments in technology and quality standards. Under IFRS, research costs are expensed as incurred in the research line item of our statement of income.

Research expenses totaled US$74.7 million in 2013 and US$77.3 million in 2012. This decrease in research expenses in 2013 is a result of a smaller number of research projects that entered into their experimental stages in 2012, thereby demanding less research resources.

In 2014, we expect to invest approximately US$80 million in our research activities.

For information on our capital expenditures, comprising investments in development and property, plant and equipment, see “Item 4B. Information on the Company—History and Development of the Company—Capital Expenditures (Property, Plant and Equipment and Development).”

Intellectual Property

Our intellectual property, which includes utility patents, design patents, trade secrets, know-how and trademarks, is important to our business. We hold trademarks over our name and symbol and the names of our products, some of which are registered and some of which are in the process of registration in a number of countries, including Brazil, the United States, Canada, Singapore, Hong Kong, China, European Union and Japan. At December 31, 2013, we had more than 450 trademarks. Our trademarks are generally renewed at the end of their validity period, which usually runs from ten years from the date of application for registration. We do not believe that the loss of any of our trademarks would have a material impact on our business or results of operations.

We develop our intellectual property in our research, development and production process. Under the agreements we have with some of our suppliers and risk-sharing partners, they grant us access to information and technology necessary to better develop, manufacture and market our products.

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We aim to protect our intellectual property rights resulting from investments in technical research and development.

We hold granted patents and patent applications relating to our manufacturing technology. Currently, we hold granted patents and patent applications from the appropriate registries in Brazil, the United States, the European Union, Russia, Japan, India and China in connection with the various technologies of our products. We require that our suppliers and risk-sharing partners respect the intellectual property rights of third parties, and we believe that we have the necessary intellectual property rights to conduct our business and operations.

We filed 227 patent applications between 2009 and 2013. We were granted 91 patents between 2009 and 2013.

Innovation

We seek to remain in the technological vanguard by constantly reinventing ourselves as we search for opportunities to transform our business, products, services and markets.

We view a focus on innovation as key to the competitiveness and sustainability of our business. For this reason, we created an innovation and knowledge management area to reinforce our initiatives. The area is responsible for the promotion of innovative ideas aimed at the development of new businesses, products, technologies, services and processes. Our Innovation Policy and our Innovation Management Model contain the bases and requirements, respectively, related to our innovation processes.

Our Innova program, or Innova, is the principal tool created by our innovation and knowledge management area to promote innovation within Embraer. The program makes channels and spaces which promote the development and implementation of innovations available, such as the prototype laboratories in São José dos Campos and Gavião Peixoto, and the Innova Spaces, in São José dos Campos, Fort Lauderdale and Melbourne.

Innova acts on the fronts of spontaneous innovation, stimulated innovation and recognition. On the spontaneous innovation front, the Green Light program evaluates innovative proposals presented voluntarily by employees. If approved, the proposing employees are granted time and resources to develop the projects. In 2013, eight innovative projects were selected, and the first two projects have already been implemented. For 2014, there are fifteen projects under evaluation.

In order to promote innovation, we have also created the Innova Challenge, by which challenges are submitted to our employees to be solved in a collaborative environment. In 2013, 12 challenges were launched, resulting in 539 new ideas. Since then, 24 prototypes entered into the final stage of implementation for 7 innovation projects, with two already implemented.

We established Innova on Demand, in which the area of innovation advises a specific business unit of our company to enhance its initiatives and improve its results. Two thousand twenty-six new ideas were presented and 15 turned into innovation projects, with two projects having already been implemented.

In 2013, we implemented the Innovation Recognition Program. Under this program, all successfully implemented innovations must be acknowledged and celebrated. Also in 2013, 235 employees were recognized for their 95 innovations in both spontaneous and encouraged innovations. In addition, nine management groups in the categories of manufacturing, engineering and main office were acknowledged as the most favorable environments for innovation in the company.

Of our net revenues in 2013, 34% came from innovations developed between 2009 and 2013. We implemented 12,430 innovations in 2013.

Embraer received the National Innovation Award, sponsored by CNI, Sebrae and the Competitive Brazil Movement, in the category of Technological Innovation Projects. The winning project was Ahead-PRO, a system of preventive monitoring for aircraft, created with the purpose of providing, at all times, an updated view of the condition in which the aircraft’s components are operating. We believe the implementation of the innovative project impacted our competitiveness, increasing our rates of customer satisfaction. The system is available for the E-Jets and Phenoms.

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5D. Trend Information

The following table summarizes our order book for the Commercial Aviation segment at December 31, 2013. Our total firm order backlog at that date, including executive jets and defense aircraft, was US$18.2 billion.

Commercial Aviation	Firm Orders		Options		Deliveries		Firm Order Backlog
EMB 120 Brasília		352		—		352		—
ERJ 135		108		—		108		—
ERJ 140		74		—		74		—
ERJ 145		708		—		708		—
EMBRAER 170		188		26		187		1
EMBRAER 175		375		472		187		188
EMBRAER 190		569		169		496		73
EMBRAER 195		145		22		128		17
EMBRAER 175 - E2		100		100		—		100
EMBRAER 190 - E2		25		25		—		25
EMBRAER 195 - E2		25		25		—		25

The following tables set forth our Commercial Aviation order book at December 31, 2013 by aircraft type, customer and country.

ERJ 135:

Customer	Firm Orders		Delivered		Firm Order Backlog
American Eagle (USA)		40		40		—
British Midland (UK)		3		3		—
City Airline AB (Sweden)		2		2		—
ExpressJet (USA)		30		30		—
Flandair (France)		3		3		—
Jet Magic (Ireland)		1		1		—
Luxair (Luxembourg)		2		2		—
Pan Européenne (France)		1		1		—
Proteus (France)		3		3		—
Regional Airlines (France)		3		3		—
Republic Airways (USA)		15		15		—
South Africa Airlink (South Africa)		5		5		—
Total		108		108		—

ERJ 140:

Customer	Firm Orders		Delivered		Firm Order Backlog
American Eagle (USA)		59		59		—
Republic Airways (USA)		15		15		—
Total		74		74		—

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ERJ 145:

Customer	Firm Orders		Delivered		Firm Order Backlog
Aerolitoral (Mexico)		5		5		—
Air Caraibes (Guadalupe)		2		2		—
Alitalia (Italy)		14		14		—
American Eagle (USA)		118		118		—
Axon (Greece)		3		3		—
British Midland (UK)		9		9		—
British Regional Airlines (UK)		23		23		—
Brymon (UK)		7		7		—
China Southern (China)		6		6		—
China Eastern Jiangsu (China)		5		5		—
China Eastern Wuhan (China)		5		5		—
Cirrus (Germany)		1		1		—
ExpressJet (USA)		245		245		—
ERA (Spain)		2		2		—
Flandre Air (France)		5		5		—
GECAS (PB Air - Thailand)		2		2		—
HNA Group (China)		25		25		—
KLM EXEL (Holland)		2		2		—
Lot Polish (Poland)		14		14		—
Luxair (Luxembourg)		9		9		—
Mesa (USA)		36		36		—
Nigeria (Nigeria)(1)		1		1		—
Portugalia (Portugal)		8		8		—
Proteus (France)		8		8		—
Regional (France)		15		15		—
Republic Airways (USA)		60		60		—
Rheintalflug (Austria)		3		3		—
Rio Sul (Brazil)		16		16		—
Satena (Colombia)(1)		3		3		—
Sichuan (China)		5		5		—
Skyways (Sweden)		4		4		—
Swiss (Switzerland)		25		25		—
Transtates (USA)		22		22		—
Total		708		708		—

(1) Aircraft delivered by Embraer Defense & Security.

EMBRAER 170:

Customer	Firm Orders		Delivered		Firm Order Backlog
Airnorth (Australia)		1		1		—
Alitalia (Italy)		6		6		—
BA CityFlyer (UK)		6		6		—
Cirrus (Germany)		1		1		—
ECC (Ireland)(1)		6		6		—
Egypt Air (Egypt)		12		12		—
Finnair (Finland)		10		10		—
Gecas (USA)		9		9		—
JAL (Japan)		15		14		1
Jetscape (USA)		1		1		—
Lot Polish (Poland)		6		6		—
Petro Air (Libya)		2		2		—
Regional (France)		10		10		—

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Customer	Firm Orders		Delivered		Firm Order Backlog
Republic Airline (USA)		48		48		—
Satena (Colombia)(2)		1		1		—
Saudi Arabian Airlines (Saudi Arabia)		15		15		—
Sirte Oil (Libya)		1		1		—
Suzuyo (Japan)		2		2		—
TAME (Ecuador)(2)		2		2		—
US Airways (USA)		28		28		—
Virgin Australia (Australia)		6		6		—
Total		188		187		1

(1) The customer is Embraer’s ECC Leasing, which delivered one aircraft to Cirrus, two to Gulf Air, two to Paramount and one to Satena (delivered by Embraer Defense & Security).

(2) Aircraft delivered by Embraer Defense & Security.

EMBRAER 175:

Customer	Firm Orders		Delivered		Firm Order Backlog
Air Canada (Canada)		15		15		—
Aldus (Ireland)		5		—		5
ECC Leasing (Ireland)(1)		1		1		—
Air Lease (USA)		8		8		—
Alitalia (Italy)		2		2		—
American Airlines (USA)		60		—		60
CIT (USA)		4		4		—
Flybe (UK)		35		11		24
Gecas (USA)		5		5		—
Jetscape (USA)		4		4		—
Lot Polish (Poland)		12		12		—
Northwest Airlines (USA)		36		36		—
Oman Airlines		5		5		—
Republic Airlines (USA)		101		73		28
Royal Jordanian (Jordan)		2		2		—
TRIP (Brazil)		5		5		—
United Airlines (USA)		30		—		30
Skywest (USA)		40		—		40
Suzuyo (Japan)		5		4		1
Total		375		187		188

(1) The customer is Embraer’s ECC Leasing, which delivered one aircraft to Air Caraibes.

EMBRAER 190:

Customer	Firm Orders		Delivered		Firm Order Backlog
Aero Republica (Colombia)		5		5		—
Aeromexico (Mexico)		12		12		—
Aldus (Ireland)		15		—		15
Air Astana (Kazakhstan)		2		2		—
Air Canada (Canada)		45		45		—
Air Caraibes (Guadalupe)		1		1		—
Air Costa (India)		1		—		1
Air Lease (USA)		23		23		—
Air Moldova (Moldova)		1		—		1

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Customer	Firm Orders		Delivered		Firm Order Backlog
Augsburg (Germany)		2		2		—
Austral (Argentina).		22		22		—
AZAL (Azerbaijan)		4		4		—
Azul (Brazil)		5		5		—
BA CityFlyer (UK)		9		8		1
BOC Aviation (Singapore)		14		6		8
Conviasa (Venezuela)		13		13		—
China Southern (China)		20		20		—
CIT (USA)		7		2		5
Copa (Panama)		15		15		—
Dniproavia (Ukraine)		5		5		—
ECC (Ireland)(1)		1		1		—
Finnair (Finland)		12		12		—
Gecas (USA)		27		26		1
Hainan (China)		50		50		—
Hebei (China)		7		5		2
JetBlue (USA)		88		64		24
Jetscape (USA)		7		7		—
Kenya Airways (Kenya)		10		10		—
KLM (Holland)		22		22		—
Kunpeng (China)		5		5		—
LAM (Republic of Mozambique)		3		2		1
Lufthansa (Germany)		9		9		—
M1 Travel (Lebanon)		8		8		—
NAS Air (Saudi Arabia)		10		3		7
NIKI (Austria)		7		7		—
Regional (France)		10		10		—
Republic (USA)		2		2		—
Taca (El Salvador)		11		11		—
TAME (Ecuador)(2)		3		3		—
Trip (Brazil)		3		3		—
US Airways (USA)		25		25		—
Virgin Blue (Australia)		18		18		—
Virgin Nigeria (Nigeria)		2		2		—
Undisclosed		8		—		8
Total		569		496		73

(1) The customer is Embraer’s ECC Leasing, which delivered one aircraft to Jet Blue (USA).

(2) Aircraft delivered by Embraer Defense & Security.

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EMBRAER 195:

Customer	Firm Orders		Delivered		Firm Order Backlog
Aurigny (Guernsey)		1		—		1
Azul (Brazil)		59		45		14
Belavia (Belarus)		2		—		2
BOC Aviation (Singapore)		1		1		—
Flybe (UK)		14		14		—
GECAS (USA)		12		12		—
Globalia (Spanish)		12		12		—
Jetscape (USA)		2		2		—
LOT Polish (Poland)		4		4		—
Lufthansa (Germany)		34		34		—
Montenegro (Montenegro)		1		1		—
Royal Jordanian (Jordanian)		2		2		—
Trip (Brazil)		1		1		—
Total		145		128		17

EMBRAER 175 – E2:

Customer	Firm Orders		Delivered		Firm Order Backlog
Skywest (USA)		100		—		100
Total		100		—		100

EMBRAER 190 E2:

Customer	Firm Orders		Delivered		Firm Order Backlog
ILFC (USA)		25		—		25
Total		25		—		25

EMBRAER 195 E2:

Customer	Firm Orders		Delivered		Firm Order Backlog
ILFC (USA)		25		—		25
Total		25		—		25

For additional information regarding trends in our business, see “Item 4C. Information on the Company—Business Overview—Business Strategies” and “Item 5A. Operating and Financial Review and Prospects—Operating Results—Current Conditions and Future Trends in the Commercial Airline Industry and Executive Jet Market.” For risks affecting our business, see “Item 3D. Key Information—Risk Factors.”

5E. Off-Balance Sheet Arrangements

In the normal course of our business, we enter into certain off-balance sheet arrangements, including guarantees, trade-in obligations, financial and residual value guarantees, product warranty commitments and operating leases. We also have a number of swap transactions that are described in “Item 11. Quantitative and Qualitative Disclosures about Market Risk.”

As of December 31, 2011, as a result of our customer American Airlines filing for creditor protection under Chapter 11, we recorded a provision of US$317.5 million to cover losses estimated in relation to our financial guarantee obligations to the vendor for 216 aircraft (ERJ 135, ERJ 140 and ERJ 145 models). During 2012, until the court approved the proposed bankruptcy terms, we made payments of US$59.7 million as a guarantee advance, which were presented as a reduction (disposals) to the provision established in 2011. The proposal for the restructuring of American Airlines was filed on September 8, 2012 with the court, which approved the conditions proposed in the negotiations. As a result of the approval and formalization of the agreements between the parties, we

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recognized the assets acquired and the obligations assumed in relation to the operation in the amount of US$149.6 million. The remaining balance for the additional provision for guarantee obligations was US$211.9 million as of December 31, 2012. On November 29, 2013 the U.S. court approved the merger between U.S. Airways and American Airlines and its bankruptcy filing was finalized. Consequently, through this event, our obligation on financial guarantees by AMR’s creditor has been completed and part of the amount paid as advance financial guarantees to such creditor of US$71.4 million was returned to us and the remaining provision of US$111.9 million was reversed against the operating result. The residual value guarantees were finalized along with American Airlines in exchange for concessions from contractual receivables and the amount of US$58.6 million was transferred from provisions to accounts payable in 2013. There was no remaining balance for the additional provision as of December 31, 2013.

See also Note 37 to our audited consolidated financial statements for additional information on our off-balance sheet arrangements. In addition, see “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—Some of our aircraft sales may be subject to financial and residual value guarantees and trade-in options that may require us to make significant cash disbursements in the future.”

Trade-in Obligations

In connection with the signing of purchase agreements for new aircraft, we may provide trade-in options to our customers. These options provide a customer with the right to trade-in existing aircraft upon the purchase and acceptance of a new aircraft. Under contractual obligations with our customers, our obligation to receive their aircraft as trade-ins arises only to the extent they accept the delivery of certain of our new aircraft. The trade-in price for commercial aircraft is determined in the manner discussed under “Item 5A.—Operating Results—Critical Accounting Estimates—Guarantees and Trade-In Rights.” In 2012, we have not accepted aircraft for trade-in pursuant to the 1 trade-in option we had in 2011 (since such trade-in option was cancelled in 2012). In 2013, we accepted 15 aircraft, with a total value of US$118.1 million, for trade-in pursuant to trade-in options signed in 2012, with respect to 7 aircraft, and 2013, with respect to 16 aircraft. As a result, we are currently subject to trade-in options relating to 8 aircraft directly tied to contractual obligations with 6 customers and subject to such customers actually taking delivery of certain new aircraft. See Note 37 to our audited consolidated financial statements for further information on our trade-in options.

We continue to monitor all trade-in commitments to anticipate any adverse economic impact they may have on our financial condition. Based on our current evaluation and on third-parties appraisals, we believe that any aircraft accepted in connection with trade-in commitments may be sold or leased in the market without significant profits or losses. See “Item 5A.—Operating Results—Critical Accounting Estimates—Guarantees and Trade-In Rights.”

We may be required to accept trade-ins at prices that are slightly above the then-market price of the aircraft, which would result in financial loss for us when we resell the aircraft. We continuously monitor all trade-in commitments in order to anticipate any adverse economic impact. Based on our current evaluation and third-party independent appraisals, we believe that any aircraft accepted under trade-in may be sold or leased in the market without significant losses.

Guarantees

Financial guarantees are triggered if customers do not perform their obligation to service the debt during the term of the financing under the relevant financing arrangements. Financial guarantees provide credit support to the guaranteed party to mitigate default-related losses. The underlying assets collateralize these guarantees. The value of the underlying assets may be adversely affected by an economic or industry downturn. Upon an event of default, we are usually the agent for the guaranteed party for the refurbishment and remarketing of the underlying asset. We may be entitled to a fee for such remarketing services. Typically a claim under the guarantee shall be made only upon surrender of the underlying asset for remarketing.

Residual value guarantees provide a third party with a specific guaranteed asset value at the end of the financing agreement. In the event of a decrease in market value of the underlying asset, we shall bear the difference between the specific guaranteed amount and the actual fair market value. Our exposure is mitigated by the fact that, in order to benefit from the guarantee, the guaranteed party has to make the underlying assets meet stringent specific return conditions.

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The following table provides quantitative data regarding guarantees we render to third parties. The maximum potential payments represent the worst-case scenario and do not necessarily reflect the results expected by us. Estimated proceeds from performance guarantees and underlying assets represent the anticipated values of assets we could liquidate or receive from other parties to offset our payments under guarantees.

	At December 31,
	2013			2012			2011			2010			2009
Description				(in US$ millions)
Maximum financial guarantees		545.5			374.2			471.6			1,133.9			1,248.4
Maximum residual value guarantees		359.9			372.7			542.2			743.4			770.8
Mutually exclusive exposure(1)		(94.7	)		(115.0	)		(209.8	)		(393.9	)		(393.9	)
Provisions and liabilities recorded(2)		(155.3	)		(114.0	)		(121.2	)		(143.2	)		(154.1	)
Off-balance sheet exposure		655.4			517.9			682.8			1,340.2			1,471.2
Estimated proceeds from performance guarantees and underlying assets		907.8			656.7			896.5			1,255.9			1,478.4

(1) 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. After a financial guarantee expires without being exercised, there is an average three-month period in which a guaranteed party may exercise the residual value guarantee. This means that our exposure to mutually exclusive financial and residual value guarantees covering a single underlying asset cannot be cumulative. Therefore, the maximum exposure shown in this line item is not an aggregate amount of the combined value of mutually exclusive financial and residual value guarantees covering a single underlying asset.

(2) Represents the sum of our financial and residual value guarantees (see Note 25 to our audited consolidated financial statements).

As discussed in Note 11 to our audited consolidated financial statements, as of December 31, 2013, 2012, 2011, 2010 and 2009, we maintained escrow deposits in the total amount of US$261.4 million, US$275.8 million, US$268.4 million, US$263.6 million and US$308.9 million, respectively, in favor of third parties for whom we have provided financial and residual value guarantees in connection with certain aircraft sales financing structures.

Financial and Residual Value Guarantees

We have guaranteed the financial performance of a portion of the financing for, and the residual value of, some of our aircraft which have already been delivered. Financial guarantees are provided to financing parties to support a portion of the payment obligations of purchasers of our aircraft under their financing arrangements to mitigate default-related losses. These guarantees are collateralized by the financed aircraft.

Assuming all customers supported by financial guarantees defaulted on their aircraft financing arrangements, and also assuming we were required to pay the full aggregate amount of outstanding financial and residual value guarantees and were not able to remarket any of the aircraft to offset our obligations, our maximum unrecorded exposure under these guarantees (less provisions and liabilities) would have been US$655.4 million as of December 31, 2013. For further discussion of these off-balance sheet arrangements, see Note 37 to our audited consolidated financial statements.

At December 31, 2013, we had US$261.4 million deposited in an escrow account as collateral for the financing of certain aircraft sold where we serve as secondary guarantor. If the initial guarantor of the debt (an unrelated third party) is required to pay the lender, the initial guarantor will be entitled to the amount in the escrow account. The amount is returned in the form of cash to us at maturity of the financing contracts (until 2021) if the aircraft purchaser does not default on the loan. The interest on the escrow account is added to the principal and recognized by us as financial income.

We allocated the deposits from the escrow account to 14-year structured notes with the depositary bank in order to earn a better interest rate. This yield enhancement was obtained through a credit default swap (CDS) transaction, which provides the right of early redemption of the note in case of a credit event by us. Upon such a

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credit event, the note may be redeemed by the holder at the greater of the note’s market value or its original face amount, which would result in a loss to us of all interest accrued on such note to date. Credit events include obligation and payment defaults under the terms of the guarantees above specified thresholds, events related to the restructuring of the obligations above a specified threshold, bankruptcy and a repudiation of and/or moratorium on the obligations above a specified threshold.

Residual value guarantees typically ensure that, at the 15^th year as of the delivery date, the relevant aircraft will have a residual market value of a percentage of the original sale price. More recently, residual value guarantees have been issued to ensure a residual market value for the 10^th year following delivery of the aircraft. Most of our residual value guarantees are subject to a limitation (a “cap”) and, therefore, on average our guaranteed residual value is 17% of the original sale price. In the event of a decrease in the market value of the underlying aircraft and an exercise by the purchaser of the residual value guarantee, we will bear the difference, if any, between the guaranteed residual value and the market value of the aircraft at the time of exercise. Our exposure is mitigated by the fact that the guaranteed party, in order to benefit from the guarantee, must make the aircraft meet specific return conditions. See Note 11 to our audited consolidated financial statements.

We continuously re-evaluate our risk under our guarantees and trade-in obligations based on a number of factors, including the estimated future market value of our aircraft based on third-party appraisals, including information developed from the sale or lease of similar aircraft in the secondary market, and the credit rating of customers.

Operating Leases

A significant part of the risks and benefits of ownership are assumed by the lessor and are classified as operating leases. Payments made for operating leases are amortized to the statement of income on the straight-line method over the contract period. Our parent company operating leases refer to telephone and computer equipment, and those relating to our subsidiaries in the United States relate to non-cancelable operating leases of land and equipment. These leases expire at various dates through 2020. For more information on our operating leases, see Note 37 to our audited consolidated financial statements.

5F. Tabular Disclosure of Contractual Obligations

The following table and discussion provide additional disclosure regarding our material contractual obligations and commercial commitments as of December 31, 2013:

	Total		Less than 1 year		1 – 3 years		3 – 5 years		More than 5 years
Contractual Obligations	(in US$ millions)
Loans and interest		3,003.8		176.6		1,167.4		182.9		1,476.9
Pension fund		157.9		15.8		31.6		31.6		78.9
Capital lease obligations		0.8		0.5		0.3		—		—
Operating leases		56.1		15.8		10.7		12.1		17.5
Non-recourse and recourse debt		400.2		12.1		317.3		27.5		43.3
Customer advances		1000.7		875.9		108.8		8.7		7.3
Contribution from suppliers		33.6		33.6		—		—		—
Suppliers		1,013.6		1,013.6		—		—		—
Financial guarantees		293.5		35.1		26.2		23.2		209.0
Other liabilities		355.2		19.3		105.7		149.8		80.4
Total		6,315.4		2,198.3		1,768.0		435.8		1,913.3

The above table shows the sum of the outstanding principal and anticipated interest due at maturity date. For the fixed rate loans, the interest expenses were calculated based on the rate established in each debt contract. For the floating rate loans, the interest expenses were calculated based on a market forecast for each period (LIBOR 6m – 12m), dated on December 31, 2013. This floating rate exposure is managed through derivatives operations. See “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”

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The above table does not reflect contractual commitments related to trade-in options and financial and residual value guarantees discussed in “Item 5E.—Off-Balance Sheet Arrangements” above. See “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer— Some of our aircraft sales may be subject to financial and residual value guarantees and trade-in options that may require us to make significant cash disbursements in the future.”

Purchase obligations consist of trade accounts payable and insurance payables.

Other liabilities include taxes and payroll charges payable in the total amount of US$348.7 million at December 31, 2013. The above table does not reflect any information about our derivative instruments, which are discussed more fully in “Item 11. Quantitative and Qualitative Disclosures About Market Risk.”

5G. Safe Harbor

See “Special Note Regarding Forward-Looking Statements.”

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

6A. Directors and Senior Management

We are managed by our Conselho de Administração, or Board of Directors, composed of 11 members, and our Diretoria, or Executive Officers, composed of at least four and at the most 11 members (each an Executive Officer). We have a permanent Conselho Fiscal, which is composed of three to five members and an equal number of alternates.

There are no family relationships among the members of our Board of Directors and/or our Executive Officers.

Board of Directors

Our Board of Directors ordinarily meets eight times a year and extraordinarily when called by the Chairman or by the majority of members of the Board. It has responsibility, among other things, for establishing our general business policies and for electing our Executive Officers and supervising their management.

Our Board of Directors is appointed by our shareholders for a two-year term, reelection being permitted, having three reserved seats as follows: (1) one acting member to be appointed by the Brazilian federal government, as holder of the “golden share,” and (2) two acting members to be appointed by our employees. The remaining eight directors are elected in accordance with the slate voting or cumulative voting rules contained in our bylaws. See “Item 10B. Additional Information—Memorandum and Articles of Association—Board of Directors—Election of Board of Directors” for a detailed description of the rules and procedures regarding the nomination and election of our Board members. There is no mandatory retirement age for our Directors.

Under the rules of the Novo Mercado, the members of our Board of Directors have agreed to comply with the Novo Mercado Listing Rules and with the rules of the São Paulo Stock Exchange Arbitration Chamber before taking office, and for such purpose have executed a Statement of Consent from the Directors (Termo de Anuência dos Administradores).

Set forth below are the names, ages, positions, the year first elected and brief biographical descriptions of the members of our Board of Directors elected at our annual shareholders’ meeting held on April 25, 2013:

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Name	Age	Position	Year First Elected to Board
Alexandre Gonçalves Silva	68	Chairman of the Board of Directors	2011
Sérgio Eraldo de Salles Pinto	49	Member of the Board of Directors	2009
Antonio Franciscangelis Neto	60	Member of the Board of Directors	2013
Arno Hugo Augustin Filho	53	Member of the Board of Directors	2012
Ernani de Almeida Ribeiro Junior	47	Member of the Board of Directors	2013
Israel Vainboim	69	Member of the Board of Directors	2009
João Cox Neto	50	Member of the Board of Directors	2011
Josué Christiano Gomes da Silva	50	Member of the Board of Directors	2011
Paulo Roberto de Oliveira	49	Member of the Board of Directors	2013
Samir Zraick	72	Member of the Board of Directors	2006
Vitor Paulo Camargo Gonçalves	57	Member of the Board of Directors	2011

Alexandre Gonçalves Silva. Mr. Silva holds a BS in Mechanical Engineering from PUC Rio de Janeiro. In his 40-year career, he occupied positions in several areas, including 22 as CEO. Mr. Silva was CEO of GE in Brazil from 2001 to 2007 and since then, Mr. Silva has occupied positions on boards of directors of various companies. Currently, Mr. Silva is Chairman of our Board of Directors and an independent board member at Fibria Celulose, Alupar, Tecsis and Nitroquímica. Mr. Silva is a Pro-Bono Director of AMCHAM Brazil and the Foundation of Maria Cecilia Souto Vidigal, Senior Advisor of the Global Infrastructure Partners in New York and Board member of the American Chamber of Commerce since 2003. Mr. Silva is an independent member of the Board of Directors of Embraer.

Sérgio Eraldo de Salles Pinto. Mr. Salles Pinto has been CEO of Bozano Group since 2011 and he was Executive Officer from 2000 to 2010. Mr. Salles Pinto currently is Chairman of the Board of Directors of Netpoints and he is member of the Board of Directors and Member of the Compensation Committee of the Board of Azul Linhas Aéreas. From 1988 to 2000, he worked at several companies of Banco Bozano Group, Simonsen S.A. He was originally elected to the Board of Directors of Embraer in April, 2009 and he is an independent member, being a member of the Human Resources Committee and coordinator of the Audit and Risk Committee. Mr. Salles Pinto earned undergraduate degrees in Economics and Electrical Engineering from the Center of Unified Teaching of Brasília (CEUB) and the University of Brasília (UnB), respectively. He holds a Master’s degree in Economics from Fundação Getúlio Vargas - Rio de Janeiro (EPGE) and a Master’s degree in Administration from the Catholic University of Rio de Janeiro (PUC).

Antonio Franciscangelis Neto. Mr. Franciscangelis is currently Secretary of Economy and Finance of the Brazilian Air Force. Among other positions held, Mr. Franciscangelis was Head of Office of the Brazilian Air Force Commander, Commander of 2nd / 5th Aviation Group; Head of Office of the Brazilian Air Force’s COMDABRA; Assistant of the Deputy Chief of the General Staff of the Armed Forces; Commander of Anapolis Air Base; Assistant of the Defense and Aeronautics Attaché at United States and Canada; Chief of the Brazilian Air Force Commission in Washington, DC; Chief of the 2nd, 1st and 6th Subchefias of EMAER; Commander of the Air Force Instruction and Adaptation Center and Commander of the Brazilian Aerospace Defense Command. Among the main academic courses completed by Mr. Franciscangelis are the Aviator Officers Formation Course - AFA; Officers Improvement Course - EAOAR; Graduation in Command and General Staff Course - ECEMAR; Politics and Aerospace Strategy Course; Recycling in Economics and Finance Course (SEFA); Management Business Administration (MBA) at Getúlio Vargas Foundation FGV- RJ; Mirage F 103 Fighter Pilot and Air Defense Course; Fighter Leadership Course; and the Brazilian Institute of Corporate Governance (IBGC) Course to board members.

Arno Hugo Augustin Filho. Mr. Arno Augustin graduated in Economics from the School of Economics of the Federal University of Rio Grande do Sul in 1983. Mr. Augustin is Secretary of the Brazilian Federal Treasury since 2007. During 2003 and 2004, Mr. Augustin occupied the positions of Assistant Executive Secretary of the Ministry of Finance, and Chairman of the Boards of Directors of Caixa Econômica Federal and Banco da Amazônia S.A. – BASA. From 1999 to 2003, Mr. Augustin acted as State Secretary of Finance of Rio Grande do Sul and as Chairman of the Board of Directors of Banrisul. From 1985 to 1998, Mr. Augustin held the following position, among others: Secretary of Finance of the Municipality of Porto Alegre, Economic Advisor to the Mayor.

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Ernani de Almeida Ribeiro Junior. Mr. Ernani de Almeida Ribeiro Junior has an undergraduate degree in business administration from the Nogueira da Gama College, with an MBA in Business Administration from Fundação Getúlio Vargas, and graduate degrees in Business Management from Fundação Dom Cabral and in Marketing and Foreign Trade at INPG. He has been our employee since 1986, and currently holds the position of advisor and coordinator of the Boa Idéia Program, which creates incentives for our employees to suggest improvements in our business processes, in our Brazilian business units since 2000. He was an alternate member of the Board of Directors of Embraer from April 2011 to April 2013.

IsraelVainboim. Currently, Mr. Vainboim is a member of the Board of Directors of Itaú Unibanco Banco Múltiplo S.A., member of the Board of Directors of Cia. Iochpe-Maxion, member of the Decision-making Council of MAM (Museu de Arte Moderna de São Paulo), Chairman of the Fiscal Council of Albert Einstein Hospital in São Paulo, member of the Board of the House of Culture of Israel in São Paulo, member of the Board of the alumni association of the Federal University of Rio de Janeiro, member of the International Advisory Council of General Atlantic Partners, located in New York, USA and of the Business Administration School of the University of Stanford. Mr. Vainboim has served Unibanco since 1969. Mr. Vainboim was also the President of Unibanco from 1988 to 1992 and member of its Board of Directors until 2008. Mr. Vainboim was president of Unibanco Holdings S.A. from 1994 to 2007, Chairman of the Board of Directors and the President of the Audit Committee of Unibanco Holdings S.A. from 2007 to February 2009. He was first elected to the Board of Directors of Embraer in April, 2009 and he is an independent member. Mr. Vainboim earned an undergraduate degree in Mechanical Engineering from the Federal University of Rio de Janeiro and holds an MBA from Stanford University.

João Cox Neto. Mr. Cox has a degree in economics from the Federal University of Bahia and extended his postgraduate studies in economics at the Université du Québec à Montréal and the PSC’s Oxford University. Mr. Cox speaks Portuguese, English, French and Spanish. Cox heads Cox Investments & Advisory, a boutique investment firm providing M&A, financing and consulting services as well as holding interests in private equity funds. He was also a member of the Board of Directors of companies in various countries (Brazil, Argentina, Netherlands and Israel), and acted as advisor for the CRSFN - Appeals Council of the National Financial System, the Board of Directors of ABRASCA (Brazilian Association of Listed Companies) and IBRI (Brazilian Institute of Investor Relations). Cox currently serves on the board of directors of Estácio de Sá S.A. Since April 1999 he has been deeply involved with the telecommunications industry, as President, CEO or vice president. From 2006 to 2010, he served Claro, the second largest mobile operator in Brazil, as President, CEO or Vice-President. From April 1999 to August 2004 he served as Vice-President Finance and Investor Relations of Telemig Celular Participações and Tele Norte Celular Participações, a position that he shared with the position of CEO of Telemig Celular and Amazonia Celular. In 2005 he served as Vice-Chairman of the Board of Directors of Cellcom, the largest mobile operator in Israel. Cox maintains ties with the universities where he taught for several years at the undergraduate and graduate levels. Mr. Cox is an independent member of the Board of Directors of Embraer, also acting as a member of the Human Resources Committee and the Strategy Committee.

Josué Christiano Gomes da Silva. Mr. Gomes da Silva is currently President of the Companhia de Tecidos Norte de Minas – Coteminas, leader in the bed and bath segment, with plants in many countries of the American continent. He is founder and chairman of the Board of Directors of Cantagalo General Grains S.A., a company involved in production, marketing and logistics of grain, and member of the Board of Directors of Embraer. He served as member of the Board of the Institute for Studies in Industrial Development – IEDI, having chaired the institute from 2005 to 2009, President Emeritus and Member of the Supreme Council of the Association of the Textile and Clothing Industry – ABIT, having chaired the organization from 2005 to 2007, Third Vice-President of the Federation of Industries of the State of São Paulo – FIESP, Vice-Chairman of the Business Council of Latin America – CEAL, Member of the Brazil-US CEOs Forum, Member of the Corporate Council Owen School at Vanderbilt University, President of the International Textile Manufactures Federation – ITMF, and Member of the Board of Visitors of the Institute of Cancer of São Paulo Octavio Frias de Oliveira – ICESP. Mr. Josué has a degree in Civil Engineering from the Federal University of Minas Gerais, Bachelor of Law from Law School at Milton Campos. He won the “Gold Medal” (Founder Medal) at Vanderbilt University – United States, where he concluded his Master degree in Business Administration – MBA.

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Paulo Roberto de Oliveira. Mr. Paulo Roberto de Oliveira has a degree in mechanical engineering with specialization in project management and MBA in business management. He has been an employee of our company since 1987 and has performed several duties, such as expert analyst of planning, including as adviser to Vice President of Engineering, Technology Development and Strategic Planning. He is currently responsible for the planning of new products in its early stages. Mr. Oliveira is Chairman of the Board of CIEMB – Clube de Investimento dos Empregados da Embraer, being appointed as its representative on the Board of Directors of Embraer.

Samir Zraick. Mr. Zraick was chief financial officer of CVRD, and head of its U.S. affiliate from 1971 to 1986, being responsible for the financial formulation of Carajás Project. After this, he was a member of the Board of Directors of CVRD during the year of 2000 and served as a Special Advisor and member of CVRD’s Strategic Committee from 2001 to 2004. He served as Finance and Development Director of Caemi Mineração e Metalurgia S.A. from 1986 to 1998. He was a member of the Board of Directors and Chairman of the Marketing Committee of Quebec Cartier Mining, in Montreal, Quebec, from 1990 to 1999. He served as a Board Member of Canico Resources in Vancouver, British Columbia, from July 2004 to March 2006. Mr. Zraick is currently an independent member of the Board of Directors of the companies MMX Mineração e Metálicas, S.A. and CCX Carvão da Colombia S.A. He was first elected in March, 2006 to the Board of Directors of Embraer and he is an independent member.

Vitor Paulo Camargo Gonçalves. Mr. Vitor Gonçalves is Director of Planning of Previ, elected to serve until May 2014. He joined the Bank of Brazil in 1976 and has served with Previ as Director of Participation, Deliberative Officer and Audit Committee. He is member of the Board of Directors of Embraer S.A., having served as Board member in Paranapanema S.A., Petroflex S.A., Invepar S.A and Kepler Weber S.A. He is a member of the Board of ABRAPP – Brazilian Association of Pension Funds, as the representative of Previ, President of the ICSS and member of the Board of the National Association of Officials of the Bank of Brazil – ANABB. He holds an undergraduate degree in Business Administration from Mackenzie University, and has graduate degrees in Business Management from Fundação Getúlio Vargas (RJ), with specialization in business management from Fundação Dom Cabral (MG) and IBMEC (RJ); in corporate governance from IBMEC (RJ) and IBGC – Brazilian Institute of Corporate Governance; and in management of pension funds from the Wharton School in Philadelphia (USA). Mr. Gonçalves is an independent member of the Board of Directors of Embraer.

Committees

Three committees were formed to assist the Board of Directors in its duties and responsibilities:

• Strategies Committee: which may have up to five members, but has no executive power. The primary purpose of the Strategies Committee is to assist the Board of Directors in its functions. The members of our Board of Directors and Board of Executive Officers may serve on this committee. The Strategies Committee’s responsibilities include aiding the Board of Directors in the formulation of our strategic plan. The current members of the Strategies Committee are Israel Vainboim (coordinator), Alexandre Gonçalves Silva, Josué Christiano Gomes da Silva and João Cox Neto.

• Audit and Risks Committee: See “Item 6C.—Board Practices—Audit and Risks Committee” below.

• Human Resources Committee: which has up to five members appointed by our Board of Directors. The members of the Human Resources Committee may be members of our Board of Directors or our Executive Officers. Its purpose is to assist the Board of Directors in connection with human resources issues which include appointing and removing Executive Officers from office and designating their duties as provided by the bylaws, compensation and human relations policy, transferring of our resources to employee associations, charity and recreational entities, the private security fund and foundation. The current members of the Human Resources Committee are Vitor Paulo Camargo Gonçalves (coordinator), João Cox Neto, Alexandre Gonçalves da Silva and Sérgio Eraldo de Salles Pinto.

• Conselho Fiscal: See “Item 6C.—Board Practices—Audit and Risks Committee—Conselho Fiscal” below.

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In the event an Executive Officer serves on the Strategies Committee and the Human Resources Committee, he will only be entitled to receive the compensation corresponding to the higher paying position. The Directors appointed to serve on such Committees and on the Audit and Risks Committee may combine the compensation for each position so held.

Executive Officers

Our Executive Officers are responsible for our day-to-day management. The Executive Officers have individual responsibilities established by our bylaws and by the Board of Directors.

The terms of office for members of our Board of Directors and for our Executive Officers is two years, with each Executive Officer eligible for reelection.

The vote of at least nine members of our Board of Directors is necessary to remove an Executive Officer.

Our bylaws forbid any Executive Officer from also serving at the same time as a member of our Board of Directors. Our bylaws contain a provision that our CEO will participate in meetings of the Board of Directors, but shall not vote on resolutions of the Board of Directors.

Our Executive Officers have agreed to comply with the Novo Mercado Listing Rules and to the rules of the São Paulo Stock Exchange Arbitration Chamber before taking office and for such purpose have executed a Statement of Consent from Senior Managers (Termo de Anuência dos Administradores).

Set forth below are the names, ages, positions, the year first elected and brief biographical descriptions of our current Executive Officers as of the date of this annual report:

Name	Age	Position	Year First Elected
Frederico Pinheiro Fleury Curado	52	President and Chief Executive Officer	1995
Mauro Kern Junior	53	Executive Vice President – Engineering and Technology	2007
Paulo Cesar de Souza e Silva	58	Executive Vice President – Commercial Aviation	2010
Artur Aparecido V. Coutinho	65	Chief Operating Officer	2005
Jackson Medeiros de F. Schneider	49	Executive Vice President – Personnel, Institutional Relations and Sustainability	2012
José Antonio de Almeida Filippo	53	Executive Vice President – Chief Financial and Investor Relations Officer	2012
Marco Tulio Pellegrini	55	Executive Vice President of Executive Jets Market	2013
Terena Penteado Rodrigues	40	Executive Vice President – General Counsel	2013

Frederico Pinheiro Fleury Curado. Mr. Curado has been an Executive Officer of Embraer S.A. since 1995, and President and Chief Executive Officer since 2007. He has a degree in Mechanical Aeronautical Engineering from ITA – Instituto Tecnológico de Aeronáutica and an M.B.A. from the University of São Paulo. Besides his activities at Embraer, he is the Chairman of the Brazilian Chapter of the Brazil-US Business Council, a member of Brazil’s National Council for Industrial Development and an executive board member of the International Chamber of Commerce. He is also an independent board member at Transocean Ltd (NYSE:RIG). Mr. Curado has been awarded the Medal for Aeronautical Merit by the Brazilian Government and the Medal for Merit by the Brazilian Association of Military Engineering

Mauro Kern Junior. In April 2011, Mr. Kern was appointed Embraer’s Executive Vice-President for Engineering and Technology. He joined Embraer in 1982 as a Mechanical Systems Engineer and served for 13 years in several technical and managerial positions. In 1999, Mr. Kern joined the Embraer 170/190 program as its Chief Engineer and Program Manager. In April 2007, he was appointed Embraer’s Executive Vice-President for the Airline Market. Mr. Kern holds a Bachelor’s degree in Engineering from the University of Rio Grande do Sul.

Paulo Cesar de Souza e Silva. Mr. Silva joined the company in 1997 and spent 13 years focusing and developing Embraer’s Customer Financing strategies. Since April 2010 he has been the President & CEO of

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Embraer Commercial Aviation. As Embraer’s representative at Aviation Working Group, an international industry organization dedicated to developing initiatives to foster and facilitate advanced aviation financing, Mr. Silva contributed to the development and implementation of the Cape Town Treaty and the Aircraft Sector Understanding (ASU), which regulates the terms and conditions for Export Credit Agencies support. Both are key instruments to the airlines gaining access to efficient aircraft financing. Prior to joining Embraer, Mr. Silva held many executive positions within the international bank industry. He holds a bachelor’s degree in economics from Mackenzie University (Sao Paulo – Brazil) and a MBA earned in Switzerland.

Artur Aparecido V. Coutinho. In 2010, Mr. Coutinho was appointed Embraer’s Executive Vice-President and Chief Operating Officer. In 2005, he was appointed our Executive Vice-President for Procurement and Industrial Operations and had been acting in that capacity until being elected as our Chief Operating Officer. From January 2003 to March 2005, Mr. Coutinho was Embraer’s Vice-President responsible for marketing, sales and customer support activities in North America. From February 2000 to December 2002, he was our Vice-President for Customer Service. Prior to that, Mr. Coutinho held several different positions at Embraer in the areas of marketing, training and quality control.

Jackson Medeiros F. Schneider. Mr. Schneider is Chief Executive Officer of Embraer Defense & Security and previously he held the position of Executive Vice President of People, Institutional Relations, and Sustainability of Embraer. He has a Law degree from the University of Brasilia – UNB, and an MBA from the Business School of São Paulo. He began his career in the Ministry of Justice (Brazilian Government). In the private sector, he was Deputy Director of Corporate Affairs of Unilever and Vice President of Human Resources, Legal Relations and Corporate Affairs of Mercedes Benz Brazil. In addition, Mr. Schneider was President of ANFAVEA (Brazilian Vehicle Manufacturer Association) and ABIPLA (Brazilian Association of Manufacturers of Cleaning Products, and Related Items), as well as a member of the Board of Tax Council of the Ministry of Economy and Finance, among other assignments. He is currently Vice President of the FIESP (State of São Paulo industry federation), and Board member of organizations including the Biennial Foundation of São Paulo, the Ayrton Senna Institute, the AACD (association to support disabled children) and The Economic and Social Development Council of the President of the Republic of Brazil, among others.

José Antonio de Almeida Filippo. On June 2012, Mr. José Antonio de Almeida Filippo was elected CFO and Investor Relations Executive Vice-President of Embraer. Mr. Filippo started his career at Gafisa Imobiliária, in which he held the position of CFO and Administrative Director. From 1995 to 2000 he held the Corporate Financial Manager position at Reynolds Aluminum - Latasa. From 2000 to 2004, he held the position of CFO of Latin America at Ingersoll-Rand Company. From June 2004 to 2010 he held the position of CFO and Investors Relations Vice-President at CPFL Energia. On March 2010, he held the position of CFO of Companhia Brasileira de Distribuição (Grupo Pão de Açucar), before joining Embraer. Mr. Filippo has a degree in Civil Engineering from the Federal University of Rio de Janeiro in 1983, with postgraduate studies in Finance at the Catholic University of Rio de Janeiro and IBMEC – Brazilian Institute of Capital Markets. He also participated in the Program Development and Management at the Harvard Business School in 1999.

Marco Tulio Pellegrini. Mr. Pellegrini has been in the aerospace industry for 25 years. Most of his career has been spent at Embraer where in April 2011 he was appointed Senior Vice President Operations and COO, Executive Jets. Before assuming Executive Jets operations, Mr. Pellegrini was Embraer’s VP of New Programs – Airline Market. He has previously acted as Vice President, Production and Industrial Strategy, responsible for manufacturing, manufacturing engineering, tooling and industrial architecture. Before that he acted as Vice President of Market Intelligence for Executive Jets, responsible for product strategies, sales support, market assessment, marketing and competitive analysis for business aviation. He previously acted as Sr. Manager for Industrial Planning, responsible for industrial architecture and site selection for new Embraer facilities. Before joining Embraer, Mr. Pellegrini spent part of his career at Vasp, a major Brazilian airline, working as Sr. Manager for Quality Assurance. His experience includes a year-long training program at McDonnell Douglas’ Long Beach facility in the R&D and production liaison areas. Mr. Pellegrini holds a Master degree of Science in Mechanical Engineering. After graduating Mr. Pellegrini began his career at an automobile parts manufacturer, as a Manufacturing Engineer.

Terena Penteado Rodrigues holds a LL.B. from the University of São Paulo Law School and an LL.M. from the Georgetown University Law Center (Washington, DC). She joined Embraer in 2004 as Legal Advisor, becoming Associate General Counsel for industry/regulatory and later for sales/aftermarket. She became Senior

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Vice President, General Counsel & Compliance in 2012, and since April 2013 she is the Executive Vice President, General Counsel. Before Embraer, she worked as Senior Legal Counsel at United Technologies Corporation (Hartford, CT), and as an International Associate at Wilmer, Cutler & Pickering (Washington, DC).

6B. Compensation

Overview

Our Executive Officers, directors and fiscal council members are entitled to fixed compensation. In addition, our Executive Officers are eligible to participate in our executive profit sharing plan, which provides them with variable compensation that is based on their and our performance and is limited to a percentage of our net income for the year.

For the fiscal year ended December 31, 2013, the aggregate compensation (including benefits in kind granted) that we paid to members of the Board of Directors, the Audit and Risks Committee, the Conselho Fiscal and the Executive Officers for services in all capacities was US$18.9 million: US$2.8 million to members of the Board of Directors, US$0.4 million to members of the Conselho Fiscal and US$15.7 million to the Executive Officers.

For the fiscal year ended December 31, 2013, members of our committees of the Board of Directors, including our Audit and Risks Committee, received an aggregate additional compensation of US$0.7 million, which is included in the US$18.9 million compensation mentioned above.

In addition, in 2013, we contributed US$0.3 million for the payment of pension benefits to our Executive Officers. Members of our Board of Directors and Conselho Fiscal do not receive such benefits. The board members, Conselho Fiscal members and Executive Officers did not receive any compensation (including benefits in kind) from any of our subsidiaries. At December 31, 2013, none of the board members, Conselho Fiscal members or Executive Officers had any financial or other interests in any transaction involving us which was not in the ordinary course of our business.

In addition, on December 31, 2013, our board members and Executive Officers owned an aggregate of 434,298 common shares.

Stock Option Plan

At a special shareholders’ meeting held on April 17, 1998, our controlling shareholders approved a stock option plan for management and employees, including those of our subsidiaries, subject to restrictions based on continuous employment with us for at least two years. The five-year term for the granting of options under the plan expired on May 31, 2003.

Under the terms of the plan, we were authorized to grant options to purchase up to 25,000,000 common shares over the five-year period from the date of the first grant. As of the end of this five-year period, we had granted options for an aggregate of 20,237,894 common shares, including 662,894 options granted in connection with our share dividend in 2002, at a weighted average exercise price of R$6.17 per share. The options granted to each employee vest as follows: 30% after three years from the date granted, an additional 30% after four years and the remaining 40% after five years. Employees may exercise their options for up to seven years from the date they are granted. At December 31, 2008, 17,892,239 of the total options granted had been exercised. Of the total number of options granted, options to purchase an aggregate of 7,799,470 common shares have been granted to our Executive Officers at a weighted average exercise price of R$4.57 per share, of which 7,057,105 were exercised during the period from June 1, 2001 through December 31, 2008. No options under this plan were exercised in 2010.

At a special shareholders’ meeting held on April 19, 2010, our shareholders approved a second stock option plan for management and employees, including those of our subsidiaries, subject to their continuous employment with us for at least two years. Our Board of Directors may choose employees and members of management who will be eligible to receive stock options, which are to be awarded free of charge. Nevertheless, in extraordinary circumstances our Board of Directors may grant stock options to persons employed with us for less than two years with a view to hiring and retaining strategic personnel. Our Board of Directors may also determine the terms of the

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stock option contracts. This second stock option plan has an indefinite period of duration and may be terminated at any time by our Board of Directors, after which no new options may be granted. However, options granted prior to the termination of the plan will not be affected and may be exercised subject to the terms and conditions of the plan and respective stock option contract. Under the terms of this second stock option plan, we are authorized to grant options to purchase up to 1.5% of our common shares, and the options vest as follows: 20% after one year following the date the options were granted; 30% after two years following the date the options were granted; and 50% after three years following the date the options were granted. As of December 31, 2012, 6,510,000 options had been granted on April 30, 2010, at an exercise price of R$10.19 per share, 6,345,000 options had been granted on January 18, 2011, at exercise prices of R$12.05 per share, 150,000 options had been granted on March 16, 2011, at exercise prices of R$12.89 per share, 4,860,000 options had been granted on January 23, 2012, at an exercise price of R$11.50 per share, 4,494,000 options had been granted on March 20, 2013, at exercise prices of R$15.71 per share, 584,400 options had been granted on April 25, 2013, at exercise prices of R$16.81 per share, and our Executive Officers owned vested options to purchase an aggregate of 7,190,500 shares of our common stock at a weighted average exercise price of R$13.03 per share as of December 31, 2013.

At a special shareholders’ meeting held on January 10, 2012, the second stock option plan detailed above was amended to provide for a revised vesting schedule, such that options granted after January 10, 2012 vest as follows: 33% after three years following the date the options were granted; 33% after four years following the date the options were granted; and 34% after five years following the date the options were granted. The exercise price of each option is to be set on the grant date as the weighted average trading price of the last 60 trading days and can be adjusted by up to 30% to counteract any speculative activity in the market. Each option holder has up to five years from the date of grant to exercise options received prior to and during 2011, and up to seven years from the date of grant to exercise options received after 2011. Option holders may only exercise options during the term of their employment with Embraer. This amendment does not affect the accounting for grants existing prior to this plan.

At a special shareholders meeting held on April 25, 2013, our shareholders approved a stock option plan for members of our Board of Directors. Under this plan, each member of our Board, upon taking office, receives stock options equal to 30% of his total remuneration for serving on our Board. The total number of shares subject to stock options under this plan, together with the other stock option plans described above, may not exceed 1.5% of our total capital stock. Stock options under this plan may be exercised during a period of four to six years after they are granted. In the event a Board member’s term ends for any reason other than the member’s abandoning his office, he may exercise a portion of the options which is proportional to the period for which he has served. A Board member who abandons his office loses his stock options granted under this plan.

Employee Profit Sharing Plan

We first implemented a profit sharing plan in 1998 that linked employee profit sharing to dividend payments. In December 2008, the Board of Directors approved changes to the methodology for calculating the employee profit sharing. The new program, as amended in 2008 by our Board of Directors, is now tied to our net income, calculated in accordance with IFRS, and to individual and business unit performance targets. Of the total amount reserved for the profit sharing program, 50% is distributed in equal parts to all employees, while 50% is distributed proportionally to the employee’s salary.

For the 2013, 2012, 2011, 2010 and 2009 fiscal years, we distributed US$57.2 million, US$36.1 million, US$33.4 million, US$41.3 million and US$33.7 million, respectively, to our employees under our profit sharing plan.

Short-Term Variable Compensation Policy

Our Short-Term Variable Compensation Policy is designed to promote the retention of executives and alignment of their interests with those of shareholders. Goals with greater impact and importance for our company are given greater weight. We distribute short-term variable compensation to our eligible executives which is equal to a percentage of our operating profits.

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Long-Term Incentive Plan

The objectives of our Long-Term Incentive Plan are the recruitment and retention of highly-qualified personnel and to allow those who can contribute to our performance the opportunity to participate in our profits. We intend for incentives under the plan to promote continuity among our management and alignment of the interests of our executives with those of shareholders. Amounts distributed are defined with reference to the market, under the conditions described in our Long-Term Incentive Plan.

Defined Contribution Pension Plan

We sponsor a defined contribution pension plan for employees, the participation in which is optional. The plan is managed by EMBRAER PREV – Sociedade de Previdência Complementar. Contributions made by us to this plan in the years ended December 31, 2013, 2012, 2011, 2010 and 2009 were US$28.1 million, US$27.4 million, US$28.4 million, US$22.8 million and US$16.0 million, respectively. For more information on our post-retirement benefits, see Note 27 to our audited consolidated financial statements.

We amended our healthcare plan for retired employees, considered a post-employment benefit. Under this healthcare plan, our employees who retire have the option of remaining in the plan, contributing the full amount charged by the insurance company. However, due to certain rules for increases under Brazilian law, there could be times at which the contribution made by our retired employees is insufficient to cover the medical plan expenses, which would represent exposure for us.

Actuarial studies are made annually to identify the future exposure to be recorded as a provision. The provision recorded was US$57 million on December 31, 2012 and US$68.5 million on December 31, 2013. As of December 31, 2011, we had recorded no provision.

EAH sponsors a post-retirement healthcare plan, which was amended in 2007 and employees hired as of that date do not qualify for this plan. The estimated pension and post-retirement healthcare costs for the beneficiaries and their dependents are recorded as a provision using the accrual method, based on actuarial studies. The provision recorded was US$4.4 million on December 31, 2012 and US$2.5 million on December 31, 2013.

The actuarial methods used comply with the generally accepted actuarial methods in force, in accordance with the projected unit credit method.

6C. Board Practices

Our Board of Directors is appointed for a two-year term. See “Item 6A.—Directors and Senior Management—Board of Directors.”

The Executive Officers are elected by the Board of Directors. Our current Executive Officers were elected on April 25, 2013, with a term of office until the meeting of our Board of Directors to be held following the annual general meeting of our shareholders in April 2015 to approve our financial statements for the fiscal year ended December 31, 2014.

The members of our Board of Directors and our Executive Officers have a uniform two-year term and are eligible for reelection. A vote of at least nine members of our Board of Directors is necessary to remove an Executive Officer. See “Item 6A.—Directors and Senior Management—Executive Officers.”

None of our Directors is party to an employment agreement providing for benefits upon termination of term. All of our Executive Officers are party to a service agreement setting forth the rights and obligations of the Executive Officers. If we terminate a service agreement with any of our Executive Officers, we will be required to pay a termination benefit to such Executive Officer equivalent to 50% of his/her remaining annual compensation, provided that a minimum of six monthly wages of the annual compensation is paid.

Audit and Risks Committee

Our Audit and Risks Committee may have up to five members and has no executive power. The primary purpose of the Audit and Risks Committee is to assist the Board of Directors in its functions. The members of our

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Board of Directors may serve on the committee. The Audit and Risks Committee’s responsibilities include validation and submission to the Board of Directors of guidelines for risk policy, verification of risk management policy compliance, supervision of activities performed by our independent auditors and monitoring the quality and integrity of internal controls and financial statements. Embraer’s statutory “Audit and Risks Committee” is composed of independent members of our Board of Directors. Because foreign private issuers are subject to local legislation which may prohibit the full Board of Directors from delegating certain responsibilities to the audit committee, pursuant to Rule 10A-3, audit committees of foreign private issuers may be granted responsibilities, which may include advisory powers, with respect to such matters to the extent permitted by law. Due to certain restrictions imposed by the Brazilian Corporate Law, our Audit and Risks Committee, unlike a U.S. audit committee, only has an “advisory” role and may only make recommendations for adoption by the full Board of Directors, which is responsible for the ultimate vote and final decision. For example, our Audit and Risks Committee makes recommendations regarding the appointment of auditing firms, which are subject to a vote of the board of directors. Our Audit and Risks Committee complies with Brazilian legal requirements (including for “independent directors,” as defined by Brazilian law).

Set forth below are the names, ages, the year first elected and positions of the members of our Audit and Risks Committee elected at our annual shareholders’ meeting held on April 25, 2013.

Name	Age	Position	Year First Elected
Sergio Eraldo de Salles Pinto	49	Coordinator and Effective member	2011
Israel Vainboim	69	Effective member	2011
Samir Zraick	72	Effective member	2011
Vitor Paulo Camargo Gonçalves	57	Effective member	2011

Conselho Fiscal

Under the Brazilian Corporate Law, the Conselho Fiscal is a corporate body independent of management and a company’s external auditors. The Conselho Fiscal has not typically been equivalent to or comparable with a U.S. audit committee; its primary responsibility has been to monitor management’s activities, review the financial statements, and report its findings to the shareholders. In our case, our statutory Audit and Risks Committee, established in accordance with the Novo Mercado Listing Rules, will serve as our equivalent of a U.S. audit committee. See “Item 6A.—Directors and Senior Management— Committees.”

Under the Brazilian Corporate Law, the Conselho Fiscal may not contain members who are members of the Board of Directors or the executive committee, or who are our employees or employees of a controlled company or of a company of this group, or a spouse or relative of any member of our management. In addition, the Brazilian Corporate Law requires that Conselho Fiscal members receive a remuneration of at least 10% of the average amount paid to each Executive Officer. The Brazilian Corporate Law requires a Conselho Fiscal to be composed of a minimum of three and a maximum of five members and their respective alternates. Under the rules of the Novo Mercado, the members of the Conselho Fiscal have agreed to comply with the Novo Mercado Listing Rules and to the rules of the São Paulo Stock Exchange Arbitration Chamber before taking office and for such purpose have executed a Statement of Consent from of the Conselho Fiscal.

Our Conselho Fiscal is composed of three to five members who are elected at the annual shareholders’ meeting, with terms lasting until the next annual shareholders’ meeting after their election. Under the Brazilian Corporate Law, in the event a company acquires control of another company, minority shareholders that in the aggregate hold at least 10% of the voting shares also have the right to elect separately one member of the Conselho Fiscal. Such provision will not be applicable to us as long as we are subject to widespread control. Set forth below are the names, ages, the year first elected and positions of the members of our Conselho Fiscal and respective alternates, elected at our annual shareholders’ meeting held on April 25, 2013.

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Name	Age	Position	Year First Elected
Ivan Mendes do Carmo(1)	51	Effective member	2008
Tarcísio Luiz Silva Fontenele	51	Alternate	2001
José Mauro Laxe Vilela	66	Effective member	2011
Wanderley Fernandes da Silva	40	Alternate	2011
Taiki Hirashima	73	Effective member	2004
Carla Alessandra Trematore	38	Alternate	2013
Eduardo Coutinho Guerra(2)	47	Effective member	2007
Marcus Pereira Aucélio	47	Alternate	2013
Nelson de Menezes Filho	57	Effective member	2013
Josiane Angieuski Vaz	50	Alternate	2013

(1) President of the Conselho Fiscal.

(2) Vice-President of the Conselho Fiscal.

6D. Employees

The table below sets forth the number of our employees by category as of the dates indicated, which number includes the employees of our consolidated joint ventures and subsidiaries OGMA, HEAI, ECTS, Atech, Bradar, Harpia, Visiona and Savis:

	At December 31,
	2013		2012		2011		2010		2009
Production Process		6,628		6,558		6,950		8,541		8,704
Research and Development		5,914		5,245		4,463		3,373		2,401
Customer Support		3,737		3,269		3,035		3,026		2,928
Administrative – Production Support		2,067		2,367		2,218		2,453		2,088
Administrative – Corporate		3,302		2,711		2,600		1,491		2,507
Total		21,648		20,150		19,266		18,884		18,628

Approximately 82.0% of our workforce is employed in Brazil. Most of our technical staff is trained at leading Brazilian engineering schools, including ITA, located in São José dos Campos. A small percentage of our employees belong to one of two labor unions: the Sindicato dos Metalúrgicos (Union of Metallurgical Workers) and the Sindicato dos Engenheiros do Estado de São Paulo (Union of Engineers of the State of São Paulo). Overall, union membership as a percentage of total workforce has declined significantly in past years. At December 31, 2000, approximately 74.1% of our employees were not affiliated with any unions, compared to 92.1% at December 31, 2013. We believe that relations with our employees are good.

We actively support the training and professional development of our employees. We have established a program at our facility in São José dos Campos to provide newly graduated engineers with specialized training in aerospace engineering.

6E. Share Ownership

At December 31, 2013, our board members and Executive Officers owned an aggregate of 434,298 of our common shares. None of the officers or directors individually owns more than 1% of the outstanding common shares.

As of December 31, 2013, our Executive Officers owned options to purchase an aggregate of 7,190,500 shares of our common stock at a weighted average exercise price of R$13.03 per share.

See “Item 6B.—Compensation—Stock Option Plan” for a description of our stock option plan applicable to our management and employees, including those of our subsidiaries.

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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

7A. Major Shareholders

Shareholders

We have total authorized capital of 1,000,000,000 shares, with a total aggregate of 740,465,044 common shares, including one special “golden share” held by the Brazilian federal government, issued and outstanding as of February 28, 2013. The golden share provides the Brazilian federal government with veto rights in certain specific circumstances. In addition, non-Brazilian shareholders may have their voting rights restricted in certain specific circumstances. See “Item 10B. Additional Information—Memorandum and Articles of Association—Description of Capital Stock—Voting Rights of Shares.”

The following table sets forth share ownership information for each significant shareholder that beneficially owns our equity securities and sets forth the aggregate shareholdings on the São Paulo Stock Exchange and the New York Stock Exchange at December 31, 2013:

	Common Shares
	Shares		(%)
Oppenheimer Funds(1)		76,874,823		10.38
PREVI(2)		57,938,103		7.82
Baillie Gifford & Co.(3)		40,625,008		5.49
BNDESPAR(4)		39,762,489		5.37
Thornburg Investment Management(5)		39,552,236		5.34
União Federal/Brazilian federal government(6)		1		—
Shares in company treasury		9,460,001		1.28
Others		476,252,383		64.32
Total		740,465,044		100.00

(1) Oppenheimer Funds is one of the largest asset management companies in the United States, and its controlled affiliates offer a broad range of products and services to individuals, corporations and institutions, including mutual funds, separately managed accounts, investment management for institutions, hedge fund products, qualified retirement plans and subadvisory investment-management services.

(2) Banco do Brasil Employee Pension Fund, or PREVI, was founded in 1904 as a pension fund for the employees of Banco do Brasil S.A., which is controlled by the Brazilian federal government.

(3) Baillie Gifford & Co., also known as Baillie Gifford International, L.L.C., is an Edinburgh, Scotland-based independent investment management firm. The firm is 100% owned by its senior partners. The firm manages the Baillie Gifford series of funds in addition to other funds and caters to individuals and institutions.

(4) BNDESPAR is a wholly-owned subsidiary of Banco Nacional de Desenvolvimento Econômico e Social–BNDES, the government-owned national development bank of Brazil.

(5) Thornburg Investment Management is an employee-owned investment management company based in Santa Fe, New Mexico, with assets under management of over US$60 billion (as of December 31, 2013). The firm manages the Thornburg series of mutual funds in addition to other funds for select institutions and individuals.

(6) The Brazilian federal government holds our “golden share.”

Other than as discussed in “Item 4B. Information on the Company—History and Development of the Company,” there have been no significant changes in percentage ownership by any major shareholder in the past three years.

On December 31, 2013, we had approximately 48,000 holders of common shares, including common shares in the form of ADSs. According to the most accurate information available to us, on December 31, 2013, an aggregate of 94,047,433 common shares in the form of ADSs were held by 151 record holders, including DTC in the United States.

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7B. Related Party Transactions

The Brazilian Federal Government

The Brazilian federal government, through its direct and indirect stakes in us and its ownership of our “golden share,” is one of our major shareholders. The issuance of the “golden share” was a requirement of the regulations governing our privatization in 1994 and grants the Brazilian federal government veto rights over certain military-related programs and corporate actions (such as transfers of control and changes in our name, logo and corporate purposes). See “Item 10B. Additional Information—Memorandum and Articles of Association—Description of Capital Stock—Voting Rights of Shares—Golden Share.” As of February 28, 2013, in addition to the “golden share,” the Brazilian federal government owned an indirect 5.37% stake in us through the BNDESPAR, a wholly-owned subsidiary of the Banco Nacional do Desenvolvimento Econômico e Social (the Brazilian Development Bank), which, in turn, is controlled by the Brazilian federal government. As a result, for the purposes of this Form 20-F’s disclosure requirements, we consider transactions between Embraer and the Brazilian federal government or its agencies as falling within the definition of “related party transactions.”

The Brazilian government plays an important role in our business activities, including as:

• a major customer of our defense products (through the Brazilian Air Force);

• a source for research debt financing through technology development institutions such as the 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).

See “Item 5B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Lines of Credit,” “Item 4C. Information on the Company—Business Overview—Aircraft Financing Arrangements,” “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—Any decrease in Brazilian federal government-sponsored customer financing, or increase in government-sponsored financing that benefits our competitors, may decrease the cost competitiveness of our aircraft” and “Item 3D. Key Information—Risk Factors——Risks Relating to Embraer—The Brazilian federal government may reduce funds available to our customers under government-sponsored financing programs.” For more information regarding our related party transactions, see Note 15 to our audited consolidated financial statements.

A Major Customer (Brazilian Federal Government)

The Brazilian federal government, principally through the Brazilian Air Force, has been a significant customer of Embraer since its inception. For the year ended December 31, 2013, the Brazilian federal government, principally through the Brazilian Air Force, accounted for 71%, or US$852 million, of the revenue of our Defense & Security segment. In addition, as of December 31, 2013, the Brazilian Air Force owed us US$158.4 million in trade account receivables and had a credit against us of US$210.3 million in customer advances. We expect to continue to be the primary source of new aircraft and spare parts and services for the Brazilian federal government. For a description of our transactions with the Brazilian federal government, see “Item 4C. Information on the Company—Business Overview—Defense & Security Business.”

Financing Source

BNDES

We are borrowers under a number of credit facilities from the BNDES, the sole parent of BNDESPAR, one of our significant direct shareholders and an affiliate of the Brazilian Federal Government. As of December 31, 2013, we had a total outstanding balance of loans borrowed from the BNDES in the aggregate amount of US$255.2 million. For further information on the amounts, maturity dates and interest rates of the principal loans we have with the BNDES, see “Item 5B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Lines of Credit.”

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FINEP

We maintain credit facilities with the FINEP, which as of December 31, 2013 had a total outstanding balance of US$67.7 million. These loans were extended to us primarily to fund research and development expenses of the Phenom 100 and 300 aircraft and the Legacy 500 aircraft. For further information on the amounts, maturity dates and interest rates of the principal loans we have with the FINEP, see “Item 5B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Lines of Credit.”

Banco do Brasil

Banco do Brasil is a publicly-listed, state-owned bank controlled by the Brazilian federal government. As of December 31, 2013, we maintained outstanding non-recourse and recourse debt with Banco do Brasil in the total amount of US$311.6 million, which is recorded as a non-current liability on our statement of financial position. In addition, we maintained outstanding Export Credit Notes with Banco do Brasil in the total amount of US$85.4 million. For further information on the amounts, maturity dates and interest rates of the principal loans we have with Banco do Brasil, see “Item 5B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Lines of Credit.”

Caixa Econômica Federal

Caixa Econômica Federal is a state-owned bank controlled by the Brazilian federal government. As of December 31, 2013 we maintained outstanding Export Credit Notes with Caixa Econômica Federal in the total amount of US$42.8 million. For further information on the amounts, maturity dates and interest rates of the principal loans we have with Caixa Econômica Federal, see “Item 5B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Lines of Credit.”

Customer Financing by the BNDES

The Brazilian federal government has been an important source of export financing for our customers through the BNDES-exim program, managed by the BNDES. Beginning in the second half of 2007, the BNDES started providing financing to our customers on financial terms and conditions which complied with the Aircraft Sector Understanding of the OECD. Brazil has been joined by Canada, the United States and the European Union, among others, at the OECD, as a participant in the “Sector Understanding on Export Credits for Civil Aircraft” that aims to assure a “level-playing field” among the airframe manufacturers and encourages manufacturers and airlines to focus on price and quality rather than on financial packages provided under government support (see “Item 4C. Information on the Company—Business Overview—Aircraft Financing Arrangements”).

A Service Provider (Banco do Brasil)

At December 31, 2013, we maintained cash and cash equivalents of US$497.6 million with Banco do Brasil and several of its affiliates. At that date, we also had deposited with Banco do Brasil an amount of US$311.6 million in cash and cash equivalents, which served as collateral for a loan extended by Banco do Brasil to one of our subsidiaries. Banco do Brasil has been a provider of regular commercial banking and asset management services to us for many decades. These services include maintaining our checking account and managing exclusive investment funds in which we are the sole investor.

7C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

8A. Consolidated Statements and Other Financial Information

See “Item 3A. Key Information—Selected Financial Data.”

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Legal Proceedings

Labor Lawsuits. We are defendants in individual labor lawsuits, for which we are awaiting the decision of the Brazilian labor courts. Due to the immaterial amount involved in these legal proceedings, we do not believe that any liabilities related to these individual labor lawsuits would have a material adverse effect on our financial condition or results of operations. See Note 26 to our audited consolidated financial statements for a further discussion of our labor lawsuits.

Tax Matters. We have challenged the constitutionality of certain Brazilian taxes and payroll charges, as well as modifications and the increases in the rates and basis of calculation of such taxes and charges and have obtained writs of mandamus or injunctions to avoid their payments or recover past payments.

Interest on the total amount of unpaid taxes and payroll charges accrues monthly based on the Selic rate, the key lending rate of the Central Bank, and we make an accrual to the interest income (expenses), net item of our statements of income. As of December 31, 2013, there was a US$232.0 million provision recorded as a liability (taxes and payroll charges) on our statement of financial position in connection with litigation contingencies that we classify as representing probable losses to us. See “Item 3D. Key Information—Risk Factors—Risks Relating to Embraer—We may have to make significant payments as a result of unfavorable outcomes of pending challenges to various taxes and payroll charges” and Note 23 and Note 26 to our audited consolidated financial statements for a further discussion of these challenges.

SEC/DOJ Investigation. We received a subpoena from the SEC in September, 2010, which inquired about certain operations concerning sales of aircraft abroad. In response to this SEC-issued subpoena and associated inquiries into the possibility of non-compliance with the FCPA, we retained outside counsel to conduct an internal investigation on transactions carried out in three specific countries.

Since then, in response to additional information, we have voluntarily expanded the scope of the internal investigation to include sales in additional countries and have reported on those matters to the SEC and the DOJ. The internal investigation and related government inquiries concerning these matters remain ongoing. We will continue to respond to any additional information and cooperate with the SEC, DOJ and other relevant authorities, as circumstances warrant. We, with the support of our outside counsel, have concluded that it is still not possible to estimate the duration, scope or results of the internal investigation or related inquiries by relevant authorities. In the event that the authorities take action against us with respect to these or any related matters that may arise in the future, or we enter into an agreement to settle such matters, we may be required to pay substantial fines and/or to incur other sanctions or liabilities. We, based upon the opinion of our outside counsel, believe that there is no basis for estimating reserves or quantifying any possible contingency at this time.

Other Proceedings. In addition, we are involved in other legal proceedings, including tax disputes, all of which are in the ordinary course of business.

Our management does not believe that any of our proceedings, if adversely determined, would materially or adversely affect our business, financial condition or results of operations. See Note 23 and Note 26 to our audited financial statements.

Dividends and Dividend Policy

Amounts Available for Distribution

At each annual shareholders’ meeting, the Board of Directors is required to recommend how net profits for the preceding fiscal year are to be allocated. For purposes of the Brazilian Corporate Law, net profits are defined as net income after income taxes and social contribution taxes for such fiscal year, net of any accumulated losses from prior fiscal years and any amounts allocated to employees’ and management’s participation in our profits, determined under Brazilian GAAP. In accordance with the Brazilian Corporate Law and our bylaws, the amounts available for dividend distribution are the amounts determined under Brazilian GAAP in our parent company financial statements. Such amount for distribution is equal to our net income after taxes less any amounts allocated from such net income after taxes to:

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• the legal reserve;

• a contingency reserve for anticipated losses; and

• an unrealized revenue reserve.

For further information on amounts available for distributions, see Note 29 to our audited consolidated financial statements.

We are required to maintain a legal reserve, to which we must allocate 5% of net profits for each fiscal year until the amount for such reserve equals 20% of our paid-in capital. However, we are not required to make any allocations to our legal reserve in respect of any fiscal year in which it, when added to our other established capital reserves, exceeds 30% of our capital. Net losses, if any, may be charged against the legal reserve. The balance of our legal reserve was US$165.3 million, which was equal to 11.5% of our paid-in capital at December 31, 2013.

The Brazilian Corporate Law also provides for two additional, discretionary allocations of net profits that are subject to approval by the shareholders at the annual meeting. First, a percentage of net profits may be allocated to a contingency reserve for anticipated losses that are deemed probable in future years. Any amount so allocated in a prior year must be either reversed in the fiscal year in which the loss was anticipated if such loss does not in fact occur, or written off in the event that the anticipated loss occurs. Second, if the amount of unrealized revenue exceeds the sum of:

• the legal reserve;

• the investment and working capital reserve;

• retained earnings; and

• the contingency reserve for anticipated losses,

Such excess amount may be allocated to an unrealized revenue reserve. Under the Brazilian Corporate Law, unrealized revenue is defined as the sum of:

• price-level restatement of statement of financial position accounts;

• the share of equity earnings of affiliated companies; and

• profits from installment sales to be received after the end of the next succeeding fiscal year.

According to our bylaws and subject to shareholder approval, our Board of Directors may allocate to an investment and working capital reserve up to 75% of our parent company adjusted net income after taxes under Brazilian GAAP. The reserve may not exceed 80% of our capital. The purpose of the investment and working capital reserve is to make investments in fixed assets or increase our working capital. This reserve may also be used to amortize our debts. We may also grant a participation in our net income to our management and employees. However, the allocation to the investment and working capital reserve or the participation of our management and employees cannot reduce the mandatory distributable amount (discussed below). Otherwise, the amount in excess of our capital must be used to increase our capital or be distributed as a cash dividend. The balance of the investment and working capital reserve may be used:

• in the deduction of accumulated losses, whenever necessary;

• in the distribution of dividends, at any time;

• in the redemption, withdrawal, purchase or open market repurchase of shares, as authorized by law; and

• to increase our capital, including by means of an issuance of new shares.

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The amounts available for distribution may be further increased by a reversion of the contingency reserve for anticipated losses constituted in prior years but not realized, or further increased or reduced as a result of the allocations of revenues to or from the unrealized revenue reserve. The amounts available for distribution are determined on the basis of financial statements prepared in accordance with the Brazilian Corporate Law method. We have no such contingency reserve.

At December 31, 2013, unappropriated retained earnings of R$2,943.6 million (equivalent to US$2,000.1 million) were recorded in our statutory parent company books under Brazilian GAAP. At December 31, 2013, such amounts are net of minimum dividends and interest on shareholders’ equity paid or payable, as determined by the Brazilian Corporate Law. For further information, see Note 29 to our audited consolidated financial statements.

Mandatory Distribution

The Brazilian Corporate Law generally requires that the bylaws of each Brazilian corporation specify a minimum percentage of the amounts available for distribution by such corporation for each fiscal year that must be distributed to shareholders as dividends, also known as the mandatory distributable amount. Under our bylaws, the mandatory distribution is based on a percentage of adjusted net income, not lower than 25%, rather than a fixed monetary amount per share. The Brazilian Corporate Law, however, permits a publicly held company, such as Embraer, to suspend the mandatory distribution of dividends if the Board of Directors and report of the fiscal council to the shareholders’ meeting indicate that the distribution would be inadvisable in view of the Embraer’s financial condition. This suspension is subject to approval of holders of common shares. In this case, the Board of Directors shall file a justification for such suspension with the CVM. Profits not distributed by virtue of the suspension mentioned above shall be attributed to a special reserve and, if not absorbed by subsequent losses, shall be paid as dividends as soon as the financial condition of such company permits such payments.

Payment of Dividends

We are required by the Brazilian Corporate Law and by our bylaws to hold an annual shareholders’ meeting by the end of the fourth month after the end of each fiscal year at which, among other things, the shareholders have to decide on the payment of an annual dividend. The payment of annual dividends is based on our parent company financial statements prepared under Brazilian GAAP for the relevant fiscal year. Brazilian companies, like us, are permitted to make a special distribution to shareholders referred to as interest on shareholders’ equity, which may be distributed in lieu of dividends as part of the mandatory distributable amount. Such payments of interest on shareholders’ equity are treated as deductible tax expense for Brazilian income and social contribution tax purposes. Under the Brazilian Corporate Law, dividends generally are required to be paid within 60 days following the date the dividend was declared, unless a shareholders’ resolution sets forth another date of payment, which, in either case, must occur prior to the end of the fiscal year in which the dividend was declared. A shareholder has a three-year period from the dividend payment date to claim dividends (or interest payments) in respect of its shares, after which the amount of the unclaimed dividends reverts to us.

The Brazilian Corporate Law permits a company to pay interim dividends out of preexisting and accumulated profits determined under Brazilian GAAP for the preceding fiscal year or semester, based on financial statements approved by its shareholders. According to our bylaws, the shareholders may declare, at any time, interim dividends based on the preexisting and accumulated profits, provided the mandatory dividend has already been distributed to the shareholders. Our bylaws also permit us to prepare financial statements semiannually and for shorter periods. Our Board of Directors may approve the distribution of dividends calculated with reference to those financial statements, even before they have been approved by the shareholders. However, such dividends cannot exceed the amount of capital reserves.

In general, shareholders who are not residents of Brazil must register with the Central Bank to have dividends, sales proceeds or other amounts with respect to their shares eligible to be remitted outside of Brazil. The common shares underlying our ADSs will be held in Brazil by Banco Itaú S.A., also known as the custodian, as agent for the depositary, which will be the registered owner on the records of the registrar for our shares. Our current registrar is Banco Itaú S.A. The depositary electronically registers the common shares underlying our ADSs with the Central Bank and, therefore, is able to have dividends, sales proceeds or other amounts with respect to these shares eligible to be remitted outside Brazil.

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Payments of cash dividends and distributions, if any, will be made in Brazilian currency to the custodian on behalf of the depositary, which will then convert such proceeds into U.S. dollars and will cause such U.S. dollars to be delivered to the depositary for distribution to holders of ADSs. Under current Brazilian law, dividends paid to shareholders who are not Brazilian residents, including holders of ADSs, will not be subject to Brazilian withholding income tax, except for dividends declared based on profits generated prior to December 31, 1995. See “Item 10E. Additional Information—Taxation—Material Brazilian Tax Consequences.”

History of Dividend and Interest on Shareholders’ Equity Payments and Dividend Policy

Law No. 9,249, dated December 26, 1995, as amended, provides for distribution of interest on shareholders’ equity as an alternative form of payment to shareholders and treats those payments as a deductible expense for purposes of calculating Brazilian corporate income tax and social contribution on net profits. These distributions may be paid in cash. Such interest is limited to the daily pro rata variation of the TJLP and cannot exceed the greater of:

• 50% of net income (after the deduction of social contribution on net profits, but before taking into account the provision for corporate income tax and the amounts attributable to shareholders as net interest on shareholders’ equity) for the period in respect of which the payment is made; or

• 50% of the sum of retained profits and profit reserves as of the beginning of the period in respect of which the payment is made.

Any payment of interest on shareholders’ equity to holders of ADSs or common shares, whether or not they are Brazilian residents, is subject to Brazilian withholding income tax at the rate of 15% or 25% if the beneficiary is resident in a tax haven jurisdiction, that is, a country or location that does not impose any income tax or which imposes such tax at a maximum rate of less than 20%, or in which the domestic legislation imposes restrictions on the disclosure of the shareholding composition or the ownership of the investment (“Tax Haven Holder”). See “Item 10E. Additional Information—Taxation—Material Brazilian Tax Consequences.” The amount paid to shareholders as interest on shareholders’ equity, net of any withholding tax, may be included as part of any mandatory distributable amount.

Under Brazilian law, we are obligated to distribute to shareholders an amount sufficient to ensure that the net amount received by them, after payment by us of applicable Brazilian withholding taxes in respect of the distribution of interest on shareholders’ equity, plus the amount of declared dividends, is at least equal to the mandatory distributable amount. When we distribute interest on net worth, and that distribution is not accounted for as part of the mandatory distribution, Brazilian withholding tax will apply. All payments to date were accounted for as part of the mandatory distribution.

The following table sets forth the historical payments of dividends and historical payments of interest on shareholders’ equity we have made to our shareholders:

Date of approval	Period in which profits were generated	Total amount of Distribution
		(in R$ millions)		(in US$ millions)(1)
March 9, 2007(2)	First quarter of 2007		43.4		21.2
June 11, 2007(2)	Second quarter of 2007		50.0		26.0
September 14, 2007(2)	Third quarter of 2007		149.6		81.4
December 7, 2007(2)	Fourth quarter of 2007		82.8		46.7
March 7, 2008(1)	Full year of 2007		123.0		69.4
March 7, 2008(2)	First quarter of 2008		65.9		37.7
June 13, 2008(2)	Second quarter of 2008		65.4		40.7
September 12, 2008(2)	Third quarter of 2008		92.9		48.5
December 11, 2009(2)	Fourth quarter of 2009		173.7		99.8
April 19, 2010(3)	Full year of 2009		55.2		31.7
June 10, 2010(2)	First quarter of 2010		34.5		19.2
September 16, 2010(2)	Third quarter of 2010		21.7		12.8
December 9, 2010(2)(4)	Fourth quarter of 2010		144.7		86.9
March 16, 2011(3)	First quarter of 2011		43.4		26.7

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Date of approval	Period in which profits were generated	Total amount of Distribution
		(in R$ millions)		(in US$ millions)(1)
June 9, 2011(3)	Second quarter of 2011		72.4		46.4
September 4, 2011(3)	Third quarter of 2011		65.1		35.1
June 14, 2012(2)	First semester of 2012		65.3		32.3
September 13, 2012(2)	Third quarter of 2012		50.8		25.0
December 6, 2012(2)(5)	Fourth quarter of 2012		36.3		17.8
April 25, 2013(3)	Full year of 2012		30.1		15.0
March 11, 2013(2)	First quarter of 2013		29.1		14.4
June 13, 2013(2)	Second quarter of 2013		29.1		13.2
September 12 ,2013(2)	Third quarter of 2013		29.2		13.1
December 5, 2013(2)(6)	Fourth quarter of 2013		65.8		28.1
April 16, 2014(3)(7)	Full year of 2013		49.0		20.9

(1) Translated from nominal reais into U.S. dollars at the selling exchange rates in effect on the last date of the month in which the dividends were approved.

(2) Represents interest on shareholders’ equity.

(3) Represents dividend payments.

(4) Amount declared in 2010 but paid in 2011.

(5) Amount declared in 2012 but paid in 2013.

(6) Amount declared in 2013 but paid in 2014.

(7) Proposal pending shareholder approval.

In 2013, we distributed US$83.8 million in interest on shareholders’ equity or/and dividends in connection with profits generated in the year ended December 31, 2013. Our Board of Directors declared interest on shareholders’ equity with respect to profits generated during the first half of 2013, the third quarter of 2013 and the fourth quarter of 2013 (see “Item 8A. Financial Information—Mandatory Distribution”).

We intend to declare and pay dividends and/or interest on shareholders’ equity, as required by the Brazilian Corporate Law and our bylaws. Our Board of Directors may approve the distribution of dividends and/or interest on shareholders’ equity, calculated based on our semiannual or quarterly financial statements. The declaration of annual dividends, including dividends in excess of the mandatory distribution, requires approval by the vote of the majority of the holders of our common stock. The amount of any distributions will depend on many factors, such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our Board of Directors and shareholders. Within the context of our tax planning, we may in the future continue to determine that it is to our benefit to distribute interest on shareholders’ equity.

8B. Significant Changes

No significant changes or events have occurred after the close of the statement of financial position date at December 31, 2013, other than the events already described in this annual report.

ITEM 9. THE OFFER AND LISTING

9A. Offer and Listing Details

Our ADSs are listed on the New York Stock Exchange, or NYSE, under the symbol “ERJ.” In addition, our common shares are traded on the São Paulo Stock Exchange under the symbol “EMBR3.” Each ADS represents four common shares.

The reported high and low closing prices in U.S. dollars for the ADSs on the NYSE for the periods indicated are set forth in the following table. Trading prices for the ADSs until June 2, 2006 are for the former Embraer ADSs, each of which represented four preferred shares of former Embraer. Our ADSs began trading on the NYSE on June 5, 2006, with each ADS representing four common shares issued by us.

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	Price in U.S. dollars per ADS
	High		Low
2009
Year		24.65		9.75
2010
Year		31.25		20.01
2011
Year		35.27		21.40
2012
First quarter		32.28		25.99
Second quarter		35.29		24.91
Third quarter		28.40		23.06
Fourth quarter		28.51		24.65
Year		35.29		23.06
2013
First quarter		35.67		26.80
Second quarter		38.58		32.35
Third quarter		39.22		31.74
Fourth quarter		35.33		29.36
Year		39.22		26.80
Month ended:
October 31, 2013		35.33		29.39
November 30, 2013		31.93		29.39
December 31, 2013		32.30		29.36
January 31, 2014		34.50		30.69
February 28, 2014		36.48		29.86

The tables below set forth, for the periods indicated, the reported high and low closing prices in nominal reais for the common shares on the São Paulo Stock Exchange. Trading prices for the common shares until June 2, 2006 are for the former Embraer common shares. Our common shares began trading on the Novo Mercado segment of the São Paulo Stock Exchange on June 5, 2006.

	Nominal reais per common share
	High		Low
2009:
Year-end		11.07		5.80
2010:
Year-end		12.84		9.21
2011:
First quarter		14.30		11.90
Second quarter		13.13		11.75
Third quarter		12.05		8.54
Fourth quarter		12.49		10.53
Year		14.30		8.54
2012
First quarter		14.64		11.74
Second quarter		16.53		12.86
Third quarter		14.34		11.87
Fourth quarter		14.52		12.77
Year		16.53		11.74

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	Nominal reais per common share
	High		Low
2013
First quarter		18.00		13.77
Second quarter		21.25		16.01
Third quarter		21.70		17.82
Fourth quarter		19.05		16.35
Year		21.70		13.77
Month ended:
October 31, 2013		19.05		16.35
November 30, 2013		18.18		16.53
December 31, 2013		18.89		17.22
January 31, 2014		20.30		18.39
February 28, 2014		21.15		18.27

On December 31, 2013, we had approximately 48,000 holders of common shares, including common shares in the form of ADSs. On December 31, 2013, an aggregate of 94,047,433 common shares, including common shares in the form of ADSs, were held by 151 record holders, including DTC in the United States.

On February 28, 2014, the closing sale price for our common shares on the São Paulo Stock Exchange was R$ 20.95, which is equivalent to US$35.91 per ADS. On the same date, the closing sale price for our ADSs on the NYSE was US$35.90. The ADSs are issued under a deposit agreement and JPMorgan Chase Bank serves as depositary under that agreement.

9B. Plan of Distribution

Not applicable.

9C. Markets

Trading on the São Paulo Stock Exchange

In 2000, the São Paulo Stock Exchange was reorganized through the execution of memoranda of understanding by the Brazilian stock exchanges. Under the memoranda, all securities are now traded only on the São Paulo Stock Exchange, with the exception of electronically traded public debt securities and privatization auctions, which are traded on the Rio de Janeiro Stock Exchange.

The common shares are listed and traded on the Novo Mercado segment of the São Paulo Stock Exchange. Trades in our common shares on the São Paulo Stock Exchange settle in three business days after the trade date. Delivery of and payment for shares is made through the facilities of the CBLC—Companhia Brasileira de Liquidação e Custódia (clearinghouse for the São Paulo Stock Exchange), which maintains accounts for member brokerage firms.

In order to better control volatility, the São Paulo Stock Exchange adopted a “circuit breaker” system pursuant to which trading sessions may be suspended for a period of 30 minutes or one hour whenever the indices of this stock exchange fall below the limit of 10% and 15%, respectively, in relation to the index registered in the previous trading session.

The São Paulo Stock Exchange is less liquid than the NYSE and other major exchanges in the world. The São Paulo Stock Exchange had an aggregate market capitalization of approximately R$2.41 trillion, equivalent to US$1.02 trillion at December 31, 2013. In comparison, the NYSE had a market capitalization of approximately US$17.9 trillion at the same date. Although any of the outstanding shares of a listed company may trade on the São Paulo Stock Exchange, in most cases less than one-half of the listed shares are actually available for trading by the public, the remainder being held by small groups of controlling persons, by governmental entities or by one principal shareholder. At December 31, 2013, we accounted for approximately 0.58% of the market capitalization of all listed companies on the São Paulo Stock Exchange.

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There is also significantly greater concentration in the Brazilian securities markets than in the NYSE or other major exchanges. During the one-year period ended December 31, 2013, the ten largest companies listed on the São Paulo Stock Exchange represented approximately 39.1% of the total market capitalization of all listed companies.

Trading on the São Paulo Stock Exchange by non-residents of Brazil is subject to limitations under Brazilian foreign investment legislation.

Novo Mercado Corporate Governance Practices

In 2000, the São Paulo Stock Exchange introduced three special listing segments, known as Levels 1 and 2 of Differentiated Corporate Governance Practices and the Novo Mercado, aiming at fostering a secondary market for securities issued by Brazilian companies with securities listed on the São Paulo Stock Exchange, by prompting such companies to follow good practices of corporate governance. The listing segments were designed for the trading of shares issued by companies voluntarily undertaking to abide by corporate governance practices and disclosure requirements in addition to those already imposed by Brazilian law. These rules generally increase shareholders’ rights and enhance the quality of information provided to shareholders.

To become a Level 1 (Nível 1) company, in addition to the obligations imposed by current Brazilian law, an issuer must agree to (a) ensure that shares of the issuer representing 25% of its total capital are effectively available for trading, (b) adopt offering procedures that favor widespread ownership of shares whenever making a public offering, (c) comply with minimum quarterly disclosure standards, (d) follow stricter disclosure policies, with regards to contracts with related parties, material contracts and transactions made by controlling shareholders, directors and officers involving securities issued by the issuer, (e) submit any existing shareholders’ agreements and stock option plans to the São Paulo Stock Exchange, and (f) make a schedule of corporate events available to shareholders.

To become a Level 2 (Nível 2) company, in addition to the obligations imposed by current Brazilian law, an issuer must agree to (a) comply with all of the listing requirements for Level 1 companies, (b) grant tag-along rights for all shareholders in connection with a transfer of control of the company, offering the same price paid per share for controlling block common shares and 80% of the price paid per share of controlling block preferred shares, (c) grant voting rights to holders of preferred shares in connection with certain corporate restructurings and related party transactions, such as (1) any transformation of the company into another corporate form, (2) any merger, consolidation or spin-off of the company, (3) approval of any transactions between the company and its controlling shareholder, including parties related to the controlling shareholder, (4) approval of any valuation of assets to be delivered to the company in payment for shares issued in a capital increase, (5) appointment of an expert firm to ascertain the fair value of the company in connection with any deregistration and delisting tender offer, and (6) any changes to these voting rights, (d) have a Board of Directors composed of at least five members, of which 20% must be independent directors, with a term limited to two years, (e) prepare annual financial statements in English, including cash flow statements, in accordance with international accounting standards, such as U.S. GAAP or IFRS, (f) if it elects to delist from the Level 2 segment, hold a tender offer by the company’s controlling shareholder (the minimum price of the shares to be offered will be determined by an appraisal process), and (g) adhere exclusively to the rules of the São Paulo Stock Exchange Arbitration Chamber for resolution of disputes between the company and its investors.

To be listed on the Novo Mercado, an issuer must meet all of the requirements described above, in addition to (a) issuing only voting shares and (b) granting tag-along rights for all shareholders in connection with a transfer of control of the company, offering the same price paid per share for controlling block common shares. Our shares are listed on the Novo Mercado segment.

Regulation of Brazilian Securities Markets

The Brazilian securities markets are regulated by the CVM, which has regulatory authority over stock exchanges and the securities markets generally, and by the Central Bank, which has, among other powers, licensing authority over brokerage firms and regulates foreign investment and foreign exchange transactions.

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Under the Brazilian Corporate Law, a corporation is either public (companhia aberta), like us, or closely held (companhia fechada). All public companies, including us, are registered with the CVM and are subject to reporting requirements. Our shares are listed and traded on the Novo Mercado segment of the São Paulo Stock Exchange and may be traded privately subject to limitations.

We have the option to ask that trading in our securities on the São Paulo Stock Exchange be suspended in anticipation of a material announcement. Trading may also be suspended on the initiative of the São Paulo Stock Exchange or the CVM, among other reasons, based on or due to a belief that a company has provided inadequate information regarding a material event or has provided inadequate responses to the inquiries by the CVM or the São Paulo Stock Exchange.

Trading on the São Paulo Stock Exchange by non-residents of Brazil is subject to limitations under Brazilian foreign investment and tax legislation. The Brazilian custodian for our common shares and the depositary for our ADSs have obtained an electronic certificate of registration from the Central Bank to remit U.S. dollars abroad for payments of dividends, any other cash distributions, or upon the disposition of the shares and sales proceeds thereto. In the event that a holder of ADSs exchanges ADSs for common shares, the holder will be entitled to continue to rely on the depositary’s electronic certificate of registration for five business days after the exchange. Thereafter, the holder may not be able to obtain and remit U.S. dollars abroad upon the disposition of the common shares, or distributions relating to the common shares, unless the holder obtains a new electronic certificate of registration or registers its investment in the common shares under Resolution No. 2,689.

Disclosure Requirements

Pursuant to CVM Rule No. 358, of January 3, 2002, the CVM revised and consolidated the requirements regarding the disclosure and use of information related to material facts and acts of publicly held companies, including the disclosure of information on the trading and acquisition of securities issued by publicly held companies.

These requirements include provisions that:

• establish the concept of a material fact that gives rise to reporting requirements. Material facts include decisions made by the controlling shareholders, resolutions of the general meeting of shareholders and of management of the company, or any other facts related to the company’s business (whether occurring within the company or otherwise somehow related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade such securities or to exercise any of such securities’ underlying rights;

• specify examples of facts that are considered to be material, which include, among others, the execution of shareholders’ agreements providing for the transfer of control, the entry or withdrawal of shareholders that maintain any managing, financial, technological or administrative function with or contribution to the company, and any corporate restructuring undertaken among related companies;

• oblige the investor relations officer, controlling shareholders, other officers, directors, members of the audit committee and other advisory boards to disclose material facts;

• require simultaneous disclosure of material facts to all markets in which the corporation’s securities are admitted for trading;

• require the acquirer of a controlling stake in a corporation to publish material facts, including its intentions as to whether or not to de-list the corporation’s shares, within one year;

• establish rules regarding disclosure requirements in the acquisition and disposal of a material stockholding stake; and

• restrict the use of insider information.

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9D. Selling Shareholders

Not applicable.

9E. Dilution

Not applicable.

9F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

10A. Share Capital

Not applicable.

10B. Memorandum and Articles of Association

Set forth below is certain information concerning our capital stock, and a brief summary of certain significant provisions of our bylaws, the Brazilian Corporate Law, the relevant rules and regulations of the CVM, and the relevant rules of the Novo Mercado applicable to our capital stock. This description does not purport to be complete and is qualified by reference to our bylaws and to Brazilian law.

Corporate Purpose

We are a joint stock company with a principal place of business and jurisdiction in the city of São José dos Campos, São Paulo, Brazil, governed mainly by our bylaws and the Brazilian Corporate Law. Our corporate purpose, as stated in our bylaws, is to (1) design, build and market aircraft and aerospace materials and related accessories, components and equipment, according to the highest standards of technology and quality, (2) perform and carry out technical activities related to the manufacturing and servicing of aerospace materials, (3) contribute to the training of technical personnel as necessary for the aerospace industry, (4) engage in other technological, manufacturing and business activities in connection with the aerospace industry, and to provide services therefore, (5) design, build and trade equipment, materials, systems, software, accessories and components for the defense, security and energy industries, as well as to perform and carry out technical activities related to such manufacturing and maintenance activities, according to the highest standards of technology and quality, and (6) perform other technological, manufacturing and trade activities and services related to the defense, security and energy industries.

Description of Capital Stock

General

As of December 31, 2013, our capital stock consisted of a total of 731,005,042 outstanding common shares, without par value, including 9,460,001 common shares held in treasury and one special class of common share known as the “golden share,” held by the Brazilian federal government. Our bylaws authorize the Board of Directors to increase the capital stock up to 1,000,000,000 common shares without seeking specific shareholder approval. All our outstanding shares are fully paid. Our shareholders must approve at a shareholders’ meeting any capital increase that exceeds the above-referenced authorized amounts. Our shareholders are not liable for further capital calls. Their liability is limited to the amount of any portion of our capital which they have subscribed but not fully paid in.

Share Buyback

Pursuant to our bylaws, our Board of Directors approved on December 7, 2007 a share buyback program for our common shares, in compliance with Instrução CVM No. 10/80, for the purpose of adding value to our shareholders through the management of our capital structure. We were authorized to buy back up to an aggregate of 16,800,000 common shares, representing approximately 2.3% of our outstanding capital, which totaled 740,465,044 common shares outstanding. The acquisition of the shares was made on the São Paulo Stock Exchange and the

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common shares bought back will be kept in treasury form, and the treasury shares would not have any political or economic rights. The program was terminated on March 31, 2008. A total of 16,800,000 shares were purchased at an average price of R$19.06 per share. See “Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.”

On January 23, 2012, our Board of Directors approved a new share buyback program for our common shares, in compliance with Instrução CVM No. 10/80, for the purpose of backing our second and third stock option plans, to be launched in 2012 and 2013, respectively. We were authorized to buy back up to an aggregate of 1,065,000 common shares, representing approximately 0.15% of our outstanding capital, which totaled 740,465,044 common shares outstanding. No shares have been acquired by us under this program. The acquisition of the shares will be made on the São Paulo Stock Exchange, and may not be superior to 30% of the average daily volume of shares traded, and the common shares bought back will be kept in treasury, with no political or economic rights. The program will last for one year as of the date of approval.

Common Shares

Each common share entitles the holder thereof to one vote at our annual and special shareholders’ meetings. Pursuant to our bylaws and the São Paulo Stock Exchange listing agreement in connection with the listing of our shares on the Novo Mercado, we cannot issue shares without voting rights or with restricted voting rights.

The Brazilian Corporate Law and our bylaws require that all our shareholders’ meetings be called by publication of a notice in the Diário Oficial do Estado de São Paulo (official government publication of the State of São Paulo), and in a newspaper of general circulation in the city in which our principal place of business is located, currently the O Vale in São José dos Campos, at least 30 days prior to the meeting, and in another newspaper of general circulation in São Paulo, where the São Paulo Stock Exchange is located, currently the Valor Econômico. The quorum to hold general meetings of our shareholders at first call is the presence of shareholders representing 35% of the common shares; at second call the meetings can be held with the presence of shareholders representing 25% of the common shares; and at third call the meeting can be held with the presence of any number of shareholders.

According to our by-laws, in order to attend a shareholders’ meeting, a shareholder must show the ownership of the shares it intends to vote by showing an identification document and a proof of share ownership. Our shareholders may be represented at shareholders’ meetings by (1) a proxy, issued within a one-year period prior to the meeting, (2) one of our directors or officers, (3) a lawyer or (4) a financial institution. Investment funds must be represented by their administrator.

According to the Brazilian Corporate Law, the common shares are entitled to dividends in proportion to their share of the amount available for distribution. See “Item 8A. Financial Information—Consolidated Statements and Other Financial Information—Dividends and Dividend Policy” for a more complete description of payment of dividends on our shares. In addition, upon any liquidation of the company, the common shares are entitled to return of capital in proportion to their share of our net worth.

According to the Brazilian Corporate Law, neither our bylaws nor actions taken at a shareholders’ meeting may deprive a shareholder of the following rights:

• the right to participate in the distribution of profits;

• the right to participate equally and proportionally in any remaining residual assets in the event of liquidation of the company;

• preemptive rights in the event of issuance of shares, convertible debentures or warrants, except in some specific circumstances under Brazilian law described in “Item 10D.—Preemptive Rights”;

• the right to supervise our management in accordance with Article 109 of the Brazilian Corporate Law; and

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• the right to appraisal rights in the cases specified in the Brazilian Corporate Law, which are described in “Item 10D.—Redemption and Right of Withdrawal.”

Golden Share

The golden share is held by the Federative Republic of Brazil. For a discussion of the rights to which the golden share is entitled, see “Item 10B.—Voting Rights of Shares—Golden Share.”

Voting Rights of Shares

Each share of common stock is generally empowered with one vote at general meetings of our shareholders. Pursuant to our bylaws and the São Paulo Stock Exchange listing agreement in connection with the listing of our shares on the Novo Mercado, we cannot issue shares without voting rights or with restricted voting rights.

Limitations on the Voting Rights of Certain Holders of Common Shares

Our bylaws provide that, at any general meeting of our shareholders, no shareholder or group of shareholders, including brokers acting on behalf of one or more holders of ADSs, may exercise votes representing more than 5% of the quantity of shares into which our capital stock is divided. Votes that exceed this 5% threshold will not be counted.

For purposes of our bylaws, two or more of our shareholders are considered to be a “group of shareholders” if:

• they are parties in a voting agreement;

• one of them is, directly or indirectly, a controlling shareholder or controlling parent company of the other, or the others;

• they are companies directly or indirectly controlled by the same person/entity, or group of persons/entities, which may or may not be shareholders; or

• they are companies, associations, foundations, cooperatives and trusts, investment funds or portfolios, universalities of rights or any other forms of organization or undertaking (a) with the same administrators or managers, or further (b) whose administrators or managers are companies that are directly or indirectly controlled by the same person/entity, or group of persons/entities, which may or may not be shareholders.

In the case of investment funds having a common administrator, only funds with policies of investment and of exercise of voting rights at shareholders’ meetings that fall under the responsibility of the administrator on a discretionary basis will be considered to be a group of shareholders.

In addition, shareholders represented by the same proxy, administrator or representative on any account at any general meeting of our shareholders will be considered to be a group of shareholders, except for holders of our ADSs when represented by the relevant depositary. All signatories to a shareholders’ agreement that addresses the exercise of voting rights will also be considered to be a group of shareholders for purposes of the foregoing limitation.

This limitation on the voting rights of certain holders of common shares is illustrated in the following table:

Equity Interest of Shareholder or Group of Shareholders	Voting Rights as a Percentage of our Capital Stock
1%	1%
2%	2%
3%	3%
4%	4%
5%	5%
> 5%	5%

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Limitation on the Voting Rights of Non-Brazilian Shareholders

In accordance with the edital (invitation to bid) issued by the Brazilian federal government in connection with the privatization of Embraer in 1994, voting participation of non-Brazilian holders of Embraer common shares was limited to 40% of Embraer common shares.

Our bylaws provide that, at any general meeting of our shareholders, non-Brazilian shareholders and groups of non-Brazilian shareholders may not exercise voting rights representing more than two-thirds of the total votes of all of the Brazilian shareholders present at such meeting. The total number of votes that may be exercised by Brazilian shareholders and by non-Brazilian shareholders will be assessed after giving effect to the 5% voting limitation described above in “Item 10B.—Limitation on the Voting Rights of Certain Holders of Common Shares” above. Votes of non-Brazilian shareholders that exceed this two-thirds threshold will not be counted. If the total vote of non-Brazilian shareholders at any general meeting of our shareholders exceeds two-thirds of the votes that may be exercised by the Brazilian shareholders present at such meeting, the number of votes of each non-Brazilian shareholder will be proportionately reduced so that the total vote of non-Brazilian shareholders does not exceed two-thirds of the total votes that can be exercised by Brazilian shareholders present at such shareholders’ meeting.

The fraction of two-thirds effectively limits the voting rights of non-Brazilian shareholders and groups of non-Brazilian shareholders to 40% of our total share capital. The objective of this limitation is to ensure that Brazilian shareholders constitute a majority of the total votes cast at any general meeting of our shareholders. This limitation will effectively prevent our takeover by non-Brazilian shareholders and limit the ability of non-Brazilian shareholders to effect control over us.

For purposes of our bylaws, the following are considered to be “Brazilian shareholders”:

• Brazilian individuals, whether native or naturalized, resident in Brazil or abroad;

• legal private entities organized under the laws of Brazil that have their administrative head offices in Brazil and (a) do not have a foreign controlling parent company, unless the parent company meets the requirements of clause (b) of this item, and (b) are controlled, directly or indirectly, by one or more Brazilian individuals, whether native or naturalized, resident in Brazil or abroad; and

• investment funds or clubs organized under the laws of Brazil that have their administrative head office in Brazil and whose managers and/or quotaholders holding the majority of their quotas are persons/entities referred to above.

A Brazilian shareholder will be required to provide evidence to us and the depositary for the book-entry registry that such shareholder satisfies the foregoing requirements and only after such evidence is given will such shareholder be included in the records of Brazilian shareholders.

For purposes of our bylaws, “non-Brazilian shareholders” are considered to be persons or legal entities, investment funds or clubs and any other entities not composed of Brazilian shareholders and that cannot evidence that they satisfy the requirements to be considered Brazilian shareholders.

A “group of shareholders,” as defined above, will be considered to be non-Brazilian whenever one or more of its members is a non-Brazilian shareholder.

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The effect of this limitation on the voting rights of non-Brazilian shareholders (i.e., their participation) is illustrated in the following table, where the column “Non-Brazilian Shareholder Participation” indicates the maximum percentage of votes a non-Brazilian shareholder may cast:

Brazilian Shareholder Participation	Non-Brazilian Shareholder Participation	Non-Brazilian Shareholder Participation(1)
(% of capital stock)	(% of capital stock)	(%)
90	10	10.00
80	20	20.00
70	30	30.00
60	40	40.00
59	41	39.33
50	50	33.33
40	60	26.67
30	70	20.00
20	80	13.33
10	90	6.67

(1) Number of votes calculated based on two-thirds of the Brazilian shareholders’ votes.

The tables below illustrate, in different situations, the voting system that will apply at our shareholders’ meetings.

Example 1

All Brazilian shareholders hold less than 5% and non-Brazilian shareholders hold a total of 40%, but without any individual holdings higher than 5%. This example shows a situation where the general restriction for non-Brazilian shareholders does not affect the voting ratio.

Shareholder	% Shares Attending		Effective % of Votes After 5% Vote Restriction		Effective % of Votes After Non-Brazilian Restriction		% of Valid Votes			Vote Ratio (Votes/Share)
Brazilian A		5		5		5		5			1.00
Brazilian B		5		5		5		5			1.00
Brazilian C		5		5		5		5			1.00
Brazilian D		5		5		5		5			1.00
Brazilian E		5		5		5		5			1.00
Brazilian F		5		5		5		5			1.00
Brazilian G		5		5		5		5			1.00
Brazilian H		5		5		5		5			1.00
Brazilian I		5		5		5		5			1.00
Brazilian J		5		5		5		5			1.00
Brazilian K		5		5		5		5			1.00
Brazilian L		5		5		5		5			1.00
Total Brazilians		60		60		60		60			1.00
Non-Brazilians(1)		40		40		40		40	(2)		1.00
Total		100		100		100		100			1.00

(1) Assumes that no individual non-Brazilian shareholder holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, such shareholder will also be subject to the 5% voting restriction on such holding.

(2) Two-thirds of 60 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 40 votes.

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Example 2

One Brazilian shareholder holds more than 5% of our capital, the other Brazilian shareholders hold 5% and non-Brazilian shareholders hold a total of 50%, but without any individual holdings higher than 5%.

Shareholder	% Shares Attending		Effective % of Votes After 5% Vote Restriction		Effective % of Votes After Non-Brazilian Restriction			% of Valid Votes		Vote Ratio (Votes/Share)
Brazilian A		20		5		5.0			8.57		0.25
Brazilian B		5		5		5.0			8.57		1.00
Brazilian C		5		5		5.0			8.57		1.00
Brazilian D		5		5		5.0			8.57		1.00
Brazilian E		5		5		5.0			8.57		1.00
Brazilian F		5		5		5.0			8.57		1.00
Brazilian G		5		5		5.0			8.57		1.00
Total Brazilians		50		35		35.0			59.99		1.00
Non-Brazilians(1)		50		50		23.3	(2)		40.00		0.47
Total		100		85		58.3	(2)		100.00		0.58

(1) Assumes that no individual non-Brazilian shareholder holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, such shareholder will also be subject to the 5% voting restriction on such holding.

(2) Two-thirds of 35 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 23 votes.

Example 3

No Brazilian shareholders hold more than 5% of our capital, a non-Brazilian shareholder holds 30% and other non-Brazilian shareholders hold a total of 40%, but without any individual holdings higher than 5%.

Shareholder	% Shares Attending		Effective % of Votes After 5% Vote Restriction		Effective % of Votes After Non-Brazilian Restriction			% of Valid Votes		Vote Ratio (Votes/Share)
Brazilian A		5		5		5.0			10.0		1.00
Brazilian B		5		5		5.0			10.0		1.00
Brazilian C		5		5		5.0			10.0		1.00
Brazilian D		5		5		5.0			10.0		1.00
Brazilian E		5		5		5.0			10.0		1.00
Brazilian F		5		5		5.0			10.0		1.00
Total Brazilians		30		30		30.0			60.0		1.00
Non-Brazilians A		30		5		2.2	(2)		4.4		0.07
Non-Brazilians(1)		40		40		17.8	(2)		35.6		0.44
Total		100		75		50.0			100.0		0.50

(1) Assumes that no individual non-Brazilian shareholder (except Non-Brazilian A) holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, such shareholder will also be subject to the 5% voting restriction on such holding.

(2) Two-thirds of 30 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 20 votes, proportionally divided between Non-Brazilian A and the other non-Brazilians.

Example 4

Two Brazilian shareholders holding more than 5% of our capital, three Brazilian shareholders holding 5% and non-Brazilian shareholders holding a total of 30%, but without individual holdings higher than 5%.

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Shareholder	% Shares Attending		Effective % of Votes After 5% Vote Restriction		Effective % of Votes After Non-Brazilian Restriction			% of Valid Votes		Vote Ratio (Votes/Share)
Brazilian A		30		5		5.0			12		0.17
Brazilian B		25		5		5.0			12		0.20
Brazilian C		5		5		5.0			12		1.00
Brazilian D		5		5		5.0			12		1.00
Brazilian E		5		5		5.0			12		1.00
Total Brazilians		70		25		25.0			60		1.00
Non-Brazilians(1)		30		30		16.7	(2)		40		0.56
Total		100		55		41.7			100		0.42

(1) Assumes that no individual non-Brazilian shareholder (except Non-Brazilian A) holds more than 5% of our capital. If a non-Brazilian shareholder holds more than 5% of our capital, such shareholder will also be subject to the 5% voting restriction on such holding.

(2) Two-thirds of 25 (total votes of the Brazilian shareholders after application of the 5% voting restriction) equals 16.7 votes.

Shareholders’ Agreement

In connection with the merger of former Embraer with and into Embraer approved on March 31, 2006, Cia. Bozano, PREVI and SISTEL, the former controlling shareholders of former Embraer, terminated the shareholders’ agreement governing matters relating to their equity ownership of former Embraer, and relinquished voting control over former Embraer in favor of all Embraer shareholders. As of the implementation of the merger, Cia. Bozano, PREVI and SISTEL no longer have the ability to control the outcome of matters submitted to a vote of Embraer shareholders. Our bylaws prohibit any shareholder or group of shareholders from exercising voting control over us.

Golden Share

The golden share is held by the Federative Republic of Brazil. The golden share is entitled to the same voting rights as the holders of common shares. In addition, the golden share entitles the holder thereof to veto rights over the following corporate actions:

• change of our name and corporate purpose;

• modification and/or application of our logo;

• creation and/or alteration of military programs (whether or not involving Brazil);

• development of third party skills in technology for military programs;

• discontinuance of the supply of spare parts and replacement parts for military aircraft;

• transfer of our control;

• any amendments to the list of corporate actions over which the golden share carries veto rights, including the right of the Brazilian federal government to appoint one acting member to our Board of Directors and the right of our employees to appoint two acting members to our Board of Directors, and to the rights conferred to the golden share; and

• changes to certain provisions of our bylaws pertaining to voting restrictions, rights of the golden share and the mandatory tender offer requirements applicable to holders of 35% or more of our outstanding shares.

The matters listed above are subject to prior approval by our Board of Directors and the approval within 30 days of the Brazilian federal government, as holder of the golden share. Such matters are also subject to prior notice to the Brazilian Ministry of Finance. In the absence of the approval of the Brazilian federal government within the 30-day period, the matter will be deemed to have been approved by our Board of Directors.

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Disclosure of Significant Interest

Brazilian Requirements

Brazilian law and our bylaws provide that all shareholders or groups of shareholders will be required to disclose, through notice to us and to the stock exchanges on which our securities are traded, the acquisition of shares that, together with those already held by them, exceed 5% of our capital stock. A violation of this disclosure obligation could result in the suspension of rights, including voting rights, by a resolution of shareholders at a shareholders’ meeting.

Certain U.S. Legal Requirements

In addition, the U.S. Exchange Act imposes reporting requirements on shareholders or groups of shareholders who acquire beneficial ownership (as such term is defined under Rule 13d-3 of the U.S. Exchange Act) of more than 5% of our common shares. In general, such shareholders must file, within ten days after such acquisition, a report of beneficial ownership with the SEC containing the information prescribed by the regulations under the U.S. Exchange Act. This information is also required to be sent to us and to each U.S. securities exchange on which our common shares are traded. Shareholders should consult with their own legal advisor regarding their reporting obligations under the U.S. Exchange Act.

Form and Transfer

As our shares are in registered book-entry form, the transfer of shares is governed by the rules of Article 35 of the Brazilian Corporate Law. This Article provides that a transfer of shares is effected by an entry made by Banco Itaú S.A., also known as the registrar, in its books, by debiting the share account of the transferor and crediting the share account of the transferee. Banco Itaú S.A. also performs all the services of safe-keeping and transfer of shares and related services for us.

Transfers of shares by a non-Brazilian shareholder are made in the same way and executed by that shareholder’s local agent on the shareholder’s behalf except that if the original investment was registered with the Central Bank pursuant to Resolution No. 2,689, the foreign investor must also seek amendment, if necessary, through its local agent, of the electronic registration to reflect the new ownership.

The São Paulo Stock Exchange operates as a central clearing system. A holder of our shares may choose, in its discretion, to participate in this system and all shares elected to be put into this system will be deposited in the custody of the São Paulo Stock Exchange (through a Brazilian institution duly authorized to operate by the Central Bank and having a clearing account with the São Paulo Stock Exchange). The fact that those shares are held in the custody of the São Paulo Stock Exchange will be reflected in our register of shareholders. Each participating shareholder will, in turn, be registered in our register of beneficial shareholders maintained by the São Paulo Stock Exchange and will be treated in the same way as registered shareholders.

Board of Directors

Under the Brazilian Corporate Law, the members of a company’s Board of Directors must be shareholders of the company. There is no requirement as to the number of shares an individual must own in order to act as a member of the Board of Directors.

According to the Brazilian Corporate Law, our officers and directors are prohibited from voting on, or acting in, matters in which their interests conflict with ours.

Our bylaws provide that the shareholders are responsible for determining the global remuneration of the members of our management bodies. Our Board of Directors is responsible for dividing such remuneration among the members of management. There are no specific provisions regarding the directors’ power to vote on their compensation in the absence of an independent quorum.

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With respect to the borrowing powers of the Board of Directors, the Board of Directors has the power to authorize the borrowing of funds, either in the form of bonds, notes, commercial papers or other instruments of regular use in the market. Other financing arrangements, including bank loans, may be entered into by us upon the joint signatures of (1) two Executive Officers, (2) one officer and one attorney-in-fact, or (3) two attorneys-in-fact.

There is no requirement under the Brazilian Corporate Law or our bylaws that directors retire upon reaching a certain age. In addition, our bylaws do not provide for the re-election of directors at staggered intervals.

For a discussion of our Board of Directors, see “Item 6A. Directors, Senior Management and Employees—Directors and Senior Management—Board of Directors” and “Item 6C. Directors, Senior Management and Employees—Board Practices.”

Election of Board of Directors

The election of members of our Board of Directors, absent a request to adopt a cumulative voting system, will be conducted under a system of slate voting whereby voting will be based on a slate of directors and no voting will be allowed on individual candidates. According to our bylaws, the current members of the board at the time of the election will always be candidates as a slate for a new term of office. Our Board of Directors is appointed by our shareholders for a two-year term, having three reserved seats as follows: (1) one acting member to be appointed by the Brazilian federal government, as holder of the “golden share” and (2) two acting members to be appointed by our employees. The remaining eight directors are elected in accordance with the slate voting or cumulative voting rules contained in our bylaws. A person may participate in two or more different slates. Each shareholder may only vote on one slate and the slate that receives the highest number of votes shall be declared elected.

Any shareholder has a right to propose and submit other slates of members for election to the Board of Directors, other than the slate of members provided according to our bylaws. Our bylaws also contain a provision whereby a shareholder that intends to appoint one or more members of the Board of Directors, other than the current members of the Board of Directors, must notify Embraer in writing at least ten days prior to the general meeting at which the members of the Board of Directors will be elected, providing us with the name and resume of the candidate. In case we receive such a notification, we must disclose receipt and the contents of such notification (1) immediately, electronically, to the CVM and the São Paulo Stock Exchange and (2) through a press release to our shareholders that must also be available on our website, within at least eight days before the date of the general meeting.

Alternatively, the election of members of the Board of Directors may be conducted under a system of cumulative voting. According to the regulations of the CVM and to our bylaws, adoption of a resolution for cumulative voting depends on a written request by shareholders representing at least 5% of our capital stock, submitted at least 48 hours in advance of the time for which the general shareholders’ meeting has been called. Under the cumulative voting system, each share is entitled to the same number of votes as the number of board members to be elected (subject to the restriction on shareholders holding greater than 5% of the common shares and restrictions on non-Brazilian shareholders), and each shareholder is entitled to concentrate votes in just one member or to distribute the votes among more than one or all of the members. Any vacant offices not filled due to a tie in the voting will be subject to a new vote, under the same process.

Preemptive Rights

Each of our shareholders has a general preemptive right to subscribe for shares in the event of any capital increase, or securities convertible into shares, in proportion to its shareholding, except in the event of the grant and exercise of any option to acquire shares of our capital stock. A period of at least 30 days following the publication of notice of the issuance of shares or securities convertible into shares is allowed for exercise of the right, and the right is negotiable. According to the Brazilian Corporate Law and our bylaws, the Board of Directors may, in its discretion, eliminate the preemptive rights of the shareholders in the event that we issue shares, debentures convertible into shares, or subscription warrants that will be offered either through a stock exchange or in a public offering, or through an exchange of shares in a public offering, the purpose of which is to acquire control of another company, as established by law.

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In the event of a capital increase by means of the issuance of new shares, holders of ADSs, or of common shares, would, except under the circumstances described above, have preemptive rights to subscribe to any class of our newly issued shares. However, a holder may not be able to exercise the preemptive rights relating to the common shares underlying the ADSs unless a registration statement under the Securities Act is effective with respect to those shares to which the rights relate or an exemption from the registration requirements of the Securities Act is available. See “Item 3D. Key Information—Risk Factors—Risks Relating to Our Common Shares and ADSs—Holders of our ADSs might be unable to exercise preemptive rights with respect to the common shares.” We are not obligated to file such registration statement.

Redemption and Right of Withdrawal

According to our bylaws, our common shares will not be redeemable.

The Brazilian Corporate Law provides that, under limited circumstances, a shareholder has the right to withdraw his equity interest from the company and to receive payment for the portion of shareholder’s equity attributable to his equity interest. This right of withdrawal may be exercised by our dissenting shareholders in the event that at least half of all voting shares outstanding authorize us to:

• reduce the mandatory distribution of dividends;

• change our corporate purpose;

• merge into or consolidate with another company, subject to the conditions set forth in the Brazilian Corporate Law;

• transfer all of our shares to another company or receive shares of another company in order to make the company whose shares were transferred a wholly owned subsidiary of such other company, known as incorporação de ações;

• acquire control of another company at a price which exceeds the limits set forth in the Brazilian Corporate Law;

• participate in a centralized group of companies as defined under the Brazilian Corporate Law and subject to the conditions set forth therein; or

• conduct a spin-off that results in (a) a change of our corporate purposes, except if the assets and liabilities of the spun-off company are contributed to a company that is engaged in substantially the same activities, (b) a reduction in the mandatory dividend or (c) any participation in a centralized group of companies, as defined under the Brazilian Corporate Law.

In addition, in the event that the entity resulting from a merger, incorporação de ações, as described above, or a consolidation or a spin-off of a listed company fails to become a listed company within 120 days of the shareholders’ meeting at which such decision was taken, the dissenting shareholders may also exercise their right of withdrawal.

The Brazilian Corporate Law contains provisions that restrict withdrawal rights and allow companies to redeem their shares at their economic value, subject to certain requirements. As our bylaws currently do not provide that our shares would be redeemable at their economic value, our shares would be redeemable at their book value, determined on the basis of the last statement of financial position approved by the shareholders. If the shareholders’ meeting giving rise to withdrawal rights occurs more than 60 days after the date of the last approved statement of financial position, a shareholder may demand that its shares be valued on the basis of a new statement of financial position that is as of a date within 60 days of such shareholders’ meeting.

According to the Brazilian Corporate Law, in events of consolidation, merger, incorporação de ações, participation in a group of companies, and acquisition of control of another company, the right to withdraw does not apply if the shares in question meet certain tests relating to market liquidity and float. Shareholders would not be entitled to withdraw their shares if the shares are a component of a general stock index in Brazil or abroad and shares held by persons unaffiliated with the controlling shareholder represent more than half of the outstanding shares of the relevant type or class.

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Mechanism to Promote Dispersed Ownership of Our Shares

Our bylaws contain provisions that have the effect of avoiding concentration of our shares in the hands of an investor or a small group of investors, in order to promote more dispersed ownership of our shares. To this end, these provisions place certain obligations on a shareholder or group of shareholders that becomes a holder of 35% or more of our total capital stock, or an Acquiring Shareholder. Not later than 15 days after a shareholder becomes an Acquiring Shareholder, such shareholder must submit a request to the Brazilian federal government, through the Ministry of Finance, to make a public tender offer to acquire all of our capital stock. The Brazilian federal government will have full discretion to accept or deny this request. The Acquiring Shareholder may not purchase any additional shares until the Brazilian federal government provides its opinion on the public offer. If the request is accepted by the Brazilian federal government, the Acquiring Shareholder must make a public offer for all shares within 60 days of acceptance. The offer must be made in accordance with the CVM and the São Paulo Stock Exchange regulations and the provisions of our bylaws. If the request is denied by the Brazilian federal government, the Acquiring Shareholder must sell all shares such Acquiring Shareholder owns in excess of 35% of our total capital stock within 30 days. Failure to comply with these provisions will subject the Acquiring Shareholder to the potential suspension of all voting rights inherent to the shares held by it, if a resolution to such effect is approved at a general meeting of our shareholders called by our management. These provisions are not applicable to shareholders who become holders of 35% or more of our total capital stock in certain transactions specified in our bylaws as, for example, cancellation of our common shares held in treasury.

The public tender offer must be (1) directed to all of our shareholders, (2) made through an auction to take place on the São Paulo Stock Exchange, (3) launched at a set price calculated in accordance with the procedure set forth below, (4) paid upfront, in Brazilian currency, (5) made so as to assure equal treatment to all shareholders, (6) irrevocable and not subject to any changes after publication of the bidding offer, and (6) based on a valuation report to be prepared in accordance with the rules set forth in our bylaws and in applicable CVM rules and regulations.

The price to be offered for the shares in such public tender offer shall be calculated as follows:

• Tender Offer Price = Value of the Share + Premium,

where:

• “Tender Offer Price” corresponds to the acquisition price for each share issued by us in the public offering of shares provided hereunder.

• “Value of the Share” corresponds to the greater of:

(1) the highest unit quotation obtained for the shares issued by us during the 12-month period prior to the tender offer among values recorded on any stock exchange on which the shares were traded;

(2) the highest price paid by the Acquiring Shareholder, during the 36-month period prior to the tender offer, for a share or tranche of shares issued by us;

(3) the amount equivalent to 14.5 times our Consolidated Average EBITDA, as defined below, reduced by our net consolidated indebtedness, divided by the total number of shares issued by us; or

(4) the amount equivalent to 0.6 times the amount of our firm backlog orders, according to the last information disclosed by the latter, reduced by our net consolidated indebtedness, divided by the total number of shares issued by us.

• “Premium” corresponds to 50% of the Value of the Share.

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• “Consolidated EBITDA” is our consolidated operating profit before net financial expenses, income tax and social contribution, depreciation, depletion and amortization, as assessed based on the audited statements for our most recent complete fiscal year.

• “Average Consolidated EBITDA” is the arithmetic average of our consolidated EBITDA for the two most recent complete fiscal years.

The launch of a public tender offer does not preclude us or any of our shareholders from launching a competing public tender offer, in accordance with applicable regulations.

Arbitration

Any disputes or controversies relating to the regulations of the Novo Mercado, our bylaws, the Brazilian Corporate Law, the rules published by the CMN, the Central Bank, the CVM, any shareholders’ agreement filed at our headquarters, and other rules applicable to the Brazilian capital markets in general, must be submitted to arbitration conducted in accordance with the rules of the São Paulo Stock Exchange Arbitration Chamber. According to Chapter 12 of such Rules, the parties may consensually agree to use another arbitration chamber or center to resolve their disputes. Any shareholder that becomes a holder of shares representing our control must agree to comply with the rules of the São Paulo Stock Exchange Arbitration Chamber within 30 days of the acquisition of the shares. These provisions will not apply however, in the event of a dispute or controversy related to a dispute or controversy deriving from the golden share.

Going Private Process

We may become a private company only if we or our controlling shareholders conduct a public tender offer to acquire all of our outstanding shares subject to prior approval of the public offer by the Brazilian federal government, as holder of the golden share, and in accordance with the rules and regulations of the Brazilian Corporate Law and the CVM regulations and rules of the Novo Mercado, if applicable. The minimum price offered for the shares in the public tender offer will correspond to the economic value of such shares, as determined by a valuation report issued by a specialized firm.

The valuation report must be prepared by a specialized and independent firm of recognized experience chosen by the shareholders representing the majority of the outstanding shares (excluding, for such purposes, the shares held by the controlling shareholder, its partner and any dependents included in the income tax statement, should the controlling shareholders be an individual, treasury shares, shares held by our affiliates and by other companies that are a part of our economic group, as well as blank votes) from a list of three institutions presented by our Board of Directors. All the expenses and costs incurred in connection with the preparation of the valuation report must be paid for by the controlling shareholder.

Shareholders holding at least 10% of our outstanding shares may require our management to call a special meeting of our shareholders to determine whether to perform another valuation using the same or a different valuation method. This request must be made within 15 days following the disclosure of the price to be paid for the shares in the public offering. The shareholders who make such request, as well as those who vote in its favor, must reimburse us for any costs involved in preparing the new valuation, if the new valuation price is not higher than the original valuation price. If the new valuation price is higher than the original valuation price, the public offering must be made at the higher price. If our shareholders determine to take us private and at that time we are controlled by a shareholder holding less than 50% of our total capital stock or by a shareholder that is not a member of a group of shareholders (as defined in its bylaws), we must conduct the public tender offer, within the limits imposed by law. In this case, we may only purchase shares from shareholders that have voted in favor of us becoming a private company after purchasing all shares from the other shareholders that did not vote in favor of such deliberation and that have accepted the public tender offer.

Delisting from the Novo Mercado

At any time, we may delist our shares from the Novo Mercado, provided that shareholders representing the majority of our shares approve the action and that at least 30 days’ written notice is given to the São Paulo Stock Exchange. The decision of the shareholders must specify if the delisting will occur because the securities will no longer be traded on the Novo Mercado, or because we are going private. Our delisting from the Novo Mercado will not result in the loss of our registration as a public company on the São Paulo Stock Exchange.

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If we delist from the Novo Mercado, by decision taken at a shareholders’ meeting, any controlling shareholder or group of controlling shareholders at the time, if any, must conduct a public offering for the acquisition of our outstanding shares, within a period of 90 days if we delist in order for its shares to be tradable outside the Novo Mercado, or within a period of 120 days if we delist as a result of a corporate reorganization in which the surviving company is not listed on the Novo Mercado. The price per share shall be equivalent to the economic value of those shares as determined in a valuation report prepared by a specialized and independent company of recognized experience, which will be chosen at a shareholders’ meeting from a list of three institutions presented by our Board of Directors, by an absolute majority of the votes of the shareholders of our outstanding shares present at the meeting (excluding, for such purposes, the shares held by any controlling shareholder or group of shareholders at the time, if any, its partners and dependents included in our income tax statement, should the controlling shareholder be an individual, treasury shares, shares held by our affiliates and by other companies that are a part of our economic group, as well as blank votes). All the expenses and costs incurred in connection with the preparation of the valuation report must be paid by the controlling shareholder.

If we are subject to widespread control at the time of our delisting from the Novo Mercado, either for our shares to be traded outside the Novo Mercado or as a result of a corporate reorganization, the shareholders that voted in favor of such deliberation must conduct a public tender offer for the acquisition of our shares.

Pursuant to our bylaws, we may also be delisted if the São Paulo Stock Exchange decides to suspend trading of our shares on the Novo Mercado due to our non-compliance with the Novo Mercado Regulations. In this case, the Chairman of the Board of Directors must call a shareholders’ meeting, within two days of the determination by the São Paulo Stock Exchange, in order to replace all members of our Board of Directors. If the Chairman of the Board of Directors does not call the shareholders’ meeting, any shareholder may do so. The new Board of Directors will be responsible for the compliance with the requirements that resulted in the delisting.

Additionally, if we are delisted from the Novo Mercado (1) because a decision taken at a general meeting of our shareholders resulted in non-compliance with the Novo Mercado Regulations, the public tender offer must be conducted by the shareholders that voted in favor of the deliberation, or (2) as a result of our non-compliance with the Novo Mercado Regulations resulting from acts of our management, we must conduct the public tender offer in order to become a private company, within the limits imposed by law.

According to the Novo Mercado Regulations, in the event of a transfer of our shareholding control within 12 months following our delisting from the Novo Mercado, the selling controlling shareholders and the acquirer must offer to acquire the remaining shares for the same price and terms offered to the selling controlling shareholders, adjusted for inflation.

If our shares are delisted from the Novo Mercado, we will not be permitted to have shares listed on the Novo Mercado for a period of two years after the delisting date, unless there is a change in our control after our delisting from the Novo Mercado.

According to the Novo Mercado Regulations, the São Paulo Stock Exchange may issue complementary rules to regulate the public offering in the event of delisting in case a company has dispersed ownership.

Sarbanes Oxley Act of 2002

We maintain controls and procedures designed to ensure that we are able to collect the information required to disclose in the report we file with the SEC, and to process, summarize and disclose the information within the periods specified in the rules of the SEC. We have filed the relevant officer certifications under Section 404 of the U.S. Sarbanes Oxley Act of 2002 regarding internal controls over financial reporting as Exhibits 12.1 and 12.2 to this annual report.

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10C. Material Contracts

Issuance of US$400 million 6.375% Guaranteed Notes due 2017

In October 2006, our wholly owned finance subsidiary, Embraer Overseas, issued US$400 million 6.375% guaranteed notes due 2017 and, as of December 31, 2013, US$238.0 million was outstanding (US$6.5 million in the short-term), including principal and accrued interest. Interest will be paid semiannually. The notes are unconditionally guaranteed by us. The notes are listed on the Luxembourg Stock Exchange. On March 30, 2007, we and Embraer Overseas commenced an exchange offer to exchange the notes for new notes duly registered with the SEC. The exchange offer was concluded on May 18, 2007 and US$376.3 million, or 95% of the principal amount of unregistered notes were exchanged for registered notes. The indenture under which the notes were issued contains customary covenants and restrictions such as limitation on liens, consolidation, merger or transfer of assets. As described below, in September 2013 we completed an exchange offer in which US$146.4 million in principal amount of our guaranteed notes due 2017 were exchanged for our guaranteed notes due 2023.

Issuance of US$500 million 6.375% Guaranteed Notes due 2020

In October 2009, Embraer Overseas issued US$500 million 6.375% guaranteed notes due 2020 and, as of December 31, 2013, US$162.5 million was outstanding (US$2.4 million in the short-term), including principal and accrued interest. Interest will be paid semiannually. The notes are unconditionally guaranteed by us. The notes have been registered with the SEC and listed on the NYSE. As described below, in September 2013 we completed an exchange offer in which US$337.2 million in principal amount of our guaranteed notes due 2020 were exchanged for our guaranteed notes due 2023. In connection with the exchange offer, we received the requisite consents from holders of our guaranteed notes due 2020 to eliminate substantially all the restrictive covenants, certain events of default and related provisions contained in the indenture under which the notes were issued, and we delisted our guaranteed notes due 2020 from the New York Stock Exchange.

Issuance of US$500 million 5.150% Notes due 2022

In June 2012, we issued US$500 million 5.150% notes due 2022 and, as of December 31, 2013, US$498.9 million was outstanding (US$1.1 million in the short-term), including principal and accrued interest. Interest will be paid semiannually. The notes are our unsecured and unsubordinated obligations. The notes have been registered with the SEC and listed on the NYSE. The indenture under which the notes were issued contains customary covenants and restrictions such as limitation on liens, consolidation, merger or transfer of assets.

For more information on additional financing arrangements, see “Item 5B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Lines of Credit—Long-term Facilities.”

Issuance of US$540.5 million 5.696% Guaranteed Notes due 2023

In September 2013, we completed an exchange offer in which US$146.4 million in principal value of our guaranteed notes with maturity in 2017 and US$337.2 million in principal value of our guaranteed notes with maturity in 2020 were exchanged for approximately US$540.5 million in principal value of notes issued by Embraer Overseas, with maturity in 2023. As of December 31, 2013, US$490.0 million of the notes due in 2023 was outstanding (US$8.9 million in the short-term), including principal and accrued interest. Interest will be paid semiannually. The notes due in 2023 are unconditionally guaranteed by us and were issued exempt from registration with the SEC pursuant to Regulation S and Rule 144A under the Securities Act. The notes due in 2023 are subject to a registration rights agreement, pursuant to which we have agreed to exchange the notes within 270 days of their issuance for notes with the same terms and conditions which are registered with the SEC. The indenture under which the notes were issued contains customary covenants and restrictions such as limitation on liens, consolidation, merger or transfer of assets.

10D. Exchange Controls

There are no restrictions on ownership of our common shares by individuals or legal entities domiciled outside Brazil. However, the right to convert dividend payments and proceeds from the sale of common shares into foreign currency and to remit such amounts outside Brazil is subject to restrictions under foreign investment legislation which generally requires, among other things, the registration of the relevant investment with the Central Bank.

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Pursuant to Brazilian law, investors may invest in the common shares under Resolution No. 2,689 of January 26, 2000 of the CMN. The rules of Resolution No. 2,689 allow foreign investors to invest in almost all financial assets and to engage in almost all transactions available in the Brazilian financial and capital markets, provided that some requirements are fulfilled. In accordance with Resolution No. 2,689, the definition of foreign investor includes individuals, legal entities, mutual funds and other collective investment entities domiciled or headquartered abroad.

Pursuant to the rules, foreign investors must: (1) appoint at least one representative in Brazil with powers to perform actions relating to the foreign investment; (2) complete the appropriate foreign investor registration form; (3) register as a foreign investor with the CVM; and (4) register the foreign investment with the Central Bank.

Securities and other financial assets held by foreign investors pursuant to Resolution No. 2,689 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading is restricted to transactions carried out in the stock exchanges or organized over-the-counter markets licensed by the CVM.

Under Resolution No. 2,689, foreign investors registered with the CVM may buy and sell shares on the São Paulo Stock Exchange without obtaining a separate certificate of registration for each transaction. Investors under these regulations are also generally entitled to favorable tax treatment.

Annex V to Resolution No. 1,289, as amended, of the CMN, also known as the Annex V Regulations, provides for the issuance of depositary receipts in foreign markets in respect of shares of Brazilian issuers.

In connection with the equity offerings of our common shares, an electronic registration was issued in the name of the depositary with respect to the ADSs and is maintained by the custodian on behalf of the depositary. This electronic registration was carried out through the Central Bank Information System-SISBACEN. Pursuant to the registration, the custodian and the depositary are able to convert dividends and other distributions with respect to the common shares represented by ADSs into foreign currency and remit the proceeds outside Brazil. In the event that a holder of ADSs exchanges such ADSs for common shares, the holder will be entitled to continue to rely on the depositary’s registration for five business days after the exchange. Thereafter, a holder must seek to obtain its own electronic registration. Unless the common shares are held pursuant to Resolution No. 2,689 by a duly registered investor or a holder of common shares who applies for and obtains a new certificate of registration, that holder may not be able to convert into foreign currency and remit outside Brazil the proceeds from the disposition of, or distributions with respect to, the common shares. In addition, if the foreign investor resides in a “tax haven” jurisdiction or is not an investor registered under Resolution No. 2,689, the investor will be subject to less favorable Brazilian tax treatment than a holder of ADSs.

See “Item 3D. Key Information—Risk Factors—Risks Relating our Common Shares and ADSs—If holders of ADSs exchange the ADSs for common shares, they risk losing the ability to remit foreign currency abroad and Brazilian tax advantages” and “Item 10E. Additional Information—Taxation—Material Brazilian Tax Consequences.”

10E. Taxation

The following discussion, subject to the limitations set forth below, summarizes certain Brazilian and United States tax considerations relating to the ownership of our common shares or ADSs. This discussion does not purport to be a complete analysis of all tax considerations in those countries and does not address tax treatment of shareholders under the laws of other countries. Shareholders who are resident in countries other than Brazil and the United States, along with shareholders that are resident in those two countries, are urged to consult with their own tax advisors as to which countries’ tax laws could be relevant to them. This summary is based upon the tax laws of Brazil and the United States as in effect on the date of this annual report, which are subject to change, possibly with retroactive effect, and to differing interpretations. Any change in such law may change the consequences described below.

Although there presently is no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had discussions that may culminate in such a treaty. No assurance can be given, however, as to if or when a treaty will enter into force or how it will affect the U.S. holders of common shares or ADSs.

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Material Brazilian Tax Consequences

General. The following discussion summarizes the principal Brazilian tax consequences of the acquisition, ownership and disposition of common shares or ADSs, as the case may be, by a holder that is not considered domiciled in Brazil (“Non-Brazilian Holder”), for purposes of Brazilian taxation.

Taxation of Dividends. Dividends, including stock dividends and other dividends paid in property, paid by us to the depositary in respect of the ADSs, or to a Non-Brazilian Holder in respect of the common shares, are currently not subject to income withholding tax, provided that they are paid out of profits generated as of January 1, 1996 (or out of reserves derived therefrom). We do not have retained earnings generated prior to January 1, 1996 (or reserves out of such earnings).

Taxation of Gains. According to Law No. 10,833, enacted on December 29, 2003, the sale or disposition of assets located in Brazil, by a Non-Brazilian Holder, regardless of whether the sale or the disposition is made to another non-Brazilian resident or to a Brazilian resident, is subject to taxation in Brazil. Accordingly, on the disposition of the common shares, which are considered assets located in Brazil, the Non-Brazilian Holder will be subject to income tax on the gains assessed, following the rules described below, regardless of whether the transactions are conducted in Brazil or abroad and with a Brazilian resident or not. Regarding the ADSs, although the matter is not free from doubt, arguably the gains realized by a Non-Brazilian Holder on the disposition of ADSs to another non-Brazilian resident are not taxed in Brazil, based on the argument that ADSs would not constitute assets located in Brazil for purposes of Law No. 10,833/03. However, we cannot assure you of how Brazilian courts would interpret the definition of assets located in Brazil in connection with the taxation of gains realized by a Non-Brazilian Holder on the disposition of ADSs to another non-Brazilian resident. Thus, the gain on a disposition of ADSs by a Non-Brazilian Holder to a resident in Brazil (or even to a non-Brazilian resident in the event that courts determine that ADSs would constitute assets located in Brazil) may be subject to income tax in Brazil according to the rules described below for ADSs or those applicable to the disposition of common shares, when applicable.

As a general rule, gains assessed are the positive difference between the amount in reais realized on the sale of exchange of the security and its acquisition cost measured in reais (without correction for inflation).

Under Brazilian law, income tax rules on such gains can vary depending on the domicile of the Non-Brazilian Holder, the type of registration of the investment by the Non-Brazilian Holder with the Central Bank and how the disposition is carried out, as described below.

The deposit of common shares in exchange for ADSs may be subject to Brazilian income tax on capital gains at the rate of 15% or 25%, in case of a Non-Brazilian Holder located in a tax haven jurisdiction (as defined below), if the acquisition cost of the common shares is lower than (1) the average price per common share on a Brazilian stock exchange on which the greatest number of such shares were sold on the day of deposit or (2) if no common shares were sold on that day, the average price on the Brazilian stock exchange on which the greatest number of common shares were sold in the 15 trading sessions immediately preceding such deposit. In such case, the difference between the average price of the common shares, calculated as above, and the corresponding acquisition cost, will be considered a capital gain. There are arguments to support that such taxation is not applicable in case of Non-Brazilian Holders registered under Resolution No. 2,689/00 (“2,689 Holder”) that are not Tax Haven Holders. The withdrawal of ADSs in exchange for common shares is not subject to Brazilian tax as far as the regulatory rules in respect to the registration of the investment before the Central Bank are duly observed.

Gains assessed on the disposition of common shares carried out on the Brazilian stock exchange (which includes the transactions carried out on the organized over-the-counter market):

• are exempt from income tax when assessed by a Non-Brazilian Holder that is a 2,689 Holder and is not a Tax Haven Holder; or

• are subject to income tax at a rate of 15% in any other case, including the gains assessed by a Non-Brazilian Holder that (1) is not a 2,689 Holder; or (2) is a 2,689 Holder but a Tax Haven Holder. In these cases, a withholding income tax of 0.005% on the sale value shall be applicable and can be later offset with the eventual income tax due on the capital gain.

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Any other gains assessed on a disposition of the common shares that is not carried out on Brazilian stock exchanges are subject to income tax at a rate of 15%, except for Tax Haven Holders, which, in this case, are subject to income tax at a rate of 25%. In case the gains are related to transactions conducted on the Brazilian non-organized over-the-counter market with intermediation, the withholding income tax of 0.005% on the sale value shall also be applicable and can be offset with the eventual income tax due on the capital gain.

In the case of a redemption of common shares or a capital reduction, the positive difference between the amount effectively received by the Non-Brazilian Holder and the acquisition cost of the securities redeemed or returned, is treated as capital gain derived from sale or exchange of common shares carried out in a Brazilian stock exchange market and is therefore subject to income tax at the rate of 15%, or 25%, in case of Tax Haven Holders.

Any exercise of preemptive rights relating to the common shares or ADSs will not be subject to Brazilian taxation. Any gain on the sale or assignment of preemptive rights relating to our common shares by the depositary on behalf of holders of our ADSs or to Non-Brazilian Holders of common shares will be subject to Brazilian income taxation according to the same rules applicable to the sale or disposition of these shares.

Taxation on Interest on Shareholders’ Equity. Any payment of interest on shareholders’ equity (see “Item 8A. Financial Information—Consolidated Statements and Other Financial Information—Dividends and Dividend Policy—History of Dividend and Interest on Shareholders’ Equity Payments and Dividend Policy”) to Non-Brazilian Holders of ADSs or common shares is subject to Brazilian withholding income tax at the rate of 15% at the time Embraer records such liability, whether or not the effective payment has been made at that time. In the case of Tax Haven Holders, the applicable rate of withholding income tax is 25%. For tax purposes, this interest is limited to the daily pro rata variation of the TJLP, as determined by the Central Bank from time to time, and the amount of the deduction may not exceed the greater of:

• 50% of net income (after the deduction of social contribution on net profits but before taking into account the provision for corporate income tax and the amounts attributable to shareholders as net interest on shareholders’ equity) related to the period in respect of which the payment is made; and

• 50% of the sum of retained profits and profit reserves as of the date of the beginning of the period in respect of which the payment is made.

The Brazilian Corporation Law establishes that interest attributed to shareholders’ equity can either be accounted for as part of the mandatory dividend or not. In the event that the payment of such interest is accounted for as part of the mandatory dividend, we would be required to pay an additional amount to ensure that the net amount received by the shareholders, after the income tax, plus the amount of declared dividends, is at least equal to the minimum mandatory dividend. The distribution of interest attributed to shareholders’ equity would be proposed by our Board of Directors and subject to subsequent declaration by the shareholders at a general meeting.

Taxation on Foreign Exchange Transactions. Brazilian law imposes a Tax on Foreign Exchange Transactions, or IOF/Exchange, due on the conversion of reais into foreign currency and on the conversion of foreign currency into reais. Currently, for most exchange transactions, the rate of IOF/Exchange is 0.38%.

However, on the inflow of resources into Brazil for investments carried out by Non-Brazilian Holders in the Brazilian financial and capital markets, IOF/Exchange is assessed at a 1.5% rate, except for the rate of zero percent applicable to investments related to (a) variable yield instruments carried out in the stock, commodities and future exchanges; and (b) the acquisition of shares in a public offering registered with the CVM, or for the underwriting of shares, provided, in both cases, that the issuer is authorized to trade its shares at the Brazilian stock exchange. The outflow of funds related to investments carried out by Non-Brazilian Holders in the Brazilian financial and capital markets, as well as the remittance of dividends and interest on shareholders’ equity, are subject to IOF/Exchange at a zero percent rate.

In any case, the Brazilian federal government may increase the rate at any time, up to 25.0%. However, any increase in rates may only apply to future transactions.

Tax on Transactions Involving Bonds and Securities. Brazilian law imposes a Tax on Transactions Involving Bonds and Securities, or IOF/Bonds Tax, due on transactions involving bonds and securities, including

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those carried out on a Brazilian stock exchange. Although the rate of IOF/Bonds Tax applicable to transactions involving common shares is currently zero, the rate of the IOF/Bonds Tax applicable to the transfer of shares with the sole purpose of enabling the issuance of ADSs is currently 1.5%. This rate is applied on the product of (1) the number of shares which are transferred, multiplied by (2) the closing price for those shares on the date prior to the transfer or, if such closing price is not available on that date, the last available closing price for those shares. The Brazilian federal government may increase the rate of the IOF/Bonds Tax at any time by up to 1.5% per day of the transaction amount, but only in respect of future transactions.

Other Brazilian Taxes. There are no Brazilian inheritance, gift or succession taxes applicable to the ownership, transfer or disposition of common shares or ADSs, except for gift and inheritance taxes which are levied by some states of Brazil on gifts made or inheritances bestowed by Non-Brazilian Holders to individuals or entities resident or domiciled or residing within such state in Brazil. There are no Brazilian stamp, issue, registration or similar taxes or duties payable by holders of common shares or ADSs.

Material U.S. Federal Income Tax Consequences

The following discussion, subject to the limitations and conditions set forth herein, summarizes certain U.S. federal income tax consequences of the purchase, ownership and disposition of Embraer common shares and ADSs. This discussion only applies to beneficial owners of Embraer common shares or ADSs that are “U.S. Holders” (as defined below) that hold common shares or ADSs of Embraer as capital assets (generally for investment purposes). This discussion does not address all aspects of U.S. federal income taxation that may be applicable to a U.S. Holder, including Medicare contribution tax consequences, or the tax consequences to U.S. Holders subject to special treatment under U.S. federal income tax law, including:

• partnerships and other entities classified as partnerships for U.S. federal income tax purposes;

• persons subject to the alternative minimum tax;

• tax-exempt entities;

• dealers and traders in securities or foreign currencies;

• insurance companies;

• certain financial institutions;

• persons who own Embraer common shares or ADSs as part of an integrated investment, including a straddle, hedging or conversion transaction, comprising the Embraer common shares or ADSs and one or more other positions for tax purposes;

• persons whose functional currency is not the U.S. dollar for U.S. federal income tax purposes;

• persons who actually or constructively own 10% or more of Embraer’s voting stock;

• persons who acquired Embraer common shares or ADSs pursuant to the exercise of any employee stock option or otherwise as compensation; and

• persons holding Embraer common shares or ADSs in connection with a trade or business conducted outside the United States.

In addition, there is no discussion of state, local, or non-U.S. tax considerations of the purchase, ownership and disposition of Embraer common shares or ADSs. The discussion is based upon the provisions of the Internal Revenue Code of 1986, as amended, or Code, its legislative history, existing final, temporary, and proposed U.S. Treasury regulations, rulings and other pronouncements of the U.S. Internal Revenue Service, or IRS, and judicial decisions as of the date of this annual report. Such authorities may be repealed, revoked or modified (with possible retroactive effect) so as to result in U.S. federal income tax consequences different from those discussed below.

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This discussion is also based in part on the representations of the depository and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

Shareholders are urged to consult their own independent tax advisors concerning the U.S. federal income tax consequences of the ownership of Embraer common shares and ADSs in light of their particular situations, as well as any consequences arising under the laws of any other taxing jurisdiction.

As used herein, the term “U.S. Holder” means a beneficial owner of Embraer common shares or ADSs representing Embraer common shares that is (1) an individual who is a citizen or resident of the United States, (2) a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States, any State or the District of Columbia, (3) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (4) a trust (X) that is subject to the supervision of a court within the United States and the control of one or more U.S. persons as described in Section 7701(a)(30) of the Code or (Y) that has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. Except where specifically described below, this discussion assumes that we are not a passive foreign investment company, or PFIC, for U.S. federal income tax purposes.

If a partnership (or an entity treated as a partnership for U.S. federal income tax purposes) holds Embraer common shares or ADSs, the tax treatment of such partnership and each partner will generally depend upon the status of the partner in such partnership. Partnerships that hold Embraer common shares or ADSs, and partners of a partnership holding such common shares or ADSs, are urged to consult their own tax advisors regarding the consequences of the purchase, ownership and disposition of Embraer common shares or ADSs.

In general, for U.S. federal income tax purposes, a U.S. Holder who is a beneficial owner of an ADS will be treated as the owner of the underlying Embraer common shares that are represented by such ADS. The U.S. Treasury has expressed concerns that parties to whom ADSs are pre-released before shares are delivered to the depositary, or intermediaries in the chain of ownership between holders of ADSs and the issuer of the security underlying the ADSs, may be taking actions that are inconsistent with the claiming of foreign tax credits by holders of ADSs. Accordingly, the creditability of any Brazilian taxes could be affected by actions taken by such parties or intermediaries. Deposits or withdrawals of underlying shares by U.S. Holders for ADSs will not be subject to U.S. federal income tax.

Distributions on Embraer Common Shares or ADSs

For U.S. federal income tax purposes, the gross amount of any distributions (including distributions of notional interest charges attributed to shareholders’ equity) paid to U.S. Holders of Embraer common shares or ADSs (including Brazilian withholding taxes imposed on such distributions) will be treated as a dividend, to the extent paid out of current or accumulated earnings and profits of Embraer and its predecessor as determined under U.S. federal income tax principles. Such a dividend will be includable in the gross income of a U.S. Holder as ordinary income on the date received by the U.S. Holder. To the extent that the amount of any distribution exceeds Embraer’s current and accumulated earnings and profits for a taxable year (as determined under U.S. federal income tax principles), the distribution will first be treated as a tax-free return of capital to the extent of a U.S. Holder’s adjusted tax basis in the Embraer common shares or ADSs, and thereafter as capital gain. Because we do not expect to maintain earnings and profits in accordance with U.S. federal income tax principles, U.S. Holders should expect that a distribution will be treated as a dividend for U.S. federal income tax purposes.

Dividends paid by Embraer will not be eligible for the dividends received deduction allowed to corporations under the Code.

The amount of any cash distribution paid in reais will be included in a U.S. Holder’s gross income in an amount equal to the U.S. dollar value of the reais calculated by reference to the exchange rate in effect on the date the dividend is received by the U.S. Holder, in the case of Embraer common shares, and by the depository, in the case of ADSs, regardless of whether the reais are converted into U.S. dollars. If the reais received as a dividend are not converted into U.S. dollars on the date of receipt, a U.S. Holder will have a tax basis in the reais equal to their U.S. dollar value on the date of receipt. Any gain or loss realized on a subsequent conversion or other disposition of the reais will be treated as U.S. source ordinary income or loss for U.S. federal income tax purposes.

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Subject to the discussion above regarding concerns expressed by the U.S. Treasury and a number of other complex limitations and conditions, a U.S. Holder will be entitled to claim a U.S. foreign tax credit in respect of any Brazilian withholding taxes imposed on dividends received on Embraer’s common shares or ADSs. U.S. Holders who do not elect to claim a credit for foreign taxes may instead claim a deduction in respect of such Brazilian withholding taxes. Dividends received with respect to the Embraer common shares or ADSs will be treated as foreign source income for U.S. federal income tax purposes, and will be “passive category income” for purposes of calculating foreign tax credits in most cases, subject to various limitations. The rules relating to computing foreign tax credits or deducting foreign income taxes are extremely complex, and U.S. Holders are urged to consult their own independent tax advisors regarding the availability of foreign tax credits with respect to any Brazilian withholding taxes in regards of dividends paid on Embraer’s common shares or ADSs.

Subject to certain exceptions for short-term and hedged positions, the amount of dividends received by certain non-corporate U.S. holders (including individuals) with respect to the Embraer common shares or ADSs may be eligible for a reduced rate of taxation if the dividends represent “qualified dividend income.” Dividends paid on the Embraer common shares or ADSs will be treated as qualified dividend income if (1) the Embraer common shares or ADSs are readily tradable on an established securities market in the United States and (2) neither Embraer nor its predecessor was in the year prior to the year in which the dividend was paid, and is not in the year in which the dividend is paid, a passive foreign investment company, or PFIC. Under guidance issued by the IRS, the ADSs of Embraer should qualify as readily tradable on an established securities market in the United States so long as they are listed on the NYSE. In the case of Embraer common shares held directly by U.S. Holders and not underlying an ADS, it is not clear whether dividends paid with respect to such shares will represent “qualified dividend income.” U.S. Holders holding Embraer common shares directly and not through an ADS are urged to consult their own independent tax advisors.

Based on its audited financial statements as well as relevant market and shareholder data, Embraer believes that it was not a PFIC for U.S. federal income tax purposes with respect to its 2013 taxable year. In addition, based on Embraer’s audited or projected financial statements and current expectations regarding the value and nature of its assets, the sources and nature of its income, and relevant market and shareholder data, Embraer does not anticipate becoming a PFIC for its 2014 taxable year. However, because this determination is based on the nature of Embraer’s income and assets from time to time, involves the application of complex tax rules, and since Embraer’s view is not binding on the courts or the IRS, no assurances can be provided that Embraer (or its predecessor) will not be considered a PFIC for the current, or any past or future tax year. The potential application of the PFIC rules is further discussed below.

Sale, Exchange or Other Taxable Disposition of Embraer Common Shares or ADSs

A U.S. Holder will recognize taxable gain or loss on any sale, exchange or other taxable disposition of Embraer common shares or ADSs in an amount equal to the difference between the amount realized on the sale, exchange or other taxable disposition and the U.S. Holder’s adjusted tax basis (determined in U.S. dollars) in the Embraer common shares or ADSs. Such gain or loss will generally be capital gain or loss and will be long-term capital gain or loss if the Embraer common shares or ADSs have a holding period of more than one year. Certain non-corporate U.S. Holders (including individuals) may be eligible for preferential rates of U.S. federal income tax in respect of long-term capital gains. The deductibility of capital losses is subject to limitations under the Code.

Any gain or loss recognized by a U.S. Holder from the sale, exchange or taxable disposition of Embraer common shares or ADSs generally will be gain or loss from U.S. sources for U.S. foreign tax credit purposes. Consequently, if a Brazilian withholding tax or capital gains tax is imposed pursuant to a sale of Embraer common shares or ADSs, U.S. Holders who do not have sufficient foreign source income might not be able to derive effective U.S. foreign tax credit benefit in respect of such Brazilian withholding tax or capital gains tax. The rules relating to foreign tax credits, including the amount of foreign income taxes that may be claimed as a credit in any given year, are extremely complex and subject to limitations. U.S. Holders are urged to consult their own independent tax advisor regarding the application of the foreign tax credit rules to their particular circumstances.

Deposits and withdrawals of Embraer common shares in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.

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Passive Foreign Investment Company Rules

If, during any taxable year of a non-U.S. corporation, 75% or more of the corporation’s gross income consists of certain types of “passive” income, or the average value during a taxable year of the “passive assets” of the corporation (generally assets that generate passive income) is 50% or more of the average value of all the corporation’s assets, the corporation will be treated as a PFIC under U.S. federal income tax law. If a corporation is treated as a PFIC, a U.S. Holder may be subject to increased tax liability upon the sale of its stock, or upon the receipt of certain dividends, unless such U.S. Holder makes an election to be taxed currently on its pro rata portion of the corporation’s income, whether or not such income is distributed in the form of dividends, or otherwise makes a “mark-to-market” election with respect to the corporation’s stock as permitted by the Code. Under recently issued temporary regulations, a U.S. Holder who owns common shares or ADSs in any year that Embraer is a PFIC in excess of certain de minimis amounts and fails to qualify for certain other exemptions would be required to file IRS Form 8621 to report such holdings. In addition, as discussed above, a U.S. Holder would not be entitled to (if otherwise eligible for) the preferential reduced rate of tax payable on certain dividend income. As stated above, although no assurances can be given, based on Embraer’s operations, projections and business plans and the other items discussed above, Embraer does not believe that it (or its predecessor) was or currently is a PFIC, and does not expect to become a PFIC for subsequent taxable years.

U.S. Holders are urged to consult their own independent tax advisors regarding the potential application of the PFIC rules and related reporting requirements to the common shares or ADSs and the availability and advisability of making an election to avoid the adverse tax consequences of the PFIC rules should Embraer be considered a PFIC for any taxable year.

Information Reporting and Backup Withholding

In general, payments of dividends on Embraer common shares or ADSs, and payments of the proceeds of the sale, exchange or other disposition of Embraer common shares or ADSs, paid within the United States or through certain U.S.-related financial intermediaries to a U.S. Holder may be subject to information reporting and backup withholding at a current maximum rate of 28% unless the U.S. Holder (1) is a corporation or other exempt recipient or (2) in the case of backup withholding, provides an accurate taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Backup withholding is not an additional tax. The amount of any backup withholding from a payment to a U.S. Holder will be allowed as a refund or a credit against the U.S. Holder’s U.S. federal income tax liability, provided the required information is timely provided to the IRS. A U.S. Holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed its U.S. federal income tax liability by filing a timely refund claim with the IRS.

In addition, certain U.S. Holders are required to report to the IRS information relating to an interest in the shares or ADSs, subject to exceptions (including an exception for shares or ADSs held in accounts maintained by certain financial institutions), by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with its tax return for each year in which it held an interest in the shares or ADSs. U.S. Holders are urged to consult their own tax advisors regarding the effect, if any, of this information reporting requirement on their acquisition, ownership and disposition of the shares or ADSs.

10F. Dividends and Paying Agents

Not applicable.

10G. Statements by Experts

Not applicable.

10H. Documents on Display

We are subject to the periodic reporting and other informational requirements of the Exchange Act. Accordingly, we are required to file reports and other information with the SEC. You may inspect and obtain copies, at prescribed rates, of reports and other information filed by us with the SEC at its Public Reference Room maintained at 100 F Street, N.E., Washington, D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC in the United States at 1-800-SEC-0330. You may also inspect and copy this material at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.

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We file our annual report on Form 20-F, including our financial statements, and other reports, including our reports on Form 6-K, electronically with the SEC. These filings are available at www.sec.gov. We also file financial statements and other periodic reports electronically with the CVM at its website, www.cvm.gov.br. Copies of our annual reports on Form 20-F and documents referred to in this annual report and our bylaws will be available for inspection upon request at our headquarters at Av. Brigadeiro Faria Lima, 2170, 12227-901 São José dos Campos, São Paulo State, Brazil.

10I. Subsidiary Information

Not required.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks, primarily related to potential loss arising from adverse changes in interest rates and foreign currency exchange rates. We have established policies and procedures to manage sensitivity to interest rate and foreign currency exchange rate risk. These procedures include the monitoring of our levels of exposure to each market risk, including an analysis based on forecast of future cash flows, the funding of variable rate assets with variable rate liabilities, and limiting the amount of fixed rate assets which may be funded with floating rate liabilities. We may also use derivative financial instruments to mitigate the effects of interest rate fluctuations and to reduce our exposure to exchange rate risk. The following sections address the significant market risks associated with our financial activities.

Interest Rate Risk

Our exposure to market risk for interest rate fluctuations principally relates to changes in the market interest rates of our U.S. dollar-denominated and real-denominated monetary assets and liabilities, principally our short- and long-term debt obligations. Increases and decreases in prevailing interest rates generally translate into increases and decreases in interest expense. Additionally, the fair values of interest rate-sensitive instruments are also affected by general market conditions.

Our short and long-term debt obligations totaled US$2,194.3 million at December 31, 2013 and were denominated in U.S. dollars, Brazilian reais and Euros. Of the total amount of debt denominated in U.S. dollars (i.e., US$1,457.5 million), approximately US$1,398.6 million was subject to fixed rates. The remaining floating rate U.S. dollar-denominated debt was indexed to six-month LIBOR. Of our US$660.3 million Brazilian real-denominated debt at December 31, 2013, US$68.8 million bears interest at a variable rate based on the TJLP, the long-term interest rate in Brazil, US$0.3 million bears interest at a variable rate based on the CDI, and US$591.1 million bears interest at a fixed rate of 4.97% per annum. The TJLP was 5.0% per annum at December 31, 2013. Our Euro-denominated debt totaled US$76.5 million at fixed rate at December 31, 2013.

The table below provides information about our short-term debt obligations as of December 31, 2013 that are sensitive to changes in interest rates and foreign currency exchange rates.

	Weighted Average Interest Rate 2013		Total Amount Outstanding		Total Fair Value
	(%)		(in US$ millions)
Short-Term Debt
U.S. dollars (fixed rate)		6.00		19.5		19.5
U.S. dollars (LIBOR indexed)		1.25		1.8		1.8
Euro (fixed rate)		2.82		3.2		3.2
Euro (EURIBOR indexed)		—		—		—
Reais (fixed rate)		4.97		35.1		35.1
Reais (CDI indexed)		10.97		0.2		0.2
Reais (TJLP indexed)		6.31		19.5		19.5
Total short-term debt				79.3		79.3

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The table below provides information about our long-term debt obligations as of December 31, 2013 that are sensitive to changes in interest rates and foreign currency exchange rates:

	Weighted Average Interest Rate 2013		Total Amount Outstanding		2015		2016		2017		2018		2019 and thereafter		Total Fair Value
	(%)
Long-Term Debt
U.S. dollars (fixed rate)		6.00		1,379.1		0.5		1.4		233.2		0.4		1,143.6		1,504.2
U.S. dollars (LIBOR indexed)		1.25		57.1		1.9		1.9		2.0		2.0		49.3		57.1
Euro (fixed rate)		2.82		73.4		7.6		36.9		17.3		10.5		1.1		73.4
Euro (EURIBOR indexed)		—		—		—		—		—		—		—		—
Reais (fixed rate)		4.97		556.1		32.4		455.0		36.1		14.6		18.0		556.1
Reais (CDI indexed)		10.97		0.1		0.1		—		—		—		—		0.1
Reais (TJLP indexed)		6.31		49.2		17.3		13.6		13.7		4.6		—		49.2
Total long-term debt				2,115.0		59.8		508.8		302.3		32.1		1,212.0		2,240.1

In order to manage our interest rate risk on our monetary liabilities, we have entered into a number of swaps, which effectively convert US$381.1 million of our fixed interest rate, Brazilian real-denominated debt into floating interest rate, Brazilian real-denominated obligations and convert US$5.2 million of our floating interest rate, U.S. dollar-denominated debt to fixed interest rate, U.S. dollar-denominated obligations.

The table below provides information about our short-term debt obligations as of December 31, 2013, after considering the effects of the above mentioned derivative transactions:

	Weighted Average Interest Rate 2013		Total Amount Outstanding		Total Fair Value
	(%)		(in US$ millions)
Short-Term Debt
U.S. dollars (fixed rate)		6.00		19.8		19.8
U.S. dollars (LIBOR indexed)		1.14		1.5		1.5
Euro (fixed rate)		2.82		3.2		3.2
Euro (EURIBOR indexed)		0.00		—		—
Reais (fixed rate)		4.01		32.8		32.8
Reais (CDI indexed)		7.35		2.5		2.5
Reais (TJLP indexed)		6.31		19.5		19.5
Total short-term debt				79.3		79.3

The table below provides information about our long-term debt obligations as of December 31, 2013, after considering the effects of the above mentioned derivative transactions:

	Weighted Average Interest Rate 2013		Total Amount Outstanding		2015		2016		2017		2018		2019 and thereafter		Total Fair Value
	(%)		(in US$ millions)
Long-Term Debt
U.S. dollars (fixed rate)		6.00		1,384.0		0.9		1.8		233.7		0.8		1,146.8		1,509.1
U.S. dollars (LIBOR indexed)		1.14		52.3		1.5		1.5		1.6		1.6		46.1		52.3
Euro (fixed rate)		2.82		73.4		7.6		36.9		17.3		10.5		1.1		73.4
Euro (EURIBOR indexed)		—		—		—		—		—		—		—		—
Reais (fixed rate)		4.01		177.3		32.4		76.2		36.1		14.6		18.0		177.3
Reais (CDI indexed)		7.35		378.8		0.1		378.7		—		—		—		378.8
Reais (TJLP indexed)		6.31		49.2		17.3		13.6		13.7		4.6		—		49.2
Total long-term debt				2,115.0		59.8		508.7		302.4		32.1		1,212.0		2,240.1

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Foreign Exchange Rate Risk

In managing our foreign currency risk, we focus on balancing our non-U.S. dollar-denominated assets against our non-U.S. dollar-denominated liabilities plus shareholders’ equity in relation to our forecasts of future cash flows. Beyond the foreign currency exposure related to our debt obligations as summarized above, we also have other assets and liabilities denominated in currencies other than the U.S. dollar. These monetary assets and liabilities are primarily cash and cash equivalents, financial assets, accounts receivable and payable, deferred income taxes, dividends and certain other assets and liabilities and are primarily denominated in Brazilian reais. The effects on such assets and liabilities of the appreciation or devaluation of other foreign currencies against the U.S. dollar result in foreign exchange gains (losses) recognized as interest income (expense), net. The translation gains and losses arising from the remeasurement of our financial statements to U.S. dollars are recognized on our Statement of Income as foreign exchange gain (loss), net.

Complementing our strategy to mitigate foreign exchange rate risks, we have contracted certain financial hedges in order to reduce our 2014 cash flow exposure. Our cash flow exposure comes as a result of the fact that approximately 10% of our net revenues and 25% of our total costs are denominated in reais. Having more real denominated costs than revenues generates such exposure. Approximately 55% of our real exposure is protected in case the U.S. dollar depreciates below R$2.00 to the U.S. dollar.

The table below provides information about our assets and liabilities exposed to foreign currency risk as of December 31, 2013, as well as the derivative transactions outstanding at the same date:

	Total Outstanding Amount		Outstanding Amount by Year of Maturity
			2014		2015		2016		2017		2018		Thereafter		Total Fair Value
	(in US$ millions)
ASSETS
Cash and cash equivalents and financial investments
In reais		1,269.7		1,269.7		—		—		—		—		—		1,269.7
In Euro		21.4		21.4		—		—		—		—		—		21.4
In Other Currencies		38.7		38.7		—		—		—		—		—		38.7
Trade accounts receivable
In reais		43.1		43.1		—		—		—		—		—		43.1
In Euro		144.3		144.3		—		—		—		—		—		144.3
In Other Currencies		1.0		1.0		—		—		—		—		—		1.0
Deferred income tax assets
In Euro		7.5		0.7		0.7		0.7		0.6		0.7		4.1		7.5
In Other Currencies		1.0		0.1		0.1		0.1		0.1		0.1		0.5		1.0
Other assets
In reais		345.7		200.1		145.6		—		—		—		—		345.7
In Euro		30.1		28.5		1.6		—		—		—		—		30.1
In Other Currencies		11.5		11.5		—		—		—		—		—		11.5
Total Assets in reais		1,658.5		1,512.9		145.6		—		—		—		—		1,658.5
Total Assets in Euro		203.3		194.9		2.3		0.7		0.6		0.7		4.1		203.3
Total Assets in Other Currencies		52.2		51.3		0.1		0.1		0.1		0.1		0.5		52.2
LIABILITIES
Loans
In reais		660.3		54.8		49.8		468.7		49.8		19.2		18.0		660.3
In Euro		76.5		3.2		7.6		36.8		17.3		10.5		1.1		76.5
Accounts payable to suppliers
In reais		84.2		84.2		—		—		—		—		—		84.2
In Euro		110.6		110.6		—		—		—		—		—		110.6
In Other Currencies		3.3		3.3		—		—		—		—		—		3.3
Customer advances
In reais		278.2		278.2		—		—		—		—		—		278.2
Other accounts payable & accrued liabilities
In reais		720.3		556.4		163.9		—		—		—		—		720.3
In Euro		60.0		58.6		1.4		—		—		—		—		60.0
In Other Currencies		3.7		3.7		—		—		—		—		—		3.7
Taxes and payroll charges payable
In reais		339.8		243.6		67.9		28.3		—		—		—		339.8
In Euro		8.5		8.5		—		—		—		—		—		8.5
Accrued taxes on income

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	Total Outstanding Amount			Outstanding Amount by Year of Maturity
				2014		2015			2016			2017			2018			Thereafter			Total Fair Value
	(in US$ millions)
In reais		1.6			1.6		—			—			—			—			—			1.6
In Euro		8.5			8.5		—			—			—			—			—			8.5
In Other Currencies		2.1			2.1		—			—			—			—			—			2.1
Deferred income tax liabilities
In reais		183.7			16.8		16.6			16.6			15.8			17.0			100.9			183.7
In Other Currencies		0.4			0.2		—			—			—			—			0.2			0.4
Accrued dividends
In reais		45.7			45.7		—			—			—			—			—			45.7
Contingencies
In reais		40.7			4.1		4.1			4.1			4.1			4.1			20.2			40.7
In Euro		1.0			0.1		0.1			0.1			0.1			0.1			0.5			1.0
Total liabilities in reais		2,354.5			1,285.4		302.3			517.7			69.7			40.3			139.1			2,354.5
Total liabilities in Euro		265.1			189.5		9.1			36.9			17.4			10.6			1.6			265.1
Total liabilities in Other Currencies		9.1			9.1		—			—			—			—			—			9.1
Total exposure in reais		(696.0	)		227.5		(156.7	)		(517.7	)		(69.7	)		(40.3	)		(139.1	)		(696.0	)
Total exposure in Euro		(61.8	)		5.4		(6.8	)		(36.2	)		(16.8	)		(9.9	)		2.5			(61.8	)
Total exposure in Other Currencies		43.1			42.2		0.1			0.1			0.1			0.1			0.5			43.1
DERIVATIVE INSTRUMENTS(1)
Net exposure in assets/liabilities
In reais		(696.0	)		227.5		(156.7	)		(517.7	)		(69.7	)		(40.3	)		(139.1	)		(696.0	)
In Euro		(61.8	)		5.4		(6.8	)		(36.2	)		(16.8	)		(9.9	)		2.5			(61.8	)
In Other Currencies		43.1			42.2		0.1			0.1			0.1			0.1			0.5			43.1

(1) No foreign currency derivatives were outstanding as of December 31, 2013.

Credit Risk

We may incur losses if counterparties to our various contracts do not pay amounts that are owed to us. In that regard, our primary credit risk derives from the sales of aircraft, spare parts and related services to customers, including the financial obligations related to those sales in the cases where we provide guarantees for the benefit of the providers of finance to the aircraft purchases of our customers. We are also exposed to the credit risk of the counterparties to our financial derivative contracts.

Financial instruments which may potentially subject us to credit risk concentration include (1) cash and cash equivalents, (2) trade and other accounts receivable, (3) customer commercial financing, (4) advances to suppliers and (5) financial derivative contracts. We seek to limit our credit risk associated with cash and cash equivalents by placing the investments we make with those instruments with investment grade-rated institutions in short-term securities and mutual funds. With respect to trade accounts receivable and customer commercial financing, we seek to limit our credit risk by performing ongoing credit evaluations. All such customers are currently meeting their commitments with us, are operating within the established credit limits that we assign to them and are considered by management to represent an acceptable credit risk level to us. Advances to suppliers are made only to select, long-standing suppliers. The financial condition of those suppliers is analyzed on an ongoing basis with a view to limiting credit risk. We address credit risk related to derivative instruments by restricting the counterparties of such derivatives to major financial institutions.

We may also have credit risk related to the sale of aircraft during the period in which their purchasers are finalizing the financing arrangements for their aircraft purchases from us. In order to try to minimize these risks, customer credit analyses are continuously monitored and we work closely with financial institutions to facilitate customer aircraft financing.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

12A. Debt Securities

Not applicable.

12B. Warrants and Rights

Not applicable.

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12C. Other Securities

Not applicable.

12D. American Depositary Shares

Depositary Fees and Charges

American Depositary Receipt, or ADR, holders will be charged a fee for each issuance of ADSs, including issuances resulting from distributions of shares, rights and other property, and for each surrender of ADSs in exchange for deposited securities. The fee in each case is US$5.00 for each 100 ADSs (or any portion thereof) issued or surrendered.

The following additional charges shall be incurred by ADR holders, by any party depositing or withdrawing shares or by any party surrendering ADRs or to whom ADRs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADRs or the deposited securities or a distribution of ADRs), whichever is applicable:

• to the extent not prohibited by the rules of any stock exchange or interdealer quotation system upon which the ADSs are traded, a fee of US$1.50 per ADR or ADRs for transfers of certificated or direct registration ADRs;

• to the extent not prohibited by the rules of any stock exchange or interdealer quotation system upon which the ADSs are traded, a fee of US$0.02 or less per ADS (or portion thereof) for any cash distribution made pursuant to the deposit agreement governing our ADSs;

• to the extent not prohibited by the rules of any stock exchange or interdealer quotation system upon which the ADSs are traded, a fee of US$0.02 per ADS (or portion thereof) per year for services performed, by the depositary in administering our ADR program (which fee shall be assessed against holders of ADRs as of the record date set by the depositary not more than once each calendar year and shall be payable in the manner described in the next succeeding provision);

• any other charge payable by any of the depositary, any of the depositary’s agents, including, without limitation, the custodian, or the agents of the depositary’s agents in connection with the servicing of our common shares or other deposited securities (which charge shall be assessed against registered holders of our ADRs as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such registered holders or by deducting such charge from one or more cash dividends or other cash distributions);

• a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those holders entitled thereto;

• stock transfer or other taxes and other governmental charges;

• cable, telex and facsimile transmission and delivery charges incurred at the request of ADR holders;

• transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities;

• expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars; and

• such fees and expenses as are incurred by the depositary (including, without limitation, expenses incurred in connection with compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable law, rule or regulation.

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We will pay all other charges and expenses of the depositary and any agent of the depositary (except the Brazilian custodian of our common shares) pursuant to agreements from time to time between us and the depositary. The fees described above may be amended from time to time.

Only in the case of fees owed to the depositary in connection with cash distributions payable to ADS holders is JPMorgan Chase Bank, the depositary for our ADR program, entitled to collect those fees by offsetting them against the referred cash distributions payable to holders of our ADRs. In all other cases, JPMorgan Chase Bank will not offset fees owed to it against distributions payable to ADR holders.

Depositary Payments for the Year December 31, 2013

In 2013, JPMorgan Chase Bank paid US$0.4 million in connection with investor relations related expenses of Embraer incurred in 2013 that are eligible for reimbursement from JPMorgan Chase Bank under our contractual arrangements with that entity.

PART II

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

No matters to report.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Material Modifications to the Rights of Security Holders

Not applicable.

Use of Proceeds

Not applicable.

ITEM 15. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures refers to the controls and other procedures adopted by us that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

Our President and CEO, Frederico Pinheiro Fleury Curado, and our executive vice-president and chief financial and investor relations officer, José Antonio de Almeida Filippo, after evaluating, together with management, the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2013, the end of the period covered by this annual report, concluded that, as of such date, our disclosure control and procedures were effective to ensure information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and were effective in ensuring that such information is accumulated and communicated to our management, including our CEO and chief financial officer, as appropriate to allow timely decisions regarding required disclosures.

135

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance to our management and Board of Directors regarding the reliability of financial reporting and the preparation of our financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Effective internal control over financial reporting cannot, and does not, provide absolute assurance of achieving our control objectives. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2013. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework (1992). Based on this assessment, our management concluded that, as of December 31, 2013, our internal control over financial reporting was effective based on those criteria.

Attestation Report of the Registered Public Accounting Firm

The effectiveness of our internal control over financial reporting as of December 31, 2013 has been audited by KPMG Auditores Independentes, an independent registered public accounting firm, as stated in their report which appears herein on page F-2.

Changes in Internal Control over Financial Reporting

Our risks and internal controls department periodically evaluates our internal controls for the main cycles, documenting the processes used in each cycle, identifying opportunities and suggesting improvements for the existing control mechanisms. There was no change in our internal controls over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

ITEM 16.A AUDIT COMMITTEE FINANCIAL EXPERT

Our Board of Directors has determined that Mr. Sergio Eraldo de Salles Pinto, an effective member of our statutory Audit and Risks Committee is an “audit committee financial expert” as defined by current SEC rules. For a discussion of the role of our Audit and Risks Committee, see “Item 6C. Directors, Senior Management and Employees—Board Practices—Audit and Risks Committee.”

ITEM 16.B CODE OF ETHICS

Our Board of Directors has adopted a Code of Ethics and Conduct applicable to our directors, officers and employees worldwide, including our principal executive officer, principal financial officer and controller. A copy of our Code of Ethics and Conduct has been filed as Exhibit 11.1 to this annual report.

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ITEM 16.C PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth by category of service the total fees for services performed by KPMG Auditores Independentes during the fiscal years ended December 31, 2013 and 2012:

Principal accountant fees and services	Year ended December 31,
	2013		2012
	(in US$ thousands)
Audit Fees		3,095		2,394
Audit-Related Fees		89		17
Tax Fees		162		272
All Other Fees		10		2
Total		3,356		2,685

Audit Fees

Audit fees consisted of the aggregate fees in connection with (1) the audit of our annual financial statements and quarterly limited reviews under Brazilian GAAP, which are published in Brazil, (2) our annual consolidated statements under IFRS and (3) statutory audits of our subsidiaries.

Audit-Related Fees

Audit-related fees consisted mainly of the aggregate fees billed in 2013 in connection with services related to regulatory compliance by certain of our subsidiaries.

Tax Fees

Tax fees in 2013 consisted of the aggregate fees billed by KPMG Auditores Independentes in connection with tax compliance for some of our subsidiaries.

All Other Fees

All other audit fees refers to miscellaneous permitted services rendered by KPMG Auditores Independentes in 2013 and 2012.

Pre-Approval Policies and Procedures

Our Board of Directors approves all audit and audit-related services provided by KPMG Auditores Independentes. Any services provided by KPMG Auditores Independentes that are not specifically included within the scope of the audit must be pre-approved by our Audit and Risks Committee in advance of any engagement. Pursuant to Rule 2-01 of Regulation S-X, audit committees are permitted to approve certain fees for audit-related services, tax services and other services pursuant to a de minimis exception prior to the completion of an audit engagement. In 2013, 2012, 2011, 2010 and 2009, none of the fees paid to KPMG Auditores Independentes and PricewaterhouseCoopers Auditores Independentes were approved pursuant to the de minimis exception.

ITEM 16.D EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

None.

ITEM 16.E PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

The following table shows the results of our last share buyback program which was completed on March 31, 2008 for a total purchase price of US$183.7 million.

137

	Total Number of Shares Purchased (1)		Average Price Paid per Share (2)		Total Number of Shares Purchased as Part of Publicly Announced Program (3)		Maximum Number of Shares that May Yet Be Purchased Under the Program
			(in R$)
December 19-20, 2007		70,000		11.21		70,000		16,730,000
January 2-31, 2008		7,602,100		9.93		7,602,100		9,127,900
February 1-29, 2008		5,604,500		11.98		5,604,500		3,523,400
March 3-31, 2008		3,523,400		11.44		3,523,400		—

(1) All shares were purchased through a publicly announced program, in open-market transactions on the São Paulo Stock Exchange.

(2) Translated from nominal reais into U.S. dollars at the selling exchange rate in effect on each date on which purchases were made.

(3) The share buyback program was approved by our Board of Directors on December 7, 2007, in compliance with Instrução CVM No. 10/80. We were authorized to buy back up to an aggregate of 16,800,000 common shares, representing approximately 2.3% of our outstanding capital, which totaled 740,465,044 common shares outstanding. The program was terminated on March 31, 2008. A total of 16,800,000 shares were purchased at an average price of U$10.93 per share.

On January 23, 2012, our Board of Directors approved a new share buyback program for our common shares, in compliance with Instrução CVM No. 10/80, for the purpose of backing our second and third stock option plans, to be launched in 2012 and 2013, respectively. We were authorized to buy back up to an aggregate of 1,065,000 common shares, representing approximately 0.15% of our outstanding capital, which totaled 740,465,044 common shares outstanding. No shares have been acquired by us under this program. The acquisition of the shares will be made on the São Paulo Stock Exchange, and may not be superior to 30% of the average daily volume of shares traded, and the common shares bought back will be kept in treasury, with no political or economic rights. The program will last for one year as of the date of approval.

ITEM 16.F CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16.G CORPORATE GOVERNANCE

We are subject to NYSE corporate governance listing standards. As a foreign private issuer, the standards applicable to us are considerably different than the standards applied to U.S. listed companies. Under the NYSE rules, we are required only to: (1) have an audit committee or audit board, pursuant to an applicable exemption available to foreign private issuers, that meets certain requirements, as discussed below, (2) provide prompt certification by our CEO of any material non-compliance with any corporate governance rules and (3) provide a brief description of the significant differences between our corporate governance practices and the NYSE corporate governance practice required to be followed by U.S. listed companies. The discussion of the significant differences between our corporate governance practices and those required of U.S. listed companies follows below.

Majority of Independent Directors

The NYSE rules require that a majority of the Board must consist of independent Directors. Independence is defined by various criteria, including the absence of a material relationship between the director and the listed company, which independence must be affirmatively determined by the Board of Directors. Likewise, the Novo Mercado Listing Rules requires that at least 20% of the members of the Board of Directors of a company listed on the Novo Mercado segment of the São Paulo Stock Exchange be independent. Independence of Board members in accordance with the Novo Mercado Listing Rules is defined by criteria similar to those set forth in the NYSE rules. However, under the Novo Mercado Listing Rules and Brazilian law, neither our Board of Directors nor our management is required to test the independence of Directors before their election to the Board.

138

With the exception of Mr. Antonio Franciscangelis Neto (the representative of the Brazilian federal government, through the government’s ownership of the “golden share”), Messrs. Ernani de Almeida Ribeiro Junior, Paulo Roberto de Oliveira (both representatives of our employees) and Arno Hugo Augustin Filho, all the current members of our Board of Directors have declared that they are independent for purposes of the Novo Mercado Listing Rules. While our Directors meet the qualification requirements of the Brazilian Corporate Law, the CVM requirements and the Novo Mercado Listing Rules, our Board of Directors has not determined whether our Directors are considered independent under the NYSE test for Director independence.

The Brazilian Corporate Law and our bylaws require that our Directors be elected by our shareholders at a general shareholders’ meeting. The election of members of our Board of Directors, absent a request to adopt a cumulative voting system, will be conducted under a system of slate voting whereby voting will be based on a slate of Directors and no voting will be allowed on individual candidates. According to our bylaws, the Board of Directors will nominate a slate for the subsequent term of office. Our Board of Directors is appointed by our shareholders for a two-year term, having three reserved seats as follows: (1) one acting member to be appointed by the Brazilian federal government, as holder of the “golden share” and (2) two acting members to be appointed by our employees. The remaining eight Directors are elected in accordance with the slate voting or cumulative voting rules contained in our bylaws. A person may participate in two or more different slates. Each shareholder may only vote on one slate and the slate that receives the highest number of votes shall be declared elected. See “Item 10B. Additional Information—Memorandum and Articles of Association—Board of Directors—Election of Board of Directors.”

Executive Sessions

NYSE rules require that the non-management directors must meet at regularly scheduled executive sessions without management. The Brazilian Corporate Law does not have a similar provision. According to the Brazilian Corporate Law, up to one-third of the members of the Board of Directors can be elected from management. The remaining non-management directors are not expressly empowered to serve as a check on management and there is no requirement that those directors meet regularly without management. As a result, the non-management directors on our board do not typically meet in executive session.

Nominating/Corporate Governance Committee

NYSE rules require that listed companies have a Nominating/Corporate Governance Committee composed entirely of independent directors and governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities, which include, among other things, identifying and selecting qualified board member nominees and developing a set of corporate governance principles applicable to the company. We are not required under applicable Brazilian law to have a Nominating Committee/Corporate Governance Committee, and accordingly, to date, have not established such a committee. The directors are elected by our shareholders at a general shareholders’ meeting. Our corporate governance practices are adopted by the entire board.

Compensation Committee

NYSE rules require that listed companies have a Compensation Committee composed entirely of independent directors and governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities, which include, among other things, reviewing corporate goals relevant to CEO compensation, evaluating CEO performance and approving CEO compensation levels and recommending to the board non-CEO compensation, incentive-compensation and equity-based plans. We are not required under applicable Brazilian law to have a Compensation Committee. Under the Brazilian Corporate Law, the total amount available for compensation of our directors and Executive Officers and for profit-sharing payments to our Executive Officers is established by our shareholders at the annual general meeting. The Board of Directors is then responsible for determining the individual compensation and profit sharing of each Executive Officer, as well as the compensation of our board and committee members. In making such determinations, the board reviews the performance of the Executive Officers, including the performance of our CEO.

139

Audit Committee

NYSE rules require that listed companies have an audit committee that (1) is composed of a minimum of three independent directors who are all financially literate, (2) meets the SEC rules regarding audit committees for listed companies, (3) has at least one member who has accounting or financial management expertise and (4) is governed by a written charter addressing the committee’s required purpose and detailing its required responsibilities. We have an Audit and Risks Committee which meets the requirements of Rule 10A-3 under the U.S. Securities Exchange Act of 1934. We do not claim an exemption from the listing standards for audit committees.

Embraer’s statutory “Audit and Risks Committee” is composed of independent members of our board of directors. Because foreign private issuers are subject to local legislation which may prohibit the full board of directors from delegating certain responsibilities to the audit committee, pursuant to Rule 10A-3, audit committees of foreign private issuers may be granted responsibilities, which may include advisory powers, with respect to such matters to the extent permitted by law. Due to certain restrictions imposed by the Brazilian Corporate Law, our Audit and Risks Committee, unlike a U.S. audit committee, only has an “advisory” role and may only make recommendations for adoption by the full board of directors, which is responsible for the ultimate vote and final decision. For example, our Audit and Risks Committee makes recommendations regarding the appointment of auditing firms, which are subject to a vote of the board of directors. Our Audit and Risks Committee complies with Brazilian legal requirements (including “independent directors,” as defined by Brazilian law).

Shareholder Approval of Equity Compensation Plans

NYSE rules require that shareholders be given the opportunity to vote on all equity compensation plans and material revisions thereto, with limited exceptions. Under the Brazilian Corporate Law, shareholders must approve all stock option plans. In addition, any issuance of new shares that exceeds our authorized share capital is subject to shareholder approval.

Corporate Governance Guidelines

NYSE rules require that listed companies adopt and disclose corporate governance guidelines. In addition to being subject to the Novo Mercado Regulations that include rules on corporate governance, we have not adopted any formal corporate governance guidelines. We have adopted and observe a disclosure policy, our Policy on Publicizing Acts or Relevant Facts, which requires the public disclosure of all relevant information pursuant to guidelines set forth by the CVM, as well as an insider trading policy, our Policy on Securities Transactions, which, among other things, establishes black-out periods and requires insiders to inform management of all transactions involving our securities.

Code of Business Conduct and Ethics

NYSE rules require that listed companies adopt and disclose a code of business conduct and ethics for directors, officers and employees, and promptly disclose any waivers of the code for directors or Executive Officers. Applicable Brazilian law does not have a similar requirement. However, in April 2004, we adopted a Code of Ethics and Conduct applicable to our officers, directors and employees worldwide, including at the subsidiary level. We believe this code substantially addresses the matters required to be addressed pursuant to the NYSE rules. A copy of our Code of Ethics and Conduct has been filed as Exhibit 11.1 to this annual report. For a further discussion of our Code of Ethics and Conduct, see “Item 16.B Code of Ethics.”

Internal Audit Function

NYSE rules require that listed companies maintain an internal audit function to provide management and the audit committee with ongoing assessments of the company’s risk management processes and system of internal control. Our internal audit reports to the Audit and Risks Committee, and risk management and internal control report to the Chief Financial Officer, respectively, assuring the necessary independence and competence to assess the design of our internal control over financial reporting, as well as to test its effectiveness as required by Section 404 of the Sarbanes-Oxley Act of 2002.

140

ITEM 16.H MINE SAFETY DISCLOSURE

Not applicable.

PART III

ITEM 17. FINANCIAL STATEMENTS

We have responded to Item 18 in lieu of responding to this item.

ITEM 18. FINANCIAL STATEMENTS

Our audited consolidated financial statements, together with the Independent Registered Public Accounting Firm thereon, are filed as part of this annual report and are located following the signature page hereof.

ITEM 19. EXHIBITS

Exhibit Number	Description
1.1	Bylaws of Embraer approved at the Annual and Special Shareholders’ Meeting held on March 8, 2013, incorporated herein by reference from Form 6-K furnished on March 11, 2013. (English translation).
2.1	Form of Amended and Restated Deposit Agreement among Embraer S.A., JP Morgan Chase Bank, N.A., as depositary, and the Holders from time to time of American Depositary Shares issued thereunder, including the Form of American Depositary Receipts, incorporated herein by reference from Exhibit 9(a)(2) to Embraer’s Registration Statement No. 333-133162.
2.2	Indenture, dated as of October 25, 2006, among Embraer Overseas Limited, Embraer-Empresa Brasileira de Aeronáutica S.A., The Bank of New York, as Trustee, Registrar, Transfer Agent, and Principal Paying Agent, and The Bank of New York (Luxembourg) S.A., as Luxembourg Paying Agent and Transfer Agent, incorporated herein by reference from Exhibit 4.1 to Embraer’s Registration Statement No. 333-141629.
2.3	Indenture, dated October 8, 2009, among Embraer Overseas Limited, Embraer-Empresa Brasileira de Aeronáutica S.A. and The Bank of New York, Mellon, as Trustee, incorporated herein by reference from Exhibit 4.1 to Embraer’s Registration Statements Nos. 333-162103 and 333-162103-1.
2.4	First Supplemental Indenture, dated October 8, 2009, among Embraer Overseas Limited, Embraer-Empresa Brasileira de Aeronáutica S.A. and The Bank of New York Mellon, as Trustee, incorporated herein by reference from Exhibit 4.2 to Embraer’s Registration Statements Nos. 333-162103 and 333-162103-1.
2.5	Second Supplemental Indenture, dated as of September 16, 2013, among Embraer Overseas Limited, Embraer S.A., formerly known as Empresa Brasileira de Aeronáutica S.A. and The Bank of New York Mellon.
2.6	Indenture, dated June 15, 2012, among Embraer S.A. and The Bank of New York, Mellon, as Trustee, incorporated herein by reference from Exhibit 4.1 to Embraer’s Registration Statement No. 333-182039.
2.7	First Supplemental Indenture, dated June 15, 2012, among Embraer S.A. and The Bank of New York, Mellon, as Trustee, incorporated herein by reference from Exhibit 4.2 to Embraer’s Registration Statement No. 333-182039.
2.8	Indenture, dated as of September 16, 2013, among Embraer Overseas Limited, Embraer S.A. and The Bank of New York Mellon, as Trustee, Registrar, Transfer Agent, and Principal Paying Agent.
2.9	Registration Rights Agreement, dated as of September 16, 2013, among Embraer Overseas Limited, Embraer S.A. and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the initial purchasers.

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Exhibit Number	Description
2.10	The registrant hereby agrees to furnish to the SEC, upon request, copies of instruments defining the rights of holders of long-term debt of the registrant and its consolidated subsidiaries and for any of its unconsolidated subsidiaries for which financial statements are required to be filed.
4.1	Protocol of Merger and Justification of Embraer-Empresa Brasileira de Aeronáutica S.A. with and into Rio Han Empreendimentos e Participações S.A., dated as of January 19, 2006, and exhibits thereto, or Merger Agreement (English translation), incorporated herein by reference from Exhibit 2.1 to Embraer’s Registration Statement No. 333-132289.
4.2	Lease Agreement, as amended, between Howard County and Embraer Aircraft Corporation, dated as of April 21, 1998, incorporated herein by reference from Exhibit 10.6 to Embraer’s Registration Statement No. 333-12220.
4.3	Lease Agreement, as amended, between the Paris Airport and Embraer, dated as of January 1, 1999, together with an English translation, incorporated herein by reference from Exhibit 10.6 to Embraer’s Registration Statement No. 333-12220.
8.1	List of Embraer’s subsidiaries.
11.1	Code of Ethics and Conduct, incorporated herein by reference from Exhibit 11.1 to Embraer’s Annual Report on Form 20-F for the fiscal year ended December 31, 2003.
12.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer.
12.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer.
13.1	Section 1350 Certification of Chief Executive Officer.
13.2	Section 1350 Certification of Chief Financial Officer.

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SIGNATURES

The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

	EMBRAER S.A.
Date: March 20, 2014	By:	/s/ FREDERICO PINHEIRO FLEURY CURADO
	Name:	Frederico Pinheiro Fleury Curado
	Title:	President and Chief Executive Officer
Date: March 20, 2014	By:	/s/ JOSÉ ANTONIO DE ALMEIDA FILIPPO
	Name:	José Antonio de Almeida Filippo
	Title:	Executive Vice - President
		and Chief Financial and Investor Relations Officer

INDEX TO FINANCIAL STATEMENTS

	Page
Index to Financial Statements		1
Consolidated Statements of Financial Position as of December 31, 2013 and 2012 and January 1, 2012		5
Consolidated Statements of Income for the Years Ended December 31, 2013, 2012 and 2011		7
Consolidated Statements of Comprehensive Income for the Years Ended December 31, 2013, 2012 and 2011		8
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2013, 2012 and 2011		9
Consolidated Statements of Cash Flows for the Years Ended December 31, 2013, 2012 and 2011		10
Notes to Consolidated Financial Statements		11

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Embraer S.A.

We have audited the accompanying consolidated statement of financial position of Embraer S.A. and subsidiaries (the “Company”) as of December 31, 2013 and 2012, and the related consolidated statements of income, comprehensive income, shareholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2013. We also have audited Embraer S.A.’s internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting under item 15 of the Company’s Form 20-F. Our responsibility is to express an opinion on these consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

F-2

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Embraer S.A. and subsidiaries as of December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2013, in conformity with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2013, based on criteria established in Internal Control – Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

As discussed in Note 2.2.1, the Company changed the manner in which it accounts for joint arrangements under IFRS 11 - Joint Arrangements in 2013, which included disclosure of the January 1, 2012 statement of financial position.

São José dos Campos - Brazil

March 20, 2014

/s/ KPMG Auditores Independentes

F-3

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

Embraer S.A.

In our opinion, the consolidated statements of income, of comprehensive income, of shareholders’ equity and of cash flows for the year ended December 31, 2011 present fairly, in all material respects, the results of operations and cash flows of Embraer S.A. and its subsidiaries for the year ended December 31, 2011, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

As discussed in Note 2.2.1 to the consolidated financial statements, the Company changed the manner in which it accounted for joint arrangements under IFRS 11 - Joint Arrangements.

Campinas - Brazil

April 13, 2012, except for the effects of adopting IFRS 11 – Joint Arrangements as discussed in Note 2.2.1 to the consolidated financial statements as to which the date is March 20, 2014

/s/ PricewaterhouseCoopers

Auditores Independentes

F-4

Embraer S.A.

Consolidated Statements of Financial Position

as of December 31, 2013, 2012 and January 01, 2012

In millions of U.S. dollars

	Note		12.31.2013		12.31.2012		01.01.2012
					(Restated)*		(Restated)*
ASSETS
CURRENT
Cash and cash equivalents		5		1,683.7		1,797.0		1,347.8
Financial investments		6		939.9		578.2		753.6
Trade accounts receivable, net		7		572.2		525.6		503.4
Derivative financial instruments		8		14.6		11.2		8.2
Customer and commercial financing		9		9.6		22.7		12.0
Collateralized accounts receivable		10		10.5		13.0		14.9
Inventories		12		2,287.3		2,156.9		2,283.4
Other assets		13		250.0		254.1		240.6
				5,767.8		5,358.7		5,163.9
NON-CURRENT
Financial investments		6		45.4		51.3		54.7
Trade accounts receivable		7		6.5		9.9		0.2
Derivative financial instruments		8		15.8		24.8		22.7
Customer and commercial financing		9		64.1		86.9		90.2
Collateralized accounts receivable		10		415.4		413.0		472.7
Guarantee deposits		11		574.7		581.5		471.3
Deferred income tax		24		8.5		12.9		65.7
Inventories		12		—		—		4.2
Other assets		13		141.9		241.1		239.6
				1,272.3		1,421.4		1,421.3
Investments				—		3.6		4.8
Property, plant and equipment, net		16		1,993.3		1,738.4		1,450.4
Intangible assets		17		1,109.1		958.8		808.3
				4,374.7		4,122.2		3,684.8
TOTAL ASSETS				10,142.5		9,480.9		8,848.7

* See note 2.2.1 for the discussion relating to the adjustments.

The accompanying notes are an integral part of these consolidated financial statements.

F-5

Embraer S.A.

Consolidated Statements of Financial Position

as of December 31, 2013, 2012 and January 01, 2012

In millions of U.S. dollars

	Note		12.31.2013			12.31.2012			01.01.2012
						(Restated)*			(Restated)*
LIABILITIES
CURRENT
Trade accounts payable		19		1,013.6			758.7			829.2
Loans and financing		20		79.3			336.3			251.8
Non-recourse and recourse debt		10		12.1			11.9			312.8
Other payables		21		304.8			277.2			260.8
Contribution from suppliers				33.6			0.9			0.9
Advances from customers		22		875.9			899.2			854.0
Derivative financial instruments		8		13.7			0.9			1.0
Taxes and payroll charges payable		23		133.1			65.1			89.0
Income tax and social contribution				18.8			63.6			11.2
Financial guarantee and residual value		25		90.0			114.1			—
Dividends payable		29.8		45.7			30.4			0.1
Unearned income				173.6			133.7			131.1
Provisions		26.1		98.5			96.7			96.5
				2,892.7			2,788.7			2,838.4
NON-CURRENT
Loans and financing		20		2,115.0			1,730.2			1,406.3
Non-recourse and recourse debt		10		388.1			388.3			149.8
Other payables		21		88.3			11.1			14.0
Contribution from suppliers				—			—			1.0
Advances from customers		22		131.1			100.4			214.0
Derivative financial instruments		8		—			—			0.2
Taxes and payroll charges payable		23		215.6			350.0			386.8
Deferred income tax and social contribution		24		209.2			26.5			22.8
Financial guarantee and residual value		25		203.5			470.3			494.9
Unearned income				101.1			108.2			84.0
Provisions		26.1		165.7			156.9			118.7
				3,617.6			3,341.9			2,892.5
TOTAL LIABILITIES				6,510.3			6,130.6			5,730.9
SHAREHOLDERS’ EQUITY
Capital		29		1,438.0			1,438.0			1,438.0
Treasury shares		29		(103.8	)		(154.2	)		(183.7	)
Revenue reserves				2,205.2			1,980.3			1,737.3
Share-based remuneration		30		27.8			21.0			13.1
Cumulative translation adjustments				(33.9	)		(26.8	)		2.6
				3,533.3			3,258.3			3,007.3
Non-controlling interest				98.9			92.0			110.5
TOTAL SHAREHOLDERS’ EQUITY				3,632.2			3,350.3			3,117.8
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY				10,142.5			9,480.9			8,848.7

* See note 2.2.1 for the discussion relating to the adjustments.

The accompanying notes are an integral part of these consolidated financial statements.

F-6

Embraer S.A.

Consolidated Statements of Income

Years Ended

(In millions of U.S. dollars, except weighted average shares and earnings per share)

	Note		12.31.2013			12.31.2012			12.31.2011
						(Restated)*			(Restated)*
REVENUE				6,235.0			6,167.0			5,790.9
Cost of sales and services				(4,818.9	)		(4,676.6	)		(4,488.1	)
GROSS PROFIT				1,416.1			1,490.4			1,302.8
OPERATING INCOME (EXPENSE)
Administrative				(210.5	)		(279.2	)		(261.3	)
Selling				(454.4	)		(480.4	)		(418.6	)
Research				(74.7	)		(77.3	)		(85.3	)
Other operating income (expense), net		33		36.9			(42.8	)		(219.7	)
Equity in income of associates				—			1.2			0.3
OPERATING PROFIT BEFORE FINANCIAL INCOME				713.4			611.9			318.2
Financial expense, net		35		(96.4	)		(6.8	)		(90.5	)
Foreign exchange gain (loss), net		36		(14.6	)		8.7			20.1
PROFIT BEFORE TAXES ON INCOME				602.4			613.8			247.8
Income tax expense		24.2		(256.4	)		(265.2	)		(127.4	)
NET INCOME FOR THE YEAR				346.0			348.6			120.4
Attributable to:
Owners of Embraer				342.0			347.8			111.6
Non-controlling interest				4.0			0.8			8.8
Weighted average number of shares (in thousands)
Basic		31		729,001			725,023			723,667
Diluted		31		733,796			727,731			724,847
Earnings per share-basic in US$		31		0.4691			0.4797			0.1542
Earnings per share-diluted in US$		31		0.4661			0.4780			0.1540

* See note 2.2.1 for the discussion relating to the adjustments.

The accompanying notes are an integral part of these consolidated financial statements.

F-7

Embraer S.A.

Consolidated Statements of Comprehensive Income

Years Ended

(In millions of U.S. dollars)

	12.31.2013			12.31.2012			12.31.2011
				(Restated)*			(Restated)*
Net income for the year		346.0			348.6			120.4
Actuarial loss on post employment benefit obligation		(7.4	)		(37.4	)		—
Translation adjustments - subisidiaries		9.0			6.1			(8.8	)
Put options of minority interest		1.1			—			—
Financial instruments available for sale		(0.9	)		—			(0.9	)
Other comprehensive income, net of tax effects (i)		1.8			(31.3	)		(9.7	)
Total of comprehensive income		347.8			317.3			110.7
Attributable to:
Owners of Embraer		344.4			312.8			103.3
Non-controlling interest		3.4			4.5			7.4
		347.8			317.3			110.7

(i) presented items above are net of deferred income tax.

* See note 2.2.1 for the discussion relating to the adjustments.

The accompanying notes are an integral part of these consolidated financial statements.

F-8

Embraer S.A.

Consolidated Statements of Shareholders’ Equity

Years Ended

(In millions of U.S. dollars)

																							Accumulated other comprehensive (loss) income
										Revenue reserves
	Note		Capital		Treasury shares			Share-based remuneration		Investment subsidy		Statutory reserve		Additional proposed dividends			For investment and working capital			Retained earnings			Result in transactions with non controlling interest			Actuarial gain (loss) on post employment benefit obligation			Cumulative translation adjustment			Other cumulative translation adjustment			Total shareholders equity			Non-controlling interest			Total shareholders’ equity
At December 31, 2010				1,438.0		(183.7	)		3.4		26.1		127.4		27.2			1,579.1			—			—			0.7			10.2			—			3,028.4			103.1			3,131.5
Net income for the year				—		—			—		—		—		—			—			111.6			—			—			—			—			111.6			8.8			120.4
Translation adjustments - subsidiaries				—		—			—		—		—		—			—			—			—			—			(7.4	)		—			(7.4	)		(1.4	)		(8.8	)
Financial instruments				—		—			—		—		—		—			—			—			—			—			(0.9	)		—			(0.9	)		—			(0.9	)
															—
Total comprehensive income				—		—			—		—		—		—			—			111.6			—			—			(8.3	)		—			103.3			7.4			110.7
Share-based remuneration				—		—			9.7		—		—		—			—			—			—			—			—			—			9.7			—			9.7
Allocation of profits:
Investment in subsidy				—		—			—		6.5		—		—			—			(6.5	)		—			—			—			—			0.0			—			0.0
Legal reserve				—		—			—		—		4.2		—			—			(4.2	)		—			—			—			—			—			—			—
Interest on own capital (R$ 0.25 per share)				—		—			—		—		—		(27.2	)		—			(106.9	)		—			—			—			—			(134.1	)		—			(134.1	)
Reserve for investments and working capital (practice adjustment)				—		—			—		—		—		—			(6.0	)		6.0			—			—			—			—			—			—			—
At December 31, 2011 (Restated)*				1,438.0		(183.7	)		13.1		32.6		131.6		—			1,573.1			—			—			0.7			1.9			—			3,007.3			110.5			3,117.8
Net income for the year				—		—			—		—		—		—			—			347.8			—			—			—			—			347.8			0.8			348.6
Actuarial loss on post employment benefit obligation				—		—			—		—		—		—			—			—			—			(37.4	)		—			—			(37.4	)		—			(37.4	)
Translation adjustments - subsidiaries				—		—			—		—		—		—			—			—			—			—			2.4			—			2.4			3.7			6.1
																														—
Total comprehensive income				—		—			—		—		—		—			—			347.8			—			(37.4	)		2.4			—			312.8			4.5			317.3
Share-based remuneration				—		—			7.9		—		—		—			—			—			—			—			—			—			7.9			—			7.9
Stock options grants exercised				—		29.5			—		—		—		—			—			(15.0	)		—			—			—			—			14.5			—			14.5
Acquisition of non controlling interest				—		—			—		—		—		—			—			—			5.6			—			—			—			5.6			(23.0	)		(17.4	)
Allocation of profits:
Investment in subsidy				—		—			—		4.3		—		—			—			(4.3	)		—			—			—			—			—			—			—
Legal reserve				—		—			—		—		17.1		—			—			(17.1	)		—			—			—			—			—			—			—
Interest on own capital (R$ 0.04 per share)				—		—			—		—		—		—			—			(75.1	)		—			—			—			—			(75.1	)		—			(75.1	)
Dividends				—		—			—		—		—		—			—			(14.7	)		—			—			—			—			(14.7	)		—			(14.7	)
Reserve for investments and working capital (net income for the year)				—		—			—		—		—		—			221.6			(221.6	)		—			—			—			—			—			—			—
At December 31, 2012 (Restated)*				1,438.0		(154.2	)		21.0		36.9		148.7		—			1,794.7			—			5.6			(36.7	)		4.3			—			3,258.3			92.0			3,350.3
Net income for the year				—		—			—		—		—		—			—			342.0			—			—			—			—			342.0			4.0			346.0
Actuarial loss on post employment benefit obligation				—		—			—		—		—		—			—			—			—			(7.4	)		—			—			(7.4	)		—			(7.4	)
Translation adjustments				—		—			—		—		—		—			—			—			—			—			9.9			—			9.9			(0.9	)		9.0
PUT options of non-controlling interest				—		—			—		—		—		—			—			—			—			—			—			1.1			1.1			—			1.1
Financial instruments available for sale				—		—			—		—		—		—			—			—			—			—			—			(0.9	)		(0.9	)		—			(0.9	)
Total comprehensive income				—		—			—		—		—		—			—			342.0			—			(7.4	)		9.9			0.2			344.7			3.1			347.8
Share-based remuneration				—		—			6.8		—		—		—			—			—			—			—			—			—			6.8			—			6.8
Stock options grants exercised				—		50.4			—		—		—		—			—			(27.1	)		—			—			—			—			23.3			—			23.3
Acquisition of non controlling interest				—		—			—		—		—		—			—			—			(9.8	)		—			—			—			(9.8	)		3.5			(6.3	)
Allocation of profits:
Investment in subsidy				—		—			—		3.2		—		—			—			(3.2	)		—			—			—			—			—			—			—
Legal reserve				—		—			—		—		16.6		—			—			(16.6	)		—			—			—			—			—			—			—
Interest on own capital (R$ 0.07 per share)		29.6		—		—			—		—		—		—			—			(68.8	)		—			—			—			—			(68.8	)		—			(68.8	)
Dividends		29.7		—		—			—		—		—		—			—			(20.9	)		—			—			—			—			(20.9	)		—			(20.9	)
Reserve for investments and working capital (net income for the year)				—		—			—		—		—		—			205.4			(205.4	)		—			—			—			—			—			—			—
At December 31, 2013				1,438.0		(103.8	)		27.8		40.1		165.3		—			2,000.1			—			(4.2	)		(44.1	)		14.2			0.2			3,533.6			98.6			3,632.2

* See note 2.2.1 for the discussion relating to the adjustments.

The accompanying notes are an integral part of these consolidated financial statements.

F-9

Embraer S.A.

Consolidated Statements of Cash Flows

Years Ended

(In millions of U.S. dollars)

	Note		12.31.2013			12.31.2012			12.31.2011
						(Restated)*			(Restated)*
Operating activities
Net income				346.0			348.6			120.4
Adjustment to net income for items not affecting cash
Depreciation		16		145.8			139.9			109.3
Amortization		17		144.8			138.9			129.5
Contribution from suppliers				(26.0	)		(31.8	)		(29.8	)
Allowance (reversal) for inventory obsolescence				13.4			9.2			(12.8	)
Inventory and PPE provision for adjustment to market value				28.6			39.3			5.3
Provision for doubtful accounts				(4.8	)		11.4			4.4
Deferred income tax and social contribution		24.2		192.6			75.3			85.5
Accrued interest				(2.4	)		(5.5	)		1.7
Equity in the losses (gain) of associates				3.6			(1.2	)		0.3
Share-based remuneration				6.8			7.9			9.7
Foreign exchange gain (loss), net				1.9			4.5			(13.1	)
Residual value guarantee		25		21.3			14.0			34.4
Other				0.3			0.9			(10.7	)
Changes in assets:
Financial investments				(443.7	)		160.0			(124.3	)
Derivative financial instruments				18.4			(5.4	)		(9.7	)
Collateralized accounts receivable and accounts receivable				(40.0	)		10.8			(126.3	)
Customer and commercial financing				35.9			(7.3	)		(31.8	)
Inventories				(157.2	)		70.1			(97.9	)
Other assets				60.1			(162.0	)		(0.1	)
Changes in liabilities:
Trade accounts payable				258.4			(72.2	)		83.8
Non-recourse and recourse debt				—			(62.4	)		(7.7	)
Other payables				125.7			140.5			(24.9	)
Contribution from suppliers				84.5			1.0			70.0
Advances from customers				50.4			(48.2	)		85.7
Taxes and payroll charges payable				(62.5	)		23.5			(1.2	)
Financial guarantees				(312.2	)		(8.6	)		241.0
Other provisions				42.0			(125.0	)		(4.3	)
Unearned income				32.9			26.8			(6.3	)
Net cash generated by operating activities				564.6			693.0			480.1
Investing activities
Acquisition to property, plant and equipment		16		(437.6	)		(328.0	)		(334.3	)
Proceeds from sale of property, plant and equipment				0.2			1.3			0.3
Additions to intangible assets		17		(316.6	)		(252.4	)		(217.4	)
Investments in associates		14		—			2.5			(3.0	)
Business acquisitions, net of cash acquired		38.2		2.5			(6.2	)		(51.4	)
Acquisition of non controlling interest				(17.3	)		(17.4	)		—
Proceeds from held to maturity securities				4.8			(17.1	)		3.8
Net cash used in investing activities				(764.0	)		(617.3	)		(602.0	)
Financing activities
Repayment of borrowings				(650.2	)		(1,225.3	)		(2,082.7	)
Proceeds from borrowings				890.8			1,692.6			2,362.5
Dividends and interest on own capital				(71.4	)		(59.5	)		(183.4	)
Proceeds from stock options exercised				23.3			14.5			—
Net cash generated by financing activities				192.5			422.3			96.4
Increase (decrease) in cash and cash equivalents				(6.9	)		498.0			(25.5	)
Effects of exchange rate changes on cash and cash equivalents				(106.4	)		(48.8	)		(19.8	)
Cash and cash equivalents at the beginning of the year				1,797.0			1,347.8			1,393.1
Cash and cash equivalents at the end of the year				1,683.7			1,797.0			1,347.8

* See note 2.2.1 for the discussion relating to the adjustments.

The accompanying notes are an integral part of these consolidated financial statements.

F-10

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

1. Operations

Embraer S.A. (the “Embraer” or “the Company”) is a publicly-held company incorporated under the laws of the Federative Republic of Brazil with headquarters in São José dos Campos, State of São Paulo, Brazil. The corporate purpose of the Company is:

(i) The development, production and sale of jet and turboprop aircraft for civil and defense aviation, aircraft for agricultural use, structural components, mechanical and hydraulic systems, aviation services and technical activities related to the production and maintenance of aerospace material;

(ii) The design, construction and sale of equipment, materials, systems, software, accessories and components to the defense, security and energy industries and the promotion or performance of technical activities related to production and maintenance, to achieve the highest technological and quality standards;

(iii) The performance of other technological, industrial, commercial and service activities related to the defense, security and energy industries; and

(iv) Contribution to the development of technical professionals necessary to the aerospace industry.

The Company’s 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 S.A. also has American Depositary Shares (evidenced by American Depositary Receipts - ADRs) 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.

The Company has consolidated wholly-owned entities, jointly controlled entities and commercial representation offices, located in Brazil, the United States of America (the “U.S.”), France, Spain, Portugal, Netherlands, Ireland, United Kingdom, China and Singapore.

These consolidated financial statements were approved by the Board of Directors of the Company on February 25, 2014.

2. Presentation of the Financial Statements and Accounting Practices

2.1.1 Presentation and preparation of the financial statements

The consolidated financial statements have been prepared in conformity with International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) which includes (i) IFRS, (ii) the International Accounting Standard (“IAS”), and (iii) the International Financial Reporting Interpretations Committee (“IFRIC”) or its predecessor, the Standing Interpretations Committee (“SIC”).

As of January 1, 2013, the Company adopted IFRS 10 - Consolidated Financial Statements, IFRS 11 - Joint Arrangements (Note 2.2.1) and IFRS 12 – Disclosure of Interests in Other Entities (Note 14.5). As determined by the new IFRS pronouncements, the effects should be reflected at the beginning of the earliest period presented. Thus, the comparative figures presented in these consolidated financial statements have been adjusted relative to those previously reported.

2.1.2 Basis of preparation

These consolidated financial statements were prepared under the historical cost convention except when the item requires different criteria and adjusted to reflect assets and liabilities measured at fair value through profit or loss or marked to market when available for sale.

The preparation of financial statements in conformity with IFRS requires the use of certain critical

F-11

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

accounting estimates. It also requires management of the Company to exercise its judgment in the process of applying the Company’s accounting policies. These consolidated financial statements include accounting estimates for certain assets, liabilities and other transactions.

The areas which involve a higher degree of judgment or complexity, or assumptions and estimates significant to the consolidated financial statements are disclosed in Note 3.

2.1.3 Consolidation

The consolidated financial statements include the balances of December 31, 2013 financial statements of the Company and all subsidiaries that Embraer, directly or indirectly has control, special purpose entities “SPEs” for which the Company has control, and exclusive investment funds. Jointly controlled entities (joint ventures) are not consolidated and are presented as Investments and accounted for by the equity method. The joint operations are proporcional consolidated, as follows:

ELEB - Equipamentos Ltda. - “ELEB” - a wholly-owned subsidiary located in São José dos Campos, which produces and sells precision hydraulic and mechanical equipment for the aviation industry, mainly for Embraer aircraft.

Embraer Aircraft Holding Inc. - “EAH” - a wholly-owned subsidiary, located in Fort Lauderdale, United States, responsible for corporate and institutional activities. It also has the following wholly-owned subsidiaries also located in the United States:

• Embraer Aircraft Customer Services, Inc. - “EACS” – located in Fort Lauderdale, United States of America, sells spare parts and provides product support to customers in the United States, Canada and the Caribbean.

• Embraer Aircraft Maintenance Services Inc. - “EAMS” – located in Delaware, with its operational base in Nashville, United States of America, provides maintenance services for aircraft and components.

• Embraer Training Services - “ETS” - located in Dallas, United States, is responsible for corporate and institutional activities and has a 51% subsidiary, Embraer CAE Training Services - “ECTS”, also located in Dallas, which provides training for pilots, mechanics and crew.

• Embraer Executive Jet Services, LLC - “EEJS” - located in Delaware, provides after sales support services and maintenance services for executive aircraft.

• Embraer Services Inc. - “ESI” – located in Delaware, with its operational base in Fort Lauderdale, United States of America, which provides support in the United States for the defense and commercial market programs.

• Embraer Executive Aircraft, Inc. - “EEA” - located in Delaware, has its operational base in Melbourne, Florida, United States where it provides final assembly and delivery of the Phenom executive jet.

• Embraer Engineering & Technology Center USA, Inc. - “EETC” – located in Delaware, incorporated on April 27, 2012, provides engineering services related to aircraft research and development.

• Aero Seating Technologies LLC. - “AST” - a subsidiary in which EAH holds 85.5% of the capital, is domiciled in San Gabriel, United States of America and its core activity is the production and maintenance of aircraft seats.

• Embraer Defense and Security Incorporated - “EDSI” - established in February 2013, is domiciled in Jacksonville Florida in the United States, and shall be the basis to attend the LAS (Light Air Support) program that will provide aircraft A-29 Super Tucano for the U.S. Air Force.

Embraer Australia PTY Ltd. - “EAL” - a wholly-owned subsidiary - located in Melbourne, Australia, which provided after-sales support services to customers in the Australasian and Asian regions. The company is currently inactive.

F-12

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Embraer Aviation Europe SAS - “EAE” - a wholly-owned subsidiary - located in Villepinte, France, is responsible for corporate and institutional activities and has the following wholly-owned subsidiaries:

• Embraer Aviation International SAS - “EAI” - located in Villepinte - sells parts and provides after sales support services in Europe, Africa and the Middle East.

• Embraer Europe SARL - “EES” - located in Villepinte - provides sales representation for the Company in Europe, Africa and the Middle East.

Embraer Credit Ltd. - “ECL” - a wholly-owned subsidiary - located in Delaware, which provides support for sales operations.

Embraer GPX Ltda - “GPX” – a subsidiary with 99.9% of its capital is held by Embraer, located in Gavião Peixoto, State of São Paulo, provides specialized aircraft maintenance services.

Embraer Overseas Limited - “EOS” - a wholly-owned subsidiary - located in the Cayman Islands, B.W.I., with the sole objective of carrying out financial transactions, including raising and investing funds, and provides intercompany loans for Embraer companies.

Embraer Representation LLC - “ERL” - a wholly-owned subsidiary - located in Delaware - provides commercial and institutional representation for the Company.

Embraer Spain Holding Co. SL - “ESH” - a wholly-owned subsidiary - located in Spain - coordinates investments in subsidiaries abroad, including those focused on activities that support the sale of aircraft and management of assets derived from these operations. ESH’s operations are carried out by the following subsidiaries:

• ECC Investment Switzerland AG, a wholly-owned subsidiary, located in Switzerland, holds 100% of the capital of the following:

• ECC Insurance & Financial Co. Ltd. – “ECC Insurance” - located in the Cayman Islands, is an in-house insurance company providing cover for the financial guarantees offered to customers and/or financing agents involved in structuring the sales of Embraer aircraft.

• Embraer Finance Ltd. - “EFL” - located in the Cayman Islands, assists customers in obtaining third-party financing, as well as providing support for some of the Company’s purchase and sale transactions.

• Harbin Embraer Aircraft Industry Company Ltd. “HEAI” – a subsidiary consolidated by Embraer, in which Embraer Spain Holding Co. SL holds 51% of the capital, is based in the town of Harbin, China. Having started operations in 2002, with the objective of manufacturing aircraft to meet the demands of the Chinese air transport market, its activities has been dedicated to the manufacture of Legacy 600/650 executive jets since signing an agreement with the leaders of the Chinese Government the first delivery is scheduled take place in the 1^st quarter 2014.

Embraer Netherlands B.V. – “ENL” - a wholly-owned subsidiary - located in Netherlands, has as its main objective the coordination of investments in subsidiaries abroad, including those intended to support the marketing activities of aircraft and asset management from these operations. The activities of ENL are affected by its subsidiaries:

• Embraer Asia Pacific PTE. Ltd. - “EAP” - a wholly-owned subsidiary - located in Singapore which provide with the objective of providing after-sales support services in Asia.

• Airholding SGPS, S.A. - a wholly-owned subsidiary - located in Portugal. Its main activity is its 65% participation in the voting capital of OGMA - Indústria Aeronáutica de Portugal S.A., a Portuguese aviation maintenance and production company. The remaining 35% of the voting capital is held by Empresa Portuguesa de Defesa - EMPORDEF.

F-13

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

• ECC Leasing Co. Ltd. – “ECC Leasing” – a wholly-owned subsidiary - located in Dublin, Ireland, leases and sells used aircraft.

• EMBRAER CAE Training Services Ltd. - “ECUK” – a subsidiary in which ENL holds 51% of the capital, located in Burges Hill, United Kingdom, provides training for pilots, mechanics and crew.

• EMBRAER Portugal - SGPS S.A. - a wholly-owned subsidiary located in Evora, Portugal, coordinates investments and economic activities in the following wholly-owned subsidiaries as following:

• Embraer-Portugal Estruturas Metalicas S.A. - located in Evora, Portugal, manufactures, assembles, maintains and sells parts, components and metal sets and carries out other technological, industrial, commercial and service activities related to the metal products industry.

• Embraer-Portugal Estruturas em Compositos S.A. - located in Evora, Portugal manufactures, assembles and sells structures based on parts and sets in composite materials and carries out other technological, industrial, commercial and service activities related to the composite, non-metal products manufacturing industry.

• Embraer (China) Aircraft Technical Services Co., Ltd – “ECA”, a wholly-owned subsidiary located in Beijing, China, provides after-sales support services, maintenance services and sells parts to customers in the China.

• EZ Air Interior Limited. “EZ” - joint venture owned by Embraer Netherlands and Zodiac Aerospace (50% each) - located in Ireland, with the objective of manufacturing cabin interiors of the EMBRAER 170/190 jet family and will be jointly operated with a factory located in México. In the 3rd quarter of 2013 began operations with the first shipment of its production for Embraer.

ECC do Brasil Cia. de Seguros - “ECC” – a wholly-owned subsidiary - located in Porto Alegre, in the state of Rio Grande do Sul, Brazil, it was registered with the Private Insurance Agency - SUSEP and its objective was to deal solely with export credit insurance. Given the fact that it has never operated and that it is no longer part of the Company’s strategy, Embraer’s Board of Directors approved its closure and in December 2013 SUSEP approved the cancelation of its authorization to operate as an insurance company. As it has never operated as an insurance company, its discontinuation will cause no significant impact on the Company’s results.

Indústria Aeronáutica Neiva Ltda. - “Neiva” – a wholly-owned subsidiary located in Botucatu, State of São Paulo, Brazil, sells agricultural aircraft and related parts and components.

Embraer Defesa e Segurança Participações S.A. “EDSP” – a wholly-owned subsidiary, located in São José dos Campos, state of São Paulo, Brazil, coordinates the investments in the Defense and Security segment and holds interests in the following companies:

• Orbisat Indústria S.A. “Orbisat” – of which 90% of its capital is held by Embraer Defesa e Segurança Participações S.A. - located in São José dos Campos, state of São Paulo, Brazil, develops technology for remote sensing and builds air, sea and land surveillance radars. In 2013 the Company announced the change of its corporate name to Bradar Indústria S.A. at the moment meets the formal processes to accomplish this change.

• Orbisat Aerolevantamento Ltda - a subsidiary established in February 2013, located in São José dos Campos, State of São Paulo, with the participation of Orbisat Indústria S.A. in 25% of its capital, it aims at providing aerial survey service (mapping areas based on advanced technology onboard aircraft) and remote sensing.

• Atech Negócios em Tecnologias S.A. - “Atech” was initially a joint venture and became a subsidiary of Embraer Defesa & Segurança Participações S.A. in February 2013 (note 14) and a

F-14

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

wholly owned subsidiary in November 2013, with ownership of 100% of its shares. Located in São Paulo, it develops strategic solutions for command, control, communications, computers and intelligence and provides specialized consulting services and technical and logistics support in all of the following project phases: conceptualization, specification, development, integration, implementation management, installation, testing, maintenance and training.

• Harpia Sistemas S.A. - “Harpia” - located in Brasilia, Distrito Federal, Brazil, is an entity controlled by Embraer Defesa e Segurança Participações S.A., which hold interests of 51%, 40% interests are hold by AEL Sistemas (a subsidiary of Elbit Systems Lts. Of Israel), and 9% interests are hold by Avibrás Divisão Aérea e Naval S.A.. Its main activity is the development, construction, sale, maintenance, modernization and after-sales services of unmanned aerial vehicles (“UAV’s”). Harpia Sistemas S.A. will also focus on marketing, development, systems integration, manufacturing, sales and after-sales support of simulators and modernization of avionics systems, by the 3^rd quarter was in pre-operating stage and had its first revenue in 4^th quarter 2013.

• Visiona Tecnologia Espacial S.A. - “Visiona” – located in São José dos Campos, State of São Paulo, Brasil, and fully consolidated subsidiary of Embraer, in which Embraer Defesa e Segurança Participações S.A. and Telebrás hold interests of 51% and 49%, respectively. It will initially act integration and delivery of the Geostationary Satellite System Defense Communication (SGDC) of the Brazilian Government, with the aim of serving the satellite communication needs of the federal government, including the National Broadband Program and a wide spectrum of strategic defense transmissions.

• Visiona International B.V. (International Visiona) – wholly owned subsidiary of Visiona Brazil, located in Amsterdam in Netherlands, was established in 2013 and will also work on integrating and providing of the SGDC – Brazilian Government system.

• SAVIS Tecnologia e Sistemas S.A. - “SAVIS” – incorporated in June 2012 and based in Campinas, State of São Paulo, is a wholly owned subsidiary of Embraer Defesa e Segurança. Its objective is to operate with the Brazilian government in the defense and security market.

Special Purpose Companies - “SPEs” - the Company organizes some of its aircraft sale financing transactions through SPEs, in which the Company has no direct or indirect interest. Although it has no equity interests, the Company controls all operations of the SPEs or takes a majority share of their risks and rewards, therefore the SPEs are consolidated in the financial statements of the Parent Company (Embraer S.A.). The consolidated SPEs are: PM Limited, Refine Inc., RS Limited, River One Ltd. and Table Inc. Other SPEs in which Embraer has no control or continuous involvement were not consolidated, based on technical analyses made by Management. Other structures involving SPEs may be used. Although it does not control their operations, the Company analyzes potential risks presented by the SPEs and discloses them, if significant. Apart from the SPEs mentioned, Embraer has no significant risks attributed to other structured operations involving SPEs.

Consortium Tepro – a consortium formed in October 2012 by Savis Tecnologia e Sistemas S.A. and OrbiSat Indústria S.A., companies controlled by Embraer Defesa e Segurança Participações S.A., signed a contract with the Brazilian Army in November 2012 for implementation of the first phase of the Integrated Frontier Monitoring System (Sistema Integrado de Monitoramento de Fronteiras - Sisfron). Located in Campinas – SP, the consortium is 93.5% owned by Savis and 6.5% owned by Orbisat. Operations started in the first quarter of 2013.

Exclusive Investment Funds - in connection with its business strategies, the Company has investments in exclusive funds, which are consolidated in the financial statements. The balances of marketable securities and investments maintained through these funds are recorded in cash and cash equivalents or financial investments, based on the original maturities of the securities and the fund investment strategies, which take into account immediate liquidity (Note 5 and 6).

F-15

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

2.1.4 Interest in other entities

Interest in other entities is not consolidated in the consolidated financial statements. As of December 31, 2013, these comprise AEL Sistemas SA - “AEL”, domiciled in Porto Alegre, Brazil, in which Embraer Defesa e Segurança Participações S.A. has a 25% interest. AEL´s main activities are research, development, manufacture and sales of electronic components: electronic equipment used in aviation and software programs. Despite its 25% interest, Embraer Defesa e Segurança Participações S.A. does not have significant influence in AEL, and, therefore, the investment is classified as a non-current financial instrument asset, measured at fair value, and the changes in valuation are recognized in other comprehensive income and presented in shareholders’ equity.

2.2 Summary of significant accounting policies

The accounting policies adopted by the Company were changed only by the adoption of IFRS 10, 11 and 12 from those disclosed in the consolidated financial statements as of December 31, 2012.

The adoption of the accounting pronouncements IAS 19 Employee Benefits, IFRS 13 Fair Value Measurement, IAS 1 Presentation of Financial Statements and IFRS 7 Financial Instruments: Disclosures, with mandatory application from 1 January 2013, did not no affect and / or impact the financial statements previously presented, thus the comparative periods have not been adjusted due to the application of these new pronouncements.

2.2.1 Changes for Adoption of IFRS 10, 11 and 12

a) IFRS 10 - Consolidated Financial Statements

With an effective date since January 1, 2013, IFRS 10 expands the concept of control taking into account the power and the returns that a participant has about an investment. In this context, a scenario of shareholding voting rights is analyzed together with the substantive rights that give power over the relevant activities of the investee. The subsidiary is fully consolidated from the date on which control is transferred to the Company and transactions with non-controlling interests as transactions with equity owners of the Group are presented within equity as “participation of non- controlling interest”. There were no changes in the Company’s accounting policies with the adoption of IFRS 10.

b) IFRS 11 - Joint Arrangements

Applicable from January 1, 2013, IFRS 11 - “Joint Arrangements” provides more realistic reflections of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form providing two types of joint arrangements: (i) joint operations - that usually occurs when an operator has rights to the assets and contractual obligations and hence accounts for its share of the assets, liabilities, revenues and expenses (proportional consolidation) and (ii) joint venture - occurs when an operator has rights to the net assets of the contracts and accounts for the investment by the equity method. In this case the proportional consolidation is no longer permitted.

Although the change did not have a material impact on the consolidated financial statements, the comparative figures for the year ended December 31, 2012 for comparative purposes, no longer reflect the proportionate consolidation of the Company’s jointly controlled entities, EZ Air Interior Limited and Atech Negócios em Tecnologias S.A.. The Company acquired Atech on February 2013, (Note 14), and started fully consolidating its results in the financial statements.

After its operations had started in the 3rd quarter of 2013, and due to the type of business relationship with the Company, EZ Air Interior Limited was determined to be a jointly controlled operation, which allowed it to be proportionally consolidated in the 2013 financial statements of the Company.

F-16

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

c) Restatement of values for comparative purposes

By retrospective application of IFRS 11, and in line with IAS 26 1/CPC - Presentation of Financial Statements, the Company is restating comparatives for the financial position on December 31, 2012 ends, and the financial position at January 1 2012 to represent the beginning of the period of retrospective application of that IFRS.

Also for comparative purposes the Company is restating the other statements and related notes for the periods ended December 31, 2012 and December 31, 2011 which in addition to the effects of the retrospective application of IFRS 11, were also reclassified amounts previously presented in other lines.

Below are the effects on the consolidated financial statements originally issued by the Company and the consolidated financial statements adjusted to the application of IFRS 11 presented for comparative purposes:

Statement of Financial Position:

	At January 01, 2012
	Statement of Financial Position published		IFRS 11 adjustments			Statement of Financial Position as Restated
Current assets		5,169.4		(5.5	)		5,163.9
Investments		2.8		2.0			4.8
Non current assets		3,686.1		(6.1	)		3,680.0
Total Assets		8,858.3		(9.6	)		8,848.7
Current liabilities		2,841.7		(3.3	)		2,838.4
Non current liabilities		2,898.8		(6.3	)		2,892.5
Shareholders’ Equity		3,117.8		—			3,117.8
Total Liabilities and Shareholders’ equity		8,858.3		(9.6	)		8,848.7

	At December 31, 2012
	Statement of Financial Position published		IFRS 11 adjustments			Statement of Financial Position as Restated
Current assets		5,365.9		(7.2	)		5,358.7
Investments		—		3.6			3.6
Non current assets		4,124.5		(5.9	)		4,118.6
Total Assets		9,490.4		(9.5	)		9,480.9
Current liabilities		2,792.4		(3.7	)		2,788.7
Non current liabilities		3,347.7		(5.8	)		3,341.9
Shareholders’ Equity		3,350.3		—			3,350.3
Total Liabilities and Shareholders’ equity		9,490.4		(9.5	)		9,480.9

F-17

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Statements of income:

	At December 31, 2011
	Statement of Income published			IFRS 11 adjustments			Statement of Income as restated
Revenue		5,803.0			(12.1	)		5,790.9
Gross Profit		1,307.1			(4.3	)		1,302.8
Operating income (expenses)		(988.6	)		3.7			(984.9	)
Equity in gain or losses of associates		(0.3	)		0.6			0.3
Operating income		318.2			—			318.2
Financial results		(70.7	)		0.3			(70.4	)
Profit before taxes on income		247.5			0.3			247.8
Income tax (expense) income		(127.1	)		(0.3	)		(127.4	)
Net income		120.4			—			120.4
Atributable to:
Owners of Embraer		111.6			—			111.6
Noncontrolling interest		8.8			—			8.8

	At December 31, 2012
	Statement of Income published			IFRS 11 adjustments			Statement of Income as restated
Revenue		6,177.9			(10.9	)		6,167.0
Gross Profit		1,495.0			(4.6	)		1,490.4
Operating income (expenses)		(882.7	)		3.0			(879.7	)
Equity in gain or losses of associates		(0.2	)		1.4			1.2
Operating income		612.1			(0.2	)		611.9
Financial results		2.0			(0.1	)		1.9
Profit before taxes on income		614.1			(0.3	)		613.8
Income tax (expense) income		(265.5	)		0.3			(265.2	)
Net income		348.6			—			348.6
Atributable to:
Owners of Embraer		347.8			—			347.8
Noncontrolling interest		0.8			—			0.8

F-18

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Statements of Cash Flows:

	At December 31, 2011
	Cash Flow published			IFRS 11 adjustments			Reclassifications (i)			Cash Flow as restated
Net income		120.4			—			—			120.4
Adjustment to net income for items not affecting cash		343.5						(29.7	)		313.7
Changes in assets and liabilities:		16.3			—			29.7			46.0
Net cash used in operating activities		480.2			—			—			480.1
Net cash used in investing activities		(602.0	)		—			—			(602.0	)
Net cash generated by financing activities		96.4			—			—			96.4
Increase in cash and cash equivalents		(25.4	)		—			—			(25.5	)
Cash and cash equivalents at the beginning of the year		1,393.1			—			—			1,393.1
Effects of exchange rate changes on cash and cash equivalents		(17.6	)		(2.3	)		—			(19.8	)
Cash and cash equivalents at the end of the year		1,350.2			(2.3	)		—			1,347.8

	At December 31, 2012
	Cash Flow published			IFRS 11 adjustments			Reclassifications (i)			Cash Flow as restated
Net income		348.6			—			—			348.6
Adjustment to net income for items not affecting cash		432.0			2.6			(31.8	)		402.8
Changes in assets and liabilities:		(85.6	)		(4.6	)		31.8			(58.4	)
Net cash used in operating activities		695.0			(2.0	)		—			693.0
Net cash used in investing activities		(600.0	)		0.1			(17.4	)		(617.3	)
Net cash generated by financing activities		405.0						17.4			422.3
Increase in cash and cash equivalents		500.0			(1.9	)		—			498.0
Cash and cash equivalents at the beginning of the year		1,350.2			(2.3	)		—			1,347.8
Effects of exchange rate changes on cash and cash equivalents		(49.0	)		0.1			—			(48.8	)
Cash and cash equivalents at the beginning of the year		1,801.2			(4.2	)		—			1,797.0

(i) Reclassifications for comparative purposes, where US$ 31.8 in 2012 and US$ 29.7 in 2011 refer to the contribution of partners previously presented as a liability now deduced change in the amortization of intangible assets and US$ 17.4 in 2012 related to the change in participation in subsidiaries and associates previously presented in Financing activities now presented in Investing activities.

d) IFRS 12 - Disclosure of Interests in Other Entities

Applicable from January 1, 2013, IFRS 12 - “Disclosure of Interests in Other Entities” requires an entity to disclose information that enables users of financial statements (a) to understand: the composition of the group; and (ii) the interest that non-controlling interests have in the group’s activities and cash flows; and (b) to evaluate: (i) the nature and the effect of significant restrictions on its ability to access and use assets of the group, and settle liabilities of the group; (ii) the nature of, and changes in, the risks associated with its interests in consolidated structured entities; (iii) the consequences of changes in the parent’s ownership interest in a subsidiary that do not result in a loss of control; and (iv) the consequences of losing control of a subsidiary during the reporting period.

Disclosures required by IFRS 12 are presented in Note 14.2. of this financial information.

2.2.2 Subsidiaries

Subsidiaries are all entities (including SPEs) whose financial and operating policies can be directed by the Company and in which it normally holds more than half of the voting shares. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Company.

F-19

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

2.2.3 Acquisition of new subsidiaries

The purchase method is used to account for acquisition of new subsidiaries. The cost of an acquisition is measured as the fair value of the assets received, equity instruments issued and liabilities incurred or assumed at the acquisition date. The acquisition-related costs are recognized as expenses in the period in which the costs are incurred and the services received. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest. The excess of the cost of acquisition over the fair value of the Company’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the statement of income.

If the business combination is achieved in stages, any non-controlling equity interest previously held in the acquiree’s capital is remeasured to fair value at the acquisition date with gain or loss recognized in the income statement.

The accounting policies of the subsidiaries are consistent with the policies adopted by the Company.

2.2.4 Consortia

The activities of a Consortium and their registration in its accounting records are governed by specific regulations. There is not a specific vehicle established of this operation, as based on its caractheristics it is considered as a joint operation. Although there are mandatory accounting controls, applicable to the consortia, the entries are posted in the accounts of the members of consortia in accordance with the proportion of the consortia attributed to each one. Such accounts of the members, which are subsidiaries of Embraer are consolidated financial statements of the Company.

2.2.5 Functional and presentation currency

After analyzing Embraer’s operations and businesses, particularly in relation to the factors involved in determining its functional currency, Management concluded that the Company’s functional currency is the US dollar (“US$” or “dollar”). This conclusion was based on an analysis of the following indicators:

• Currency that most influences sales prices of goods and services;

• Currency of the country whose competitive forces and regulations most determine the sales price of its goods and services;

• Currency that most influences labor, materials and other costs of providing goods or services;

• Currency in which the funds for financial operations are largely obtained; and

• Currency in which revenue from operations is usually accumulated.

2.2.6 Transactions in foreign currencies

Transactions in currencies other than the functional currency are translated to the functional currency, using the exchange rates in effect on the date of the transactions or measurement, on which the items are re-measured. Foreign exchange gains and losses resulting from translation using the closing rate at the end of the year, relating to monetary assets and liabilities that are due or payable in currencies other than the functional currency, are recognized in the statement of income.

2.2.7 Translation of subsidiaries’ financial statements

For subsidiaries whose functional currency is a currency other than the US dollar, asset and liability accounts are translated into the Company’s reporting currency using exchange rates in effect at the date

F-20

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

of the statement of financial position, and income and expense items are translated using period average exchange rates. The resulting translation adjustments are reported in a separate component of shareholders’ equity, as cumulative translation adjustment.

2.2.8 Financial Instruments

a) Financial assets

The Company classifies its financial assets among the following categories: (i) measured at fair value through profit or loss, including assets held for trading (ii) available for sale, (iii) held to maturity and (iv) loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management decides on the classification of its financial assets at initial recognition.

Regular purchases and sales of financial assets are recognized on the trade date—the date on which the Company commits to purchase or sell the asset.

Financial assets are initially recognized at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognized at fair value, and transaction costs are expensed in the statement of income.

Financial assets are derecognized when the rights to receive cash flows from the investments have expired or have been transferred. Derecognition occurs if the Company has transferred substantially all risks and rewards of the asset ownership.

b) Classification and measurement

b.1) Financial assets measured at fair value through profit or loss

Financial assets measured at fair value through profit or loss are those held for active and frequent trading. The assets in this category are classified as current assets. Gains and losses resulting from differences in the fair value of financial assets measured at fair value through profit or loss are presented in the statement of income in financial income in the period in which they occur.

The fair values of publicly quoted investments are based on the current purchase and sale prices. In the case of financial assets without an active market or not publicly quoted, the Company uses valuation techniques to calculate the fair value. These methods include comparison with recent transactions with third parties, reference to other substantially similar instruments, analysis of discounted cash flows and options pricing models that prioritize market information and minimize information generated by Management.

b.2) Financial assets available for sale

Financial assets available for sale are non-derivative instruments classified in this category or that are not classified in any other category. They are included in non-current assets, unless Management intends to dispose of the investment within 12 months after the statement of financial position date. Financial assets available for sale are recorded at fair value. The interest on securities available for sale, calculated by the effective interest rate method, is recorded in the statement of income as financial income (expense). The portion corresponding to the change in fair value is posted directly to shareholders’ equity, in other comprehensive income, and realized through profit or loss on settlement when the loss is considered permanent (impairment).

b.3) Investments held to maturity

The investments in non-derivative instruments that the Company has the ability and intention to hold until maturity are classified as investments held to maturity and are measured initially recorded at fair value, including cost of the transaction and subsequently at amortized cost.

The Company evaluates whether there is objective evidence that a financial asset or a group of financial assets is registered above its recovery value. When applicable, a provision for devaluation is recognized.

F-21

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

b.4) Loans and receivables

This category includes loans granted and receivables that are non-derivative financial assets with fixed or determinable payments, not quoted in an active market. They are classified as current assets, except for those with maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets.

The Company’s loans and receivables comprise loans to associates, trade accounts receivable, customer financing and other accounts receivable.

The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. When applicable, a loss allowance is recorded.

2.2.9 Cash and cash equivalents

Cash and cash equivalents includes cash on hand, cash in transit (amounts paid by our customers or debtors but at the reporting date was in the release process by intervening bank), bank deposits and highly liquid short-term investments, usually maturing within 90 days of the investment date, readily convertible into a known amount of cash and subject to an insignificant risk of change in value. This classification includes repurchase agreements and Bank Deposit Certificates - CDBs with a daily liquidity index in the Clearing House for the Custody and Financial Settlement of Securities - CETIP.

Amounts related to cash and cash equivalents, which, however, are not available for use by the Company, are presented within other assets in the consolidated financial statements.

2.2.10 Financial Investments

Financial investments are those assets acquired by the Company, principally for the purpose of selling in the short-term. Usually, this classification includes securities with original maturities over 90 days from the date of acquisition.

2.2.11 Trade accounts receivable

Trade accounts receivable are recognized initially at present value and include revenues recorded using the percentage-of-completion of the project based on the methods of incurred costs or physical advancement, net of the respective customer advances. They are subsequently recorded at amortized cost using the effective interest rate method, less allowance for doubtful accounts.

An allowance for doubtful accounts of trade receivable is recorded when there is objective evidence that the Company will not be able to recover all the amounts owed by its customers. Significant financial difficulties of the debtor, probability of the debtor filing for bankruptcy or reorganization proceedings and failure to pay or default are considered indicators that the trade receivables are impaired. The amount of the provision is the difference between the book value and the recoverable value. The book value of the asset is reduced by the amount of the provision, and the amount of the loss is recorded in the statement of income as selling expenses. When a trade receivable is deemed totally unrecoverable, it is written off against a provision for trade receivables. Subsequent recovery of amounts previously written off is registered in the statement of income, as selling expenses.

The present value calculation, where applicable, is made on the date of the transaction based on an interest rate that reflects the timing and market conditions at the time.

2.2.12 Derivative financial instruments and hedge operations

The Company uses derivative instruments to protect its operations against the risk of fluctuations in foreign exchange and interest rates; they are not used for speculative purposes.

F-22

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Gains and losses on derivative transactions are recorded monthly in profit or loss, taking into account the realizable value of these instruments (market value). The provision for unearned gains and losses is recognized in the statement of financial position under derivative financial instruments, and the counterpart in profit and loss under financial income (expense) net, (Note 35), except for operations to hedge exposures to changes in exchange rate or designated as hedge accounting.

Embedded derivatives are separated from their host contracts and are measured at their fair values as long as they meet the derivative definition.

2.2.13 Hedge accounting

Derivative transactions contracted to protect the company against risks, accounted for differently, that seek to eliminate the effects of the volatility caused by such risks.

At the time of initial designation of the hedge, the Company formally documents the relationship between hedging instruments and items that are hedged, including the risk management objectives and the strategy for conducting the transaction, together with the methods used to evaluate the effectiveness of the relationship. The Company continually assesses the contract to conclude whether the instrument is “highly effective” in offsetting changes in fair value of the hedged items during the period for which the hedge is designated, and whether the actual results of each hedge are within the range of effectiveness of 80% to 125%.

The Company has derivative financial instruments designated as fair value hedge and cash flow hedges, as follows:

a) Fair value hedges

Changes in the fair value of derivatives that are designated as hedges are recorded in the statement of income, together with any changes in the fair value of the hedged asset or liability attributable to the hedged risk. The Company only uses fair value hedge accounting to hedge fixed interest risk on borrowings.

If the hedge no longer meets the hedge accounting criteria, the fair value of the instrument continues to be recognized in the statement of income and the fair value of the hedged item is treated as if it were not hedged and amortized to profit or loss over the period to maturity.

b) Cash flow hedges

The Company uses hedge accounting for cash flow hedges in order to protect itself from cash flow variations attributed to exchange rate variation risk related to a transaction that will likely affect the Company’s results.

The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges is recognized in shareholders’ equity under other comprehensive income. The gain or loss related to the ineffective portion is recognized in profit or loss as financial income (expense).

Amounts accumulated in equity are reclassified to the statement of income in the periods when the hedged item affects profit or loss. However, when the forecasted transaction that is hedged results in the recognition of a non-financial asset, the gains and losses previously deferred in equity are transferred from equity and included in the initial measurement of the cost of the asset.

When a cash flow hedge instrument is settled, or no longer meets the criteria for hedge accounting, any cumulative gain or loss in equity at that time is realized against profit or loss. When the hedged transaction is no longer expected to occur, the gain or loss in equity is immediately transferred to profit or loss for the year under financial income (expense).

2.2.14 Customer and commercial financing

These relate to financing granted on the sale of certain aircraft and are measured at the amortized cost, by the effective interest rate method.

F-23

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

The Company assesses at the end of each reporting period whether there is objective evidence that the assets are recorded at an amount higher than their recoverable value (impairment). When applicable, a provision is recorded to reduce the value of this asset.

2.2.15 Collateralized accounts receivable and recourse and non-recourse debt

Certain Company sales are made under structured financing arrangements whereby an SPE purchases the aircraft, pays the Company the purchase price on delivery or at the end of the structured sales financing period, and transfers the purchased aircraft to the final customer. A financial institution finances the purchase of the aircraft by an SPE. In such cases, the Company offers financial guarantees and/or residual value guarantees in favor of the institution and continues to have obligations to be fulfilled until the end of the transaction. In accordance with these characteristics, the Company recognizes the assets and liabilities related to the SPEs on its consolidated financial stetaments, which are written down as the financing is paid off and the financial guarantee eliminated.

The assets are classified in the financial statements under collateralized accounts receivable and the obligations assumed are classified under recourse and non-recourse debt.

The amount is classified as recourse when the Company bears the risk and as non-recourse in relation to the part of the transaction not tied to any obligations on the part of the Company.

2.2.16 Inventories

Inventories, including spare parts and aircrafts, are valued and stated at acquisition or production cost. In all cases the net realizable value is calculated considering the lower of cost or market value. Except for used aircraft, the cost of sales is calculated using the weighted average cost.

Inventories of work in process and finished goods comprise raw materials, direct labor, and general production costs and, when applicable, are reduced to net realizable value after deduction for costs, taxes and selling expenses.

Inventories of the Company, in almost their entirety are presented in current assets, except in cases where it is expected to be consumed in the production in a period exceeding twelve months.

The Company records a valuation allowance when items are determined to be obsolete or are held in quantities that are in excess of projected usage based on Management’s estimate of net realizable values. Allowances are utilized if inventories are sold or written-off. Inventories in transit are stated at accumulated cost of each item.

2.2.17 Income tax and social contribution

Tax expense for the period comprises current and deferred income tax. Tax is recorded in the statements of income, except to the extent that it relates to items recognized in other comprehensive income or directly in shareholders’ equity in which case the tax is also recognized in shareholders’ equity.

The current income tax charge is calculated at the nominal rate applicable in each country, which is approximately 34% in the case of the Brazilian operations and is composed of income tax of 25% and social contribution on net income of 9%.

Deferred income tax is recognized on temporary differences arising between the tax bases of assets and liabilities and their accounting values in the consolidated financial statements.

Deferred tax assets are recorded on income tax and social contribution losses, and on temporary differences between the book and tax bases of assets and liabilities, when it is probable that future taxable income will be sufficient to recover these tax credits. This assessment is based on projections of future results of operations prepared and supported by internal assumptions and on future economic scenarios and are, accordingly, subject to change.

F-24

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

There is no expiration date for tax loss carryforwards from the Brazilian operations; however offset is limited to 30% annual taxable income.

Transitional tax regime (Regime Tributário de Transição – “RTT”)

In line with the Transitional Tax Regime (RTT) from 2009, since the application of international accounting standards on its 2008 financial statements, the Company has been calculating its income tax and social contribution on net income based on the accounting practices until December 31, 2007.

The RTT will be in force until a law regulating the tax effects arising from the adoption of the new Brazilian accounting principles come into effect.

On November 11, 2013, the Brazilian Internal Revenue, issued the Provisional Measure nº 627, by changing federal tax laws relating to Tax Corporate Income , Social Contribution on Net Income, the Contribution to PIS/PASEP, Contribution to Social Security Financing – COFINS and revoked the Transitional Tax Regime – RTT, introduced by Law 1941 of May 27, 2009. This Provisional Measure provides for the taxation of the legal entity located in Brazil and among others, recognizes the effects of the application of international standards giving the respective treatment in the calculation of Income Tax and Social Contribution on Net Income.

Valid from January 2015, the Provisional Measure permits early adoption as of January 2014. Management is assessing early adoption of Provisional Measure and does not expect it will have significant effects on its financial statements.

2.2.18 Investments

Investments in associates are recorded and valued in the consolidated financial statements using the equity method of accounting. The Company’s participation in the results of associates is recorded in the income statement of the period as operating income (expense). In the case of exchange variations on foreign investments in a different functional currency used by the Company, variations in the value of the investment caused solely by exchange variations are recorded in cumulative translation adjustments, in shareholders’ equity and only transferred to income of the period at the time the investment is sold or written off as a loss.

For purposes of calculating the equity adjustment, unrealized transactions between the Company and its investees are fully eliminated, as is also done for transactions between the subsidiaries. Unrealized losses are not eliminated since they are an indication of asset impairment.

When necessary, the accounting practices of the investees are adjusted to bring them in line with the Company’s practices.

Investments in associated entities in which the Company has significant influence are presented within the Consolidated Investments in affiliates in noncurrent assets (Note 14) and measured by the equity method.

Investments in jointly controlled entities are accounted for under the equity method.

2.2.19 Property, plant and equipment

Property, plant and equipment are recorded at purchase, formation or construction cost, less accumulated depreciation and impairment losses.

Depreciation is calculated on the straight-line method (except spare parts held in the Exchange Pool Program) based on their estimated useful lives. (Note 16) This considers the time over which the asset will provide a financial return for the Company, and is reviewed annually. Land is not depreciated.

F-25

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

The Company estimates the residual value for certain aircraft and spare parts included in the Exchange Pool Program. Other items of property, plant and equipment do not have residual value attributed by the Company since, due to the characteristics and use of these assets, it is unusual to dispose of large quantities of these assets and, when this occurs, they are realized at insignificant values.

Subsequent costs are included in the book value of the asset or recorded as a separate asset, as appropriate, only when it is likely that the item will yield future economic benefits and the cost of the item can be reliably measured. The book value of replacement items or parts is written off. All other repairs and maintenance costs incurred are recorded in the statement of income.

Materials allocated to specific projects are capitalized in property, plant and equipment in progress and subsequently transferred to the final property, plant and equipment accounts.

The gains and losses on disposals are determined by comparing the amount received with the book value and are reported under other operating income (expenses), net in the statement of income.

The items comprising property, plant and equipment are summarized below:

a) Land - mainly comprises areas on which the industrial, engineering and administrative buildings are located.

b) Buildings and land improvements - mainly plants, engineering departments and offices, and land improvements include parking lots, road systems and water and sewage networks.

c) Facilities - comprise auxiliary industrial facilities that directly or indirectly support the Company’s industrial operations, as well as facilities of the engineering and administrative departments.

d) Machinery and equipment - machinery and other equipment directly or indirectly used in the manufacturing process.

e) Furniture and fixtures - furniture and fixtures used in the production, engineering and administrative departments.

f) Vehicles - mainly industrial vehicles and automobiles.

g) Aircraft - mainly aircraft leased to airlines, and those used by the parent company to assist in testing new projects.

h) Computers and peripherals - technology equipment used mainly in the production process, engineering and administration.

i) Tooling - tools used in the production process of the Company.

j) Property, plant and equipment in progress - construction works to expand the manufacturing plants and aircraft maintenance centers.

k) Spare parts pool - a spare parts pool for the exclusive use of customers who are included in the Exchange Pool Program and aircraft still under warranty. These spare parts are used for customer service, whereby these customers are allowed to exchange a damaged component for one in working condition, as defined in the contract. These items are depreciated based on estimated useful lives of seven to ten years and an average residual value of 35%, which the Company believes to be the approximate utilization time and realizable amount, respectively.

F-26

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

2.2.20 Intangible assets

a) Research and development

Research costs are recorded as an expense when they are incurred. Costs of product development, including drawings, engineering designs and construction of prototypes, are recorded as intangible assets when it is probable that the projects will generate future benefits, taking into account their commercial and technological feasibility, availability of technological and financial resources and only if the cost can be reliably measured. Development costs that do not meet these criteria are recorded in the statements of income as research expenses, as they occur.

Capitalized development costs begin to be amortized from the moment that benefits begin to accrue (units produced), based on the number of estimated aircraft sales for each project, and the amortized amounts are appropriated to production cost.

These estimates are reviewed on an annual basis or as required. In the case of inactive projects or those that are unlikely to be completed, the deferred costs are written off or reduced to the recoverable amount.

Development costs previously recorded as an expense are not subsequently capitalized as an asset.

The Company has agreements with certain key suppliers, here called partners. To ensure their participation in research and development the Company receives cash contributions. The Company records these contributions when received as non-current liabilities. If the contractual milestones are not achieved the amounts are refunded to the suppliers. As the milestones are completed these contributions are recorded as a reduction of development expenditures capitalized in intangible assets.

b) Computer software

Software licenses are capitalized and amortized over their estimated useful lives.

Costs associated with development or maintaining computer software programs are recognized as an expense as incurred. Development costs that are directly attributable to identifiable and unique software, controlled by the Company and that are expected to generate benefits greater than costs for more than one year, are recorded in intangible assets and amortized according to the number of aircraft.

c) Intangible assets acquired in business combinations

Identified intangible assets acquired under business combinations are recognized at fair value at the acquisition date.

c.1) Goodwill - recorded in the consolidated financial statements as an intangible asset and is not subject to amortization, once that is achievable at the write-off of the investment, and its recoverability is tested at least annually. If it is identified that goodwill will not be recovered in its entirety, an impairment charge is recorded in the statement of income. Recognized impairment losses on goodwill are not reversed.

c.2) Trademarks - acquired in business combinations and are recognized at fair value at acquisition date. Trademarks have defined useful lives and are amortized on the straight-line method over their estimated useful life.

c.3) Product development - from business combinations when these represent significant value to the Company. Product development assets have a defined useful life and are amortized according to the estimated useful life of the product.

F-27

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

c.4) Non-compete agreements – from business combinations as agreed with the sellers for a contractual period. These contracts are recorded at fair value at the acquisition date as an intangible asset and amortized over the term of the contract.

c.5) Firm orders - acquired in business combinations and represent orders or production orders awaiting execution, are recorded at fair value and amortized over the period of delivery specified in the contracts.

2.2.21 Impairment

Property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

In such cases, the recoverable value is determined. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For assessment purposes, assets are grouped in cash-generating units (CGUs) based on the similarity of the products and services produced and provided by the Company and the way in which it monitors and manages the cash flows generated. The CGUs are determined on a corporate basis, irrespective of where the assets, goods and services are used, produced or provided.

Intangible assets under development and new business acquisitions are tested for impairment regardless of whether or not there is evidence of impairment losses.

The recoverable amount of a CGU is determined based on its value in use calculations. These calculations use cash flow projections, before income tax and social contribution, based on financial budgets approved by management for the corresponding expected lifecycle of each CGU, due to the characteristics of the Company’s business and the investment period made in fixed assets and intangible assets are high and the returns, from medium to long-term and the redirection of assets for new business is common.

Main assumptions used in value in use calculations:

In general, all the consideration set forth below, as well as the future cash flows of each CGU has its origin in the Strategic Plan of the company defined and approved in the last quarter of each year.

a) Gross margin - the Administration projected inflows and outflows based on past performance considering its expectations for the market development. These projections also consider the efficiencies planned for the product cycle;

b) Growth rates - the rates of growth were reflected in the flow of budgeted revenues by the Company, consistent with the forecasts included in industry reports;

c) Discount Rates - a discount rate that reflects the expected return of investors at the time the calculation is being made is utilized.

In the case there is an adjustment on account of non-recovery of assets allocated to a CGU, its value is prorated depending on the net assets of the Group and recognized in all subsidiaries that operate for that CGU within other operating expenses.

2.2.22 Other current and non-current assets

Other current and non-current assets are stated at cost or realizable value including, when applicable accrued income.

2.2.23 Loans and financing

Loans and financing are recognized initially at fair value. Loans and financing are subsequently carried at amortized cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the statement of income over the period of the contract using the effective interest method.

F-28

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Fees paid on the establishment of loan facilities are recognized as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the transaction costs are capitalized as a pre-payment for credit line availability services and amortized over the period of the facility to which it relates.

Loans and financing are registered as current liabilities, unless the Company has an unconditional right to defer the settlement of the liability until at least 12 months after the date of the statement of financial position.

2.2.24 Leases

The classification of a lease depends on whether an agreement is or contains a lease, is based on the essence of the agreement and includes a determination as to whether (i) the fulfillment of the agreement depends on the use of one or more specific assets and (ii) the agreement assigns the right to use the asset.

a) Aircraft leases

Aircraft leases classified as operating leases are recorded on the statement of financial position as property, plant and equipment, and depreciated over their estimated useful lives. The rental income (net of any subsidy granted to the lessee) is recorded by the straight-line method over the lease period. Aircraft leases classified as finance leases are derecognized as assets once the lease commences; the income and respective cost of sales are recorded at inception.

b) Other leases

Other leases in which the Company holds substantially all the risks and benefits of ownership are classified as finance leases. Finance leases are recorded as a financed purchase, initially by recording a property, plant and equipment asset and a financial liability (lease). Property, plant and equipment assets purchased as finance leases are depreciated at the rates in Note 16.

Other leases in which a significant part of the risks and benefits of ownership are assumed by the lessor are classified as operating leases. Payments made for operating leases are amortized to the statement of income on the straight-line method over the contract period.

2.2.25 Borrowing costs

Borrowing costs attributable to the acquisition, construction or production of qualifying assets that will not be ready for use or sale for a considerable time are capitalized as part of the cost of the asset. Other borrowing costs are recognized as an expense in the period in which they are incurred. Borrowing costs include interest and other fund raising costs incurred by the Company in connection with the loan resources.

2.2.26 Advances from customers

These refer basically to advances, mostly denominated in dollars, received from customers prior to the delivery of the aircraft.

2.2.27 Financial guarantees and residual value guarantees

In certain cases, after a market analysis, the Company grants financial or residual value guarantees (“RVG”) as part of the aircraft financing structure. The guaranteed residual value is based on the expected future fair value of the aircraft at the end of the funding. Financial guarantees are granted to the lender over the term of such financing agent and are subject to a guaranteed maximum limit on the situation of non-payment of installments of funding by clients and / or operators.

F-29

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Financial guarantees are calculated at the time of delivery of the aircraft and recognized as a reduction in sales revenue against unearned income. The income is realized on a straight-line basis as sales revenue over the aircraft financing period and all the unearned income is recognized by the end of that period.

To cover the risk of losses on such guarantees, the Company may record an additional provision in the event of significant circumstances such as a customer filing for Chapter 11, based on the estimated losses resulting from the exposure (Note 25).

In some cases, the Company holds guarantees in the form of deposits in favor of third parties to whom financial and RVGs have been provided as part of aircraft financing structures (Note 11).

2.2.28 Dividends and interest on own capital

Under the bylaws, shareholders are entitled to dividends or interest on own capital equivalent to 25% of net income for the year, adjusted in accordance with the bylaws. The calculation takes into account the interest on own capital net of withholding tax.

Proposed distributions of dividends to shareholders are recorded as a liability in the financial statements at the end of the year, pursuant to the bylaws. Any amount over and above the minimum mandatory dividend is recognized in a specific account as additional dividends proposed in the revenue reserve in shareholders’ equity, pursuant to article 196 of Law 6404/76 until it is approved by the shareholders, at which point the reserve is reversed against a liability in the consolidated financial statements.

Interest on own capital paid or provisioned is recorded as a financial expense for tax purposes. However, for purposes of these consolidated financial statements, the amount is disclosed as distribution of net income for the year, and the gross amount is reclassified to shareholders’ equity, as the tax benefits arising from the distribution are included in the net income for the year.

2.2.29 Unearned income

This refers to commitments to supply spare parts, training, technical representatives and other commitments established in sales contracts for aircraft already delivered, the income from which will be amortized when the service or product is delivered to the customer.

This also refers to deferred revenues of defense contracts for which the milestone of the contract has not been completed. Revenue is recognized when the step is completed and the respective costs are recorded.

This account also includes the unearned income on the sale of certain aircraft that, because of contractual obligations, are accounted for as operating leases.

2.2.30 Provisions, contingent assets and liabilities, legal obligations and judicial deposits

Provisions – provisions are recognized based on the judgment of the Company’s Management and its legal counsel, the nature of the lawsuits, legal precedent, complexity and court interpretations, whenever the loss is considered probable, when such loss would result in a probable outflow of resources to settle the obligations and when the amounts involved can be measured with a reasonable degree of certainty. The amounts provided represent the Company’s best estimate of the anticipated outflow of resources.

Contingent assets – are not recognized except when the Company concludes that the gain is virtually certain or has the right to real guarantees or has received a favorable legal decision which cannot be appealed.

Contingent liabilities - classified as possible losses are not recorded in the accounts, but merely disclosed in the financial statements. Where the probability of loss is classified as remote, neither provision nor disclosure is required, unless the Company considers disclosure relevant.

F-30

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Legal obligations - result from tax liabilities which are being challenged as to their legality or constitutionality. The related amounts are fully provided for.

Court-mandated escrow deposits - are recorded as other assets.

2.2.31 Employee benefits

a) Defined contribution

The Company provides defined contribution pension plans for its employees. Since 2010, for the companies incorporated in Brazil, the plan has been managed by EMBRAER PREV - Sociedade de Previdência Complementar.

b) Post-retirement healthcare benefits

The Company and some of its subsidiaries provide healthcare benefits to retirees.

The planned costs of offering post-retirement healthcare benefits and coverage for dependents are recorded as a provision during the period of employment services based on actuarial studies conducted to identify future risk exposure whose premises are:

• Discount rate - brings future benefit flows to present value and it is defined based on the ratio of Brazilian government securities;

• Growth rate of medical costs - represents the increase in the value of medical care and is not applied linearly, as the companies historically tend to perform actions aimed at reducing the cost, or even change the health plan provider;

• Rate of morbidity (aging factor) - measures the increased use of health plans in light of the aging population;

• Mortality rate - uses the RP-2000 generational table provided by Society of Actuaries (SOA), which shows the rate of mortality by age and sex;

• Probability of Retirement - estimate the probability of retirement by age group;

• Churn rate - uses the T-3 Table Service available at Society of Actuaries (SOA), which shows the average rate of termination of employees by age.

The Company recognizes changes in the provision of that plan through other comprehensive income in equity, net of taxes, to the extent that there are changes in the plan and against profit or loss if a fluctuation in the costs of the current benefit plan occurs.

The cost of the post-employment medical benefit plan is determined using the unit credit method and several actuarial assumptions, the most significant being: the discount rate and the trend growth rate of medical costs. This provision is reviewed annually at the reporting date.

2.2.32 Product warranties

Warranty expenses relating to aircraft and spare parts are recognized at the moment of their delivery, based on the estimated amounts to be incurred. These estimates are based on historical factors that include warranty claims and the corresponding repair and replacement costs, the warranty given by the suppliers and the contractual coverage period. The warranty coverage period is usually between three and five years.

In some cases, the Company might be required by the aviation certification authorities to modify the product after delivery, due to upgrades or performance improvements. A provision is recorded for the estimated costs of these modifications when the new requirements or improvements are demanded and known.

F-31

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Certain sales contracts may contain clauses guaranteeing minimum aircraft performance levels subsequent to delivery, based on predetermined operating targets. If the aircraft which is subject to such guarantees does not achieve the minimum performance indices after delivery, the Company may be obliged to reimburse its customers for the increase in operating costs and services incurred, based on the criteria defined in the agreements. Losses relating to such performance guarantees are recognized when known or when, in Management’s opinion, circumstances indicate that the aircraft is unlikely to meet the minimum expected performance requirement.

2.2.33 Other current and non-current liabilities

These are stated at known or estimated amounts including, when applicable, accrued charges and foreign exchange gains/losses.

2.2.34 Share-based payment

The Company operates an equity-settled, share-based compensation plan for directors and employees. The objective is to retain and attract qualified personnel who effectively contribute to the Company’s performance. The Company in return compensates its directors and employees through equity instruments (options). The fair value of the employee services received in exchange for the grant of the options is recognized as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted.

The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. Periodically, the Company revises its estimates of the number of options that are expected to vest. It recognizes the impact of revisions to original estimates prospectively.

2.2.35 Government grants

Under Company policy, benefits received in the form of subsidies are recognized against the expenses for which the resources were used.

Government research and development grants are recognized to the extent that the resources are invested and the contractual milestones are met, as a reduction of research expenses.

Subsidies for acquisition of fixed assets are recognized as a reduction of the acquisition cost to the extent that the contractual milestones are met and are recorded in the statement of income by calculating the depreciation, reducing the related expense.

Subsidies are recorded as “reserve of subsidies for investment”, in shareholders’ equity, pursuant to Brazilian legislation, preventing them from being distributed to shareholders.

2.2.36 Earnings per share

The Company presents its basic earnings per share and diluted earnings per share in its consolidated financial statements. Basic earnings per common share is computed by dividing net income attributable to owners of Embraer available to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted earnings per share is computed similarly to basic earnings per share except that the weighted average outstanding shares are increased to include the number of additional shares that would have been outstanding had the potentially dilutive shares attributable to stock options been issued during the respective periods, utilizing the treasury stock method.

F-32

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

2.2.37 Revenue recognition

Revenue comprises the fair value of the remuneration received or to be received for the sale of products and services in the normal course of business. Revenue is presented net of taxes, returns, reductions and discounts, and in the consolidated financial statements, after eliminating intercompany sales.

a) Revenue from aircrafts, spare parts and services

Revenue from sales of commercial, executive and other aircraft, spare parts and services are generally recognized at the time of delivery or shipment, when the risks and benefits are transferred to the customer and when all the conditions for recognition are met.

When the sale of aircraft does not meet the contractual obligations at the time of the delivery, related revenue is deferred and accounted for as unearned income until the obligations are met.

b) Revenue with multiple elements

Revenue from aircraft sales contracts involving the supply of spare parts, training and technical representation. These revenues are recognized when the product or service is provided to the customer.

c) Revenue from Exchange Pool Program

Revenue from the Exchange Pool Program is recognized during the period of the contract and consists of a fixed charge and a variable charge directly related to the hours effectively flown by the aircraft under the program.

d) Revenue from construction contracts

In the Defense & Security segment, some operations consist of long-term contracts, and revenues are recognized by the Percentage-of-completion (POC) method, through incurred costs or physical advancement and also through recognition upon delivery or shipment. Some contracts contain provisions for price adjustment based on pre-established index and these are recognized on an accrual basis. The adjustments of revenue recognition relating to sales of the Defense & Security segment contracts is performed based on Management’s best estimates as they become evident.

e) Revenue from operating leases

The Company also recognizes the revenue from aircraft rental as operating leases, proportional to the lease period, and records such revenues as income by segment. Revenue is allocated to its respective segments (Commercial Aviation, Executive Jets and Defense and Security).

2.2.38 Cost of sales and services

Cost of sales and services consists of the cost of the aircraft, spare parts and services rendered, comprising:

a) Material - substantially all material cost are covered by contracts with suppliers. Prices under these contracts are generally adjusted based on escalation formulas which reflect, in part, inflation in the United States.

b) Labor – comprises salaries and related charges, primarily in Brazilian real.

c) Depreciation - property, plant and equipment are depreciated over their useful lives, on a straight-line basis, from 5 to 48 years.

F-33

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Depreciation of aircraft classified as operating leases is recorded in cost of sales and services, from lease inception using the straight-line method over the estimated asset useful life less a residual value at the end of the lease term.

d) Amortization – Internally generated intangible assets are amortized in accordance with the estimated sales of the series of aircraft. Intangible assets acquired from third parties are amortized on straight-line bases over their estimated useful lives.

e) Product warranties - The Company estimates and records a liability for guarantee obligations related to its products on the date of delivery of the aircraft, based on historical experience and recorded as cost of goods sold.

f) Multiple elements arrangements - The Company enters into transactions that represent multiple-element arrangements, such as for providing training, technical assistance, spare parts and other concessions. These costs are recognized when the product or service is provided to the customer.

2.2.39 Operating expenses and other income

Operating expenses are principally made up of sales and marketing, administration, research, share in profit/loss of associates and other operating income (expenses).

2.2.40 Employee profit sharing plan

The employee profit-sharing program is linked to the Company’s net income and to performance targets. Provisions are recorded on a monthly basis for the amounts determined proportionally to the salaries payable and classified in the statement of income in accordance to each employee receiving the benefit. The employee profit sharing plan policy is described in (Note 34).

2.2.41 Financial income and expenses and foreign exchange gains/losses

Financial income and expenses principally comprise earnings on short-term investments, financial charges on loans, interest on contested taxes and contingencies (Note 26), as well as foreign exchange gains/losses (Note 36) on assets and liabilities expressed in currencies other than the functional currency (dollar), on an accrual basis.

It is also recorded as financial revenue (expense) the change in fair value of the residual value guarantees and the result with the provision and implementation of derivative financial instruments.

Financial income and expenses exclude borrowing costs attributable to acquisitions, buildings or the production of qualifying assets that require a substantial period of time to be ready for use or sale which are capitalized as part of the cost of the asset.

2.2.42 Statement of cash flows

The statement of cash flows was prepared using the indirect method.

2.2.43 Segment reporting

Operating segment information is presented in a manner consistent with the internal reports provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources among and assessing the performance of the operating segments and for making strategic decisions, is the chief executive officer.

F-34

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

3. Critical accounting estimates

The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and adopt assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the fair value of financial instruments and guarantees on the statement of financial position dates and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from such estimates.

In order to provide an understanding about how Management forms its judgments about future events, including the variables and assumptions underlying the estimates, and the sensitivity of those judgments to different variables and conditions, the estimates and assumptions that may cause a risk of material adjustment to the carrying amounts of assets and liabilities are addressed below:

3.1. Sales and other operating revenues

The Company recognizes revenues from sales made by the Commercial Aviation, Executive Jets, and Defense and Security businesses when benefits and risk of ownership are transferred to customers, which, in the case of aircraft, occurs when delivery is made, and, in the case of aviation services, when the service is rendered.

The Company also recognizes rental revenue for leased aircraft, classified as operating leases on a straight-line basis over the lease term and, when presenting information by operating segment, rental revenue is recorded in its respective operating segment.

In the Defense and Security segment, a significant portion of revenue is derived from long-term development contracts with the Brazilian and foreign governments accounted for using the POC and the physical advancement method. These contracts contain provisions for price escalation based on a mix of indices related to raw material and labor cost. From time to time, the Company reassesses the expected margins of certain construction contracts, adjusting revenue recognition based upon projected costs to completion. Use of the POC method requires the Company to estimate the total costs to be incurred on the contracts. Were the total costs to be incurred to come in 10% below Management’s estimates, the amount of revenue recognized in the year of 2013 would increase by US$ 195.6, and if the total costs were to come in by 10% above the estimate, the amount of revenue recognized would decrease by US$ 210.5.

Revenue under Exchange Pool Programs is recognized monthly over the contract term and consists in part of a fixed fee and in part a variable fee directly related to aircraft flying hours.

The Company enters into transactions that represent multiple-element arrangements, such as training, technical assistance, spare parts and others concessions, which are included in the aircraft purchase price. Multiple-element arrangements are assessed to determine whether they can be separated into more than one unit of accounting when all of the following criteria are met:

• the delivered item has value to the client on a stand-alone basis; and

• there is objective and reliable evidence of the fair value of the undelivered item.

If these criteria are not met, the arrangement is accounted for as a single unit of accounting, which results in revenue being deferred until the earlier of when such criteria are met or when the last completed element is delivered. If these criteria are met for each element and there is objective and reliable evidence of fair value for all units of accounting in an arrangement, the arrangement consideration is allocated to the separate units of accounting based on each unit’s relative fair value.

3.2. Product warranties

Generally, aircraft sales are accompanied by a standard warranty for systems, accessories, equipment, parts and software manufactured by the Company and/or by the Company’s risk-sharing partners and suppliers. The Company recognizes warranty expenses, as cost of sales and services, at the time of sale based on the estimated warranty costs anticipated to be incurred. These estimates are based on a number of factors, including historical warranty claims and cost experience, the type and duration of the warranty coverage, volume and mix of aircraft sold and in service and warranty coverage available from the related suppliers. Actual product warranty costs may have different patterns from past experience,

F-35

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

mainly when a new family of aircraft enters service, which could require the Company to increase the product warranty reserve. The warranty period is three years for spare parts and five years for components that are a part of the aircraft when sold.

3.3. Financial guarantees

The Company may offer financial guarantees related to aircraft sold. The guarantee is granted at fair value at the time of delivery of the aircraft when it is supported by a financing agreement. The guarantee is recorded as a reduction in sales and an increase in deferred revenue. The deferred revenue is amortized to the income statement over the period of the guarantee. The Company evaluates the creditworthiness of the obligor at aircraft delivery and discloses its maximum exposure under the guarantee as a contingent liability in Note 37 – Joint liabilities co-obligation, responsibilities and commitments. The Company monitors the obligor’s credit worthiness periodically and in the event of an official default (Chapter 11) or negotiation the exposure is recalculated based on the best estimate when and if the payments become probable and can be estimated reliably, recognizing a provision according to IAS 37 - Provisions, Contingent Assets and Liabilities. If an agreement for the payment of this allowance is negotiated, the default values are reclassified to accounts payable.

3.4. Residual value guarantees

The Company may offer residual value guarantees related to sold aircraft. At the time of the offering the guarantees are evaluated by the fair value and are reviewed quarterly to reflect eventual loss due to the fair value of these commitments. The future fair value is estimated using aircraft assessments of third parties, including information obtained from the selling or leasing of similar aircraft in the secondary market.

3.5. Residual interests in aircraft

In structured financing arrangements, an entity purchases an aircraft from the Company, pays the full purchase price on delivery or at the conclusion of the sales financing structure, and leases the related aircraft to the ultimate customer. A third-party financial institution facilitates the financing of the aircraft and a portion of the credit risk remains with that third party.

Although it has no equity investee interests, the Company controls the SPE’s operations or takes a majority share of its risks and rewards. When the Company no longer holds control, the assets and liabilities related to the aircraft are deconsolidated from the Company’s statement of financial position.

The Company evaluates control characteristics over a SPE’s principally based on a qualitative assessment. This includes a review of the SPE’s capital structure, contractual relationships and terms, nature of the SPE’s operations and purpose, nature of the SPE’s interests issued, and the Company’s interests in the entity which either create or absorb variability. The Company evaluates the design of a SPE and the related risks the entity and the variable interest holders are exposed to in evaluating consolidation. In a few cases, when it is unclear from a qualitative standpoint if the Company has control over a SPE, it uses a quantitative analysis to calculate the probability-weighted expected losses and probability-weighted expected residual returns using cash flow and statistical risk measurement modeling.

3.6. Impairment

Non-current assets held for use are subject to impairment assessment if facts and circumstances indicate that the carrying value is no longer recoverable based upon the higher of the discounted future cash flows of the asset or its net realizable value. The Company’s cash-generating units (CGUs) have been defined and are reviewed annually, in accordance with the aircraft families/platforms and other business conducted by the parent Company and other group companies. Similarly, the impairment test is performed at annual periods, at the end of each year, except in the existence of any indicators of impairment that the Company may indentify through surveys answered by the managers of the respective CGU, which would oblige the Company to design a test of intermediate impairment. The impairment test considers assumptions and estimates made by management in line with the Company’s strategic plan, as well as a discount rate that reflects the expectations of shareholders.

F-36

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Even if the discount rate used to discount to present value the estimated future cash flow of all CGUs tested were 10% lower or 10% higher compared to the rate used by management, it would not result in any adjustments for non recovery of assets.

3.7. Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. The Company uses its judgment to select a variety of methods using assumptions that are mainly based on market conditions existing at the end of each reporting period.

3.8. Income taxes

The Company is subject to income taxes in multiple jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain. The Company also recognizes liabilities based on estimates of whether additional taxes will be due. When the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred income tax assets and liabilities in the period in which such determination is made.

Because the majority of the Company’s tax basis is in Brazilian real and its functional currency is the dollar, the income tax expense line item is highly sensitive to the effects of changes in exchange rates particularly from changes in non-monetary assets.

Had the real devalued or appreciated by 10% against the dollar in relation to the actual exchange rate as of December 31, 2013, the deferred income tax expense would have been higher or lower by approximately US$ 115.3.

3.9. Post-employment medical benefit plan

The Company and certain of its subsidiaries have a post-employment medical benefit plan that provides medical care to retired employees. To identify the future exposure of this benefit and therefore its measurement in the financial statements, the Company and its subsidiaries use assumptions that are usually based on statistical data, often observed internally or supplied by institutes or entities dedicated to this type of activity.

Whereas these studies use actuarial assumptions such as discount rate growth rate of medical costs, morbidity rate (aging factor), mortality, probability of retirement and churn rate, which are mostly determined based on statistical data, the definition of a reasonably possible change is very subjective. Therefore, an increase of 0.5% in the discount rate used in the actuarial calculation of medical post-employment benefit plan granted by the Company would reduce its exposure on December 31, 2013 of US$ 7.2 and a decrease of 0.5% at the same rate would increase its exposure to US$ 8.4. For the growth rate of medical costs, an increase of 1% in the actuarial calculation, the Company’s exposure would increase by US$ 18.6 and a decrease of 1% at the same rate would decrease its exposure to US$ 32.4.

Medical plan post-employment benefit granted abroad are not relevant. Therefore sensitivity analysis is not presented.

4. Accounting pronouncements not yet adopted

Standards and amendments to existing standards mentioned in this section have been published, but the implementation is not mandatory for the year ended December 31, 2013, and the Company has not early adopted the amendments in this Financial Statement.

Follows the existing accounting pronouncements that are not yet effective and have not been adopted by the Company:

• IFRS 9 - “Financial instruments’ addresses the classification, measurement and recognition of financial assets and liabilities. IFRS 9 requires the classification of financial assets into two categories: at fair value and measured at amortized cost. The determination is made at initial recognition. The basis of

F-37

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

classification depends on the entity’s business model and the contractual cash flow characteristics of the financial instruments. In relation to financial liabilities, the standard retains most of the requirements established by IAS 39. The main change is that in cases where the fair value option is taken for financial liabilities, the portion of change in fair value due to credit risk of the entity itself is recorded in Other comprehensive income and not in the income statement, unless otherwise it results in an accounting mismatch. The adoption of the first phase of IFRS 9 will cause effect on the classification and measurement of financial assets of the Company, depending on the composition of the portfolio on the date of implementation. The Company will quantify the effect in conjunction with the other phases, when the final rule is issued, including all phases. The standard is applicable from 1 January 2015.

• IAS 32 - “Financial Instruments: Presentation “these reviews explain the meaning of “currently has the legal right to compensation”. The revisions also clarify the adoption of the offsetting criteria in IAS 32 for settlement systems (such as systems of clearinghouses) that apply gross settlement mechanisms that are not simultaneous. These revisions will not have an impact on the financial position or performance of the Company’s disclosures are effective for annual periods beginning on or after January 1, 2014.

• Amendments to IFRS 10 - Consolidated Financial Statements and SIC 12 - Consolidation - Special Purpose Entities and IAS 27 - Separate Financial Statements “Investment Entities”: Amendments to IFRS 10 show an exception to the requirement to consolidate the subsidiaries of an investment entity. In terms of exception, an entity shall measure its investment interest in subsidiaries at fair value through profit or loss. The exception does not apply to controlled entities providing investment related to the activities of the entity investment services. This review will not impact on the financial position or performance of the Company and the disclosures are effective for annual periods beginning on or after January 1, 2014.

5. Cash and cash equivalents

	12.31.2013		12.31.2012
			(Restated)
Cash and banks		147.4		241.1
		147.4		241.1
Cash equivalents
Repurchase agreements (i)		85.2		67.5
Private securities (ii)		618.0		498.3
Fixed deposits (iii)		772.3		843.8
Investment funds (iv)		60.8		146.3
		1,536.3		1,555.9
		1,683.7		1,797.0

(i) Repurchase agreements related to the purchase of assets, mainly government securities, with the commitment to repurchase at a rate previously established by the parties, generally with a one-day term.

(ii) Investment in Bank Deposit Certificates - CDBs, issued by Brazilian financial institutions, with original maturities of 90 days or less for which there are no penalties on remuneration.

(iii) Fixed term deposits with highly-rated financial institutions with original maturities of 90 days or less.

(iv) Money Market Funds in dollars with daily liquidity and a constant net asset value in conformity with the standards of the SEC. The investment portfolio is comprised of securities issued by premium institutions abroad.

The weighted average interest rate on December 31, 2013, for cash equivalents in reais and in dollars were 8.16% p.a. and 1.13% p.a. (8.55% p.a. and 1.22% p.a. on December 31, 2012), respectively.

F-38

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

6. Financial investments

	12.31.2013								12.31.2012 (Restated)
	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
Public securities		140.7		—		—		140.7		298.8		—		—		298.8
Private securities		381.9		—		25.1		407.0		79.4		—		22.3		101.7
Money market funds		266.2		—		—		266.2		30.0		—		—		30.0
Investment funds		123.4		—		—		123.4		143.7		—		—		143.7
Public securities(i)		—		3.4		—		3.4		—		7.4		—		7.4
Other		0.4		41.6		2.6		44.6		0.3		40.0		7.6		47.9
		912.6		45.0		27.7		985.3		552.2		47.4		29.9		629.5
Current portion		912.6		2.2		25.1		939.9		552.2		3.7		22.3		578.2
Non-current		—		42.8		2.6		45.4		—		43.7		7.6		51.3

(i) Securities classified as held to maturity are notes receivable composed of Brazilian government securities (NTNs - Notas do Tesouro Nacional), denominated in US dollars and acquired by the Company from its customers as an adjustment of the interest rates payable by the Export Financing Program (Proex), between the 11th and 15th year after the sale of the respective aircraft, recognized at present value, since the Company intends and has the ability to hold them in its portfolio until maturity.

On December 31, 2013, the financial investments comprise of treasury shares and securities of exclusive investment funds. The portfolios of the exclusive investment funds in Brazil were mainly comprised of highly liquid federal government securities and securities issued by Brazilian financial institutions, measured at their realizable values. The funds are exclusively for the benefit of the Company and are managed by third parties who charge a monthly fee. The investments are marked to market daily and changes in fair value are reflected in the income statement, as the Company classifies these investments as assets measured at fair value through profit or loss.

On December 31, 2013, the financial investments abroad comprised private securities, fixed term deposits and exclusive investment funds, and consist of securities issued by international institutions and by highly-rated corporations with high liquidity, measured at their realizable values. The investments are marked to market daily and changes in fair value are reflected in the income statement, as the Company classifies these investments as assets measured at fair value through profit or loss.

These investment funds have no significant financial obligations. The financial obligations are restricted to the asset management and custody fees, audit fees and similar expenses, which are already accounted for based on the value of each asset in the portfolio. No Company assets were used as collateral for these obligations and the fund creditors have no right of recourse against the general credit of the Company.

7. Trade accounts receivable, net

	12.31.2013			12.31.2012
				(Restated)
Foreign customers		437.2			406.1
Brazilian Air Force		161.8			149.2
Domestic customers		26.8			32.1
		625.8			587.4
Allowance for doubtful accounts		(47.1	)		(51.9	)
		578.7			535.5
Current portion		572.2			525.6
Non-current portion		6.5			9.9

Unbilled accounts receivables recognized under the POC method for Defense and Security segment totaled US$ 208.9 at December 31, 2013 and revenues recorded in 2013 were US$ 657.9. Costs related to construction contracts using the POC method totaled US$ 540.4 in 2013.

F-39

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

At December 31, 2013, the accounts receivable of US$ 499.1 (US$ 452.1 at December 31, 2012) were current and not past due.

For the period presented, there was accounts receivable overdue, but not impaired related to independent customers with no recent history or expectation of default. The analysis of past due accounts receivable is presented below:

	12.31.2013		12.31.2012
			(Restated)
Up to 90 days		56.3		57.4
From 91 to 180 days		9.7		16.8
More than 180 days		13.6		9.2
		79.6		83.4

The net amount of accounts receivable denominated in the following currencies is:

	12.31.2013		12.31.2012
			(Restated)
U.S. dollars		390.3		502.3
Euros		144.3		1.5
Reais		43.1		31.7
Other		1.0		—
		578.7		535.5

The changes to the allowance for doubtful accounts are summarized as follows:

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Beginning balance		51.9			40.3			36.9
Foreign exchange variation		—			0.2			(1.0	)
Additions		1.1			15.1			5.7
Reversal		(3.5	)		(1.4	)		(0.9	)
Disposals		(2.4	)		(2.3	)		(0.4	)
Ending balance		47.1			51.9			40.3

8. Derivative financial instruments

Derivative financial instruments are contracted to protect the Company’s operations from exchange and interest rate fluctuations and are not used for speculation.

As of December 31, 2013, the Company had derivative financial instruments such as interest swaps, cash flow hedges and options.

Swaps are contracted to exchange a floating rate loan to a fixed rate loan or to exchange cash flows in dollars to cash flows in reais, or vice versa. They are valued 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 hedging operations are contracted to protect highly probable salary and healthcare expense flows denominated in reais from exchange rate variations. The expense flows are expected to occur on a monthly basis beginning in January 2013 and ending in December 2014. Financial instruments normally used by the Company for this type of transaction mode is zero-cost collar, which consists of the buying of Put Options and selling of Call Options contracted with the same counterparty and with zero net premium. The fair value of these instruments is determined by the pricing model observable market (through information providers) and widely used by market participants to measure similar instruments. When the closing rate of dollar is between the values of exercise of Put and Call, the fair value reflects the extrinsic value of the option, i.e., the value that is directly connected to the time remaining to maturity.

F-40

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

During 2013 there was no gain or loss recognized on the maturity of derivative instruments since during the year the exchange rate was between the Put and Call values. Thus no value was recorded in the income statement, except the extrinsic value of transactions maturing in 2014.

The option exchange operations are contracted with the purpose of protecting the flows of exchange risks. Their fair values are calculated using observable market pricing models.

As of December 31, 2013, the Company did not have any derivative contracts subject to margin calls.

The table below shows the breakdown of derivative financial instruments for the Company.

Purpose	Risk	Counterparty	Settlement date		12.31.2013			12.31.2012
								(Restated)
Recourse and non-recourse debt (i)	Interest rate	Natixis		2022		21.4			30.7
Export financing (ii)	Interest rate	Bradesco		2013		—			0.9
		Goldman Sachs		2013		—			0.9
		ItauBBA		2016		(3.2	)		—
		Votorantim		2016		(2.8	)		—
		Citi		2016		(1.7	)		—
		Santander		2016		(2.3	)		—
		HSBC		2016		(0.7	)		—
		Societe Generale		2016		(0.8	)		—
		Bradesco		2016		(0.8	)		—
Stock options (iii)	Object price	Republic Airways Holdings Inc		2015		8.8			3.4
Acquisition of property, plant and equipment (iv)	Interest rate	Compass Bank		2024		(0.4	)		(0.7	)
Brazilian Real expenses (v)	Exchange rate	ItauBBA		2013		—			(0.1	)
		ItauBBA		2014		(0.3	)		—
		Deutsche		2014		(0.4	)		—
		Citibank		2014		(0.1	)		—
Other assets	Cupom USD Pre	JP Morgan		2012		—			—
						16.7			35.1

i. Derivative financial instruments (swap), not qualifying for as hedge accounting and contracted by the Company and have effectively converted the amount of R$ 326.6 million (US$ 139.4) for recourse and non-recourse debt, from a fixed interest rate of 6.20% p.a., into a floating rate equivalent to LIBOR + 1.21% p.a.;

ii. Derivative financial instruments in the form of swap that converted a debt in the form of export in the amount of R$ 887.0 million equivalent to US$ 378.6, from a fixed interest rate of 5.50% p.a. to an average rate equivalent floating to 64.53% p.a. CDI (Interbank Deposit Certificate);

iii. Derivative financial instruments related to in convertible option into shares (embedded derivative), received as part of a negotiation regarding the restructuring of a subsidiary of Republic Airways Holdings Inc.;

iv. Derivative financial instruments (swap), not qualifying for hedge accounting, relating to a transaction in the amount of R$ 12.3 million (US$ 5.2) which converted financing transactions subject to floating interest rate of LIBOR 1 month + 2.44% p.a. at fixed interest rate of 5.23% p.a.; and

v. Derivative financial instruments in the form zero-cost collar, designated as a cash flow hedge in the amount of R$ 1,068.2 million equivalent to US$ 534.1, made buying PUT with an exercise price of US$ 2.00 and sales CALL with an average price of R$ 3.50.

F-41

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

On December 31, 2013 and December 31, 2012, the fair value of derivative financial instruments was presented in the Statement Financial Position as shown below:

	12.31.2013			12.31.2012
				(Restated)
Assets
Current portion		14.6			11.2
Non-current		15.8			24.8
Liabilities
Current portion		(13.7	)		(0.9	)
Non-current		—			—
Total		16.7			35.1

9. Customer and commercial financing

Customer and commercial financing refer to the partial financing of certain sales of new aircraft by the Company, at average interest rates at December 31, 2013, of 5.08% p.a. (December 31, 2012 – 4.90% p.a.) , secured by the aircraft covered by the financing and at present value when applicable. The maturities are monthly, quarterly and half-yearly, classified as follows:

	12.31.2013		12.31.2012
			(Restated)
Current portion		9.6		22.7
Non-current portion		64.1		86.9
		73.7		109.6

At December 31, 2013 and December 31, 2012, the total value of customer and commercial financing were current and not past due.

At December 31, 2013, the long-term maturities of the financing of accounts receivable were as follows:

Year
2015	18.7
2016	8.5
2017	7.5
2018	5.2
Thereafter 2018	24.2
	64.1

10. Collateralized accounts receivable and recourse and non-recourse debt

10.1. Collateralized accounts receivable

	12.31.2013			12.31.2012
				(Restated)
Estimated residual value of leased assets		303.2			303.2
Minimum lease payments receivable		258.3			276.3
Unearned income		(135.6	)		(153.5	)
Investment in sales-type lease		425.9			426.0
Current portion		10.5			13.0
Non-current portion		415.4			413.0

F-42

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

At December 31, 2013, the maturities of the amounts classified as non-current assets are as follows:

Year
2015	8.1
2016	8.7
2017	18.8
2018	34.2
Thereafter 2018	345.6
	415.4

10.2. Recourse and non-recourse debt

	12.31.2013		12.31.2012
			(Restated)
Recourse Debt		364.7		361.6
Non Recourse Debt		35.5		38.6
		400.2		400.2
Current portion		12.1		11.9
Non-current portion		388.1		388.3

At December 31, 2013, the maturities of the amounts classified as non-current liabilities were as follows:

2015	317.3
2016	8.7
2017	18.8
2018	14.1
Thereafter 2018	29.2
	388.1

11. Guarantee Deposits

	12.31.2013		12.31.2012
			(Restated)
Sales structure guarantees (i)		261.4		275.8
Sales financing guarantees (ii)		311.7		303.6
Others		1.6		2.1
		574.7		581.5
Non-current		574.7		581.5

(i) US dollar amounts deposited in an escrow account as collateral for the financing of certain aircraft sold where Embraer serves as secondary guarantor. If the initial guarantor of the debt, unrelated party is required to pay the lender, the initial guarantor will be entitled to the amount in the escrow account. The amount is returned in the form of cash to the Company at maturity of the financing contracts (until 2021) if the aircraft purchaser does not default on the loan. The interest on the escrow account is added to the principal and recognized by the Company as financial income.

In 2004, seeking to ensure profitability compatible with the term of the guarantee, the Company allocated the total amount at that time of US$ 123.4 from the deposits in escrow account to 14-year structured notes. This yield enhancement was obtained through a credit default swap (CDS) transaction, which provides the right of early redemption of the note in case of a credit event by the Company. Upon such a credit event, the note may be redeemed by the holder at the greater of the note’s market value or its original face amount, which would result in a loss to us of all interest accrued on such note to date.

F-43

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

In the event of default, the maturity dates of these notes will be accelerated and the notes would be realized at market value, limited to a minimum of the amounts originally invested. Any amount by which the market value exceeds the amount invested will be paid to the Company in the form of bonds, or loans of that amount.

Credit events include obligation and payment defaults under the terms of the guarantees above specified thresholds, events related to the restructuring of the obligations above a specified threshold, bankruptcy and a repudiation of and/or moratorium on the obligations above a specified threshold.

(ii) Financial investments denominated in US dollars and held by third-party financial institutions as a pledge under a specific sale financing structure. These investments earn interest at the annual LIBOR rate.

12. Inventories

	12.31.2013			12.31.2012
				(Restated)
Raw materials		948.8			684.4
Work-in-process		614.1			778.6
Spare parts		351.4			340.6
Inventory in transit		217.4			156.1
Finished goods (i)		197.3			258.6
Advances to suppliers		70.6			45.9
Aircraft available for sales (ii)		36.1			46.8
Consumption materials		31.6			28.9
Provision for adjustment to market value (iii)		(19.2	)		(33.7	)
Provision for obsolescence (iv)		(160.8	)		(149.3	)
		2,287.3			2,156.9
Current portion		2,287.3			2,156.9

(i) The following aircraft were held in inventory at:

• December 31, 2013: three Legacy 650, one Phenom 100, four Phenom 300, three Lineage and seven Ipanema; and

• December 31, 2012: two EMBRAER 175, three Legacy 650, one Legacy 600, eight Phenom 100, six Phenom 300, two Lineage and three Ipanema.

Of the total aircraft inventories at December 31, 2013, four Ipanema sold through up to February 24, 2014.

(ii) The following aircraft were held in inventory as available for sale:

• December 31, 2013: One ERJ 145, one Legacy 600, one Legacy 650; and

• December 31, 2012: one ERJ 145, one EMBRAER 190, one Legacy 600.

F-44

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

(iii) Refers to the provision recorded for adjustments to the realizable value of used aircraft. Changes in market value were as follows:

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Beginning balance		(149.3	)		(140.1	)		(152.9	)
Additions		(35.5	)		(39.4	)		(12.7	)
Disposals		21.0			26.3			22.3
Reversals		1.1			4.2			3.0
Foreign exchange loss		1.9			(0.3	)		0.2
Ending balance		(160.8	)		(149.3	)		(140.1	)
Current portion		(160.8	)		(149.3	)		(140.1	)

(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. Changes in market value were as follows:

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Beginning balance		(33.7	)		(63.7	)		(83.2	)
Additions		(8.1	)		(1.2	)		(6.1	)
Disposals		22.0			31.2			22.2
Reversals		0.6			—			3.4
Ending balance		(19.2	)		(33.7	)		(63.7	)
Current portion		(19.2	)		(33.7	)		(63.7	)

13. Other Assets

	12.31.2013		12.31.2012
			(Restated)
Taxes recoverable (i)		200.1		143.3
Court-mandated escrow deposits (ii)		86.0		179.2
Prepaid expenses		36.3		25.6
Credit with suppliers (iii)		23.3		31.7
Advances to employees		6.1		14.1
Prepaid Insurance		6.1		3.3
Advances for services rendered		5.3		4.2
Indemnity assets (iv)		3.6		7.2
Advances of commissions		3.9		—
Compulsory loan		1.1		0.9
Collateral pledge		1.0		1.0
Restricted cash		0.4		—
Claims (v)		—		66.7
Other		18.7		18.0
		391.9		495.2
Current portion		250.0		254.1
Non-current portion		141.9		241.1

(i) Taxes recoverable

	12.31.2013		12.31.2012
			(Restated)
Income tax and contribution for social security on net income withheld		98.4		39.9
ICMS (State Value-added Tax) and IPI (Excise Tax)		64.8		58.9
PIS (Social Integration Program) and COFINS (Contribution for Social Security)		23.1		35.1
Others		13.8		9.4
		200.1		143.3
Current portion		155.1		94.7
Non-current portion		45.0		48.6

F-45

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

(ii) Court-mandated escrow deposits relate to amounts deposited in connection with pending legal actions, substantially federal contributions totaling US$ 70.1. There is a corresponding accrual in the Company’s liabilities (Note 26).

(iii) Refers to rework carried out on products supplied by third parties, which will be reimbursed in accordance with contractual agreements.

(iv) Assets recorded in a business combination, when the Company has negotiated the right of offset from the sellers, for possible future liabilities.

(v) Claims received as a result of the court approval of the bankruptcy administration of American Airlines (Note 25).

14. Business Combination and acquisition of non controlling interest

14.1. Business Combination

14.1.1 Acquisition of Atech’s control on February 1, 2013

On 1 April 2011, through Embraer Defesa & Securança Participações S.A., the Company acquired 50% stake in Atech Negócios e Tecnologias S.A., which was treated as a jointly controlled business and therefore proportionately consolidated in the financial statements of Company. At that time it was agreed between the parties the call option by Embraer Defesa & Segurança for buying 1% of the shares of the other shareholders exercisable from 1 February 2013. The acquisition of over 1% of the shares of Atech, earning one more vote in the investee board of directors, which associated the powers on its relevant activities, Embraer Defesa & Segurança would exercise control Atech. Because it is an already exercisable option is a unilateral decision of the Company as of February 1, 2013 Atech became a subsidiary of the Company and therefore fully consolidated in its financial statements, and the non-controlling interest measured at fair proportion to the non-controlling shareholders in the assets and liabilities acquired. The synergy from this alliance aims to ensure greater customer satisfaction in the long run through more comprehensive solutions in complex systems.

There was no cash outflow for acquisition of the 1 % and although it is a previously jointly controlled investment, it is an acquisition of control and therefore subject to the application of IFRS 3/CPC R1 15—Business Combinations. This event was classified as a business combination achieved in steps performed without the transfer of consideration, so the acquisition is revalued at fair value and recognized as goodwill against income for the year valuation. This revaluation was conducted by specialists of the Company using multiples of market and discounted cash-flow evaluation techniques.

F-46

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

The table below shows the financial position of Atech the date of acquisition of control and the adjustment of goodwill:

	Assets and liabilities,
	net as of 02.01.2013
Atech’s equity position on February 1, 2013
Cash and cash equivalents		4.6
Trade accounts receivable		6.3
Property, plant and equipment		0.2
Intangible		0.2
Other assets		3.0
Suppliers		(0.4	)
Advances from customers		(5.6	)
Trade accounts payable		(0.9	)
Other liabilities		(0.5	)
Assets and liabilities, net at February 1, 2013		6.9
Non-controlling		(3.5	)
Net contingent assets and liabilities identified in the acquisition of control (i)		(0.2	)
Participation at fair value on acquisition of control on 02/01/13		3.2
Fair value of the interest acquired on February 1, 2013		(21.8	)
Total goodwill for future profitability		(18.6	)
Previous goodwill on initial acquisition		(19.7	)
Adjustment of goodwill on acquisition of control		1.1

(i) Net amount of liabilities relating to labor and contingent assets related to forecasting reimbursements by vendors defined in the contract.

The goodwill of US$ 18.6 reflects the ability to develop products and services in the areas of command, control, computing, communications, and intelligence (C4I). With respect to the goodwill based on future profitability and provided by tax legislation, the Company intends, exhausted the necessary conditions, to use it according to the law.

Net revenue and net income earned by Atech during the year 2013, amounted to US$ 28.3 and US$ 3.1 respectively, of which US$ 26.4 of net income and US$ 2.8 of net income were generated between the date of acquisition and the year end.

14.1.2 Acquisition of non-controlling interest of Atech on August 15, 2013

Additionally, on August 15, 2013, Embraer Defesa & Segurança has signed a purchase agreement for 50% of the remaining shares of Atech Negócios e Tecnologias S.A. as part of its acquisition strategy.

The completion of the deal was subject to compliance with certain conditions which EERA completion period of 150 days from the signing of the contract. These conditions were fulfilled and November 26, 2013 Atech became a wholly owned subsidiary of Embraer Defesa & Segurança. The acquisition of 50% of the remaining shares of Atech, Embraer Defesa & Segurança and paid US$ 18.8, US$ 17.3 in cash and US$ 1.5 through the recognition of accounts payable, of which US$ 3.8 recognized as investment and US$ 14.9 recognized in equity as valuation adjustments to equity in line specifies “result in transactions with non-controlling shareholders” within equity.

14.1.3 Acquisition of AST’s control on October 1, 2012

On August 4, 2011, through its wholly-owned subsidiary Embraer Aircraft Holding Inc. (EAH), the Company acquired 36.7% of the capital of Aero Seating Technologies (AST) for US$ 3.0, which was treated as an investment in an associate in the financial statements as of December 31, 2011. On October 1, 2012, EAH acquired a further 48.8% of the capital of AST for US$ 4.0, and now holds a controlling stake, with an 85.5% interest in its capital.

F-47

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Since the acquisition was made in stages, the total amounts for the acquisition of 85.5% of AST’s capital as of October 1, 2012 are shown below, as if the whole amount had been paid on that date.

	Assets and liabilities,
	net as of 10.01.12
Aero Seating Technologies
Working capital, net		1.3
Intangible assets		7.1
Property, plant and equipament		0.2
Loans		(1.5	)
Fair value of assets and liabilities, net		7.1
Noncontrolling interest (14.5%)		(0.9	)
Amount paid for 85.5% of the interest		(7.1	)
Goodwill		(0.9	)

The measurement process, completed on December 31, 2012, identified intangible assets totaling US$ 7.1, mainly related to the capacity to certify materials, parts and applications used in aircraft seats, based on an external report.

The goodwill on this acquisition reflects AST’s ability to develop, certify and manufacture high-quality seats for executive aircraft in line with the Company’s business expectations.

The fair value of the 36.7% interest in AST on the purchase date was US$ 3.0 and remeasurement of the participation resulted in a gain of US$ 0.6.

The net income and the net loss recorded by AST in 2012 totaled US$ 2.9 and US$ (1.4) respectively. US$ 0.9 of the net income and US$ (0.7) of the net loss were generated between the date control was obtained and the end of the year.

14.2. Interest in entities

(i) Wholly owned subsidiaries and special purpose entities

Subsidiaries, jointly controlled entities and structured entities that the Company directly or indirectly has control, disclosed in the consolidated financial statements as of December 31, 2013, are consolidated into the Embraer group.

The Company does not have any contractual or legal restrictions to access assets or settle liabilities of the wholly owned subsidiaries of the group.

These entities have risks inherent to the operations and the main ones are described below:

• Economic Risks: are potential losses from fluctuations in market conditions (price of products, exchange rate and interest);

• Operational risk: are potential losses by the emergence of new technologies or failure of current processes;

• Credit risk: are potential losses that may occur where the third party (customer) becomes unable to meet its obligations; and

• Liquidity risk: financial inability to cover financial obligations.

F-48

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

(ii) Subsidiaries with participation of non-controlling shareholders

Group entities described below have participation of non-controlling shareholders, but based on contractual agreements and analysis of IFRS, the Company has control and therefore to consolidate these entities:

		Participation			Participation
Entity	Country	Embraer Group			noncontrolling
Orbisat Indústria S.A.	Brazil		90.0	%		10.0	%
Aero Seating Technologies LLS	United States of America		85.5	%		14.5	%
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	%
Harpia Sistemas S.A	Brazil		51.0	%		49.0	%
EZ Air Interior Limited	Ireland		50.0	%		50.0	%
Orbisat Aerolevantamento Ltda.	Brazil		25.0	%		75.0	%

Although the group Embraer has 51.0% of the entities: Harbin Embraer Aircraft Industry Company Ltd., Embraer CAE Training Services Ltd., and Visiona Tecnologia Espacial S.A., the powers described in the contractual agreements demonstrate that the Board of Directors is composed in mostly by representatives from Embraer and direction of the relevant activities of the entity are approved with the consent of those representatives.

The shareholder agreement of Orbisat Aerolevantamento Ltda. assigns to Embraer S.A. an irrevocable option to purchase all of the shares of non-controlling interest. This option is exercisable at any time and can be transferred to any person, which determined the control group Orbisat Aerolevantamento by Embraer, despite the shareholding of only 25% of its capital.

The equity interests held in these subsidiaries do not differ substantially from the right proportion of votes held by Embraer Group.

Following is the summary of the financial position of the group entities that have non-controlling interest:

	12.31.2013		12.31.2012
Cash and cash equivalent		87.1		89.0
Current assets		343.4		284.3
Non current assets		116.3		126.6
Current liabilities		161.1		116.2
Non current liabilities		51.8		61.5
Revenue		257.9		241.5
Net income for the year		7.2		1.3

Group subsidiaries with non-controlling interests are subject to the same risks described for the wholly owned subsidiaries.

(iii) Jointly controlled entity

The EZ Air Interior Limited is a joint operation between group Embraer and Zodiac Aerospace and shares with the other member the joint administration of the relevant activities of the entity.

This joint operation has net assets and liabilities recognized in the consolidation in accordance with the rights and obligations assigned to Embraer.

F-49

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

	12.31.2013			12.31.2012
Cash and cash equivalent		2.3			0.9
Current assets		9.3			1.0
Non current assets		3.2			—
Current liabilities		11.2			0.9
Non current liabilities		2.0			—
Revenue		4.4			—
Net income for the year		(0.7	)		—

(iv) Interest in other companies

Interest in other companies in Embraer Group is represented only by the participation of 25% of Embraer Defesa & Segurança in AEL Sistemas SA. Despite this interest, Embraer Group does not have significant influence on the management of this entity, and therefore the investment is measured as a financial instrument in the consolidated financial statements at fair value.

15. Related Party Transactions

15.1. 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, (ii) balances of financial investments; and (iii) bank deposits;

• liabilities: (i) purchase of aircraft components and spare parts, (ii) advances received on account of sales contracts; (iii) financing for research and product development at market rates (iv) loans and financing; and (v) export financing; and

• 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; (iii) interest on financing for research and product development, import and export financing and advances on exchange contracts; and (iv) supplementary pension plan.

15.1.1 December 31, 2013

	Current				Non-Current				Financial			Operating
	Assets		Liabilities		Assets		Liabilities		Results			Results
Banco do Brasil S.A.		497.6		311.8		311.6		85.4		47.1			—
Banco Nacional de Desenvolvimento Econômico e Social – BNDES		—		41.9		—		213.3		(18.3	)		—
Brazilian Air Force		158.4		210.3		—		—		—			130.3
Caixa Econômica Federal		197.6		0.1		—		42.7		7.9			—
Embraer Prev - Sociedade de Previdência Complementar		—		—		—		—		—			(29.1	)
Empresa Portuguesa de Defesa – EMPORDEF		—		—		—		6.9		—			—
Exército Brasileiro		5.7		—		—		—		—			5.7
Financiadora de Estudo e Projetos – FINEP		—		11.6		—		56.1		(1.7	)		—
		859.3		575.7		311.6		404.4		35.0			106.9

15.1.2 December 31, 2012 (Restated)

	Current				Non-Current				Financial			Operating
	Assets		Liabilities		Assets		Liabilities		Results			Results
Banco do Brasil S.A.		644.4		—		303.6		303.6		37.0			—
Banco Nacional de Desenvolvimento Econômico e Social – BNDES		—		255.1		—		184.1		(27.6	)		—
Brazilian Air Force		149.2		171.9		—		—		—			145.4
Embraer Prev - Sociedade de Previdência Complementar		—		—		—		—		—			(27.6	)
Empresa Portuguesa de Defesa – EMPORDEF		—		—		—		6.5		—			—
Ez Air Interior Limited		1.9		—		—		—		—			—
Financiadora de Estudo e Projetos – FINEP		—		17.9		—		46.7		(1.9	)		—
		795.4		444.9		303.6		540.9		7.5			117.8

F-50

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

15.1.3 December 31, 2011 (Restated)

	Financial			Operating
	Results			Results
Aero Seating Technologies LLC (AST)		—			—
Banco do Brasil S.A.		16.8			—
Banco Nacional de Desenvolvimento Econômico e Social – BNDES		(23.1	)		—
Brazilian Air Force		—			213.0
Embraer Prev - Sociedade de Previdência Complementar		—			(29.4	)
Financiadora de Estudo e Projetos – FINEP		(1.0	)		—
		(7.3	)		183.5

15.2. Remuneration of key Management personnel:

	12.31.2013		12.31.2012		12.31.2011
Short-term benefits (i)		19.7		16.9		16.6
Stock option program		3.6		3.9		4.6
Labor contract termination		0.5		—		0.4
Total remuneration		23.8		20.8		21.6

(i) Includes salaries and social security contributions.

Key Management includes members of the statutory Board of Directors and Executive Directors.

In 2013 and 2012 and 2011, no post-retirement or long-term benefits were paid.

16. Property, Plant and Equipment

The average annual rate of depreciation by asset class on December, 31, 2013 is as follows:

	Average useful life
Class of assets	(years)
Buildings and improvements		4.6	%
Installations		7.7	%
Machinery and equipament		12.3	%
Furniture and fixtures		14.4	%
Vehicles		22.7	%
Aircraft		12.4	%
Computers and peripherals		34.3	%
Tooling		12.1	%
Other assets		0.0	%
Exchange pool program assets		8.4	%

F-51

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

	12.31.2013
	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 (ii)			Total
Cost
At December 31, 2012 (Restated)		11.1		443.0			127.8			512.1			54.4			15.6			588.1			128.2			327.6			67.3			460.3			136.6			2,872.1
Additions		—		4.1			—			79.5			3.2			0.6			61.5			18.8			49.8			11.3			85.6			127.0			441.4
Additions - business combination		—		—			—			—			—			—			—			0.3			—			—			—			—			0.3
Disposals		—		—			(0.1	)		(5.8	)		(1.0	)		(0.8	)		(0.5	)		(1.6	)		—			(1.1	)		(0.8	)		(2.2	)		(13.9	)
Impairment		—		—			—			—			—			—			(14.1	)		—			—			—			—			—			(14.1	)
Reclassifications*		—		72.0			6.5			56.6			2.3			0.3			(59.8	)		0.1			9.6			(43.0	)		42.6			(114.7	)		(27.5	)
Translation adjustments		—		1.5			(0.1	)		4.2			0.9			0.2			(0.5	)		1.8			0.2			1.3			(10.8	)		5.7			4.4
At December 31, 2013		11.1		520.6			134.1			646.6			59.8			15.9			574.7			147.6			387.2			35.8			576.9			152.4			3,262.7
Accumulated depreciation
At December 31, 2012 (Restated)		—		(137.9	)		(87.3	)		(309.8	)		(29.1	)		(11.3	)		(155.3	)		(104.9	)		(169.9	)		(1.3	)		(126.9	)		—			(1,133.7	)
Depreciation		—		(13.1	)		(3.0	)		(23.5	)		(3.4	)		(0.9	)		(50.6	)		(7.4	)		(18.0	)		—			(25.9	)		—			(145.8	)
Disposals		—		—			0.1			4.8			0.9			0.8			0.5			1.4			—			—			0.7			—			9.2
Reclassifications*		—		—			—			(0.3	)		—			—			13.8			0.5			(0.3	)		0.2			—			—			13.9
Translation adjustments		—		(0.3	)		0.1			(1.9	)		(0.3	)		(0.2	)		0.1			(0.4	)		(0.1	)		—			(10.0	)		—			(13.0	)
At December 31, 2013		—		(151.3	)		(90.1	)		(330.7	)		(31.9	)		(11.6	)		(191.5	)		(110.8	)		(188.3	)		(1.1	)		(162.1	)		—			(1,269.4	)
Net
At December 31, 2012 (Restated)		11.1		305.1			40.5			202.3			25.3			4.3			432.8			23.3			157.7			66.0			333.4			136.6			1,738.4
At December 31, 2013		11.1		369.3			44.0			315.9			27.9			4.3			383.2			36.8			198.9			34.7			414.8			152.4			1,993.3

	12.31.2012
	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 (ii)			Total
Cost
At December 31, 2011 (Restated)		11.1		428.4			125.4			480.1			47.8			14.0			477.2			120.8			305.6			7.8			351.3			93.4			2,462.9
Additions		—		4.4			0.2			39.5			2.2			0.7			140.4			19.6			15.8			62.4			63.9			63.1			412.2
Additions - business combination		—		—			—			0.1			—			—			—			0.1			—			—			—			—			0.2
Disposals		—		(1.1	)		(0.2	)		(11.2	)		(1.7	)		(0.2	)		—			(2.6	)		—			(0.4	)		(3.5	)		(0.1	)		(21.0	)
Impairment		—		—			—			—			—			—			(9.3	)		—			—			—			—			—			(9.3	)
Reclassifications*		—		15.5			2.5			3.1			5.6			1.0			(20.0	)		(10.2	)		6.1			(2.5	)		43.4			(21.1	)		23.4
Translation adjustments		—		(4.2	)		(0.1	)		0.5			0.5			0.1			(0.2	)		0.5			0.1			—			5.2			1.3			3.7
At December 31, 2012 (Restated)		11.1		443.0			127.8			512.1			54.4			15.6			588.1			128.2			327.6			67.3			460.3			136.6			2,872.1
Accumulated depreciation
At December 31, 2011 (Restated)		—		(127.6	)		(85.0	)		(301.1	)		(27.7	)		(10.5	)		(121.1	)		(102.1	)		(146.0	)		(1.2	)		(90.2	)		—			(1,012.5	)
Depreciation		—		(10.8	)		(2.5	)		(23.5	)		(2.9	)		(0.8	)		(35.8	)		(5.1	)		(20.0	)		(0.1	)		(38.4	)		—			(139.9	)
Disposals		—		0.7			0.2			10.4			1.6			0.1			—			2.6			—			—			1.6			—			17.2
Reclassifications*		—		0.2			(0.1	)		(4.8	)		—			—			(1.5	)		—			4.7			—			—			—			(1.5	)
Translation adjustments		—		(0.4	)		0.1			9.2			(0.1	)		(0.1	)		3.1			(0.3	)		(8.6	)		—			0.1			—			3.0
At December 31, 2012 (Restated)		—		(137.9	)		(87.3	)		(309.8	)		(29.1	)		(11.3	)		(155.3	)		(104.9	)		(169.9	)		(1.3	)		(126.9	)		—			(1,133.7	)
Net
At December 31, 2011 (Restated)		11.1		300.8			40.4			179.0			20.1			3.5			356.1			18.7			159.6			6.6			261.1			93.4			1,450.4
At December 31, 2012 (Restated)		11.1		305.1			40.5			202.3			25.3			4.3			432.8			23.3			157.7			66.0			333.4			136.6			1,738.4

F-52

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

	12.31.2011
	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 (ii)			Total
Cost
At December 31, 2010		11.1		394.4			124.9			438.7			44.9			13.2			472.3			115.1			274.3			3.2			179.6			40.0			2,111.7
Additions		—		0.1			0.2			21.1			4.4			0.7			66.7			18.0			10.3			10.3			105.4			97.1			334.3
Additions - business combination		—		—			—			23.3			0.2			—			3.3			1.3			—			0.1			—			0.4			28.6
Disposals		—		—			—			(4.2	)		(1.0	)		(0.3	)		—			(1.9	)		—			—			—			—			(7.4	)
Impairment		—		—			—			—			—			—			(2.6	)		—			—			—			—			—			(2.6	)
Reclassifications*		—		34.4			0.6			3.9			0.7			0.4			(62.0	)		(11.6	)		21.0			(5.7	)		77.1			(43.7	)		15.1
Translation adjustments		—		(0.5	)		(0.3	)		(2.7	)		(1.4	)		—			(0.5	)		(0.1	)		—			(0.1	)		(10.8	)		(0.4	)		(16.8	)
At December 31, 2011 (Restated)		11.1		428.4			125.4			480.1			47.8			14.0			477.2			120.8			305.6			7.8			351.3			93.4			2,462.9
Accumulated depreciation
At December 31, 2010		—		(117.6	)		(82.6	)		(278.5	)		(26.7	)		(10.3	)		(91.0	)		(98.7	)		(129.4	)		(1.1	)		(74.8	)		—			(910.7	)
Depreciation		—		(9.9	)		(2.4	)		(17.3	)		(1.8	)		(0.6	)		(36.4	)		(4.3	)		(16.6	)		(0.1	)		(19.9	)		—			(109.3	)
Depreciation - business combination		—		—			—			(14.4	)		—			—			—			(0.7	)		—			—			—			—			(15.1	)
Disposals		—		—			—			4.0			0.6			0.3			0.5			1.5			—			—			—			—			6.9
Reclassifications*		—		—			—			—			—			—			5.9			—			—			—			—			—			5.9
Translation adjustments		—		(0.1	)		—			5.1			0.2			0.1			(0.1	)		0.1			—			—			4.5			—			9.8
At December 31, 2011 (Restated)		—		(127.6	)		(85.0	)		(301.1	)		(27.7	)		(10.5	)		(121.1	)		(102.1	)		(146.0	)		(1.2	)		(90.2	)		—			(1,012.5	)
Net
At December 31, 2010		11.1		276.8			42.3			160.2			18.2			2.9			381.3			16.4			144.9			2.1			104.8			40.0			1,201.0
At December 31, 2011 (Restated)		11.1		300.8			40.4			179.0			20.1			3.5			356.1			18.7			159.6			6.6			261.1			93.4			1,450.4

* Non-cash transactions. In the column “Aircraft” this amount relates to aircraft owned by Embraer’s subsidiary ECC Leasing. The balances relating to the aircraft were transferred between property plant and equipment and inventory.

(i) The aircraft are used for testing, shuttle and operational leasing and are adjusted to the fair value, when applicable. The following aircraft are held:

• December 31, 2013: 45 ERJ 135, 19 ERJ 145, seven EMBRAER 170, one EMBRAER 175, two EMBRAER 190, one Phenom 100, three Phenom 300, three Legacy 600, one 690B, and one EMB-810C; and

• December 31, 2012: one EMB 120, 45 ERJ 135, 16 ERJ 145, eight EMBRAER 170, one EMBRAER 175, two EMBRAER 190, one Phenom 100, one Phenom 300, four Legacy 600, two 690B, and one EMB-810C.

(ii) Refers mainly to construction projects to expand the manufacturing plants and aircraft maintenance centers.

F-53

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

For the year ended December 31, 2013, depreciation expense of US$ 131.0 (US$ 106.1 and US$ 77.4 in 2012 and 2011, respectively) were charged to cost of sales, US$ 7.7 (US$ 24.1 and US$ 21.3 in 2012 and 2011, respectively) to selling expenses and US$ 7.1 (US$ 9.7 and US$ 10.6 in 2012 and 2011, respectively) to administrative expenses.

There was no interest qualified to be capitalized for the year ended December 31. 2013.

At December 31, 2013, US$ 269.1 property, plant and equipment were pledged as collateral to loans and financing guarantees and labor contingencies.

17. Intangible Assets

Internally developed intangible assets relate to the costs incurred in developing programs for each 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 reduce emissions, in addition to speeding up design and manufacture, while optimizing the use of resources.

	12.31.2013
	Internally developed											Acquired from third party
	Commercial			Executive			Defense and Security			Other		Development			Software			Goodwill			Other			Total
Intangible cost
At December 31, 2012 (Restated)		996.8			845.8			24.3			—		14.7			175.0			39.4			23.1			2,119.1
Additions		98.8			171.8			—			11.8		—			34.3			(1.1	)		1.0			316.6
Additions - business combination		—			—			—			—		2.9			—			—			—			2.9
Contributions from suppliers		(51.8	)		—			—			—		—			—			—			—			(51.8	)
Disposals		—			—			—			—		—			(3.1	)		—			—			(3.1	)
Reclassifications		—			10.3			—			—		—			—			—			—			10.3
Translation adjustments		—			—			—			—		(2.6	)		—			—			—			(2.6	)
At December 31, 2013		1,043.8			1,027.9			24.3			11.8		15.0			206.2			38.3			24.1			2,391.4
Accumulated amortization
At December 31, 2012 (Restated)		(785.1	)		(235.4	)		(23.6	)		—		(2.4	)		(112.7	)		—			(1.1	)		(1,160.3	)
Amortization		(59.9	)		(67.4	)		(0.8	)		—		—			(15.3	)		—			(1.4	)		(144.8	)
Additions - business combination		—			—			—			—		(2.9	)		(0.1	)		—			—			(3.0	)
Amortization of contribution from supplier		19.5			6.6			—			—		—			—			—			—			26.1
Disposals		—			—			—			—		—			—			—			—			—
Reclassifications		—			(0.2	)		—			—		—			—			—			—			(0.2	)
Translation adjustments		—			—			—			—		(0.1	)		—			—			—			(0.1	)
At December 31, 2013		(825.5	)		(296.4	)		(24.4	)		—		(5.4	)		(128.1	)		—			(2.5	)		(1,282.3	)
Intangible, net
At December 31, 2012 (Restated)		211.7			610.4			0.7			—		12.3			62.3			39.4			22.0			958.8
At December 31, 2013		218.3			731.5			(0.1	)		11.8		9.6			78.1			38.3			21.6			1,109.1

	12.31.2012
	Internally developed									Acquired from third party
	Commercial			Executive			Defense and Security			Development			Software			Goodwill		Other			Total
Intangible cost
At December 31, 2011 (Restated)		974.1			659.2			26.0			14.7			143.7			38.5		6.2			1,862.4
Additions		23.7			186.6			—			—			32.3			—		9.8			252.4
Contributions from suppliers		(1.0	)		—			—			—			—			—		—			(1.0	)
Additions - business combination		—			—			—			—			—			0.9		7.1			8.0
Translation adjustments		—			—			(1.7	)		—			(1.0	)		—		—			(2.7	)
At December 31, 2012 (Restated)		996.8			845.8			24.3			14.7			175.0			39.4		23.1			2,119.1
Accumulated amortization
At December 31, 2011 (Restated)		(742.5	)		(182.2	)		(23.5	)		(1.5	)		(103.5	)		—		(0.9	)		(1,054.1	)
Amortization		(66.6	)		(61.0	)		(0.1	)		(0.9	)		(10.1	)		—		(0.2	)		(138.9	)
Amortization of contribution from supplier		24.0			7.8			—			—			—			—		—			31.8
Translation adjustments		—			—			—			—			0.9			—		—			0.9
At December 31, 2012 (Restated)		(785.1	)		(235.4	)		(23.6	)		(2.4	)		(112.7	)		—		(1.1	)		(1,160.3	)
Intangible, net
At December 31, 2011 (Restated)		231.6			477.0			2.5			13.2			40.2			38.5		5.3			808.3
At December 31, 2012 (Restated)		211.7			610.4			0.7			12.3			62.3			39.4		22.0			958.8

F-54

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

	12.31.2011
	Internally developed									Acquired from third party
	Commercial			Executive			Defense and Security			Development			Software			Goodwill		Other			Total
Intangible cost
At December 31, 2010		959.8			553.1			25.1			—			130.6			—		3.5			1,672.1
Additions		15.3			190.9			0.9			—			12.6			—		(2.3	)		217.4
Additions - business combination		—			—			—			23.0			0.5			38.5		5.0			67.0
Contributions from suppliers		(1.0	)		(84.8	)		—			—			—			—		—			(85.8	)
Translation adjustments		—			—			—			(8.3	)		—			—		—			(8.3	)
At December 31, 2011 (Restated)		974.1			659.2			26.0			14.7			143.7			38.5		6.2			1,862.4
Acumulated amortization
At December 31, 2010		(694.1	)		(141.3	)		(23.3	)		—			(95.4	)		—		(1.7	)		(955.8	)
Disposals		0.1			0.6			—			—			—			—		—			0.7
Amortization		(71.9	)		(47.9	)		(0.2	)		(1.7	)		(7.7	)		—		(0.1	)		(129.5	)
Amortization of contribution from suppliers		23.4			6.4			—			—			—			—		—			29.8
Translation adjustments		—			—			—			0.2			(0.4	)		—		0.9			0.7
At December 31, 2011 (Restated)		(742.5	)		(182.2	)		(23.5	)		(1.5	)		(103.5	)		—		(0.9	)		(1,054.1	)
Intangible, net
At December 31, 2010		265.7			411.8			1.8			—			35.2			—		1.8			716.3
At December 31, 2011 (Restated)		231.6			477.0			2.5			13.2			40.2			38.5		5.3			808.3

At December 31, 2013, the Company capitalized interest of US$ 8.2 in intangible assets.

18. Impairment test

At December 31, 2013 and 2012, the Company performed an evaluation of all of its cash-generating units (“CGUs”). No indication of impairment was identified. No impairment adjustment was necessary, except for aircraft (Note 16.2). The impairment losses were established for aircraft operating segments are recognized in “Commercial Aviation” or “Executive Aviation” segments in proportion to the respective aircraft.

In the case of intangible assets arising in the process of product development or acquisition of new businesses, the recovery test was performed for all CGU related, independent of indicators of loss. For these calculations, respective policy was applied (Note 2.2.19) using a discount rate of 9.4% (expectation of return for investors) on the cash-flows presented in the Strategic Plan of the Company approved in the 4th quarter of 2013.

In the last quarter of 2011, the Company concluded the business combination of two subsidiaries: Orbisat Industria S.A. and Atech Negócios em Tecnologias S.A. (Note 14 of December 31, 2011 financial statements) which resulted in amounts of goodwill based on future economic benefits. Because Atech’s control was acquired on a step acquisition there was a slight adjustment in 2013 to the Atech’s goodwill (Note 14.1). At December 31, 2013 there were no impairment losses for those goodwill balances based on cash flow projections.

Additionally, these goodwill amounts were tested for impairment together with other property, plant and equipment and intangible amounts, considering a group of several CGUs, as the assets were related to more than one CGU.

19. Trade accounts payable

	12.31.2013		12.31.2012
			(Restated)
Foreign suppliers		640.8		384.6
Risk partners (i)		279.0		266.4
Domestic suppliers		93.8		107.7
		1,013.6		758.7
Current portion		1,013.6		758.7

(i) The Company’s risk-sharing suppliers /partners develop and produce significant aircraft components, including engines, hydraulic components, avionics, wings, tail sections, interior parts, and fuselage parts, among others. Certain contracts between the Company and these risk-sharing suppliers /partners are long-term and include deferral of payments for components and systems for a negotiated term after delivery.

F-55

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Once the risk-sharing suppliers/partners have been selected and the aircraft development and production program has commenced, changing suppliers is more challenging. For example, in the case of engines, the aircraft is specially designed to accommodate a given component, which cannot be easily replaced by another supplier without incurring delays and significant additional expense. This dependence makes the Company vulnerable to the performance, quality and financial position of its risk-sharing suppliers/partners.

20. Loans and Financing

		Contractual	Effective
	Currency	interest rate - %	interest rate - %	Maturity		12.31.2013		12.31.2012
								(Restated)
Other currencies:
Working capital	US$	5.15% a 6.38%	5.15% a 7.42%		2023		1,390.4		1,390.6
	Euro	2.00% a 5.05%	2.00% a 5.05%		2020		76.4		69.3
Project development	US$	6.08%	6.08%		2015		0.5		0.8
Advances on foreign exchange contracts	US$	6.18%	6.18%		2013		—		30.7
		2.62%	2.62%		2030
Property, plant and equipment	US$						66.4		68.4
		Libor 1M + 2.44%	Libor 1M + 2.44%		2035
		Euribor 1M + 1.625%	Euribor 1M + 1.625%		2014
	Euro						0.1		0.4
Finance leasing		1.98% a 2.50%;	1.98% a 2.50%;		2014
	US$	Libor 6M + 3.40%	Libor 6M + 3.40%		2017		0.2		0.7
							1,534.0		1,560.9
In local currency:
Export Financing	R$	5.50%	5.50%		2016		86.1		224.1
		3.50%	3.50%		2023
Project development	R$						236.3		280.8
		TLPJ + 1.92% a 5.00%	TLPJ + 1.92% a 5.00%		2018
Credit Note for Exportation		5.50%	5.50%		2016		337.5		—
	R$
Finance leasing		CDI + 1.20%	CDI + 1.20%		2015		0.4		0.7
	R$						660.3		505.6
Total							2,194.3		2,066.5
Current portion							79.3		336.3
Non-current portion							2,115.0		1,730.2

In October 2006, the Company´s wholly-owned finance subsidiary Embraer Overseas Limited, which only performs financial operations, issued US$ 400.0 in Guaranteed Notes at 6.375% p.a. due on January 24, 2017 in an offering subsequently registered with the “SEC”. In October 2009, Embraer Overseas Limited issued US$ 500.0 of 6.375% p.a. guaranteed notes due on January 15, 2020. Because Overseas Limited is a wholly owned subsidiary of Embraer S.A., and exists to conduct financial operations, funding operations made by Embraer Overseas Limited are presented in the statement of financial position of the Company.

Between the months of August and September 2013 Embraer S.A., through its subsidiary Embraer Overseas Limited, made the exchange offer for existing bonds maturing in 2017 and 2020 for “New Notes” maturing in 2023. For titles of 2017 to the Exchange Offer resulted in US$ 146.4 aggregate principal amount of existing notes and US$ 337.2 aggregate principal amount of 2020 Notes, representing approximately 54.95% of the Notes exchanged. The total of the “Exchange Offer” which considering the effects of the exchange price negotiations total issuance of New Notes closed on approximately US$ 540.5 in principal at a rate of 5.696% and maturing to September 16, 2023 value.

On March 8, 2012, Embraer S.A. signed a contract for R$ 1 billion non-reimbursable revolving credit line with four prime Brazilian financial institutions, equivalent to US$ 427.0, maturing on March 8, 2015. Each institution provided R$ 250.0 million under identical conditions, allowing the Company to disburse the full amount or smaller amounts, between March 9, 2012 and February 7, 2015. The annual cost of the credit

F-56

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

line, when realized, will be the CDI + 1.30% a year. The maintenance costs will be included in the Company’s financial results under financial expense.

The Company has the following unused amounts in these credit lines:

	12.31.2013		12.31.2012
			(Restated)
Floating:
Expiring within one year		—		—
Expiring more than one year		426.9		489.4
		426.9		489.4

On June 15, 2012, Embraer S.A. raised funds by issuing guaranteed notes, maturing on June 15, 2022, through an overseas offer of US$ 500 at a rate of 5.15% a year.

On February 2013, Embraer S.A. signed loans in the form of Export Credit Notes for the purpose of applying in export activities and the production of goods for export in the accumulated amount of R$ 712.0 million equivalent to US$ 303.9 at a fixed rate of 5.50% p.a.

On March and April, 2013, Embraer S.A. contracted the funding line Programa BNDES de Sustentação do Investimento – BNDES PSI – Subprograma Exportação de Pré-embarque in order to implement the activities of production for export in the total amount of R$ 200.0 million equivalent to US$ 85.4 at a fixed rate of 5.50% p.a.

In August 2013, Embraer S.A. contracted financing line from the Financier of Studies and Projects - FINEP for the purpose of use in research and new product development program totaling approximately R$ 303.9 million equivalent to US$ 129.8 at a rate fixed 3.50% per annum.

In December 2013, Embraer S.A. signed a contract with BNDES for use in developments projects in the amount of approximately R$ 1.4 billion equivalent to US$ 598. On December 31, 2013 there was no amount disbursed this line.

On December 31, 2013, the long-term financing agreements will mature as follows:

Year
2015	59.8
2016	508.8
2017	302.4
2018	32.1
After 2018	1,211.9
	2,115.0

20.1. Currency analysis

Total debt is denominated in the following currencies:

	12.31.2013		12.31.2012
			(Restated)
Loans
US dollar		1,457.5		1,491.2
Brazilian Real		660.3		505.6
Euro		76.5		69.7
		2,194.3		2,066.5

F-57

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

20.2. Capital lease obligations

The leasing operations are guaranteed by the assets under lease and their breakdown by maturity is shown below:

	12.31.2013			12.31.2012
				(Restated)
Less than one year		0.6			1.2
More than one year and less than five years		0.3			0.9
		0.9			2.1
Less -Implicit interest		(0.2	)		(0.3	)
Capital lease obligation		0.7			1.8
The present value of capital lease obligation, following:
Less than one year		0.4			1.1
More than one year and less than five years		0.3			0.7
		0.7			1.8

20.3. Interest and guarantees

On December 31, 2013, the loans denominated in Real (30% 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 December 31, 2013 was 6.17% p.a. (4.70% p.a. at December 31, 2012).

On December 31, 2013 the loans denominated in US dollar (66% of the total) are mainly subject to fixed interest rates. The weighted average rate was 5.81% p.a. (6.09% p.a. at December 31, 2012). In addition, as at December 31, 2013, the Company had denominated loans in Euro (4% from total) that are subject to annual weighted interest rates of 2.82% p.a. (2.65% p.a. at December 31, 2012).

The effective rates on the foreign currency financing, which includes the financial structuring costs incurred and already paid, result in an average effective weighted rate equivalent to LIBOR + 3.81% p.a. as at December 31, 2013 (LIBOR + 4.98% p.a. at December 31, 2012).

Real estate, machinery, equipment, commercial pledges and bank guarantees totaling US$ 374.8 as at December 31, 2013 (US$ 429.7 at December 31, 2012) were provided as collateral for loans.

20.4. Restrictive clauses

The long-term financing agreements are subject to restrictive clauses, consistent with normal 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 the EBITDA/net financial expense. Agreements also include customary restrictions on the creation of new encumbrances on assets, change of control of the Company, sale of assets and payment of dividends in excess of the minimum mandatory dividend in the event of default on the financing, and transactions with affiliated companies. As at December 31, 2013, the Company was in compliance with all the restrictive clauses.

F-58

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

21. Other payables

	12.31.2013		12.31.2012
			(Restated)
Contractual obligations (i)		107.4		31.3
Provisions related to payroll (ii)		130.2		133.7
Other accounts payable (iii)		56.3		44.6
Commercial incentives		18.5		22.1
Provision Employee Profit sharing (Note 34)		57.2		36.1
Security deposit		9.2		6.8
Insurance		6.3		6.2
Accrued materials (iv)		5.9		5.6
Brazilian Air Force		0.8		—
Non controlling interest option (v)		0.7		1.0
Financial credit		0.6		0.9
		393.1		288.3
Current portion		304.8		277.2
Non-current portion		88.3		11.1

(i) Represents mainly amounts recorded to cover maintenance costs of aircraft under operating under lease agreements and contractual commitments in the sale of new aircraft or completeness of financial residual value guarantees (Note 25.2).

(ii) Refers to the accrued vacation and related charges recorded in the consolidated financial statements under other payroll;

(iii) Represents primarily expenses incurred at the statement of financial position date, with payments occurring within one month;

(iv) Represents accessories or components to be installed in aircraft already delivered, in accordance with the contracts; and

(v) Refers to non-controlling (whose right to practice has not yet occurred) put options which may require some or all of the interest in the investees to be purchased by the Company.

22. Advances from customers

	12.31.2013		12.31.2012
			(Restated)
Denominated in U.S. dollars		728.8		870.3
Denominated in Reais		278.2		129.3
		1,007.0		999.6
Current portion		875.9		899.2
Non-current portion		131.1		100.4

The amount of advances from customers related to construction contracts using the POC method is US$ 309.6, on December 31, 2013.

23. Taxes and payroll charges payable

The Company is challenging, through both administrative and judicial proceedings, the constitutionality of the tax calculation base and its expansion, as well as the rate increase on certain taxes, social contributions and charges, with the aim of ensuring its right to withhold payment or recover amounts paid in previous years. By means of administrative and judicial proceedings, the Company has obtained injunctions and similar measures to suspend collection or offset payment of taxes and social contributions and charges. Provisions have been recorded for the amount of taxes not collected, as a result of preliminary legal decisions, and updated based on changes in the SELIC interest rate, pending a final and definitive decision.

F-59

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

	12.31.2013		12.31.2012
			(Restated)
Refinanced taxes (i)		164.8		3.2
INSS (social security contribution) (ii)		122.6		129.0
IRRF (Income tax withholding income tax)		20.3		19.5
IPI (Manufacturing tax)		13.0		6.5
FGTS (Government Employee Severance Indemnity Fund)		7.1		7.1
PIS and COFINS (iii)		6.4		5.0
Social contribution on net income (iv)		4.1		235.6
Other		10.4		9.2
		348.7		415.1
Current portion		133.1		65.1
Non-current portion		215.6		350.0

(i) The Company judicially and administratively discussed the recognition of the constitutional immunity of social contribution tax on exports as well as the tax basis and tax rates on certain specific and remittances abroad. With the reopening of installments program established by Law 11.941/2009, the Company decided to include these debts in this program.

The total amount of net debt included the value of the escrow deposit in December 2013 was US$ 169.6, paid in 30 months related to the consolidation in November 2009, plus Selic period. The remaining amount at December 31, 2013 was US$ 163.9.

(ii) This refers to the increase in the work-related accident insurance (“SAT”) rate. The Company is challenging the legality of the levy and absence of technical criteria for such rates since 1995, the liability for which is suspended following a lower court decision in a civil suit. The amount involved is US$ 78.3 at December 31, 2013 (US$ 86.9 at December 31, 2012).

The Company has also filed a declaratory action in ordinary proceedings, applying for advance relief, claiming waiver of the standards that govern the Accident Prevention Factor (FAP) based on direct violation of article 10 of Law nº 10666/2003, which establishes the tax calculation methodology.

The advance relief was granted in March 2011, suspending the liability for the tax credit, and revoked in September 2012. The Company made the court-mandated escrow deposit, in the terms of article 151 sub-item II, of the National Tax Code, maintaining the suspension of the FAP tax credit liability for 2010 and 2011 of US$ 10.2.

With regard to 2013 and 2012, the amounts involved are still suspended due to filing of an administrative appeal disputing the indices used in the Accident Prevention Factor. The amount involved at December 31, 2013, is US$ 19.9, for which a provision has been recorded.

On February, 2009, the Company filed a suit contesting the payment of social security on paid notice of dismissal. As a result of a lower court decision, the amounts relating to paid notices were excluded from the calculation base for the employer’s social security contribution and a provision was recorded, pending a final successful outcome of the court case. The suit was judged in the Company’s favor by the Federal Court of the 3^rd Region and is awaiting judgment of the appeal filed by the Federal Government. The amount involved in the process is US$ 12.4 at December 31, 2013 (US$ 13.2 at December 31, 2012).

(iii) This refers to contributions to the PIS/PASEP fund (Social Integration Program / Public Servant Fund). The dispute, involving the calculation base for the non-cumulative system, was included under the terms of Law nº 11941/09, and the suit was withdrawn. The Company continues to contest criteria for application of the benefits of refinancing in the ambit of the legal dispute. The other suit disputes the inclusion of the foreign exchange variation in the PASEP calculation base. The amount involved in the suit is US$ 4.2.

(iv) The Company was seeking recognition of the constitutional immunity of social contribution on exports. Regarding social contribution on exports, the case was in the Supreme Court, awaiting the judgment of Extraordinary Appeal, which was awarded suspensive effect in favor on the Company.

F-60

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

In October 2013, the tax installment plan of Law 11.941/2009, was reopened, and after evaluating the impact of amnesty on the values discussed, as well as considering the low chance of success, the Company joined in December 2013 the special stimulus installment program, sanctioned by Law 12.865/2013.

The total amount of debt, net of the judicial deposit in December 2013 was US$ 136.6, replacing the value of US$ 106.7, after application of the listed tax stimulus in Article 3 of PGFN / RFB 07 of 10/15/2013, which was divided in 30 installments.

With respect to the litigation issues mentioned above, the remaining provisions will be kept until there is a final outcome and no legal actions are applicable anymore.

24. Income Taxes

As the tax basis for the majority of the Company’s assets and liabilities are maintained in Real and the accounting basis are measured in US dollars (functional currency), the fluctuation in the exchange rate significantly impacts the tax basis and, in turn, the deferred income tax expense (benefit).

Based on expectation of future taxable income, the Company recorded deferred tax assets based on tax losses carryforward.

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.

24.1. Deferred taxes

The components of deferred tax assets and liabilities are as follows:

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Temporarily non-deductible provisions		(117.9	)		(46.9	)		72.7
Tax loss carryforwards		22.3			31.0			5.1
Differences between basis: account x tax
Difference between tax basis (Real) and functional currency measurement basis (US dollar)		(123.7	)		(32.6	)		29.9
Finance guarantee provision gain not realized and Health Insurance Provision		90.7			57.7			36.3
Effect of differences by fixed asset		(29.7	)		(25.8	)		(22.6	)
Other accounting differences		(42.4	)		3.0			(78.5	)
Deferred tax assets (liabilities), net		(200.7	)		(13.6	)		42.9
Total deferred tax asset		8.5			12.9			65.7
Total deferred tax liability		(209.2	)		(26.5	)		(22.8	)

F-61

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

The change of deferred income tax that affected profit and loss was as follows:

	From the			Other
	statement of			comprehensive
	income			income			Total
At December 31, 2010		138.5			(10.8	)		127.7
Temporarily non-deductible provisions		96.3			—			96.3
Tax loss carryforwards		(5.4	)		—			(5.4	)
Differences between basis: account x tax
Difference between tax basis (Real) and functional currency measurement basis (US dollar)		(130.9	)		—			(130.9	)
Finance Guarantee Provision Gain not realized and Health Insurance Provision		(52.0	)		—			(52.0	)
Effect of differences by fixed asset		(6.7	)		—			(6.7	)
Other accounting differences		13.2			0.7			13.9
At December 31, 2011 (Restated)		53.0			(10.1	)		42.9
Temporarily non-deductible provisions		(119.6	)		—			(119.6	)
Tax loss carryforwards		25.9			—			25.9
Differences between basis: account x tax
Difference between tax basis (Real) and functional currency measurement basis (US dollar)		(62.5	)		—			(62.5	)
Finance Guarantee Provision Gain not realized and Health Insurance Provision		21.5			—			21.5
Effect of differences by fixed asset		(3.3	)		—			(3.3	)
Other accounting differences		62.7			18.8			81.5
At December 31, 2012 (Restated)		(22.3	)		8.7			(13.6	)
Temporarily non-deductible provisions		(77.0	)		—			(77.0	)
Tax loss carryforwards		(4.7	)		—			(4.7	)
Differences between basis: account x tax
Difference between tax basis (Real) and functional currency measurement basis (US dollar)		(91.1	)		—			(91.1	)
Finance guarantee provision gain not realized and Health Insurance Provision		36.0			4.4			40.4
Effect of differences by fixed asset		(7.2	)		—			(7.2	)
Other accounting differences		(48.6	)		1.1			(47.5	)
At December 31, 2013		(214.9	)		14.2			(200.7	)

24.2. Reconciliation of income tax expense

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Profit before taxation		602.4			613.8			247.8
Income tax and social contribution expense at the nominal Brazilian composite tax rate - 34%		(204.8	)		(208.7	)		(84.3	)
Tax on profits of overseas subsidiaries		(8.5	)		18.9			(43.5	)
Difference between tax basis (Real) and functional currency measurement basis (US dollar)		(91.1	)		(62.5	)		(130.9	)
Research and development tax incentives		80.2			49.3			56.4
Interest on own capital		23.6			26.3			45.9
Gain or loss in subsidiary equity		—			(0.5	)		—
Fiscal credits (recognized and non recognized) and tax rate		(63.6	)		(60.2	)		(18.6	)
Other difference between IFRS and fiscal basis		6.7			(22.0	)		56.5
Other		1.1			(5.8	)		(8.9	)
Income tax and social contribution expense benefit as reported		(256.4	)		(265.2	)		(127.4	)
Current income tax and social contribution expense benefit as reported		(63.8	)		(189.9	)		(41.9	)
Deferred income tax and social contribution expense benefit as reported		(192.6	)		(75.3	)		(85.5	)

The recognition of the values mentioned above resulted in an effective tax rate of 42.6% for December 31, 2013, (43.2% on December 31, 2012 and 51.4% on December 31, 2011).

25. Financial Guarantees and Residual Value Guarantees

	12.31.2013		12.31.2012
			(Restated)
Accounts payable (i)		138.2		258.5
Financial guarantee of residual value		81.6		59.5
Financial guarantee		73.7		54.5
Additional provision (i)		—		211.9
		293.5		584.4
Current portion		90.0		114.1
Non-current portion		203.5		470.3

F-62

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Below is the activity of the financial guarantees and residual guarantees:

				Financial
	Financial			guarantee of		Accounts			Additional
	guarantee			residual value		payable (i)			provision (i)			Total
At December 31, 2010		132.3			11.1		—			76.1			219.5
Additions		—			—		—			362.8			362.8
Disposals		—			—		—			(23.2	)		(23.2	)
Reversals		(42.2	)		—		—			(42.0	)		(84.2	)
Reclassifications		—			—		56.2			(56.2	)		—
Market value		—			34.4		—			—			34.4
Guarantee recognition		(14.4	)		—		—			—			(14.4	)
At December 31, 2011 (Restated)		75.7			45.5		56.2			317.5			494.9
Additions		—			—		211.4			6.0			217.4
Disposals		—			—		(9.1	)		(59.6	)		(68.7	)
Reversals		—			—		—			(52.0	)		(52.0	)
Market value		—			14.0		—			—			14.0
Guarantee recognition		(21.2	)		—		—			—			(21.2	)
At December 31, 2012 (Restated)		54.5			59.5		258.5			211.9			584.4
Additions		30.6			0.8		3.8			6.7			41.9
Disposals		—			—		(121.4	)		(66.4	)		(187.8	)
Reversals		—			—		(2.7	)		(170.5	)		(173.2	)
Market value		—			21.3		—			18.3			39.6
Guarantee recognition		(11.4	)		—		—			—			(11.4	)
At December 31, 2013		73.7			81.6		138.2			—			293.5

(i) Accounts payable and additional provision:

• Mesa – Refers to accounts payable recorded in relation to financial guarantees offered to the lender in transactions with the MESA AirGroup, which filed for creditor protection under Chapter 11 in 2011. The financial guarantees in respect of 36 ERJ 145 aircraft acquired by Mesa were exercised and the Company made the respective payments. On December 31, 2013 the Company had no outstanding balance payable to the MESA AirGroup.

• American Airlines - Refers to liabilities assumed as a result of the bankruptcy filing (Chapter 11) of the customer American Airlines at the end of 2011 to cover losses related to its obligations with financial guarantees and residual value guarantees offered to the banks for 216 aircraft (ERJ 135, ERJ 140 and ERJ 145). On November 29, 2013 the U.S. Court approved the merger between U.S Airways and American Airlines and its bankruptcy filing was finalized. Consequently, through this event, the Company’s obligation on financial guarantees by the financial agent has been completed and part of the amount paid as advance financial guarantees to the financing agent of US$ 71.4 was returned to the Company and the remaining provision of US$ 111.9 was reversed against the operating result. The residual value guarantees were finalized along with American Airlines in exchange for concessions from contractual receivables (Note 21) and the amount of US$ 58.6 was reversed in 2013. On December 31, 2013, the Company did not have any outstanding provision related American Airlines and the obligation assumed in accounts payable was US$ 82.5.

• Chautauqua – Refers to the negotiation with Chautauqua Airlines Inc., a subsidiary of Republic Airways Holdings Inc., for restructuring of its financial operations. Chautauqua operates aircraft of the ERJ 145 family which were financed by loans or operating leases, at the time when Embraer provided financial guarantees for certain aircraft. The Company believes that the negotiation resulted in more favorable results for the parties, reducing the use of the financial guarantees provided by Embraer. The agreements were signed on October 29, 2012 and the Company recognized its commitments to pay in its consolidated financial statements. As part of the negotiation the Company will make payments to the financing agents over time and is entitled to acquire certain assets at the end of the financing period. The balance of accounts payable with Chautauqua Airlines Inc. on December 31, 2013 was US$ 55.7. The Company believes that the negotiation results provided favorable results to the parties, reducing the use of financial guarantees originally granted by Embraer.

F-63

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

26. Provisions and contingent liabilities

26.1. Provisions

	12.31.2013		12.31.2012
			(Restated)
Product warranties (i)		103.9		110.6
Post retirement benefits		71.0		61.4
Provisions for labor, taxes and civil (ii)		68.9		62.8
Environmental provision (iii)		5.3		—
Other (iv)		15.1		18.8
		264.2		253.6
Current portion		98.5		96.7
Non-current portion		165.7		156.9

(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 follows in the chart below Note 26.1.1.

(iii) The Company maintains allowances for spending on research of soil and potential environmental recovery services.

(iv) Refers mainly to a contingent liability of US$ 11.4 recognized in other provisions in 2011 when the Company, through its subsidiary, Embraer Defesa & Segurança Participações, acquired the jointly controlled entity Atech and the subsidiary Orbisat. This contingent liability at the time of the acquisition represented a present obligation and whose fair value was measured reliably. As a result of Atech’s acquisition of control as stated on Note 14.1, this liability was remeasured at fair value on February 1, 2013.

26.1.1 Provision labor, tax and civil

	12.31.2013		12.31.2012
			(Restated)
Tax related
PIS and COFINS (i)		14.0		11.2
Social security contributions (ii)		10.8		12.0
Third party contributions (iii)		8.7		9.5
FUNDAF (iv)		5.1		7.3
ICMS (v)		4.8		—
Import taxes (vi)		2.4		2.7
CIDE (vii)		1.7		1.9
Others		0.6		5.3
		48.1		49.9
Labor related
Plurimas 461/1379 (viii)		9.7		2.0
Reintegration (ix)		2.3		4.7
Indemnity (x)		1.6		2.1
Third parties		0.2		0.2
Others		4.8		2.7
		18.6		11.7
Civil related
Indemnity (xi)		2.2		1.2
		2.2		1.2
		68.9		62.8
Current portion		27.2		19.5
Non-current portion		41.7		43.3

F-64

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

(i) The Company calculated credits on the corresponding contributions in certain operations and is awaiting the conclusion of the administrative suit to assess the appropriate legal measures.

(ii) The Company was notified by the authorities for failing to withhold social security contributions from service providers. These lawsuits are at the 2nd court level. The Company was also ordered to pay additional allowances for work environment risks. This lawsuit is at the 1st court level.

(iii) The Company is challenging the Social Security and Assistance Fund (Fundo da Previdência e Assistência Social – FPAS) classification, amended by a regulatory ruling, which resulted in an increase in taxes on payroll.

(iv) In March 2005, an Assessment and Penalty Notice (AIIM) was filed against the Company, demanding payment of this contribution Fundo de Modernização da Administração Fazendária (FUNDAF). As a result of this notification, the Company filed a tax debt annulment lawsuit at the 1st court level, which was partially judged in the Company’s favor. The lawsuit is at the 2nd court level, for consideration of the Appeal and the Voluntary Appeal.

(v) The Company has presented an appeal at administrative stage against an Infraction and Imposition of Penalty (Auto de Infração e Imposição de Multa - AIIM) issued by the State Revenue of São Paulo. The Company does not agree with the fact that the Administrative Tax Authorities are charging ICMS (Imposto sobre Circulação de Mercadorias e Serviços) - tax on the distribution of goods, transportation, and communication - a sort of Valued Added Tax - on services that, according to the Company, are not subject to that sort of taxation. The tax authorities have not yet decided on the appeal until this moment.

(vi) The reference to import taxes is to an AIIM filed as a result of an alleged breach of the maximum period for complying with drawback. This process awaits analysis by the STJ. Another AIIM argues possible divergences in fiscal classification of certain products, awaiting analysis in first instance of court.

(vii) Between January and September 2002, the Company paid the Economic Domain Intervention Contribution (CIDE) charged on royalties, technical services and technical assistance, without adjusting the calculation base. After a first examination of this period and a favorable ruling at the administrative level with regard to the facts contested, the Federal Revenue Office ordered the Company to pay the difference on the adjusted calculation base charged during the above period. On July 17, 2012, the Company was informed of a partially favorable decision by the lower level administrative court, recognizing the statute of limitations for the CIDE-Royalties tax debts for the period from January 1, 2002 to February 28, 2002, and reversed part of the amount provisioned. A voluntary appeal was filed in the administrative suit with regard to the part judged to be groundless, and is under consideration by the Administrative Tax Appeals Council – CARF.

(viii) Refers to claims for backdated salary increases and productivity payments, brought by former employees.

(ix) Suits brought by former employees claiming reinstatement with the Company for various reasons.

(x) Indemnity claims in connection with alleged work-related accidents, pain and suffering, etc.

(xi) Other indemnity claims brought by parties that had any kind of legal relationship with the Company.

The tax, labor and civil provisions are recorded in accordance with the Company’s accounting policy (see note 2.2.29 of the December 31, 2013 consolidated financial statements), and the amounts shown here represent the estimated amounts that the Company’s legal department and its external counsel expect the Company to have to disburse to settle the lawsuits. The “Others” line in each of the categories is generally comprised of individual lawsuits and operations that differ from the main categories and are sufficiently different and insignificant not to warrant individual categories.

F-65

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Change in provision:

							Provisions
	Product			Post retirement			Labor, Taxes			Environmental			Other			Total
	warranties			benefits			and Civil			provision
At December 31, 2010		128.7			12.9			76.8			—			20.1			238.5
Additions		387.0			1.1			17.8			—			21.9			427.8
Interest		—			—			10.7			—			—			10.7
Used/payments		(75.5	)		(9.6	)		(4.7	)		—			(15.3	)		(105.1	)
Reversals		(324.4	)		—			(18.9	)		—			—			(343.3	)
Translation adjustments		—			—			(9.0	)		—			(4.4	)		(13.4	)
At December 31, 2011 (Restated)		115.8			4.4			72.7			—			22.3			215.2
Additions		86.2			57.0			21.0			—			24.6			188.8
Interest		—			—			3.4			—			—			3.4
Used/payments		(69.3	)		—			(12.1	)		—			(26.1	)		(107.5	)
Reversals		(21.7	)		—			(16.4	)		—			—			(38.1	)
Translation adjustments		(0.4	)		—			(5.8	)		—			(2.0	)		(8.2	)
At December 31, 2012 (Restated)		110.6			61.4			62.8			—			18.8			253.6
Additions		98.0			15.0			21.0			5.8			14.9			154.7
Interest		—			4.7			4.1			—			—			8.8
Used/payments		(68.5	)		(3.1	)		(2.0	)		—			—			(73.6	)
Reversals		(35.1	)		—			(9.6	)		—			(17.2	)		(61.9	)
Translation adjustments		(1.1	)		(7.0	)		(7.4	)		(0.5	)		(1.4	)		(17.4	)
At December 31, 2013		103.9			71.0			68.9			5.3			15.1			264.2

26.2. Contingent liabilities

Contingent liabilities are amounts classified as possible losses, in accordance with the Company’s accounting policy (see note 2.2.31), in the opinion of the Company’s legal department, supported by its external counsel. When the contingent asset 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. Below is the description of all contingent liability that the Company has:

• In response to tax assessment notices filed by the Brazilian Federal Revenue Authorities in December 2010 and September 2011, the Company is contesting the calculation base and the rates of taxes charged on certain remittances abroad and also the accounting and recognition of an indemnity received in a contractual dissolution.

With the reopening of encouraged installments, debts were included in the Company challenged the tax base and tax rate levied on certain remittances abroad.

The total value of the tax assessment included in December 2013 was US$ 103.3, paid in 30 months, the final amount after discount, the value subsisting US$ 62.9, related to the consolidation in December 2013, plus Selic period.

The administrative discussion regarding the tax assessment which addresses the accounting and recognition of compensation in the Administrative Appeals Council goes on. The total amount as of December 31, 2013 is US$ 40.5.

• We received a subpoena from the SEC in September 2010, which inquired about certain operations concerning sales of aircraft abroad. In response to this SEC-issued subpoena and associated inquiries into the possibility of non-compliance with the U.S. Foreign Corrupt Practices Act, we retained outside counsel to conduct an internal investigation on transactions carried out in three specific countries.

Since then, in response to additional information, the Company has voluntarily expanded the scope of the internal investigation to include sales in additional countries and has reported on those matters to the SEC and the U.S. Department of Justice, which are the responsible authorities. The investigation remains ongoing and we will continue to respond to any additional information, as circumstances warrant. We, through our outside counsel, continue to cooperate fully with the SEC and the DOJ. The Company, with the support of our outside counsel, has concluded that it is still not possible to estimate the duration, scope or results of the internal investigation or the government’s review. In the event that the authorities take action against us or

F-66

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

the parties enter into an agreement to settle the matter, we may be required to pay substantial fines and/or to incur other sanctions. The Company, based upon the opinion of our outside counsel, believes that there is no basis for estimating reserves or quantifying any possible contingency.

• The Company has contingent liabilities amounting to US$ 13.9 related to labor suits.

27. Post-retirement benefits

	12.31.2013		12.31.2012
			(Restated)
Medical benefits plan Brazil		68.5		57.0
Medical benefits plan subsidiaries		2.5		4.4
Post-retirement benefits		71.0		61.4

27.1. Defined contribution pension plan

The Company and certain subsidiaries sponsor a defined contribution pension plan for their employees, in which participation is optional. Contributions by the Company and certain subsidiaries to the plan for the years ended December 31, 2013 and 2012 were US$ 28.1 and US$ 27.4, respectively.

27.2. Post-retirement healthcare benefits provided by the Company in Brazil

The Company amended its healthcare plan for retired employees, considered a post-employment benefit. Under this healthcare plan, employees who retire from the Company have the option of remaining in the plan, contributing the full amount charged by the insurance company. However, due to certain rules for increases under Brazilian law, there could be times at which the contribution made by the retired employees is insufficient to cover the medical plan expenses, which would represent exposure for the Company.

Actuarial studies are made annually to identify the future exposure to be recorded as a provision. The provision recorded at December 31, 2013, was US$ 68.5 and December 31, 2012 was US$ 57.0.

The actuarial methods used comply with the generally accepted actuarial methods in force, in accordance with the Projected Unit Credit method.

The rationale of this recognition is described in the accounting policy (Note 2.2.28 - b). The amounts recognized in the statement of financial position were:

	12.31.2013			12.31.2012
				(Restated)
Benefit obligation - beginning of year		57.0			—
Cost of service		1.2			—
Interest on the value of the obligation		4.7			—
Actuarial losses from demographic assumptions		59.6			57.0
Actuarial gains from financial assumptions		(45.9	)		—
Benefits paid directly by the company		(0.9	)		—
Transaction adjustments		(7.2	)		—
Benefit obligation - end of year		68.5			57.0

The main actuarial assumptions were as follows:

	12.31.2013			12.31.2012
				(Restated)
Discount rate		11.5	%		9.5	%
Inflation		4.8	%		5.2	%
Growth rate of medical costs (next year)		11.0	%		11.2	%
Growth of (long term) medical cost rate		5.8	%		6.2	%

F-67

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

27.3. Post-retirement healthcare benefits provided by subsidiaries

EAH sponsors a post-retirement healthcare plan, which was amended in 2007 and employees hired as of that date do not qualify for this benefit. The estimated pension and post-retirement healthcare costs for the beneficiaries and their dependents are recorded as a provision using the accrual method, based on actuarial studies.

The change in the post-retirement benefits for the years ended December 31, 2013 and 2012 is summarized as follows:

	Other Post retirement Benefits
	12.31.2013			12.31.2012
				(Restated)
Benefits Obligations - beginning of the year		4.9			4.9
Interest cost		0.3			0.3
Actuarial loss		(1.0	)		(0.1	)
Benefits paid to participants		(0.2	)		(0.2	)
Benefits Obligations - end of year		4.0			4.9

The changes in plan assets for the years ended were as follows:

	Other Post retirement Benefits
	12.31.2013			12.31.2012
				(Restated)
Fair value of plan assets - beginning of the year		1.1			1.1
Actual return on plan assets		0.3			0.1
Benefits paid to participants		(0.2	)		(0.1	)
Fair value of plan assets - end of year		1.2			1.1

The fair value of the plan assets is measured based on Level 1 inputs in accordance with the accounting standard for fair value measurements. There has been no change since the prior year in the valuation techniques and level of inputs. The net prepaid (accrued) benefit cost as of December 31, 2013 and 2012 are summarized as follows:

	Other Post retirement Benefits
	12.31.2013			12.31.2012
				(Restated)
Accrued cost - Funded status		(2.5	)		(4.4	)
		(2.5	)		(4.4	)

The principal actuarial assumptions utilized was as follows:

	Other Post retirement Benefits (%)
	12.31.2013			12.31.2012
				(Restated)
Average discount rate		3.75	%		4.50	%
Net periodic benefit cost		4.75	%		3.75	%
Expected return on plan assets		7.75	%		7.75	%
Rate of compensation increase		5.50	%		5.50	%

F-68

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

The components of net periodic benefit cost were as follows:

	12.31.2013			12.31.2012
				(Restated)
Service cost		(0.1	)		(0.1	)
Interest cost		(0.2	)		(0.2	)
Expected return on plan assets		0.1			0.1
Net periodic benefit		(0.2	)		(0.2	)
Net benefit		(0.2	)		(0.2	)

The net benefit cost (benefit) is included in selling expenses and in administrative expenses.

The composition of plan assets, was as follows:

	12.31.2013			12.31.2012
				(Restated)
Mutual funds invested primarily in stocks		98	%		80	%
Mutual funds invested primarily in bonds		1	%		19	%
Other - cash		1	%		1	%
		100	%		100	%

The benefit payments, which reflect expected future service, are expected to be paid to participants under the post-retirement medical plan as follows:

Year	Other benefits post retirement
2014		0.2
2015		0.2
2016		0.2
2017		0.2
2018		0.3
2019 - 2023		1.4
		2.5

For measurement purposes, an annual rate of increase in the per capita cost of covered health and dental care benefits of 7% was assumed. The rate is expected to decrease to 5% in 2014. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the postretirement healthcare plan. A one percentage point change in assumed healthcare cost trend rates would not have material effects on the post-retirement benefit.

28. Financial Instruments

28.1. Financial instruments by category

	12.31.2013
	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		5		—		1,683.7		—		—		—		1,683.7
Financial investments		6		—		912.6		27.7		45.0		—		985.3
Collateralized accounts receivable		10		425.9		—		—		—		—		425.9
Trade accounts receivable, net		7		578.7		—		—		—		—		578.7
Customer and commercial financing		9		73.7		—		—		—		—		73.7
Derivative financial instruments		8		—		30.4		—		—		—		30.4
				1,078.3		2,626.7		27.7		45.0		—		3,777.7
Liabilities
Loans and financing		20		—		—		—		—		2,193.6		2,193.6
Trade accounts payable and others liabilities				—		—		—		—		1,806.9		1,806.9
Financial guarantee and of residual value		25		—		81.6		—		—		211.9		293.5
Capital lease		20		—		—		—		—		0.7		0.7
Derivative financial instruments		8		—		13.7		—		—		—		13.7
				—		95.3		—		—		4,213.1		4,308.4

F-69

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

	12.31.2012 (Restated)
	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		5		—		1,797.0		—		—		—		1,797.0
Financial investments		6		—		552.2		29.9		47.4		—		629.5
Collateralized accounts receivable		10		426.0		—		—		—		—		426.0
Trade accounts receivable, net		7		535.5		—		—		—		—		535.5
Customer and commercial financing		9		109.6		—		—		—		—		109.6
Derivative financial instruments		8		—		36.0		—		—		—		36.0
				1,071.1		2,385.2		29.9		47.4		—		3,533.6
Liabilities
Loans and financing		20		—		—		—		—		2,064.7		2,064.7
Trade accounts payable and others liabilities				—		—		—		—		1,447.2		1,447.2
Financial guarantee and of residual value		25		—		99.7		—		—		484.7		584.4
Capital lease		20		—		—		—		—		1.8		1.8
Derivative financial instruments		8		—		0.9		—		—		—		0.9
				—		100.6		—		—		3,998.4		4,099.0

28.2. Fair value of financial instruments

The fair value of the Company’s financial assets and liabilities were determined using available market information and appropriate valuation methodologies. However, considerable judgment was required in interpreting market data to generate estimates of fair values. As a consequence, 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 book values of cash, cash equivalents, 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 discounted 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.

• 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,

F-70

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

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 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 Management’s 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 sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2013. The Company’s 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.

	12.31.2013
	Fair value of financial instruments measured at fair value through profit or loss								Fair value of the other financial instruments
	Level 1		Level 2		Level 3		Total				Fair value		Book value
Assets
Cash and cash equivalents		261.6		1,422.1		—		1,683.7		—		1,683.7		1,683.7
Financial investments		140.7		771.9		—		912.6		72.7		985.3		985.3
Collateralized accounts receivable		—		—		—		—		425.9		425.9		425.9
Trade accounts receivable, net		—		—		—		—		578.7		578.7		578.7
Customer and commercial financing		—		—		—		—		73.7		73.7		73.7
Derivative financial instruments		—		30.4		—		30.4		—		30.4		30.4
		402.3		2,224.4		—		2,626.7		1,151.0		3,777.7		3,777.7
Liabilities
Loans and financing		—		—		—		—		2,193.6		2,299.3		2,193.6
Trade accounts payable and others liabilities		—		—		—		—		1,806.9		1,806.9		1,806.9
Financial guarantee and of residual value		—		—		81.6		81.6		211.9		293.5		293.5
Capital lease		—		—		—		—		0.7		0.7		0.7
Derivative financial instruments		—		13.7		—		13.7		—		13.7		13.7
		—		13.7		81.6		95.3		4,213.1		4,414.1		4,308.4

	12.31.2012 (Restated)
	Fair value of financial instruments measured at fair								Fair value of the other financial instruments
	value through profit or loss
	Level 1		Level 2		Level 3		Total				Fair value		Book value
Assets
Cash and cash equivalents		454.7		1,342.3		—		1,797.0		—		1,797.0		1,797.0
Financial investments		334.8		217.4		—		552.2		77.3		629.5		629.5
Collateralized accounts receivable		—		—		—		—		426.0		426.0		426.0
Trade accounts receivable, net		—		—		—		—		535.5		535.5		535.5
Customer and commercial financing		—		—		—		—		109.6		109.6		109.6
Derivative financial instruments		—		36.0		—		36.0		—		36.0		36.0
		789.5		1,595.7		—		2,385.2		1,148.4		3,533.6		3,533.6
Liabilities
Loans and financing		—		—		—		—		2,064.7		2,250.5		2,064.7
Trade accounts payable and others liabilities		—		—		—		—		1,447.2		1,447.2		1,447.2
Financial guarantee and of residual value		—		—		99.7		99.7		484.7		584.4		584.4
Capital lease		—		—		—		—		1.8		1.8		1.8
Derivative financial instruments		—		0.9		—		0.9		—		0.9		0.9
		—		0.9		99.7		100.6		3,998.4		4,284.8		4,099.0

F-71

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

	Fair value of liabilities measurement using significant unobservable inputs (level 3)
At December 31,2011 (Restated)		121.1
Profits (losses) unrealized		(21.4	)
At December 31,2012 (Restated)		99.7
Profits (losses) unrealized		1.2
Market value		39.3
Reversal		(58.6	)
At December 31,2013		81.6

28.3. Financial risk management policy

The Company has and follows a risk management policy to direct transactions, which involves the diversification of transactions and counterparties. This 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 Company’s risk management policy was established by the Executive Directors and submitted by to the Board of Directors, and provides for a Financial Management Committee. Under this policy, the market risks are mitigated when there is no counterparty in the Company’s operations and when it is considered necessary to support the corporate strategy. The Company’s internal control procedures provide for a 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 Company’s operations, including significant risk management policies, procedures and practices.

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.

28.3.1 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 also 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 the financial 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 Management.

Accordingly, the Company has been able to maintain cash surpluses over the balance of financial indebtedness and to assure liquidity by establishing and maintaining a standby credit line (see Note 20).

The capital management may be changed due to economy scenario alterations or to strategic repositioning of the Company.

On December 31, 2013, cash and cash equivalents exceeded the Company’s financial indebtedness by US$ 429.3 (December 31, 2012 - US$ 308.7) resulting, on a net basis, in a leverage-free capital structure.

F-72

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

Of the total financial indebtedness as at December 31, 2013, 3.6% was short-term (16.3% at December 31, 2012) and the average weighted term was equivalent to 6.3 years (5.8 years at December 31, 2012). The Company’s own capital accounted for 35.8% as at December 31, 2013 and 35.3% of the total liabilities as at December 31, 2012.

28.3.2 Credit risk

Credit risk is the risk of unfulfillment, by the counterparty, of an obligation due to the Company represented in financial instruments, or receivables due from sales to customers, which leads to a financial loss. The Company is exposed to credit risk with respect to its operational activities, cash held in banks and financial investments held in other institutions.

• Financial investment

The credit risk of cash and financial investment, which is managed by the Financial Department, is managed according to the defined policy. The credit limit of the counterparties is reviewed on a daily basis in order to minimize the concentration risk and mitigate financial losses due to bankruptcy of the counterparties. The Financial Management Committee assists the Financial Department in examining and reviewing operations done with counterparties.

• Accounts receivable

The Company may incur losses on amounts receivable from sales of spare parts and services. To reduce this risk, customer credit analyses are made continuously. In relation to accounts receivable from aircraft sales, the Company may have credit risks 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 risk of loss from doubtful accounts, the Company has recorded an allowance in an amount 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.

a) Credit risk for counterparty with external assessment

	12.31.2013		12.31.2012
			(Restated)
Cash and cash equivalents		1,683.7		1,797.0
Financial investments		985.3		629.5
Derivative financial instruments		30.4		36.0
Total		2,699.4		2,462.5
Based on external appraisal:
AAA		1,344.6		1,511.5
AA		123.4		222.8
A		115.2		172.0
BBB		1,082.4		530.6
N/A		33.8		25.6
Total		2,699.4		2,462.5

N/A – Not available: no observable input to credit assessment

F-73

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

b) Credit risk for counterparties without external evaluation

	12.31.2013		12.31.2012
			(Restated)
Collateralized accounts receivable		425.9		426.0
Trade accounts receivable, net		578.7		535.5
Customer and commercial financing		73.7		109.6
Total		1,078.3		1,071.1
Based on internal appraisal:
Group 1		9.8		23.6
Group 2		79.5		83.4
Group 3		989.0		964.1
Total		1,078.3		1,071.1

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

28.3.3 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.

To manage the liquidity of cash in dollars and reais, Management has established projections and assumptions based on contracts for future disbursements and receipts, which are monitored daily by the Company. Accordingly, possible mismatches are detected well in advance allowing the Company to adopt mitigation measures in advance, reducing the risk and financial cost.

The following table provides additional information related to 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 December 31, 2013
Loans and financing		3,003.8		176.6		1,167.4		182.9		1,476.9
Suppliers		1,013.6		1,013.6		—		—		—
Recourse and non recourse debt		400.2		12.1		317.3		27.5		43.3
Financial guarantees		293.5		35.1		26.2		23.2		209.0
Other liabilities		355.2		19.3		105.7		149.8		80.4
Capital lease		0.8		0.5		0.3		—		—
Total		5,067.1		1,257.2		1,616.9		383.4		1,809.6
At December 31, 2012 (Restated)
Loans and financing		2,729.8		418.5		493.0		677.8		1,140.5
Suppliers		758.7		758.7		—		—		—
Recourse and non recourse debt		400.2		11.9		317.5		27.5		43.3
Financial guarantees		584.4		114.1		189.7		24.4		256.2
Other liabilities		276.2		6.0		70.8		164.3		35.1
Capital lease		2.1		1.2		0.9		—		—
Total		4,751.4		1,310.4		1,071.9		894.0		1,475.1

The above table shows the outstanding principal and anticipated interest due at maturity date. For the fixed rate liabilities, the interest expenses were calculated based on the rate established in each debt contract. For the floating rate liabilities, the interest expenses were calculated based on a market forecast for each period (e.g. LIBOR 6m—12m).

F-74

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

28.3.4 Market risk

a) Interest rate risk

This risk arises from the possibility that the Company might incur losses on account of interest rate fluctuations that increase the financial expense of liabilities and related to floating interest rates that reduce the assets income subject to floating interest rates and / or when the fluctuation in the determination of fair value price of assets or liabilities that are marked to market by fixed rates.

• Cash, cash equivalents and financial investments - Company policy for managing the risk of fluctuations in interest rates on financial investments is to measure market risk by the Value-At-Risk - VAR 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 financing - the Company uses derivative contracts to hedge against the risk of fluctuations in interest rates on certain transactions, and also 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.

At December 31, 2013, the Company’s cash, cash equivalents, financial investments and loans and financing were indexed as follows:

	Pre-fixed					Post-fixed					Total
	Amount		%			Amount		%			Amount		%
Without derivative effect
Cash, cash equivalents and financial investments		1,215.1		45.53	%		1,453.9		54.47	%		2,669.0		100.00	%
Loans and financing		2,066.2		94.16	%		128.1		5.84	%		2,194.3		100.00	%
	Pre-fixed					Post-fixed					Total
	Amount		%			Amount		%			Amount		%
With derivative effect
Cash, cash equivalents and financial investments		1,215.1		45.53	%		1,453.9		54.47	%		2,669.0		100.00	%
Loans and financing		1,685.4		76.81	%		508.9		23.19	%		2,194.3		100.00	%

At December 31, 2013, the Company’s cash, cash equivalents, financial investments and loans and financing post -fixed were indexed as follows:

	Without derivative effect					With derivative effect
	Amount		%			Amount		%
Cash equivalents and financial investments		1,453.9		100.00	%		1,453.9		100.00	%
CDI		1,226.2		84.34	%		1,226.2		84.34	%
Libor		227.7		15.66	%		227.7		15.66	%
Loans and financing		128.0		100.00	%		508.9		100.00	%
TJLP		68.8		53.75	%		68.8		13.52	%
Libor		58.8		45.94	%		54.5		10.71	%
CDI		0.4		0.31	%		385.6		75.77	%

b) Foreign exchange rate risk

The Company’s functional currency is the US dollar.

Consequently, the Company’s operations which are most exposed to foreign exchange gains/losses are those denominated in Real (labor costs, local expenses, financial investments and loans and financing) as well as investments in subsidiaries in currencies other than the US dollar.

F-75

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

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 dollars, show an increase or reduction of the share of costs when Real denominated.

The Company, in certain market conditions, may protect itself against future expenses and revenues, denominated in foreign currency, to minimize future mismatches which lead to foreign currency gains/losses in the results.

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 8).

	Without the effect of						With the effect of
	derivative transactions						derivative transactions
	12.31.2013			12.31.2012			12.31.2013			12.31.2012
				(Restated)						(Restated)
Loans and financing
Brazilian reais		660.3			505.6			660.3			505.6
U.S. dollars		1,457.5			1,491.2			1,457.5			1,491.2
Euro		76.5			69.7			76.5			69.7
		2,194.3			2,066.5			2,194.3			2,066.5
Trade accounts payable
Brazilian reais		84.2			84.1			84.2			84.1
U.S. dollars		815.5			618.0			815.5			618.0
Euro		110.6			52.1			110.6			52.1
Other currencies		3.3			4.5			3.3			4.5
		1,013.6			758.7			1,013.6			758.7
Total (1)		3,207.9			2,825.2			3,207.9			2,825.2
Cash and cash equivalents and financial investments
Brazilian reais		1,269.7			978.1			1,269.7			978.1
U.S. dollars		1,339.3			1,278.5			1,339.3			1,278.5
Euro		21.4			50.5			21.4			50.5
Other currencies		38.6			119.4			38.6			119.4
		2,669.0			2,426.5			2,669.0			2,426.5
Trade accounts receivable:
Brazilian reais		43.1			31.7			43.1			31.7
U.S. dollars		390.3			502.3			390.3			502.3
Euro		144.3			1.5			144.3			1.5
Other currencies		1.0			—			1.0			—
		578.7			535.5			578.7			535.5
Total (2)		3,247.7			2,962.0			3,247.7			2,962.0
Net exposure (1 - 2):
Brazilian reais		(568.3	)		(420.1	)		(568.3	)		(420.1	)
U.S. dollars		543.4			328.4			543.4			328.4
Euro		21.4			69.8			21.4			69.8
Other currencies		(36.3	)		(114.9	)		(36.3	)		(114.9	)

The Company also has other financial assets and liabilities that are influenced by the foreign exchange variations and were not included in the table above. They are used to minimize the exposure in the presented currencies.

28.4 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 is presented below, including derivatives, describing the effects on the monetary and foreign exchange variations on the financial income and expense determined on the balances recorded at December 31, 2013, in the event of the occurrence of such variations in the risk component.

F-76

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

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.

28.4.1 Methodology

Assuming that the balances remain constant, the Company calculated the interest and exchange variation differential for each of the projected scenarios.

In the evaluation of the amounts exposed to interest rate risk, only the financial statement risks were considered. The operations subject to prefixed interest rates were not included.

The probable scenario is based on the Company’s 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 statement of financial position 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 statement of financial position date.

28.4.2 Interest risk factor

					Additional variations in book balances (*)
	Risk factor	Amounts exposed at 12.31.2013			-50%			-25%			Probable scenario			+25%			+50%
Cash equivalents and financial investments	CDI		1,226.2			(59.9	)		(29.9	)		9.0			29.9			59.9
Loans and financing	CDI		0.4			—			—			—			—			—
Net impact	CDI		1,225.8			(59.9	)		(29.9	)		9.0			29.9			59.9
Cash equivalents and financial investments	LIBOR		227.7			(0.3	)		(0.1	)		0.1			0.1			0.3
Loans and financing	LIBOR		58.8			0.1			—			—			—			(0.1	)
Net impact	LIBOR		168.9			(0.2	)		(0.1	)		0.1			0.1			0.2
Loans and financing	TJLP		68.8			1.7			0.9			—			(0.9	)		(1.7	)
Net impact	TJLP		(68.8	)		1.7			0.9			—			(0.9	)		(1.7	)
Rates considered	CDI		9.77	%		4.89	%		7.33	%		10.50	%		12.21	%		14.66	%
Rates considered	LIBOR		0.25	%		0.12	%		0.18	%		0.27	%		0.31	%		0.37	%
Rates considered	TJLP		5.00	%		2.50	%		3.75	%		5.00	%		6.25	%		7.50	%

(*) The positive and negative variations of 25% and 50% were applied on the rates in effect at 12.31.2013

28.4.3 Foreign exchange risk factor

					Additional variations in book balances (*)
	Risk factor	Amounts exposed at 12.31.2013			-50%			-25%			Probable scenario			+25%			+50%
Assets			1,635.9			817.9			409.0			(5.2	)		(409.0	)		(817.9	)
	BRL
Cash, cash equivalents and financial investments			1,269.8			634.8			317.5			(4.0	)		(317.5	)		(634.8	)
Other assets	BRL		366.1			183.1			91.5			(1.2	)		(91.5	)		(183.1	)
Liabilities			1,698.1			(849.2	)		(424.5	)		5.4			424.5			849.2
Loans and financing	BRL		660.3			(330.3	)		(165.1	)		2.1			165.1			330.3
Other liabilities	BRL		1,037.8			(518.9	)		(259.4	)		3.3			259.4			518.9
Net impact			(62.2	)		(31.3	)		(15.5	)		0.2			15.5			31.3
Exchange rate considered			2.3426			1.1713			1.7570			2.3500			2.9283			3.5139

(*) The positive and negative variations of 25% and 50% were applied on the rates in effect at 12.31.2013

F-77

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

28.4.4 Derivative contracts

					Additional variations in book balances (*)
	Risk factor	Amounts exposed at 12.31.2013			-50%			-25%			Probable scenario			+25%			+50%
Interest swap	LIBOR		21.3			12.6			10.7			(0.9	)		(2.3	)		(4.3	)
Interest swap	CDI		(12.4	)		26.0			12.5			(2.4	)		(11.5	)		(22.0	)
Hedge desifnated as cash flow	US$/R$		(0.9	)		169.3			40.1			—			(11.6	)		(64.8	)
Foreign Exchange option	Object -price		8.8			(7.1	)		(4.1	)		—			4.9			10.4
Total			16.8			200.8			59.2			(3.3	)		(20.5	)		(80.7	)
Rate considered	LIBOR		0.25	%		0.12	%		0.18	%		0.27	%		0.31	%		0.37	%
Rate considered	CDI		9.77	%		4.89	%		7.33	%		10.50	%		12.21	%		14.66	%
Rate considered	US$/R$		2.3426			1.1713			1.7570			2.3500			2.9283			3.5139
Object -price considered	Object -price		10.70			5.35			8.03			10.70			13.38			16.05

(*) The positive and negative variations of 25% and 50% were applied on the rates in effect at 12.31.2013

28.4.5 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 Company’s 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.

				Additional variations in book balances
	Amounts exposed at 12.31.2013			-50%		-25%		Probable scenario		+25%			+50%
Financial guarantee of residual value		(81.6	)		197.8		110.6		0.8		(63.2	)		(74.5	)
Total		(81.6	)		197.8		110.6		0.8		(63.2	)		(74.5	)

If a provision is considered to be insufficient to cover the probable execution of the guarantees, it is increased to adjust it to the Company’s exposure at the reporting period.

28.4.6 Derivative contracts that comprise exclusive Investment Funds

The Company maintains a structure of exclusive funds, which it controls and which are consolidated in the financial statements.

These funds were set up with the objective of outsourcing management of the Company’s short-term financial investments. The managers contracted have discretion, within the restrictions established in the investment policy, to select the assets that will comprise the investment portfolio.

All the funds are classified as multimarket and they may hold derivatives in their portfolio as a means of attaining the proposed profitability objective. These derivatives relate exclusively to the positions taken by the funds themselves and are in no way connected with the Company’s own derivatives used as a hedge to mitigate its risks exposures.

The following tables show the derivatives held by the funds at December 31, 2013, and the sensitivity analysis of the main risk factors to which the instruments are exposed.

Certain statistical simplifications were made in isolating the variability of the risk factors in question. Consequently, the actual results may differ from these estimates. 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.

F-78

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

a) Description of derivative instruments held by the exclusive investment funds

Type	Nº of contracts		Due date		Unit market price		Reference value at 12.31.2013
Purchase - Forward DI		62		January-15		38.6		(2.4	)
Purchase - Forward DI		236		January-16		34.3		(8.1	)
Purchase - Forward DI		9		January-17		30.2		(0.3	)
Purchase - Forward DI		1		January-21		18.1		—
Total								(10.8	)

b) Sensitivity analysis

	Additional variations in the return of the fund
Risk factor	Reference value at 12.31.2013			-50%			-25%			Probable Scenario			25%			50%
CDI		(10.8	)		(0.7	)		(0.2	)		0.4			0.8			1.2
Total		(10.8	)		(0.7	)		(0.2	)		0.4			0.8			1.2
Rates used
CDI		9.77	%		4.89	%		7.33	%		10.50	%		12.21	%		14.66	%

29. Shareholders’ equity

29.1 Capital

The authorized capital is divided into 1,000,000,000 common shares. The Company’s subscribed and paid up capital at December 31, 2013 was US$1,438.0 and was comprised of 740,465,044 common shares, without par value, of which 9,496,000 shares were held in Treasury.

29.2 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 Company’s bylaws, including veto rights over decisions pertaining to the following matters:

I - Change of the Company’s name or its corporate objective;

II - Alteration and/or application of the Company’s logo;

III - Creation and/or modification of military programs (whether or not the Federal Republic of Brazil is involved);

IV - Training third parties in technology for military programs;

V - Interruption of the supply of maintenance and spare parts for military aircraft;

VI - Transfer of control of the Company’s stock control; and

VII - Any changes in (i) article 9 of the Company’s bylaws, article 4, the main clause of art. 10, articles 11, 14 e 15, sub-item III of art. 18, paragraphs 1 and 2 of art. 27, sub-item X of art. 33, sub-item XII of art. 39 or Chapter VII of the Company’s bylaws, or (ii) the rights attributed by the bylaws to the special class share.

F-79

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

29.3 Treasury Shares

Common shares acquired by April 4, 2008, using the sources from the investment reserve and working capital. This operation was conducted in accordance with rules approved by the Statutory Board of Director’s in a meeting held on December 7, 2007 and corresponds to 9,496,000 common shares and US$ 103.8 as of December 31, 2013. These shares lose voting and economic rights during the period in which they are held in Treasury.

	USD			Quantity			Share value
In the beggining of the year		154.2			14,104,900			10.93
Used for share based compensation (i)		(50.4	)		(4,608,900	)		10.93
At December 31, 2013		103.8			9,496,000			10.93

(i) The beneficiaries of the shares used in the share-based compensation plan include the Statutory Board of Directors, Executive Directors and certain employees.

At December 31, 2013, the market value of the shares held in Treasury was US$ 76.4 (December 31, 2012 - US$ 100.5).

29.4 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 part of the retained earnings derived from government subsidies received by the Company and is recognized in the statements of income in the same line item of the realized investments.

These subsidies are not included in the calculation of the minimum mandatory dividends.

29.5 Statutory reserve

The statutory reserve is recorded annually as an appropriation of 5% of the net income for the year. The reserve may not exceed 20% of capital, or 30% of capital and capital reserves.

29.6 Interest on own capital

Interest on capital is allocated to dividends and are approved by the Statutory Board of Directors as follows. Interest on capital approved or paid during the quarterly periods are treated as an anticipation of the mandatory dividends, adjusted in the last quarter of the year to total a distribution of 25% of annual income as provided in its statutes.

• In meetings held on March 11, 2013, the Statutory Board of Directors approved the distribution of interest on own capital for the first quarter of 2013 in the amount of US$ 14.4, corresponding to US$ 0.02 per share. The interest on own capital payment is subject to 15% of income tax. The payment was made on April 11, 2013.

• In meetings held on June 13, 2013, the Statutory Board of Directors approved the distribution of interest on own capital for the second quarter of 2013 in the amount of US$ 13.2, corresponding to US$ 0.02 per share. The interest on own capital payment is subject to 15% of income tax. The payment was made on June 18, 2013.

• In meetings held on September 12, 2013, the Statutory Board of Directors approved the distribution of interest on own capital for the fourth quarter of 2013 in the amount of US$ 13.1, corresponding to US$ 0.02 per share. The interest on own capital payment is subject to 15% of income tax. The payment was made on October 16, 2013.

F-80

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

• In meetings held on December 5, 2013, the Statutory Board of Directors approved the distribution of interest on own capital for the fourth quarter of 2013 in the amount of US$ 28.1, corresponding to US$ 0.03 per share. The interest on own capital payment is subject to 15% of income tax. The payment was made on January 10, 2014.

29.7 Proposed dividends

The determination of the annual dividends, subject to the approval of the shareholders at the Annual General Meeting, is presented in reais as Brazilian Corporate Law establishes that all dividends are determined and paid based on real amounts in the legal books, as shown below:

	12.31.2013			12.31.2012			12.31.2011
Net income for the year		777.7			697.8			156.3
Investment Subsidy		(6.2	)		(8.0	)		(11.1	)
Legal Reserve		(38.9	)		(34.9	)		(7.8	)
		732.6			654.9			137.4
Minimun mandatory dividend (25%)		183.2			163.7			34.3
Dividends:
Interest on own capital, net of tax		134.2			133.7			158.6
Proposed dividends		49.0			30.1			—
Total stockholder remuneration		183.2			163.7			158.6
Payments of the year		(76.6	)		(101.8	)		(158.5	)
Total shareholders remuneration of period		106.6			61.9			—
Total shareholders remuneration of previous period		0.1			0.2			0.2
Total shareholders remuneration - in millions of Brazilian reais		106.7			62.2			0.2
Total shareholders remuneration - in millions of US$		45.5			30.4			0.1

29.7.1 Investment and working capital reserve

The purpose of this reserve is to shield funds which might otherwise be subject to distribution and are earmarked for: (i) investments in property, plant and equipment, without detriment to retained earnings, pursuant to art. 196 of Law 6,404/76; and (ii) the Company’s working capital. The reserve may also be used to (i) redeem, reimburse or purchase shares of the Company and (ii) be distributed to the shareholders.

29.7.2 Other Comprehensive Income

Consists of the following adjustments:

• Cumulative translation adjustment: foreign exchange gains/losses resulting from translation of the consolidated financial statements in the functional currency to the presentation currency (Real) and foreign exchange gains/losses resulting from translation of the foreign subsidiaries’ financial statements, measured in the functional currency other than of the Company (dollar), to the functional currency; and

• Other comprehensive income: unrealized actuarial gains (losses) resulting from the healthcare plans sponsored by the Company and to fair value variation of financial instruments available for sale.

F-81

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

30. Share-based compensation

30.1. Program for the granting of options to purchase shares to executive officers and employees

The Extraordinary General Meeting of April 19, 2010 approved the Stock option grant program offered to directors and employees of the Company and its subsidiaries who have been employed for at least two years. Vesting under the program’s policy occurs at three moments: term (i) from 20% after the first year, (ii) from 30% after the second year (iii) from 50% after the third year, always taking the date on which each stock option was granted.

The Extraordinary General Meeting of January 10, 2012 approved, by a majority of votes, the amendment of clauses 6.1 and 7.1 of the stock option grant plan, in respect of the terms and percentages for vesting and exercise of the stock option, which are now: I) 33% after the 3^rd year, II) 33% after the 4th year and III) 34% after the 5^th year, always taking the date on which each stock option was granted. This amendment only applies to new grants.

The exercise price of each option is established on the grant date based on the weighted average of the shares quoted in the last 60 trading sessions, and may be adjusted by up to 30% to eliminate the effects of any speculative trading. The participant will have a maximum period for exercise of option grants awarded for five years until 2011 and seven years for the other, started from the date of grant. In either situation, from the Extraordinary General Meeting held on April 25, 2013, the condition for exercising the option, the employee’s need to be part of the Company on the date of exercise was altered by setting a maximum six months from the termination of the employee for exercising. In death, cause of the exercise period is anticipated and options transferred to their successors.

30.2. Program for the granting of stock options to members of the Statutory Board of Directors

At the Extraordinary General Meeting held on April 25, 2013, at the Company approved the “Program for the granting of stock options to members of the Statutory Board of Directors”, exclusively for the members of the Statutory Board of Directors, which shall to receive part of their total compensation set to its mandate in the form of stock options. The acquisition of rights exercise of all options will occur at the end of the fourth year and will have a maximum exercise period of six years, both from the grant date of each option. The other conditions of this program as setting the exercise price, option exercise, delivery of shares, etc., are identical to the program for directors and employees.

30.3. Stock options granted

The fair value of the options granted is determined based on model Black & Scholes pricing that takes into account the value of the underlying asset, strike price, time to elapse before exercising the option, the probability of the option being exercised, historical volatility based the daily closing price of the shares over the last six months and interest rate weighted for the period of each lot based on the DI rate published by BM&FBOVESPA. Note that the time to elapse before exercising the option is defined as management’s decision and considers the end of the grace period for exercise of each lot of options. This assumption was adopted because management believes that the exercise of the option will occur at the end of each vesting period due to high liquidity and high expected return for each share.

• On April 30, 2010, call options were granted for 6,510,000 shares, with an exercise price of R$ 10.19 (US$ 5.89) per share. The fair value attributed to these options was based on the Black-Scholes pricing model, whereby the value of each option was calculated at R$ 1.77 (US$ 1.02) for the portion that may be exercised as from the end of the first year, R$ 2.74 (US$ 1.58) for the portion that may be exercised as from the end of the second year and R$ 3.44 (US$ 1.99) for the portion that may be exercised as from the end of the third year.

• On January 18, 2011, call options were granted for 6,345,000 shares and on March 16, 2011 additional call options for 150,000 shares were granted, with an exercise price of R$ 12.05 (US$ 7,20) and R$ 12.89 (US$ 7.73) per share, respectively. The fair value attributed to the options was based on the Black-Scholes pricing model, whereby the value of each option granted on January 18, 2011 was calculated at R$ 1.89 (US$ 1.02) for the portion that may be exercised as

F-82

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

from the end of the first year, R$ 2.88 (US$ 1.58) for the portion that may be exercised as from the end of the second year and R$ 3.62 (US$ 1.99) for the portion that may be exercised as from the end of the third year. For the option granted on March 16, 2011 the calculated fair values were R$ 2.11 (US$ 1.02) for the portion that may be exercised as from the end of the first year, R$ 3.22 (US$ 1.58) for the portion that may be exercised as from the end of the second year and R$ 4.08 (US$ 1.99) for the portion that may be exercised as from the end of the third year.

• On January 23, 2012, 4,860,000 options were granted to purchase shares at an exercise price of R$ 11.50 (US$ 6.56) per share. The fair value attributed to these options was determined using the standard Black-Scholes pricing model and the value of each option was determined at R$ 3.51 (US$ 2.00) with early exercise rights at the end of the third year, R$ 4.00 (US$ 2.28) with early exercise rights at the end of fourth year and R$ 4.35 (US$2.48) with early exercise rights at the end of the fifth year.

• On March 20, 2013, 4,494,000 options were granted to purchase shares at an exercise price of R$ 15.71 (US$ 7.91) per share. The fair value attributed to these options was determined using the standard Black-Scholes pricing model and the value of each option was determined at R$ 4.47 (US$ 2.25) with early exercise rights at the end of the third year, R$ 5.29 (US$ 2.66) with early exercise rights at the end of fourth year and R$ 5.97 (US$ 3.00) with early exercise rights at the end of the fifth year.

• On April 25, 2013, options were granted to purchase 584,400 shares to members of the Board of Directors, which was attributed to the exercise price of R$ 16.81 (US$ 8.36) per share. The fair value attributed to these options was determined using the standard Black & Scholes pricing model and value of each option was determined at R$ 5.51 (US$ 2.74), with early exercise right at the end of the fourth year.

	12.31.2013												Weighted average exercise Price (R$)		Weighted average exercise Price (US$)
	in thousands of options
	Grants		Exercised			Canceled (i)			Outstanding		Exercible
Grants on April 30, 2010		6,510,000		(5,289,000	)		(528,000	)		693,000		693,000		10.19		5.89
Grants on January 18, 2011		6,345,000		(1,885,000	)		(796,000	)		3,664,000		889,500		12.05		7.20
Grants on March 16, 2011		150,000		—			—			150,000		75,000		12.89		7.73
Grants on January 23, 2012		4,860,000		(130,000	)		(215,000	)		4,515,000		—		11.50		6.56
Grants on March 20, 2013		4,494,000		—			—			4,494,000		—		15.71		7.91
Grants on April 25, 2013		584,400		—			—			584,400		—		16.81		7.93
As of December 31, 2013		22,943,400		(7,304,000	)		(1,539,000	)		14,100,400		1,657,500

(i) The cancellations refer to shares granted to members of the Board of Directors and employees who no longer work for the Company. As provide in “Share-based compensation plan”, as provided in “program for the granting of stock options”, in case of dismissal of the participant, shall be canceled the option with regard to parcels whose right to exercise has not yet been acquired.

31. Earnings per Share

31.1. Basic

Basic earnings per common share were computed by dividing net income attributable to Embraer available to shareholders by the weighted average number of shares during the period, excluding shares held in Treasury.

	12.31.2013		12.31.2012		12.31.2011
			(Restated)		(Restated)
Net income attributable to owners of Embraer		342.0		347.8		111.6
Weighted average number of shares (in thousands)		729,001		725,023		723,667
Basic earnings per share - U.S. dollars		0.4691		0.4797		0.1542

F-83

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

31.2. Diluted

Diluted earnings per share is calculated by adjusting the weighted average number of 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 Company’s 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 options to purchase shares.

	12.31.2013		12.31.2012		12.31.2011
			(Restated)		(Restated)
Net income attributable to owners of Embraer		342.0		347.8		111.6
Weighted average number of shares (in thousands) - diluted		729,001		725,023		723,667
Dilution for the issuance of stock options (in thousands) (i)		4,795		2,708		1,180
Weighted average number of shares (in thousands) - diluted		733,796		727,731		724,847
Diluted earnings per share - U.S. dollars		0.4661		0.4780		0.1540

(i) Refers to the effect of potentially dilutive shares for the December 31, 2013.

At December 31, 2013 and 2012, there were no anti-dilutive effects.

32. Revenue and (expenses) by nature

The Company opted to present the statements of income by function. The table below shows the detailed costs and expenses by nature:

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
As presented as statements of Income:
Revenue		6,235.0			6,167.0			5,790.9
Cost of sales and services		(4,818.9	)		(4,676.6	)		(4,488.1	)
Administrative		(210.5	)		(279.2	)		(261.3	)
Selling		(454.4	)		(480.4	)		(418.6	)
Research		(74.7	)		(77.3	)		(85.3	)
Other income (expenses), net		36.9			(42.8	)		(219.7	)
Equity in losses on associates		—			1.2			0.3
Operating profit before financial income		713.4			611.9			318.2
Revenue (expenses) by nature:
Revenue from sales of goods		5,399.7			5,435.1			5,195.0
Revenue from sales of services		955.4			799.8			672.9
Sales deductions and tax on revenue		(120.1	)		(67.9	)		(77.0	)
Material cost		(4,528.3	)		(4,397.8	)		(4,249.3	)
Depreciation		(145.8	)		(139.9	)		(109.3	)
Amortization		(144.8	)		(138.9	)		(129.5	)
Personnel expenses		(340.0	)		(369.4	)		(342.1	)
Selling expenses		(113.3	)		(138.3	)		(96.6	)
Other operating (expense) income		(249.4	)		(370.8	)		(545.9	)
Operating profit before financial income		713.4			611.9			318.2

F-84

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

33. Other operating income (expense), net

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Financial guarantee (i)		152.7			(24.7	)		(278.0	)
Contractual fines (ii)		38.0			32.0			63.7
Royalties		11.5			8.9			7.5
Recovery of expenses		11.0			10.8			8.9
Other sales		6.4			7.3			9.8
Restructuring expenses		(0.4	)		(0.4	)		(0.7	)
Aircraft maintenance third parties		(1.0	)		—			(0.3	)
Aircraft maintenance and flights costs - fleet		(2.9	)		(4.7	)		(6.2	)
Pre operating expenses		(1.4	)		(11.5	)		—
Gan on disposal of assets		(3.5	)		—			—
Product modifications		(3.7	)		(4.4	)		(4.0	)
Flight safety standards		(3.8	)		(3.8	)		(4.1	)
Environmental provision		(5.3	)		—			—
Corporate Projects		(11.4	)		(0.7	)		—
Training and development		(14.1	)		(4.0	)		(1.0	)
Impairment of aircraft		(14.2	)		(9.5	)		(3.0	)
Provision for contingencies		(14.9	)		12.0			6.5
Expenses system project		(17.6	)		(13.9	)		(8.0	)
Taxes on other outputs		(30.8	)		(20.9	)		(24.0	)
Refis Installments (tax recovery program)		(37.0	)		—			—
Other		(20.7	)		(15.3	)		13.2
		36.9			(42.8	)		(219.7	)

(i) The amount related to adjustment of the estimate for the financial guarantee provisions as a result of the exposure cased by the current situation of our customers and commitment recognized in relation to negotiation of the restructuring of the financial operations. In 2013 the American Airlines bankrupts filling was finalized and the obligation was reversal, as mentioned in Note 25.

(ii) Mainly reflects contractual fines charged from customers due to contract cancellations, mostly in Executive Jets, as defined in the respective contracts.

34. Employee profit sharing-plan

The Company provides an employee profit sharing plan which was approved by the Board of Directors in April 1996, as amended in December 2008, which allows the employees to participate in the Company’s profit and is linked to a performance plan. A performance appraisal measures the results and the attainment of specific goals against those established and agreed upon at the beginning of each year. Through 2009, the profit sharing expense was equivalent to 12.5% of net income for the year, determined in accordance with the then IFRS financial statements.

Upon adoption of IFRS, the net income determined in accordance with IFRS and presented in Reais became the basis for the profit sharing. Of the distributable amount, 50% is distributed in equal parts to all employees and 50% proportional to salaries.

In 2011, exceptionally, the employee profit sharing amount was calculated disregarding the effects of the changes in the financial guarantee provisions.

The amounts recorded, Parent company and Consolidated, are shown in the financial statements in accounts payable (Note 21).

F-85

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

35. Financial income (expense), net

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Financial income:
Interest on cash and cash equivalents and financial investments		106.1			93.2			133.8
Interest on receivables		31.9			26.6			25.9
Residual value guarantee		—			19.1			—
Gains on financial transactions		—			—			0.3
Other		19.8			0.2			0.6
Total financial income		157.8			139.1			160.6
Financial expenses:
Interest on loans and financing		(128.3	)		(113.3	)		(100.7	)
Residual value guarantee		(79.7	)		—			(110.0	)
Interest on taxes, social charges and contributions		(11.9	)		(10.8	)		(13.8	)
IOF - (Tax on financial transactions)		(3.5	)		(5.3	)		(3.1	)
Financial restructuring costs		(1.9	)		(1.9	)		(10.4	)
Other		(34.2	)		(14.6	)		(13.1	)
Total financial expenses		(259.5	)		(145.9	)		(251.1	)
Derivative instruments		5.3			—			—
Financial income (expenses), net		(96.4	)		(6.8	)		(90.5	)

36. Foreign exchange gains (losses), net

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Monetary and foreign exchange variations
Assets :
Cash and cash equivalents and financial investments		(189.4	)		(84.8	)		(120.6	)
Tax credits		(24.2	)		(16.6	)		(14.6	)
Trade accounts receivable		(8.0	)		(7.5	)		(17.0	)
Advances to suppliers		—			(0.3	)		2.1
Other		(30.4	)		(21.7	)		(23.0	)
		(252.0	)		(130.9	)		(173.1	)
Liabilities :
Loans and financing		109.9			53.2			76.5
Taxes and charges payable		52.5			31.8			56.4
Advances from customers		48.6			20.2			12.7
Provisions		27.5			13.8			25.0
Suppliers		6.6			—			5.5
Provisions for contingencies		4.6			2.9			7.5
Accounts payable		(1.0	)		5.9			4.3
Translation losses on conversion of foreign subsidiaries		—			0.1			—
Deferred taxes		—			—			0.2
Other		1.4			(1.5	)		(1.9	)
		250.1			126.4			186.2
Net monetary and foreign exchange variations		(1.9	)		(4.5	)		13.1
Derivative instruments		(12.7	)		13.2			7.0
Foreign exchange gain (loss), net		(14.6	)		8.7			20.1

37. Responsibilities and Commitments

37.1 Trade-ins

The Company has offered seven 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. Based on the current evaluation of the Company and third-party independent appraisals, the Company believes that any aircraft accepted under trade-in may be sold or leased in the market without significant losses.

F-86

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

37.2 Leases

In the parent company the operating leases refer to telephone and computer equipment and in the United States subsidiaries include non-cancelable operating leases of land and equipment. On December 31, 2013 the amounts recognized as expenses totaled US$ 19.4 and December 31, 2012 UD$ 16.5. These leases expire at various dates through 2038.

At December 31, 2013, the Company has operating leases with payments scheduled as follows:

Year
2014	15.8
2015	10.7
2016	7.0
2017	5.1
After 2017	17.5
Total	56.1

37.3 Financial Guarantees

The table below provides quantitative data on the Company’s 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.

	12.31.2013			12.31.2012
				(Restated)
Maximum financial guarantees		545.5			374.2
Maximum residual value guarantees		359.9			372.7
Mutually exclusive exposure (i)		(94.7	)		(115.0	)
Provisions and liabilities recorded (Note 25)		(155.3	)		(114.0	)
Off-balance sheet exposure		655.4			517.9
Estimated proceeds from financial guarantees and underlying assets		907.8			656.7

(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.

38. Supplemental Cash Flow information

38.1 Payments made during the year and transactions not affecting cash and cash equivalents

	12.31.2013			12.31.2012			12.31.2011
				(Restated)			(Restated)
Payments made during the year :
Interest		130.9			112.2			50.2
Income tax and social contribution		68.3			52.0			32.6
Non-cash financing and investing transactions
Disposals property, plant and equipment for providing for the sale of inventory		(42.1	)		(19.6	)		(52.3	)
Transfer of inventory to fixed assets		39.9			44.2			72.9

F-87

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

38.2 Business combinations

	Consolidated on 12.31.2013 (i)
Cash and cash equivalents		4.6
Trade accounts receivable		6.3
Property, plant and equipment		0.2
Intangible		0.2
Other assets		3.0
Suppliers		(0.4	)
Advances from customers		(5.6	)
Trade accounts payable		(0.9	)
Other liabilities		(0.5	)
Assets and liabilities, net at February 1, 2013		6.9
Non-controlling		(3.5	)
Net contingent assets and liabilities identified in the acquisition of control (i)		(0.2	)
Participation at fair value on acquisition of control on 02/01/13		3.2
Cash and cash equivalents		(4.6	)
Adjustment of goodwill on acquisition of control (Note 14.4)		(1.1	)
Net effect of acquisitions on cash flow		(2.5	)

(i) Refers to the acquisition of control of Atech Negócios em Tecnologias S.A through the option to purchase 1% of the shares of other shareholders exercisable from February 1, 2013 (Note 14).

	Consolidated on 12.31.2012 (ii)
Cash and cash equivalents		0.8
Trade accounts receivable		0.1
Inventory		0.9
Intangible assets		7.1
Property, plant and equipment		0.2
Other assets		0.1
Loans and financing		(1.5	)
Other liabilities		(0.6	)
Acquired assets and liabilities, net		7.1
Non-controlling interest		(0.9	)
Assets and liabilities, net		6.2
Acquired goodwill		0.9
		7.1
Contingent payments		—
Amount paid for the interest		7.1
Cash and cash equivalents		(0.9	)
Net effect interest acquisition on the cash flow		6.2

(ii) Refers to acquisition of an interest in AST, 85.5% of capital (Note 14).

39. Segment information

Management defined the Company’s operating segments based on the reports used for strategic decision reviewed by the chief operating decision-maker.

The chief operating decision-maker analyzed the business, dividing it geographically and in terms of markets for specific products. From a geographic perspective, Management considers the performance of the operations in Brazil, North America, Latin America, Asia Pacific, Europe and Others.

F-88

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

From a product perspective, the analysis considers the following market segments:

39.1 Commercial aviation business

The Commercial Aviation business mainly involves the development, production and sale of commercial jets and rendering of support services, particularly in the regional aviation segment and operating leasing of aircraft.

• ERJ 145 family, comprising the ERJ 135, ERJ 140 and ERJ 145 jets, certified to operate with 37, 44 and 50 seats, respectively.

• EMBRAER 170/190 family, comprising the EMBRAER 170, a 70-seat jet, EMBRAER 175, a 76-seat jet, EMBRAER 190, a 100-seat jet and the EMBRAER 195, a 108-seat jet. The EMBRAER 170 model has been operating commercially since 2004, the EMBRAER 175 and EMBRAER 190 models started commercial operations in 2006, and the EMBRAER 195 model in 2007.

• E-Jets E2, the second generation of the E-Jets family of commercial aircraft consists of three new aircraft - E175-E2 with capacity up to 88 seats, E190-E2 with seats up to 106 and E195-E2 reaching up to 132 seats. The E190-E2 will enter service in the first half of 2018. The E195-E2 is scheduled to enter service in 2019 and E175-E2 in 2020.

39.2 Defense and security business

The defense and security business operations mainly involve research, development, production, modification and support for military defense and security aircraft, as well as a wide range of products and integrated solutions that include state-of-the-art radars, unmanned aerial systems (UAS), special space systems (satellites) and advanced information and communications systems, such as Command, Control, Communications, Computer, Intelligence, Surveillance and Reconnaissance, or C4ISR systems.

The expansion and diversification of the portfolio, previously focused on military aircraft, was made possible by a strategy of partnerships and acquisitions. One result of this diversification was the signing of an agreement for implementation of the first phase of the Integrated Frontier Monitoring System (SISFRON – Sistema Integrado de Monitoramento de Fronteiras) – by the Tepro Consortium (set up by the subsidiaries Savis Tecnologia e Sistemas S.A. and Bradar Indústria S.A the new name of OrbiSat Indústria S.A.), which will involve monitoring of approximately 650 kilometers of the border between Mato Grosso do Sul, Paraguay and Bolivia.

The Company’s principal customer is currently the Brazilian Defense Ministry and, in particular, the Brazilian Air Force, although the diversification of the portfolio has resulted in a corresponding diversification of customers: the Brazilian Army and Navy and the Communications Ministry, as well as a growing international presence of our products and solutions.

The main products of the portfolio of Defense and Security are the following:

• Super Tucano - a light attack aircraft, specially developed to operate in severe climates, be subjected to extremes of temperature and humidity, and equipped with sophisticated navigation and attack, training and flight simulation systems. In 2013, the U.S. Air Force (USAF) announced the victory of the A-29 Super Tucano for the LAS (Light Air Support) program. The first 20 aircraft will be built in Jacksonville, Florida, USA, and supplied in partnership with Sierra Nevada Corporation (SNC).

• AMX - an advanced ground attack jet, developed and produced through a cooperation agreement between Brazil and Italy. Embraer was contracted by the Brazilian Air Force to modernize these aircraft, A-1 calls within the client to a version named the A-1M.

• F-5BR Program - modernization of the F-5 jet fighters.

• The ISR family (Intelligence, Surveillance and Reconnaissance), based on the ERJ 145 platform,

F-89

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

includes the EMB 145 AEW&C - Airborne Early Warning and Control, EMB 145 AGS - Remote Sensing and Air to Ground Surveillance and P-99 - Maritime Patrol and Anti-submarine Warfare models. Originally developed for the SIVAM program, different versions were ordered by the Greek, Mexican and, more recently, the Indian governments. Embraer was hired to modernize the aircraft E-99 of FAB.

• KC-390 - the scope of the KC-390 Program is to develop and produce two prototype aircraft for military transport and in-flight refueling.

• Military Transport and Transportation of Authorities – based on the aircraft of the Commercial Aviation and Executive Jets platforms, the best example of which is the 190PR – based on the EMBRAER 170/190 platform, the objective is transportation of the President of the Republic of Brazil and members of his staff.

• Radars – OrbiSat Indústria S.A. develops a state-of-the-art radar and sensing system for tree-covered land, the SABER M60, designed and developed for the Brazilian Army.

• Command and Control – a combination of the expertise of Atech – Negócios em Tecnologias S.A. and Embraer’s investments in system development and integration, enables the Company to offer a suite of Command and Control products, such as Air Traffic Control systems.

• Unmanned aircraft - Harpia Sistemas, a joint venture between Embraer and AEL Sistemas (a subsidiary of the Israeli group Elbit), is involved in the marketing, development, systems integration, manufacture and after-sale support of unmanned systems.

• Satellites - Visiona Space Technology - Joint venture between Embraer and Telebras - was hired in 2013 to build and integrate the SGDC system.

39.3 Executive Jets business

The Executive Aviation market operations is constituted by development, production and sale of executive jets as well as by providing support services and aircraft operational leasing to the following product lines:

• Legacy 600 and Legacy 650 - executive jets in the Super Midsize and Large categories which started to be delivered in 2002 and 2010, respectively.

• Legacy 450 and Legacy 500- executive jets in the Midsize and Midlight categories, respectively. Both models were launched in April 2008 and are currently in development.

• Phenom - executive jets in the Entry Jet and Light Jet categories, respectivel. The first deliveries of Phenom 100 were made in 2008, and deliveries of Phenom 300, started in 2009.

• Lineage 1000 - an ultra-large executive jet. Deliveries of this model started in 2009.

39.4 Other

Operations in this segment relate to supply of structural parts and mechanical and hydraulic systems, and production of agricultural crop-spraying aircraft.

F-90

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

• Statement of income data by operating segment – year ended December 31, 2013:

	Commercial Aviation			Defense and Security			Executive Aviation			Other			Unallocated			Total
Revenue		3,307.0			1,196.9			1,644.5			86.6			—			6,235.0
Cost of sales and services		(2,532.6	)		(951.2	)		(1,284.7	)		(50.4	)		—			(4,818.9	)
Gross profit		774.4			245.7			359.8			36.2			—			1,416.1
Gross profit %		23.4	%		20.5	%		21.9	%		41.8	%					22.7	%
Operating income ( expense )		(272.3	)		(154.1	)		(262.8	)		(13.5	)		—			(702.7	)
Operating profit before financial income (expense)		502.1			91.6			97.0			22.7			—			713.4
Financial income (expense), net														(96.4	)		(96.4	)
Foreign exchange gain (loss), net														(14.6	)		(14.6	)
Profit before taxes on income																	602.4
Income tax expense														(256.4	)		(256.4	)
Net income																	346.0

• Revenue by geographic area – year ended December 31,2013:

	Commercial Aviation		Defense and Security		Executive Aviation		Other		Total
North America		1,089.4		26.4		632.2		59.7		1,807.7
Europe		916.4		166.9		290.6		—		1,373.9
Asia Pacific		546.3		71.0		336.6		—		953.9
Latin America, except Brazil		457.9		16.3		6.3		—		480.5
Brazil		103.5		848.5		357.7		26.9		1,336.6
Other		193.5		67.8		21.1		—		282.4
Total		3,307.0		1,196.9		1,644.5		86.6		6,235.0

• Assets by operating segment - year ended December 31, 2013:

	Commercial Aviation		Defense and Security		Executive Aviation		Other		Unallocated		Total
Trade accounts receivable		142.0		384.8		33.0		18.9		—		578.7
Property, plant and equipment		885.5		353.4		718.5		35.9		—		1,993.3
Intangible assets		218.2		0.8		731.4		80.5		78.2		1,109.1
Total		1,245.7		739.0		1,482.9		135.3		78.2		3,681.1

• Assets by geographic area - year ended December 31, 2013:

	North America		Europe		Asia Pacific		Brazil		Total
Trade accounts receivable		62.6		341.1		7.4		167.6		578.7
Property, plant and equipment		335.6		732.1		58.2		867.4		1,993.3
Intangible assets		10.9		4.1		0.2		1,093.9		1,109.1
Total		409.1		1,077.3		65.8		2,128.9		3,681.1

• Statement of income data by operating segment – year ended December 31, 2012 (Restated):

	Commercial Aviation			Defense and Security			Executive Aviation			Other			Unallocated			Total
Revenue		3,755.4			1,045.2			1,292.0			74.4			—			6,167.0
Cost of sales and services		(2,809.3	)		(785.5	)		(1,035.8	)		(46.0	)		—			(4,676.6	)
Gross profit		946.1			259.7			256.2			28.4			—			1,490.4
Gross profit %		25.2	%		24.8	%		19.8	%		38.2	%					24.2	%
Operating income ( expense )		(507.7	)		(144.9	)		(216.7	)		(9.2	)		—			(878.5	)
Operating profit before financial income (expense)		438.4			114.8			39.5			19.2			—			611.9
Financial income (expense), net														(6.8	)		(6.8	)
Foreign exchange gain (loss), net														8.7			8.7
Profit before taxes on income																	613.8
Income tax expense														(265.2	)		(265.2	)
Net income																	348.6

F-91

Embraer S.A.

Notes to the Consolidated Financial Statements

In millions of U.S. dollars, unless otherwise stated

• Revenue by geographic area – year ended December 31,2012 (Restated):

	Commercial Aviation		Defense and Security		Executive Aviation		Other		Total
North America		875.3		20.0		505.9		47.4		1,448.6
Europe		1,510.8		178.4		254.6		—		1,943.8
Asia Pacific		920.8		79.5		327.4		—		1,327.7
Latin America, except Brazil		144.6		21.7		43.3		0.4		210.0
Brazil		46.0		648.5		136.8		26.6		857.9
Other		257.9		97.1		24.0		—		379.0
Total		3,755.4		1,045.2		1,292.0		74.4		6,167.0

• Assets by operating segment - year ended December 31, 2012 (Restated):

	Commercial Aviation		Defense and Security		Executive Aviation		Other		Unallocated		Total
Trade accounts receivable		107.2		376.0		40.7		11.6		—		535.5
Property, plant and equipment		928.7		110.3		691.1		8.3		—		1,738.4
Intangible assets		211.9		0.6		674.0		9.9		62.4		958.8
Total		1,247.8		486.9		1,405.8		29.8		62.4		3,232.7

• Assets by geographic area - year ended December 31, 2012 (Restated):

	North America		Europe		Asia Pacific		Brazil		Total
Trade accounts receivable		53.4		263.0		5.2		213.9		535.5
Property, plant and equipment		283.8		710.1		54.3		690.2		1,738.4
Intangible assets		9.8		3.5		0.2		945.3		958.8
Total		347.0		976.6		59.7		1,849.4		3,232.7

• Statement of income data by operating segment–year ended December 31, 2011 (Restated):

	Commercial Aviation			Defense and Security			Executive Aviation			Other			Unallocated			Total
Revenue		3,751.2			839.9			1,118.8			81.0			—			5,790.9
Cost of sales and services		(2,921.8	)		(636.8	)		(888.8	)		(40.7	)		—			(4,488.1	)
Gross profit		829.4			203.1			230.0			40.3			—			1,302.8
Gross profit %		22.1	%		24.2	%		20.6	%		49.8	%					22.5	%
Operating income ( expense )		(672.3	)		(121.1	)		(174.8	)		(16.4	)		—			(984.6	)
Operating profit before financial income (expense)		157.1			82.0			55.2			23.9			—			318.2
Financial income (expense), net														(90.5	)		(90.5	)
Foreign exchange gain (loss), net														20.1			20.1
Profit before taxes on income																	247.8
Income tax expense														(127.4	)		(127.4	)
Net income																	120.4

• Revenue by geographic area – year ended December 31,2011 (Restated):

	Commercial Aviation		Defense and Security		Executive Aviation		Other		Total
North America		739.1		27.6		360.8		55.5		1,183.0
Europe		1,013.8		175.9		281.1		—		1,470.8
Asia Pacific		1,041.5		145.2		155.0		—		1,341.7
Latin America, except Brazil		540.3		15.6		83.9		—		639.8
Brazil		294.9		446.2		210.5		25.5		977.1
Other		121.6		29.4		27.5		—		178.5
Total		3,751.2		839.9		1,118.8		81.0		5,790.9

40. Insurance cover

The Company contracts different types of insurance policies to protect assets in the event of any accident which may cause significant damage. Policies are also contracted to the risks subject to compulsory insurance, either legally or contractually.

The Company and its subsidiaries have liability insurance for its operations in Brazil and abroad, with toppings and conditions that management considers these appropriate to the risks involved.

To cover material damage for the assets and loss of earnings of its operations in Brazil and abroad, the Company has ensured an amount of USD 6.3 billion.

F-92

EX-2.5

Exhibit 2.5

SECOND SUPPLEMENTAL INDENTURE

This Second Supplemental Indenture, dated as of September 16, 2013 (the “Second Supplemental Indenture”), among Embraer Overseas Limited, a Cayman Islands exempted company incorporated with limited liability (herein called the “Company”), having its principal office at Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman KY1-9005, Cayman Islands, Embraer S.A. (formerly Embraer – Empresa Brasileira de Aeronáutica S.A.), a company organized under the laws of the Federative Republic of Brazil (herein called the “Guarantor”), having its principal office at Avenida Brigadeiro Faria Lima, 2170, 12227-901, São José dos Campos, São Paulo State, Brazil, and THE BANK OF NEW YORK MELLON, a banking corporation duly organized and existing under the laws of the State of New York, as Trustee (herein called the “Trustee”), having its principal corporate trust office at 101 Barclay Street, Floor 7E, New York, New York 10286.

WITNESSETH:

WHEREAS, the Company, the Guarantor and the Trustee are party to an Indenture, dated as of October 8, 2009 (the “Base Indenture”), as amended by the First Supplemental Indenture, dated as of October 8, 2009, among the Company, the Guarantor and the Trustee (the “First Supplemental Indenture” and together with the Base Indenture the “Indenture”) providing for the issuance of an aggregate principal amount of $500,000,000 6.375% Notes due 2020 of the Company (the “Notes”);

WHEREAS, the Company and the Guarantor have solicited consents (the “Consent Solicitation”) to amend the terms of certain of the covenants and related definitions and events of default set forth in the First Supplemental Indenture (the “Amendments”) as more fully described in the exchange offering memorandum and letter of transmittal and consent, both dated August 28, 2013;

WHEREAS, pursuant to Section 9.2 of the Base Indenture and in connection with the Consent Solicitation, the Company and the Guarantor have received the written consent of at least a majority in aggregate principal amount of the outstanding Notes to permit the Amendments;

WHEREAS, the parties hereto desire to amend the First Supplemental Indenture pursuant to Subsection 9.2 of the Base Indenture in connection with exchange offer described in the exchange offering memorandum dated August 28, 2013 (the “Offering Memorandum”);

WHEREAS, the Company and the Guarantor have duly authorized the execution and delivery of this Second Supplemental Indenture to eliminate certain restrictive covenants and events of default in the First Supplemental Indenture;

WHEREAS, all things necessary to make this Second Supplemental Indenture a valid and binding legal obligation of the Company and the Guarantor according to its terms have been done;

WHEREAS, all other conditions precedent to the execution of this Second Supplemental Indenture have been complied with; and

WHEREAS, each party hereto has duly authorized the execution and delivery of this Second Supplemental Indenture.

NOW, THEREFORE, pursuant to subsection 9.2 of the Base Indenture, the parties hereto are executing and delivering this Second Supplemental Indenture in order to amend the provisions of the First Supplemental Indenture in the manner set forth below and consistent with the description of such amendments in the Offering Memorandum.

ARTICLE I

Definitions

SECTION 1.1. Defined Terms. As used in this Second Supplemental Indenture, terms defined in the Indenture or in the preamble or recital hereto are used herein as defined therein. The words “herein,” “hereof” and “hereby” and other words of similar import used in this Second Supplemental Indenture refer to this Second Supplemental Indenture as a whole and not to any particular section hereof. Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Indenture.

ARTICLE II

SECTION 2.1. Effectiveness and Effect. This Second Supplemental Indenture supplements the First Supplemental Indenture and shall be a part of and subject to all of the terms hereof. Except insofar as herein otherwise expressly provided, all the definitions, provisions, terms and conditions of the Indenture shall remain in full force and effect. This Second Supplemental Indenture shall take effect on the date hereof. The First Supplemental Indenture, as amended and supplemented by this Second Supplemental Indenture, is in all respects ratified and confirmed, and the Indenture and this Second Supplemental Indenture shall be read, taken and considered as one and the same instrument for all purposes.

2

ARTICLE III

SECTION 3.1. Amendments to the First Supplemental Indenture. The First Supplemental Indenture is hereby amended as follows:

(a) Amendment to Section 3.4 of the First Supplemental Indenture:

Section 3.4 of the First Supplemental Indenture is deleted in its entirety and replaced with the following:

Section 3.4. [RESERVED]

(b) The following Section is included in Article 3 of the First Supplemental Indenture:

Section 3.5. Sections 5.1.4, 5.1.5 and 10.6 of the Base Indenture are inapplicable to the Notes.

ARTICLE IV

SECTION 4.1. Severability. If any one or more of the covenants, agreements, provisions or terms or portions thereof of this Second Supplemental Indenture shall be for any reason whatsoever held invalid, then such covenants, agreements, provisions or terms or portions thereof shall be deemed severable from the remaining covenants, agreements, provisions or terms of this Second Supplemental Indenture and shall in no way affect the validity or enforceability of the other covenants, agreements, provisions or terms or portions of this Second Supplemental Indenture.

SECTION 4.2. Ratification of Indenture; Second Supplemental Indenture Part of Indenture. Except as expressly amended hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This Second Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of a Note heretofore or hereafter authenticated and delivered shall be bound hereby.

SECTION 4.3. The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Company and the Guarantor.

SECTION 4.4. Headings. The headings of the Articles and the Sections in this Second Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this Second Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 4.5. Successors. All covenants and agreements in this Second Supplemental Indenture by the parties hereto shall bind their successors and assigns, whether so expressed or not.

SECTION 4.6. Counterparts. This Second Supplemental Indenture may be executed simultaneously in any number of counterparts, each of which counterparts shall be deemed to be an original, and all of which counterparts shall constitute one and the same instrument.

ARTICLE V

SECTION 5.1. GOVERNING LAW. THIS SECOND SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

3

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

4

IN WITNESS WHEREOF, the parties hereto have caused this Second Supplemental Indenture to be executed by their respective officers, thereunto duly authorized, as of the day and year first above written.

EMBRAER OVERSEAS LIMITED
By:	/s/ José Antonio A. Filippo
	Name:	José Antonio A. Filippo
	Title:	Director
By:	/s/ Marcio Almeida Libanio
	Name:	Marcio Almeida Libanio
	Title:	Director
EMBRAER S.A.
By:	/s/ Frederico P. Fleury Curado
	Name:	Frederico P. Fleury Curado
	Title:	President and CEO
By:	/s/ José Antonio A. Filippo
	Name:	José Antonio A. Filippo
	Title:	Executive Vice President and CFO
THE BANK OF NEW YORK MELLON, as Trustee
By:	/s/ Michelle Drinkard
	Name:	Michelle Drinkard
	Title:	Vice President

SUPPLEMENT TO 2020 INDENTURE

EX-2.8

Exhibit 2.8

EXECUTION COPY

EMBRAER OVERSEAS LIMITED

EMBRAER S.A.

THE BANK OF NEW YORK MELLON,

as Trustee, Registrar, Transfer Agent and Principal Paying Agent

INDENTURE

Dated as of September 16, 2013

5.696% Guaranteed Notes due 2023

CROSS-REFERENCE TABLE

Certain Sections of this Indenture relating to Sections 310 through

318, inclusive, of the Trust Indenture Act of 1939:

Trust Indenture Act Section		Indenture Section
310(a)(1)		7.8; 7.9
(a)(2)		7.9
(a)(3)		N.A.
(a)(4)		N.A.
(a)(5)		7.9
(b)		7.7; 7.9
(c)		N.A.
311(a)		7.10
(b)		7.10
(c)		N.A.
312(a)		2.6
(b)		12.6
(c)		12.6
313(a)		7.11
(b)(1)		N.A.
(b)(2)		7.11
(c)		7.11
(d)		7.11
314(a)		4.8
(b)		N.A.
(c)(1)		9.5;10.3;12.3
(c)(2)		9.5;10.3;12.3
(c)(3)		N.A.
(d)		N.A.
315(a)		7.1
(b)		7.5
(c)		7.1
(d)		7.1
316(a)(last sentence)		1.1
(a)(1)(A)		6.12
(a)(1)(B)		6.13
(a)(2)		N.A.
(b)		6.8
(c)		9.3
317(a)(1)		6.3
(a)(2)		6.10
(b)		2.4
318(a)		1.2
(c)		1.2
	N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture.

TABLE OF CONTENTS

		Page
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF
GENERAL APPLICATION
Section 1.1	Definitions		1
Section 1.2	Rules of Construction		12
Section 1.3	Table of Contents; Headings		13
Section 1.4	Form of Documents Delivered to Trustee		13
Section 1.5	Acts of Holders		13
ARTICLE II
THE NOTES
Section 2.1	Form and Dating		14
Section 2.2	Execution, Authentication and Delivery		15
Section 2.3	Transfer Agent, Registrar and Paying Agent		17
Section 2.4	Paying Agent to Hold Money in Trust		18
Section 2.5	Payment of Principal and Interest; Principal and Interest Rights Preserved		18
Section 2.6	Holder Lists		19
Section 2.7	Transfer and Exchange		19
Section 2.8	Replacement Notes		22
Section 2.9	Temporary Notes		22
Section 2.10	Cancellation		23
Section 2.11	Defaulted Interest		23
Section 2.12	CUSIP and ISIN Numbers		23
Section 2.13	Open Market Purchases		24
Section 2.14	Issuance of Additional Notes		24
Section 2.15	One Class of Notes		24
ARTICLE III
REDEMPTION AND REPURCHASES
Section 3.1	Right of Redemption		25
Section 3.2	Applicability of Article		26
Section 3.3	Election to Redeem; Notice to Trustee		26
Section 3.4	Notice of Redemption by the Company		26
Section 3.5	Deposit of Redemption Price		27
Section 3.6	Effect of Notice of Redemption		27
Section 3.7	Notes Redeemed in Part		28

ii

ARTICLE IV
COVENANTS
Section 4.1	Payment of Principal and Interest Under Notes	28
Section 4.2	Maintenance of Office or Agency	28
Section 4.3	Money for Note Payments to Be Held in Trust	29
Section 4.4	Maintenance of Corporate Existence	30
Section 4.5	Payment of Taxes and Claims	30
Section 4.6	Maintenance of Insurance	31
Section 4.7	Payment of Additional Amounts	31
Section 4.8	Reporting Requirements	34
Section 4.9	Available Information	35
Section 4.10	Limitation on Liens	35
Section 4.11	Additional Limitations on the Company	35
ARTICLE V
CONSOLIDATION, MERGER, CONVEYANCE,
TRANSFER OR LEASE
Section 5.1	Company and Guarantor May Consolidate, etc. Only on Certain Terms	37
Section 5.2	Successor Substituted	38
Section 5.3	Notes to Be Secured in Certain Events	38
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
Section 6.1	Events of Default	39
Section 6.2	Acceleration of Maturity, Rescission and Amendment	41
Section 6.3	Collection Suit by Trustee	41
Section 6.4	Other Remedies	42
Section 6.5	Trustee May Enforce Claims Without Possession of Notes	42
Section 6.6	Application of Money Collected	42
Section 6.7	Limitation on Suits	43
Section 6.8	Rights of Holders to Receive Principal and Interest	43
Section 6.9	Restoration of Rights and Remedies	43
Section 6.10	Trustee May File Proofs of Claim	44
Section 6.11	Delay or Omission Not Waiver	44
Section 6.12	Control by Holders	44
Section 6.13	Waiver of Past Defaults and Events of Default	45
Section 6.14	Rights and Remedies Cumulative	45
Section 6.15	Waiver of Stay or Extension Laws	45

iii

ARTICLE VII
TRUSTEE AND PRINCIPAL PAYING AGENT
Section 7.1	Duties of Trustee and Principal Paying Agent	45
Section 7.2	Rights of Trustee	46
Section 7.3	Individual Rights of Trustee	48
Section 7.4	Trustee’s Disclaimer	49
Section 7.5	Notice of Defaults and Events of Default	49
Section 7.6	Compensation and Indemnity	49
Section 7.7	Replacement of Trustee	50
Section 7.8	Successor Trustee by Merger	51
Section 7.9	Eligibility; Disqualification	52
Section 7.10	Preferential Collection of Claims Against Company	52
Section 7.11	Reports by Trustee	52
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.1	Discharge of Liability on Notes	52
Section 8.2	Conditions to Defeasance	53
Section 8.3	Application of Trust Money	55
Section 8.4	Repayment to Company	55
Section 8.5	Indemnity for U.S. Governmental Obligations	56
Section 8.6	Reinstatement	56
ARTICLE IX
AMENDMENTS
Section 9.1	Without Consent of Holders	56
Section 9.2	With Consent of Holders	57
Section 9.3	Revocation and Effect of Consents and Waivers	58
Section 9.4	Notation on or Exchange of Notes	59
Section 9.5	Trustee to Sign Amendments	59
Section 9.6	Payment for Consent	59
ARTICLE X
GUARANTEE
Section 10.1	Unconditional Guarantee	59
Section 10.2	Execution and Delivery of the Guarantee	61
Section 10.3	Release of the Guarantor	61

iv

ARTICLE XI
MEETINGS OF HOLDERS
Section 11.1	Purposes for Which Meetings May Be Called	62
Section 11.2	Manner of Calling Meetings	62
Section 11.3	Call of Meetings by Company or Holders	62
Section 11.4	Who May Attend and Vote at Meetings	63
Section 11.5	Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment	63
Section 11.6	Voting at the Meeting and Record to Be Kept	64
Section 11.7	Exercise of Rights of Trustee or Holders May Not Be Hindered or Delayed by Call of Meeting	64
Section 11.8	Procedures Not Exclusive	64
ARTICLE XII
MISCELLANEOUS
Section 12.1	Provisions of Indenture and Notes for the Sole Benefit of Parties and Holders of Notes	64
Section 12.2	Notices	65
Section 12.3	Officers’ Certificate and Opinion of Counsel as to Conditions Precedent	66
Section 12.4	Statements Required in Officers’ Certificate or Opinion of Counsel	67
Section 12.5	Rules by Trustee, Registrar Paying Agent and Transfer Agents	67
Section 12.6	Communications by Holders With Other Holders	67
Section 12.7	Currency Indemnity	67
Section 12.8	No Recourse Against Others	68
Section 12.9	Legal Holidays	68
Section 12.10	Governing Law	68
Section 12.11	Consent to Jurisdiction; Waiver of Immunities	68
Section 12.12	Successors and Assigns	70
Section 12.13	Multiple Originals	70
Section 12.14	Qualification of Indenture	70
Section 12.15	Severability Clause	70

v

EXHIBITS:

EXHIBIT A –	Form of Note
EXHIBIT B –	Form of Transfer Notice
EXHIBIT C –	Form of Certificate for Transfer from Restricted Global Note or Certificated Note Bearing a Securities Act Legend to Regulation S Global Note or Certificated Note Not Bearing a Securities Act Legend
EXHIBIT D –	Form of Transfer Certificate for Transfer from Regulation S Global Note or Certificated Note Not Bearing a Securities Act Legend to Restricted Global Note or Certificated Note Bearing a Securities Act Legend
EXHIBIT E –	Form of Certificate for Removal of the Securities Act Legend on a Certificated Note
EXHIBIT F –	Form of Guarantee

vi

INDENTURE, dated as of September 16, 2013, among EMBRAER OVERSEAS LIMITED, an exempted company with limited liability incorporated under the laws of the Cayman Islands (the “Company”), EMBRAER S.A., a corporation (sociedade por ações) organized under the laws of Brazil (the “Guarantor”) and THE BANK OF NEW YORK MELLON, a New York banking corporation, as Trustee, Registrar, Transfer Agent and Principal Paying Agent.

RECITALS

The Company has duly authorized (i) the issue of 5.696% Guaranteed Notes due 2023 (the “Initial Notes”, initially in an aggregate principal amount of US$531,849,000, (ii) if and when issued, the Company’s 5.696% Guaranteed Notes due 2023 that may be issued from time to time in exchange for Initial Notes pursuant to a Registration Rights Agreement, as hereinafter defined (the “Exchange Notes” and, together with the Initial Notes and any Additional Notes, as hereinafter defined, the “Notes”) and (iii) the execution and delivery of this Indenture.

The Guarantor has authorized the Guarantee (as hereinafter defined) of the Initial Notes and, if and when issued, the Exchange Notes, and to provide therefor the Guarantor has duly authorized the execution and delivery of this Indenture.

All things necessary have been done to make the Initial Notes and the Guarantee, when executed and authenticated and delivered hereunder and duly issued, the respective valid obligations of the Company and the Guarantor, and to make this Indenture a valid agreement of the Company and the Guarantor.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

For and in consideration of the premises and the purchase of the Initial Notes by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders, as follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF

GENERAL APPLICATION

Section 1.1 Definitions.

“Act”, when used with respect to any Holder, has the meaning specified in Section 1.5.

“Additional Amounts” has the meaning specified in Section 4.7.

“Additional Interest” shall mean the additional interest at any time then owing pursuant to the Registration Rights Agreement.

“Additional Notes” means 5.696% Guaranteed Notes due 2023 issued from time to time after the Issue Date under the terms of this Indenture (other than pursuant to Sections 2.7, 2.8, 2.9 and 9.4 of this Indenture, in the case of Notes that are not already Additional Notes, and other than Exchange Notes issued pursuant to an exchange offer for the other Notes outstanding under this Indenture).

“Affiliate” means, with respect to any specified Person, (i) any other Person which, directly or indirectly, is in control of, is controlled by or is under common control with such specified Person or (ii) any other Person who is a director or officer (a) of such specified Person, (b) of any subsidiary of such specified Person or (c) of any Person described in clause (i) above. For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Applicable Procedures” means the applicable procedures of DTC, Euroclear and Clearstream Banking, in each case to the extent applicable.

“Authenticating Agent” has the meaning specified in Section 2.2. “Authorized Denomination” has the meaning specified in Section 2.2.

“Bankruptcy Law” means (i) Title 11, United States Code or any similar U.S. federal or state law for the relief of debtors or the administration or liquidation of debtors’ estates for the benefit of their creditors, (ii) the Brazilian Bankruptcy Law or any similar Brazilian federal or state law for the relief of debtors or the administration or liquidation of debtors’ estates for the benefit of their creditors and (iii) the Cayman Islands bankruptcy law or any other similar Cayman or other law for the relief of debtors or the administration or liquidation of debtors’ estates for the benefit of their creditors.

“Board of Directors” means, as the case may be, the Board of Directors of the Company or the Board of Directors of the Guarantor (Conselho de Administração) or any committee thereof duly authorized to act on behalf of such Board of Directors.

“Board Resolution” means a copy of a resolution certified by the Secretary, the Assistant Secretary or another Officer performing corporate secretarial functions of the Company or the Guarantor, as applicable, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification and delivered to the Trustee.

“Brazil” means the Federative Republic of Brazil.

“Brazilian Bankruptcy Law” means Brazilian Federal Law No. 11,101.

“Business Day” means any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City, the Cayman Islands or São Paulo, Brazil.

“Capitalized Lease Obligation” means, with respect to any Person, any obligation which is required to be classified and accounted for as a capital lease on the face of a balance

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sheet of such Person prepared in accordance with IFRS; the amount of such obligation shall be the capitalized amount thereof, determined in accordance with IFRS; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty.

“Capital Stock” means, with respect to any Person, any and all shares of stock, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated, whether voting or non-voting), such person’s equity including any preferred stock, but excluding any debt securities convertible into or exchangeable for such equity.

“Certificated Note” has the meaning specified in Section 2.1.

“Clearstream Banking” means Clearstream Banking, société anonyme, and its successors.

“Company” means the Person named as such in the first paragraph of this Indenture and any successor thereof.

“Company Order” means a written order signed in the name of the Company by an Officer.

“Comparable Treasury Issue” means the United States Treasury security or securities selected by an Independent Investment Banker as having an actual or interpolated maturity comparable to the remaining term of any Notes to be redeemed that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate notes of a comparable maturity to the remaining term of such Notes.

“Comparable Treasury Price” means, with respect to any Redemption Date (i) the average of the Reference Treasury Dealer Quotations for such Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotation or (ii) if the Independent Investment Banker obtains fewer than four such Reference Treasury Dealer Quotations, the average of all such quotations.

“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be administered (which office as of the date of this Indenture is located at 101 Barclay Street, Floor 7E, New York, New York, 10286).

“covenant defeasance option” has the meaning specified in Section 8.1.

“Custodian” means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law.

“CVM” means the Brazilian Securities Commission (Comissão de Valores Mobiliários).

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“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“defeasance trust” has the meaning specified in Section 8.2.

“Depositary” means DTC or any successor depositary for the Notes.

“DTC” means The Depository Trust Company, and its successors.

“Euroclear” means Euroclear Bank S.A./N.V., and its successors.

“Event of Default” has the meaning specified in Section 6.1.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Exchange Notes” has the meaning specified in the first paragraph under Recitals in this Indenture and shall be substantially in the form of Note set forth in Exhibit A.

“Exchange Offer” has the meaning specified in the Registration Rights Agreement.

“GAAP” means generally accepted accounting principles in the United States of America in effect from time to time.

“Global Note” means a global note representing the Notes substantially in the form attached hereto as Exhibit A.

“guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness or other obligation of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term “guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “guarantee” used as a verb has a corresponding meaning.

“Guarantee” has the meaning specified in Section 10.1.

“Guarantor” means the Person named as such in the first paragraph of this Indenture and any successor thereof.

“Hedging Agreement” means (i) any interest rate swap agreement, interest rate cap agreement or other agreement designed to protect against fluctuations in interest rates or (ii) any foreign exchange forward contract, currency swap agreement or other agreement designed to protect against fluctuations in foreign exchange rates.

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“Holder” means the Person in whose name a Note is registered in the Register.

“IFRS” means International Financial Reporting Standards, as issued by the International Accounting Standards Board.

“Illegality Event” means an event as a result of which it becomes and continues to be unlawful for the Company or the Guarantor to perform or comply with any one or more of its obligations under the Notes or this Indenture.

“Indebtedness,” with respect to any Person, means any amount payable (whether as a direct obligation or indirectly through a guarantee by such Person) pursuant to (i) an agreement or instrument involving or evidencing money borrowed; (ii) a conditional sale or a transfer with recourse or with an obligation to repurchase; or(iii) a Capitalized Lease Obligation.

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the provisions hereof.

“Independent Investment Banker” means one of the Reference Treasury Dealers appointed by the Company.

“Initial Notes” has the meaning specified in the first paragraph under Recitals in this Indenture and shall be in the form of Note set forth in Exhibit A.

“interest” on a Note means the interest (including any Additional Interest, if any) on such Note (including any Additional Amounts payable by the Company in respect of such interest).

“Interest Payment Date” means the Payment Date of an installment of interest on the Notes.

“Issue Date” means September 16, 2013.

“legal defeasance option” has the meaning specified in Section 8.1.

“Lien” means any mortgage, pledge, lien, hypothecation, security interest or other encumbrance.

“Make-Whole Amount” has the meaning specified in Section 3.1(c).

“Maturity” means, when used with respect to any Note, the date on which the outstanding principal of and interest on such Note becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.

“Notes” has the meaning specified in the first paragraph under Recitals in this Indenture and shall be in the form of Note set forth in Exhibit A.

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“Officer” means, with respect to a corporation, the president, chief executive officer, chief financial officer or any other executive officer performing decision-making functions for such corporation (including, in the case of the Guarantor, any member of its Diretoria (Board of Executive Officers), and in the case of the Company, any director thereof.

“Officers’ Certificate” means a certificate signed by any two Officers of the Company or the Guarantor, as applicable, and delivered to the Trustee.

“Opinion of Counsel” means a written opinion of legal counsel of recognized standing (who may be an employee of or counsel to the Guarantor) and who shall be reasonably acceptable to the Trustee, which opinion is reasonably satisfactory to the Trustee.

“Outstanding” means, when used with respect to Notes, as of the date of determination, all Notes theretofore authenticated and delivered under this Indenture, except:

(i) Notes theretofore cancelled by the Trustee or delivered to the Trustee for cancellation;

(ii) Notes for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent (other than the Company) in trust or set aside and segregated in trust by the Company (if the Company shall act as its own Paying Agent) for the Holders of such Notes; provided that, if such Notes are to be redeemed pursuant to Section 3.1(b) or (c), notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made;

(iii) Notes, except to the extent provided in Sections 8.1 and 8.2, with respect to which the Company has effected legal defeasance and/or covenant defeasance as provided in Article VIII; and

(iv) Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Trustee proof satisfactory to it that such Notes are held by a protected purchaser in whose hands such Notes are valid obligations of the Company;

provided, however, that in determining whether the Holders of the requisite principal amount of Outstanding Notes have given any request, demand, authorization, direction, consent, notice or waiver hereunder, Notes owned by the Company, the Guarantor or any of their Affiliates shall be disregarded and deemed not to be Outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, consent, notice or waiver, only Notes which a Responsible Officer of the Trustee has received written notice at its address specified herein of being so owned shall be so disregarded. Notes so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes and that the pledgee is not the Company, the Guarantor, or any other obligor upon the Notes or any of its Affiliates or such other obligor.

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“Paying Agent” means and any Person authorized by the Company to pay the principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due in respect of, any Notes on behalf of the Company hereunder, including the Principal Paying Agent.

“Payment Date” means the date on which payment of interest (including Additional Interest, if any) on and/or principal of, and any Additional Amounts in respect of, the Notes is due.

“Permitted Lien” means any Lien:

(i) granted upon or with regard to any property acquired after the Issue Date by the Guarantor to secure the purchase price of such property or to secure Indebtedness incurred solely for the purpose of financing the acquisition of such property; provided, however, that the maximum amount secured thereby shall not exceed the purchase price of such property or the Indebtedness incurred solely for the purpose of financing the acquisition of such property;

(ii) in existence on the Issue Date and any extension, renewal or replacement thereof; provided, however, that the total amount of Indebtedness so secured shall not exceed the amount so secured on the Issue Date;

(iii) arising in the ordinary course of business of the Guarantor in connection with the financing of any aircraft owned by the Guarantor that is leased to another Person; provided, however, that such Lien is limited to such aircraft;

(iv) arising by operation of law, such as tax, merchants’, maritime or other similar Liens arising in the ordinary course of business of the Company or the Guarantor;

(v) granted upon or with regard to any present or future asset or property of in respect of Indebtedness of the Guarantor which is owed to (a) any Brazilian governmental credit agency (including, but not limited to the Brazilian National Treasury, Banco Nacional de Desenvolvimento Econômico e Social, BNDES Participações S.A., Financiadora de Estudos e Projetos and Agência Especial de Financiamento Industrial); (b) any international official export-import bank or official export-import credit insurer; or (c) the International Finance Corporation or any international multilateral or government-sponsored agency;

(vi) (a) existing with respect to any assets of a Person at the time such Person is merged or consolidated with or into the Company or the Guarantor (and such Lien is not incurred in anticipation of such transaction), provided that such Lien is not extended to any asset of the Company or the Guarantor other than the assets of such Person affected thereby prior to giving effect to such merger or consolidation, (b) existing on any assets at the time of the acquisition thereof (and not incurred in anticipation of such transaction), and (c) to secure any extension, renewal, refinancing, refunding or exchange (or successive extensions, renewals, refinancing, refunding or exchanges), in whole or in part, of or for any Indebtedness secured by liens referred to above, provided that such Liens do not extend to any other property;

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(vii) created pursuant to any order of attachment or similar legal process arising in connection with court proceedings which are being contested by the Company or the Guarantor in good faith and by appropriate proceedings;

(viii) on any property or assets in connection with Indebtedness related to any regulated program for industrial or defense development related to the activities performed by Guarantor imposed or entered into as a result of the regulations or requirements of an applicable governmental authority; provided, however, that such Lien is limited to such property or assets associated with such regulated program;

(ix) existing on any asset prior to the acquisition thereof by the Company and/or the Guarantor and not created in contemplation of such acquisition;

(x) created over funds reserved for the payment of principal, interest and premium, if any, and any Additional Amounts due in respect of Notes;

(xi) arising from Capitalized Lease Obligations entered into by the Guarantor in the ordinary course of business of the Guarantor in connection with the financing of, export, import or other trade related transactions of the Guarantor; or

(xii) granted after the Issue Date upon or in respect of any asset of the Guarantor other than those referred to above, provided that the aggregate amount of Indebtedness secured pursuant to this exception shall not, on the date any such Indebtedness is incurred, exceed an amount equal to 10% of the Guarantor’s shareholders’ equity (calculated on the basis of the Guarantor’s latest quarterly unaudited or annual audited consolidated financial statements whichever is the most recently prepared in accordance with IFRS and currency exchange rates prevailing on the last day of the period covered by such financial statements).

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity.

“principal” of a Note means the principal amount of such Note (including any Additional Amounts payable by the Company in respect of such principal).

“Principal Paying Agent” means The Bank of New York Mellon, until a successor Principal Paying Agent shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Principal Paying Agent” shall mean such successor Principal Paying Agent.

“Principal Payment Date” means September 16, 2023 or any other date upon which principal of the Note becomes due, whether upon acceleration or otherwise hereunder.

“Proceeding” has the meaning specified in Section 12.11. “Process Agent” has the meaning specified in Section 12.11.

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“Record Date” means, when used with respect to the interest (including Additional Interest, if any) on the Notes, and any Additional Amounts due in respect thereof, payable on any Interest Payment Date, the March 1 or September 1 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.

“Redemption Date” means, when used with respect to any Note to be redeemed pursuant to Section 3.1(b), or (c) as applicable, the date fixed for such redemption by or pursuant to this Indenture.

“Redemption Price” means, when used with respect to any Notes to be redeemed pursuant to Section 3.1(b) or (c), as applicable, the price at which it is to be redeemed pursuant to this Indenture.

“Reference Treasury Dealer” means each of Merrill Lynch, Pierce, Fenner & Smith Incorporated, Citigroup Global Markets Inc. and Deutsche Bank Securities or their affiliates which are primary United States government securities dealers and no less than two other leading primary United States government securities dealers in New York City reasonably designated by the Company; provided, however, that if any of the foregoing shall cease to be a primary United States government securities dealer in New York City (a “Primary Treasury Dealer”), the Company shall substitute therefor another Primary Treasury Dealer.

“Reference Treasury Dealer Quotation” means, with respect to each Reference Treasury Dealer, and any redemption date, the average, as determined by the Independent Investment Banker, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Independent Investment Banker by such Reference Treasury Dealer at 3:30 pm New York time on the third Business Day preceding such Redemption Date.

“Register” has the meaning specified in Section 2.3.

“Registrar” means The Bank of New York Mellon, until a successor Registrar shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Registrar” shall mean such successor Registrar.

“Registration Rights Agreement” means the Registration Rights Agreement, dated as of September 16, 2013, among the Company, the Guarantor and the Initial Purchasers as such agreement may be amended, modified or supplemented from time to time, and, with respect to any Additional Notes, one or more registration rights agreements between the Company and the other parties thereto, as such agreement(s) may be amended, modified or supplemented from time to time, relating to rights given by the Company to purchasers of Additional Notes with respect to registration of such Additional Notes under the Securities Act.

“Restricted Period” means the 40 consecutive days beginning on and including the later of (i) the day on which the Initial Notes first are offered to persons other than distributors (as defined in Regulation S under the Securities Act) and (ii) the Issue Date or the date on which any Additional Notes are originally issued in the form of Initial Notes as the case may be.

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“Regulation S” means Regulation S under the Securities Act, as in effect from time to time.

“Regulation S Global Note” means one or more permanent Global Notes in definitive fully registered form without interest coupons representing Notes initially sold outside of the United States pursuant to Regulation S.

“Relevant Date” has the meaning specified in Section 4.7.

“Relevant Withholding Taxes” has the meaning specified in Section 4.7.

“Responsible Officer” means any officer of the Trustee with direct responsibility for the administration of this Indenture.

“Restricted Global Note” means one or more permanent Global Notes in definitive fully registered form without interest coupons initially sold to “qualified institutional buyers” (as such term is defined in Rule 144A) pursuant to Rule 144A.

“Rule 144A” means Rule 144A under the Securities Act, as in effect from time to time.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

“Securities Act Legend” means the following legend, printed in capital letters:

THIS NOTE (AND RELATED GUARANTEE) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO EMBRAER OVERSEAS LIMITED, EMBRAER S.A. OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (II) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) IN ACCORDANCE WITH RULE 144A, (III) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF SUCH CASES IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER APPLICABLE JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES THAT IT SHALL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ONLY WITH THE CONSENT OF THE ISSUER.

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“Significant Subsidiary” means any Subsidiary of the Guarantor which at the time of determination either (i) had assets which, as of the date of the Guarantor’s most recent quarterly consolidated balance sheet, constituted at least 10% of the Guarantor’s total assets on a consolidated basis as of such date or (ii) had revenues for the 12-month period ending on the date of the Guarantor’s most recent quarterly consolidated statement of income which constituted at least 10% of the Guarantor’s total revenues on a consolidated basis for such period.

“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the Holder thereof upon the happening of any contingency unless such contingency has occurred).

“Subsidiary” means any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) the Guarantor, (ii) the Guarantor and one or more Subsidiaries or (iii) one or more Subsidiaries.

“Successor Corporation” has the meaning specified in Section 5.1.

“Successor Jurisdiction” means the jurisdiction, other than Brazil or the Cayman Islands, in which a Successor Corporation is incorporated or considered to be resident.

“Transfer Agent” means The Bank of New York Mellon or any other Person authorized by the Company to effectuate the exchange or transfer of any Note on behalf of the Company hereunder.

“Treasury Rate” means, with respect to any Redemption Date, the rate per annum equal to the semi-annual equivalent yield to maturity or interpolated maturity (on a day count basis) of the Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Redemption Date.

“Trust Indenture Act” means the U.S. Trust Indenture Act of 1939, as amended.

“Trustee” means The Bank of New York Mellon, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture and, thereafter, “Trustee” shall mean such successor Trustee.

“United States” and “U.S.” means the United States of America (including the States and the District of Columbia) and its territories, its possessions and other areas subject to its jurisdiction.

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“U.S. Dollars” and “US$” each mean the currency of the United States.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States is pledged and which are not callable at the issuer’s option.

Section 1.2 Rules of Construction.

(a) For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:

(i) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

(ii) the words “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;

(iii) “or” is not exclusive;

(iv) “including” means including, without limitation; and

(v) unless the context otherwise requires, any reference to an “Article”, a “Section” or an “Exhibit” refers to an Article, a Section or an Exhibit, as the case may be, of this Indenture.

(b) All accounting terms not otherwise defined herein shall have the meanings assigned to them in accordance with GAAP.

(c) For purposes of the definitions set forth in Article I and this Indenture generally, all calculations and determinations shall be made in accordance with GAAP and shall be based upon the consolidated financial statements of the Guarantor and its Subsidiaries prepared in accordance with GAAP.

(d) All references to (a) Initial Notes shall refer also to any Additional Notes issued in the form of Initial Notes and (b) Exchange Notes shall refer also to any Additional Notes issued in the form of Exchange Notes, in each case, pursuant to Section 2.14.

(e) All references to the date the Notes were originally issued shall refer to the Issue Date or the date any Additional Notes were originally issued, as the case may be.

(f) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Indenture by the Trust Indenture Act, such required provision shall control.

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Section 1.3 Table of Contents; Headings.

The table of contents and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof.

Section 1.4 Form of Documents Delivered to Trustee.

In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.

Any certificate or opinion of an Officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such Officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an Officer or Officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.

Section 1.5 Acts of Holders.

(a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in Person or by agents duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments are delivered to the Trustee and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this Section 1.5.

(b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him the

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execution thereof. Where such execution is by a signer acting in a capacity other than his individual capacity, such certificate or affidavit shall also constitute sufficient proof of his authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee reviewing such instrument or writing deems sufficient.

(c) The principal amount and serial numbers of Notes held by any Person, and the date of holding the same, shall be proved by the Register.

(d) If the Company solicits from the Holders of Notes any request, demand, authorization, direction, notice, consent, waiver or other Act, the Company may, at its option, by or pursuant to a Board Resolution, fix in advance a record date for the determination of Holders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other Act, but the Company shall not have any obligation to do so. Such record date shall be the record date specified in or pursuant to such Board Resolution, which shall be a date not earlier than the date 30 days prior to the first solicitation of Holders generally in connection therewith and not later than the date such solicitation is completed. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other Act may be given before or after such record date, but only the Holders of record at the close of business on such record date shall be deemed to be Holders for the purposes of determining whether Holders of the requisite proportion of Outstanding Notes have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other Act, and for that purpose the Outstanding Notes shall be computed as of such record date; provided that no such authorization, agreement or consent by the Holders on such record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than eleven months after the record date.

(e) Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Holder of any Note shall bind every future Holder of the same Note and the Holder of every Note issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Note.

ARTICLE II

THE NOTES

Section 2.1 Form and Dating.

The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Note set forth in Exhibit A, which is hereby incorporated in, and expressly made a part of, this Indenture. The Notes may have such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such notations, legends or endorsements as may be required to comply with any law, stock exchange rule, agreement to which the Company is subject, if any, or usage, provided that any such notation, legend or endorsement is in a form acceptable to the Company.

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Each Global Note representing Initial Notes shall be dated the Issue Date, and each Global Note representing Exchange Notes shall be dated the relevant exchange date. Each definitive certificated note (“Certificated Note”) shall be dated the date of its authentication.

Global Notes will be deposited with the Trustee as custodian for DTC and registered in the name of a nominee of DTC.

Each Global Note may be represented by more than one certificate, if so required by DTC’s rules regarding the maximum principal amount to be represented by a single certificate. The aggregate principal amount of any Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

The Notes shall be printed, lithographed or engraved or produced by any combination of these methods or may be produced in any other manner permitted by the rules of any stock exchange on which the Notes may be listed, if any, all as determined by the officers executing such Notes, as evidenced by their execution of such Notes.

Section 2.2 Execution, Authentication and Delivery.

(a) Two Officers of the Company shall sign the Notes for the Company by manual or facsimile signature.

(i) If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

(ii) A Note shall not be valid until an authorized signatory of the Trustee or an authenticating agent manually signs the certificate of authentication on the Note upon Company Order. Such signature shall be conclusive evidence that the Note has been authenticated under this Indenture. Such Company Order shall specify the amount of the Notes to be authenticated and the date on which the original issue of Notes is to be authenticated.

(iii) The Trustee or an authenticating agent shall authenticate and deliver (A) Initial Notes on the Issue Date in an aggregate principal amount of US$531,849,000, (B) any Additional Notes for original issue from time to time after the Issue Date in such principal amounts as set forth in Section 2.14 and (C) any Exchange Notes for issue only in exchange for a like principal amount of Initial Notes, in each case upon a Company Order.

(iv) The Company may from time to time, without notice to or consent of the Holders, issue such additional principal amounts of Additional Notes as may be issued and authenticated pursuant to Section 2.2(a)(iii)(B) and Notes authenticated and delivered upon registration or transfer

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of, or in exchange for, or in lieu of, other Notes of the same class pursuant to Section 2.7, Section 2.8, Section 2.10, Section 9.4, and except for transactions similar to the Exchange Offer.

(v) The Notes shall be issued in fully registered form without coupons attached in minimum denominations of US$2,000 and integral multiples of US$1,000 in excess thereof (each, an “Authorized Denomination”).

(b) The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Notes (the “Authenticating Agent”). Unless limited by the terms of such appointment, an Authenticating Agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by an Authenticating Agent. An Authenticating Agent has the same rights as the Registrar or any Transfer Agent or Paying Agent or agent for service of notices and demands.

(i) Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation.

(ii) Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and the Company. The Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Company. Upon receiving such notice of resignation or upon such a termination, the Trustee may appoint a successor Authenticating Agent reasonably acceptable to the Company and shall give written notice of such appointment to the Company.

(iii) The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services and reimbursement for its reasonable expenses relating thereto.

(iv) The Trustee shall have the right to decline to authenticate and deliver any Additional Notes under this Section if the Trustee, determines that such action may not lawfully be taken by the Company or if the Trustee in good faith by its board of directors or board of trustee, executive committee, or a trust committee of directors or trustees or Responsible Officers shall determine that such action would expose the Trustee to personal liability to existing Holders.

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Section 2.3 Transfer Agent, Registrar and Paying Agent.

(a) Subject to such reasonable regulations as the Company may prescribe, the books of the Company for the exchange, registration, and registration of transfer of Notes shall be kept at the office of the Registrar (such books maintained in such office and in any other office or agency designated for such purpose being herein referred to as the “Register”). The Company shall also cause the Trustee to maintain books for the exchange, registration and registration of transfer of Notes. The Trustee shall notify the Registrar and the Registrar shall notify the Trustee, when necessary, upon any exchange, registration or registration of transfer of any Notes and shall cause their respective books to be amended accordingly. The Company may have one or more co-registrars and one or more additional Transfer Agents or Paying Agents. The terms “Transfer Agent” and “Paying Agent” include any additional transfer agent or paying agent, as the case may be. The term “Registrar” includes any co-registrar.

(i) The Company shall enter into any appropriate agency agreements with any Registrar, Transfer Agent or Paying Agent not a party to this Indenture, which shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.6. The Company initially appoints the Trustee as Registrar, Transfer Agent and Principal Paying Agent in connection with the Notes.

(b) The Trustee shall keep a record of all the Notes and shall make such record available for inspection, during regular business hours, upon the request of the Company, provided reasonable advance notice of such inspection is given to the Trustee. Such books and records shall include notations as to whether such Notes have been redeemed, or otherwise paid or cancelled, and, in the case of mutilated, destroyed, defaced, stolen or lost Notes, whether such Notes have been replaced. In the case of the replacement of any of the Notes, the Trustee shall keep a record of the Note so replaced, and the Notes issued in replacement thereof. In the case of the cancellation of any of the Notes, the Trustee shall keep a record of the Note so cancelled and the date on which such Note was cancelled. Each Transfer Agent shall notify the Trustee of any transfers or exchanges of Notes effected by it. The Trustee shall not be required to register the transfer of or exchange Certificated Notes for a period of 15 days preceding any date of selection of Notes for redemption, or register the transfer of or exchange any Certificated Notes previously called for redemption.

(c) All Notes surrendered for payment, redemption, registration of transfer or exchange shall be cancelled by the relevant Transfer Agent or Paying Agent or the Trustee, as the case may be. Each Registrar and Transfer Agent shall notify the Trustee of the surrender and cancellation of such Notes and shall deliver such Notes to the Trustee. The Trustee may destroy or cause to be destroyed all such Notes surrendered for payment, redemption, registration of transfer or exchange in accordance with its customary procedures and, if so destroyed, shall, upon the Company’s written request, promptly deliver a certificate of destruction to the Company.

(d) The Paying Agent shall comply with applicable backup withholding tax and information reporting requirements under the U.S. Internal Revenue Code of 1986, as

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amended, and the U.S. Treasury Regulations promulgated thereunder with respect to payments made under the Notes (including, to the extent required, the collection of Internal Revenue Service Forms W-8 and W-9 and the filing of U.S. Internal Revenue Service Forms 1099 and 1096).

Section 2.4 Paying Agent to Hold Money in Trust.

By 10:00 A.M. New York time, on the Business Day prior to each Payment Date on any Note, the Company or the Guarantor shall deposit with the Principal Paying Agent in immediately available funds a sum sufficient to pay such principal and interest (including Additional Interest, if any), and any Additional Amounts due in respect thereof, when so becoming due (including any amounts under Section 4.7). The Company or the Guarantor shall request that the bank through which such payment is to be made agree to supply to the Principal Paying Agent by 10:00 A.M. (New York time) two Business Days prior to the due date from any such payment an irrevocable confirmation (by tested telex) of its intention to make such payment. The Company or the Guarantor shall require each Paying Agent (other than the Trustee) to agree in writing that such Paying Agent shall hold in trust, for the benefit of Holders or the Trustee, all money held by such Paying Agent for the payment of principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes and shall notify the Trustee of any default by the Company or the Guarantor in making any such payment. The Company or the Guarantor at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by it. Upon complying with this Section 2.4, the Paying Agent shall have no further liability for the money delivered to the Trustee.

Section 2.5 Payment of Principal and Interest; Principal and Interest Rights Preserved.

(a) Principal of, and interest (including Additional Interest, if any) on, and any Additional Amount due with respect to, the Notes shall be payable at the Corporate Trust Office, at the offices of the Trustee and, subject to any fiscal or other laws and regulations applicable thereto, at the specified offices of any other Paying Agent appointed by the Company.

(b) Except as otherwise provided herein for the redemption of the Notes, the payment of principal on the Notes shall be allocated on a pro rata basis among all Outstanding Notes, without preference or priority of any kind among the Notes.

(c) Final payments in respect of any Note (whether upon redemption, declaration of acceleration or Stated Maturity) shall be made only against presentation and surrender of such Note at the Corporate Trust Office, at the offices of the Trustee and, subject to any fiscal or other laws and regulations applicable thereto, at the specified offices of any other Paying Agent appointed by the Company.

(d) Payment of the principal of, and any Additional Amounts due with respect to, any Note on the Principal Payment Date shall be made by U.S. Dollar check drawn on a bank in New York City and mailed to the Person entitled thereto at its address as it appears in the Register or, at the election of the Holder, by wire transfer to a U.S. Dollar account

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maintained by the payee with a bank in New York City, provided that such Holder so elects by giving written notice to such effect designating such account, upon application to the Trustee at least 10 days prior to the Principal Payment Date.

(e) Payment of interest (including Additional Interest, if any), and any Additional Amounts due with respect thereto, on each Interest Payment Date with respect to any Note shall be made to the Person in whose name such Note is registered on the Record Date immediately preceding such Interest Payment Date, by U.S. Dollar check drawn on a bank in New York City and mailed to the Person entitled thereto at its address as it appears in the Register, or, at the election of the Holder, by wire transfer to a U.S. Dollar account maintained by the payee with a bank in New York City, provided that the Holder so elects by giving written notice to such effect designating such account, which is received by the Trustee or a Paying Agent no later than the Record Date immediately preceding such Interest Payment Date. Unless such designation is revoked, any such designation made by such Holder with respect to such Note shall remain in effect with respect to any future payments with respect to such Note payable to such Holder. The Company shall pay any administrative costs imposed by banks in connection with making payments by wire transfer.

(f) If the Payment Date in respect of any Note is not a business day at the place in which it is presented for payment, the Holder thereof shall not be entitled to payment of the amount due until the next succeeding business day at such place and shall not be entitled to any further interest or other payment in respect of any such delay.

Notwithstanding the provisions of this Section 2.5, payments on Notes registered in the name of DTC or its nominee shall be effected in accordance with the Applicable Procedures.

The Company and the Guarantor shall make all payments on the Notes exclusively in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debt.

Section 2.6 Holder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable, the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee in writing, at least ten Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders.

Section 2.7 Transfer and Exchange.

(a) Interests in the Regulation S Global Note and the Restricted Global Note shall be exchangeable or transferable, as the case may be, for physical delivery of Certificated Notes only if (i) DTC notifies the Company that it is unwilling or unable to continue as depositary for such Global Note, or DTC ceases to be a “clearing agency” registered under the Exchange Act, and a successor depositary is not appointed by the Company within 90 days, or (ii) an Event of Default has occurred and is continuing with respect to such Notes, provided that such transfer or exchange is made in accordance with the provisions of this Indenture and the Applicable Procedures.

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Upon receipt of notice by DTC or the Trustee, as the case may be, regarding the occurrence of any of the events described in the preceding paragraph, the Company shall use its best efforts to make arrangements with DTC for the exchange of interests in the Global Notes for individual Certificated Notes, and cause the requested individual Certificated Notes to be executed and delivered to the Trustee in sufficient quantities and authenticated by the Trustee for delivery to Holders. In the case of Certificated Notes issued in exchange for the Restricted Global Note, such Certificated Notes shall bear the Securities Act Legend. Upon the transfer, exchange or replacement of Notes bearing such Securities Act Legend, or upon specific request for removal of the Securities Act Legend on a Note, the Company shall deliver only Notes that bear such Securities Act Legend, or shall refuse to remove such Securities Act Legend, as the case may be, unless there is delivered to the Company a certificate in the form of Exhibit C or Exhibit E, as the case may be, or such satisfactory evidence as may reasonably be required by the Company, which may include an Opinion of Counsel, that neither the Securities Act Legend nor the restrictions on transfer set forth therein are required to ensure compliance with the provisions of the Securities Act. The Trustee shall exchange a Note bearing the Securities Act Legend for a Note not bearing such Securities Act Legend only if it has been directed to do so in writing by the Company, upon which direction it may conclusively rely.

(b) On or prior to the 40th day of the Restricted Period, transfers by an owner of a beneficial interest in the Regulation S Global Note to a transferee who takes delivery of such interest through the Restricted Global Note shall be made only in Authorized Denominations in accordance with the Applicable Procedures and upon receipt by the Trustee or Transfer Agent of a written certification from the transferor of the beneficial interest in the form of Exhibit D to the effect that such transfer is being made to a Person who the transferor reasonably believes is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction. After such 40th day, such certification requirement shall no longer apply to such transfers.

(c) Transfers by an owner of a Certificated Note bearing the Securities Act Legend or of a beneficial interest in the Restricted Global Note to a transferee who takes delivery of such interest through the Regulation S Global Note or in the form of a Certificated Note not bearing the Securities Act Legend shall be made only in Authorized Denominations upon receipt by the Trustee or Transfer Agent of a written certification from the transferor in the form of Exhibit C to the effect that such transfer is being made in accordance with Regulation S.

Beneficial interests in the Global Notes shall be shown on, and transfers thereof shall be effected only through, records maintained by DTC and its direct and indirect participants, including Euroclear and Clearstream Banking.

Transfers between participants in DTC shall be effected in the ordinary way in accordance with the Applicable Procedures and shall be settled in DTC’s Same-Day Funds Settlement System and secondary market trading activity in such Notes shall therefore settle in immediately available funds. Transfers between participants in Euroclear and Clearstream Banking shall be effected in the ordinary way in accordance with Applicable Procedures.

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(d) Certificated Notes may be exchanged or transferred in whole or in part in the principal amount of Authorized Denominations by surrendering such Certificated Notes at the office of the Trustee or any Transfer Agent with a written instrument of transfer as provided in this Indenture in the form of Exhibit B hereto duly executed by the Holder thereof or his attorney duly authorized in writing.

In exchange for any Certificated Note properly presented for transfer, the Trustee shall promptly authenticate and deliver or cause to be authenticated and delivered at the Corporate Trust Office, to the transferee, or send by mail (at the risk of the transferee) to such address as the transferee may request, a Certificated Note or Notes, as the case may require, registered in the name of such transferee, for the same aggregate principal amount as was transferred. In the case of the transfer of any Certificated Note in part, the Trustee shall also promptly authenticate and deliver or cause to be authenticated and delivered at the Corporate Trust Office, to the transferor, or send by mail (at the risk of the transferor) to such address as the transferor may request, a Certificated Note or Notes, as the case may require, registered in the name of such transferor, for the aggregate principal amount that was not transferred. No transfer of any Notes shall be made unless the request for such transfer is made by the registered Holder or his attorney duly authorized in writing at the Corporate Trust Office and is accompanied by a completed instrument of transfer in the form of Exhibit B attached to the Note presented for transfer.

(e) Transfer, registration and exchange of any Note or Notes shall be permitted and executed as provided in this Section 2.7 without any charge to the Holder of any such Note or Notes other than any taxes or governmental charges or insurance charges payable on transfers or any expenses of delivery by other than regular mail, but subject to such reasonable regulations as the Company, the Registrar and the Trustee may prescribe.

The costs and expenses of effecting any exchange or registration of transfer pursuant to the foregoing provisions, except for the expense of delivery by other than regular mail (if any) and except for the payment of a sum sufficient to cover any tax or other governmental charges or insurance charges that may be imposed in relation thereto, shall be borne by the Company.

All Certificated Notes issued upon any exchange or registration of transfer of Notes shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits, as the Notes surrendered upon exchange or registration of transfer.

(f) Transfers of Notes shall be registrable at the Corporate Trust Office, at the offices of the Trustee and at the offices of the Transfer Agent. The Trustee or the Transfer Agent shall effect transfers of Global Notes and Certificated Notes. In addition, the Registrar shall keep the Register for the ownership, exchange and transfer of any Notes. The Transfer Agent shall give prompt notice to the Registrar and the Registrar shall likewise give prompt notice to the Trustee of any exchange or transfer of such Notes. Neither the Trustee nor any Transfer Agent shall register the exchange or the transfer of interests during the period of 15 days ending on the Record Date. The Trustee shall give prompt notice to the Company of any replacement, transfer, cancellation or destruction of the Notes.

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(g) Upon any such exchange of all or a portion of any Global Note for a Certificated Note or an interest in either the Restricted Global Note or the Regulation S Global Note, the Global Note to be so exchanged shall be marked to reflect the reduction of its principal amount by the aggregate principal amount of such Certificated Note or the interest to be so exchanged for an interest in a Regulation S Global Note or a Restricted Global Note, as the case may be. Until so exchanged in full, the Note shall in all respects be entitled to the same benefits under this Indenture as the Notes authenticated and delivered hereunder.

(h) Subject to Section 2.7(a), upon the occurrence of the Exchange Offer in accordance with the Registration Rights Agreement, the Company shall issue and, upon receipt of an authentication order in accordance with Section 2.2, the Trustee shall authenticate one or more Exchange Notes in an aggregate principal amount equal to the principal amount of the beneficial interests in the Initial Notes or Additional Notes tendered for acceptance by Persons that certify in the applicable letters of transmittal that (i) they are not broker-dealers, (ii) they are not participating in a distribution of the Exchange Notes and (iii) they are not affiliates (as defined in Rule 144 under the Securities Act) of the Company, and accepted for exchange in the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee shall cause the aggregate principal amount of the applicable Initial Notes in the form of Global Notes and/or Additional Notes in the form of Global Notes to be reduced accordingly.

Section 2.8 Replacement Notes.

If any Note at any time becomes mutilated, defaced, destroyed, stolen or lost, such Note may be replaced at the cost of the applicant (including reasonable legal fees of the Company, the Trustee, the Transfer Agents, the Registrar and the Paying Agent) at the office of the Trustee or any Transfer Agent, upon provision of, in the case of destroyed, stolen or lost Notes, evidence satisfactory to the Trustee and the Company that such Note was destroyed, stolen or lost, together with such indemnity as the Trustee and the Company may require. Mutilated or defaced Notes must be surrendered before replacements shall be issued.

Each Note authenticated and delivered in exchange for or in lieu of any such Note shall carry rights to accrued and unpaid interest (including Additional Interest, if any) and to interest (including Additional Interest, if any) to accrue equivalent to the rights that were carried by such Note before such Note was mutilated, defaced, destroyed, stolen or lost.

Every replacement Note is an additional obligation of the Company and shall be entitled to the benefits at this Indenture.

Section 2.9 Temporary Notes.

Subject to the provisions of Section 2.7(a), until Certificated Notes are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form of Certificated Notes but may have variations that the Company considers appropriate for temporary Notes. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate Certificated Notes and deliver them in

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exchange for temporary Notes at the office or agency of the Company or the Trustee, without charge to the Holder. Until so exchanged, the temporary Notes shall be entitled to the same benefits under this Indenture as Certificated Notes.

Section 2.10 Cancellation.

The Company at any time may deliver Notes to the Trustee for cancellation. The Transfer Agents and the Paying Agents shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee or a Paying Agent and no one else shall cancel and the Trustee shall destroy in accordance with its customary procedures (subject to the record-retention requirements of the Exchange Act) all Notes surrendered for transfer, exchange, payment or cancellation and, if so destroyed, upon the Company’s written request, deliver a certificate of such destruction to the Company unless the Company directs the Trustee in writing to deliver cancelled Notes to the Company. The Company may not issue new Notes to replace Notes it has redeemed, paid or delivered to the Trustee for cancellation, which shall not prohibit the Company from issuing any Additional Notes, or any Exchange Notes in exchange for Initial Notes. A Note does not cease to be outstanding because the Company, the Guarantor or any of their Affiliates holds such Note.

Section 2.11 Defaulted Interest.

If the Company defaults in a payment of interest (including Additional Interest, if any) on the Notes, or Additional Amounts due with respect thereto, the Company shall pay the defaulted interest (plus interest on such defaulted interest at the rate specified in Section 4.1 to the extent lawful) in any lawful manner not inconsistent with the requirements of any stock exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after written notice given by the Company to the Trustee of the proposed payment pursuant to this Section 2.11, such manner of payment shall be deemed practicable by the Trustee.

The Company may pay the defaulted interest (including Additional Interest, if any) and any Additional Amounts due in respect thereof, to the Persons who are Holders on a subsequent special record date, which date shall be at least five Business Days prior to the payment date of such defaulted interest. The Company shall fix or cause to be fixed any such special record date and payment date, and, at least 15 days before any such special record date, the Company shall deliver to each Holder, with a copy to the Trustee, a notice that states the special record date, the payment date and the amount of defaulted interest to be paid.

Section 2.12 CUSIP and ISIN Numbers.

The Company in issuing the Notes may use CUSIP and ISIN numbers (if then generally in use) and, if so, the Trustee shall use CUSIP and ISIN numbers in notices as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice and that reliance may be placed only on the other identification numbers printed on the Notes, and any such notice shall not be affected by any defect in or omission of such numbers. The Company shall promptly notify the Trustee in writing of any change in CUSIP or ISIN numbers.

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Section 2.13 Open Market Purchases.

The Company, the Guarantor or any of their Affiliates may at any time purchase Notes in the open market or otherwise at any agreed upon price. Any Notes so purchased may be cancelled or resold at the option of the Company, but shall only be resold in accordance with applicable securities and other laws.

Section 2.14 Issuance of Additional Notes.

The Company shall be entitled, from time to time, without notice to, or consent of, the Holders of the Notes, to create and issue additional principal amounts of Additional Notes under this Indenture which shall have identical terms as the Initial Notes issued on the Issue Date or the Exchange Notes exchanged therefor (in each case, other than with respect to the issue date, issue price, the payment of interest accruing prior to the issue date thereof and the first payment of interest (including Additional Interest, if any) thereon, and any Additional Amounts due with respect thereto, after the issue date thereof), as the case may be.

With respect to any Additional Notes, the Company shall set forth in a resolution of the Board of Directors and an Officers’ Certificate, a copy of each shall be delivered to the Trustee, the following information:

(i) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

(ii) the issue price, the issue date and the “CUSIP” and “ISIN” number of any such Additional Notes and the amount of interest payable on the first payment date applicable thereto;

(iii) whether such Additional Notes shall be transfer restricted securities and issued in the form of Initial Notes or shall be issued in the form of Exchange Notes, in each case as set forth in Exhibit A to this Indenture; and

(iv) if applicable, the resale restriction termination date relating to the Notes and the Restricted Period for such Additional Notes.

Section 2.15 One Class of Notes.

The Initial Notes, any Additional Notes and the Exchange Notes shall vote and consent together on all matters as one class; and none of the Initial Notes, any Additional Notes and the Exchange Notes shall have the right to vote or consent as a separate class on any matter. The Initial Notes, any Additional Notes and the Exchange Notes shall together be deemed to constitute a single class or series for all purposes under this Indenture.

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ARTICLE III

REDEMPTION AND REPURCHASES

Section 3.1 Right of Redemption.

(a) Except as described in this Section 3.1 and Paragraph 10 of the form of Note set forth in Exhibit A, the Notes may not be redeemed prior to maturity.

(b) The Notes shall be redeemable, at the option of the Company, in whole, but not in part, upon giving not less than 30 nor more than 60 days’ notice to the Holders, at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest (including Additional Interest, if any) and any Additional Amounts due with respect thereto, to the Redemption Date, where as a result of a change in, or amendment occurring after August 28, 2013 to, the laws of the Cayman Islands or Brazil or any political subdivision or taxing authority thereof or therein (or rules and regulations thereunder or the official interpretation, administration or application thereof), the Company or the Guarantor would be required to pay Additional Amounts in excess of those attributable to Cayman Islands or Brazilian withholding tax on the basis of a statutory rate of 15%. No such notice of redemption shall be given earlier than 60 calendar days prior to the earliest date on which the Company or the Guarantor, as the case may be, would be obligated to pay such Additional Amounts if a payment in respect of such Notes were then due.

Prior to the publication or mailing of any notice of redemption pursuant to the preceding paragraph, the Company shall deliver to the Trustee an Officers’ Certificate to the effect that the obligation of the Company or the Guarantor, as the case may be, to pay Additional Amounts cannot be avoided by the Company or the Guarantor taking reasonable measures available to it. The Company shall also deliver an Opinion of Counsel that is independent of the Company stating that the Company or the Guarantor, as the case may be, would be obligated to pay Additional Amounts due to the changes in tax laws or regulations. The Trustee shall accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set forth above, in which event it shall be conclusive and binding on the Holders.

(c) The Notes shall be redeemable, at the option of the Company, in whole or in part, upon giving not less than 30 nor more than 60 days’ notice to the Holders (which notice shall be irrevocable), at a Redemption Price equal to the greater of (i) 100% of the principal amount thereof and (ii) the sum of the present values of each remaining scheduled payment of principal and interest thereon (exclusive of interest (including Additional Interest, if any) accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year comprised of twelve 30-day months) at the Treasury Rate plus 50 basis points (the “Make-Whole Amount”), plus in each case accrued interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes to the Redemption Date.

If less than all the Notes are to be redeemed at any time pursuant to this Section 3(c), the particular Notes to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the outstanding Notes not previously called for

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redemption, in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee in accordance with the rules of the Depositary shall deem fair and appropriate (and in such manner as complies with applicable legal requirements) and which may provide for the selection for redemption of portions of the principal of the Notes; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less than US$2,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the method it has chosen for the selection of Notes and the principal amount thereof to be redeemed.

Section 3.2 Applicability of Article.

Redemption of Notes at the option of the Company, as permitted by Section 3.1 or required by any provision of this Indenture, shall be made in accordance with such provision and this Article III.

Section 3.3 Election to Redeem; Notice to Trustee.

The election of the Company to redeem the Notes pursuant to Section 3.1(b) or (c) shall be evidenced by a Board Resolution. In case of any redemption of Notes at the election of the Company, the Company shall, at least 70 days prior to the Redemption Date fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such Redemption Date.

Section 3.4 Notice of Redemption by the Company.

In the case of redemption of Notes pursuant to Section 3.1(b) or (c), notice of redemption shall be mailed at least 30 but not more than 60 days before the Redemption Date to each Holder of any Note to be redeemed by first-class mail at its registered address and such notice shall be irrevocable.

The notice shall state:

(i) the aggregate amount of Notes to be redeemed;

(ii) the Redemption Date;

(iii) the Redemption Price;

(iv) the name and address of the Paying Agents;

(v) that Notes called for redemption must be surrendered to a Paying Agent to collect the Redemption Price;

(vi) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest (including Additional Interest, if any) on Notes called for redemption ceases to accrue on and after the Redemption Date;

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(vii) the paragraph of the Notes pursuant to which the Notes called for redemption are being redeemed;

(viii) the CUSIP or ISIN number, if any; and

(ix) that no representation is made as to the correctness or accuracy of the CUSIP or ISIN number, if any, listed in such notice or printed on the Notes.

At the Company’s election and at its request, made in writing to the Trustee at least 60 days before a date for redemption of Notes, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense; provided that the Company shall deliver to the Trustee, at least 70 days prior to the Redemption Date, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

Section 3.5 Deposit of Redemption Price.

By 10:00 A.M. New York City time on the Business Day prior to the Redemption Date, the Company shall deposit with the Principal Paying Agent money sufficient to pay the Redemption Price of and accrued interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes other than Notes that have been delivered by the Company to the Trustee at least 15 days prior to the Redemption Date for cancellation. The Company shall request that the bank through which such payment is to be made agree to supply to the Principal Paying Agent by 10:00 A.M. (New York time) two Business Days prior to the due date from any such payment an irrevocable confirmation (by tested telex) of its intention to make such payment.

Section 3.6 Effect of Notice of Redemption.

Notice of redemption having been given as aforesaid, the Notes shall, on the Redemption Date, become due and payable at the applicable Redemption Price (together with accrued interest, if any (including Additional Interest, if any), and any Additional Amounts due with respect thereto, to the Redemption Date), and from and after such date (except in the event of a default in the payment of the Redemption Price and accrued interest (including Additional Interest, if any), and any Additional Amounts due with respect to, such Notes shall cease to bear interest (including Additional Interest). Upon surrender of any such Note for redemption in accordance with such notice, such Note shall be paid by the Company at the Redemption Price, together with accrued interest, if any, to the Redemption Date; provided, however, that installments of interest (including Additional Interest, if any) and any Additional Amounts due with respect thereto, whose Payment Date is on or prior to the Redemption Date shall be payable to the Holders of such Notes registered as such at the close of business on the relevant Record Dates according to their terms.

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If any Note to be redeemed shall not be so paid upon surrender thereof in accordance with the Company’s instructions for redemption, the principal shall, until paid, bear interest (including Additional Interest) from the Redemption Date at the rate borne by the Notes. Upon surrender to the Paying Agent, such Notes shall be paid at the applicable Redemption Price, plus accrued interest (including Additional Interest, if any), and any Additional Amounts due with respect thereto, to the Redemption Date; provided, however, that installments of interest (including Additional Interest, if any) and any Additional Amounts due with respect thereto, payable on or prior to the redemption date shall be payable to the Holders of such Notes registered as such at the close of business on the relevant Record Date according to their terms.

Section 3.7 Notes Redeemed in Part.

Upon surrender of a Note that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder thereof (at the Company’s expense) a new Note, equal in a principal amount to the unredeemed portion of the Note surrendered; provided that each new Note shall be in a Principal amount of US$2,000 or an integral multiple of US$1,000 in excess thereof.

For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to redemption of Notes shall relate, in the case of any Note redeemed or to be redeemed only in part, to the portion of the principal amount of such Note which has been or is to be redeemed.

ARTICLE IV

COVENANTS

Section 4.1 Payment of Principal and Interest Under Notes.

The Company shall punctually pay the principal of and interest (including Additional Interest, if any) on, and Additional Amounts due with respect to, the Notes on the dates and in the manner provided in the form of Note set forth as Exhibit A. By 10:00 a.m. (New York City time), on the Business Day prior to any Payment Date, the Company shall irrevocably deposit with the Trustee or with the Paying Agent money sufficient to pay such principal and interest (including Additional Interest, if any) and any such Additional Amounts.

No interest (including Additional Interest, if any) shall be payable hereunder in excess of the maximum rate permitted by applicable law.

Section 4.2 Maintenance of Office or Agency.

The Company shall maintain in each place of payment for the Notes an office or agency where Notes may be presented or surrendered for payment and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Corporate Trust Office of the Trustee shall be such office or agency of the Company, unless the Company shall designate and maintain some other office or agency for one or more of such purposes. The Company shall give prompt written notice to the Trustee of any change in the location of any such office or agency. If at any time the Company shall fail to maintain any such

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required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the Company hereby appoints the Trustee as its agent to receive all such presentations, surrenders, notices and demands.

Section 4.3 Money for Note Payments to Be Held in Trust.

If the Company shall at any time act as its own Paying Agent, it shall, on or before each due date of the principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, any of the Notes, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay the principal of, or interest (including Additional Interest, if any), and any such Additional Amounts so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and shall promptly notify the Trustee of its action or failure so to act.

Whenever the Company shall have one or more Paying Agents for the Notes, it shall, on or before each due date of the principal of, or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, any Notes, irrevocably deposit with a Paying Agent a sum sufficient to pay such principal or interest (including Additional Interest, if any), and any such Additional Amounts, so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest (including Additional Interest, if any), and any such Additional Amounts, and (unless such Paying Agent is the Trustee) the Company shall promptly notify the Trustee in writing of such action or any failure so to act.

Each Paying Agent, subject to the provisions of this Section 4.3, shall:

(i) hold all sums held by it for the payment of the principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein; provided, however, such sums need not be segregated from other funds held by it, except as required by law;

(ii) give the Trustee written notice of any default by the Company (or any other obligor upon the Notes) in the making of any payment of principal or interest (including Additional Interest, if any), and any Additional Amounts due with respect thereto; and

(iii) at any time during the continuance of any such default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such Paying Agent.

The Company shall cause each Paying Agent (other than the Principal Paying Agent) to execute and deliver an instrument in which such Paying Agent shall agree with the Trustee to act as a Paying Agent in accordance with this Section 4.3.

The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any

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Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such sums.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, any Note and remaining unclaimed for two years after such principal or interest (including Additional Interest, if any), and any Additional Amounts due with respect thereto, has become due and payable shall be paid to the Company at the request of the Company, or (if then held by the Company) shall be discharged from such trust; and the Holder of such Note shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, however, that the Trustee or such Paying Agent, before being required to make any such repayment, shall, upon written request and at the expense of the Company, cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, New York City, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining shall be repaid to the Company.

Section 4.4 Maintenance of Corporate Existence.

The Guarantor shall, and shall cause each of its Subsidiaries to, (i) maintain in effect its corporate existence and all registrations necessary therefor, provided that these restrictions shall not prohibit any transactions permitted by Article V or the merger of any Subsidiary with or into the Guarantor or with or into any other Subsidiary of the Guarantor; (ii) take all reasonable actions to maintain all rights, privileges, titles to property, franchises and the like necessary or desirable in the normal conduct of its business, activities or operations; and (iii) maintain or cause to be maintained in good repair, working order and condition (normal wear and tear excepted) all properties used or useful in their business; provided, however, that neither the Guarantor nor its Subsidiaries shall be prevented from discontinuing those operations or suspending the maintenance of those properties which, in the reasonable judgment of the Guarantor as evidenced by a Board Resolution, are no longer necessary or useful in the conduct of the Guarantor’s business, or that of its Subsidiaries; and provided, further, that such discontinuation of operations or maintenance shall not be materially disadvantageous to the Holders of the Notes.

Section 4.5 Payment of Taxes and Claims.

The Guarantor shall, and shall cause each of its Subsidiaries to, pay all taxes, assessments and other governmental charges imposed upon it or any of its property in respect of any of its franchises, businesses, income or profits before any penalty or interest accrues thereon, and pay all claims (including claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or might become a Lien upon its property; provided, however, that any such payment shall not be required unless the failure to make such

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payment would have a material adverse effect upon the financial condition of the Guarantor and its Subsidiaries considered as one enterprise or an adverse effect on the performance of the Guarantor’s obligations hereunder; and provided, further, that no such charge or claim need be paid while it is being contested in good faith by appropriate proceedings promptly initiated and diligently conducted and if appropriate reserves or other provisions shall have been made therefor.

Section 4.6 Maintenance of Insurance.

The Guarantor shall, and shall cause each of its Subsidiaries to, maintain insurance with respect to its general business and its properties, with financially sound, responsible and reputable insurance companies in such amounts and covering such risks as are usually carried by companies of good repute engaged in similar businesses and owning and/or operating properties similar to those owned and/or operated by the Guarantor or such Subsidiary, as the case may be, in the jurisdictions in which the Guarantor or such Subsidiary owns and/or operates its properties, including policies covering property losses wherein settlement is on a replacement value basis, resultant business interruption and general liability.

Section 4.7 Payment of Additional Amounts.

(a) All payments by the Company or the Guarantor in respect of the Notes or the Guarantee, as the case may be, including, without limitation, Additional Interest, if any, shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or other governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Brazil or the Cayman Islands or a successor jurisdiction or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. In that event, the Company or the Guarantor (as guarantor of the Notes), as applicable, shall make such deduction or withholding, make payment of the amount so withheld to the appropriate governmental authority and pay to each Holder such additional amounts (“Additional Amounts”) as may be necessary to ensure that the net amounts receivable by the Holders (including Additional Amounts) after such withholding or deduction shall equal the respective amounts of principal of, or premium, if any, or interest which would have been receivable in respect of the Notes in the absence of such withholding or deduction. Notwithstanding the foregoing, neither the Company nor the Guarantor will have to pay Additional Amounts:

(i) to, or to a third party on behalf of, a Holder who is liable for such taxes, duties, assessments or governmental charges in respect of such Note by reason of such Holder or the beneficial owner having some connection with Brazil or the Cayman Islands other than the mere holding of the Note and the receipt of payments with respect to the Note;

(ii) in respect of Notes surrendered (if surrender is required) more than 30 days after the Relevant Date except to the extent that the Holder of such Note would have been entitled to such Additional Amounts on surrender of such Note for payment on the last day of such period of 30 days;

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(iii) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to any European Union Directive on the taxation of savings implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 or any law implementing or complying with, or introduced in order to conform to, such directive;

(iv) to, or to a third party on behalf of, a Holder who is liable for such taxes, duties, assessments or other governmental charges by reason of the failure of such Holder or the beneficial owner to comply with any certification, identification or other reporting requirement concerning the nationality, residence, identity or connection with Brazil, the Cayman Islands or a successor jurisdiction or applicable political subdivision or authority thereof or therein having power to tax, of such Holder or the beneficial owner, if compliance is required by such jurisdiction, or any political subdivision or authority thereof or therein having power to tax, as a precondition to exemption from, or reduction in the rate of, the tax, assessment or other governmental charge and the Company or the Guarantor, as applicable, has given the Holders at least 30 days’ notice that Holders will be required to provide such certification, identification or other requirement;

(v) in respect of any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or governmental charge;

(vi) in respect of any tax, assessment or other governmental charge which is payable other than by deduction or withholding from payments of principal of, or premium, if any, or interest (including Additional Interest, if any) on the Note or by direct payment by the Company or the Guarantor in respect of claims made against the Company or the Guarantor;

(vii) in respect of any tax imposed, withheld or otherwise deducted on a note presented for payment (where presentation is required) by or on behalf of a Holder who would have been able to avoid that withholding or deduction by presenting the relevant note to another paying agent; or

(viii) any combination of the above.

(b) For purposes of the provisions described above, “Relevant Date” means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received by the Trustee on or prior to such due date, the date on which notice is given to the Holders that the full amount is so received by the Trustee. The Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation. Except as specifically provided above, neither the Company nor the Guarantor shall be required to make a payment with respect to any tax, assessment or governmental charge imposed by any government or a political subdivision or taxing authority thereof or therein.

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(c) In the event that Additional Amounts actually paid with respect to the Notes described above are based on rates of deduction or withholding of withholding taxes in excess of the appropriate rate applicable to the Holder of such Notes, and, as a result thereof such Holder is entitled to make claim for a refund or credit of such excess from the authority imposing such withholding tax, then such Holder shall, by accepting such Notes, be deemed to have assigned and transferred all right, title, and interest to any such claim for a refund or credit of such excess to the Company or the Guarantor, as the case may be.

(d) The Company or the Guarantor, as the case may be, shall also pay any present or future stamp, court, issue, registration or documentary taxes or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from execution, delivery, registration or making of payments or enforcement in respect of the Notes and the Guarantee, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside of Brazil or the Cayman Islands other than those resulting from, or required to be paid in connection with, the enforcement of the Notes and the Guarantee following the occurrence of any Default or Event of Default.

(e) No Additional Amounts shall be paid with respect to a payment on any Note or the Guarantee to a Holder that is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or beneficial owner would not have been entitled to receive payment of the Additional Amounts had the beneficiary, settlor, member or beneficial owner been the Holder of the Note.

(f) The Company or the Guarantor shall provide the Trustee with the official acknowledgment of the relevant taxing authority (or, if such acknowledgement is not available, a certified copy thereof, or other available documentation) evidencing any payment of taxes in respect of which the Company or the Guarantor has paid any Additional Amounts. Copies of such documentation shall be made available to the Holders or beneficial owners of the Notes or the Paying Agents, as applicable, upon request therefor.

(g) The Company or the Guarantor shall:

(i) at least 10 Business Days prior to the first Payment Date (and at least 10 Business Days prior to each succeeding Payment Date or any Redemption Date or Maturity date if there has been any change with respect to the matters set forth in the below-mentioned Officers’ Certificate), deliver to the Trustee and each Paying Agent an Officers’ Certificate (A) specifying the amount, if any, of taxes described in this Section 4.7 (the “Relevant Withholding Taxes”) required to be deducted or withheld on the payment of principal of or interest (including Additional Interest, if any) on the Notes to Holders and the Additional Amounts, if any, due to Holders in connection with such payment, and (B) certifying that the Company or the Guarantor shall pay such deduction or withholding;

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(ii) prior to the due date for the payment thereof, pay any such Relevant Withholding Taxes, together with any penalties or interest applicable thereto;

(iii) within 15 days after paying such Relevant Withholding Taxes, deliver to the Trustee and each Paying Agent evidence of such payment and of the remittance thereof to the relevant taxing or other authority as described in this Section 4.7; and

(iv) pay any Additional Amounts due to Holders on any Interest Payment Date, Redemption Date or date of Maturity to the Trustee in accordance with the provisions of this Section 4.7 and Section 2.4.

(h) The Company and the Guarantor shall, jointly and severally, indemnify the Trustee and each Paying Agent for, and hold each harmless against, any loss, liability or expense reasonably incurred without negligence or willful misconduct on such Person’s part, arising out of or in connection with actions taken or omitted by any of them in reliance on any Officers’ Certificate furnished pursuant to this Section 4.7 or the failure of the Trustee or any Paying Agent for any reason (other than its own negligence or willful misconduct) to receive on a timely basis any such Officers’ Certificate or any information or documentation requested by it or otherwise required by applicable law or regulations to be obtained, furnished or filed in respect of such Relevant Withholding Taxes. The Company or the Guarantor, as the case may be, shall make available to any Holder or beneficial owner of the Notes requesting the same, evidence that the applicable Relevant Withholding Taxes have been paid.

(i) Any Officers’ Certificate required by this Section 4.7 to be provided to the Trustee and each Paying Agent shall be deemed to be duly provided if sent by facsimile to the Trustee and each Paying Agent.

Section 4.8 Reporting Requirements.

(a) The Company (unless at the time no Outstanding Notes have been registered with the SEC pursuant to the Securities Act) and the Guarantor shall file with the Trustee and the SEC, and transmit to Holders, such information, documents and other reports, and such summaries thereof, as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant to such Act.

(b) Notwithstanding that the Guarantor may not be required to remain subject to the reporting requirements of Sections 12, 13 and 15(d) of the Exchange Act, the Guarantor will continue to file with the SEC and provide the Trustee with such annual reports and such information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which are specified in Sections 12, 13 and 15(d) of the Exchange Act.

(c) In addition, the Company shall deliver to the Trustee, as soon as possible and in any event within 30 days after the Company becomes aware of the occurrence of any Default or Event of Default, an Officers’ Certificate describing such Default or Event of Default, its status and the action which the Company proposes to take with respect thereto.

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(d) The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company, an Officers’ Certificate complying with the requirements of Section 314 of the Trust Indenture Act and stating whether or not the signers know of any Default or Event of Default. If they do know of such Default or Event of Default, the certificate shall describe the Default or Event of Default, its status and the action which the Company proposes to take with respect thereto. One of the signatures to such Officers’ Certificate shall be the principal executive, financial, or accounting officer of the Company.

(e) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such reports, information and documents shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s and the Guarantor’s compliance with any of its covenants in this Indenture (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates), other than with respect to any Default or Event of Default of which the Trustee receives written notice pursuant to Section 4.8(c) or (d).

Section 4.9 Available Information.

The Company shall take all action necessary to provide information to permit resales of the Notes pursuant to Rule 144A, including furnishing to any Holder of a Note or owner of a beneficial interest in a Global Note, or to any prospective purchaser designated by such a Holder or beneficial owner, upon request to such Holder or beneficial owner, financial and other information required to be delivered under paragraph (d)(4) of Rule 144A (as amended from time to time and including any successor provision) unless, at the time of such request, the Guarantor is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act or is exempt from such requirements pursuant to Rule 12g3-2(b) under the Exchange Act (as amended from time to time and including any successor provision).

Section 4.10 Limitation on Liens.

The Guarantor will not create, incur, issue or assume any Indebtedness secured by any Lien, other than a Permitted Lien, without, at the same time or prior thereto, securing the Notes equally and ratably with or prior to such secured Indebtedness.

Section 4.11 Additional Limitations on the Company.

For so long as any of the Notes is outstanding, the Company shall not:

(i) engage in any business or enter into, or be a party to, any transaction or agreement except for:

(A) the issuance, sale and redemption of the Notes (including any Additional Notes) and any other Indebtedness (including syndicated loans) and any activities incidentally related thereto;

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(B) the incurrence of Indebtedness to make inter-company loans to the Guarantor and its Subsidiaries to finance the acquisition of supply materials by the Guarantor and its Subsidiaries, and activities reasonably related thereto;

(C) any cash management measures and short-term investments;

(D) entering into Hedging Agreements relating to the Notes or other Indebtedness;

(E) any transaction in the ordinary course of business of the Company; and

(F) any other transaction required by applicable law;

(ii) enter into any consolidation, merger, amalgamation, joint venture, or other form of combination with any Person, or selling, leasing, conveying or otherwise disposing of any of its assets or receivables, except, in each case, with or to the Guarantor or a Subsidiary and which is as otherwise permitted pursuant to Section 5.1; provided, however, if the Company enters into such a transaction with a Subsidiary, and it results in the Successor Corporation becoming incorporated in or considered to be resident in a jurisdiction other than the Cayman Islands, then such transaction will only be permitted if such transaction will not result in the payment of Additional Amounts pursuant to Section 4.7 (as provided by the provisions of Section 5.1(iv)) in connection with the next payment in respect of the Notes;

(iii) enter into any transaction which would cause it to be deemed an “investment company” as defined in the U.S. Investment Company Act of 1940, as amended; and

(iv) create any Lien in favor of any Person other than (A) created over funds reserved for the payment of principal, interest (including Additional Interest, if any) and premium, if any, due in respect of Notes or (b) any Lien incurred in connection with the entering into any Hedging Agreement permitted under clause (i)(D) above.

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ARTICLE V

CONSOLIDATION, MERGER, CONVEYANCE,

TRANSFER OR LEASE

Section 5.1 Company and Guarantor May Consolidate, etc. Only on Certain Terms.

Neither the Company or the Guarantor shall, without the consent of the Holders of a majority in aggregate principal amount of the Outstanding Notes in accordance with this Indenture, consolidate with or merge into any other corporation or convey or transfer all or substantially all of its properties or assets to any other Person, unless:

(i) the Person formed by such consolidation or into which the Company or Guarantor is merged or the Person which acquires by conveyance or transfer all or substantially all of the properties or assets of the Company or the Guarantor (the “Successor Corporation”) shall expressly assume, by way of a supplement to this Indenture, the due and punctual repayment of the principal and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, all the Notes and all other obligations of the Company or the Guarantor, as applicable, under the Indenture and the Notes and, in the event that such consolidation, merger, conveyance or transfer involves the Company, the Guarantor will expressly reaffirm its obligations under the Indenture and the Guarantee;

(ii) immediately after giving effect to such transaction, no Event of Default with respect to the Notes shall have occurred and be continuing;

(iii) the Company and the Guarantor shall have delivered to the Trustee (a) a certificate signed by two executive officers of the Company and two executive officers of the Guarantor stating that such consolidation, merger, conveyance or transfer complies with this Section 5.1 and that all conditions precedent herein provided, which relate to such transaction, have been complied with and (b) an Opinion of Counsel of recognized standing stating that such consolidation, merger, conveyance or transfer complies with this Section 5.1 and that all conditions provided, which relate to such transaction and any supplemental indenture, have been complied with;

(iv) the Successor Corporation shall expressly agree, by way of a supplement to this indenture or otherwise, to withhold against any tax, duty, assessment or other governmental charge thereafter imposed or levied by Brazil, the Cayman Islands, a Successor Jurisdiction or any political subdivision or authority thereof or therein having power to tax as a consequence of such consolidation, merger, conveyance or transfer with respect to the payment of principal of or interest (including Additional Interest, if any) on the Notes, and to pay such Additional Amounts as may be necessary to ensure that the net amounts receivable by Holders after any such withholding or deduction shall equal the respective amounts of principal, premium (if any) and interest (including Additional Interest, if any) which would have been receivable in respect of the Notes in the absence of such consolidation, merger, conveyance or transfer, subject to the exceptions and limitations contained in Section 4.7 in relation to the Successor Jurisdiction; and

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(v) in the case of a consolidation or merger of the Company or conveyance or transfer of all or substantially all of the Company’s properties or assets, such transaction is permitted by Section 4.11(ii).

The Trustee shall accept such Officers’ Certificate and Opinion of Counsel as sufficient evidence of the satisfaction of the conditions precedent set forth in this Section 5.1, in which event it shall be conclusive and binding on the Holders.

Section 5.2 Successor Substituted.

Upon any consolidation, merger, conveyance or transfer in accordance with Section 5.1, the Successor Corporation shall succeed to, and be substituted for, and may exercise every right and power of, the Company or Guarantor, as applicable, under the Notes, this Indenture and, if applicable, the Guarantee with the same effect as if the Successor Corporation had been named as the issuer or the guarantor of the Notes under this Indenture and, if applicable, the Guarantee. In the event that a Successor Corporation assumes all the obligations of its predecessor under this Indenture, the Notes and, if applicable, the Guarantee, the predecessor shall be released from those obligations; provided that in the case of a transfer by lease, the predecessor shall not be released from the payment of principal and interest (including Additional Interest, if any), on and any Additional Amounts due with respect to, the Notes.

No Successor Corporation shall have the right to redeem the Notes, pursuant to Article III unless the Company or the Guarantor, as applicable, would have been entitled to redeem the Notes in similar circumstances.

Section 5.3 Notes to Be Secured in Certain Events.

If, upon any such consolidation of the Guarantor with or merger of the Guarantor into any other corporation, or upon any conveyance, lease or transfer of the property of the Guarantor substantially as an entirety to any other Person, any property or assets of the Guarantor would thereupon become subject to any Lien, then unless such Lien could be created pursuant to Section 4.10 without equally and ratably securing the Notes, the Guarantor, prior to or simultaneously with such consolidation, merger, conveyance, lease or transfer, shall as to such property or assets, secure the Outstanding Notes (together with, if the Guarantor so determines, any other Indebtedness of the Guarantor now existing or hereinafter created which is not subordinate in right of payment to the Notes) equally and ratably with or prior to the Indebtedness which upon such consolidation, merger, conveyance, lease or transfer is to become secured as to such property or assets by such Lien, or shall cause such Notes to be so secured.

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ARTICLE VI

EVENTS OF DEFAULT AND REMEDIES

Section 6.1 Events of Default.

The term “Event of Default” means, when used herein, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to, or as a result of any failure to obtain, any authorization, order, rule, regulation, judgment or decree of any governmental or administrative body or court):

(1) The Company or the Guarantor defaults in any payment of interest (including any Additional Interest, if any) on, and any Additional Amounts due with respect to, any Note when the same becomes due and payable, and such Default continues for a period of 30 calendar days;

(2) The Company or the Guarantor defaults in the payment of the principal (including premium, if any, and any Additional Amounts) of any Note when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration or otherwise;

(3) The Company or the Guarantor fails to comply with any of its covenants or agreements in the Notes or this Indenture (other than those referred to in clauses (1) and (2) of this Section 6.1), and such failure continues for 60 calendar days after the notice specified below;

(4) The maturity of any Indebtedness of the Company, the Guarantor or any Significant Subsidiary in a total aggregate principal amount of US$50,000,000 (or the equivalent thereof at the time of determination) or more is accelerated in accordance with the terms of such Indebtedness, or the failure by the Company, the Guarantor or any Significant Subsidiary to make payment at maturity of such Indebtedness (after giving effect to any grace period provided in the terms of such Indebtedness), it being understood that prepayment or redemption by the Company, the Guarantor or any Significant Subsidiary of any Indebtedness is not an acceleration for this purpose;

(5) One or more final judgments or decrees for the payment of money in excess of US$50,000,000 (or the equivalent thereof at the time of determination) in the aggregate are rendered against the Company, the Guarantor or any Significant Subsidiary and are not paid (whether in full or in installments in accordance with the terms of the judgment) or otherwise discharged and, in the case of each such judgment or decree, either (a) an enforcement proceeding has been commenced by any creditor upon such judgment or decree and is not dismissed within 60 days following commencement of such enforcement proceedings or (b) there is a period of 60 days following such judgment during which such judgment or decree is not discharged, waived or the execution thereof stayed;

(6) An Illegality Event shall have occurred and be continuing;

(7) A final judgment or judgments (not subject to appeal) determines the guarantees of the Notes to be unenforceable or invalid, such guarantees cease for any reason to be valid and binding or enforceable against the Guarantor, or any person acting on its behalf denies or disaffirms its obligations under such guarantees; or

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(8) (a) The Company, the Guarantor or any Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law:

(i) commences a voluntary case or files a request or petition for a writ of execution to initiate bankruptcy proceedings or have itself adjudicated as bankrupt;

(ii) applies for or consents to the entry of an order for relief against it in an involuntary case;

(iii) applies for or consents to the appointment of a Custodian of it or for any substantial part of its property;

(iv) makes a general assignment for the benefit of its creditors;

(v) proposes or agrees to an accord or composition in bankruptcy between itself and its creditors; or

(vi) files for a reorganization of its debts (judicial or extrajudicial recovery); or

(b) A court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(i) is for relief against the Company, the Guarantor or any Significant Subsidiary in an involuntary case;

(ii) appoints a Custodian of the Company, the Guarantor or any Significant Subsidiary or for any substantial part of the property of the Company, the Guarantor or any Significant Subsidiary;

(iii) orders the winding up or liquidation of the Company, the Guarantor or any Significant Subsidiary;

(iv) adjudicates the Company, the Guarantor or a Significant Subsidiary as bankrupt or insolvent;

(v) ratifies an accord or composition in bankruptcy between the Company, the Guarantor or a Significant Subsidiary and the respective creditors thereof; or

(vi) grants a judicial or extrajudicial recovery to the Company, the Guarantor or a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 30 days.

A Default under clause (3) of this Section 6.1 is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Outstanding Notes notify the Guarantor of the Default and the Guarantor does not cure, or cause to be cured such Default within the time specified after receipt of such notice.

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For purposes of the cross-acceleration provision described in (4), above, “Indebtedness” shall not include any payment made by the Guarantor on behalf of an Affiliate, upon any Indebtedness of such Affiliate becoming immediately due and payable as a result of a default by such Affiliate, pursuant to a guarantee or similar instrument provided by the Guarantor in connection with such Indebtedness, provided that such payment made by the Guarantor is made within five business days of notice being provided to the Guarantor that payment is due under such guarantee or similar instrument.

Section 6.2 Acceleration of Maturity, Rescission and Amendment.

If an Event of Default (other than an Event of Default specified in clause (8) of Section 6.1) occurs and is continuing, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Notes may declare all unpaid principal of and accrued interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, all Notes to be due and payable immediately, by a notice in writing to the Company or the Guarantor, as the case may be (and to the Trustee, if the notice is given by the Holders), stating that such notice is an “acceleration notice,” and upon any such declaration such amounts shall become due and payable immediately. If an Event of Default specified in clause (8) of Section 6.1 occurs and is continuing, then the principal of and accrued interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, all Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

At any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this Article, the Holders of a majority in principal amount of the Notes by written notice to the Company and the Trustee may rescind or annul such declaration if:

(i) the Company has paid or deposited with the Trustee a sum sufficient to pay (a) all overdue interest (including Additional Interest, if any) on Outstanding Notes, (b) all unpaid principal of the Notes that has become due otherwise than by such declaration of acceleration, (c) to the extent that payment of such interest on the Notes is lawful, interest on such overdue interest (including Additional Interest, if any), as provided herein (d) any Additional Amounts due with respect to the Notes and (e) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel; and

(ii) all Events of Default have been cured or waived as provided in Section 6.13 other than the nonpayment of principal that has become due solely because of acceleration.

No such rescission shall affect any subsequent Default or Event of Default or impair any right consequent thereto.

Section 6.3 Collection Suit by Trustee.

If an Event of Default specified in Section 6.1(1) or Section 6.1(2) occurs, the Trustee, in its own name as trustee of an express trust, (i) may institute a judicial proceeding for

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the collection of the whole amount then due and payable on such Notes for principal and interest (including Additional Interest, if any), interest on any overdue principal and, to the extent that payment of such interest shall be legally enforceable, upon any overdue installment of interest (including Additional Interest, if any), at the rate borne by the Notes, any Additional Amounts due with respect to the Notes and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, (ii) may prosecute such proceeding to judgment or final decree and (iii) may enforce the same against the Company or any other obligor upon the Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Notes, wherever situated.

If an Event of Default occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders by any available proceeding at law or in equity, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.

Section 6.4 Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes or to enforce the performance of any provision of the Notes or this Indenture.

Section 6.5 Trustee May Enforce Claims Without Possession of Notes.

All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name and as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, be for the ratable benefit of the Holders of the Notes in respect of which such judgment has been recovered.

Section 6.6 Application of Money Collected.

Any money collected by the Trustee pursuant to this Article VI shall be applied in the following order:

FIRST: to the Trustee for amounts due to it hereunder (including, without limitation, under Section 7.6);

SECOND: to Holders for amounts due and unpaid on the Notes for principal and interest (including Additional Interest, if any), and any Additional Amounts due with respect thereto, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest (including Additional Interest, if any), and any Additional Amounts due with respect thereto, respectively; and

THIRD: to the Company.

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The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 6.6. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid.

Section 6.7 Limitation on Suits.

A Holder may not pursue any remedy with respect to this Indenture or the Notes unless:

(i) the Holder has previously given to the Trustee written notice stating that an Event of Default has occurred and is continuing;

(ii) the Holders of at least 25% in principal amount of the Notes have made a written request to the Trustee to pursue the remedy in respect of such Event of Default;

(iii) such Holder or Holders has offered and provided to the Trustee security or indemnity reasonably satisfactory to the Trustee against any cost, loss, liability or expense to be incurred in compliance with such request;

(iv) the Trustee does not comply with the request within 60 days after receipt of the request and the offer and provision of security or indemnity; and

(v) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in principal amount of the Notes outstanding.

A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder.

Section 6.8 Rights of Holders to Receive Principal and Interest.

Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes held by such Holder, on or after the respective Payment Dates expressed in the Notes, or to institute suit for the enforcement of any such payment on or after such respective dates, shall not be impaired of affected without the consent of such Holder.

Section 6.9 Restoration of Rights and Remedies.

If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or to such Holder, then and in every such case, subject to any determination in such proceeding, the Company, the Trustee and the Holders

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shall be restored severally and respectively to their former positions hereunder and thereafter all rights and remedies of the Trustee and the Holders shall continue as though no such proceeding had been instituted.

Section 6.10 Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due to the trustee hereunder) and the Holders allowed in any judicial proceedings relative to the Company or the Guarantor, their respective creditors or their respective properties and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.6. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.11 Delay or Omission Not Waiver.

No delay or omission of the Trustee or of any Holder of any Note to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VI or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be.

Section 6.12 Control by Holders.

The Holders of a majority in principal amount of the Outstanding Notes may direct in writing the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee shall be under no obligation to exercise any of the rights or powers under this Indenture at the request or direction of the Holders if such request or direction conflicts with any law or with this Indenture or, subject to Section 7.1, if the Trustee determines it is unduly prejudicial to the rights of other Holders (it being understood that, subject to Sections 7.1 and 7.2, the Trustee shall have no duty to ascertain whether or not such actions or forbearance are unduly prejudicial to such Holders) or would involve the Trustee in personal liability or expense; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such request or direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all costs, losses, liabilities and expenses caused by taking or not taking such action.

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Section 6.13 Waiver of Past Defaults and Events of Default.

Subject to Section 6.2, the Holders of a majority in principal amount of the Outstanding Notes by notice to the Trustee may waive an existing Default or Event of Default and its consequences except (i) a Default or Event of Default in the payment of the principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, a Note or (ii) a Default or Event of Default in respect of a provision that under Section 9.2 cannot be amended without the consent of each Holder affected. When a Default or Event of Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right.

Section 6.14 Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.8, no right or remedy herein conferred upon or reserved to the Trustee or to the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 6.15 Waiver of Stay or Extension Laws.

Each of the Company and the Guarantor covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture or the Notes; and each of the Company and the Guarantor (to the extent that it may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE VII

TRUSTEE AND PRINCIPAL PAYING AGENT

Section 7.1 Duties of Trustee and Principal Paying Agent.

(a) If an Event of Default has occurred and is continuing and a Responsible Officer has actual knowledge thereof, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person’s own affairs.

(b) Except during the continuance of an Event of Default, (i) the Trustee and Principal Paying Agent undertake to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into

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this Indenture against the Trustee or the Principal Paying Agent; and (ii) in the absence of negligence or willful misconduct on the part of the Trustee or the Principal Paying Agent, the Trustee or the Principal Paying Agent may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee or the Principal Paying Agent and conforming to the requirements of this Indenture. However, in the case of any certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee or the Principal Paying Agent, the Trustee and the Principal Paying Agent shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of the mathematical calculations or other facts stated therein).

(c) The Trustee may not be relieved from liability for its own negligence or willful misconduct, except that:

(i) this Section 7.1(c) does not limit the effect of Section 7.1(b);

(ii) the Trustee and the Principal Paying Agent shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Trustee or the Principal Paying Agent was grossly negligent in ascertaining the pertinent facts; and

(iii) the Trustee and the Principal Paying Agent shall not be liable with respect to any action it takes or omits to take in accordance with a direction received by it pursuant to Section 6.7 or exercising any trust or power conferred upon the Trustee or the Principal Paying Agent, under this Indenture.

(d) The Trustee and the Principal Paying Agent shall not be liable for interest on any money received by it except as the Trustee and the Principal Paying Agent may agree in writing with the Company.

(e) Money held in trust by the Trustee or any Paying Agent need not be segregated from other funds except to the extent required by law.

(f) No provision of this Indenture shall require the Trustee or the Principal Paying Agent to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds and/or adequate indemnity against such risk or liability is not satisfactorily assured to it.

(g) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee and the Principal Paying Agent shall be subject to the provisions of this Section 7.1.

Section 7.2 Rights of Trustee.

(a) The Trustee and the Principal Paying Agent may rely upon, and shall be protected in acting or refraining from acting based upon, any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee and the Principal Paying Agent need not investigate any fact or matter stated in any such document.

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(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate, the written advice of a qualified tax expert or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers’ Certificate, the qualified tax expert’s written advice or Opinion of Counsel.

(c) The Trustee may act through agents and shall not be responsible for the willful misconduct or negligence of any agent appointed with due care.

(d) Any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by an Officers’ Certificate of the Company (unless other evidence in respect thereof be herein specifically prescribed); and any resolution of the Board of Directors of the Company may be evidenced to the Trustee or the Principal Paying Agent by copies thereof certified by the Secretary or an Assistant Secretary (or equivalent officer) of the Company.

(e) The Trustee and the Principal Paying Agent shall be under no obligation to exercise any of the trusts or powers vested in it by this Indenture at the request, order or direction of any of the Holders pursuant to the provisions of this Indenture, unless such Holders shall have offered to the Trustee or the Principal Paying Agent security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities that might be incurred thereby.

(f) The Trustee and the Principal Paying Agent shall not be liable for any action taken or omitted by it in good faith and believed by it to be authorized or within the discretion, rights or powers conferred upon it by this Indenture.

(g) The Trustee and the Principal Paying Agent shall not be liable for any action they take or omit to take in good faith which they believe to be authorized or within their rights or powers; provided that the conduct of the Trustee or the Principal Paying Agent does not constitute willful misconduct or negligence.

(h) The Trustee and the Principal Paying Agent may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel.

(i) The Trustee and the Principal Paying Agent shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document unless requested in writing by the Holders of not less than a majority in aggregate principal amount of the Notes Outstanding; provided that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not satisfactorily assured to the Trustee by the security afforded to it by the terms of this Indenture,

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the Trustee may require from the Holders indemnity satisfactory to the Trustee against such expenses or liabilities as a condition to proceeding; the reasonable expenses of every such investigation shall be paid by the Company or, if paid by the Trustee, shall be reimbursed by the Company upon demand.

(j) Neither the Trustee nor any Paying Agent shall be required to invest, or shall be under any liability for interest, on any moneys at any time received by it pursuant to any of the provisions of this Indenture or the Notes except as the Trustee or any Paying Agent may otherwise agree with the Company. Such moneys need not be segregated from other funds except to the extent required by mandatory provisions of law.

(k) In no event shall the Trustee or Principal Paying Agent be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits), even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action).

(l) The permissive rights of the Trustee enumerated herein shall not be construed as duties of the Trustee.

(m) The Trustee shall not be deemed to have notice of any Default or Event of Default unless written notice of any event which is in fact such a Default is received by a Responsible Officer of the Trustee at the Corporate Trust Office of the Trustee, and such notice references the Notes and this Indenture.

(n) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder.

(o) The Trustee may request that the Company or the Guarantor deliver an Officers’ Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers’ Certificate may be signed by any person authorized to sign an Officers’ Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services (it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances).

Section 7.3 Individual Rights of Trustee.

The Trustee and any Paying Agent, Registrar or co-registrar or any other agent of the Company or of the Trustee, in its individual or any other capacity, may become the owner or

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pledgee of Notes and may otherwise deal with the Company or the Guarantor or their respective Affiliates with the same rights it would have if it were not Trustee, Paying Agent, Registrar or such other agent.

Section 7.4 Trustee’s Disclaimer.

The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes, and it shall not be responsible for any statement of the Company or the Guarantor in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee’s certificate of authentication.

Section 7.5 Notice of Defaults and Events of Default.

If a Default or Event of Default occurs and is continuing, and if it is known to the Responsible Officer, the Trustee shall mail to each Holder notice of the Default or Event of Default within 90 days after a Responsible Officer receives written notification of such Default or Event of Default. Except in the case of a Default or Event of Default in payment of principal of or interest (including Additional Interest, if any) on, or any Additional Amounts due with respect to, any Note, the Trustee may withhold the notice and shall be protected from withholding the notice if and so long as a committee of its Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interests of Holders. For all purposes of this Indenture and the Notes, the Trustee shall not be deemed to have knowledge of a Default or Event of Default unless (a) a Responsible Officer of the Trustee has actual knowledge thereof or (b) written notice of such Default or Event of Default has been given to the Trustee by the Guarantor, the Company or any Holder.

Section 7.6 Compensation and Indemnity.

The Company agrees to pay to the Trustee and the Principal Paying Agent from time to time such compensation as shall be agreed upon in writing for its services. The Trustee’s compensation shall not be limited by any law regarding compensation of a trustee of an express trust. The Company agrees to reimburse promptly the Trustee and the Principal Paying Agent upon request for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee’s and the Principal Paying Agent’s agents, counsel, accountants and experts. Payments of any such expenses by the Company to the Trustee or the Principal Paying Agent, as the case may be, shall be made free and clear of and without withholding or deduction for or on account of any present or future taxes, duties, assessments, fees or other governmental charges of whatever nature (and any fines, penalties or interest related thereto) imposed or levied by or on behalf of Brazil or the Cayman Islands or any political subdivision or authority thereof or therein having power to tax, unless such withholding or deduction is required by law. In that event, the Company shall pay to the Trustee or the Principal Paying Agent, as the case may be, such additional amounts as may be necessary in order that every net payment made by the Company to the Trustee and Principal Paying Agent, as the case may be, after deducting or withholding for or on account of any present or future tax, penalty, fine, duty, assessment or other governmental charge imposed upon

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or as a result of such payment by Brazil or the Cayman Islands or any political subdivision or taxing authority thereof or therein shall not be less than the amount then due and payable to the Trustee or the Principal Paying Agent, as the case may be; provided, however, that such additional amounts will not be paid on account of any taxes or other charges deducted or withheld by reason of (i) the Trustee or the Principal Paying Agent, as the case may be, having any present or former connection with the jurisdiction imposing such taxes or other charges other than solely as a result of the execution and delivery of, or performance of its obligations under, this Indenture or (ii) the failure by the Trustee or the Principal Paying Agent, as the case may be, to comply with a timely request to provide certification, information, documents or other evidence concerning the nationality, residence, identity or connection with the relevant taxing jurisdiction of the Trustee or the Principal Paying Agent, as the case may be, which is required by a statute, treaty, regulation or administrative practice of the jurisdiction imposing such taxes or other charges as a precondition to exemption from all or part of such taxes or other charges. The Company and the Guarantor, jointly and severally, shall indemnify each of the Trustee and the Principal Paying Agent against any and all loss, liability or expense (including reasonable attorneys’ fees and expenses) incurred by it without negligence or willful misconduct on its part arising out of and in connection with the administration of this Indenture and the performance of its respective duties hereunder, including, without limitation, the costs and expenses of defending itself against any claim or liability and of complying with any process served upon it or any of its officers in connection with the exercise or performance of any of its powers or duties under this Indenture. The Trustee shall notify the Company or the Guarantor, as the case may be, promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company or the Guarantor shall not relieve the Company or the Guarantor of its obligations hereunder. The Company or the Guarantor, as the case may be, shall defend the claim and the Trustee may have separate counsel and the Company or the Guarantor, as the case may be, shall pay the reasonable fees and expenses of such counsel.

To secure the payment obligations of the Company and the Guarantor in this Section 7.6, the Trustee shall have a lien prior to the Notes on all money or property held or collected by the Trustee or the Principal Paying Agent, except that held in trust to pay principal of and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, particular Notes.

The obligations of the Company and the Guarantor pursuant to this Section 7.6 shall survive the resignation or removal of the Trustee and satisfaction and discharge of this Indenture. When the Trustee or the Principal Paying Agent incurs expenses after the occurrence of a Default or Event of Default specified in Section 6.1(7), the expenses are intended to constitute expenses of administration under the Bankruptcy Law.

Section 7.7 Replacement of Trustee.

The Trustee may resign at any time by so notifying the Company in writing. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee in writing and may appoint a successor Trustee. The Company shall remove the Trustee if:

(i) the Trustee fails to comply with Section 7.9;

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(ii) the Trustee is adjudged a bankrupt or insolvent;

(iii) a receiver or other public officer takes charge of the Trustee or its property; or

(iv) the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the retiring Trustee) the Company shall promptly appoint a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.6.

If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, at the expense of the Company, the Company or the Holders of a majority in principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.9, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Notwithstanding the replacement of the Trustee pursuant to this Section 7.7, the Company’s obligation under Section 7.6 shall continue for the benefit of the retiring Trustee.

Section 7.8 Successor Trustee by Merger.

Any corporation or association into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation or association resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation or association to which all or substantially all of the corporate trust business of the Trustee may be sold or otherwise transferred, shall be the successor trustee hereunder; provided that such corporation or association shall be otherwise qualified and eligible under this Article VII and Section 310 of the Trust Indenture Act without any further act.

In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such adopted certificates shall have the full force of all provisions within the Notes or in this Indenture relating to the certificate of the Trustee.

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Section 7.9 Eligibility; Disqualification.

The Trustee hereunder shall at all times be a corporation, bank or trust company organized and doing business under the laws of the United States or any state thereof which (i) is authorized under such laws to exercise corporate trust power, (ii) is subject to supervision or examination by governmental authorities, (iii) shall have at all times a combined capital and surplus of at least US$50,000,000 as set forth in its most recent published annual report of condition and (iv) shall have its Corporate Trust Office in New York City. The Trustee shall at all times be eligible for appointment under, and shall comply with, Section 310 of the Trust Indenture Act. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 7.9, it shall resign immediately in the manner and with the effect specified in Section 7.7.

Section 7.10 Preferential Collection of Claims Against Company.

In the event the Trustee shall be or become a creditor of the Company (or any other obligor upon the Notes, including the Guarantor), the Trustee shall comply with the provisions of Section 311 of the Trust Indenture Act regarding the collection of claims against the Company (or any such other obligor, including the Guarantor).

Section 7.11 Reports by Trustee.

(a) Within sixty (60) days after May 15 of each year commencing with the year 2007, the Trustee shall transmit to Holders such report, dated as of each such May 15, concerning the Trustee and its actions under this Indenture within the preceding 12 months as may be required pursuant to Section 313 of the Trust Indenture Act, at the times and in the manner provided pursuant thereto.

(b) A copy of such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange upon which the Notes are listed and with the SEC, and be delivered to the Company. The Company will notify the Trustee in writing within a reasonable time when the Notes are listed on any stock exchange and when any such listing is discontinued.

ARTICLE VIII

DISCHARGE OF INDENTURE; DEFEASANCE

Section 8.1 Discharge of Liability on Notes.

(a) [Intentionally omitted.]

(b) When (i) the Company or the Guarantor delivers to the Trustee all Outstanding Notes (other than replacement Notes replaced pursuant to Section 2.8) for cancellation or (ii) all Outstanding Notes have become due and payable and the Company or the

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Guarantor irrevocably deposits in trust, for the benefit of the Holders, with the Trustee funds sufficient to pay at maturity all Outstanding Notes and interest (including Additional Interest, if any) thereon, and any Additional Amounts due with respect thereto (other than replacement Notes replaced pursuant to Section 2.8), and if in any such case the Company or the Guarantor pays all other sums payable hereunder by the Company, then this Indenture, and the obligations of the Company and the Guarantor pursuant hereto, shall, subject to Sections 8.1(d) and 8.6, cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company or the Guarantor accompanied by an Officers’ Certificate and an Opinion of Counsel (each stating that all conditions precedent herein provided relating to the satisfaction and discharge of this Indenture have been complied with) and at the cost and expense of the Guarantor.

(c) Subject to Sections 8.1(d), 8.2 and 8.6, the Company and the Guarantor at any time may terminate (i) all their respective obligations under this Indenture, the Notes and the Guarantee (“legal defeasance option”) or (ii) their respective obligations under Sections 4.6, 4.8, 4.9, 4.10, 4.11, 5.1(ii) and 5.3 and the operation of Sections 6.1(1), 6.1(2), 6.1(3), 6.1(4) and 6.1(5) (“covenant defeasance option”). The legal defeasance option may be exercised notwithstanding any prior exercise of the covenant defeasance option.

If the legal defeasance option is exercised, payment of the Notes may not be accelerated because of an Event of Default with respect thereto. If the covenant defeasance option is exercised, payment of the Notes may not be accelerated because of an Event of Default specified in Section 6.1(1), 6.1(2), 6.1(3), 6.1(4) or 6.1(5).

Upon satisfaction of the conditions set forth herein and upon request of the Company, the Trustee shall acknowledge in writing the discharge of the obligations of the Company and the Guarantor hereunder except those specified in Section 8.1(d).

(d) Notwithstanding Sections 8.1(b) and 8.1(c), the Company’s or the Guarantor’s obligations, as the case may be, pursuant to Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 4.7, 7.6, 7.7, 8.5 and 8.6 shall survive until the Notes have been paid in full. Thereafter, the obligations of the Company or the Guarantor, as the case may be, pursuant to Sections 7.6, 7.7, and 8.5 shall survive.

(e) Subject to Section 8.2, in the event that the Company or the Guarantor exercises the legal defeasance option, the Guarantee shall terminate and be of no further force or effect.

Section 8.2 Conditions to Defeasance.

The Company or the Guarantor may exercise the legal defeasance option or the covenant defeasance option only if:

(a) the Company or the Guarantor irrevocably deposits or causes to be deposited with the Trustee as trust funds in trust, specifically pledged as security for, and dedicated solely to, the benefit of the Holders (the “defeasance trust”) pursuant to an irrevocable trust and security agreement in form and substance satisfactory to the Trustee, money or U.S. Government Obligations, or a combination thereof, sufficient for the payment of principal of and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, all the Notes to maturity or redemption, as the case may be;

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(b) the Company or the Guarantor delivers to the Trustee a certificate from an internationally recognized firm of independent accountants expressing their opinion that the payments of principal of and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment and after payment of all federal, state and local taxes or other charges or assessments in respect thereof payable by the Trustee shall provide cash at such times and in such amounts as shall be sufficient to pay principal of and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, all the Notes when due at Maturity or on redemption, as the case may be;

(c) 123 days pass after the deposit is made in accordance with the terms of Section 8.2(a) and during such 123-day period no Default or Event of Default specified in Section 6.1(7) occurs which is continuing at the end of the period;

(d) no Default or Event of Default has occurred and is continuing on the date of such deposit and after giving effect thereto;

(e) the deposit does not constitute a default or event of default under any other agreement binding on the Company or the Guarantor, as the case may be;

(f) the Company or the Guarantor delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is not qualified as, a regulated investment company under the U.S. Investment Company Act of 1940, as amended;

(g) the Company or the Guarantor delivers to the Trustee Opinions of Counsel stating that, under Cayman Islands law and Brazilian law, Holders and beneficial owners of the Notes (other than Cayman Islands persons or Brazilian persons) shall not recognize gain for Cayman Islands or Brazilian tax purposes and payments from the defeasance trust to any such Holder shall not be subject to withholding payments under Cayman Islands or Brazilian law;

(h) in the case of the legal defeasance option, the Company or the Guarantor delivers to the Trustee an Opinion of Counsel stating that (i) the Company or the Guarantor, as the case may be, has received from, or there has been published by, the U.S. Internal Revenue Service a ruling, or (ii) since the date of this Indenture there has been a change in the applicable U.S. federal income tax law, in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders and the beneficial owners of the Notes shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred;

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(i) in the case of the covenant defeasance option, the Company or the Guarantor delivers to the Trustee an Opinion of Counsel to the effect that the Holders and the beneficial owners of the Notes shall not recognize income, gain or loss for U.S. federal income tax purposes as a result of such covenant defeasance and shall be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred;

(j) the Company or the Guarantor delivers to the Trustee an Opinion of Counsel, in form and substance reasonably satisfactory to Trustee, to the effect that, after the passage of 123 days following the deposit, the trust funds shall not be subject to any applicable bankruptcy, insolvency, reorganization or similar law affecting creditors’ rights generally; and

(k) the Company or the Guarantor delivers to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Notes as contemplated by this Article VIII have been complied with.

Before or after a deposit, the Company or the Guarantor may make arrangements satisfactory to the Trustee for the redemption of Notes at a future date in accordance with Article III.

Section 8.3 Application of Trust Money.

The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to Section 8.2. It shall apply the deposited money and the money from U.S. Government Obligations through the Paying Agent or Paying Agents and in accordance with this Indenture to the payment of principal of and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes.

Section 8.4 Repayment to Company.

Upon termination of the trust established pursuant to Section 8.2, the Trustee and each Paying Agent shall promptly pay to the Company or the Guarantor, as the case may be, upon request, any excess cash or U.S. Government Obligations held by them.

Subject to any applicable abandoned property law, the Trustee and each Paying Agent shall pay to the Company, upon request, any monies held by them for the payment of principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes that remains unclaimed for two years after the due date for such payment of principal or interest (including Additional Interest, if any) and any such Additional Amounts, and, thereafter, the Trustee and each Paying Agent, as the case may be, shall not be liable for payment of such amounts hereunder and the Holders shall be entitled, as general creditors, to recover such amounts only from the Company.

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Section 8.5 Indemnity for U.S. Governmental Obligations.

The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations.

Section 8.6 Reinstatement.

If the Trustee or any Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article VIII by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the obligations of the Company or the Guarantor, as the case may be, under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to this Article VIII until such time as the Trustee or such Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article VIII; provided, however, that, if the Company or the Guarantor, as the case may be, has made any payment of principal of or interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, any Notes because of the reinstatement of its obligations, the Company or the Guarantor, as the case may be, shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or such Paying Agent.

ARTICLE IX

AMENDMENTS

Section 9.1 Without Consent of Holders.

The Company and the Guarantor, when authorized by applicable Board Resolutions, and the Trustee may amend or supplement this Indenture or the Notes, without notice to or consent of any Holder for the following purposes:

(i) to cure any ambiguity, omission, defect or inconsistency; provided that such amendment or supplement does not materially and adversely affect the rights of any Holder;

(ii) to evidence the succession of another Person to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor herein and in the Notes;

(iii) to add additional guarantees or any collateral with respect to the Notes;

(iv) to add to the covenants of the Company or the Guarantor for the benefit of the Holders;

(v) to surrender any right herein conferred upon the Company or the Guarantor;

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(vi) to evidence and provide for the acceptance of an appointment by a successor Trustee;

(vii) to comply with any requirements of the SEC in connection with any qualification of this Indenture under the Trust Indenture Act;

(viii) to provide for the issuance of Additional Notes; or

(ix) to make any other change that does not materially and adversely affect the rights of any Holder;

provided that, in the case of clause (i) or (ii) above, the Company has delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate, each stating that such amendment or supplement complies with the provisions of this Section 9.1.

Upon the written request of the Company and the Guarantor, accompanied by applicable Board Resolution authorizing the execution of any supplemental indenture, and upon receipt by the Trustee, in addition to the documents required by Section 12.3, of the documents described in Section 9.5, the Trustee shall join with the Company in the execution of any supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations which may be therein contained, but the Trustee shall not be obligated to enter into any such supplemental indenture which affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.2 With Consent of Holders.

Except as specified in Section 9.1, the Company, when authorized by applicable Board Resolutions, and the Trustee, together, may amend this Indenture, the Notes or the Guarantee with the written consent of the Holders of at least a majority in principal amount of the Outstanding Notes for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or modifying in any manner the rights of the Holders under this Indenture, provided, however, that, without the consent of each Holder affected, an amendment may not:

(i) change the Stated Maturity for any principal or interest of any Note;

(ii) reduce the principal amount, the interest rate, the redemption price for any Note or the principal amount that would be due and payable upon acceleration;

(iii) change the obligation to pay Additional Amounts;

(iv) change the currency for payment of principal of, or interest (including Additional Interest, if any) on, and any Additional Amounts due in respect of, any Note;

(v) change the place of any payment of any Note;

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(vi) impair the right to institute suit for the enforcement of any payment on or with respect to any Note;

(vii) change the terms of payment from, or control over, or release or reduction of any collateral or security interest to secure the payment of principal, interest or premium, if any, under any Note;

(viii) amend or modify any provisions of the Guarantee in a manner that would materially and adversely affect the Holders; or

(ix) make any change in the sections of this Indenture relating to supplemental indentures, waiver with the consent of Holders or waiver of past defaults, except to increase the percentage of Holders required to make a modification or waiver or to provide that certain other provisions of this cannot be modified or waived without the approval of each Holder.

Upon the written request of the Company or the Guarantor, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of the Holders as aforesaid, and upon receipt by the Trustee of the documents described in Section 9.5 hereof, the Trustee shall join with the Company and the Guarantor in the execution of such supplemental indenture but the Trustee shall not be obligated to enter into any such supplemental indenture which affects its own rights, duties or immunities under this Indenture or otherwise.

The Company shall mail to Holders prior written notice of any amendment or waiver proposed to be adopted under this Section 9.2.

It shall not be necessary for the consent of the Holders under this Section 9.2 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section 9.2 becomes effective, the Company shall mail to Holders a notice briefly describing such amendment or waiver. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment or waiver under this Section 9.2.

Section 9.3 Revocation and Effect of Consents and Waivers.

(a) A consent to an amendment or a waiver by a Holder of Notes shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder’s Note or portion of the Note if the Trustee receives the written notice of revocation at least one Business Day prior to the date the amendment or waiver becomes effective. After it becomes effective, an amendment or waiver shall bind every Holder.

(b) The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action

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described above. If a record date is fixed, then notwithstanding Section 9.3(a) those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date.

Section 9.4 Notation on or Exchange of Notes.

If an amendment changes the terms of a Note, the Company may require the Holder to deliver the Note to the Trustee. If so instructed by the Company, the Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Company so determines, the Company in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment.

Section 9.5 Trustee to Sign Amendments.

The Trustee shall sign any amendment authorized pursuant to this Article IX if the amendment, waiver or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. In signing such amendment, waiver or supplement, the Trustee shall be entitled to receive, in addition to the documents required by Section 12.3, and, subject to Section 7.1, shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel, each stating that, and as conclusive evidence that, such amendment, waiver or supplemental indenture is authorized or permitted by this Indenture, that it is not inconsistent herewith, and that it shall be valid and binding upon the Company and the Guarantor in accordance with its terms.

Section 9.6 Payment for Consent.

Neither the Guarantor nor any of its Affiliates shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture, the Notes or the Guarantee unless such consideration is offered to be paid or agreed to be paid to all Holders which so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

ARTICLE X

GUARANTEE

Section 10.1 Unconditional Guarantee.

The Guarantor hereby unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee, and to the Trustee on behalf of such Holder, the full and punctual payment of the principal of and interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, each such Note when and as the same shall become due and payable, whether at the Stated Maturity, by acceleration, purchase or otherwise and all other liabilities of the Company to the Holders and the Trustee, in accordance with the

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terms of such Note and of this Indenture (the “Guarantee”). In case of the failure of the Company punctually to make any such payment, the Guarantor hereby agrees to pay or cause such payment to be made punctually when and as the same shall become due and payable, whether at the Stated Maturity, by acceleration, call for redemption, purchase or otherwise, and as if such payment were made by the Company.

The Guarantor agrees that its obligations hereunder shall be unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any exchange, or any release or amendment or waiver of any term of any guarantee of all or any of the Notes, or any consent to departure from any requirement of any guarantee of all or any of the Notes, the election by the Trustee or any of the Holders in any proceeding under any applicable Bankruptcy Law, the disallowance, under any applicable Bankruptcy Law, of all or any portion of the claims of the Trustee or any of the Holders for payment of any of the Notes (including, without limitation, any interest (including Additional Interest, if any), and any Additional Amounts due with respect thereto, any waiver or consent by the Holder of such Note or by the Trustee with respect to any provisions thereof or of this Indenture or with respect to the provisions of this Article X as they apply to the Guarantor, the obtaining of any judgment against the Company or any action to enforce the same or any other circumstances which might otherwise constitute a legal or equitable discharge or defense of the Guarantor. The Guarantor hereby waives the benefits of diligence, presentment, demand of payment, any requirement that the Trustee or any of the Holders protect, secure, perfect or insure any security interest in or other Lien on any property subject thereto or exhaust any right or take any action against the Company or any other Person, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that its guarantee shall not be discharged in respect of such Note except by complete performance of the obligations contained in such Note and in the Guarantee. The Guarantor hereby agrees that, in the event of a default in payment of principal or interest (including Additional Interest, if any), on and any Additional Amounts due with respect to, such Note, whether at their Stated Maturity, by acceleration, purchase or otherwise, legal proceedings may be instituted by the Trustee on behalf of, or by, the Holder of such Note, subject to the terms and conditions set forth in this Indenture, directly against the Guarantor to enforce its Guarantee without first proceeding against the Company. The Guarantor agrees if, after the occurrence and during the continuance of an Event of Default, the Trustee or any of the Holders are prevented by applicable law from exercising their respective rights to accelerate the maturity of the Notes, to collect interest (including Additional Interest, if any) on, and any Additional Amounts due with respect to, the Notes, or to enforce or exercise any other right or remedy with respect to the Notes, to pay to the Trustee for the account of the Holders, upon demand thereof, the amount that would otherwise have been due and payable had such rights and remedies been permitted to be exercised by the Trustee or any of the Holders.

The Guarantee shall remain in full force and effect and continue to be effective should any petition be filed by or against the Company for liquidation or reorganization, should the Company become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of the Company’s assets, and shall, to the fullest extent permitted by law, continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Notes is, pursuant to applicable law, rescinded

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or reduced in amount, or must otherwise be restored or returned by an obligee on the Notes whether as a “voidable preference”, “fraudulent transfer”, or otherwise, all as though such payment or performance has not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Notes shall, to the fullest extent permitted by law, be reinstated and deemed reduced only by such amount paid and not so rescinded, restored or returned.

Rights of Holders to payment in full under the Notes pursuant to the Guarantee shall be equal in right of payment with all other existing and future unsecured obligations of the Guarantor and senior in right of payment to the Guarantor’s subordinated debt.

Section 10.2 Execution and Delivery of the Guarantee.

The form of Guarantee to be annexed to the Notes is set forth in Exhibit F. The Guarantor shall execute its Guarantee to be annexed to each Note authenticated and delivered by the Trustee.

The Guarantee shall be executed on behalf of the Guarantor by an Officer of the Guarantor. The signature of any Officer on the Guarantee may be manual or facsimile.

A Guarantee bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Guarantor shall bind the Guarantor, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of the Note on which such Guarantee is endorsed or did not hold such offices at the date of such Guarantee.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee endorsed thereon on behalf of the Guarantor. The Guarantor agrees that its Guarantee set forth in Section 10.1 shall remain in full force and effect notwithstanding any failure to endorse a Guarantee on any Note.

Section 10.3 Release of the Guarantor.

(a) Concurrently with any consolidation or merger of the Guarantor as permitted by Section 5.1 hereof, and upon delivery to the Trustee of an Officers’ Certificate and an Opinion of Counsel, and the documents required by Section 12.3, to the effect that such consolidation, merger, sale or conveyance was made in accordance with Section 5.1 hereof, the Trustee shall execute any documents reasonably required in order to evidence the release of the Guarantor from its obligations under the Guarantee and under this Article X.

(b) Concurrently with the legal defeasance of the Notes under Section 8.1 hereof (complying with the conditions set forth in Section 8.2 hereof), the Guarantor shall be released from all of its obligations under the Guarantee and under this Article X.

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ARTICLE XI

MEETINGS OF HOLDERS

Section 11.1 Purposes for Which Meetings May Be Called.

A meeting of Holders may be called at any time and from time to time pursuant to the provisions of this Article XI for any of the following purposes:

(a) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to waive or to consent to the waiving of any Default or Event of Default hereunder and its consequences, or to take any other action authorized to be taken by Holders pursuant to any of the provisions of Article VI;

(b) to remove the Trustee or appoint a successor Trustee pursuant to the provisions of Article VII;

(c) to consent to an amendment, supplement or waiver pursuant to the provisions of Section 9.2; or

(d) to take any other action authorized to be taken by or on behalf of the Holders of any specified aggregate principal amount of the Notes under any other provision of this Indenture, or authorized or permitted by law.

Section 11.2 Manner of Calling Meetings.

The Trustee may at any time call a meeting of Holders to take any action specified in Section 11.1, to be held at such time and at such place in New York City, New York or elsewhere as the Trustee shall determine. Notice of every meeting of Holders, setting forth the time and place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed by the Trustee, first-class postage prepaid, to the Company and to the Holders at their last addresses as they shall appear on the registration books of the Registrar not less than 10 nor more than 60 days prior to the date fixed for a meeting.

Any meeting of Holders shall be valid without notice if the Holders of all Outstanding Notes are present in Person or by proxy, or if notice is waived before or after the meeting by the Holders of all Outstanding Notes, and if the Company and the Trustee are either present by duly authorized representatives or have, before or after the meeting, waived notice.

Section 11.3 Call of Meetings by Company or Holders.

In case at any time the Company, pursuant to a Board Resolution, or the Holders of not less than 10% in aggregate principal amount of the Outstanding Notes shall have requested the Trustee to call a meeting of Holders to take any action specified in Section 11.1, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or the Holders of Notes in the amount above specified may determine the time and place in New York City, New York or elsewhere for such meeting and

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may call such meeting for the purpose of taking such action, by mailing or causing to be mailed notice thereof as provided in Section 11.2, or by causing notice thereof to be published at least once in each of two successive calendar weeks (on any Business Day during such week) in a newspaper or newspapers printed in the English language, customarily published at least five days a week of a general circulation in New York City, New York, the first such publication to be not less than 10 nor more than 60 days prior to the date fixed for the meeting.

Section 11.4 Who May Attend and Vote at Meetings.

To be entitled to vote at any meeting of Holders, a Person shall (i) be a registered Holder of one or more Notes, or (ii) be a Person appointed by an instrument in writing as proxy for the registered Holder or Holders of Notes. The only Persons who shall be entitled to be present or to speak at any meeting of Holders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and the Guarantor and their respective counsel.

Section 11.5 Regulations May Be Made by Trustee; Conduct of the Meeting; Voting Rights; Adjournment.

Notwithstanding any other provision of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any action by or any meeting of Holders, in regard to proof of the holding of Notes and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, and submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think appropriate. Such regulations may fix a record date and time for determining the Holders of record of Notes entitled to vote at such meeting, in which case those and only those Persons who are Holders of Notes at the record date and time so fixed, or their proxies, shall be entitled to vote at such meeting whether or not they shall be such Holders at the time of the meeting.

The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Holders as provided in Section 11.3, in which case the Company or the Holders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by vote of the Holders of a majority in principal amount of the Notes represented at the meeting and entitled to vote.

At any meeting each Holder or proxy shall, subject to the provisions of Section 11.4, be entitled to one vote for each US$1,000 principal amount of Notes held or represented by him or her; provided, however, that no vote shall be cast or counted at any meeting in respect of any Notes challenged as not Outstanding and ruled by the chairman of the meeting to be not Outstanding. The chairman may adjourn any such meeting if he is unable to determine whether any Holder or proxy shall be entitled to vote at such meeting. The chairman of the meeting shall have no right to vote other than by virtue of Notes held by him or instruments in writing as aforesaid duly designating him as the proxy to vote on behalf of other Holders. Any meeting of Holders duly called pursuant to the provisions of Section 11.2 or Section 11.3 may be adjourned from time to time by vote of the Holders of a majority in aggregate principal amount of the Notes represented at the meeting and entitled to vote, and the meeting may be held as so adjourned without further notice.

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Section 11.6 Voting at the Meeting and Record to Be Kept.

The vote upon any resolution submitted to any meeting of Holders shall be by written ballots on which shall be subscribed the signatures of the Holders of Notes or/of their representatives by proxy and the principal amount of the Notes voted by the ballot. The permanent chairman of the meeting shall appoint two inspectors of votes, who shall count all votes cast at the meeting for or against any resolution and shall make and file with the secretary of the meeting their verified written reports in duplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Holders shall be prepared by the secretary of the meeting and there shall be attached to such record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts, setting forth a copy of the notice of the meeting and showing that such notice was mailed as provided in Section 11.2. The record shall be signed and verified by the affidavits of the permanent chairman and the secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

Section 11.7 Exercise of Rights of Trustee or Holders May Not Be Hindered or Delayed by Call of Meeting.

Nothing contained in this Article XI shall be deemed or construed to authorize or permit, by reason of any call of a meeting of Holders or any rights expressly or impliedly conferred hereunder to make such call, any hindrance or delay in the exercise of any right or rights conferred upon or reserved to the Trustee or to the Holders under any of the provisions of this Indenture or of the Notes.

Section 11.8 Procedures Not Exclusive.

The procedures set forth in this Article XI are not exclusive and the rights and obligations of the Company, the Trustee and the Holders under other Articles of this Indenture (including, without limitation, Articles VI, VII, VIII, IX and X) shall in no way be limited by the provisions of this Article XI.

ARTICLE XII

MISCELLANEOUS

Section 12.1 Provisions of Indenture and Notes for the Sole Benefit of Parties and Holders of Notes.

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Nothing in this Indenture, the Notes or the Guarantee, expressed or implied, shall be given to any Person other than the parties hereto and their successors hereunder and the Holders of the Notes any benefit or any legal or equitable right, remedy or claim under this Indenture, the Notes or the Guarantee.

Section 12.2 Notices.

Any request, demand, authorization, direction, notice, consent, waiver or other communication or document provided or permitted by this Indenture to be made upon, given, provided or furnished to, or filed with, any party to this Indenture shall, except as otherwise expressly provided herein, be deemed to have been received only upon actual receipt thereof by prepaid first class mail, courier or telecopier, addressed to the relevant party as follows:

To the Company:

Embraer Overseas Limited

c/o Embraer S.A.

Avenida Brigadeiro Faria Lima, 2.170

12.227-901 São José dos Campos, São Paulo

Brazil

Attention: José Antonio de Almeida Filippo, Executive Vice President—Chief

Financial and Investor Relations Officer

Telephone: 55 12 3927 4404

Telecopy: 55 12 3927 4404

To the Guarantor:

Embraer S.A.

Avenida Brigadeiro Faria Lima, 2.170

12.227-901 São José dos Campos, São Paulo

Brazil

Attention: José Antonio de Almeida Filippo, Executive Vice President—Chief

Financial and Investor Relations Officer

Telephone: 55 12 3927 4404

Telecopy: 55 12 3927 4404

To the Trustee and to the Principal Paying Agent:

The Bank of New York Mellon

101 Barclay Street, Floor 7E

New York, New York 10286

Attention: Corporate Trust - Global Americas

Telephone: 1-212-815-5782

Telecopy: 1-212-815-5603

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Any party by notice to the other parties may designate additional or different addresses for subsequent notices or communications.

The Trustee shall accept electronic transmissions; provided, that (i) the Trustee shall not have any duty or obligation to verify or confirm that the Person sending instructions, directions, reports, notices or other communications or information by electronic transmission is, in fact, a Person authorized to give such instructions, directions, reports, notices or other communications or information on behalf of the party purporting to send such electronic transmission; and the Trustee shall not have any liability for any losses, liabilities, costs or expenses incurred or sustained by any party as a result of such reliance upon or compliance with such instructions, directions, reports, notices or other communications or information and (ii) each other party agrees to assume all risks arising out of the use of electronic methods to submit instructions, directions, reports, notices or other communications or information to the Trustee, including without limitation the risk of the Trustee acting on unauthorized instructions, notices, reports or other communications or information, and the risk of interception and misuse by third parties.

Where this Indenture provides for the giving of notice to Holders, such notice shall be deemed to have been given (i) in the case of Global Notes, when given to the Depositary in accordance with Applicable Procedures; and (ii) in the case of Certificated Notes, upon the mailing of first class mail, postage prepaid, of such notice to Holders of Certificated Notes at their registered addresses as recorded in the Register.

The Company shall also cause all other such publications of such notices as may be required from time to time by applicable Cayman Islands or Brazilian law, including, without limitation, those required under the applicable regulations issued by the CVM.

Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed to a Holder in the manner provided above, it is duly given, whether or not the addressee receives it.

Section 12.3 Officers’ Certificate and Opinion of Counsel as to Conditions Precedent.

Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee:

(i) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.4) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(ii) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 12.4) stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

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Section 12.4 Statements Required in Officers’ Certificate or Opinion of Counsel.

Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(i) a statement that each Person making or rendering such Officers’ Certificate or Opinion of Counsel has read such covenant or condition and the related definitions;

(ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers’ Certificate or Opinion of Counsel are based;

(iii) a statement that, in the opinion of each such Person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(iv) a statement as to whether or not, in the opinion of each such Person, such covenant or condition has been complied with.

Section 12.5 Rules by Trustee, Registrar Paying Agent and Transfer Agents.

The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar, the Paying Agents and the Transfer Agents may make reasonable rules for their functions.

Section 12.6 Communications by Holders With Other Holders.

The rights of Holders to communicate with other Holders with respect to their rights under this Indenture, the Notes or the Guarantee, and the corresponding rights and duties of the Trustee, shall be as provided by Section 312 of the Trust Indenture Act.

Section 12.7 Currency Indemnity.

U.S. Dollars are the sole currency of account and payment for all sums payable by the Company or the Guarantor under or in connection with the Notes, including damages. Any amount received or recovered in a currency other than U.S. Dollars (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Guarantor, the Company or otherwise) by any Holder of a Note in respect of any sum expressed to be due to it from the Company or the Guarantor shall only constitute a discharge of the Company or the Guarantor, as the case may be, to the extent of the U.S. Dollar amount which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that U.S. Dollar amount is less than the U.S. Dollar amount expressed to be due to the recipient under any Note, the Company or the Guarantor, as the case may be, shall indemnify such Holder against any loss sustained by it as a result, and if the amount of U.S. Dollars so purchased is greater than the sum

67

originally due to such Holder, such Holder shall be deemed to have agreed to repay such excess. In any event, the Company or the Guarantor, as the case may be, shall indemnify the recipient against the cost of making any such purchase. For the purposes of this Section 12.7, it shall be sufficient for the Holder of a Note to certify in a satisfactory manner (indicating the sources of information used) that it would have suffered a loss had an actual purchase of U.S. Dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of U.S. Dollars on such date had not been practicable, on the first date on which it would have been practicable, it being required that the need for a change of date be certified in the manner mentioned above). These indemnities constitute a separate and independent obligation from the other obligations of the Company and the Guarantor, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any Holder of a Note and shall continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Note.

Section 12.8 No Recourse Against Others.

No director, officer, employee or shareholder, as such, of the Company, the Guarantor or the Trustee shall have any liability for any obligations of the Company, the Guarantor or the Trustee, respectively, under this Indenture, the Notes or the Guarantee or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Notes.

Section 12.9 Legal Holidays.

In any case where any Interest Payment Date or Redemption Date or at Stated Maturity or Maturity of any Note shall not be a Business Day, then (notwithstanding any other provision of this Indenture or of the Notes) payment of interest or principal (including Additional Interest, if any), and any Additional Amounts due with respect thereto, need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the Interest Payment Date, Redemption Date, or at the Stated Maturity or Maturity; provided that no interest (including Additional Interest, if any) shall accrue for the period from and after such Interest Payment Date, Redemption Date, Stated Maturity or Maturity, as the case may be.

Section 12.10 Governing Law.

THIS INDENTURE, THE NOTES AND THE GUARANTEE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

Section 12.11 Consent to Jurisdiction; Waiver of Immunities.

(a) Each of the parties hereto hereby irrevocably submits to the non-exclusive jurisdiction of any New York state or U.S. federal court sitting in the Borough of Manhattan in New York City with respect to actions brought against it as a defendant in respect of any suit, action or proceeding or arbitral award arising out of or relating to this Indenture, the Notes or the Guarantee or any transaction contemplated hereby or thereby (a “Proceeding”), and irrevocably accepts for itself and in respect of its property, generally and unconditionally, the

68

jurisdiction of the aforesaid courts. Each of the parties hereto irrevocably waives, to the fullest extent it may do so under applicable law, trial by jury and any objection which it may now or hereafter have to the laying of the venue of any such Proceeding brought in any such court and any claim that any such Proceeding brought in any such court has been brought in an inconvenient forum. Each of the Company and the Guarantor irrevocably appoints National Registered Agent, Inc. (the “Process Agent”), with an office at 875 Avenue of the Americas, Suite 501, New York, New York 10001, as its authorized agent to receive on behalf of it and its property service of copies of the summons and complaint and any other process which may be served in any Proceeding. If for any reason such Person shall cease to be such agent for service of process, the Company or the Guarantor, as the case may be, shall forthwith appoint a new agent of recognized standing for service of process in the State of New York and deliver to the Trustee a copy of the new agent’s acceptance of that appointment within 30 days.

(b) Each of the Company and the Guarantor hereby irrevocably appoints the Process Agent as its agent to receive, on behalf of itself and its property, service of copies of the summons and complaint and any other process which may be served in any such suit, action or proceeding brought in such New York state or U.S. federal court sitting in the Borough of Manhattan in New York City. Such service shall be made by delivering by hand a copy of such process to the Company or the Guarantor, as the case may be, in care of the Process Agent at the address specified above. Each of the Company and the Guarantor hereby irrevocably authorizes and directs the Process Agent to accept such service on its behalf. Failure of the Process Agent to give notice to the Company or the Guarantor, as the case may be, or failure of the Company or the Guarantor, as the case may be, to receive notice of such service of process shall not affect in any way the validity of such service on the Process Agent or the Company or the Guarantor. As an alternative method of service, each of the Company and the Guarantor also irrevocably consents to the service of any and all process in any such Proceeding by the delivery by hand of copies of such process to the Company or the Guarantor, as the case may be, at its address specified in Section 12.2 or at any other address previously furnished in writing by the Company or the Guarantor to the Trustee. The Guarantor covenants and agrees that it shall take any and all reasonable action, including the execution and filing of any and all documents, that may be necessary to continue the designation of the Process Agent above in full force and effect during the term of the Notes, and to cause the Process Agent to continue to act as such. The Company covenants and agrees that it shall take any and all reasonable action, including the execution and filing of any and all documents, that may be necessary to continue the designation of the Process Agent above in full force and effect until the Initial Notes are exchanged for the Exchange Notes, and to cause the Process Agent to continue to act as such.

(c) Nothing in this Section 12.11 shall affect the right of any party, including the Trustee, the Principal Paying Agent or any Holder, to serve legal process in any other manner permitted by law or affect the right of any party to bring any action or proceeding against the Company, the Guarantor or any other party or its property in the courts of any other competent jurisdictions.

(d) Each of the Company and the Guarantor irrevocably agrees that, in any proceedings anywhere (whether for an injunction, specific performance or otherwise), no immunity (to the extent that it may at any time exist, whether on the grounds of sovereignty or otherwise) from such proceedings, from attachment (whether in aid of execution, before

69

judgment or otherwise) of its assets or from execution of judgment shall be claimed by it or on its behalf or with respect to its assets, except to the extent required by applicable law, any such immunity being irrevocably waived, to the fullest extent permitted by applicable law. Each of the Company and the Guarantor irrevocably agrees that, where permitted by applicable law, it and its assets are, and shall be, subject to such proceedings, attachment or execution in respect of its obligations under this Indenture, the Notes or the Guarantee.

Section 12.12 Successors and Assigns.

All covenants and agreements of each of the Company and the Guarantor in this Indenture, the Notes and the Guarantee shall bind its respective successors and assigns, whether so expressed or not. All agreements of the Trustee in this Indenture shall bind its successors.

Section 12.13 Multiple Originals.

The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture.

Section 12.14 Qualification of Indenture.

The Company shall qualify this Indenture under the Trust Indenture Act in accordance with the terms and conditions of the Registration Rights Agreement and shall pay all reasonable costs and expenses (including reasonable attorneys’ fees for the Company, the Trustee and the Holders) incurred in connection therewith, including, but not limited to, costs and expenses of qualification of this Indenture and the Notes and printing this Indenture and the Notes. The Trustee shall be entitled to receive from the Company any such Officers’ Certificates, Opinions of Counsel or other documentation as it may reasonably request in connection with any such qualification of this Indenture under the Trust Indenture Act.

Section 12.15 Severability Clause.

In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any term or provision hereof invalid or unenforceable in any respect.

THE PARTIES HERETO EACH HEREBY AND EACH HOLDER OF A NOTE BY ITS ACCEPTANCE THEREOF WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR EACH NOTE GUARANTEE OR ANY TRANSACTION RELATED HERETO OR THERETO TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW.

[Remainder of page intentionally left blank; signature page follows.]

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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above.

EMBRAER OVERSEAS LIMITED
By:	/s/ José Antonio A. Filippo	(*)
	Name: José Antonio A. Filippo
	Title: Director

By:	/s/ Marcio Almeida Libanio	(*)
	Name: Marcio Almeida Libanio
	Title: Director

EMBRAER S.A.
By:	/s/ Frederico P. Fleury Curado	(*)
	Name: Frederico P. Fleury Curado
	Title: President and CEO

By:	/s/ José Antonio A. Filippo	(*)
	Name: José Antonio A. Filippo
	Title: Executive Vice President and CFO

Witnesses:
By:
	Name:
By:
	Name:

(*) Signed in Brazil.

Indenture Signature Page

THE BANK OF NEW YORK MELLON, as Trustee, Registrar, Transfer Agent and Principal Paying Agent
By:	/s/ Michelle Drinkard
	Name: Michelle Drinkard
	Title: Vice President

Indenture Signature Page

STATE OF NEW YORK	)
	) ss:
COUNTY OF NEW YORK	)

On the     day of                     , 2013, before me personally came                    , to me known, who, being by me duly sworn, did depose and say that he is a                    of The Bank of New York Mellon, one of the corporations described in and which executed the foregoing instrument; that he knows the seal of said corporation; that the seal affixed to said instrument is such corporate seal; that it was so affixed by authority of the Board of Directors of said corporation; and that he signed his name thereto by like authority.

[Notarial Seal]

Notary Public

COMMISSION EXPIRES

Indenture Signature Page

EXHIBIT A

FORM OF NOTE

[FACE OF NOTE]

UNLESS THIS GLOBAL NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK LIMITED PURPOSE TRUST COMPANY (“DTC”), TO THE ISSUER NAMED HEREIN (THE “COMPANY”) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

TRANSFERS OF THIS GLOBAL NOTE IN WHOLE SHALL BE LIMITED TO TRANSFERS TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY AND TRANSFERS OF THIS GLOBAL NOTE IN PART SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE AND REFERRED TO ON THE REVERSE HEREOF.

Include if Note is a Restricted Global Note, or a Note issued in exchange therefor, as required under this Indenture: THIS NOTE (AND RELATED GUARANTEE) HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT THIS NOTE OR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO EMBRAER OVERSEAS LIMITED, EMBRAER S.A. OR ANY OF THEIR RESPECTIVE SUBSIDIARIES, (II) SO LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT (“RULE 144A”), TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) IN ACCORDANCE WITH RULE 144A, (III) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR 904 OF REGULATION S UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH OF SUCH CASES IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR OTHER APPLICABLE JURISDICTION. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, REPRESENTS AND AGREES THAT IT SHALL NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO ABOVE.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE ONLY WITH THE CONSENT OF THE ISSUER.

[Include if Note is Regulation S Global Note, or a Note issued in exchange therefor, in accordance with this Indenture: THIS NOTE (AND THE RELATED GUARANTEE) HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY OTHER SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES THAT NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

THE FOREGOING LEGEND MAY BE REMOVED FROM THIS NOTE, SUBJECT TO THE CONSENT OF THE ISSUER, AFTER 40 DAYS BEGINNING ON AND INCLUDING THE LATER OF (I) THE DAY ON WHICH THE NOTES ARE EXCHANGED FOR NOTES OWNED BY PERSONS OTHER THAN DISTRIBUTORS (AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT) AND (II) THE ORIGINAL ISSUE DATE OF THIS NOTE.]

A-2

EMBRAER OVERSEAS LIMITED

US$531,849,000

5.696% Guaranteed Notes due 2023

[RESTRICTED GLOBAL NOTE]

[REGULATION S GLOBAL NOTE]

[CERTIFICATED NOTE]

Representing US$            

5.696% Guaranteed Notes due 2023

Guaranteed by

Embraer S.A.

No. [R-1] [S-1] [X-1]

CUSIP No. [144A: 29081YAD8] [Reg. S: G30376AB6]	Principal Amount
ISIN No. [144A: US29081YAD85] [Reg. S: USG30376AB69]	US$

EMBRAER OVERSEAS LIMITED, a company with limited liability organized under the laws of the Cayman Islands (the “Company,” which term includes any successor corporation under the Indenture referred to on the reverse hereof), for value received, hereby promises to pay to             , or registered assigns, US$            , on September 16, 2023 (the “Principal Payment Date”), upon presentment and surrender of this Note, or on such other date or dates as the then relevant principal sum may become payable in accordance with the provisions hereof and in the Indenture.

Interest on the outstanding principal amount shall be borne at the rate of 5.696% per annum payable semiannually in arrears on each March 16 and September 16 (each such date an “Interest Payment Date”), commencing on March 16, 2014 [first interest payment date relating to any Additional Notes], until payment of said principal amount has been made or duly provided for in full together with such other amounts as may be payable, all subject to and in accordance with the terms and conditions set forth herein and in the Indenture.

Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.

Unless the certificate of authentication herein has been executed by the Trustee or Authenticating Agent by the manual signature of one of its authorized signatories, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed.

Dated:            , 2013	EMBRAER OVERSEAS LIMITED
	By:
		Name:
		Title:
	By:
		Name:
		Title:

A-4

TRUSTEE’S CERTIFICATE OF AUTHENTICATION This is one of the Notes referred to in the within mentioned Indenture.
THE BANK OF NEW YORK MELLON as Trustee
By:
	Authorized Officer

A-5

[FORM OF REVERSE SIDE OF NOTE]

5.696% Guaranteed Notes due 2023

TERMS AND CONDITIONS OF THE NOTES

This Note is one of a duly authorized issue of 5.696% Guaranteed Notes Due 2023 of the Company guaranteed by the Guarantor. The Notes constitute senior unsecured obligations of the Company, initially in an aggregate principal amount of US$531,849,000, and mature at 100% of the principal amount on September 16, 2023.

1. Indenture.

The Notes are, and shall be, issued under an Indenture, dated as of September 16, 2013 (the “Indenture”), among Embraer Overseas Limited, Embraer S.A. and The Bank of New York Mellon, as Trustee, Registrar, Transfer Agent and Principal Paying Agent (the “Trustee”). The terms of the Notes include those stated in the Indenture. The Holders of the Notes shall be entitled to the benefit of, be bound by and be deemed to have notice of, all provisions of the Indenture. Reference is hereby made to the Indenture and all supplemental indentures thereto for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee and the Holders of the Notes and the terms upon which the Notes, are, and are to be, authenticated and delivered. All terms used in this Note that are defined in the Indenture shall have the meanings assigned to them in the Indenture. Copies of the Indenture and each Global Note shall be available for inspection at the offices of the Trustee and each Paying Agent.

The Company may from time to time, without the consent of the Holders of the Notes, create and issue Additional Notes having the same terms and conditions as the Notes in all respects, except for issue date, issue price, the payment of interest accruing prior to the issue date thereof and the first payment of interest thereon after the issue date thereof. Additional Notes issued in this manner shall be consolidated with and shall form a single series with the previously outstanding Notes.

The Note is one of the [Initial]^* [Exchange]^** Notes referred to in the Indenture. The Notes include the Initial Notes issued on the Issue Date, any Additional Notes issued in accordance with Section 2.14 of the Indenture and any Exchange Notes issued in exchange for the Initial Notes or Additional Notes pursuant to the Indenture and the Registration Rights Agreement. The Initial Notes, any Additional Notes and the Exchange Notes are treated as a single class of securities under the Indenture.

The Indenture imposes certain limitations on the creation of Liens by the Guarantor and the Company and consolidation, merger and certain other transactions involving the Guarantor. In addition, the Indenture requires the maintenance of insurance for the Guarantor and its Subsidiaries, the maintenance of the existence of the Guarantor and its Subsidiaries, the payment of certain taxes and claims and reporting requirements applicable to the Guarantor.

^*  Include if Initial Note.

^**  Include if Exchange Note.

A-6

2. Guarantee.

The Guarantor shall unconditionally guarantee, on a senior unsecured basis, the Company’s payment obligations under the Notes and the Indenture. The obligations of the Guarantor under the Guarantee shall rank:

(i) equal in right of payment to all other existing and future senior unsecured debt of the Guarantor subject to statutory preferences under applicable law, including labor and tax claims; and

(ii) senior in right of payment to the Guarantor’s subordinated debt. A Guarantee of the Guarantor is annexed to this Note.

3. Interest.

The Notes bear interest at the rate per annum shown above from [September 16, 2013] [date of issuance of any Additional Notes] or from the most recent Interest Payment Date (as defined below) to which interest has been paid or provided for, payable semiannually in arrears on March 16 and September 16 of each year (each such date, an “Interest Payment Date”), commencing on [March 16, 2014] [first interest payment date relating to any Additional Notes]. Interest on the Notes shall be computed on the basis of a 360-day year of twelve 30-day months.

[In the event that either the exchange offer registered under the Securities Act (the “Exchange Offer”) is not completed or the shelf registration statement (the “Shelf Registration Statement”), if required by the Registration Rights Agreement, dated as of September 16, 2013, among the Company, the Guarantor and the Initial Purchasers (the “Registration Rights Agreement”), is not declared effective by the date that is 270 days after the Issue Date (the “Target Registration Date”), the interest rate on the Securities will be increased by (A) 0.25% per annum for the first 90-day period immediately following the Target Registration Date and (B) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until Exchange Offer is completed or the Shelf Registration Statement, if required by the Registration Rights Agreement, is declared effective by the SEC, as the case may be, or until the Securities become freely tradable under the Securities Act, up to a maximum of 0.5% per annum of additional interest. In the event the Company receives a request pursuant to Section 2(b)(iii) of the Registration Rights Agreement (a “Shelf Request”), and the Shelf Registration Statement required to be filed thereby is not declared effective by the later of (x) the date that is 150 days after the Closing Date or (y) 90 days after the delivery of such Shelf Request (such later date, the “Shelf Additional Interest Date”), then the interest rate on the Securities will be increased by (1) 0.25% per annum for the first 90-days period immediately following the Shelf Additional Interest Date and (2) and additional 0.25% per annum with respect to each subsequent 90-day period, in each case until the Shelf Registration Statement is declared effective, up to a maximum of 0.5% per annum of additional interest.

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If the Shelf Registration Statement, if required by the Registration Rights Agreement, has been declared effective and thereafter either ceases to be effective or the Prospectus contained therein ceases to be usable, in each case whether or not permitted by this Agreement, at any time during the Shelf Effectiveness Period (as defined in the Registration Rights Agreement), and such failure to remain effective or usable exists for more than 45 days (whether or not consecutive) in any 3-month period or 90 days (whether or not consecutive) in any 12-month period, then the interest rate on the Securities will be increased by 0.25% per annum (which rate will be increased by an additional 0.25% per annum for each subsequent 90-day period) commencing on the 46th or 91st day, as applicable, in such 3-month or 12-month period and ending on such date that the Shelf Registration Statement has again become effective or the Prospectus again becomes usable.

For the avoidance of doubt, any increase in the interest rate pursuant to the two preceding paragraphs shall not be cumulative.

The Holder of this security is entitled to the benefits of the Registration Rights Agreement.]^*

4. Principal.

Unless previously redeemed or purchased and cancelled, the Notes shall be redeemed at 100% of the principal amount thereon on September 16, 2023.

5. Method of Payment.

Principal of, and interest [(including Additional Interest, if any)]* on, and any Additional Amounts due in respect of, this Note shall be payable at the Corporate Trust Office, at the offices of the Trustee and, subject to any fiscal or other laws and regulations applicable thereto, at the specified offices of any other Paying Agent appointed by the Company.

Payments of interest [(including Additional Interest, if any)]* and any Additional Amounts due in respect of each Note shall be made on each Interest Payment Date by the Paying Agents to the Person in whose name such Note is registered as shown on the Register at the close of business on March 1 and September 1 as the case may be (each, a “Record Date”), next preceding such Interest Payment Date.

Payments in respect of each Note shall be made by U.S. Dollar check drawn on a bank in New York City and may be mailed to the Holder of such Note at its address appearing in the Register. Upon written application by the Holder to the specified office of any Paying Agent not less than 10 days before the due date for any payment in respect of a Note, such payment may be made by wire transfer to a U.S. Dollar account maintained by the payee with a bank in New York City. Notwithstanding the foregoing, payments in respect of Notes registered in the name of DTC or its nominee shall be effected in accordance with the Applicable Procedures.

^*  Initial Notes only.

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The Company and the Guarantor shall make all payments on this Note exclusively in such coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debt. Except as provided in Section 2.8 of the Indenture, no fees or expenses shall be charged to the Holders in respect of such payments.

If the Payment Date in respect of any Note is not a business day at the place in which it is presented for payment, the Holder thereof shall not be entitled to payment of the amount due until the next succeeding business day at such place and shall not be entitled to any further interest [(including Additional Interest)]* or other payment in respect of any such delay.

If the amount of principal or interest [(including Additional Interest, if any)]* and any Additional Amounts due on the Notes is not paid in full, the Registrar shall annotate the Register with a record of the amount of principal or interest [(including Additional Interest and, if any),]* and any Additional Amounts due with respect thereto, in fact paid, if any.

6. Registrar, Paying Agent and Transfer Agent.

The Trustee shall act as Registrar and Transfer Agent. The Bank of New York Mellon shall act as Principal Paying Agent of the Notes. The Company may appoint and change any Registrar, Paying Agent or Transfer Agent without notice.

7. Additional Amounts.

All payments by the Company or the Guarantor in respect of the Notes or the Guarantee, as the case may be, including, without limitation, Additional Interest, if any, shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or other governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of Brazil or the Cayman Islands or a successor jurisdiction or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. In that event, the Company or the Guarantor (as guarantor of the Notes), as applicable, shall make such deduction or withholding, make payment of the amount so withheld to the appropriate governmental authority and pay to each Holder such additional amounts (“Additional Amounts”) as may be necessary to ensure that the net amounts receivable by the Holders (including Additional Amounts) after such withholding or deduction shall equal the respective amounts of principal of, or premium, if any, or interest which would have been receivable in respect of the Notes in the absence of such withholding or deduction.

(a) Notwithstanding the foregoing, neither the Company nor the Guarantor will have to pay Additional Amounts:

(i) to, or to a third party on behalf of, a Holder who is liable for such taxes, duties, assessments or governmental charges in respect of such Note by reason of such Holder or the beneficial owner having some connection with Brazil or the Cayman Islands other than the mere holding of the Note and the receipt of payments with respect to the Note;

(ii) in respect of Notes surrendered (if surrender is required) more than 30 days after the Relevant Date except to the extent that the Holder of such Note would have been entitled to such Additional Amounts on surrender of such Note for payment on the last day of such period of 30 days;

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(iii) where such withholding or deduction is imposed on a payment to an individual and is required to be made pursuant to any European Union Directive on the taxation of savings implementing the conclusions of the ECOFIN Council meeting of November 26-27, 2000 or any law implementing or complying with, or introduced in order to conform to, such directive;

(iv) to, or to a third party on behalf of, a Holder who is liable for such taxes, duties, assessments or other governmental charges by reason of the failure of such Holder or the beneficial owner to comply with any certification, identification or other reporting requirement concerning the nationality, residence, identity or connection with Brazil, the Cayman Islands or a successor jurisdiction or applicable political subdivision or authority thereof or therein having power to tax, of such Holder or the beneficial owner, if compliance is required by such jurisdiction, or any political subdivision or authority thereof or therein having power to tax, as a precondition to exemption from, or reduction in the rate of, the tax, assessment or other governmental charge and the Company or the Guarantor, as applicable, has given the Holders at least 30 days’ notice that Holders will be required to provide such certification, identification or other requirement;

(v) in respect of any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or governmental charge;

(vi) in respect of any tax, assessment or other governmental charge which is payable other than by deduction or withholding from payments of principal of, or premium, if any, or interest (including Additional Interest, if any) on the Note or by direct payment by the Company or the Guarantor in respect of claims made against the Company or the Guarantor;

(vii) any combination of the above.

For purposes of the provisions described above, “Relevant Date” means whichever is the later of (i) the date on which such payment first becomes due and (ii) if the full amount payable has not been received by the Trustee on or prior to such due date, the date on which notice is given to the Holders that the full amount is so received by the Trustee. The Notes are subject in all cases to any tax, fiscal or other law or regulation or administrative or judicial interpretation. Except as specifically provided above, neither the Company nor the Guarantor shall be required to make a payment with respect to any tax, assessment or governmental charge imposed by any government or a political subdivision or taxing authority thereof or therein.

In the event that Additional Amounts actually paid with respect to the Notes described above are based on rates of deduction or withholding of withholding taxes in excess of the appropriate rate applicable to the Holder of such Notes, and, as a result thereof such Holder is entitled to make claim for a refund or credit of such excess from the authority imposing such withholding tax, then such Holder shall, by accepting such Notes, be deemed to have assigned and transferred all right, title, and interest to any such claim for a refund or credit of such excess to the Company or the Guarantor, as the case may be.

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The Company or the Guarantor, as the case may be, shall also pay any present or future stamp, court, issue, registration or documentary taxes or any other excise or property taxes, charges or similar levies which arise in any jurisdiction from execution, delivery, registration or making of payments or enforcement in respect of the Notes and the Guarantee, excluding any such taxes, charges or similar levies imposed by any jurisdiction outside of Brazil or the Cayman Islands other than those resulting from, or required to be paid in connection with, the enforcement of the Notes and the Guarantee following the occurrence of any Default or Event of Default.

No Additional Amounts shall be paid with respect to a payment on any Note or the Guarantee to a Holder that is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent a beneficiary or settlor with respect to such fiduciary or a member of such partnership or beneficial owner would not have been entitled to receive payment of the Additional Amounts had the beneficiary, settlor, member or beneficial owner been the Holder of the Note.

The Company or the Guarantor shall provide the Trustee with the official acknowledgment of the relevant taxing authority (or, if such acknowledgement is not available, a certified copy thereof, or other available documentation) evidencing any payment of taxes in respect of which the Company or the Guarantor has paid any Additional Amounts. Copies of such documentation shall be made available to the Holders or beneficial owners of the Notes or the Paying Agents, as applicable, upon request therefor.

8. Open Market Purchases.

The Company, the Guarantor or any of their Affiliates may at any time purchase Notes in the open market or otherwise at any agreed upon price. Any Notes may be cancelled or resold at the option of the Company, but shall only be resold in accordance with applicable securities and other laws.

9. Redemption.

(a) Except as described in Section 3.1 of the Indenture and this Paragraph 10, the Notes may not be redeemed prior to September 16, 2023.

(b) The Notes shall be redeemable, at the option of the Company, in whole, but not in part, upon giving not less than 30 nor more than 60 days’ notice to the Holders, at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest (including Additional Interest, if any) and any Additional Amounts due with respect thereto, to the Redemption Date, where as a result of a change in, or amendment occurring after August 28, 2013 to, the laws of the Cayman Islands or Brazil or any political subdivision or taxing authority thereof or therein (or rules and regulations thereunder or the official interpretation, administration or application thereof), the Company or the Guarantor would be required to pay Additional Amounts in excess of those attributable to Cayman Islands or Brazilian withholding tax on the basis of a

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statutory rate of 15%. No such notice of redemption shall be given earlier than 60 calendar days prior to the earliest date on which the Company or the Guarantor, as the case may be, would be obligated to pay such Additional Amounts if a payment in respect of such Notes were then due.

Prior to the publication or mailing of any notice of redemption pursuant to the preceding paragraph, the Company shall deliver to the Trustee an Officers’ Certificate to the effect that the obligation of the Company or the Guarantor, as the case may be, to pay Additional Amounts cannot be avoided by the Company or the Guarantor taking reasonable measures available to it. The Company shall also deliver an Opinion of Counsel that is independent of the Company stating that the Company or the Guarantor, as the case may be, would be obligated to pay Additional Amounts due to the changes in tax laws or regulations. The Trustee shall accept such certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent set forth above, in which event it shall be conclusive and binding on the Holders.

(c) The Notes shall be redeemable, at the option of the Company, in whole or in part, upon giving not less than 30 nor more than 60 days’ notice to the Holders (which notice shall be irrevocable), at a Redemption Price equal to the greater of (i) 100% of the principal amount thereof and (ii) the sum of the present values of each remaining scheduled payment of principal and interest thereon (exclusive of interest [(including Additional Interest, if any)]^* accrued to the Redemption Date) discounted to the Redemption Date on a semiannual basis (assuming a 360-day year comprised of twelve 30-day months) at the Treasury Rate plus 50 basis points (the “Make-Whole Amount”), plus in each case accrued interest [(including Additional Interest, if any)]* on, and any Additional Amounts due with respect to, the Notes to the Redemption Date.

If less than all the Notes are to be redeemed at any time pursuant to this Section 3(c), the particular Notes to be redeemed shall be selected not more than 45 days prior to the Redemption Date by the Trustee, from the outstanding Notes not previously called for redemption, in compliance with the requirements of the principal national securities exchange, if any, on which such Notes are listed, or, if such Notes are not so listed, on a pro rata basis, by lot or by such other method as the Trustee in its sole discretion shall deem fair and appropriate (and in such manner as complies with applicable legal requirements) and which may provide for the selection for redemption of portions of the principal of the Notes; provided, however, that no such partial redemption shall reduce the portion of the principal amount of a Note not redeemed to less than US$2,000. The Trustee shall promptly notify the Company in writing of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the method it has chosen for the selection of Notes and the principal amount thereof to be redeemed.

Upon surrender of a Note that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder thereof (at the Company’s expense) a new Note, equal in a principal amount to the unredeemed portion of the Note surrendered; provided that each new Note shall be in a Principal amount of US$2,000 or an integral multiple of US$1,000 in excess thereof.

^*  Initial Notes only.

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(d) In the case of redemption of Notes pursuant to this Paragraph 10, notice of redemption shall be mailed at least 30 calendar days but not more than 60 calendar days before the redemption date to each Holder of any Note to be redeemed by first-class mail its registered address.

10. Denominations; Transfer; Exchange.

The Notes are in registered form without coupons in minimum denominations of US$2,000 and integral multiples of US$1,000 in excess thereof.

A Holder may transfer or exchange Notes in accordance with the Indenture. The Trustee or Transfer Agent, as the case may be, may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.

The Trustee or Transfer Agent, as the case may be, need not register the transfer or exchange of any Notes selected for redemption or any Notes for a period of 15 days before a selection of Notes to be redeemed or before an Interest Payment Date.

11. Persons Deemed Owners.

The registered Holder of this Note may be treated as the owner thereof for all purposes.

12. Unclaimed Money.

Subject to applicable abandoned property law, the Trustee and the Paying Agents shall pay to the Company upon request any monies held by them for the payment of principal or interest [(including Additional Interest, if any)]* on, and any Additional Amounts due with respect to, the Notes that remains unclaimed for two years, and thereafter, Holders entitled to such monies must look to the Company for payment as general creditors.

13. Defeasance.

Subject to the terms of the Indenture, the Company or the Guarantor, as the case may be, at any time may terminate some or all of its obligations under the Notes and the Indenture if the Company or the Guarantor, as the case may be, irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal and interest on all the Notes to redemption or Maturity, as the case may be. In the case of legal defense, the Guarantee shall terminate and be of no further force or effect.

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15. Amendment; Waiver.

Subject to certain exceptions set forth in the Indenture, the Indenture or the Notes may be amended or supplemented without notice to any Holder but with the written consent of the Holders of at least a majority in principal amount of the Notes then outstanding, and any past Default or compliance with any provision may be waived with the consent of the Holders of at least a majority in principal amount of the Notes then outstanding. However, subject to certain exceptions set forth in the Indenture, without the consent of each Holder of an outstanding Note affected thereby, no amendment may, among other things:

(i) change the Stated Maturity for any principal or interest of any Note;

(ii) reduce the principal amount, the interest rate, the redemption price for any Note or the principal amount that would be due and payable upon acceleration;

(iii) change the obligation to pay Additional Amounts;

(iv) change the currency for payment of principal of, or interest (including Additional Interest, if any) on, and any Additional Amounts due in respect of, any Note;

(v) change the place of any payment of any Note;

(vi) impair the right to institute suit for the enforcement of any payment on or with respect to any Note;

(vii) change the terms of payment from, or control over, or release or reduction of any collateral or security interest to secure the payment of principal, interest or premium, if any, under any Note;

(viii) amend or modify any provisions of the Guarantee in a manner that would materially and adversely affect the Holders; or

(ix) make any change in the sections of this Indenture relating to supplemental indentures, waiver with the consent of Holders or waiver of past defaults, except to increase the percentage of Holders required to make a modification or waiver or to provide that certain other provisions of this cannot be modified or waived without the approval of each Holder.

The Company and the Trustee may, without the consent of any Holder of the Notes, amend the Indenture or the Notes:

(i) cure any ambiguity, omission, defect or inconsistency; provided that such amendment or supplement does not adversely affect the rights of any Holder;

(ii) to evidence the succession of another Person to the Company or the Guarantor and the assumption by any such successor of the covenants of the Company or the Guarantor herein and in the Notes;

(iii) add additional guarantees or any collateral with respect to the Notes;

A-14

(iv) add to the covenants of the Company or the Guarantor for the benefit of the Holders;

(v) to surrender any right herein conferred upon the Company or the Guarantor;

(vi) to evidence and provide for the acceptance of an appointment by a successor Trustee;

(vii) to comply with any requirements of the SEC in connection with any qualification of the Indenture under the Trust Indenture Act;

(viii) to provide for the issuance of Additional Notes; or

(ix) to make any other change that does not materially and adversely affect the rights of any Holder;

provided that, in such case, the Company has delivered to the Trustee an Opinion of Counsel and an Officers’ Certificate, each stating that such amendment, waiver or supplement complies with the provisions of Section 9.1 of the Indenture.

16. Defaults and Remedies.

An “Event of Default” occurs if:

(i) The Company or the Guarantor defaults in any payment of interest (including any Additional Interest, if any) on, and any Additional Amounts due with respect to, any Note when the same becomes due and payable, and such Default continues for a period of 30 calendar days;

(ii) The Company or the Guarantor defaults in the payment of the principal (including premium, if any, and any Additional Amounts) of any Note when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration or otherwise;

(iii) The Company or the Guarantor fails to comply with any of its covenants or agreements in the Notes or this Indenture (other than those referred to in clauses (i) and (ii) above), and such failure continues for 60 calendar days after the notice specified below;

(iv) The maturity of any Indebtedness of the Company, the Guarantor or any Significant Subsidiary in a total aggregate principal amount of US$50,000,000 (or the equivalent thereof at the time of determination) or more is accelerated in accordance with the terms of such Indebtedness, or the failure by the Company, the Guarantor or any Significant Subsidiary to make payment at maturity of such Indebtedness (after giving effect to any grace period provided in the terms of such Indebtedness), it being understood that prepayment or redemption by the Company, the Guarantor or any Significant Subsidiary of any Indebtedness is not an acceleration for this purpose;

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(v) One or more final judgments or decrees for the payment of money in excess of US$50,000,000 (or the equivalent thereof at the time of determination) in the aggregate are rendered against the Company, the Guarantor or any Significant Subsidiary and are not paid (whether in full or in installments in accordance with the terms of the judgment) or otherwise discharged and, in the case of each such judgment or decree, either (a) an enforcement proceeding has been commenced by any creditor upon such judgment or decree and is not dismissed within 30 days following commencement of such enforcement proceedings or (b) there is a period of 60 days following such judgment during which such judgment or decree is not discharged, waived or the execution thereof stayed;

(vi) An Illegality Event shall have occurred and be continuing;

(vii) A final judgment or judgments (not subject to appeal) determines the guarantees of the Notes to be unenforceable or invalid, such guarantees cease for any reason to be valid and binding or enforceable against the Guarantor, or any person acting on its behalf denies or disaffirms its obligations under such guarantees; or

(viii) certain events of bankruptcy, reorganization or insolvency of the Company, the Guarantor or any Significant Subsidiary as set forth in the Indenture.

A Default under clause (iii) above is not an Event of Default until the Trustee or the Holders of at least 25% in principal amount of the Outstanding Notes notify the Guarantor of the Default and the Guarantor does not cure, or cause to be cured such Default within the time specified after receipt of such notice.

For purposed of the cross-acceleration provision described in (iv), above, “Indebtedness” will not include any payment made by the Guarantor on behalf of an Affiliate, upon any Indebtedness of such Affiliate becoming immediately due and payable as a result of a default by such Affiliate, pursuant to a guarantee or similar instrument provided by the Guarantor in connection with such Indebtedness, provided that such payment made by the Guarantor is made within five business days of notice being provided to the Guarantor that payment is due under such guarantee or similar instrument.

The Trustee is not to be charged with knowledge of any Default or Event of Default or knowledge of any cure of any Default or Event of Default unless written notice of such Default or Event of Default has been given to authorized officer or agent of the Trustee with direct responsibility for the Indenture by the Guarantor, the Company or any Holder.

If an Event of Default (other than an Event of Default specified in clause (vii) above) occurs and is continuing, the Trustee or the Holders of not less than 25% in principal amount of the Outstanding Notes may declare all unpaid principal of and accrued interest

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[(including Additional Interest, if any)]^* on, and any Additional Amounts due with respect to, all Notes to be due and payable immediately, by a notice in writing to the Company or the Guarantor (and to the Trustee if the notice is given by the Holders) stating that such notice is an “acceleration notice,” and upon any such declaration such amounts shall become due and payable immediately. If an Event of Default specified in clause (vii) above occurs and is continuing, then the principal of, and accrued interest [(including Additional Interest, if any)]^* on, and any Additional Amounts due with respect to, all Notes shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder.

Subject to the provisions of the Indenture relating to the duties of the Trustee in case an Event of Default shall occur and be continuing, the Trustee shall be under no obligation to exercise any of its rights or powers under the Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee indemnity reasonably satisfactory to it. Subject to such provision for the indemnification of the Trustee, the Holders of a majority in aggregate principal amount of the outstanding Notes shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee.

At any time after a declaration of acceleration has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as provided in the Indenture, the Holders of a majority in principal amount of the Notes by written notice to the Company and the Trustee may rescind or annul a declaration of acceleration if (i) the Company has paid or deposited with the Trustee a sum sufficient to pay all overdue interest [(including Additional Interest, if any)]^* on Outstanding Notes, all unpaid principal of the Notes that has become due otherwise than by such declaration of acceleration, interest on such overdue interest [(including Additional Interest, if any)]^* as provided in the Indenture, any Additional Amounts due with respect to the Notes and all sums paid or advanced by the Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and (ii) all Events of Default have been cured or waived except nonpayment of principal that has become due solely because of acceleration.

No such rescission shall affect any subsequent Default or Event of Default or impair any right consequent thereto.

17. Trustee Dealings with the Company or the Guarantor.

Subject to certain limitations imposed by the Indenture, the Trustee in its individual or any other capacity, may become the owner or pledgee of Notes and may otherwise deal with and collect obligations owed to it by the Company or the Guarantor or their respective Affiliates and may otherwise deal with the Company or the Guarantor or their respective Affiliates with the same rights it would have if it were not Trustee.

^*  Initial Notes only.

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18. Governing Law.

THE INDENTURE AND THIS NOTE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

19. No Recourse Against Others.

No director, officer, employee or shareholder, as such, of the Company or the Trustee shall have any liability for any obligations of the Company under the Notes or any obligations of the Company or the Trustee under the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Note, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Notes.

20. CUSIP and ISIN Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP or ISIN numbers, as applicable, to be printed on the Notes and has directed the Trustee to use CUSIP or ISIN numbers, as applicable, in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

The Company shall furnish to any Holder upon written request and without charge a copy of the Indenture, which includes the form of this Note. Requests may be made to:

EMBRAER OVERSEAS LIMITED

c/o Embraer S.A.

Avenida Brigadeiro Faria Lima, 2.170

12.227-901 São José dos Campos, São Paulo

Brazil

Attention: José Antonio de Almeida Filippo, Executive Vice President—Chief

Financial and Investor Relations Officer

Telephone: 55 12 3927 4404

Telecopy: 55 12 3927 4404

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EMBRAER S.A.

Embraer S.A.

Avenida Brigadeiro Faria Lima, 2.170

12.227-901 São José dos Campos, São Paulo

Brazil

Attention: José Antonio de Almeida Filippo, Executive Vice President—Chief

Financial and Investor Relations Officer

Telephone: 55 12 3927 4404

Telecopy: 55 12 3927 4404

21. Consent to Jurisdiction; Waiver of Immunities.

Pursuant to the provisions of the Indenture, each of the Company and the Guarantor has irrevocably (1) submitted to the non-exclusive jurisdiction of any New York state or U.S. federal court sitting in the Borough of Manhattan in New York City with respect to actions brought against it as a defendant in respect of any suit, action or proceeding or arbitral award arising out of or relating to the Indenture, this Note or the Guarantee annexed to this Note, or any transaction contemplated hereby or thereby (a “Proceeding”), (2) accepted for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts, (3) waived, to the fullest extent it may do so under applicable law, trial by jury and any objection which it may now or hereafter have to the laying of the venue of any such Proceeding brought in any such court and any claim that any such Proceeding brought in any such court has been brought in an inconvenient forum, and (4) appointed National Registered Agent, Inc., with an office at 875 Avenue of the Americas, Suite 501, New York, New York 10001, as its authorized agent to receive on behalf of it and its property service of copies of the summons and complaint and any other process which may be served in any Proceeding.

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EXHIBIT B

FORM OF

TRANSFER NOTICE

FOR VALUE RECEIVED, the undersigned Holder hereby sell(s), assign(s) and transfer(s) unto

Insert Taxpayer Identification No.

Please print or typewrite name and address, including postal zip code, of assignee

this Note and all rights hereunder, hereby irrevocably constituting and appointing

                             attorney to transfer said Note on the books of Embraer Overseas Limited with full power of substitution in the premises.

In connection with any transfer of this Note occurring prior to the date [which is two years after the original issue date of the Notes,]^* [which is on or prior to the 40th day of the Restricted Period (as defined in the Indenture governing the Notes),]^** the undersigned confirms that:

[Check one]

¨ (a) This Note is being transferred to a person whom the Holder reasonably believes is a qualified institutional buyer (as defined in Rule 144A under the U.S. Securities Act of 1933, as amended (the “Securities Act”), in a transaction meeting the requirement of Rule 144A;

¨ (b) This Note is being transferred in an offshore transaction in accordance with Rule 904 under the Securities Act;

¨ (c) This Note is being transferred pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available);

¨ (d) This Note is being transferred pursuant to an effective registration statement under the Securities Act; or

¨ (e) This Note is being transferred to Embraer S.A. or one of its Subsidiaries,

^*  Include in Restricted Note.

^**  Include in Regulation S Note.

in each of cases (a) through (e) above, in accordance with any applicable securities laws of any State of the United States.

If none of the foregoing boxes is checked, the Transfer Agent shall not be obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in Section 2.7 of the Indenture shall have been satisfied.

Date:                     

NOTICE: The signature to this assignment must correspond with the name as written upon the face of this instrument in every particular, without alteration, enlargement or any other change whatever.

B-2

EXHIBIT C

FORM OF CERTIFICATE

FOR TRANSFER FROM RESTRICTED GLOBAL

NOTE OR CERTIFICATED NOTE BEARING

A SECURITIES ACT LEGEND TO REGULATION S

GLOBAL NOTE OR CERTIFICATED NOTE

NOT BEARING A SECURITIES ACT LEGEND

The Bank of New York Mellon

101 Barclay Street, Floor 7E

New York, New York 10286

Attn: International Corporate Trust

Re: 5.696% Guaranteed Notes due 2023 (the “Notes”)

Reference is hereby made to the Indenture, dated as of September 16, 2013 (the “Indenture”), among Embraer Overseas Limited, Embraer S.A. and The Bank of New York Mellon, as Trustee, Registrar, Transfer Agent and Principal Paying Agent (the “Trustee”). Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

This letter relates to US$            principal amount of Notes which are held in the form of [a beneficial interest in the Restricted Global Note with the Depositary in the name of the undersigned] [a Certificated Note bearing a Securities Act Legend].

The undersigned has requested a transfer of such [beneficial interest] [Certificated Note] to a Person who shall take delivery thereof in the form of [a beneficial interest of equal principal amount in the Regulation S Global Note (ISIN No. USG30376AB69) to be held with [Euroclear]^* [Clearstream Banking]^* (Common Code No. [•]) through the Depositary] [a Certificated Note of equal principal amount not bearing a Securities Act Legend]. In connection with such transfer, the undersigned does hereby certify that such transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and the Notes and pursuant to and in accordance with Rule 903 or 904 of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the undersigned further certifies that:

(1) the offer of the Notes was not made to a U.S. Person (as defined under Regulation S);

[(2) at the time the buy order was originated, the transferee was outside the United States or the undersigned and any Person acting on behalf of the undersigned reasonably believed that the transferee was outside the United States;]*

^*  Indicate appropriate clearing system.

[(2) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither the undersigned nor any Person acting on behalf of the undersigned knows that the transaction was prearranged with a buyer in the United States;]^*

(3) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or 904(b) of Regulation S, as applicable;

(4) the undersigned is not the Company, a distributor, an affiliate of either the Company or a distributor, or a Person acting on behalf of any of the foregoing; and

(5) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act.

This certificate and the statements contained herein are made for your benefit and for the benefit of Embraer Overseas Limited and Embraer S.A. Terms used in this certificate and not otherwise defined in the Indenture have the meanings set forth in Regulation S.

[INSERT NAME OF TRANSFEROR]
By:
	Name:
	Title:

Dated:                    , 20    

cc: Embraer Overseas Limited

Embraer S.A.

^*  Insert one of the two provisions.

C-2

EXHIBIT D

FORM OF TRANSFER CERTIFICATE

FOR TRANSFER FROM REGULATION S GLOBAL

NOTE OR CERTIFICATED NOTE NOT BEARING

A SECURITIES ACT LEGEND TO RESTRICTED GLOBAL

NOTE OR CERTIFICATED NOTE BEARING

A SECURITIES ACT LEGEND

(PRIOR TO 40TH DAY OF RESTRICTED PERIOD)

The Bank of New York Mellon

101 Barclay Street, Floor 7E

New York, New York 10286

Attn: International Corporate Trust

Re: 5.696% Guaranteed Notes due 20[23] (the “Notes”)

Reference is hereby made to the Indenture, dated as of September 16, 2013 (the “Indenture”), among Embraer Overseas Limited, Embraer S.A. and The Bank of New York Mellon, as Trustee, Registrar, Transfer Agent and Principal Paying Agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

This letter relates to US$             principal amount of Notes which are held in

the form of [a beneficial interest in the Regulation S Global Note (ISIN No. USG30376AB69) with the Depositary in the name of the undersigned] [a Certificated Note not bearing the Securities Act Legend].

The undersigned has requested a transfer of such [beneficial interest] [Certificated Note] to a Person who shall take delivery thereof in the form of [a beneficial interest in the Restricted Global Note (CUSIP No. 29081YAD8) to be held through the Depositary] [a Certificated Note bearing the Securities Act Legend]. In connection with such transfer, the undersigned does hereby confirm that such transfer has been effected in accordance with the transfer restrictions set forth in the Indenture and the Notes and pursuant to and in accordance with Rule 144A under the U.S. Securities Act of 1933, as amended, and accordingly, the undersigned represents that:

(1) the Notes are being transferred to a transferee that the undersigned reasonably believes is purchasing the Notes for its own account or one or more accounts with respect to which the transferee exercises sole investment discretion; and

(2) the transferee and any such account is a “qualified institutional buyer” within the meaning of Rule 144A, in a transaction meeting the requirements of Rule 144A and in accordance with any applicable securities laws of any state of the United States or any other jurisdiction.

This certificate and the statements contained herein are made for your benefit and for the benefit of Embraer Overseas Limited and Embraer S.A.

[NAME OF UNDERSIGNED]
By:
	Name:
	Title:

Dated:                     , 20    

cc: Embraer Overseas Limited

Embraer S.A.

D-2

EXHIBIT E

FORM OF CERTIFICATE FOR REMOVAL

OF THE SECURITIES ACT LEGEND ON A CERTIFICATED NOTE

The Bank of New York Mellon

101 Barclay Street, Floor 7E

New York, New York 10286

Attn: International Corporate Trust

Re: 5.696% Guaranteed Notes due 2017 (the “Notes”)

Reference is hereby made to the Indenture, dated as of September 16, 2013 (the “Indenture”), among Embraer Overseas Limited, Embraer S.A. and The Bank of New York Mellon, as Trustee, Registrar, Transfer Agent and Principal Paying Agent. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

This letter relates to US$            principal amount of Notes which are held in the form of [a beneficial interest in the Restricted Global Note (CUSIP No. 29081YAD8) with the Depositary]^* [[a] Certificated Note(s) in the name of the undersigned.]^*

The undersigned has requested for the restrictive Legend on the Certificated Note(s) to be removed.

In connection with such transfer, the undersigned does hereby certify that such transfer has been effected only (i) in an offshore transaction in accordance with Rule 904 under the Securities Act, (ii) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available) or (iii) pursuant to an effective registration statement under the Securities Act, in each of cases (i) through (iii) in accordance with any applicable securities laws of any State of the United States.

^*  Indicate form in which Notes are held.

This certificate and the statements contained herein are made for your benefit and for the benefit of Embraer Overseas Limited and Embraer S.A.

[NAME OF UNDERSIGNED]
By:
	Name:
	Title:

Dated:                    , 20            

cc: Embraer Overseas Limited

Embraer S.A.

E-2

EXHIBIT F

FORM OF GUARANTEE

For value received, Embraer S.A. (including any successor Person under the Indenture referred to in the Note to which this Guarantee is annexed) hereby unconditionally guarantees, on a senior unsecured basis (such guarantee being referred to herein as the “Guarantee”):

(1) the due and punctual payment of principal of and interest [(including Additional Interest, if any)]^* on, and any Additional Amounts due with respect to, the Notes, whether at maturity, by acceleration or purchase or otherwise, the due and punctual payment of interest on any overdue principal of or interest [(including Additional Interest, if any]* on, and any Additional Amounts due with respect to, the Notes, to the extent lawful, and the due and punctual performance of all other obligations of Embraer Overseas Limited to the Holders or the Trustee, all in accordance with the terms set forth in Article X of the Indenture; and

(2) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same shall be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration, purchase or otherwise.

This Guarantee shall be effective in accordance with the provisions of Article X of the Indenture and its terms shall be evidenced therein.

The obligations under this Guarantee are, to the extent and in the manner provided in the Indenture, equal in right of payment to all other existing and future senior unsecured debt of Embraer S.A., subject to certain statutory preferences under applicable law (including labor and tax claims), and senior in right of payment to Embraer S.A.’s subordinated debt; and effectively subordinated to the debt and other liabilities (including subordinated debt and trade payables) of its subsidiaries and to secured debt of the Guarantor, to the extent of such security.

No director, officer, employee, direct or indirect shareholder or incorporator, as such, of Embraer S.A. shall have any liability for any obligations of Embraer S.A. under this Guarantee or for any claim based on, in respect or by reason of such obligations or its creation.

Pursuant to the provisions of the Indenture, the Guarantor has irrevocably (1) submitted to the non-exclusive jurisdiction of any New York state or U.S. federal court sitting in the Borough of Manhattan in New York City with respect to actions brought against it as a defendant in respect of any suit, action or proceeding or arbitral award arising out of or relating to the Indenture, the Note to which this Guarantee is annexed or this Guarantee, or any transaction contemplated hereby or thereby (a “Proceeding”), (2) accepted for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts, (3) waived, to the fullest extent it may do so under applicable law, trial by jury and any objection which it may now or hereafter have to the laying of the venue of any such Proceeding brought in

^*  Include on Guarantee of Initial Note.

any such court and any claim that any such Proceeding brought in any such court has been brought in an inconvenient forum, and (4) appointed National Registered Agent, Inc., with an office at 875 Avenue of the Americas, Suite 501, New York, New York 10001, as its authorized agent to receive on behalf of it and its property service of copies of the summons and complaint and any other process which may be served in any Proceeding.

F-2

This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Notes to which this Guarantee is annexed shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized officers.

EMBRAER S.A.
By:
	Name:
	Title:

By:
	Name:
	Title:

F-3

EX-2.9

Exhibit 2.9

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT dated as of September 16, 2013 (the “Agreement”) is entered into by and among Embraer Overseas Limited, an exempted limited liability company incorporated under the laws of the Cayman Islands (the “Company”), Embraer S.A., a Brazilian corporation (the “Initial Guarantor”), and Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as representatives of the initial purchasers (the “Dealer Managers”) listed in Schedule 1 to the Dealer Manager Agreement referred to below.

The Company, the Guarantor and the Dealer Managers are parties to the Dealer Manager Agreement dated August 28, 2013 (the “Dealer Manager Agreement”), which provides for the sale by the Company to the Dealer Managers of Company’s newly issued Senior Notes due 2023 (the “Securities”) which will be guaranteed on an unsecured senior basis by the Guarantor. As an inducement to the Dealer Managers to enter into the Dealer Manager Agreement, the Company and the Guarantor have agreed to provide to the Dealer Managers and their direct and indirect transferees the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the closing under the Dealer Manager Agreement.

In consideration of the foregoing, the parties hereto agree as follows:

1. Definitions. As used in this Agreement, the following terms shall have the following meanings:

“Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to remain closed.

“Company” shall have the meaning set forth in the preamble and shall also include the Company’s successors.

“Dealer Manager Agreement” shall have the meaning set forth in the preamble.

“Dealer Managers” shall have the meaning set forth in the preamble.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

“Exchange Dates” shall have the meaning set forth in Section 2(a) hereof.

“Exchange Offer” shall mean the exchange offer by the Company and the Guarantor of Exchange Securities for Registrable Securities pursuant to Section 2(a) hereof.

“Exchange Offer Registration” shall mean a registration under the Securities Act effected pursuant to Section 2(a) hereof.

“Exchange Offer Registration Statement” shall mean an exchange offer registration statement on Form S-4 (or, if applicable, on another appropriate form) and all amendments and

supplements to such registration statement, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

“Exchange Securities” shall mean senior notes issued by the Company and guaranteed by the Guarantor under the Indenture containing terms identical to the Securities (except that the Exchange Securities will not be subject to restrictions on transfer or to any increase in annual interest rate for failure to comply with this Agreement) and to be offered to Holders of Securities in exchange for Securities pursuant to the Exchange Offer.

“FINRA” means the Financial Industry Regulatory Authority, Inc.

“Free Writing Prospectus” means each free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or referred to by the Company in connection with the sale of the Securities or the Exchange Securities.

“Global Business Day” shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York, N.Y. or São Paulo, Brazil are authorized or required by law to remain closed.

“Guarantor” shall mean the Initial Guarantor and any Guarantor’s successor that guarantees the Securities.

“Holders” shall mean the Dealer Managers, for so long as they own any Registrable Securities, and each of their successors, assigns and direct and indirect transferees who become owners of Registrable Securities under the Indenture; provided that for purposes of Sections 4 and 5 of this Agreement, the term “Holders” shall include Participating Broker-Dealers.

“Indemnified Person” shall have the meaning set forth in Section 5(c) hereof.

“Indemnifying Person” shall have the meaning set forth in Section 5(c) hereof.

“Indenture” shall mean the Indenture relating to the Securities dated as of September 16, 2013 among the Company, the Guarantor, and The Bank of New York Mellon, as trustee, registrar, transfer agent and principal paying agent, and as the same may be amended from time to time in accordance with the terms thereof.

“Inspector” shall have the meaning set forth in Section 3(a)(xiii) hereof.

“Issuer Information” shall have the meaning set forth in Section 5(a) hereof.

“Majority Holders” shall mean the Holders of a majority of the aggregate principal amount of the outstanding Registrable Securities; provided that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, any Registrable Securities owned directly or indirectly by the Company or any of its affiliates (within the meaning of Rule 405 under the Securities Act) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount; and provided, further, that if the Company shall issue any additional Securities under the Indenture

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prior to consummation of the Exchange Offer or, if applicable, the effectiveness of any Shelf Registration Statement, such additional Securities and the Registrable Securities to which this Agreement relates shall be treated together as one class for purposes of determining whether the consent or approval of Holders of a specified percentage of Registrable Securities has been obtained.

“Notice and Questionnaire” shall mean a notice of registration statement and selling security holder questionnaire distributed to a Holder by the Company upon receipt of a Shelf Request from such Holder.

“Participating Broker-Dealers” shall have the meaning set forth in Section 4(a) hereof.

“Participating Holder” shall mean any Holder of Registrable Securities that has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 2(b) hereof.

“Person” shall mean an individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

“Prospectus” shall mean the prospectus included in, or, pursuant to the rules and regulations of the Securities Act, deemed a part of, a Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, including a prospectus supplement with respect to the terms of the offering of any portion of the Registrable Securities covered by a Shelf Registration Statement, and by all other amendments and supplements to such prospectus, and in each case including any document incorporated by reference therein.

“Registrable Securities” shall mean the Securities; provided that the Securities shall cease to be Registrable Securities (i) when a Registration Statement with respect to such Securities has become effective under the Securities Act and such Securities have been exchanged or disposed of pursuant to such Registration Statement, (ii) when such Securities cease to be outstanding or (iii) except in the case of Securities that otherwise remain Registrable Securities and that are held by a Dealer Manager and that are ineligible to be exchanged in the Exchange Offer, when the Exchange Offer is consummated.

“Registration Default” shall mean the occurrence of any of the following: (i) the Exchange Offer is not completed on or prior to the Target Registration Date, (ii) the Shelf Registration Statement, if required pursuant to Section 2(b)(i) or Section 2(b)(ii) hereof, has not become effective on or prior to the Target Registration Date, (iii) if the Company receives a Shelf Request pursuant to Section 2(b)(iii), the Shelf Registration Statement required to be filed thereby has not become effective by the later of (a) the Target Registration Date and (b) 90 days after a Participating Holder has returned a completed and signed Notice and Questionnaire to the Company in accordance with Section 2(b) hereof, (iv) the Shelf Registration Statement, if required by this Agreement, has become effective and thereafter ceases to be effective or the Prospectus contained therein ceases to be usable, in each case whether or not permitted by this Agreement, at any time during the Shelf Effectiveness Period, and such failure to remain effective or usable exists for more than 45 days (whether or not consecutive) in any 3-month period or 90 days (whether or not consecutive) in any 12-month period.

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“Registration Expenses” shall mean any and all expenses incident to performance of or compliance by the Company and the Guarantor with this Agreement, including without limitation: (i) all SEC, stock exchange or FINRA registration and filing fees, (ii) all fees and expenses incurred in connection with compliance with state securities or blue sky laws (including reasonable fees and disbursements of counsel for any Underwriters or Holders in connection with blue sky qualification of any Exchange Securities or Registrable Securities), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any Free Writing Prospectus and any amendments or supplements thereto, any underwriting agreements, securities sales agreements or other similar agreements and any other documents relating to the performance of and compliance with this Agreement, (iv) all rating agency fees, (v) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws and the Trust Indenture Act, (vi) the fees and disbursements of the Trustee and its counsel, (vii) the fees and disbursements of counsel for the Company and the Guarantor and, in the case of a Shelf Registration Statement, the fees and disbursements of one counsel for the Participating Holders (which counsel shall be Simpson Thacher & Bartlett LLP or such other counsel selected by the Participating Holders holding a majority of the aggregate principal amount of Registrable Securities held by such Participating Holders and which counsel may also be counsel for the Dealer Managers) and (viii) the fees and disbursements of the independent registered public accountants of the Company and the Guarantor, including the expenses of any special audits or “comfort” letters required by or incident to the performance of and compliance with this Agreement, but excluding fees and expenses of counsel to the Underwriters (other than fees and expenses set forth in clause (ii) above) or the Holders and underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder.

“Registration Statement” shall mean any registration statement of the Company and the Guarantor that covers any of the Exchange Securities or Registrable Securities pursuant to the provisions of this Agreement and all amendments and supplements to any such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

“SEC” shall mean the United States Securities and Exchange Commission.

“Securities” shall have the meaning set forth in the preamble.

“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

“Shelf Effectiveness Period” shall have the meaning set forth in Section 2(b) hereof.

“Shelf Registration” shall mean a registration effected pursuant to Section 2(b) hereof.

“Shelf Registration Statement” shall mean a “shelf” registration statement of the Company and the Guarantor that covers all or a portion of the Registrable Securities (but no

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other securities unless approved by a majority in aggregate principal amount of the Securities held by the Participating Holders) on an appropriate form under Rule 415 under the Securities Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein or deemed a part thereof, all exhibits thereto and any document incorporated by reference therein.

“Shelf Request” shall have the meaning set forth in Section 2(b) hereof.

“Staff” shall mean the staff of the SEC.

“Target Registration Date” shall mean June 27, 2014.

“Trust Indenture Act” shall mean the Trust Indenture Act of 1939, as amended from time to time.

“Trustee” shall mean the trustee with respect to the Securities under the Indenture.

“Underwriter” shall have the meaning set forth in Section 3(e) hereof.

“Underwritten Offering” shall mean an offering in which Registrable Securities are sold to an Underwriter for reoffering to the public.

2. Registration Under the Securities Act. (a) To the extent not prohibited by any applicable law or applicable interpretations of the Staff, the Company and the Guarantor shall use their reasonable best efforts to (i) cause to be filed an Exchange Offer Registration Statement covering an offer to the Holders to exchange all the Registrable Securities for Exchange Securities and (ii) have such Registration Statement become and remain effective until 270 days after the final settlement date, which is expected to occur 3 (three) business days after the last Exchange Date for use by one or more Participating Broker-Dealers. The Company and the Guarantor shall commence the Exchange Offer promptly after the Exchange Offer Registration Statement is declared effective by the SEC and use their reasonable best efforts to complete the Exchange Offer not later than 60 days after such effective date.

The Company and the Guarantor shall commence the Exchange Offer by mailing the related Prospectus, appropriate letters of transmittal (if any) and other accompanying documents to each Holder stating, in addition to such other disclosures as are required by applicable law, substantially the following:

(i) that the Exchange Offer is being made pursuant to this Agreement and that all Registrable Securities validly tendered and not properly withdrawn will be accepted for exchange;

(ii) the dates of acceptance for exchange (which shall be a period of at least 20 Business Days from the date such notice is mailed) (the “Exchange Dates”);

(iii) that any Registrable Security not tendered will remain outstanding and continue to accrue interest but will not retain any rights under this Agreement, except as otherwise specified herein;

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(iv) that any Holder electing to have a Registrable Security exchanged pursuant to the Exchange Offer will be required to (A) surrender such Registrable Security, together with the appropriate letters of transmittal (if any), to the institution and at the address and in the manner specified in the notice, or (B) effect such exchange otherwise in compliance with the applicable procedures of the depositary for such Registrable Security, in each case prior to the close of business on the last Exchange Date;

(v) that any Holder will be entitled to withdraw its election, not later than the close of business on the last Exchange Date, by (A) sending to the institution and at the address (located in the Borough of Manhattan, The City of New York) specified in the notice, a telegram, facsimile transmission or letter setting forth the name of such Holder, the principal amount of Registrable Securities delivered for exchange and a statement that such Holder is withdrawing its election to have such Securities exchanged or (B) effecting such withdrawal in compliance with the applicable procedures of the depositary for the Registrable Securities.

As a condition to participating in the Exchange Offer, a Holder will be required to represent to the Company and the Guarantor that (i) any Exchange Securities to be received by it will be acquired in the ordinary course of its business, (ii) at the time of the commencement of the Exchange Offer it has no arrangement or understanding with any Person to participate in the distribution (within the meaning of the Securities Act) of the Exchange Securities in violation of the provisions of the Securities Act, (iii) it is not an “affiliate” (within the meaning of Rule 405 under the Securities Act) of the Company or the Guarantor and (iv) if such Holder is a broker-dealer that will receive Exchange Securities for its own account in exchange for Registrable Securities that were acquired as a result of market-making or other trading activities, then such Holder will deliver a Prospectus (or, to the extent permitted by law, make available a Prospectus to purchasers) in connection with any resale of such Exchange Securities.

As soon as reasonably practicable after the last Exchange Date, the Company and the Guarantor shall:

(i) accept for exchange Registrable Securities or portions thereof validly tendered and not properly withdrawn pursuant to the Exchange Offer; and

(ii) deliver, or cause to be delivered, to the Trustee for cancellation all Registrable Securities or portions thereof so accepted for exchange by the Company and issue, and cause the Trustee to promptly authenticate and deliver to each Holder, Exchange Securities equal in principal amount to the principal amount of the Registrable Securities tendered by such Holder.

The Company and the Guarantor shall use their reasonable best efforts to complete the Exchange Offer as provided above and shall comply with the applicable requirements of the Securities Act, the Exchange Act and other applicable laws and regulations in connection with the Exchange Offer. The Exchange Offer shall not be subject to any conditions, other than that the Exchange Offer does not violate any applicable law or applicable interpretations of the Staff.

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(b) In the event that (i) the Company and the Guarantor determine that the Exchange Offer Registration provided for in Section 2(a) hereof is not available or the Exchange Offer may not be completed as soon as reasonably practicable after the last Exchange Date because it would violate any applicable law or applicable interpretations of the Staff, (ii) the Exchange Offer is not for any other reason completed by the Target Registration Date or (iii) upon receipt of a written request (a “Shelf Request”) from any Holder representing that it holds Registrable Securities that are or were ineligible to be exchanged in the Exchange Offer, the Company and the Guarantor shall use their reasonable best efforts to cause to be filed as soon as reasonably practicable after such determination, date or Shelf Request, as the case may be, a Shelf Registration Statement providing for the sale of all the Registrable Securities by the Holders thereof and to have such Shelf Registration Statement become effective; provided that no Holder will be entitled to have any Registrable Securities included in any Shelf Registration Statement, or entitled to use the prospectus forming a part of such Shelf Registration Statement, until such Holder shall have delivered a completed and signed Notice and Questionnaire and provided such other information regarding such Holder to the Company as is contemplated by Section 3(b) hereof.

In the event that the Company and the Guarantor are required to file a Shelf Registration Statement pursuant to clause (iii) of the preceding sentence, the Company and the Guarantor shall use their reasonable best efforts to file and have become effective both an Exchange Offer Registration Statement pursuant to Section 2(a) hereof with respect to all Registrable Securities and a Shelf Registration Statement (which may be a combined Registration Statement with the Exchange Offer Registration Statement) with respect to offers and sales of Registrable Securities held by the Dealer Managers after completion of the Exchange Offer.

The Company and the Guarantor agree to use their reasonable best efforts to keep the Shelf Registration Statement continuously effective until the Securities cease to be Registrable Securities (the “Shelf Effectiveness Period”). The Company and the Guarantor further agree to supplement or amend the Shelf Registration Statement, the related Prospectus and any Free Writing Prospectus if required by the rules, regulations or instructions applicable to the registration form used by the Company for such Shelf Registration Statement or by the Securities Act or by any other rules and regulations thereunder or if reasonably requested by a Holder of Registrable Securities with respect to information relating to such Holder, and to use their reasonable best efforts to cause any such amendment to become effective, if required, and such Shelf Registration Statement, Prospectus and Free Writing Prospectus, as the case may be, to become usable as soon as thereafter practicable. The Company and the Guarantor agree to furnish to the Participating Holders copies of any such supplement or amendment promptly after its being used or filed with the SEC.

(c) The Company and the Guarantor shall pay all Registration Expenses in connection with any registration pursuant to Section 2(a) or Section 2(b) hereof. Each Holder shall pay all underwriting discounts and commissions, brokerage commissions and transfer taxes, if any, relating to the sale or disposition of such Holder’s Registrable Securities pursuant to the Shelf Registration Statement.

(d) An Exchange Offer Registration Statement pursuant to Section 2(a) hereof will not be deemed to have become effective unless it has been declared effective by the SEC. A Shelf Registration Statement pursuant to Section 2(b) hereof will not be deemed to have become effective unless it has been declared effective by the SEC or is automatically effective upon filing with the SEC as provided by Rule 462 under the Securities Act.

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If a Registration Default occurs, the interest rate on the Registrable Securities will be increased by (i) 0.25% per annum for the first 90-day period beginning on the day immediately following such Registration Default and (ii) an additional 0.25% per annum with respect to each subsequent 90-day period, in each case until and including the date such Registration Default ends, up to a maximum increase of 0.5% per annum. A Registration Default ends when the Securities cease to be Registrable Securities or, if earlier, (1) in the case of a Registration Default under clause (i) of the definition thereof, when the Exchange Offer is completed, (2) in the case of a Registration Default under clause (ii) or clause (iii) of the definition thereof, when the Shelf Registration Statement becomes effective or (3) in the case of a Registration Default under clause (iv) of the definition thereof, when the Shelf Registration Statement again becomes effective or the Prospectus again becomes usable. If at any time more than one Registration Default has occurred and is continuing, then, until the next date that there is no Registration Default, the increase in interest rate provided for by this paragraph shall apply as if there occurred a single Registration Default that begins on the date that the earliest such Registration Default occurred and ends on such next date that there is no Registration Default.

For the avoidance of doubt, any increase in the interest rate pursuant to this Section 2(d) shall not be cumulative.

(e) Without limiting the remedies available to the Dealer Managers and the Holders, the Company and the Guarantor acknowledge that any failure by the Company or the Guarantor to comply with their obligations under Section 2(a) and Section 2(b) hereof may result in material irreparable injury to the Dealer Managers or the Holders for which there is no adequate remedy at law, that it will not be possible to measure damages for such injuries precisely and that, in the event of any such failure, the Dealer Managers or any Holder may obtain such relief as may be required to specifically enforce the Company’s and the Guarantor’s obligations under Section 2(a) and Section 2(b) hereof.

3. Registration Procedures. (a) In connection with their obligations pursuant to Section 2(a) and Section 2(b) hereof, the Company and the Guarantor shall promptly:

(i) prepare and file with the SEC a Registration Statement on the appropriate form under the Securities Act, which form (x) shall be selected by the Company and the Guarantor, (y) shall, in the case of a Shelf Registration, be available for the sale of the Registrable Securities by the Holders thereof and (z) shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the SEC to be filed therewith; and use their reasonable best efforts to cause such Registration Statement to become effective and remain effective for the applicable period in accordance with Section 2 hereof;

(ii) prepare and file with the SEC such amendments and post-effective amendments to each Registration Statement as may be necessary to keep such Registration Statement effective for the applicable period in accordance with Section 2 hereof and cause each Prospectus to be supplemented by any required prospectus supplement and, as so supplemented, to be filed

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pursuant to Rule 424 under the Securities Act; and keep each Prospectus current during the period described in Section 4(3) of and Rule 174 under the Securities Act that is applicable to transactions by brokers or dealers with respect to the Registrable Securities or Exchange Securities;

(iii) to the extent any Free Writing Prospectus is used, file with the SEC any Free Writing Prospectus that is required to be filed by the Company or the Guarantor with the SEC in accordance with the Securities Act and to retain any Free Writing Prospectus not required to be filed;

(iv) in the case of a Shelf Registration, furnish to each Participating Holder, to counsel for the Dealer Managers, to counsel for such Participating Holders and to each Underwriter of an Underwritten Offering of Registrable Securities, if any, without charge, as many copies of each Prospectus, preliminary prospectus or Free Writing Prospectus, and any amendment or supplement thereto, as such Participating Holder, counsel or Underwriter may reasonably request in order to facilitate the sale or other disposition of the Registrable Securities thereunder; and, subject to Section 3(c) hereof, the Company and the Guarantor consent to the use of such Prospectus, preliminary prospectus or such Free Writing Prospectus and any amendment or supplement thereto in accordance with applicable law by each of the Participating Holders and any such Underwriters in connection with the offering and sale of the Registrable Securities covered by and in the manner described in such Prospectus, preliminary prospectus or such Free Writing Prospectus or any amendment or supplement thereto in accordance with applicable law;

(v) use their reasonable best efforts to register or qualify the Registrable Securities under all applicable state securities or blue sky laws of such jurisdictions as any Participating Holder shall reasonably request in writing by the time the applicable Registration Statement becomes effective; cooperate with such Participating Holders in connection with any filings required to be made with FINRA; and do any and all other acts and things that may be reasonably necessary or advisable to enable each Participating Holder to complete the disposition in each such jurisdiction of the Registrable Securities owned by such Participating Holder; provided that neither the Company nor the Guarantor shall be required to (1) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (2) file any general consent to service of process in any such jurisdiction or (3) subject itself to taxation in any such jurisdiction if it is not so subject;

(vi) notify counsel for the Dealer Managers and, in the case of a Shelf Registration, notify each Participating Holder and counsel for such Participating Holders promptly and, if requested by any such Participating Holder or counsel, confirm such advice in writing (1) when a Registration Statement has become effective, when any post-effective amendment thereto has been filed and becomes effective, when any Free Writing Prospectus has been filed or any amendment or supplement to the Prospectus or any Free Writing Prospectus has been filed, (2) of any request by the SEC or any state securities authority for amendments and supplements to a Registration Statement, Prospectus or any Free Writing Prospectus or for additional information after the Registration Statement has become effective, (3) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, including the receipt by the Company of any notice of objection of the SEC to the use of a Shelf Registration Statement or any post-effective

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amendment thereto pursuant to Rule 401(g)(2) under the Securities Act, (4) if, between the applicable effective date of a Shelf Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company or the Guarantor contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to an offering of such Registrable Securities cease to be true and correct in all material respects or if the Company or the Guarantor receives any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation of any proceeding for such purpose, (5) of the happening of any event during the period a Registration Statement is effective that makes any statement made in such Registration Statement or the related Prospectus or any Free Writing Prospectus untrue in any material respect or that requires the making of any changes in such Registration Statement or Prospectus or any Free Writing Prospectus in order to make the statements therein not misleading and (6) of any determination by the Company or the Guarantor that a post-effective amendment to a Registration Statement or any amendment or supplement to the Prospectus or any Free Writing Prospectus would be appropriate;

(vii) use their reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement or, in the case of a Shelf Registration, the resolution of any objection of the SEC pursuant to Rule 401(g)(2) under the Securities Act, including by filing an amendment to such Registration Statement on the proper form, at the earliest possible moment and provide immediate notice to each Holder or Participating Holder of the withdrawal of any such order or such resolution;

(viii) in the case of a Shelf Registration, furnish to each Participating Holder, without charge, at least one conformed copy of each Registration Statement and any post-effective amendment thereto (without any documents incorporated therein by reference or exhibits thereto, unless requested);

(ix) in the case of a Shelf Registration, cooperate with the Participating Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends and enable such Registrable Securities to be issued in such denominations and registered in such names (consistent with the provisions of the Indenture) as such Participating Holders may reasonably request at least one Global Business Day prior to the closing of any sale of Registrable Securities;

(x) in the case of a Shelf Registration, upon the occurrence of any event contemplated by Section 3(a)(vi)(5) hereof, use their reasonable best efforts to prepare and file with the SEC a supplement or post-effective amendment to the Shelf Registration Statement or the related Prospectus or any Free Writing Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered (or, to the extent permitted by law, made available) to purchasers of the Registrable Securities, such Prospectus or Free Writing Prospectus, as the case may be, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and the Company and the Guarantor shall notify the Participating Holders to suspend use of the Prospectus or any Free Writing Prospectus as promptly as practicable after the occurrence of such an event, and such Participating Holders, hereby agree to suspend use of the Prospectus or any Free Writing Prospectus, as the case may be, until the Company and the Guarantor have amended or supplemented the Prospectus or the Free Writing Prospectus, as the case may be, to correct such misstatement or omission;

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(xi) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any Free Writing Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or a Free Writing Prospectus or of any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus after initial filing of a Registration Statement, provide copies of such document to the Dealer Managers and their counsel (and, in the case of a Shelf Registration Statement, to the Participating Holders and their counsel) and make such of the representatives of the Company and the Guarantor as shall be reasonably requested by the Dealer Managers or their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders or their counsel) available for discussion of such document; and the Company and the Guarantor shall not, at any time after initial filing of a Registration Statement, use or file any Prospectus, any Free Writing Prospectus, any amendment of or supplement to a Registration Statement or a Prospectus or a Free Writing Prospectus, or any document that is to be incorporated by reference into a Registration Statement, a Prospectus or a Free Writing Prospectus, of which the Dealer Managers and their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders and their counsel) shall not have previously been advised and furnished a copy or to which the Dealer Managers or their counsel (and, in the case of a Shelf Registration Statement, the Participating Holders or their counsel) shall object within five Business Days of receipt of such copy;

(xii) obtain a CUSIP number for all Exchange Securities or Registrable Securities, as the case may be, not later than the initial effective date of a Registration Statement;

(xiii) cause the Indenture to be qualified under the Trust Indenture Act in connection with the registration of the Exchange Securities or Registrable Securities, as the case may be; cooperate with the Trustee and the Holders to effect such changes to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and execute, and use their reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner;

(xiv) in the case of a Shelf Registration, make available for inspection by a representative of the Participating Holders (an “Inspector”), any Underwriter participating in any disposition pursuant to such Shelf Registration Statement, any attorneys and accountants designated by a majority in aggregate principal amount of the Securities held by the Participating Holders and any attorneys and accountants designated by such Underwriter, at reasonable times and in a reasonable manner, all pertinent financial and other records, documents and properties of the Company and its subsidiaries, and cause the respective officers, directors and employees of the Company and the Guarantor to supply all information reasonably requested by any such Inspector, Underwriter, attorney or accountant in connection with a Shelf Registration Statement; provided that if any such information is identified by the Company or the Guarantor as being confidential or proprietary, each Person receiving such information shall take such actions as are reasonably necessary to protect the confidentiality of such information to the extent such action is otherwise not inconsistent with, an impairment of or in derogation of the rights and interests of any Inspector, Holder or Underwriter (including if requested by the Company or a Guarantor, the execution of a customary confidentiality agreement);

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(xv) in the case of a Shelf Registration, use their reasonable best efforts to cause all Registrable Securities to be listed on the New York Stock Exchange if requested by the Majority Holders, to the extent such Registrable Securities satisfy applicable listing requirements;

(xvi) if reasonably requested by any Participating Holder, promptly include in a Prospectus supplement or post-effective amendment such information with respect to such Participating Holder as such Participating Holder reasonably requests to be included therein and make all required filings of such Prospectus supplement or such post-effective amendment as soon as the Company has received notification of the matters to be so included in such filing; and

(xvii) in the case of a Shelf Registration, enter into such customary agreements and take all such other actions in connection therewith (including those requested by the Holders of a majority in principal amount of the Registrable Securities covered by the Shelf Registration Statement) in order to expedite or facilitate the disposition of such Registrable Securities and upon entering into any underwriting agreement relating to an Underwritten Offering and at the closing of any such Underwritten Offering, if required thereunder, (1) to the extent reasonably possible, make such representations and warranties to the Participating Holders and any Underwriters of such Registrable Securities with respect to the business of the Company and its subsidiaries and the Registration Statement, Prospectus, any Free Writing Prospectus and documents incorporated by reference or deemed incorporated by reference, if any, in each case, in form, substance and scope as are customarily made by issuers to underwriters in underwritten offerings and confirm the same if and when requested, (2) obtain opinions of counsel to the Company and the Guarantor (which counsel and opinions, in form, scope and substance, shall be reasonably satisfactory to the Participating Holders and such Underwriters and their respective counsel) addressed to each Participating Holder and Underwriter of Registrable Securities, covering the matters customarily covered in opinions requested in underwritten offerings, (3) obtain “comfort” letters from the independent registered public accountants of the Company and the Guarantor (and, if necessary, any other registered public accountant of any subsidiary of the Company or the Guarantor, or of any business acquired by the Company or the Guarantor for which financial statements and financial data are or are required to be included in the Registration Statement) addressed to each Participating Holder (to the extent permitted by applicable professional standards) and Underwriter of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in “comfort” letters in connection with underwritten offerings, including but not limited to financial information contained in any preliminary prospectus, Prospectus or Free Writing Prospectus and (4) deliver such documents and certificates as may be reasonably requested by the Holders of a majority in principal amount of the Registrable Securities being sold or the Underwriters, and which are customarily delivered in underwritten offerings, to evidence the continued validity of the representations and warranties of the Company and the Guarantor made pursuant to clause (1) above and to evidence compliance with any customary conditions contained in an underwriting agreement.

(b) In the case of a Shelf Registration Statement, the Company may require each Holder of Registrable Securities to furnish to the Company a Notice and Questionnaire and such

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other information regarding such Holder and the proposed disposition by such Holder of such Registrable Securities as the Company and the Guarantor may from time to time reasonably request in writing.

(c) Each Participating Holder agrees that, upon receipt of any notice from the Company and the Guarantor of the happening of any event of the kind described in Section 3(a)(vi)(3) or Section 3(a)(vi)(5) hereof, such Participating Holder will forthwith discontinue disposition of Registrable Securities pursuant to the Shelf Registration Statement until such Participating Holder’s receipt of the copies of the supplemented or amended Prospectus and any Free Writing Prospectus contemplated by Section 3(a)(x) hereof and, if so directed by the Company and the Guarantor, such Participating Holder will deliver to the Company and the Guarantor all copies in its possession, other than permanent file copies then in such Participating Holder’s possession, of the Prospectus and any Free Writing Prospectus covering such Registrable Securities that is current at the time of receipt of such notice.

(d) If the Company and the Guarantor shall give any notice to suspend the disposition of Registrable Securities pursuant to a Registration Statement, the Company and the Guarantor shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement by the number of days during the period from and including the date of the giving of such notice to and including the date when the Holders of such Registrable Securities shall have received copies of the supplemented or amended Prospectus or any Free Writing Prospectus necessary to resume such dispositions. The Company and the Guarantor may give any such notice only twice during any 365-day period and any such suspensions shall not exceed 45 days in any three-month period or 90 days in any 12-month period for each suspension and there shall not be more than two suspensions in effect during any 365-day period.

(e) The Participating Holders who desire to do so may sell such Registrable Securities in an Underwritten Offering. In any such Underwritten Offering, the investment bank or investment banks and manager or managers (each an “Underwriter”) that will administer the offering will be selected by the Holders of a majority in principal amount of the Registrable Securities included in such offering, subject to the Guarantor’s prior approval of such Underwriter (which approval shall not be unreasonably delayed or withheld).

4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff has taken the position that any broker-dealer that receives Exchange Securities for its own account in the Exchange Offer in exchange for Securities that were acquired by such broker-dealer as a result of market-making or other trading activities (a “Participating Broker-Dealer”) may be deemed to be an “underwriter” within the meaning of the Securities Act and must deliver a prospectus meeting the requirements of the Securities Act in connection with any resale of such Exchange Securities.

The Company and the Guarantor understand that it is the Staff’s position that if the Prospectus contained in the Exchange Offer Registration Statement includes a plan of distribution containing a statement to the above effect and the means by which Participating Broker-Dealers may resell the Exchange Securities, without naming the Participating Broker-Dealers or specifying the amount of Exchange Securities owned by them, such Prospectus may be delivered by Participating Broker-Dealers (or, to the extent permitted by law, made available to purchasers) to satisfy their prospectus delivery obligation under the Securities Act in connection with resales of Exchange Securities for their own accounts, so long as the Prospectus otherwise meets the requirements of the Securities Act.

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(b) In light of the above, and notwithstanding the other provisions of this Agreement, the Company and the Guarantor agree to amend or supplement the Prospectus contained in the Exchange Offer Registration Statement for a period of up to 270 days after the final settlement date, which is expected to occur 3 (three) business days after the last Exchange Date (as such period may be extended pursuant to Section 3(d) hereof), in order to expedite or facilitate the disposition of any Exchange Securities by Participating Broker-Dealers consistent with the positions of the Staff recited in Section 4(a) above. The Company and the Guarantor further agree that Participating Broker-Dealers shall be authorized to deliver such Prospectus (or, to the extent permitted by law, make available) during such period in connection with the resales contemplated by this Section 4.

(c) The Dealer Managers shall have no liability to the Company, the Guarantor or any Holder with respect to any request that they may make pursuant to Section 4(b) hereof.

5. Indemnification and Contribution. (a) The Company and the Guarantor, jointly and severally, agree to indemnify and hold harmless each Dealer Manager and each Holder, their respective affiliates, directors and officers and each Person, if any, who controls any Dealer Manager or any Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, legal fees and other expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such fees and expenses are incurred), joint or several, that arise out of, or are based upon, (1) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or any omission or alleged omission to state therein a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or (2) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus, any Free Writing Prospectus or any “issuer information” (“Issuer Information”) filed or required to be filed pursuant to Rule 433(d) under the Securities Act, or any omission or alleged omission to state therein a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, in each case except insofar as such losses, claims, damages or liabilities arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to any Dealer Manager or information relating to any Holder furnished to the Company in writing through the Dealer Managers or any selling Holder, respectively, expressly for use therein. In connection with any Underwritten Offering permitted by Section 3, the Company and the Guarantor, jointly and severally, will also indemnify the Underwriters, if any, selling brokers, dealers and similar securities industry professionals participating in the distribution, their respective affiliates and each Person who controls such Persons (within the meaning of the Securities Act and the Exchange Act) to the same extent as provided above with respect to the indemnification of the Holders, if requested in connection with any Registration Statement, any Prospectus, any Free Writing Prospectus or any Issuer Information.

(b) Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantor, the Dealer Managers and the other selling Holders, the directors of the

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Company and the Guarantor, each officer of the Company and the Guarantor who signed the Registration Statement and each Person, if any, who controls the Company, the Guarantor, any Dealer Manager and any other selling Holder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with any information relating to such Holder furnished to the Company in writing by such Holder expressly for use in any Registration Statement, any Prospectus and any Free Writing Prospectus.

(c) If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any Person in respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above, such Person (the “Indemnified Person”) shall promptly notify the Person against whom such indemnification may be sought (the “Indemnifying Person”) in writing; provided that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have under paragraph (a) or (b) above except to the extent that it has been materially prejudiced (through the forfeiture of substantive rights or defenses) by such failure; and provided, further, that the failure to notify the Indemnifying Person shall not relieve it from any liability that it may have to an Indemnified Person otherwise than under paragraph (a) or (b) above. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others entitled to indemnification pursuant to this Section 5 that the Indemnifying Person may designate in such proceeding and shall pay the fees and expenses of such proceeding and shall pay the fees and expenses of such counsel related to such proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary; (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood and agreed that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm (x) for any Dealer Manager, its affiliates, directors and officers and any control Persons of such Dealer Manager shall be designated in writing by such Dealer Manager, (y) for any Holder, its directors and officers and any control Persons of such Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be designated in writing by the Company or the Guarantor. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding

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the foregoing sentence, if at any time an Indemnified Person shall have requested that an Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnification could have been sought hereunder by such Indemnified Person, unless such settlement (A) includes an unconditional release of such Indemnified Person, in form and substance reasonably satisfactory to such Indemnified Person, from all liability on claims that are the subject matter of such proceeding and (B) does not include any statement as to or any admission of fault, culpability or a failure to act by or on behalf of any Indemnified Person.

(d) If the indemnification provided for in paragraphs (a) and (b) above is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor from the offering of the Securities and the Exchange Securities, on the one hand, and by the Holders from receiving Securities or Exchange Securities registered under the Securities Act, on the other hand, or (ii) if the allocation provided by clause (i) is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) but also the relative fault of the Company and the Guarantor on the one hand and the Holders on the other in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantor on the one hand and the Holders on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company and the Guarantor or by the Holders and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

(e) The Company, the Guarantor and the Holders agree that it would not be just and equitable if contribution pursuant to this Section 5 were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d) above shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with any such action or claim. Notwithstanding the provisions of this Section 5, in no event shall a Holder be required to contribute any amount in excess of the amount by which the total price at which the Securities or Exchange Securities sold by such Holder exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent

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misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 5 are several and not joint.

(f) The remedies provided for in this Section 5 are not exclusive and shall not limit any rights or remedies that may otherwise be available to any Indemnified Person at law or in equity.

(g) The indemnity and contribution provisions contained in this Section 5 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Dealer Manager or any Holder or any Person controlling any Dealer Manager or any Holder, or by or on behalf of the Company or the Guarantor or the officers or directors of or any Person controlling the Company or the Guarantor, (iii) acceptance of any of the Exchange Securities and (iv) any sale of Registrable Securities pursuant to a Shelf Registration Statement.

6. General.

(a) No Inconsistent Agreements. The Company and the Guarantor represent, warrant and agree that (i) the rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of any other outstanding securities issued or guaranteed by the Company or the Guarantor under any other agreement and (ii) neither the Company nor the Guarantor has entered into, or on or after the date of this Agreement will enter into, any agreement that is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof.

(b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless the Company and the Guarantor have obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or consent; provided that no amendment, modification, supplement, waiver or consent to any departure from the provisions of Section 5 hereof shall be effective as against any Holder of Registrable Securities unless consented to in writing by such Holder. Any amendments, modifications, supplements, waivers or consents pursuant to this Section 6(b) shall be by a writing executed by each of the parties hereto.

(c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, registered first-class mail, telex, telecopier, or any courier guaranteeing overnight delivery (i) if to a Holder, at the most current address given by such Holder to the Company by means of a notice given in accordance with the provisions of this Section 6(c), which address initially is, with respect to the Dealer Managers, the address set forth in the Dealer Manager Agreement; (ii) if to the Company and the Guarantor, initially at the Company’s address set forth in the Dealer Manager Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c); and (iii) to such other persons at their respective addresses as provided in the

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Dealer Manager Agreement and thereafter at such other address, notice of which is given in accordance with the provisions of this Section 6(c). All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Global Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if telecopied; and on the next Global Business Day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture.

(d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided that nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms of the Dealer Manager Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all the terms of this Agreement, and by taking and holding such Registrable Securities such Person shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement and such Person shall be entitled to receive the benefits hereof. The Dealer Managers (in their capacity as Dealer Managers) shall have no liability or obligation to the Company or the Guarantor with respect to any failure by a Holder to comply with, or any breach by any Holder of, any of the obligations of such Holder under this Agreement.

(e) Third Party Beneficiaries. Each Holder shall be a third party beneficiary to the agreements made hereunder between the Company and the Guarantor, on the one hand, and the Dealer Managers, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights or the rights of other Holders hereunder.

(f) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

(g) Headings. The headings in this Agreement are for convenience of reference only, are not a part of this Agreement and shall not limit or otherwise affect the meaning hereof.

(h) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

(i) Jurisdiction. The Company and the Guarantor agree that any suit, action or proceeding against the Company or the Guarantor arising out of or based upon this Agreement or the transactions contemplated hereby may be instituted in any U.S. federal or state court in the Borough of Manhattan, The City of New York, and waives any objection which it may now or hereafter have to the laying of venue of any such proceeding, and irrevocably submits to the non-exclusive jurisdiction of such courts in any suit, action or proceeding. Each of the Company and the Guarantor have appointed National Registered Agent, Inc., at its offices located at 875

18

Avenue of the Americas, Suite 501, New York, New York 10001, USA as their authorized agent (the “Authorized Agent”) upon whom process may be served in any suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated herein that may be instituted in any U.S. federal or state court in New York City, by any Dealer Manager, the directors, officers, employees, affiliates and agents of any Dealer Manager, or by any person who controls any Dealer Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and expressly accepts the nonexclusive jurisdiction of any such court in respect of any such suit, action or proceeding. Such appointment shall be irrevocable. The Company and the Guarantor hereby represent and warrant that the Authorized Agent has accepted such appointment and has agreed to act as said agent for service of process, and the Company and the Guarantor agree to take any and all action, including the filing of any and all documents that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent shall be deemed, in every respect, effective service of process upon the Company or the Guarantor. Notwithstanding the foregoing, any action arising out of or based upon this Agreement may be instituted by any Dealer Manager, the directors, officers, employees, affiliates and agents of any Dealer Manager, or by any person who controls any Dealer Manager within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, in any court of competent jurisdiction in Brazil or the Cayman Islands. The parties hereto each hereby waive any right to trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement.

(j) Currency. Each reference in this Agreement to U.S. dollars (the “relevant currency”), including by use of the symbol “US$”, is of the essence. To the fullest extent permitted by applicable law, the obligation of the Company or the Guarantor in respect of any amount due under this Agreement will, notwithstanding any payment in any other currency (whether pursuant to a judgment or otherwise), be discharged only to the extent of the amount in the relevant currency that the party entitled to receive such payment may, in accordance with its normal procedures, purchase with the sum paid in such other currency (after any premium and costs of exchange) on the Business Day immediately following the day on which such party receives such payment. If the amount in the relevant currency that may be so purchased for any reason falls short of the amount originally due, the Company or the Guarantor will pay such additional amounts, in the relevant currency, as may be necessary to compensate for the shortfall. Any obligation of the Company or the Guarantor not discharged by such payment will, to the fullest extent permitted by applicable law, be due as a separate and independent obligation and, until discharged as provided herein, will continue in full force and effect.

(k) Waiver of Immunity. To the extent that the Company or the Guarantor has or hereafter may acquire any immunity (sovereign or otherwise) from any legal action, suit or proceeding, from jurisdiction of any court or from set-off or any legal process (whether service or notice, attachment in aid or otherwise) with respect to itself or any of its property, the Company and the Guarantor hereby irrevocably waive and agree not to plead or claim such immunity in respect of its obligations under this Agreement to the fullest extent permitted by applicable law.

(l) Entire Agreement; Severability. This Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and prior writings with respect thereto. If any term, provision, covenant or restriction contained in

19

this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable or against public policy, the remainder of the terms, provisions, covenants and restrictions contained herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated. The Company, the Guarantor and the Dealer Managers shall endeavor in good faith negotiations to replace the invalid, void or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, void or unenforceable provisions.

20

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

EMBRAER OVERSEAS LIMITED
By:	/s/ José Antonio A. Filippo		(*)
	Name:	José Antonio A. Filippo
	Title:	Director
By:	/s/ Marcio Almeida Libanio		(*)
	Name:	Marcio Almeida Libanio
	Title:	Director
EMBRAER S.A.
By:	/s/ Frederico P. Fleury Curado		(*)
	Name:	Frederico P. Fleury Curado
	Title:	President and CEO
By:	/s/ José Antonio A. Filippo		(*)
	Name:	José Antonio A. Filippo
	Title:	Executive Vice President and CFO

Registration Rights Agreement Signature Page

Confirmed and accepted as of the date first above written:

CITIGROUP GLOBAL MARKETS INC.
For itself and on behalf of the several Dealer Managers
By:	/s/ Adrian Guzzoni
	Authorized Signatory

Registration Rights Agreement Signature Page

Confirmed and accepted as of the date first above written:

DEUTSCHE BANK SECURITIES INC.
For itself and on behalf of the several Dealer Managers
By:	/s/ André Silva
	Authorized Signatory
	André Silva
	Managing Director
By:	/s/ Matthew Dukes
	Authorized Signatory
	Matthew Dukes
	Director

Registration Rights Agreement Signature Page

Confirmed and accepted as of the date first above written:

MERRILL LYNCH, PIERCE, FENNER & SMITH                               INCORPORATED For itself and on behalf of the several Dealer Managers
By:	/s/ Maxim Volkov
	Authorized Signatory
	Maxim Volkov
	Managing Director

Registration Rights Agreement Signature Page

EX-8.1

EXHIBIT 8.1

List of Subsidiaries of Embraer S.A.

Name	Jurisdiction of Incorporation
Embraer Aircraft Holding, Inc – EAH	Delaware, U.S.A.
Embraer Aircraft Customer Services, Inc. – EACS	Florida, U.S.A.
Embraer Aircraft Maintenance Services, Inc. – EAMS	Delaware, U.S.A.
Embraer Services, Inc. – ESI	Delaware, U.S.A.
Embraer Executive Jet Services, LLC – EEJS	Delaware, U.S.A.
Embraer Executive Aircraft, Inc. – EEA	Delaware, U.S.A.
Embraer Training Services, LLC – ETS	Delaware, U.S.A.
Aero Seating Technologies, LLC	Delaware, U.S.A.
Embraer CAE Training Services, LLC – ECTS	Delaware, U.S.A.
Embraer Engineering & Technology Center USA, Inc.	Delaware, U.S.A.
Embraer Credit Ltd. – ECL	Delaware, U.S.A.
Embraer Representations, LLC – ERL	Delaware, U.S.A.
Embraer Defense and Security, Inc	Delaware, U.S.A.
Indústria Aeronáutica Neiva Ltda.	Brazil
ELEB Equipamentos Ltda.	Brazil
Embraer GPX Ltda	Brazil
ECC do Brasil Cia de Seguros	Brazil
Embraer Defesa e Segurança Participações S.A.	Brazil
Atech Negócios em Tecnologia S.A.	Brazil
Orbisat Indústria S.A.	Brazil
Harpia Sistemas S.A.	Brazil
AEL Sistemas S.A.	Brazil
Savis Tecnologia e Sistemas S.A.	Brazil
Visiona Tecnologia Espacial S.A.	Brazil
Embraer Merco S/A – EMS	Uruguay
Embraer Aviation Europe SAS – EAE	France
Embraer Aviation International SAS – EAI	France
Embraer Europe SARL – EES	France
Embraer Australia Pty Ltd. – EAL	Australia
EZ Air Interior Limited	Ireland
Harbin Embraer Aircraft Industry Company, Ltd. – HEAI	China
Embraer (China) Aicraft Technical Services Co., Ltd – ECA	China
Embraer Spain Holding Co., SL – ESH	Spain
ECC Investment Switzerland AG	Switzerland
ECC Insurance & Financial Company Ltd.	Cayman Islands, BWI
Embraer Finance Ltd. – EFL	Cayman Islands, BWI
Embraer Overseas Limited	Cayman Islands, BWI
Listral Estruturas Aeronáuticas S.A.	Portugal
Embraer Portugal – SGPS, S.A.	Portugal
Embraer Portugal Estruturas Metálicas S.A.	Portugal
Embraer Portugal Estruturas em Compósito S.A.	Portugal
Air Holding SGPS, S.A.	Portugal
OGMA – Ind. Aeronáutica de Portugal S.A.	Portugal
ECC Leasing Company Ltd.	Ireland
Embraer Asia Pacific Pte-Limited – EAP	Singapore
Embraer CAE Training Services (UK) Ltd. – ECTS	United Kingdom
Visiona International BV	Netherlands
Embraer Netherlands B.V. – ENL	Netherlands

EX-12.1

EXHIBIT 12.1

CERTIFICATION

I, Frederico Pinheiro Fleury Curado, certify that:

1. I have reviewed this annual report on Form 20-F of Embraer S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and to the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 20, 2014

By:	/s/ Frederico Pinheiro Fleury Curado
Name:	Frederico Pinheiro Fleury Curado
Title:	President and Chief Executive Officer

EX-12.2

EXHIBIT 12.2

CERTIFICATION

I, José Antonio de Almeida Filippo, certify that:

1. I have reviewed this annual report on Form 20-F of Embraer S.A.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;

4. The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:

a) designed such disclosure controls and procedures or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and

5. The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and to the audit committee of the company’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.

Date: March 20, 2014

By:	/s/ José Antonio de Almeida Filippo
Name:	José Antonio de Almeida Filippo
Title:	Executive Vice – President and Chief Financial and Investor Relations Officer

EX-13.1

EXHIBIT 13.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Embraer S.A. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2013, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Frederico Pinheiro Fleury Curado, Chairman, President and Chief Executive Officer, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the U.S. Sarbanes Oxley Act of 2002, that to the best of my knowledge:

(i) the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 20, 2014

By:	/s/ Frederico Pinheiro Fleury Curado
Name:	Frederico Pinheiro Fleury Curado
Title:	President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-13.2

EXHIBIT 13.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Embraer S.A. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2013, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, José Antonio de Almeida Filippo, Executive Vice – President and Chief Financial and Investor Relations Officer, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the U.S. Sarbanes Oxley Act of 2002, that to the best of my knowledge:

(i) the Report fully complies with the requirements of section 13(a) or 15(d) of the U.S. Securities Exchange Act of 1934; and

(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 20, 2014

By:	/s/ José Antonio de Almeida Filippo
Name:	José Antonio de Almeida Filippo
Title:	Executive Vice – President and Chief Financial and Investor Relations Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to the company and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.