The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these
consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
The accompanying notes are an integral part of these consolidated financial statements.
Notes to the Consolidated Financial Statements
In millions of U.S. dollars, unless otherwise stated
Embraer S.A. (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:
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(i)
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To design, build and market aircraft and aerospace materials and related accessories, components and equipment, according to the highest standards of technology and quality;
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(ii)
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To perform and carry out technical activities related to the manufacturing and servicing of aerospace materials;
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(iii)
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To contribute to the training of technical personnel as necessary for the aerospace industry;
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(iv)
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To engage in and provide services for other technological, manufacturing and business activities in connection with the aerospace industry;
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(v)
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To design, build and trade in equipment, materials, systems, software, accessories and components for the defense, security and power industries, as well as perform and carry out technical activities related to the
manufacturing and servicing thereof, in accordance with the highest technological and quality standards; and
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(vi)
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To conduct other technological, manufacturing, trading and services activities related to the defense, security and power industries.
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The Companys shares are listed on the enhanced corporate governance segment of the Stock Exchange in Brazil
(BM&FBOVESPA), known as the New Market (Novo Mercado). Embraer S.A. also has American Depositary Shares (evidenced by American Depositary ReceiptsADRs) which are registered with the Securities and Exchange
Commission (SEC) and are listed on the New York Stock Exchange (NYSE). The Company has no controlling group and its capital is comprised entirely of common shares.
These consolidated financial statements were approved by the Companys Board of Directors on February 26, 2016.
2.
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Presentation of the Financial Statements and Accounting Practices
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2.1
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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 include (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).
2.1.1
|
Basis of preparation
|
These consolidated financial statements have been 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 requires the use of certain critical accounting estimates. It also requires management of the Company
to exercise its judgment in the process of applying the Companys accounting policies. These 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.
F-10
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The consolidated financial statements include
the balances of the December 31, 2015 financial statements of the Company and all subsidiaries directly or indirectly controlled by Embraer, special purpose entities (SPEs) controlled by the Company has control, exclusive investment funds (FIE)
and participation investment funds (FIP). Jointly controlled entities (joint ventures) are not consolidated and are presented as Investments and accounted for by the equity method. Joint operations are consolidated in proportion the investment.
All accounts and balances arising from transactions between consolidated entities are eliminated.
Subsidiaries are all entities (including SPEs) whose financial and
operating policies can be directed by the Company and normally evidenced by rights contractually established. 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.
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 the fair value of any consideration paid and the relevant share of the carrying value of the subsidiarys net assets acquired is recorded in equity. Gains or
losses on disposals to non-controlling interests are also recorded in equity.
The activities of consortia are governed by specific regulations and although
mandatory accounting controls apply to consortia, the entries are posted in the accounts of the members of a consortium in accordance with the proportion of the consortium attributed to each member. Such accounts of members that are subsidiaries of
Embraer are consolidated in the Companys financial statements.
2.1.3
|
Interest in other entities
|
Interest in other entities is not
consolidated in the consolidated financial statements. As of December 31, 2015, these comprise AEL Sistemas SAAEL, 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 the investment is therefore classified as a non-current financial instrument asset, measured at fair value, and changes in valuation are recognized in other
comprehensive income and presented in shareholders equity.
F-11
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
2.1.4
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Companys corporate structure
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Entity
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Participation
Embraer
Group
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Country
|
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Core activities
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ECC do Brasil Participações S.A.
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99,9%
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Brazil
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No operations
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ELEB Equipamentos Ltda.
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99,9%
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Brazil
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Sale of hydraulic and mechanical equipment for the aviation industry
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Embraer Aircraft Holding Inc.
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100%
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EUA
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Concentrates corporate activities in the USA
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Embraer Aircraft Customer Services, Inc.
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100%
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EUA
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Sale of spare parts and support services in North America and the Caribbean
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Embraer Aircraft Maintenance Services Inc.
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100%
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EUA
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Maintenance of aircraft and components
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Embraer Executive Jet Services, LLC
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100%
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EUA
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After sale support and aircraft maintenance
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Embraer Services Inc.
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100%
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EUA
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Support to the Defense and Commercial segments in the United States of America
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Embraer Executive Aircraft, Inc.
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100%
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EUA
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Final assembly and delivery of executive jets
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Embraer Engineering & Technology Center USA, Inc.
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100%
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EUA
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Engineering services related to aircraft research and development
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Aero Seating Technologies LLC
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100%
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EUA
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Production and maintenance of aircraft seats
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Embraer Defense and Security Inc.
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100%
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EUA
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Supply of Super Tucano aircraft to the American Air Force (LAS)
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Embraer Training Services
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100%
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EUA
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Comprises corporate and institutional activities
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Embraer CAE Training Services LLC
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51,0%
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EUA
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Pilot, mechanic and crew training
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Embraer Austrália PTY Ltd.
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100%
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Austrália
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No operations
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Embraer Aviation Europe SAS
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100%
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France
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Concentrates corporate activities abroad, specifically Europe
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Embraer Aviation International SAS
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100%
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France
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Sale of parts and after sale services in Europe, Africa and the Middle East
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Embraer Europe SARL
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100%
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France
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Commercial representation of the Company in Europe, Africa and the Middle East
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Embraer Credit Ltd.
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100%
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EUA
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Support to aircraft commercialization operations
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Embraer Defesa & Segurança Participações S.A.
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99,9%
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Brazil
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Coordinates investments in the Defense & Security segments
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AEL Sistemas S.A.
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25,0%
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Brazil
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Research and development of aviation technology and software programs
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Atech Negócios em Tecnologias S.A.
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99,9%
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Brazil
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Development and control, communications, computer and intelligence services
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Bradar Indústria S.A.
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95,0%
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Brazil
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Develops remote sensing and surveillance technology
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Bradar Aerolevantamento Ltda
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25,0%
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Brazil
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Aerial survey, mapping and remote sensing services
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Harpia Sistemas S.A.
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51,0%
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Brazil
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Operates in the unmanned aerial vehicles (UAVs) market
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Visiona Tecnologia Espacial S.A.
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51,0%
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Brazil
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Supply of the Brazilian Governments Geostationary Defense and Strategic
Communications Satellite System (SGDC)
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Visiona Internacional B.V.
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100%
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Holland
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Integration and supply of the Brazilian Governments (SGDC) System.
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SAVIS Tecnologia e Sistemas S.A.
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99,9%
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Brazil
|
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Operates in Defense and Security with the Brazilian Government
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Embraer GPX Ltda
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99,9%
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Brazil
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Aircraft maintenance services
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Embraer Netherlands Finance B.V.
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100%
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Holland
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Financial operations raising and investing funds of the Embraer Group
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Embraer Netherlands B.V.
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100%
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Holland
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Concentrates corporate activities abroad
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Embraer Asia Pacific PTE. Ltd.
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100%
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Singapore
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After sale services and support in Asia
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Airholding SGPS S.A.
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99,9%
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Portugal
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Coordinates investments in subsidiaries in Portugal
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Indústria Aeronáutica de Portugal S.A.
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65,0%
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Portugal
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Aviation maintenance and production
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ECC Leasing Co. Ltd.
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100%
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Ireland
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Leasing and commercialization of used aircraft
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Embraer CAE Training Services Ltd.
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51,0%
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United Kingdom
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Pilot, mechanic and crew training
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Embraer PortugalSGPS S.A.
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100%
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Portugal
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Coordinates investments and economic activities in subsidiaries in Portugal
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EmbraerPortugal Estruturas Metálicas S.A
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100%
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Portugal
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Fabrication of steel parts and products for the aviation industry
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EmbraerPortugal Estruturas em Compósitos S.A.
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100%
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Portugal
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|
Fabrication of composite parts and products for the aviation industry
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Embraer (China) Aircraft Technical Services Co. Ltd.
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100%
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China
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Sales and maintenance for after sales support in China
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EZ Air Interior Limited
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50,0%
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Ireland
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Fabrication of interiors for commercial aircraft
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Embraer Overseas Ltd.
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100%
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Cayman Islands
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Financial operations raising and investing funds of the Embraer Group
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Embraer Representation LLP
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99,0%
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EUA
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Commercial and institutional representation of the Company
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Embraer Spain Holding Co. SL
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100%
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Spain
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Concentrates corporate activities abroad
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|
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Harbin Embraer Aircraft Industry Company Ltd.
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51,0%
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|
China
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|
Fabrication of aircraft for the Chinese market
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ECC Investment Switzerland AG
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100%
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Switzerland
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|
Coordinates investments in subsidiaries abroad
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ECC Insurance & Finance Co.
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100%
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Cayman Islands
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Covers financial guarantees offered in aircraft sale structuring
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Embraer Finance Ltd.
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100%
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Cayman Islands
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Support to the Company in structuring specific operations
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Embraer Merco S.A. (EMS)
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100%
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Uruguay
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No operations
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|
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Indústria Aeronáutica Neiva Ltda
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99,9%
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Brazil
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No operations
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F-12
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
Special Purpose CompaniesSPEs
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, as the Company controls all the SPEs operations or takes a majority share of their risks and
rewards, 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 have not been consolidated, based on technical analyses made by Management. Apart from the consolidated SPEs mentioned, Embraer has no significant risks attributed to other structured operations involving SPEs.
Consortium Tepro
a consortium formed by Savis Tecnologia e Sistemas S.A. and Bradar Indústria S.A., companies controlled
by Embraer Defesa e Segurança Participações S.A., created to assist the Brazilian Army in November 2012 in implementation of the first phase of the Integrated Frontier Monitoring System (Sistema Integrado de Monitoramento de
FronteirasSisfron). Located in Campinas SP, the consortium is 93.5% owned by Savis and 6.5% owned by Bradar.
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).
Equity investment fund (FIP)
An Embraer initiative in conjunction with BNDES, FINEP and
Desenvolve SP
, created with the
aim of strengthening the aerospace supply chain, aerospace, defense and security and promoting integration of systems related to these sectors through support for small and medium enterprises. The transaction is not consolidated in the
Companys financial statements, but its results are presented in the equity line.
2.2
|
Summary of significant accounting policies
|
The relevant accounting policies adopted in
the preparation of these financial statements are presented below. Non-disclosure of relevant accounting practices could compromise correct interpretation of the financial statements, either because the international accounting standards offer more
than one treatment option or due to the complexity of the operation. The accounting policies used by the Company are:
2.2.1
|
Functional and presentation currency
|
A Companys
functional currency is the currency of the primary economic environment in which it is inserted and must be the currency that best reflects the business and operations of the Company. Based on this analysis, management has concluded that the US
Dollar (US $ or Dollar) is its functional currency, based on analysis of the following indicators:
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|
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Currency that most influences the prices of goods and services; this is the currency in which the sales price of its goods and services are expressed and settled;
|
|
|
|
Currency of the country whose competitive forces and regulations most influence the Companys business;
|
|
|
|
Currency that most influences the costs of providing goods or services, i.e., the currency in which the Companys costs are normally expressed and settled;
|
|
|
|
Currency in which the Company largely obtains funds for financial operations and in which it normally receives for its sales and accumulates cash;
|
2.2.2
|
Transactions in foreign currencies
|
Transactions in other
currencies (other than the functional currency) are translated into the functional currency at the foreign exchange rates in force on the transaction dates and subsequently updated at the exchange rates of the reporting dates in the case of
subsequent measurement. Foreign exchange gains and losses resulting from this conversion (in relation to monetary assets and liabilities indexed in currencies other than the functional currency) are recognized in the income statement as monetary and
exchange variations, net.
F-13
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
2.2.3
|
Translation of subsidiaries financial statements
|
Transactions in other currencies (other than the functional currency) are translated into the functional currency at the foreign exchange
rates in force on the transaction dates and subsequently updated at the exchange rates of the reporting dates in the case of subsequent measurement. Foreign exchange gains and losses resulting from this conversion (in relation to monetary assets and
liabilities indexed in currencies other than the functional currency) are recognized in the income statement as monetary and exchange variations, net.
2.2.4
|
Financial Instruments
|
The Company classifies its financial assets in 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.
Financial
assets are initially recognized at fair value plus transaction costs 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 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 and are classified as current assets. Gains and losses resulting from differences in the fair value 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. 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 and are recorded at fair value.
|
b.3)
|
Investments held to maturity
|
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 at fair value, including the transaction cost, and subsequently at amortized cost.
|
b.4)
|
Loans and receivables
|
The Companys loans and receivables include trade accounts
receivable, financing of customers and other receivables and are not subject to the use of fair value. Interest on loans and receivables is calculated by the effective interest rate method and recognized in the income statement as financial income
(expense), net.
F-14
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
c)
|
Adjustment to fair market value
|
The Company evaluates if there is objective evidence at
the balance sheet date that a financial asset or financial group is recognized at an amount higher than its recoverable amount. If applicable, a provision is recognized for impairment of the asset.
2.2.5
|
Cash and cash equivalents and short-term investments
|
Cash and
cash equivalents include cash in hand, cash in transit (amounts paid by our customers or debtors that are pending release by the intervening bank at the reporting date), 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.
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. Other financial investments whose maturity from the acquisition date is more than 90 days are presented as financial investments.
2.2.6
|
Trade accounts receivable
|
Trade accounts receivable are
recognized initially at present value and include revenues recorded using percentage-of-completion of the project method based on the incurred costs or physical progress of contracts, and are presented net of advances from customers and any
provision for doubtful accounts.
An allowance for doubtful trade accounts 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 carrying amount and the recoverable amount.
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.
2.2.7
|
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.
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
34), except for operations to hedge exposure 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 provided they meet the derivative definition.
Specific derivative transactions contracted to
protect the company against financial risks. These derivatives are accounted for in a different way, seeking to eliminate the effects of the volatility caused by such risks.
On initial designation of the hedge, the Company formally documents the relationship between hedging instruments and hedged items, 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 an effectiveness range of 80% to 125%.
F-15
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The Company has derivative financial instruments designated as fair value hedges and cash
flow hedges, as follows:
Changes in the fair value of derivatives 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.
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 is likely to affect the Companys results.
The effective portion of changes in the fair value of derivatives 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 in which 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 (in the same line as the hedged item) in line with realization of the hedged operation against profit and 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).
2.2.9
|
Customer and commercial financing
|
These relate to financing
granted to customers on the sale of certain aircraft and are measured at the amortized cost, by the effective interest rate method.
2.2.10
|
Collateralized accounts receivable and recourse and non-recourse debt
|
In structured sales operations, the Company established a Specific Purpose Entity (SPE), which obtained funds from a financial institution,
bought aircraft and paid the Company. In turn, this SPE structured financing for the end customer. In view of the right to receive from the end customer for the structured financing, the debt in relation to the funds obtained by the SPE from the
financial institution is registered as a recourse and non-recourse debt and the corresponding anticipated financial flow as collateralized accounts receivable.
In certain other transactions, the customer financed the purchase of an aircraft through a financing agent and the Company provided guarantees
for such financing. The Company therefore recognized the asset and liability flow for such transactions. The financial guarantee is eliminated in line with repayment of the financing.
The Companys inventories are largely
comprised of raw material, work in progress, spare parts and finished products. In general, raw material is valued at acquisition cost and work in progress and finished goods at production cost, which comprises raw materials, direct labor, other
direct costs and general related production costs. Except for used aircraft, inventories are written down by the average cost method.
The
Company periodically assesses the net realizable value of its inventories, namely the sales price less selling costs. If this amount is lower than the acquisition or production cost at which the inventory was initially recognized, the inventory
value is reduced to the realizable value.
Based on Management estimates, a provision is recorded for potential losses when spare parts
are classified as obsolete or are held in quantities that are in excess of potential demand
F-16
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
2.2.12
|
Income tax and social contribution
|
Tax expenses for the year
comprise current and deferred income tax. Income tax is recognized in the statements of income, except the portion of deferred income tax related to items recognized directly in shareholders equity in other comprehensive income.
The current income tax is calculated at the nominal rates of each country, totaling 34% in Brazil, composed of 25% income tax and 9% social
contribution on net income.
Deferred income tax is recognized on temporary differences arising between the tax and accounting bases of
assets and liabilities.
Elimination of the Transitional tax regime (
Regime Tributário de
Transição
RTT)
Since the adoption of international accounting standards in
its financial statements from 2008, and in line with the 2009 Transitional Tax Regime (RTT), the Company has calculated its income tax and social contribution on net income based on the accounting practices in force to December 31, 2007.
In November 2013, the Brazilian Internal Revenue issued Provisional Measure nº 627, converted into Law nº 12.973 in May 2014,
introduced changes to the Brazilian tax laws in relation to the effects of application of the international standards and applying the respective treatment to Income Tax and Social Contribution on Net Income.
The Company has applied this legislation and the related regulatory instructions as from 2015. No material effects have been identified in
relation to application of the international accounting standards. Accordingly, 2015 was marked by the elimination of the RTT.
Investments in associates are recorded and valued
in the consolidated financial statements using the equity method of accounting. In the case of exchange variations on foreign investments that use a functional currency other than that used by the Parent Company, such exchange variations are
recognized on Currency Translation Adjustments on equity, and are only recognized in Profit and Loss when the investment is sold or expensed.
Unrealized profits on transactions with subsidiaries are completely eliminated in equity calculations, on both sales from the subsidiary to
the Parent Company and sales between subsidiaries. Unrealized profits between the Parent Company and its subsidiaries are eliminated in the Parent Companys Profit and Loss on sales and cost of sales accounts.
Investments in associated entities over which the Parent Company has significant influence are presented in the Others line within
the investment group and measured by the equity method.
The investments in entities and Joint Ventures are measured and recognized by the
equity method.
2.2.14
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Property, plant and equipment
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Property, plant and equipment are
recorded at purchase, formation or construction cost, less accumulated depreciation and impairment losses.
Depreciation is calculated by
the straight-line method based on the assets estimated useful life (Note 16). Land is not depreciated.
Subsequent costs are
included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost of the item can be measured
reliably.
The Company estimates the residual value for certain aircraft and spare parts included in the Exchange Pool Program. The
Company does not attribute residual values to other assets as assets sold are not usually written off.
F-17
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The items comprising property, plant and equipment are summarized below:
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a)
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Land
mainly comprises areas on which the industrial, engineering and administrative buildings are located.
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b)
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Buildings and land improvements
mainly plants, engineering departments and offices, and land improvements include parking lots, road systems and water and sewage networks.
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c)
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Facilities
comprise auxiliary industrial facilities that directly or indirectly support the Companys industrial operations, as well as facilities of the engineering and administrative departments.
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d)
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Machinery and equipment
machinery and other equipment directly or indirectly used in the manufacturing process.
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e)
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Furniture and fixtures
furniture and fixtures used in the production, engineering and administrative departments
.
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f)
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Vehicles
mainly industrial vehicles and automobiles.
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g)
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Aircraft
mainly aircraft leased to airlines, and those used by the parent company to assist in testing new projects.
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h)
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Computers and peripherals
information technology equipment used mainly in the production process, engineering and administration.
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i)
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Tooling
tools used in the Companys production process.
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j)
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Property, plant and equipment in progress
construction works to expand the manufacturing plants and aircraft maintenance centers.
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k)
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Exchange pool program
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.
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Research costs are recorded as an expense when they are incurred. Project
costs, comprised mainly of expenditure on 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.
Capitalized development costs are amortized from the time at which benefits begin to accrue (units produced), based on estimated aircraft
sales, and the amortized amounts are appropriated to production cost. These estimates are reviewed on an annual basis.
The Company has
agreements with certain key suppliers, hereby denominated partners, who participate in the Companys research and development projects by contributing cash. The Company records such contributions as liabilities on receipt and as the milestones
are completed and the amounts are consequently no longer subject to return, they are recorded as a reduction of development expenditures capitalized in intangible assets and amortized on the aircraft production series.
Software licenses are capitalized and amortized over their estimated
useful lives.
Costs associated with maintaining computer software programs are recognized as expense as incurred. Development costs
directly attributable to identifiable and unique software, controlled by the Company and that is expected to generate benefits greater than the costs for more than one year, are recorded in intangible assets.
F-18
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
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c)
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Intangible assets acquired in business combinations
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Identified intangible assets
acquired in business combinations are recognized at fair value at the acquisition date. This group includes:
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c.1)
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Goodwill
recorded in the consolidated financial statements as an intangible asset and not subject to amortization, as it is realizable on disposal of the investment. It is tested at least annually for
impairment. If it is noted that the goodwill will not be fully recoverable, the amount of the impairment is recorded in the statement of income. Recognized impairment losses on goodwill are not reversed.
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c.2)
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Trademarks
acquired in business combinations are recognized at fair value at the acquisition date. Trademarks have defined useful lives and are amortized on the straight-line method over their estimated
useful life.
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c.3)
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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.
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c.4)
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Firm orders
orders or production orders awaiting execution acquired in business combinations are measured and recorded at fair value at the acquisition date and amortized over the delivery period specified
in the contracts.
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Non-current assets, specifically investments in
subsidiaries, the Companys property, plant and equipment and intangible assets, are initially measured at acquisition or construction cost. However, if there are indications that the value of such assets will not be recoverable in the future,
they are tested for impairment. The indicators are analyzed every quarter, however, even in the absence of such indicators, the Company calculates impairment at the end of each year for all CGUs whose intangible assets originated from product
development and goodwill for future profitability originated on the acquisition of new business processes.
For purposes of assessing the
realizable value, assets are grouped in cash-generating units (CGUs), taking into consideration the companys business model and its monitoring of cash flows. In general, the CGUs are defined in accordance with the families/platforms of the
aircraft or other goods and services produced by a Group company, irrespective of its geographic location.
Except for CGUs for aircraft
which may use market value to calculate the recoverable value of a CGU, the Company applies the value in use concept, using the cash flow projections before income tax and social contribution, discounted at the WACC rate, which reflects the
investors expectations of return. The cash flow projection for each CGU takes into account the Companys medium and long-term strategic plan, based on the characteristics and expectations of the business.
Any impairment of a CGU is recognized in Other Operating Expense on a pro rata basis depending on the assets of the subsidiaries that operate
in that CGU.
2.2.17
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Loans and financing
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Loans are recognized initially at fair
value, net of transaction costs, and subsequently carried at amortized cost (plus charges and interest on a pro rata basis), taking into account the effective interest rate on each transaction.
Loans are classified as current liabilities, unless the Company has an unconditional right to defer settlement of the liability for at least
12 months after the reporting date.
Determination of whether an arrangement is or contains a
lease is based on the substance of the transaction and requires an assessment of whether the arrangement transfers the risks and benefits of assets or only conveys the right to use the asset.
F-19
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
Aircraft available for lease or leased under operating leases are
recorded as property, plant and equipment and depreciated over their estimated useful lives. The rental income is recorded by the straight-line method over the lease period.
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 fixed asset and a financial liability (lease). Property, plant and equipment acquired under finance leases are
depreciated at the rates mentioned 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 appropriated to the statement of income on the straight-line method over the contract period.
Borrowing costs attributable to the
construction or production of assets that will not be ready for use for a considerable time are capitalized as part of the cost of the asset. These costs are allocated based on the average rate of all outstanding loans, weighted in accordance with
additions in the period of the assets. Borrowing costs are interest and other charges incurred by the Company in obtaining a loan.
2.2.20
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Advances from customers
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These refer basically to advances,
mostly denominated in dollars, Embraers functional currency, received from customers prior to the delivery of the aircraft.
2.2.21
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Financial guarantees and residual value guarantees
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In certain
cases, the Company grants financial or residual value guarantees on delivery of its aircraft, as part of the aircraft financing structure. The residual amount is guaranteed to the lender based on the expected future value of the aircraft at the end
of the funding, subject to a maximum limit, agreed by contract.
Financial guarantees are calculated at the time of delivery of the
aircraft and recognized as a reduction in sales revenue against deferred income. The income is realized in profit or loss over the aircraft financing period and all deferred 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 best estimate of potential losses (Note 25).
In some cases, the Company holds
guarantees in the form of deposits in favor of third parties to whom financial and residual value guarantees have been provided as part of aircraft financing structures (Note 11).
2.2.22
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Dividends and interest on own capital
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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. 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, 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, at the gross amount.
F-20
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
Amounts received from customers, without the
possibility of return, for the spare parts, training, technical representatives and other commitments established in sales contracts for aircraft already delivered. Amounts are deferred on delivery of the aircraft and the unearned income is
recognized when the service is rendered or the product is delivered to the customer.
This also refers to deferred revenues from defense
contracts for which the contractual milestones have not yet been completed. Revenue is recognized when the step is completed and the costs are recorded.
2.2.24
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Provisions, contingent assets and liabilities, legal obligations and judicial deposits
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Provisions provisions are recognized based on the judgment of the Companys 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 Companys best estimate of the anticipated outflow of resources.
Contingent assets are not recognized except when the Company concludes that the gain is virtually certain, has the right to real
guarantees or has received a favorable and unappealable legal decision.
Contingent liabilities amounts for which disbursement is
classified as possible 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 are required.
Legal obligationsresult from tax liabilities, the legality or constitutionality of which is under appeal. The related amounts are fully
provided for.
Court-mandated escrow depositsare recorded as other assets.
2.2.25
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Post-retirement benefits
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The Company provides defined contribution pension plans for its
employees. For the companies incorporated in Brazil, these are managed by EMBRAER PREVSociedade de Previdência Complementar.
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b)
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Post-retirement healthcare benefits
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The Company and some of its subsidiaries provide
healthcare benefits to retired employees.
The planned costs of offering post-retirement healthcare benefits and coverage for dependents
are recorded as a provision during the period of employment based on actuarial studies conducted to identify future exposure, based on the following main premises:
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i)
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Discount ratebrings future benefit flows to present value and is defined based on the ratio of Brazilian government securities;
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ii)
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Medical costs increase raterepresents the increase in the value of medical care and is not applied linearly, as the companies historically tend to take measures to reduce the cost, or even change health
plan providers;
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iii)
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Morbidity rate (aging factor)measures the increased use of health plans in light of the aging population;
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iv)
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Mortality rateuses the RP-2000 generational table provided by Society of Actuaries (SOA), which shows the rate by age and sex;
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v)
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Probability of Retirementestimates the probability of retirement by age group;
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vi)
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Churn rateuses the T-3 Table Service available from the Society of Actuaries (SOA), which shows the average rate of termination of employees by age.
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F-21
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The Company recognizes changes in the provision for the plan against other comprehensive
income in equity, net of taxes, to the extent that there are changes in the assumptions and against profit or loss if there are changes in the costs of the current benefit plan or in the plans contractual characteristics.
This provision is reviewed annually at the reporting date.
2.2.26
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Product warranties
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Warranty expenditure on aircraft and spare
parts is estimated on delivery of these products. The estimates are based on historical facts that include warranty claims and repair and replacement costs, warranties given by the suppliers and contractual coverage period. The coverage period
varies from 3 to 5 years.
The Company may be obliged to modify the product to meet the requirements of the certification authorities, or
after delivery, due to improvements or to the aircrafts performance. The costs of such modifications are provisioned when the new requirements or improvements are requested and known.
2.2.27
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Share Based Payment
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The Executive Remuneration Policy (PRE),
determines that the remuneration of the Companys management shall be granted as a Long Term Incentive (ILP in Portuguese) with the objective of retaining and attracting qualified personnel who will make an effective contribution to the
Companys performance. The Company provides two types of share-based remuneration in the form of LTIs:
i) stock options plan
(capital instruments based on the Companys share issues). In this modality, the program participants receive stock options in return for the services provided, the fair value of which is calculated based on the Black & Scholes pricing
model and recognized on a linear basis in the statements of income during the acquisition period, which is the period during which the acquisition criteria are met;
ii) cash-settled phantom shares plan in which the amounts attributed to the services provided by the participants are converted into virtual
share units based on the market value of the Companys shares. At the end of the acquisition period the participant receives the quantity of virtual shares converted into
Reais
, at the shares current market value. The company
recognizes the obligation during the acquisition period (quantity of virtual shares proportional to the period) in the same group as the participants normal remuneration. This obligation is presented as an account payable to employees and the
fair value is calculated based on the market price of the shares and registered as financial income (expense) in the statements of income. The phantom shares plan is a cash-settled share-based payment transaction; therefore, it has no impact on the
calculation of diluted earnings per share.
Government Grants are recognized against the
expenses for which the resources were used. Government grants advanced for investments in research and development are registered as deferred income and recognized in profit or loss to the extent that the resources are invested and the contractual
milestones are met, as a reduction of research expenses.
The government grants to acquire property, plant and equipment, will be
recognized as a obligation on the liability until the milestones defined by the conceiving entity are attended. On the moment these milestones are achieved, the grant shall be recognized as deferred revenue. This deferred revenue shall be recognized
on profit and loss as a reduction on the depreciation expense which this grant shall subside on the same proportion that this expense is recognized.
2.2.29
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Earnings per share
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Basic earnings per common share are computed
by dividing net income attributable to Embraer shareholders by the weighted average number of common shares outstanding during the period.
Diluted earnings per share are computed by adjusting the number of shares outstanding to include the number of additional shares that would
have been outstanding had the potentially dilutive shares attributable to stock options been put into circulation during the respective periods.
F-22
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
2.2.30
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Revenue recognition
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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.
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a)
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Revenue from aircraft, spare parts and services
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Revenue from sales of commercial,
executive and other aircraft, spare parts and services is generally recognized at the time of delivery or shipment, when the service is provided, 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.
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b)
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Revenue with multiple elements
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Revenue from aircraft sale contracts involving the
supply of spare parts, training and technical representation is recognized at its fair value when the product or service is delivered or provided to the customer.
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c)
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Revenue from Exchange Pool Program
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Revenue from the Exchange Pool Program is recognized
monthly during the contractual period and consists of a fixed charge and a variable charge directly related to the hours effectively flown by the aircraft under the program.
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d)
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Revenue from construction contracts
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Certain transactions in the Defense &
Security segment are construction contracts, and revenues are recognized by the Percentage-of-completion (POC) method, by incurred costs or physical progress and also through recognition upon delivery or shipment. Some contracts contain provisions
for price adjustment based on pre-established indices and these are recognized on an accrual basis. Adjustments of revenue recognition relating to sales of the Defense & Security segment contracts is based on Managements best
estimates as they arise.
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e)
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Revenue from operating leases
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The Company also recognizes the revenue from aircraft
rental as operating leases, proportional to the lease period.
2.2.31
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Cost of sales and services
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Cost of sales and services consists
of the cost of the aircraft, spare parts and services rendered, comprising:
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a)
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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.
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b)
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Labor
comprises salaries and related charges, primarily in Brazilian
reais
.
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c)
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Depreciation
The Companys fixed assets are depreciated using the straight-line basis over their useful lives.
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d)
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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.
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e)
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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.
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f)
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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 delivered or provided to the customer
.
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F-23
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
2.2.32
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Employee profit sharing plan
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The Company provides a profit
sharing plan for its employees, which is linked to performance targets set in action plans set and agreed at the beginning of each year. The profit sharing is equivalent to 12.5% of the net income for the period calculated in accordance with the
IFRS. Provisions are recognized monthly by applying the agreed percentage to the payroll of the company, recognized in the profit or loss accounts related to the job performed by each employee.
Over the total amount of the profit sharing, 50% is divided equally among all the employees and the other 50% in proportion to each
employees salary.
2.2.33
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Financial income and expenses and foreign exchange gains/losses
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Financial income and expenses principally comprise earnings on short-term investments, financial charges on loans, tax updates and foreign
exchange gains/losses on assets and liabilities expressed in currencies other than the functional currency (dollar), on an accrual basis.
Changes in the fair value of the residual value guarantees and profit or loss on the provision and implementation of derivative financial
capitalized are also recorded as financial revenue (expense).
Financial income and expense exclude borrowing costs attributable to
acquisitions, buildings or the contribution of qualifying assets that require a substantial period of time to be ready for use or sale.
2.2.34
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Statement of cash flows
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The statement of cash flows was
prepared using the indirect method.
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.
3.
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Critical accounting estimates
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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, revenue and expense and their disclosure. Therefore, variables and assumptions
derived from past experience and other factors deemed relevant were used in preparing accompanying financial statements included in this report. These estimates and assumptions are reviewed on an ongoing basis and the changes to accounting estimates
are recognized in the period in which the estimates are revised.
The significant accounting policies, including the variables and
assumptions used in the estimates, and the relevant sensitivity of those judgments to different scenarios and conditions are described below:
In the Defense & Security segment, a significant portion of
revenue is derived from long-term development and construction contracts with the Brazilian and foreign governments, and revenue is recognized by the Percentage-of-completion (POC) method, using incurred costs or physical progress as a reference for
revenue measurement. In the case of contracts measured at incurred costs, the anticipated margin of the contract is reassessed periodically, taking into account cost incurred and the projected completion costs. In the event of variations in this
margin, revenue already recognized in relation to such contracts is adjusted, taking into account the effects of the change in margin on costs already incurred. If the total costs of contracts in progress had been 10% lower than Managements
estimates, the revenue recognized in 2015 would have increased by US$ 207.0; if costs had been 10% higher than Managements estimates, there would have been a drop of US$ 248.9 in the revenue recognized.
F-24
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
3.2.
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Financial guarantees
|
Financial guarantees are granted at fair value and recognized as a
reduction in sales, and subsequently recognized as sales revenue over the period of the guarantee. On granting a financial guarantee, the Company evaluates the creditworthiness of the obligor and discloses its maximum exposure under the guarantee in
Note 36.3 Joint liabilities co-obligation, responsibilities and commitments. The Company monitors the obligors 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. When an agreement is negotiated for payment of this allowance, the amounts assumed are reclassified to accounts
payable.
3.3.
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Residual value guarantees
|
The residual value guarantees granted on aircraft sales can
be exercised at the end of a financing contract between a financial agent and the customer/operator of these aircraft. The guarantee are initially measured by fair value and are revised quarterly to reflect any losses in relation to the fair value
of these commitments. The residual value guarantees may be exercised if the quoted market value is lower than the future fair value guaranteed. The future fair value is estimated in accordance with third party evaluation of the aircraft, including
information from sale or leasing of similar aircraft on the secondary market.
The impairment test considers the Companys medium and long-term
strategic plan, brought to present value at the WACC rate compatible with the market and that reflects the shareholders expectations of return. In preparing or using this information, the Company uses estimates, as follows:
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a)
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Gross expected cash flow
the Management projected inflows and outflows based on past performance considering its business strategy and market development expectations. These projections also consider the
efficiency gains planned for the product cycle;
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b)
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Growth rates
the growth rates were reflected in the revenue flow budgeted by the Company, consistent with the forecasts included in industry reports
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c)
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Discount Rates
a WACC discount rate is used that reflects the expected return of investors at the time the calculation is made. This rate is also compared with the market to confirm its consistency;
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3.5.
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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 based on market conditions at the end of each reporting period. The methods and calculations
are the same as known techniques normally used by the financial market.
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 the final amount is determined.
Because the Companys tax is largely determined in Brazilian
reais
and its functional
currency is the dollar, the income tax expense line is highly sensitive to the effects of changes in exchange rates, particularly those due to changes in non-monetary assets.
If the real had devalued or appreciated by 10% against the dollar in relation to the actual exchange rate at December 31, 2015, the
deferred income tax expense would have been higher or lower by approximately US$ 130.2 million.
F-25
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
3.7.
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Post-retirement benefits
|
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.
Considering that these actuarial studies use premises such as discount rate, medical cost increase rate, morbidity rate (aging factor),
mortality table, retirement probability and dismissal rate, largely based on statistical data, the definition of any reasonably possible change is very subjective. In this respect, an increase of 0.5% in the discount rate used in the actuarial
calculation of the post-employment medical benefit granted by the Company would reduce its exposure at December 31, 2015 by US$ 1.5, while a reduction of 0.5% would increase the exposure by US$ 1.3. In the case of the medical cost growth rate,
a 1% increase in the actuarial calculation would increase the Companys exposure by US$ 3.1 and a 1% reduction would reduce its exposure by US$ 2.6.
4.
|
Accounting pronouncements not yet adopted
|
Standards and amendments to existing
standards mentioned in this section have been published, but implementation is not mandatory for the year ended December 31, 2015, and the Company has not early adopted the amendments in these Financial Statements.
The accounting pronouncements presented below may be relevant to the Company on the future, for this reason adoption projects are in course
for each of them, not being possible to estimate the adoption effects of the adoption until these projects are concluded:
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IFRS 9Financial Instruments: covers the classification, measurement and recognition of financial assets and liabilities. IFRS 9 requires the classification of financial assets in two categories: measured at fair
value and measured at amortized cost. The classification is defined on initial recognition. The basis for classification depends on the entitys business model and the contractual characteristics of the cash flow of the financial instruments.
With regard to the financial liability, the standard maintains most of the requirements established by IAS 39. The major change is that in cases in which the fair value option is adopted for financial liabilities, the portion of the fair value
related to the entitys own credit risk is registered as Other Comprehensive Income and not in profit or loss, except where it results in an accounting inconsistency. First time adoption of IFRS 9 could affect the classification and measurement
of the Companys financial assets, depending on the composition of the portfolio at the implementation date. The standard is applicable from January 1, 2018.
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IFRS 15Revenue from Contracts with Customers: it addresses a single new model for recognition of revenue from contracts with customers, based on five steps for determining when to recognize the revenue, and at
what amount. The model specifies that revenue should be recognized when an entity transfers control of goods and services to the customer, at the amount that the entity expects to be entitled to receive. In order to conclude as to the potential
impact on the Financial Statements, the Company has initiated a project to assess the new model introduced by the accounting pronouncement and its application to existing transactions. The project first identified the possibility of changes in the
numbers of performance obligations, as well as a change in the distribution of the total revenue over its performance obligations. The standard is applicable from January 1, 2018.
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|
|
IFRS 16Leases: introduces new concepts from the lessees perspective. The model proposed by this standard requires the lessee to recognize all leases in the balance sheet in a Fixed Assets
right-of-use account, against a liability account, measured at present value on initial recognition. The model proposed by the standard makes no significant changes in respect of recognition in the accounts by the lessor. The Company is
analyzing the new model introduced by the accounting pronouncement and its application to existing transactions. The standard is applicable from January 1, 2019.
|
Other accounting standards have been amended or are in the process of amendment and will come into effect in the coming years, however these
have not been mentioned, as the company does not expect them to result in significant impacts.
F-26
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
5.
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Cash and banks
|
|
|
379.5
|
|
|
|
230.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
379.5
|
|
|
|
230.6
|
|
|
|
|
|
|
|
|
|
|
Cash equivalents
|
|
|
|
|
|
|
|
|
Private securities
(i)
|
|
|
565.8
|
|
|
|
973.4
|
|
Fixed deposits
(ii)
|
|
|
919.3
|
|
|
|
507.5
|
|
Investment funds
|
|
|
|
|
|
|
1.5
|
|
Structured Notes
(iii)
|
|
|
300.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,786.0
|
|
|
|
1,482.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,165.5
|
|
|
|
1,713.0
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Investment in Bank Deposit Certificates CDBs and Repurchase AgreementsREPO issued by Brazilian financial institutions, with original maturities of 90 days or less, for which there are no penalties on
remuneration if the Company decides to terminate the transaction before the original maturity date.
|
(ii)
|
Fixed term deposits in US Dollars with original maturities of 90 days or less.
|
(iii)
|
Structured Note issued by an investment grade financial institution, maturing within 90 days from the issue date, subject to the credit risk of Brazilian government debt securities issued in Brazil.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
|
Assets
measured at
fair value
through profit
or loss
|
|
|
Held to
maturity
|
|
|
Available
for sale
|
|
|
Total
|
|
|
Assets
measured at
fair value
through profit
or loss
|
|
|
Held to
maturity
|
|
|
Available
for sale
|
|
|
Total
|
|
Financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Private securities
|
|
|
393.2
|
|
|
|
|
|
|
|
|
|
|
|
393.2
|
|
|
|
412.4
|
|
|
|
|
|
|
|
|
|
|
|
412.4
|
|
Structured Notes
(i)
|
|
|
|
|
|
|
702.9
|
|
|
|
|
|
|
|
702.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Money market funds
|
|
|
229.0
|
|
|
|
|
|
|
|
|
|
|
|
229.0
|
|
|
|
287.9
|
|
|
|
|
|
|
|
|
|
|
|
287.9
|
|
Investment funds
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
9.0
|
|
|
|
|
|
|
|
|
|
|
|
9.0
|
|
Public securities
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
1.1
|
|
|
|
|
|
|
|
1.1
|
|
Other
|
|
|
0.2
|
|
|
|
44.7
|
|
|
|
2.0
|
|
|
|
46.9
|
|
|
|
0.3
|
|
|
|
43.1
|
|
|
|
2.6
|
|
|
|
46.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
622.5
|
|
|
|
747.7
|
|
|
|
2.0
|
|
|
|
1,372.2
|
|
|
|
709.6
|
|
|
|
44.2
|
|
|
|
2.6
|
|
|
|
756.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
622.5
|
|
|
|
0.1
|
|
|
|
|
|
|
|
622.6
|
|
|
|
709.6
|
|
|
|
1.0
|
|
|
|
|
|
|
|
710.6
|
|
Non-current
|
|
|
|
|
|
|
747.6
|
|
|
|
2.0
|
|
|
|
749.6
|
|
|
|
|
|
|
|
43.2
|
|
|
|
2.6
|
|
|
|
45.8
|
|
(i)
|
Structured Note issued by an investment grade financial institution, according to the evaluation of management, subject to the credit risk of Brazilian government debt securities issued in Brazil.
|
The weighted average interest rates at December 31, 2015 for cash equivalents in
reais
and in dollars were 14.70% p.a. and 1.71%
p.a. (11.14% p.a. and 1.27% p.a. at December 31, 2014), respectively.
7.
|
Trade accounts receivable, net
|
|
|
|
|
|
|
|
|
|
Foreign customers
|
|
|
441.2
|
|
|
|
435.0
|
|
Brazilian Air Force
|
|
|
350.4
|
|
|
|
277.3
|
|
Domestic customers
|
|
|
39.1
|
|
|
|
34.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
830.7
|
|
|
|
746.7
|
|
|
|
|
|
|
|
|
|
|
Allowance for doubtful accounts
|
|
|
(47.3
|
)
|
|
|
(42.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
783.4
|
|
|
|
703.8
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
781.9
|
|
|
|
696.9
|
|
Non-current portion
|
|
|
1.5
|
|
|
|
6.9
|
|
F-27
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The changes to the allowance for doubtful accounts are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Beginning balance
|
|
|
(42.9
|
)
|
|
|
(47.1
|
)
|
Additions
|
|
|
(13.4
|
)
|
|
|
(6.0
|
)
|
Reversal
|
|
|
2.4
|
|
|
|
5.1
|
|
Disposals
|
|
|
3.6
|
|
|
|
2.8
|
|
Foreign exchange variation
|
|
|
3.0
|
|
|
|
2.3
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
(47.3
|
)
|
|
|
(42.9
|
)
|
|
|
|
|
|
|
|
|
|
The net amount of accounts receivable denominated in the following currencies is:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
U.S. dollars
|
|
|
617.8
|
|
|
|
508.0
|
|
Euros
|
|
|
98.7
|
|
|
|
116.8
|
|
Reais
|
|
|
65.8
|
|
|
|
77.9
|
|
Other
|
|
|
1.1
|
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
783.4
|
|
|
|
703.8
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015, the accounts receivable of US$ 697.4 (US$ 615.3 at December 31, 2014) were
current and not past due. There were accounts receivable overdue, but not impaired, for the period presented, related to independent customers with no recent history or expectation of default. The analysis of past due accounts receivable is
presented below:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Up to 90 days
|
|
|
45.6
|
|
|
|
48.4
|
|
From 91 to 180 days
|
|
|
16.3
|
|
|
|
13.3
|
|
More than 180 days
|
|
|
24.1
|
|
|
|
26.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
86.0
|
|
|
|
88.5
|
|
|
|
|
|
|
|
|
|
|
Unbilled accounts receivable recognized by the POC method for the Defense and Security segment totaled US$
504.3 at December 31, 2015 (US$ 519.2 at December 31, 2014). Revenues recorded in 2015 were US$ 754.8 (US$ 1,364.9 at December 31, 2014). Costs related to construction contracts using the POC method totaled US$ 713.3 in 2015 (US$
1,072.7 at December 31, 2014).
8.
|
Derivative financial instruments
|
Derivative financial instruments are contracted to
protect the Companys operations from exchange and interest rate fluctuations and are not used for speculation.
As of
December 31, 2015, the Company had derivative financial instruments such as interest rate swaps and, purchase options, currency put and call options and non-deliverable forwards (NDF).
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 and to exchange Euros for dollars or vice versa according to the need to protect the transactions. The fair value of these instruments is measured at the future flow, determined by applying the contractual rates up to maturity and
discounted to present value on the date of the consolidated financial statements at the current market rates.
Cash flow hedges are
contracted to protect highly probable cash flows denominated in
reais
related to salaries and health plan expenses against exchange rate variations. The related cash flows are expected to occur on a monthly basis between January 2015 and
December 2016. The financial instrument normally used by the Company for this type of transaction is the zero-cost collar, which consists of buying put options and selling call options contracted with the same counterparty and with zero net premium.
The fair value of these instruments is determined in accordance with the observable market pricing model (through market information providers) and widely used by market players to measure similar instruments. When the dollar closing rate of is
between the put and call exercise values, the fair value reflects the extrinsic value of the option, i.e., the value that is directly connected to the time remaining to maturity. The projected cash flows will affect the income statement according to
the accrual period.
F-28
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
Non-deliverable forwards are contracted to protect the Company against the risk of
fluctuations in exchange rates. The fair value is determined in accordance with the observable market pricing model.
As of
December 31, 2015, the Company did not have any derivative contracts subject to margin calls.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purpose
|
|
Risk
|
|
Counterparty
|
|
Settlement date
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Recourse and non-recourse debt
(i)
|
|
Interest rate
|
|
Natixis
|
|
|
2022
|
|
|
|
13.2
|
|
|
|
17.9
|
|
Export financing
(ii)
|
|
Interest rate
|
|
Itau BBA
|
|
|
2016
|
|
|
|
(0.3
|
)
|
|
|
(2.4
|
)
|
|
|
|
|
Votorantim
|
|
|
2017
|
|
|
|
(1.3
|
)
|
|
|
(2.5
|
)
|
|
|
|
|
Citibank
|
|
|
2016
|
|
|
|
(0.2
|
)
|
|
|
(1.3
|
)
|
|
|
|
|
Santander
|
|
|
2017
|
|
|
|
(0.2
|
)
|
|
|
(0.8
|
)
|
|
|
|
|
Société Générale
|
|
|
2016
|
|
|
|
(0.2
|
)
|
|
|
(0.6
|
)
|
|
|
|
|
Bradesco
|
|
|
2016
|
|
|
|
(0.2
|
)
|
|
|
(0.6
|
)
|
Acquisition of property, plant and equipment
(iii)
|
|
Interest rate
|
|
Compass Bank
|
|
|
2024
|
|
|
|
(0.4
|
)
|
|
|
(0.4
|
)
|
Brazilian Real expenses
(iv)
|
|
Exchange rate
|
|
Itau BBA
|
|
|
2016
|
|
|
|
0.6
|
|
|
|
(0.4
|
)
|
|
|
|
|
Citibank
|
|
|
2015
|
|
|
|
|
|
|
|
(1.1
|
)
|
|
|
|
|
Santander
|
|
|
2015
|
|
|
|
|
|
|
|
(0.6
|
)
|
|
|
|
|
Votorantim
|
|
|
2016
|
|
|
|
0.2
|
|
|
|
(1.5
|
)
|
Brazilian Real expenses
|
|
Exchange rate
|
|
Itau BBA
|
|
|
2015
|
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
|
Votorantim
|
|
|
2015
|
|
|
|
|
|
|
|
(0.4
|
)
|
Export financing
(v)
|
|
Interest rate
|
|
Itaú BBA
|
|
|
2016
|
|
|
|
(0.2
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
Bradesco
|
|
|
2016
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
Votorantim
|
|
|
2017
|
|
|
|
(0.7
|
)
|
|
|
(0.4
|
)
|
|
|
|
|
Bofa Merril Lynch
|
|
|
2018
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
Santander
|
|
|
2017
|
|
|
|
(0.7
|
)
|
|
|
(0.5
|
)
|
Project Development
(v)
|
|
Interest rate
|
|
Itaú BBA
|
|
|
2023
|
|
|
|
(0.6
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
Votorantim
|
|
|
2022
|
|
|
|
(1.2
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
Bofa Merril Lynch
|
|
|
2022
|
|
|
|
(1.2
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
Santander
|
|
|
2023
|
|
|
|
(2.4
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
HSBC
|
|
|
2022
|
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
|
Société Générale
|
|
|
2022
|
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
|
|
Safra
|
|
|
2022
|
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
|
|
Morgan Stanley
|
|
|
2022
|
|
|
|
(0.2
|
)
|
|
|
|
|
Export financing
(vi)
|
|
Exchange rate
|
|
Santander Totta
|
|
|
2015
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
|
|
|
Société Générale
|
|
|
2016
|
|
|
|
(0.4
|
)
|
|
|
|
|
Options
(vii)
|
|
Interest rate
|
|
Citibank
|
|
|
2022
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Derivative financial instruments (swaps), which converted the amount of R$ 423.4 million, equivalent to US$ 108.4 for recourse and non-recourse debt, from an average fixed interest rate of 6.05% p.a., into a
floating rate equivalent to LIBOR 6 month + 1.19% p.a.;
|
(ii)
|
Derivative financial instruments (swaps) that converted an export modality debt of R$ 672.0 million, equivalent to US$ 172.1, from an average fixed interest rate of 5.92% p.a. to an average rate weighted floating
rate equivalent to 65.17% p.a. of the CDI (Interbank Deposit Certificate);
|
(iii)
|
Derivative financial instruments (swaps), relating to a transaction of R$ 17.5 million, equivalent to US$ 4.5, which converted funding transactions subject to LIBOR 1 month + 2.63% p.a. floating interest rates to a
fixed interest rate of 5.23% p.a.;
|
(iv)
|
Zero-cost collar derivative financial instruments, designated as cash flow hedges, of R$ 1.230.2 million, equivalent to US$ 359.7, through a purchase of a put option with an exercise price of R$ 3.4200 and sales of
CALL with an average weighted exercise price of R$ 6.3445;
|
(v)
|
Derivative financial instruments (interest swaps), designated as cash flow hedge accounting, of R$ 1,915.5 million, equivalent to US $ 490.6, of the Export and Project Development debt lines, subject to a weighted
average fixed interest rate of 4.49% p.a. to a weighted average floating rate equivalent to 34.70% of the CDI (Interbank Deposit Certificate).
|
(vi)
|
Derivative financial instruments (non-deliverable forwards), amounting to US$ 50.0, equivalent to R$ 195.2 million, relating to dollar to Euro currency exchanges.
|
(vii)
|
Derivative financial instruments in the form of purchase (CALL) options, the underlying asset for which is the floating LIBOR 6 month interest rate. with exercise values from 2.80% p.a.
|
F-29
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
At December 31, 2015 and December 31, 2014, the fair value of derivative financial
instruments was presented in the Statement of Financial Position as follows:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Assets
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
5.2
|
|
|
|
5.2
|
|
Non-current
|
|
|
9.2
|
|
|
|
12.7
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
(12.3
|
)
|
|
|
(15.4
|
)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
2.1
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
9.
|
Customer and commercial financing
|
Customer and commercial financing refers to the
partial financing of certain aircraft sales by the Company, mainly dollar-denominated, at average interest rates at December 31, 2015 of 5.06% p.a. (December 31, 2014 5.07% p.a.) , secured on the aircraft covered by the financing and at
present value when applicable. The maturities are monthly, quarterly and half-yearly, classified as follows:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Current portion
|
|
|
10.8
|
|
|
|
13.6
|
|
Non-current portion
|
|
|
45.4
|
|
|
|
55.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.2
|
|
|
|
68.6
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015, the amount of US$ 0.8 was accrued for losses in accordance with Company policy and
at December 31, 2014, the customer and commercial financing portfolio was current and not past due.
At December 31, 2015, the
long-term customer financing maturities were as follows:
|
|
|
|
|
Year
|
|
|
|
2017
|
|
|
10.8
|
|
2018
|
|
|
8.3
|
|
2019
|
|
|
5.1
|
|
2020
|
|
|
5.4
|
|
Thereafter 2020
|
|
|
15.8
|
|
|
|
|
|
|
|
|
|
45.4
|
|
|
|
|
|
|
10.
|
Collateralized accounts receivable and recourse and non-recourse debt
|
10.1.
|
Collateralized accounts receivable
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Estimated residual value of leased assets
|
|
|
227.8
|
|
|
|
184.6
|
|
Minimum lease payments receivable
|
|
|
187.8
|
|
|
|
241.0
|
|
Impairment
(i)
|
|
|
(7.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in sales-type lease
|
|
|
408.0
|
|
|
|
425.6
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
91.4
|
|
|
|
9.0
|
|
Non-current portion
|
|
|
316.6
|
|
|
|
416.6
|
|
(i)
|
The amount recognized relates to the devaluation of assets linked to structured financing.
|
F-30
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
At December 31, 2015, the maturities of the amounts classified as non-current assets are
as follows:
|
|
|
|
|
Year
|
|
|
|
2017
|
|
|
17.1
|
|
2018
|
|
|
48.1
|
|
2019
|
|
|
30.5
|
|
2020
|
|
|
44.5
|
|
Thereafter 2020
|
|
|
176.4
|
|
|
|
|
|
|
|
|
|
316.6
|
|
|
|
|
|
|
10.2.
|
Recourse and non-recourse debt
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Recourse debt
|
|
|
359.3
|
|
|
|
368.7
|
|
Non recourse debt
|
|
|
25.5
|
|
|
|
31.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
384.8
|
|
|
|
400.0
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
10.1
|
|
|
|
10.3
|
|
Non-current portion
|
|
|
374.7
|
|
|
|
389.7
|
|
At December 31, 2015, the maturities of the amounts classified as non-current liabilities were as
follows:
|
|
|
|
|
Year
|
|
|
|
2017
|
|
|
17.1
|
|
2018
|
|
|
12.3
|
|
2019
|
|
|
332.6
|
|
2020
|
|
|
5.9
|
|
Thereafter 2020
|
|
|
6.8
|
|
|
|
|
|
|
|
|
|
374.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Sales financing guarantees
(i)
|
|
|
320.7
|
|
|
|
321.8
|
|
Sales structure guarantees
(ii)
|
|
|
245.2
|
|
|
|
251.7
|
|
Others
|
|
|
11.4
|
|
|
|
8.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
577.3
|
|
|
|
582.0
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Financial investments denominated in US dollars, tied to sale financing structures until the completion of such structures. These investments earn interest at the annual LIBOR rate
|
(ii)
|
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 in proportion to their guarantee. The amount is returned in the form of cash to the Company at maturity of the financing contracts (from 2016 to 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 invested principal of US$ 123.4 in 14-year
structured notes. This yield enhancement was obtained through a credit default swap (CDS), a transaction which provides the right of early redemption of the note in the case of default by the Company. Upon such default, the note may be redeemed by
the holder at its market value or its original face value, which would result in a loss to the Company of all interest accrued to that date.
Default events that can bring forward the due date for the notes include: (a) bankruptcy or insolvency of the Company and (b) failure
to pay or restructuring of Company debts in financing contracts.
In the event of default, the maturity dates of these notes will be brought
forward and the notes will 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.
F-31
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
At 31 December 2015 the guarantor to whom the guarantees are linked was in compliance.
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Raw materials
|
|
|
914.7
|
|
|
|
996.1
|
|
Work-in-process
|
|
|
712.1
|
|
|
|
649.0
|
|
Spare parts
|
|
|
379.1
|
|
|
|
357.3
|
|
Finished goods
(i)
|
|
|
159.7
|
|
|
|
157.6
|
|
Advances to suppliers
|
|
|
80.8
|
|
|
|
92.5
|
|
Used aircraft available for sales
(ii)
|
|
|
74.6
|
|
|
|
47.9
|
|
Held by third parties
|
|
|
72.8
|
|
|
|
135.3
|
|
Inventory in transit
|
|
|
64.9
|
|
|
|
93.1
|
|
Consumption materials
|
|
|
42.5
|
|
|
|
40.9
|
|
Provision for adjustment to realizable value
(iii)
|
|
|
(25.4
|
)
|
|
|
(8.0
|
)
|
Provision for obsolescence
(iv)
|
|
|
(161.2
|
)
|
|
|
(156.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
2,314.6
|
|
|
|
2,405.3
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The following aircraft were held in the finished products inventory:
|
|
|
|
At December 31, 2015: four Legacy 500, two Legacy 650, two Phenom 100, four Phenom 300, one Lineage and one Ipanema; and
|
|
|
|
At December 31, 2014: two EMBRAER 190, two Legacy 650, three Phenom 100, three Phenom 300, one Lineage and ten Ipanema.
|
Of the total aircraft inventories at December 31, 2015, one Legacy 500 and two Legacy 650 had been delivered by
March 09, 2016.
(ii)
|
The following used aircraft were held in inventory as available for sale:
|
|
|
|
At December 31, 2015: one Legacy 600, two Legacy 650, three Phenom 100 and two Phenom 300; and
|
|
|
|
At December 31, 2014: one Legacy 650, one Phenom 100, three Phenom 300 and one Challenger 604.
|
(iii)
|
Refers to the provision recorded for adjustments to the realizable value of used aircraft, as follows:
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Beginning balance
|
|
|
(8.0
|
)
|
|
|
(19.2
|
)
|
Additions
|
|
|
(18.8
|
)
|
|
|
(8.2
|
)
|
Disposals
|
|
|
1.4
|
|
|
|
19.4
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
(25.4
|
)
|
|
|
(8.0
|
)
|
|
|
|
|
|
|
|
|
|
(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 the provision for obsolescence were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Beginning balance
|
|
|
(156.4
|
)
|
|
|
(160.8
|
)
|
Additions
|
|
|
(52.9
|
)
|
|
|
(79.5
|
)
|
Disposals
|
|
|
43.8
|
|
|
|
83.5
|
|
Reversals
|
|
|
1.5
|
|
|
|
1.3
|
|
Foreign exchange loss
|
|
|
2.8
|
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
|
(161.2
|
)
|
|
|
(156.4
|
)
|
|
|
|
|
|
|
|
|
|
F-32
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Taxes recoverable
(i)
|
|
|
122.1
|
|
|
|
120.2
|
|
Advances for services to be rendered
(ii)
|
|
|
116.6
|
|
|
|
49.3
|
|
Court-mandated escrow deposits
(iii)
|
|
|
49.0
|
|
|
|
76.6
|
|
Credit with suppliers
(iv)
|
|
|
41.1
|
|
|
|
31.6
|
|
Prepaid expenses
|
|
|
30.0
|
|
|
|
24.8
|
|
Advances to employees
|
|
|
11.3
|
|
|
|
16.8
|
|
Loan with a joint operation
(v)
|
|
|
8.2
|
|
|
|
9.0
|
|
Compulsory loan
|
|
|
1.0
|
|
|
|
1.0
|
|
Collateral pledge
|
|
|
0.7
|
|
|
|
0.9
|
|
Advances of commissions
|
|
|
|
|
|
|
4.5
|
|
Indemnity assets
|
|
|
|
|
|
|
1.9
|
|
Other
|
|
|
29.2
|
|
|
|
17.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
409.2
|
|
|
|
354.0
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
289.4
|
|
|
|
167.9
|
|
Non-current portion
|
|
|
119.8
|
|
|
|
186.1
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Income tax and contribution for social security on net income withheld
|
|
|
6.8
|
|
|
|
9.4
|
|
ICMS (State Value-added Tax) and IPI (Excise Tax)
|
|
|
60.1
|
|
|
|
69.2
|
|
PIS (Social Integration Program) and COFINS (Contribution for Social Security)
|
|
|
36.3
|
|
|
|
19.3
|
|
Others
|
|
|
18.9
|
|
|
|
22.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122.1
|
|
|
|
120.2
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
67.5
|
|
|
|
69.4
|
|
Non-current portion
|
|
|
54.6
|
|
|
|
50.8
|
|
(ii)
|
Refers mainly to advances to the supplier hired by the subsidiary Visiona to launch the geostationary satellite.
|
(iii)
|
Court-mandated escrow deposits relate to amounts deposited in connection with pending legal actions, substantially federal taxes and contributions where a liability has been established, as described in Note 23.
|
(iv)
|
Refers to rework carried out on products supplied by third parties, to be reimbursed in accordance with contractual agreements and credits negotiated with certain suppliers that will be consumed over time.
|
(v)
|
Refers to the joint operation of the Embraer Group (2.1.4), in which only assets and liabilities under the Companys responsibility are consolidated. Thus, the amount presented refers to the balance of the
intercompany loan receivable from the other partner of EZ Air Interior Limited.
|
|
(i)
|
Wholly owned subsidiaries and special purpose entities
|
Wholly-owned subsidiaries and
special purpose entities (SPEs) controlled directly or indirectly by the Company and jointly controlled entities are described in the notes 2.1.2 and 2.1.3 and are consolidated into the Embraer group.
There are no contractual or legal restrictions on the Companys access to assets or settlement of liabilities of the wholly owned
subsidiaries of the group.
F-33
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
There are inherent risks to the operations of these entities, the most significant of which
are described below:
|
|
|
Economic Risks: potential losses from fluctuations in market conditions (price of products, exchange rate and interest);
|
|
|
|
Operational risk: potential losses resulting from the emergence of new technologies or failure of current processes;
|
|
|
|
Credit risk: potential losses that might occur if a third party (customer) becomes unable to meet its obligations; and
|
|
|
|
Liquidity risk: financial inability to meet financial obligations.
|
|
(ii)
|
Subsidiaries with participation of non-controlling shareholders
|
Non-controlling
shareholders have interests in the group entities listed below, however, based on contractual agreements and analysis of the current accounting standards, the Company has control and therefore has the right to consolidate these entities:
|
|
|
|
|
|
|
|
|
|
|
Entity
|
|
Country
|
|
Participation
Embraer Group
|
|
|
Participation
noncontrolling
|
|
Bradar Indústria S.A.
|
|
Brazil
|
|
|
95.0
|
%
|
|
|
5.0
|
%
|
OGMAIndústria 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
|
%
|
Bradar Aerolevantamento Ltda
|
|
Brazil
|
|
|
25.0
|
%
|
|
|
75.0
|
%
|
Although the Embraer group holds 51.0% of the entities Harbin Embraer Aircraft Industry Company Ltd., Embraer
CAE Training Services Ltd., and Visiona Tecnologia Espacial S.A., the powers enumerated in the contractual agreements show that the Board of Directors is mainly comprised of Embraer representatives and the Embraer Group directs the principal
operating activities of the entity.
An agreement with Bradar Aerolevantamento Ltda. assigns to Embraer S.A. an irrevocable option to
purchase all the shares of the non-controlling interests. This option is exercisable at any time and can be transferred to any person, which determines the control of Bradar Aerolevantamento by the Embraer group, despite holding only 25% of its
capital.
The financial position of the group entities that have non-controlling interests is summarized below:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Cash and cash equivalent
|
|
|
87.2
|
|
|
|
106.4
|
|
Current assets
|
|
|
286.7
|
|
|
|
329.0
|
|
Non current assets
|
|
|
134.3
|
|
|
|
126.0
|
|
Current liabilities
|
|
|
141.6
|
|
|
|
163.8
|
|
Non current liabilities
|
|
|
25.7
|
|
|
|
49.4
|
|
Noncontrolling interest
|
|
|
101.9
|
|
|
|
100.0
|
|
Revenue
|
|
|
292.8
|
|
|
|
323.8
|
|
Net income for the year
|
|
|
23.8
|
|
|
|
25.0
|
|
Group subsidiaries with non-controlling interests are subject to the same risks as the wholly owned
subsidiaries.
|
(iii)
|
Jointly controlled entity
|
EZ Air Interior Limited is a joint operation between the
Embraer group and Zodiac Aerospace and shares with the other members the joint management of the relevant activities of the entities.
F-34
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The net assets and liabilities of the joint operations are recognized in consolidation in
accordance with the rights and obligations assigned to Embraer.
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Cash and cash equivalent
|
|
|
1.8
|
|
|
|
1.4
|
|
Current assets
|
|
|
26.2
|
|
|
|
20.0
|
|
Non current assets
|
|
|
5.1
|
|
|
|
4.3
|
|
Current liabilities
|
|
|
18.5
|
|
|
|
11.8
|
|
Non current liabilities
|
|
|
20.4
|
|
|
|
15.9
|
|
Revenue
|
|
|
31.2
|
|
|
|
18.7
|
|
Net loss for the year
|
|
|
(3.8
|
)
|
|
|
(2.5
|
)
|
|
(iv)
|
Interests in other companies
|
Interest in other companies in the Embraer Group is
represented only by the 25% participation of Embraer Defesa & Segurança Participações S.A. in AEL Sistemas SA. Despite this interest, the 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. At December 31, 2015 and December 31, 2014 the balances were US$ 1.9 and US$ 2.5, respectively.
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, under conditions agreed between the parties, considering the volumes, risks involved and corporate policies (ii) mutual
loans to subsidiaries abroad with interest rates compatible with those used by the Company on acquiring resources in foreign currencies (iii) balances of financial investments; and (iv) bank deposits;
|
|
|
|
liabilities: (i) purchase of aircraft components and spare parts, under conditions agreed between the parties, considering the volumes, risks involved and corporate policies (ii) advances received on account
|
|
|
|
of sales contracts, according to contractual agreements; (iii) commission for sale of aircraft and spare parts (iv) financing for research and product development at market rates for this kind of financing
(v) loans and financing; and (vi) mutual loan contracts with the subsidiaries abroad with interest rates equivalent to those used by the Company to acquire similar funding (vii) export financing; and
|
|
|
|
amounts in profit or loss: (i) purchases and sales of aircraft, components and spare parts and development of products for the defense and security market; (ii) financial income from financial investments and
mutual loans; (iii) supplementary pension plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
Non-current
|
|
|
Financial
Results
|
|
|
Operating
Results
|
|
|
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
|
|
Banco do Brasil S.A.
|
|
|
141.3
|
|
|
|
2.5
|
|
|
|
328.7
|
|
|
|
396.3
|
|
|
|
4.4
|
|
|
|
|
|
Banco Nacional de Desenvolvimento Econômico e SocialBNDES
|
|
|
|
|
|
|
154.1
|
|
|
|
|
|
|
|
386.1
|
|
|
|
(20.3
|
)
|
|
|
|
|
Caixa Econômica Federal
|
|
|
248.1
|
|
|
|
25.7
|
|
|
|
|
|
|
|
|
|
|
|
27.3
|
|
|
|
|
|
Brazilian Air Force
|
|
|
350.4
|
|
|
|
143.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(84.9
|
)
|
Embraer PrevSociedade de Previdência Complementar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(22.6
|
)
|
Empresa Portuguesa de DefesaEMPORDEF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5.8
|
|
|
|
|
|
|
|
|
|
Brazilian Army
|
|
|
4.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.6
|
)
|
Financiadora de Estudo e ProjetosTotalFINEP
|
|
|
|
|
|
|
7.2
|
|
|
|
|
|
|
|
54.3
|
|
|
|
(2.6
|
)
|
|
|
|
|
Telecomunicações Brasileiras S.A.Telebrás
|
|
|
61.4
|
|
|
|
150.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
805.4
|
|
|
|
483.7
|
|
|
|
328.7
|
|
|
|
842.5
|
|
|
|
8.8
|
|
|
|
(90.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-35
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
Non-current
|
|
|
Financial
Results
|
|
|
Operating
Results
|
|
|
|
Assets
|
|
|
Liabilities
|
|
|
Assets
|
|
|
Liabilities
|
|
|
|
Banco do Brasil S.A.
|
|
|
240.7
|
|
|
|
1.4
|
|
|
|
320.5
|
|
|
|
396.4
|
|
|
|
60.8
|
|
|
|
|
|
Banco Nacional de Desenvolvimento Econômico e SocialBNDES
|
|
|
|
|
|
|
50.9
|
|
|
|
|
|
|
|
386.8
|
|
|
|
(14.9
|
)
|
|
|
|
|
Brazilian Air Force
|
|
|
277.3
|
|
|
|
198.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89.1
|
|
Caixa Econômica Federal
|
|
|
247.2
|
|
|
|
0.1
|
|
|
|
|
|
|
|
37.6
|
|
|
|
24.7
|
|
|
|
|
|
Embraer PrevSociedade de Previdência Complementar
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(29.2
|
)
|
Empresa Portuguesa de DefesaEMPORDEF
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.3
|
|
|
|
|
|
|
|
|
|
Brazilian Army
|
|
|
17.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.3
|
|
Financiadora de Estudo e ProjetosFINEP
|
|
|
|
|
|
|
9.5
|
|
|
|
|
|
|
|
88.1
|
|
|
|
(2.0
|
)
|
|
|
|
|
Telecomunicações Brasileiras S.A.Telebrás
|
|
|
46.5
|
|
|
|
20.3
|
|
|
|
|
|
|
|
79.5
|
|
|
|
|
|
|
|
31.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
829.1
|
|
|
|
280.7
|
|
|
|
320.5
|
|
|
|
994.7
|
|
|
|
68.6
|
|
|
|
104.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Results
|
|
|
Operating
Results
|
|
Banco do Brasil S.A.
|
|
|
47.1
|
|
|
|
|
|
Banco Nacional de Desenvolvimento Econômico e SocialBNDES
|
|
|
(18.3
|
)
|
|
|
|
|
Brazilian Air Force
|
|
|
|
|
|
|
130.3
|
|
Caixa Econômica Federal
|
|
|
7.9
|
|
|
|
|
|
Embraer PrevSociedade de Previdência Complementar
|
|
|
|
|
|
|
(29.1
|
)
|
Brazilian Army
|
|
|
|
|
|
|
5.7
|
|
Financiadora de Estudo e ProjetosFINEP
|
|
|
(1.7
|
)
|
|
|
|
|
Telecomunicações Brasileiras S.A.Telebrás
|
|
|
|
|
|
|
3.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35.0
|
|
|
|
110.6
|
|
|
|
|
|
|
|
|
|
|
15.2.
|
Brazilian Federal Government
|
Through its direct and indirect interests and on account
of holding a golden share, the Brazilian Federal Government is a significant shareholder. At December 31, 2015, in addition to its golden share, the Brazilian Federal Government held an indirect stake of 5.37% in the
Companys capital through BNDESPAR, a wholly-owned subsidiary of the Banco Nacional do Desenvolvimento Econômico e SocialBNDES (the Brazilian Development Bank, or BNDES), which, in turn, is controlled by the Brazilian
Federal Government. Consequently, transactions between Embraer and the Brazilian Federal Government or its agencies meet the definition of related party transactions.
The Brazilian government plays a key role in the Companys business activities, including as:
|
|
|
a major customer for defense products (through the Brazilian Air Force);
|
|
|
|
a source of research and development financing through technology development institutions such as FINEP and the BNDES;
|
|
|
|
an export credit agency (through the BNDES); and
|
|
|
|
a source of short-term and long-term financing and a provider of asset management and commercial banking services (through Banco do Brasil).
|
F-36
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
15.3.
|
Remuneration of key management personnel:
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Short-term benefits
(i)
|
|
|
10.2
|
|
|
|
15.9
|
|
Share based payment
|
|
|
6.9
|
|
|
|
5.8
|
|
Labor contract termination
|
|
|
0.7
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
Total remuneration
|
|
|
17.8
|
|
|
|
22.6
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Includes salaries and social security contributions.
|
Key Management includes members of the
statutory Board of Directors and Executive Directors.
No post-retirement or long-term benefits were recognized in 2015 and 2014.
16.
|
Property, Plant and Equipment
|
The annual weighted average rates by asset class are
shown below. This information is based on the consolidated depreciation of the assets recognized in the year, compared, after annualization and elimination of any non-typical movement, to the net balance of the assets in the previous year:
|
|
|
|
|
|
|
|
|
Class of assets
|
|
Weighted average rate (%)
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Buildings and improvements
|
|
|
3.8
|
%
|
|
|
4.0
|
%
|
Installations
|
|
|
7.9
|
%
|
|
|
8.9
|
%
|
Machinery and equipment
|
|
|
12.8
|
%
|
|
|
11.8
|
%
|
Furniture and fixtures
|
|
|
12.8
|
%
|
|
|
13.6
|
%
|
Vehicles
|
|
|
26.2
|
%
|
|
|
19.6
|
%
|
Aircraft
|
|
|
10.5
|
%
|
|
|
12.3
|
%
|
Computers and peripherals
|
|
|
26.6
|
%
|
|
|
26.0
|
%
|
Tooling
|
|
|
12.4
|
%
|
|
|
10.2
|
%
|
Exchange pool program assets
|
|
|
4.9
|
%
|
|
|
7.6
|
%
|
F-37
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2014
|
|
|
11.0
|
|
|
|
577.6
|
|
|
|
145.3
|
|
|
|
741.3
|
|
|
|
65.7
|
|
|
|
16.0
|
|
|
|
521.3
|
|
|
|
163.0
|
|
|
|
420.0
|
|
|
|
34.4
|
|
|
|
586.3
|
|
|
|
129.9
|
|
|
|
3,411.8
|
|
Additions
|
|
|
|
|
|
|
1.6
|
|
|
|
|
|
|
|
65.1
|
|
|
|
2.5
|
|
|
|
0.8
|
|
|
|
23.6
|
|
|
|
13.0
|
|
|
|
81.7
|
|
|
|
9.9
|
|
|
|
71.6
|
|
|
|
71.7
|
|
|
|
341.5
|
|
Disposals
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(5.5
|
)
|
|
|
(0.5
|
)
|
|
|
(0.4
|
)
|
|
|
(158.6
|
)
|
|
|
(2.2
|
)
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
(13.7
|
)
|
|
|
(2.2
|
)
|
|
|
(185.2
|
)
|
Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11.6
|
)
|
Reclassifications*
|
|
|
|
|
|
|
40.6
|
|
|
|
7.1
|
|
|
|
66.5
|
|
|
|
3.5
|
|
|
|
1.0
|
|
|
|
(50.7
|
)
|
|
|
(9.0
|
)
|
|
|
33.9
|
|
|
|
(21.3
|
)
|
|
|
(6.1
|
)
|
|
|
(122.3
|
)
|
|
|
(56.8
|
)
|
Translation adjustments
|
|
|
|
|
|
|
(3.2
|
)
|
|
|
(0.5
|
)
|
|
|
(14.1
|
)
|
|
|
(0.7
|
)
|
|
|
(0.4
|
)
|
|
|
(0.5
|
)
|
|
|
(1.6
|
)
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
(15.5
|
)
|
|
|
(1.3
|
)
|
|
|
(38.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
11.0
|
|
|
|
616.5
|
|
|
|
151.8
|
|
|
|
853.3
|
|
|
|
70.5
|
|
|
|
17.0
|
|
|
|
323.5
|
|
|
|
163.2
|
|
|
|
533.5
|
|
|
|
22.8
|
|
|
|
622.6
|
|
|
|
75.8
|
|
|
|
3,461.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
At December 31, 2014
|
|
|
|
|
|
|
(165.3
|
)
|
|
|
(93.9
|
)
|
|
|
(352.0
|
)
|
|
|
(34.6
|
)
|
|
|
(11.8
|
)
|
|
|
(217.6
|
)
|
|
|
(119.5
|
)
|
|
|
(207.8
|
)
|
|
|
(9.4
|
)
|
|
|
(174.1
|
)
|
|
|
|
|
|
|
(1,386.0
|
)
|
Depreciation
|
|
|
|
|
|
|
(15.9
|
)
|
|
|
(4.0
|
)
|
|
|
(49.9
|
)
|
|
|
(4.0
|
)
|
|
|
(1.1
|
)
|
|
|
(31.9
|
)
|
|
|
(11.5
|
)
|
|
|
(26.2
|
)
|
|
|
|
|
|
|
(17.4
|
)
|
|
|
|
|
|
|
(161.9
|
)
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|
|
0.3
|
|
|
|
|
|
|
|
75.1
|
|
|
|
1.4
|
|
|
|
0.4
|
|
|
|
|
|
|
|
5.9
|
|
|
|
|
|
|
|
83.9
|
|
Reclassifications*
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
0.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.7
|
|
Translation adjustments
|
|
|
|
|
|
|
0.9
|
|
|
|
0.2
|
|
|
|
11.6
|
|
|
|
0.4
|
|
|
|
0.4
|
|
|
|
0.3
|
|
|
|
0.9
|
|
|
|
0.2
|
|
|
|
|
|
|
|
(2.7
|
)
|
|
|
|
|
|
|
12.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
|
|
|
|
(180.8
|
)
|
|
|
(97.2
|
)
|
|
|
(389.5
|
)
|
|
|
(37.9
|
)
|
|
|
(12.5
|
)
|
|
|
(156.4
|
)
|
|
|
(128.7
|
)
|
|
|
(233.4
|
)
|
|
|
(9.4
|
)
|
|
|
(188.3
|
)
|
|
|
|
|
|
|
(1,434.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
At December 31, 2014
|
|
|
11.0
|
|
|
|
412.3
|
|
|
|
51.4
|
|
|
|
389.3
|
|
|
|
31.1
|
|
|
|
4.2
|
|
|
|
303.7
|
|
|
|
43.5
|
|
|
|
212.2
|
|
|
|
25.0
|
|
|
|
412.2
|
|
|
|
129.9
|
|
|
|
2,025.8
|
|
At December 31, 2015
|
|
|
11.0
|
|
|
|
435.7
|
|
|
|
54.6
|
|
|
|
463.8
|
|
|
|
32.6
|
|
|
|
4.5
|
|
|
|
167.1
|
|
|
|
34.5
|
|
|
|
300.1
|
|
|
|
13.4
|
|
|
|
434.3
|
|
|
|
75.8
|
|
|
|
2,027.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 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
|
|
Additions
|
|
|
|
|
|
|
1.7
|
|
|
|
|
|
|
|
59.9
|
|
|
|
4.5
|
|
|
|
0.6
|
|
|
|
19.5
|
|
|
|
12.1
|
|
|
|
45.6
|
|
|
|
15.8
|
|
|
|
36.7
|
|
|
|
87.3
|
|
|
|
283.7
|
|
Disposals
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
(4.5
|
)
|
|
|
(0.4
|
)
|
|
|
(0.3
|
)
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
(8.2
|
)
|
|
|
|
|
|
|
(11.4
|
)
|
|
|
(1.2
|
)
|
|
|
(26.6
|
)
|
Impairment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10.8
|
)
|
Reclassifications*
|
|
|
|
|
|
|
61.4
|
|
|
|
11.6
|
|
|
|
55.9
|
|
|
|
2.4
|
|
|
|
0.3
|
|
|
|
(65.3
|
)
|
|
|
5.0
|
|
|
|
(4.0
|
)
|
|
|
(20.0
|
)
|
|
|
10.8
|
|
|
|
(105.1
|
)
|
|
|
(47.0
|
)
|
Translation adjustments
|
|
|
(0.1
|
)
|
|
|
(6.0
|
)
|
|
|
(0.4
|
)
|
|
|
(16.6
|
)
|
|
|
(0.6
|
)
|
|
|
(0.5
|
)
|
|
|
3.2
|
|
|
|
(1.2
|
)
|
|
|
(0.6
|
)
|
|
|
2.8
|
|
|
|
(26.7
|
)
|
|
|
(3.5
|
)
|
|
|
(50.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
11.0
|
|
|
|
577.6
|
|
|
|
145.3
|
|
|
|
741.3
|
|
|
|
65.7
|
|
|
|
16.0
|
|
|
|
521.3
|
|
|
|
163.0
|
|
|
|
420.0
|
|
|
|
34.4
|
|
|
|
586.3
|
|
|
|
129.9
|
|
|
|
3,411.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
)
|
Depreciation
|
|
|
|
|
|
|
(14.8
|
)
|
|
|
(3.9
|
)
|
|
|
(37.0
|
)
|
|
|
(3.7
|
)
|
|
|
(0.8
|
)
|
|
|
(47.0
|
)
|
|
|
(9.5
|
)
|
|
|
(20.2
|
)
|
|
|
|
|
|
|
(32.0
|
)
|
|
|
|
|
|
|
(168.9
|
)
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.6
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
|
|
0.3
|
|
|
|
0.6
|
|
|
|
|
|
|
|
4.8
|
|
|
|
|
|
|
|
10.9
|
|
Reclassifications*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20.8
|
|
|
|
|
|
|
|
|
|
|
|
(8.3
|
)
|
|
|
|
|
|
|
|
|
|
|
12.5
|
|
Translation adjustments
|
|
|
|
|
|
|
0.8
|
|
|
|
0.1
|
|
|
|
11.1
|
|
|
|
0.5
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
0.5
|
|
|
|
0.1
|
|
|
|
|
|
|
|
15.2
|
|
|
|
|
|
|
|
28.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
|
|
|
|
(165.3
|
)
|
|
|
(93.9
|
)
|
|
|
(352.0
|
)
|
|
|
(34.6
|
)
|
|
|
(11.8
|
)
|
|
|
(217.6
|
)
|
|
|
(119.5
|
)
|
|
|
(207.8
|
)
|
|
|
(9.4
|
)
|
|
|
(174.1
|
)
|
|
|
|
|
|
|
(1,386.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
At December 31, 2014
|
|
|
11.0
|
|
|
|
412.3
|
|
|
|
51.4
|
|
|
|
389.3
|
|
|
|
31.1
|
|
|
|
4.2
|
|
|
|
303.7
|
|
|
|
43.5
|
|
|
|
212.2
|
|
|
|
25.0
|
|
|
|
412.2
|
|
|
|
129.9
|
|
|
|
2,025.8
|
|
F-38
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
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
|
|
|
|
|
|
|
(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
|
|
|
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
|
|
*
|
Non-cash transactions. In the column Aircraft this amount relates to aircraft owned by Embraers 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 operating leases and are adjusted to the fair value, when applicable. The following aircraft are held:
|
|
|
|
December 31, 2015: 28 ERJ 135, nine ERJ 145, six EMBRAER 170, one EMBRAER 175, one EMBRAER 190, one EMBRAER 120, one 690B, and; and
|
|
|
|
December 31, 2014: 41 ERJ 135, 17 ERJ 145, seven EMBRAER 170, one EMBRAER 175, two EMBRAER 190, one EMBRAER 120, one Legacy 600, one 690B, and one EMB-810C.
|
(ii)
|
Refers mainly to construction projects to expand installed capacity for the manufacture of new products.
|
F-39
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
Financial charges of US$ 0.7 on funds invested in fixed were capitalized in the year ended
December 31, 2015 (at December 31, 2014, there were no financial charges on funds invested in fixed assets).
At
December 31, 2015, property, plant and equipment of US$ 113.7 were pledged as collateral for loans, financing and labor contingencies. (December 31, 2014, US$ 189.4).
Internally developed intangible assets relate to expenditure incurred
in developing new aircraft, including support services, production labor, materials and direct labor allocated to the construction of aircraft prototypes or significant components, and also the use of advanced technologies to make the aircraft
lighter, quieter, more comfortable and energy-efficient and to reduce emissions, in addition to speeding up design and manufacture, while optimizing the use of resources.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internally developed
|
|
|
Acquired from third party
|
|
|
|
Commercial
|
|
|
Executive
|
|
|
Defense and
Security
|
|
|
Other
|
|
|
Development
|
|
|
Software
|
|
|
Goodwill
|
|
|
Other
|
|
|
Total
|
|
Intangible cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
1,113.6
|
|
|
|
1,162.8
|
|
|
|
25.6
|
|
|
|
24.5
|
|
|
|
12.1
|
|
|
|
235.9
|
|
|
|
38.3
|
|
|
|
22.6
|
|
|
|
2,635.4
|
|
Additions
|
|
|
302.5
|
|
|
|
86.1
|
|
|
|
|
|
|
|
11.6
|
|
|
|
|
|
|
|
27.4
|
|
|
|
|
|
|
|
|
|
|
|
427.6
|
|
Contributions from suppliers
|
|
|
(140.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(140.0
|
)
|
Translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
(21.9
|
)
|
|
|
1.1
|
|
|
|
(22.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
1,276.1
|
|
|
|
1,248.9
|
|
|
|
25.6
|
|
|
|
36.1
|
|
|
|
10.1
|
|
|
|
263.3
|
|
|
|
16.4
|
|
|
|
23.7
|
|
|
|
2,900.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
(871.6
|
)
|
|
|
(326.4
|
)
|
|
|
(25.6
|
)
|
|
|
|
|
|
|
(5.4
|
)
|
|
|
(143.0
|
)
|
|
|
|
|
|
|
(2.5
|
)
|
|
|
(1,374.5
|
)
|
Amortization
|
|
|
(71.0
|
)
|
|
|
(65.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(17.9
|
)
|
|
|
|
|
|
|
(0.5
|
)
|
|
|
(154.9
|
)
|
Amortization of contribution from suppliers
|
|
|
19.0
|
|
|
|
14.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33.8
|
|
Translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
(923.6
|
)
|
|
|
(377.1
|
)
|
|
|
(25.6
|
)
|
|
|
|
|
|
|
(4.6
|
)
|
|
|
(160.9
|
)
|
|
|
|
|
|
|
(3.0
|
)
|
|
|
(1,494.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
242.0
|
|
|
|
836.4
|
|
|
|
|
|
|
|
24.5
|
|
|
|
6.7
|
|
|
|
92.9
|
|
|
|
38.3
|
|
|
|
20.1
|
|
|
|
1,260.9
|
|
At December 31, 2015
|
|
|
352.5
|
|
|
|
871.8
|
|
|
|
|
|
|
|
36.1
|
|
|
|
5.5
|
|
|
|
102.4
|
|
|
|
16.4
|
|
|
|
20.7
|
|
|
|
1,405.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internally developed
|
|
|
Acquired from third party
|
|
|
|
Commercial
|
|
|
Executive
|
|
|
Defense and
Security
|
|
|
Other
|
|
|
Development
|
|
|
Software
|
|
|
Goodwill
|
|
|
Other
|
|
|
Total
|
|
Intangible cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013
|
|
|
1,043.8
|
|
|
|
1,027.9
|
|
|
|
25.6
|
|
|
|
11.8
|
|
|
|
15.0
|
|
|
|
206.2
|
|
|
|
38.3
|
|
|
|
22.8
|
|
|
|
2,391.4
|
|
Additions
|
|
|
203.2
|
|
|
|
169.8
|
|
|
|
|
|
|
|
12.7
|
|
|
|
|
|
|
|
29.7
|
|
|
|
|
|
|
|
|
|
|
|
415.4
|
|
Contributions from suppliers
|
|
|
(133.4
|
)
|
|
|
(52.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(185.4
|
)
|
Reclassifications
|
|
|
|
|
|
|
17.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.1
|
|
Translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
(3.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
1,113.6
|
|
|
|
1,162.8
|
|
|
|
25.6
|
|
|
|
24.5
|
|
|
|
12.1
|
|
|
|
235.9
|
|
|
|
38.3
|
|
|
|
22.6
|
|
|
|
2,635.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013
|
|
|
(825.5
|
)
|
|
|
(296.4
|
)
|
|
|
(24.8
|
)
|
|
|
|
|
|
|
(5.4
|
)
|
|
|
(128.1
|
)
|
|
|
|
|
|
|
(2.1
|
)
|
|
|
(1,282.3
|
)
|
Amortization
|
|
|
(65.7
|
)
|
|
|
(35.6
|
)
|
|
|
(0.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(14.9
|
)
|
|
|
|
|
|
|
(0.4
|
)
|
|
|
(117.4
|
)
|
Amortization of contribution from suppliers
|
|
|
19.6
|
|
|
|
5.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
(871.6
|
)
|
|
|
(326.4
|
)
|
|
|
(25.6
|
)
|
|
|
|
|
|
|
(5.4
|
)
|
|
|
(143.0
|
)
|
|
|
|
|
|
|
(2.5
|
)
|
|
|
(1,374.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013
|
|
|
218.3
|
|
|
|
731.5
|
|
|
|
0.8
|
|
|
|
11.8
|
|
|
|
9.6
|
|
|
|
78.1
|
|
|
|
38.3
|
|
|
|
20.7
|
|
|
|
1,109.1
|
|
At December 31, 2014
|
|
|
242.0
|
|
|
|
836.4
|
|
|
|
|
|
|
|
24.5
|
|
|
|
6.7
|
|
|
|
92.9
|
|
|
|
38.3
|
|
|
|
20.1
|
|
|
|
1,260.9
|
|
F-40
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internally developed
|
|
|
Acquired from third party
|
|
|
|
Commercial
|
|
|
Executive
|
|
|
Defense and
Security
|
|
|
Other
|
|
|
Development
|
|
|
Software
|
|
|
Goodwill
|
|
|
Other
|
|
|
Total
|
|
Intangible cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012
|
|
|
996.8
|
|
|
|
845.8
|
|
|
|
25.6
|
|
|
|
|
|
|
|
14.7
|
|
|
|
175.0
|
|
|
|
39.4
|
|
|
|
21.8
|
|
|
|
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
|
|
|
|
25.6
|
|
|
|
11.8
|
|
|
|
15.0
|
|
|
|
206.2
|
|
|
|
38.3
|
|
|
|
22.8
|
|
|
|
2,391.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acumulated amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012
|
|
|
(785.1
|
)
|
|
|
(235.4
|
)
|
|
|
(24.0
|
)
|
|
|
|
|
|
|
(2.4
|
)
|
|
|
(112.7
|
)
|
|
|
|
|
|
|
(0.7
|
)
|
|
|
(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 suppliers
|
|
|
19.5
|
|
|
|
6.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26.1
|
|
Reclassifications
|
|
|
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.2
|
)
|
Translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013
|
|
|
(825.5
|
)
|
|
|
(296.4
|
)
|
|
|
(24.8
|
)
|
|
|
|
|
|
|
(5.4
|
)
|
|
|
(128.1
|
)
|
|
|
|
|
|
|
(2.1
|
)
|
|
|
(1,282.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Intangible, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2012
|
|
|
211.7
|
|
|
|
610.4
|
|
|
|
1.6
|
|
|
|
|
|
|
|
12.3
|
|
|
|
62.3
|
|
|
|
39.4
|
|
|
|
21.1
|
|
|
|
958.8
|
|
At December 31, 2013
|
|
|
218.3
|
|
|
|
731.5
|
|
|
|
0.8
|
|
|
|
11.8
|
|
|
|
9.6
|
|
|
|
78.1
|
|
|
|
38.3
|
|
|
|
20.7
|
|
|
|
1,109.1
|
|
In the year ended December 31, 2015, the Company capitalized US$ 11.4 of the interest incurred on
financing of intangible assets. (December 31, 2014 US$ 9.1).
The Company assessed its cash-generating units (CGUs) at
December 31, 2015, without identifying any indication of impairment, except for certain aircraft in property, plant and equipment. Impairment calculated for aircraft is recognized in the Commercial Aviation or Executive Aviation operating
segments, according to their characteristics. CGUs holding intangible assets were also tested for impairment at December 31, 2015, irrespective of the absence of indications of losses. No indication of impairment was identified.
In this calculation, a discount rate (expectation of return for investors) was applied on the cash-flows presented in the Companys
Strategic Plan.
Goodwill based on future profitability related to the acquisition of subsidiaries was tested on a pro rata basis together
with other fixed and intangible assets allocated to the CGUs in which these subsidiaries operate. No impairment adjustment was identified.
19.
|
Trade accounts payable
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Foreign suppliers
|
|
|
661.5
|
|
|
|
622.9
|
|
Risk partners
(i)
|
|
|
321.6
|
|
|
|
282.1
|
|
Domestic suppliers
|
|
|
51.8
|
|
|
|
75.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,034.9
|
|
|
|
980.6
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The Companys risk-sharing suppliers/partners develop and produce significant aircraft components, including engines, hydraulic components, avionics, wings, tail sections, interior components and fuselage parts.
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. 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.
|
F-41
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Currency
|
|
Contractual interest rate%
|
|
Effective interest rate%
|
|
Maturity
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Other currencies:
|
|
|
|
1.25% to 6.38%
|
|
1.25% to 7.42%
|
|
|
2025
|
|
|
|
2,413.7
|
|
|
|
1,402.4
|
|
Working capital
|
|
US$
|
|
Libor 6M + 1.35%
|
|
Libor 6M + 1.35%
|
|
|
2019
|
|
|
|
18.0
|
|
|
|
18.0
|
|
|
|
|
|
Libor 3M + 2.25%
|
|
Libor 3M + 2.25%
|
|
|
2026
|
|
|
|
206.4
|
|
|
|
101.9
|
|
|
|
Euro
|
|
1.00% a 3.37%
|
|
1.00% a 3.37%
|
|
|
2020
|
|
|
|
22.2
|
|
|
|
82.4
|
|
Project development
|
|
US$
|
|
6.08%
|
|
6.08%
|
|
|
2015
|
|
|
|
|
|
|
|
0.2
|
|
Property, plant and equipment
|
|
US$
|
|
2.13%
Libor 1M + 2.44%
|
|
2.13%
Libor 1M + 2.44%
|
|
|
2030
2035
|
|
|
|
62.5
|
|
|
|
64.4
|
|
Finance leasing
|
|
US$
|
|
Libor 6M + 3.40%
|
|
Libor 6M + 3.40%
|
|
|
2017
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In local currency:
|
|
|
|
|
|
|
|
|
|
|
|
|
2,722.9
|
|
|
|
1,669.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Export Financing
|
|
R$
|
|
5.50% to 8.00%
|
|
5.5% to 8.00%
|
|
|
2017
|
|
|
|
76.3
|
|
|
|
113.2
|
|
Project development
|
|
R$
|
|
3.50 % to 5.50%
TLPJ + 1.92% a 5.00%
|
|
3.50 % to 5.50%
TLPJ + 1.92% a 5.00%
|
|
|
2023
2022
|
|
|
|
459.4
|
|
|
|
420.6
|
|
Credit Note for Exportation
|
|
R$
|
|
5.50% to 11.00%
|
|
5.5% to 11.00%
|
|
|
2019
|
|
|
|
271.2
|
|
|
|
304.8
|
|
Working capital
|
|
R$
|
|
15.39% to 17.00%
|
|
15.39% to 17.00%
|
|
|
2015
|
|
|
|
0.7
|
|
|
|
|
|
Finance leasing
|
|
R$
|
|
CDI + 1.20%
|
|
CDI + 1.20%
|
|
|
2016
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
807.6
|
|
|
|
838.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
3,530.5
|
|
|
|
2,508.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
219.4
|
|
|
|
89.7
|
|
Non-current portion
|
|
|
|
|
|
|
|
|
|
|
|
|
3,311.1
|
|
|
|
2,418.4
|
|
In October 2006, the Companys 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 in guaranteed notes at
6.375% p.a., due on January 15, 2020. Both operations are fully and unconditionally guaranteed by the Parent Company.
Between August
and September 2013, through its subsidiary Embraer Overseas Limited, Embraer S.A. made an offer to exchange existing bonds maturing in 2017 and 2020 for New Notes maturing in 2023. In the case of bonds maturing in 2017 the exchange offer
resulted in US$ 146.4 of the aggregate principal of existing notes and US$ 337.2 of the aggregate principal of the 2020 Notes, representing approximately 54.95% of the Notes exchanged. The total of the exchange offer, taking into account the effects
of the exchange price on the negotiations and the total New Notes issued closed at approximately US$ 540.5 in principal at a rate of 5.696%, maturing on September 16, 2023.
The separate financial statements of Embraer Oversas Limited are not provided, because the issuer is a fully-owned finance subsidiary of the
Company and the Company fully and unconditionally guarantees the securities. There are no significant restrictions on the ability of the Parent Company to obtain funds from its subsidiaries by dividend or loan.
On June 15, 2012, Embraer 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.
In February 2013, Embraer S.A. contracted loans of R$ 712.0 million, equivalent to US$ 229.5, in the
form of Export Credit Notes for the purpose of investing in export activities and the production of goods for export, at a fixed rate of 5.50% p.a. At December 31, 2015 the amount still outstanding was R$ 437 million, equivalent to US$
111.9 million.
On March and April, 2013, Embraer S.A. contracted a loan of R$ 200.0 million, equivalent to US$ 51.2, at a fixed rate
of 5.50% p.a., through the BNDES Investment Support BNDES PSI Pre-Shipment Subprogram (
Programa BNDES de Sustentação do Investimento BNDES PSI
Subprograma Exportação de
Pré-embarque)
funding line, for investment in export production activities.
In August 2013, Embraer S.A. contracted financing
totaling approximately R$ 303.9 million, equivalent to US$ 77.8, at a rate fixed 3.50% per annum, from the Financier of Studies and Projects (
Financiadora de Estudos e Projetos FINEP
) for use in the research and new product
development program. At December 31, 2015 the Company had received the amount of R$ 190.3 million equivalent to US$ 48.7 million.
F-42
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
In December 2013, Embraer S.A. signed a contract with the BNDES for use in developments
projects in the amount of approximately R$ 1.4 billion, equivalent to US$ 361.5, received in full by December 31, 2015.
In June
2015, the Companys wholly-owned finance subsidiary Embraer Netherlands Finance B.V, which only performs financial operations, issued US$ 1 billion in Guaranteed Notes at 5.05% p.a., due on June 15, 2025, in an offering subsequently
registered with the SEC. This operation is fully and unconditionally guaranteed by the Parent Company.
The separate financial
statements of Embraer Netherlands Finance B.V are not provided, because the issuer is a fully-owned finance subsidiary of the Company and the Company fully and unconditionally guarantees the securities. There are no significant restrictions on the
ability of the Parent Company to obtain funds from its subsidiaries by dividend or loan.
In December 2015, Embraer SA contracted loans of
R$ 685 million, equivalent to US$ 175.4, at a weighted average rate of 10.96% a year, in the form of Export Credit Notes in order to invest in export and production of goods for export.
At December 31, 2015, the maturities of the long-term financing agreements are as follows:
|
|
|
|
|
Year
|
|
|
|
2017
|
|
|
424.3
|
|
2018
|
|
|
244.7
|
|
2019
|
|
|
100.8
|
|
2020
|
|
|
228.5
|
|
After 2020
|
|
|
2,312.8
|
|
|
|
|
|
|
|
|
|
3,311.1
|
|
|
|
|
|
|
Total debt is denominated in the following currencies:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Loans
|
|
|
|
|
|
|
US dollar
|
|
|
2,700.7
|
|
|
|
1,587.0
|
|
Brazilian
Real
|
|
|
807.6
|
|
|
|
838.7
|
|
Euro
|
|
|
22.2
|
|
|
|
82.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,530.5
|
|
|
|
2,508.1
|
|
|
|
|
|
|
|
|
|
|
20.2.
|
Interest and guarantees
|
At December 31, 2015, loans denominated in US dollars (75%
of the total) are mainly subject to fixed interest rates. The weighted average rate was 5.26% p.a. (5.56% p.a. at December 31, 2014). Additionally, as at December 31, 2015, the Company had loans denominated in Euros (2% of the total),
subject to fixed interest at an average annual weighted rate of 5.68% p.a. (6.221% p.a. at December 31, 2014).
At December 31,
2015, loans denominated in
Reais
(23% 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, 2015 was 6.43% p.a. (6.01%
p.a. at December 31, 2014).
At December 31, 2015, loans demoninated in euros (1% of the total) were predominantly subject to
fixed charges and weighted average rate of 1.79% pa (2.91% pa at December 31, 2014).
Real estate, machinery, equipment, commercial
pledges and bank guarantees totaling US$ 471.3 as at December 31, 2015 (US$ 461.9 at December 31, 2014) were provided as collateral for loans.
F-43
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
20.3.
|
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 EBITDA/net financial expense. Agreements also include customary restrictions on the creation of new encumbrances on assets, significant changes in control of the Company, sale of assets and payment of
dividends in excess of the minimum mandatory dividend in the event of default on financing, and transactions with affiliated companies.
As at December 31, 2015, the Company was in compliance with all the restrictive clauses.
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Provisions related to payroll
(i)
|
|
|
97.2
|
|
|
|
128.1
|
|
Other accounts payable
(ii)
|
|
|
94.5
|
|
|
|
73.2
|
|
Contractual obligations
(iii)
|
|
|
71.3
|
|
|
|
122.7
|
|
Commissions
|
|
|
21.9
|
|
|
|
23.7
|
|
Provision employee profit sharing
|
|
|
17.8
|
|
|
|
32.0
|
|
Long-term incentive
(iv)
|
|
|
9.8
|
|
|
|
4.0
|
|
Insurance
|
|
|
8.1
|
|
|
|
6.0
|
|
Accrued materials
(v)
|
|
|
4.2
|
|
|
|
5.9
|
|
Brazilian air force
|
|
|
2.6
|
|
|
|
2.2
|
|
Non controlling interest option
(vi)
|
|
|
2.2
|
|
|
|
2.4
|
|
Security deposit
|
|
|
0.9
|
|
|
|
11.6
|
|
Financial credit
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
330.7
|
|
|
|
412.1
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
291.1
|
|
|
|
324.5
|
|
Non-current portion
|
|
|
39.6
|
|
|
|
87.6
|
|
(i)
|
Refers to the accrued vacation and related charges recorded in the consolidated financial statements;
|
(ii)
|
Primarily expenses incurred at the reporting date, with payments occurring within one month;
|
(iii)
|
Mainly amounts recorded to cover maintenance costs of aircraft under operating lease agreements and contractual commitments assumed on the sale of new aircraft or closing of financial residual value guarantees;
|
(iv)
|
Refers to the Long Term Incentive (LTI) granted to Company employees in the form of virtual shares, as described in Note 30Share-based compensation;
|
(v)
|
Accessories or components to be installed in aircraft already delivered, in accordance with the contracts; and
|
(vi)
|
Refers to options of non-controlling interests (for which the right to exercise has not yet occurred) which may require some or all of their interest in the investees to be purchased by the Company.
|
22.
|
Advances from customers
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Denominated in U.S. dollars
|
|
|
704.2
|
|
|
|
596.8
|
|
Denominated in
Reais
|
|
|
203.7
|
|
|
|
231.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
907.9
|
|
|
|
828.6
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
743.8
|
|
|
|
652.5
|
|
Non-current portion
|
|
|
164.1
|
|
|
|
176.1
|
|
The balance of advances from customers related to construction contracts using the POC method is US$ 361.2, at
December 31, 2015 (US$ 203.6 at December 31, 2014).
F-44
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
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 such 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 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.
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
INSS (social security contribution)
(i)
|
|
|
92.9
|
|
|
|
123.8
|
|
Taxes refinancing program
(ii)
|
|
|
21.9
|
|
|
|
95.5
|
|
IRRF (income tax withholding income tax)
|
|
|
14.9
|
|
|
|
20.4
|
|
PIS and COFINS
(iii)
|
|
|
7.3
|
|
|
|
9.8
|
|
FGTS (government employee severance indemnity fund)
|
|
|
5.2
|
|
|
|
6.8
|
|
IPI (manufacturing tax)
|
|
|
1.3
|
|
|
|
2.6
|
|
Others
|
|
|
7.9
|
|
|
|
10.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151.4
|
|
|
|
269.7
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
70.8
|
|
|
|
125.6
|
|
Non-current portion
|
|
|
80.6
|
|
|
|
144.1
|
|
(i)
|
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 Company received a favorable decision in November 2013 and is awaiting judgment of the appeal filed by the Treasury. The amount involved is US$ 42.6 at December 31,
2015 (US$ 72.4 at December 31, 2014).
|
The Company has also filed an application for advance relief, claiming waiver of
the standards that govern the Accident Prevention Factor (FAP).
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, maintaining the suspension of the FAP tax credit liability for 2010 and 2011 of US$ 8.6. Suspension of the FAP tax credit liability was granted in
September 2014and the Company is awaiting judgment of the appeal filed by the Treasury.
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, 2015, is US$ 27.3, for which a provision has been recorded (US$ 29.3 at
December 31, 2014).
Additionally, in February, 2009, the Company filed a suit contesting the payment of social security on paid notice
of dismissal and other indemnity payments. As a result of a lower court decision, the amounts relating to paid notice and certain indemnity payments were excluded from the calculation base for the employers social security contribution and a
provision was recorded, pending a final successful outcome of the court case. In October 2015 the Company obtained partial success in the dispute in relation to the employers portion of the Social Security on the paid notice, and therefore
reduced the amount of the provision in relation to US$ 2.1. Currently the remaining amount involved in the dispute in respect of the notice established in the collective agreement is US$ 7.1 at December 31, 2015 (US$ 11.9 at December 31,
2014).
(ii)
|
The Company included in taxes refinancing program debts previously under dispute in the judicial and administrative spheres in relation to recognition of the constitutional immunity of social contribution tax on exports
as well as the tax basis and tax rates on certain and specific remittances abroad.
|
The total amount of the debt, net of the
escrow deposit, was US$ 101.8 in December 2013, paid in 30 monthly installments, in relation to the consolidation in November 2009, plus the Selic rate for the period. The remaining amount at December 31, 2015 was US$ 20.9 (US$ 93.6 at
December 31, 2014).
(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 and an appeal decision is awaited. The
amount involved in the suit is US$ 2.7 (US$ 3.8 at December 31, 2014).
With respect to the litigation issues mentioned above, the
remaining provisions will be kept until there is a final outcome and no further appeals can be made.
F-45
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
As the tax basis for the majority of the Companys assets and
liabilities is maintained in
Reais
and the accounting basis is measured in US dollars (functional currency), the fluctuations in the exchange rate significantly impacted the tax basis and, in turn, the deferred income tax expense (benefit).
Based on the expectation of future taxable income, the Company recorded deferred tax assets based on tax losses carryforwards.
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.
The components of deferred tax assets and liabilities are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Temporarily non-deductible provisions
|
|
|
(2.8
|
)
|
|
|
(64.9
|
)
|
|
|
(69.8
|
)
|
Tax loss carryforwards
|
|
|
20.5
|
|
|
|
17.9
|
|
|
|
22.3
|
|
Difference between tax basis (Real) and functional currency measurement basis (US dollar)
|
|
|
(407.1
|
)
|
|
|
(204.7
|
)
|
|
|
(123.7
|
)
|
Gains not realized from sales of Parent Company to subsidiairies
|
|
|
19.9
|
|
|
|
28.0
|
|
|
|
19.4
|
|
Effect of differences by fixed asset
|
|
|
(36.1
|
)
|
|
|
(31.0
|
)
|
|
|
(29.7
|
)
|
Differences between basis: account x tax
|
|
|
(7.2
|
)
|
|
|
(7.6
|
)
|
|
|
(19.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets (liabilities), net
|
|
|
(412.8
|
)
|
|
|
(262.3
|
)
|
|
|
(200.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax asset
|
|
|
4.5
|
|
|
|
8.1
|
|
|
|
8.5
|
|
Total deferred tax liability
|
|
|
(417.3
|
)
|
|
|
(270.4
|
)
|
|
|
(209.2
|
)
|
F-46
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The changes in deferred income tax that affected profit and loss were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
From the
statement
of income
|
|
|
Other
comprehensive
income
|
|
|
Total
|
|
At December 31, 2012
|
|
|
(22.3
|
)
|
|
|
8.7
|
|
|
|
(13.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily non-deductible provisions
|
|
|
(64.8
|
)
|
|
|
4.8
|
|
|
|
(60.0
|
)
|
Tax loss carryforwards
|
|
|
(4.7
|
)
|
|
|
|
|
|
|
(4.7
|
)
|
Difference between tax basis (Real) and functional currency measurement basis (US dollar)
|
|
|
(91.1
|
)
|
|
|
|
|
|
|
(91.1
|
)
|
Provision Gain not realized at sales from Controlling company to subsidiairies
|
|
|
2.9
|
|
|
|
|
|
|
|
2.9
|
|
Effect of differences by fixed asset
|
|
|
(7.2
|
)
|
|
|
|
|
|
|
(7.2
|
)
|
Differences between basis: account x tax
|
|
|
(27.8
|
)
|
|
|
0.8
|
|
|
|
(27.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013
|
|
|
(215.0
|
)
|
|
|
14.3
|
|
|
|
(200.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily non-deductible provisions
|
|
|
(3.4
|
)
|
|
|
|
|
|
|
(3.4
|
)
|
Tax loss carryforwards
|
|
|
(1.7
|
)
|
|
|
|
|
|
|
(1.7
|
)
|
Difference between tax basis (Real) and functional currency measurement basis (US dollar)
|
|
|
(81.0
|
)
|
|
|
|
|
|
|
(81.0
|
)
|
Gains not realized from sales of Parent Company to subsidiairies
|
|
|
10.9
|
|
|
|
|
|
|
|
10.9
|
|
Effect of differences by fixed asset
|
|
|
(4.8
|
)
|
|
|
|
|
|
|
(4.8
|
)
|
Differences between basis: account x tax
|
|
|
1.3
|
|
|
|
17.1
|
|
|
|
18.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
(293.7
|
)
|
|
|
31.4
|
|
|
|
(262.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Temporarily non-deductible provisions
|
|
|
62.1
|
|
|
|
|
|
|
|
62.1
|
|
Tax loss carryforwards
|
|
|
2.6
|
|
|
|
|
|
|
|
2.6
|
|
Difference between tax basis (Real) and functional currency measurement basis (US dollar)
|
|
|
(202.4
|
)
|
|
|
|
|
|
|
(202.4
|
)
|
Gains not realized from sales of Parent Company to subsidiairies
|
|
|
(8.1
|
)
|
|
|
|
|
|
|
(8.1
|
)
|
Effect of differences by fixed asset
|
|
|
(5.0
|
)
|
|
|
|
|
|
|
(5.0
|
)
|
Differences between basis: account x tax
|
|
|
14.6
|
|
|
|
(14.3
|
)
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
(429.9
|
)
|
|
|
17.1
|
|
|
|
(412.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.2.
|
Reconciliation of income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Profit before taxation
|
|
|
336.2
|
|
|
|
503.9
|
|
|
|
602.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution expense at the nominal Brazilian enacted tax rate34%
|
|
|
(114.3
|
)
|
|
|
(171.3
|
)
|
|
|
(204.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax on profits of overseas subsidiaries
|
|
|
(5.7
|
)
|
|
|
(6.3
|
)
|
|
|
(8.5
|
)
|
Difference between tax basis (Real) and functional currency measurement basis (US dollar)
|
|
|
(202.4
|
)
|
|
|
(81.0
|
)
|
|
|
(91.1
|
)
|
Research and development tax incentives
|
|
|
44.9
|
|
|
|
78.3
|
|
|
|
80.2
|
|
Interest on own capital
|
|
|
12.5
|
|
|
|
28.1
|
|
|
|
23.6
|
|
Fiscal credits (recognized and non recognized) and tax rate
|
|
|
(1.5
|
)
|
|
|
4.6
|
|
|
|
(63.6
|
)
|
Other difference between IFRS and fiscal basis
|
|
|
5.1
|
|
|
|
(1.3
|
)
|
|
|
6.7
|
|
Other
|
|
|
6.0
|
|
|
|
(7.3
|
)
|
|
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(141.1
|
)
|
|
|
15.1
|
|
|
|
(51.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax and social contribution income (expense) benefit as reported
|
|
|
(255.4
|
)
|
|
|
(156.2
|
)
|
|
|
(256.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax and social contribution (expense) benefit as reported
|
|
|
(119.2
|
)
|
|
|
(77.1
|
)
|
|
|
(63.8
|
)
|
Deferred income tax and social contribution income (expense) benefit as reported
|
|
|
(136.2
|
)
|
|
|
(79.1
|
)
|
|
|
(192.6
|
)
|
The effective tax rate for the year ended December 31, 2015 was 76.0% as compared to 31.0% at
December 31, 2014.
The average effective rate of current income tax and social contribution for the year ended December 31, 2015
was 35.5% as compared to 15.3% at December 31, 2014.
25.
|
Financial Guarantees and Residual Value Guarantees
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Financial guarantee of residual value
|
|
|
94.7
|
|
|
|
94.4
|
|
Accounts payable
(i)
|
|
|
57.4
|
|
|
|
81.8
|
|
Financial guarantee
|
|
|
40.1
|
|
|
|
61.8
|
|
Additional provision
(i)
|
|
|
100.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
293.1
|
|
|
|
238.0
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
161.5
|
|
|
|
29.5
|
|
Non-current portion
|
|
|
131.6
|
|
|
|
208.5
|
|
F-47
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The activity on the financial guarantees and residual guarantees is shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
guarantee
|
|
|
Financial
guarantee
of
residual
value
|
|
|
Accounts
payable
(i)
|
|
|
Additional
provision
(i)
|
|
|
Total
|
|
At December 31, 2012
|
|
|
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 amortization
|
|
|
(11.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(11.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013
|
|
|
73.7
|
|
|
|
81.6
|
|
|
|
138.2
|
|
|
|
|
|
|
|
293.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
1.2
|
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
5.2
|
|
Disposals
|
|
|
|
|
|
|
(6.3
|
)
|
|
|
(60.4
|
)
|
|
|
|
|
|
|
(66.7
|
)
|
Market value
|
|
|
|
|
|
|
19.1
|
|
|
|
|
|
|
|
|
|
|
|
19.1
|
|
Guarantee amortization
|
|
|
(13.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(13.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
61.8
|
|
|
|
94.4
|
|
|
|
81.8
|
|
|
|
|
|
|
|
238.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
|
|
|
|
3.0
|
|
|
|
114.0
|
|
|
|
117.0
|
|
Disposals
|
|
|
|
|
|
|
|
|
|
|
(40.5
|
)
|
|
|
|
|
|
|
(40.5
|
)
|
Re-measurement
(ii)
|
|
|
(9.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9.0
|
)
|
Reclassifications
(iii)
|
|
|
|
|
|
|
|
|
|
|
13.1
|
|
|
|
(13.1
|
)
|
|
|
|
|
Market value
|
|
|
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
|
0.3
|
|
Guarantee amortization
|
|
|
(12.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(12.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
40.1
|
|
|
|
94.7
|
|
|
|
57.4
|
|
|
|
100.9
|
|
|
|
293.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Accounts payable and additional provision:
|
|
|
|
American AirlinesRefers to liabilities assumed as a result of the acquisition of certain assets of American Airlines in 2012. At December 31, 2015 the obligation assumed in accounts payable was US$ 57.4
(December 31, 2014 US$ 81.0)
|
|
|
|
On February 25, 2016, the Companys customer Republic Airways Holding, flilled for bankruptcy protection (Chapter 11) with the United States of America Court. As a result of this filling, the Company
recognized a provision US$ 100.9, to cover losses related to obligations with financial guarantees offered to the main financing agent to the ERJ 140/145 aircraft acquired by this customer. Management recognized the provision considering its best
estimates based on the information contained on the reorganization filling document.
|
|
(ii)
|
The Company granted FLDG guarantees for certain ERJ 145 aircraft in prior year sales drives. Until the third quarter of 2015, such guarantees were measured based on the maximum exposure model calculated on the principal
to be paid to the lender by the customer for each aircraft. A new model, the Guarantee Pool, was set up for such guarantees in the fourth quarter of 2015, to ensure the best negotiation for both parties. In the new model, the maximum
exposure was fixed at an amount agreed by the customer, the Company and the lender, without changing the coverage time of guarantees granted previously and including new sales in the guarantee in line with deliveries. Taking into account that the
maximum exposure in 2015 was fixed at a lower amount than previously recognized, the balance registered in the liability for the FLDG guarantee was adjusted in accordance with the new model.
|
|
(iii)
|
Refers to the transfer of financial guarantees held between provisions and accounts payable due to formalization by the parties of the exercise of such guarantees.
|
F-48
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
26.
|
Provisions and contingent liabilities
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Product warranties
(i)
|
|
|
95.7
|
|
|
|
87.3
|
|
Provisions for labor, taxes and civil
(ii)
|
|
|
49.9
|
|
|
|
80.4
|
|
Post retirement benefits
|
|
|
26.8
|
|
|
|
41.2
|
|
Taxes
|
|
|
16.9
|
|
|
|
25.3
|
|
Environmental provision
(iii)
|
|
|
1.7
|
|
|
|
4.3
|
|
Other
|
|
|
13.6
|
|
|
|
10.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
204.6
|
|
|
|
248.5
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
95.7
|
|
|
|
95.4
|
|
Non-current portion
|
|
|
108.9
|
|
|
|
153.1
|
|
(i)
|
Recorded to cover product-related expenditure, including warranties and contractual obligations to implement improvements to aircraft delivered in order to meet performance targets.
|
(ii)
|
Provisions for labor, tax or civil contingencies, as shown in the table below Note 26.1.1.
|
(iii)
|
The Company maintains allowances for spending on soil research and potential environmental recovery services.
|
26.1.1
|
Labor, tax and civil provisions
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Tax related
|
|
|
|
|
|
|
|
|
PIS and COFINS
(i)
|
|
|
16.3
|
|
|
|
12.7
|
|
Social security contributions
(ii)
|
|
|
6.8
|
|
|
|
9.9
|
|
ICMS
(iii)
|
|
|
3.3
|
|
|
|
4.6
|
|
FUNDAF
(iv)
|
|
|
3.1
|
|
|
|
4.6
|
|
Import taxes
(v)
|
|
|
1.5
|
|
|
|
2.2
|
|
Others
|
|
|
0.4
|
|
|
|
0.7
|
|
|
|
|
31.4
|
|
|
|
34.7
|
|
Labor related
|
|
|
|
|
|
|
|
|
Plurimas 461/1379
(vi)
|
|
|
7.0
|
|
|
|
9.8
|
|
Reintegration
(vii)
|
|
|
2.3
|
|
|
|
2.7
|
|
Indemnity
(viii)
|
|
|
1.7
|
|
|
|
3.4
|
|
Third parties
|
|
|
0.3
|
|
|
|
0.3
|
|
Others
|
|
|
5.3
|
|
|
|
27.4
|
|
|
|
|
16.6
|
|
|
|
43.6
|
|
Civil related
|
|
|
|
|
|
|
|
|
Indemnity
(ix)
|
|
|
1.9
|
|
|
|
2.1
|
|
|
|
|
1.9
|
|
|
|
2.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49.9
|
|
|
|
80.4
|
|
|
|
|
|
|
|
|
|
|
Current portion
|
|
|
20.0
|
|
|
|
17.5
|
|
Non-current portion
|
|
|
29.9
|
|
|
|
62.9
|
|
(i)
|
The Company calculated credits on the contributions related to PIS and COFINS 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 notified to pay work-related
environmental risk allowances. This dispute resulted in a favorable decision for the Company, which now awaits a pronouncement by the Treasury.
|
(iii)
|
The Company is contesting in the administrative sphere the Deficiency and Penalty Notice (
Auto de Infração e Imposição de MultaAIIM
) issued by the State of São Paulo for
the collection of ICMS
(Imposto sobre Circulação de Mercadorias e Serviços
) on telecommunication services, on the understanding that the services to which the AIIM refers are not subject to ICMS. There has been no
decision to date in respect of the Companys motion to deny.
|
(iv)
|
In March 2005, a Deficiency and Penalty Notice (AIIM) was filed against the Company, demanding payment of the Treasury Management Modernization Fund (
Fundo de Modernização da Administração
Fazendária
FUNDAF) contribution. 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 Companys favor. The lawsuit is at the 2nd court level,
for consideration of the Appeal and the Voluntary Appeal.
|
(v)
|
Two Deficiency and Penalty Notices issued against the Company involving the drawback regime. The first was filed due to alleged violation of the deadline for compliance with the drawback and the second discusses
possible differences in relation to the tax classification of certain products. Both disputes are running in the courts and are respectively, in the Special Appeal analysis phase in the Federal Supreme CourtSTJ (
Supremo Tribunal de
Justiça
) and awaiting an appeal judgment by the Federal Regional CourtTRF (
Tribunal Regional Federal
).
|
(vi)
|
Refers to claims for backdated salary increases and productivity payments, brought by former employees.
|
(vii)
|
Suits brought by former employees claiming reinstatement with the Company for various reasons.
|
(viii)
|
Indemnity claims in connection with alleged work-related accidents, pain and suffering, etc.
|
(ix)
|
Other indemnity claims brought by parties that had some kind of legal relationship with the Company.
|
F-49
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The tax, labor and civil provisions are recorded in accordance with the Companys
accounting policy (see note 2.2.24 of the December 31, 2015 consolidated financial statements), and the amounts shown here represent the estimated amounts that the Companys legal department and its external counsel expect the Company to
have to disburse to settle the lawsuits.
Change in provision:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
warranties
|
|
|
Post
retirement
benefits
|
|
|
Provisions
Labor,
Taxes and
Civil
|
|
|
Taxes
|
|
|
Environment
provision
|
|
|
Other
|
|
|
Total
|
|
At December 31,2012
|
|
|
110.6
|
|
|
|
61.4
|
|
|
|
62.8
|
|
|
|
4.2
|
|
|
|
|
|
|
|
14.6
|
|
|
|
253.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
98.0
|
|
|
|
15.0
|
|
|
|
21.0
|
|
|
|
4.0
|
|
|
|
5.8
|
|
|
|
10.9
|
|
|
|
154.7
|
|
Interest
|
|
|
|
|
|
|
4.7
|
|
|
|
4.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8.8
|
|
Used/payments
|
|
|
(68.5
|
)
|
|
|
(3.1
|
)
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(73.6
|
)
|
Reversals
|
|
|
(35.1
|
)
|
|
|
|
|
|
|
(9.6
|
)
|
|
|
(1.0
|
)
|
|
|
|
|
|
|
(16.2
|
)
|
|
|
(61.9
|
)
|
Translation adjustments
|
|
|
(1.1
|
)
|
|
|
(7.0
|
)
|
|
|
(7.4
|
)
|
|
|
0.1
|
|
|
|
(0.5
|
)
|
|
|
(1.5
|
)
|
|
|
(17.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2013
|
|
|
103.9
|
|
|
|
71.0
|
|
|
|
68.9
|
|
|
|
7.3
|
|
|
|
5.3
|
|
|
|
7.8
|
|
|
|
264.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
89.2
|
|
|
|
3.0
|
|
|
|
31.2
|
|
|
|
18.0
|
|
|
|
2.1
|
|
|
|
5.0
|
|
|
|
148.5
|
|
Interest
|
|
|
|
|
|
|
4.8
|
|
|
|
5.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.8
|
|
Used/payments
|
|
|
(64.1
|
)
|
|
|
(0.7
|
)
|
|
|
(9.8
|
)
|
|
|
|
|
|
|
(2.5
|
)
|
|
|
(3.0
|
)
|
|
|
(80.1
|
)
|
Reversals
|
|
|
(38.9
|
)
|
|
|
(30.0
|
)
|
|
|
(7.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(76.1
|
)
|
Translation adjustments
|
|
|
(2.8
|
)
|
|
|
(6.9
|
)
|
|
|
(7.7
|
)
|
|
|
|
|
|
|
(0.6
|
)
|
|
|
0.2
|
|
|
|
(17.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
87.3
|
|
|
|
41.2
|
|
|
|
80.4
|
|
|
|
25.3
|
|
|
|
4.3
|
|
|
|
10.0
|
|
|
|
248.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions
|
|
|
84.4
|
|
|
|
(4.7
|
)
|
|
|
14.1
|
|
|
|
1.0
|
|
|
|
1.0
|
|
|
|
5.0
|
|
|
|
100.8
|
|
Interest
|
|
|
|
|
|
|
3.1
|
|
|
|
4.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7.8
|
|
Reclassifications
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
Used/payments
|
|
|
(53.9
|
)
|
|
|
(1.1
|
)
|
|
|
(21.5
|
)
|
|
|
(10.0
|
)
|
|
|
|
|
|
|
(3.0
|
)
|
|
|
(89.5
|
)
|
Reversals
|
|
|
(22.3
|
)
|
|
|
|
|
|
|
(11.5
|
)
|
|
|
|
|
|
|
(2.0
|
)
|
|
|
|
|
|
|
(35.8
|
)
|
Translation adjustments
|
|
|
0.2
|
|
|
|
(11.7
|
)
|
|
|
(16.4
|
)
|
|
|
0.6
|
|
|
|
(1.6
|
)
|
|
|
1.6
|
|
|
|
(27.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
95.7
|
|
|
|
26.8
|
|
|
|
49.9
|
|
|
|
16.9
|
|
|
|
1.7
|
|
|
|
13.6
|
|
|
|
204.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26.2.
|
Contingent liabilities
|
Contingent liabilities are amounts
classified as possible losses, in accordance with the Companys accounting policy, in the opinion of the Companys 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. All the Companys contingent liabilities are listed below:
|
|
|
The administrative dispute regarding the tax assessment which addresses the accounting for and recognition of compensation in the Administrative Appeals Council, related Income Tax and Social Contribution is ongoing.
The total amount at December 31, 2015 is US$ 27.6 (US$ 37.9 at December 31, 2014).
|
|
|
|
In September, 2010, the Company received a subpoena from the SEC and associated inquiries from the U.S. Department of Justice, or DOJ, concerning possible non-compliance with the U.S. Foreign Corrupt Practices Act in
relation to certain aircraft sales outside of Brazil. In response, the Company retained external counsel to conduct an internal investigation of sales in three countries.
|
F-50
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
In the light of additional information, the Company voluntarily expanded the scope of the
internal investigation to include sales in other countries, reported on these matters to the SEC and the DOJ and otherwise cooperated with them. The U.S. government inquiries, related inquiries and developments in other countries and the
Companys internal investigation are ongoing and the Company will continue to cooperate with the appropriate authorities as the circumstances require. The Company started discussions with the DOJ with the objective of settling by resolution the
investigations related to non-conformity with the FCPA. Any action in these or other inquiries and related developments and proceedings in other countries may result in substantial fines for the Company and other sanctions or significant adverse
consequences. Based upon the opinion of its external counsel, the Company believes that there is no adequate basis at this time for estimating accruals or quantifying any contingency with respect to these matters.
In light of the above, we embarked on a comprehensive effort to improve and expand our compliance program worldwide. This multi-year task
involved reexamining every aspect of our compliance systems, and where appropriate, redesigning or adding to them. Some of the key enhancements include the creation of a Compliance Department, the appointment of a Chief Compliance Officer reporting
directly to the Risk and Audit Committee of the Board of Directors, the development of a program to monitor engagement of and payments to third parties, improvements to compliance policies, procedure and controls, the enhancement of anonymous and
other reporting channels, and the development of a comprehensive training and education program designed to maintain and reinforce a strong compliance culture at all levels of Embraer globally. The Company will continue to promote enhancements and
update its compliance program.
|
|
|
The Company has contingent liabilities amounting to US$ 10.2 at December 31, 2015 related to labor suits (US$ 15.3 on December, 2014).
|
27.
|
Post-retirement benefits
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Medical benefits plan Brazil
|
|
|
22.5
|
|
|
|
36.8
|
|
Medical benefits plan subsidiaries abroad
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
|
|
|
|
|
|
|
Post-retirement benefits
|
|
|
26.8
|
|
|
|
41.2
|
|
|
|
|
|
|
|
|
|
|
27.1.
|
Post-retirement healthcare benefits provided by the Company in Brazil
|
The Company amended its healthcare plan for retired employees, classified as 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.
In 2014 the
Company announced changes in employee participation in the health care plan with regard to the contribution table. These changes have been challenged by the Union, which obtained an injunction suspending the change in the amounts charged to eligible
employees, however, the change was applied for employees assisted by the benefit. In the case of other plan participants, the Company has not reviewed its exposure, and is awaiting a legal decision to proceed with a possible change of employee
participation policy in the health care plan.
The rational of this recognition is described in the accounting policy (Note
2.2.26b). The amounts recognized in the statement of financial position are:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Benefit obligationbeginning of year
|
|
|
36.8
|
|
|
|
68.5
|
|
Cost of service
|
|
|
|
|
|
|
0.7
|
|
Interest on the value of the obligation
|
|
|
2.9
|
|
|
|
4.5
|
|
Actuarial gain (loss) from demographic assumptions
|
|
|
(1.1
|
)
|
|
|
(0.1
|
)
|
Actuarial gain (loss) from financial assumptions
|
|
|
|
|
|
|
1.7
|
|
Benefits paid directly by the company
|
|
|
(3.1
|
)
|
|
|
(0.5
|
)
|
Cost incurred serviceplan amendments
|
|
|
(1.1
|
)
|
|
|
(30.0
|
)
|
Translation adjustments
|
|
|
(11.9
|
)
|
|
|
(8.0
|
)
|
|
|
|
|
|
|
|
|
|
Benefit obligationend of year
|
|
|
22.5
|
|
|
|
36.8
|
|
|
|
|
|
|
|
|
|
|
F-51
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The main actuarial assumptions were as follows:
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Discount rate
|
|
|
12.6
|
%
|
|
|
11.8
|
%
|
Inflation
|
|
|
5.0
|
%
|
|
|
5.2
|
%
|
Growth rate of medical costs (next year)
|
|
|
11.0
|
%
|
|
|
11.2
|
%
|
Growth of (long term) medical cost rate
|
|
|
6.0
|
%
|
|
|
6.2
|
%
|
27.2.
|
Post-retirement healthcare benefits provided by subsidiaries abroad
|
Embraer Aircraft Holding sponsors a post-retirement healthcare plan for employees hired up to 2007. The expected costs of pension and provision
of post-employment medical benefit for the employee concerned and their dependents are provided on an accrual basis based on actuarial studies and the calculation is reviewed annually.
The changes in the post-retirement benefits are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post retirement
Benefits
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Benefits Obligationsbeginning of the year
|
|
|
4.4
|
|
|
|
2.5
|
|
|
|
4.4
|
|
Interest cost
|
|
|
(0.2
|
)
|
|
|
0.3
|
|
|
|
0.3
|
|
Actuarial loss
|
|
|
0.2
|
|
|
|
1.7
|
|
|
|
(2.0
|
)
|
Benefits paid to participants
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits Obligationsend of year
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
2.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The changes in plan assets were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post retirement
Benefits
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Fair value of plan assetsbeginning of the year
|
|
|
1.1
|
|
|
|
1.2
|
|
|
|
1.1
|
|
Actual return on plan assets
|
|
|
|
|
|
|
0.1
|
|
|
|
0.3
|
|
Benefits paid to participants
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value of plan assetsend of year
|
|
|
0.9
|
|
|
|
1.1
|
|
|
|
1.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 costs are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post retirement
Benefits
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Accrued costUnfunded status
|
|
|
(4.3
|
)
|
|
|
(4.4
|
)
|
|
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4.3
|
)
|
|
|
(4.4
|
)
|
|
|
(2.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The principal actuarial assumptions utilized were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Post retirement
Benefits
|
|
|
|
%
|
|
|
%
|
|
|
%
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Average discount rate
|
|
|
4.00
|
%
|
|
|
4.75
|
%
|
|
|
3.75
|
%
|
Net periodic benefit cost
|
|
|
4.25
|
%
|
|
|
4.00
|
%
|
|
|
4.75
|
%
|
Rate of compensation increase
|
|
|
5.50
|
%
|
|
|
5.50
|
%
|
|
|
5.50
|
%
|
F-52
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Service cost
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
|
|
(0.1
|
)
|
Interest cost
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
Expected return on plan assets
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net periodic cost
|
|
|
(0.3
|
)
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cost
|
|
|
(0.3
|
)
|
|
|
(0.2
|
)
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The net benefit cost (benefit) is included in selling expenses and administrative expenses.
The composition of plan assets, was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Mutual funds invested primarily in stocks
|
|
|
98
|
%
|
|
|
98
|
%
|
|
|
98
|
%
|
Mutual funds invested primarily in bonds
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
1
|
%
|
Othercash
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100
|
%
|
|
|
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
|
|
2016
|
|
|
1.0
|
|
2017
|
|
|
1.1
|
|
2018
|
|
|
1.3
|
|
2019
|
|
|
1.5
|
|
2020
|
|
|
1.7
|
|
20212024
|
|
|
12.4
|
|
|
|
|
|
|
|
|
|
19.0
|
|
|
|
|
|
|
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 2015. Assumed healthcare cost trend rates have a significant effect on the amounts reported for the post-retirement healthcare plan. A one percentage point change in assumed
healthcare cost trend rates would not have material effects on the post-retirement benefit.
27.3.
|
Defined contribution pension plan
|
The Company and certain
subsidiaries sponsor a defined contribution pension plan for their employees, in which participation is optional. The Companys contributions to the plan for the years ended December 31, 2015 and 2014 were US$ 22.0 and US$ 28.4
respectively.
28.
|
Financial Instruments
|
28.1.
|
Financial instruments by category
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
|
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
|
|
|
|
|
|
|
2,165.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,165.5
|
|
Financial investments
|
|
6
|
|
|
|
|
|
|
622.5
|
|
|
|
2.0
|
|
|
|
747.7
|
|
|
|
|
|
|
|
1,372.2
|
|
Collateralized accounts receivable
|
|
10
|
|
|
408.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
408.0
|
|
Trade accounts receivable, net
|
|
7
|
|
|
783.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
783.4
|
|
Customer and commercial financing
|
|
9
|
|
|
56.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.2
|
|
Derivative financial instruments
|
|
8
|
|
|
|
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,247.6
|
|
|
|
2,802.4
|
|
|
|
2.0
|
|
|
|
747.7
|
|
|
|
|
|
|
|
4,799.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
20
|
|
|
|
|
|
|
483.9
|
|
|
|
|
|
|
|
|
|
|
|
3,046.5
|
|
|
|
3,530.4
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
1,740.6
|
|
|
|
1,750.4
|
|
Financial guarantee of residual value
|
|
25
|
|
|
|
|
|
|
94.7
|
|
|
|
|
|
|
|
|
|
|
|
198.4
|
|
|
|
293.1
|
|
Capital lease
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Derivative financial instruments
|
|
8
|
|
|
|
|
|
|
12.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
600.7
|
|
|
|
|
|
|
|
|
|
|
|
4,985.6
|
|
|
|
5,586.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-53
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2014
|
|
|
|
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
|
|
|
|
|
|
|
1,713.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,713.0
|
|
Financial investments
|
|
|
6
|
|
|
|
|
|
|
709.6
|
|
|
2.6
|
|
|
|
44.2
|
|
|
|
|
|
|
|
756.4
|
|
Collateralized accounts receivable
|
|
|
10
|
|
|
|
425.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
425.6
|
|
Trade accounts receivable, net
|
|
|
7
|
|
|
|
703.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
703.8
|
|
Customer and commercial financing
|
|
|
9
|
|
|
|
68.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68.6
|
|
Derivative financial instruments
|
|
|
8
|
|
|
|
|
|
|
17.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,198.0
|
|
|
2,440.5
|
|
|
2.6
|
|
|
|
44.2
|
|
|
|
|
|
|
|
3,685.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,507.9
|
|
|
|
2,507.9
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
1,788.7
|
|
|
|
1,792.7
|
|
Financial guarantee of residual value
|
|
|
25
|
|
|
|
|
|
|
94.4
|
|
|
|
|
|
|
|
|
|
|
143.6
|
|
|
|
238.0
|
|
Capital lease
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
0.2
|
|
Derivative financial instruments
|
|
|
8
|
|
|
|
|
|
|
15.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113.8
|
|
|
|
|
|
|
|
|
|
|
4,440.4
|
|
|
|
4,554.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
28.2.
|
Fair value of financial instruments
|
The fair value of the
Companys financial assets and liabilities was determined using available market information and appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to generate estimates of fair
values. Consequently, the estimates presented below are not necessarily indicative of the amounts that might be realized in a current market exchange. The use of different assumptions and/or methodologies could have a material effect on the
estimated realizable values.
The following methods were used to estimate the fair value of each category of financial instrument for
which it is possible to estimate the fair value.
The carrying amounts of cash, financial investments, accounts receivable, other
financial assets and current liabilities are approximately their fair values. The fair value of securities held to maturity is estimated by the discounted cash flow methodology. The fair value of non-current loans is based on the value of the
contractual cash flows. The discount rate used, when applicable, is based on the future market yield curve for the cash flows of each liability.
The Company considers fair value to be the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the
risks inherent in the inputs to the valuation technique. The Company primarily applies the market approach for recurring fair value measurements and endeavors to utilize the best available information. Accordingly, the Company utilizes valuation
techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the observable inputs. A fair value hierarchy is used to prioritize the inputs used to
measure fair value. The three Levels of the fair value hierarchy are as follows:
|
|
|
Level 1
quoted prices are available in active markets for identical assets or liabilities at the reporting period. Active markets are those in which transactions for the asset or liability occur in
sufficient frequency and volume to provide pricing information on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives and listed equities.
|
|
|
|
Level 2
pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date. However, they can be directly or
indirectly observable at the statement of financial position date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. These models are primarily industry-standard models that consider various
assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures. Substantially all of these
assumptions are observable in the marketplace throughout the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category
include non-exchange traded derivatives such as swaps or over-the-counter forwards and options.
|
F-54
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
Level 3
pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in Managements
best estimate of fair value. At each balance sheet date, the Company performs an analysis of all instruments and includes in Level 3 all of those whose fair value is based on significant unobservable inputs.
|
The following table lists the Companys financial assets and liabilities by level within the fair value hierarchy. The Companys
assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
|
|
|
|
Fair value of financial instruments
measured at fair value through profit or
loss
|
|
|
Fair value
of the other
financial
instruments
|
|
|
Fair
value
|
|
|
Book
value
|
|
|
|
Note
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
5
|
|
|
|
379.6
|
|
|
|
1,785.9
|
|
|
|
|
|
|
|
2,165.5
|
|
|
|
|
|
|
|
2,165.5
|
|
|
|
2,165.5
|
|
Financial investments
|
|
|
6
|
|
|
|
0.1
|
|
|
|
622.4
|
|
|
|
|
|
|
|
622.5
|
|
|
|
749.7
|
|
|
|
1,372.2
|
|
|
|
1,372.2
|
|
Collateralized accounts receivable
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
408.0
|
|
|
|
408.0
|
|
|
|
408.0
|
|
Trade accounts receivable, net
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
783.4
|
|
|
|
783.4
|
|
|
|
783.4
|
|
Customer and commercial financing
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56.2
|
|
|
|
56.2
|
|
|
|
56.2
|
|
Derivative financial instruments
|
|
|
8
|
|
|
|
|
|
|
|
14.4
|
|
|
|
|
|
|
|
14.4
|
|
|
|
|
|
|
|
14.4
|
|
|
|
14.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
379.7
|
|
|
|
2,422.7
|
|
|
|
|
|
|
|
2,802.4
|
|
|
|
1,997.3
|
|
|
|
4,799.7
|
|
|
|
4,799.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
20
|
|
|
|
|
|
|
|
483.9
|
|
|
|
|
|
|
|
483.9
|
|
|
|
3,046.5
|
|
|
|
3,669.8
|
|
|
|
3,530.4
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
9.8
|
|
|
|
|
|
|
|
|
|
|
|
9.8
|
|
|
|
1,740.6
|
|
|
|
1,750.4
|
|
|
|
1,750.4
|
|
Financial guarantee and of residual value
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
94.7
|
|
|
|
94.7
|
|
|
|
198.4
|
|
|
|
293.1
|
|
|
|
293.1
|
|
Capital lease
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
Derivative financial instruments
|
|
|
8
|
|
|
|
|
|
|
|
12.3
|
|
|
|
|
|
|
|
12.3
|
|
|
|
|
|
|
|
12.3
|
|
|
|
12.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9.8
|
|
|
|
496.2
|
|
|
|
94.7
|
|
|
|
600.7
|
|
|
|
4,985.6
|
|
|
|
5,725.7
|
|
|
|
5,586.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2014
|
|
|
|
|
|
|
Fair value of financial instruments
measured at fair value through profit or
loss
|
|
|
Fair value
of the other
financial
instruments
|
|
|
Fair
value
|
|
|
Book
value
|
|
|
|
Note
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
5
|
|
|
|
232.2
|
|
|
|
1,480.8
|
|
|
|
|
|
|
|
1,713.0
|
|
|
|
|
|
|
|
1,713.0
|
|
|
|
1,713.0
|
|
Financial investments
|
|
|
6
|
|
|
|
0.8
|
|
|
|
708.8
|
|
|
|
|
|
|
|
709.6
|
|
|
|
46.8
|
|
|
|
756.4
|
|
|
|
756.4
|
|
Collateralized accounts receivable
|
|
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
425.6
|
|
|
|
425.6
|
|
|
|
425.6
|
|
Trade accounts receivable, net
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
703.8
|
|
|
|
703.8
|
|
|
|
703.8
|
|
Customer and commercial financing
|
|
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68.6
|
|
|
|
68.6
|
|
|
|
68.6
|
|
Derivative financial instruments
|
|
|
8
|
|
|
|
|
|
|
|
17.9
|
|
|
|
|
|
|
|
17.9
|
|
|
|
|
|
|
|
17.9
|
|
|
|
17.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
233.0
|
|
|
|
2,207.5
|
|
|
|
|
|
|
|
2,440.5
|
|
|
|
1,244.8
|
|
|
|
3,685.3
|
|
|
|
3,685.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,507.9
|
|
|
|
2,661.5
|
|
|
|
2,507.9
|
|
Trade accounts payable and others liabilities
|
|
|
|
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|
|
|
4.0
|
|
|
|
1,788.7
|
|
|
|
1,792.7
|
|
|
|
1,792.7
|
|
Financial guarantee and of residual value
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
94.4
|
|
|
|
94.4
|
|
|
|
143.6
|
|
|
|
238.0
|
|
|
|
238.0
|
|
Capital lease
|
|
|
20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.2
|
|
Derivative financial instruments
|
|
|
8
|
|
|
|
|
|
|
|
15.4
|
|
|
|
|
|
|
|
15.4
|
|
|
|
|
|
|
|
15.4
|
|
|
|
15.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4.0
|
|
|
|
15.4
|
|
|
|
94.4
|
|
|
|
113.8
|
|
|
|
4,440.4
|
|
|
|
4,707.8
|
|
|
|
4,554.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-55
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 31,2013
|
|
|
81.6
|
|
|
|
|
|
|
Disposal
|
|
|
(6.3
|
)
|
Market value
|
|
|
19.1
|
|
|
|
|
|
|
At December 31,2014
|
|
|
94.4
|
|
|
|
|
|
|
Market value
|
|
|
0.3
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
94.7
|
|
28.3.
|
Financial risk management policy
|
The Company has and follows a
risk management policy, which involves the diversification of transactions and counterparties, with the objective of mapping the risks related to the financial transactions, as well as the operational directives related to these financial
transactions. The policy provides for regular monitoring and management of the nature and general situation of the financial risks in order to assess the results and the financial impact on cash flows. The credit limits and risk rating of the
counterparties are also reviewed periodically.
The Companys risk management policy is part of the financial management policy
established by the Executive Directors and approved by to the Board of Directors, and provides for monitoring by a Financial Management Committee. Under this policy, the market risks are mitigated when there is no counterparty in the Companys
operations and when it is considered necessary to support the corporate strategy. The Companys internal control procedures provide for consolidated monitoring and supervision of the financial results and of the impact on cash flows.
The Financial Management Committee assists the Financial Department in examining and reviewing information in relation to the economic
scenario and its potential impact on the Companys operations, including significant risk management policies, procedures and practices.
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 indebtedness, for instance).
Liquidity and the leverage level are constantly
monitored in order to mitigate refinance risk and to maximize the return to the shareholders. The ratio between the liquidity and the return to the shareholders may be changed pursuant to the assessment of the Board of Directors.
The Companys capital management may be modified to adjust to changes in the economic scenario or strategic repositioning of the Company.
At December 31, 2015, cash and cash equivalents and financial investments exceeded US$ 7.2 than the Companys financial
indebtedness and at December 31, 2014 cash and cash equivalents and financial investments were lower than the Companys financial indebtedness by US$ 38.7.
Of the total financial indebtedness as of December 31, 2015, 6.2% was short-term (3.6% at December 31, 2014) and the average
weighted term was equivalent to 6.2 years (5.4 years at December 31, 2014). The Companys own capital accounted for 32.9% of the total liabilities at December 31, 2015 and 37.1% at December 31, 2014.
F-56
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
Credit risk is the risk of a transaction
negotiated between counterparties not meeting an obligation established in a financial instrument, or in negotiation of sales to customers, leading to a financial loss. The Company is exposed to credit risk in its operational activities, cash held
in banks and other investments in financial instruments held in financial institutions.
The credit risk of cash and financial investments, which
is managed by the Companys Financial Department, is in compliance with the risk management policy. The credit limit of counterparties is reviewed on a daily basis in order to minimize concentration of risks and mitigate financial losses due to
the bankruptcy of a counterparty. The Financial Management Committee assists the Financial Department in examining and reviewing operations with counterparties.
The Company may incur losses on amounts receivable from
sales of spare parts and services and customer credit ratings are analyzed continuously in order to reduce this risk. The Company may also be subject to credit risk on accounts receivable from aircraft sales until the financing structure has been
completed. To minimize this credit risk, the Company operates with financial institutions to facilitate structuring of the financing.
To
cover possible losses on doubtful accounts, the Company has recorded an allowance considered sufficient by management to cover expected losses on realization of the receivables.
The following tables present the credit risk classification of the respective counterparty of the financial investment (including cash) and
other financial assets held by the Company.
|
a)
|
Credit risk for counterparty with external assessment
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Cash and cash equivalents
|
|
|
2,165.5
|
|
|
|
1,713.0
|
|
Financial investments
|
|
|
1,372.2
|
|
|
|
756.4
|
|
Derivative financial instruments
|
|
|
14.4
|
|
|
|
17.9
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,552.1
|
|
|
|
2,487.3
|
|
|
|
|
|
|
|
|
|
|
Based on external appraisal:
|
|
|
|
|
|
|
|
|
AAA
|
|
|
1,975.3
|
|
|
|
1,598.9
|
|
AA
|
|
|
163.9
|
|
|
|
49.0
|
|
A
|
|
|
559.6
|
|
|
|
60.0
|
|
BBB
|
|
|
765.4
|
|
|
|
779.1
|
|
BB
|
|
|
87.7
|
|
|
|
|
|
N/A
|
|
|
0.2
|
|
|
|
0.3
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,552.1
|
|
|
|
2,487.3
|
|
|
|
|
|
|
|
|
|
|
N/A
|
Not available: no observable input to credit assessment
|
F-57
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
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Collateralized accounts receivable
|
|
|
408.0
|
|
|
|
425.6
|
|
Trade accounts receivable, net
|
|
|
783.4
|
|
|
|
703.8
|
|
Customer and commercial financing
|
|
|
56.2
|
|
|
|
68.6
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,247.6
|
|
|
|
1,198.0
|
|
|
|
|
|
|
|
|
|
|
Based on internal appraisal:
|
|
|
|
|
|
|
|
|
Group 1
|
|
|
4.0
|
|
|
|
1.7
|
|
Group 2
|
|
|
87.6
|
|
|
|
88.5
|
|
Group 3
|
|
|
1,156.0
|
|
|
|
1,107.8
|
|
|
|
|
|
|
|
|
|
|
To
tal
|
|
|
1,247.6
|
|
|
|
1,198.0
|
|
|
|
|
|
|
|
|
|
|
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
This is the risk of the Company not having
sufficient liquid funds to honor its financial commitments as a result of a mismatch of terms or volumes of estimated receipts and payments.
Projections and assumptions are established to manage the liquidity of cash in dollars and
reais
, based on contracts for future
disbursements and receipts, and monitored daily by the Company. Accordingly, possible mismatches are detected well in advance allowing the Company to adopt mitigation measures to reduce risks and financial cost.
The following table provides additional information related to authorization of undiscounted contractual obligations and commercial
commitments and their respective maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
Flow
|
|
|
Less
than one
year
|
|
|
One to
three
years
|
|
|
Three to
five
years
|
|
|
More
than five
years
|
|
At December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
4,740.1
|
|
|
|
377.9
|
|
|
|
983.3
|
|
|
|
580.3
|
|
|
|
2,798.6
|
|
Suppliers
|
|
|
1,034.9
|
|
|
|
1,034.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse and non recourse debt
|
|
|
384.8
|
|
|
|
10.1
|
|
|
|
29.4
|
|
|
|
338.5
|
|
|
|
6.8
|
|
Financial guarantees
|
|
|
293.1
|
|
|
|
161.5
|
|
|
|
41.8
|
|
|
|
17.7
|
|
|
|
72.1
|
|
Other liabilities
|
|
|
266.0
|
|
|
|
3.4
|
|
|
|
120.2
|
|
|
|
85.8
|
|
|
|
56.6
|
|
Capital lease
|
|
|
0.1
|
|
|
|
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,719.0
|
|
|
|
1,587.8
|
|
|
|
1,174.8
|
|
|
|
1,022.3
|
|
|
|
2,934.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
3,279.9
|
|
|
|
195.0
|
|
|
|
1,079.0
|
|
|
|
320.5
|
|
|
|
1,685.4
|
|
Suppliers
|
|
|
980.6
|
|
|
|
980.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recourse and non recourse debt
|
|
|
400.0
|
|
|
|
10.3
|
|
|
|
328.8
|
|
|
|
32.1
|
|
|
|
28.8
|
|
Financial guarantees
|
|
|
238.0
|
|
|
|
29.5
|
|
|
|
42.1
|
|
|
|
14.8
|
|
|
|
151.6
|
|
Other liabilities
|
|
|
386.1
|
|
|
|
85.5
|
|
|
|
118.4
|
|
|
|
111.4
|
|
|
|
70.8
|
|
Capital lease
|
|
|
0.3
|
|
|
|
0.2
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,284.9
|
|
|
|
1,301.1
|
|
|
|
1,568.4
|
|
|
|
478.8
|
|
|
|
1,936.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The table above shows the outstanding principal and interest if applicable at the maturity dates. In the case
of the fixed rate liabilities, interest expense was calculated based on the rate established in each debt contract. Interest expense on floating rate liabilities was calculated based on a market forecast for each period (e.g. LIBOR 6m12m).
F-58
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
This risk arises from the possibility of the Company incurring
losses on account of interest rate fluctuations that increase the financial expense of liabilities subject to floating interest rates, reducing the income on assets subject to floating rates and / or fluctuations in fair value when calculating the
price of assets or liabilities marked to market at fixed rates.
The lines of the Financial Statements most affected by interest risks
are:
|
|
|
Cash, cash equivalents and financial investmentsCompany policy for managing the risk of fluctuations in interest rates on financial investments is to measure market risk by the Value-At-RiskVAR methodology,
analyzing a variety of risk factors that might affect the return on the investments. The financial income determined in the period already reflects the effects of marking the assets in the Brazilian and foreign investment portfolios to market.
|
|
|
|
Loans and financingthe Company uses derivative contracts to hedge against the risk of fluctuations in interest rates on certain transactions, and 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, 2015, the Companys cash, cash equivalents, financial investments and loans and financing were indexed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without derivative effect
|
|
Pre-fixed
|
|
|
Post-fixed
|
|
|
Total
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Cash, cash equivalents and financial investments
|
|
|
1,367.5
|
|
|
|
38.66
|
%
|
|
|
2,170.2
|
|
|
|
61.34
|
%
|
|
|
3,537.7
|
|
|
|
100.00
|
%
|
Loans and financing
|
|
|
3,228.1
|
|
|
|
91.43
|
%
|
|
|
302.4
|
|
|
|
8.57
|
%
|
|
|
3,530.5
|
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
With derivative effect
|
|
Pre-fixed
|
|
|
Post-fixed
|
|
|
Total
|
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Cash, cash equivalents and financial investments
|
|
|
1,367.5
|
|
|
|
38.66
|
%
|
|
|
2,170.2
|
|
|
|
61.34
|
%
|
|
|
3,537.7
|
|
|
|
100.00
|
%
|
Loans and financing
|
|
|
3,031.5
|
|
|
|
85.87
|
%
|
|
|
499.0
|
|
|
|
14.13
|
%
|
|
|
3,530.5
|
|
|
|
100.00
|
%
|
At December 31, 2015, the Companys cash equivalents and post -fixed financing were indexed as
follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without derivative
effect
|
|
|
With derivative
effect
|
|
|
Amount
|
|
|
%
|
|
|
Amount
|
|
|
%
|
|
Cash equivalents and financial investments
|
|
|
2,170.2
|
|
|
|
100.00
|
%
|
|
|
2,170.2
|
|
|
|
100.00
|
%
|
CDI
|
|
|
565.8
|
|
|
|
26.07
|
%
|
|
|
565.8
|
|
|
|
26.07
|
%
|
Libor
|
|
|
1,604.4
|
|
|
|
73.93
|
%
|
|
|
1,604.4
|
|
|
|
73.93
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
302.4
|
|
|
|
100.00
|
%
|
|
|
499.0
|
|
|
|
100.00
|
%
|
TJLP
|
|
|
22.4
|
|
|
|
7.41
|
%
|
|
|
22.4
|
|
|
|
4.49
|
%
|
Libor
|
|
|
280.0
|
|
|
|
92.59
|
%
|
|
|
73.6
|
|
|
|
14.75
|
%
|
CDI
|
|
|
|
|
|
|
0.00
|
%
|
|
|
403.0
|
|
|
|
80.76
|
%
|
|
b)
|
Foreign exchange rate risk
|
The Companys functional currency is the US dollar.
Consequently, the Companys operations which are most exposed to foreign exchange gains/losses are those denominated in
Reais
(labor costs, tax issues, local expenses, financial investments and loans and financing) as well as investments in subsidiaries in currencies other than the US dollar.
F-59
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 denominated in
Reais
.
Under certain market
conditions, the Company may protect itself against potential future mismatches of expenses and revenues denominated in foreign currency, to minimize the effects of future exchange variations on the Companys profit or loss.
Efforts to minimize the foreign exchange risk for rights and liabilities denominated in currencies other than the functional currency may
involve transactions with derivatives, such as swaps, exchange options and Non-Deliverable Forwards (NDF) (Note 8).
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Without the effect of
derivative transactions
|
|
|
With the effect of
derivative transactions
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Loans and financing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian
reais
|
|
|
807.6
|
|
|
|
838.7
|
|
|
|
807.6
|
|
|
|
838.7
|
|
U.S. dollars
|
|
|
2,700.7
|
|
|
|
1,587.0
|
|
|
|
2,700.7
|
|
|
|
1,587.0
|
|
Euro
|
|
|
22.2
|
|
|
|
82.4
|
|
|
|
22.2
|
|
|
|
82.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,530.5
|
|
|
|
2,508.1
|
|
|
|
3,530.5
|
|
|
|
2,508.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian
reais
|
|
|
83.9
|
|
|
|
114.7
|
|
|
|
83.9
|
|
|
|
114.7
|
|
U.S. dollars
|
|
|
842.8
|
|
|
|
770.1
|
|
|
|
842.8
|
|
|
|
770.1
|
|
Euro
|
|
|
102.3
|
|
|
|
95.2
|
|
|
|
102.3
|
|
|
|
95.2
|
|
Other currencies
|
|
|
5.9
|
|
|
|
0.6
|
|
|
|
5.9
|
|
|
|
0.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,034.9
|
|
|
|
980.6
|
|
|
|
1,034.9
|
|
|
|
980.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (1)
|
|
|
4,565.4
|
|
|
|
3,488.7
|
|
|
|
4,565.4
|
|
|
|
3,488.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and financial investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian
reais
|
|
|
1,015.9
|
|
|
|
1,392.3
|
|
|
|
1,015.9
|
|
|
|
1,392.3
|
|
U.S. dollars
|
|
|
2,414.8
|
|
|
|
1,011.8
|
|
|
|
2,414.8
|
|
|
|
1,011.8
|
|
Euro
|
|
|
16.0
|
|
|
|
11.0
|
|
|
|
16.0
|
|
|
|
11.0
|
|
Other currencies
|
|
|
91.0
|
|
|
|
54.3
|
|
|
|
91.0
|
|
|
|
54.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,537.7
|
|
|
|
2,469.4
|
|
|
|
3,537.7
|
|
|
|
2,469.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade accounts receivable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian
reais
|
|
|
65.8
|
|
|
|
78.0
|
|
|
|
65.8
|
|
|
|
78.0
|
|
U.S. dollars
|
|
|
617.8
|
|
|
|
508.0
|
|
|
|
617.8
|
|
|
|
508.0
|
|
Euro
|
|
|
98.7
|
|
|
|
116.8
|
|
|
|
98.7
|
|
|
|
116.8
|
|
Other currencies
|
|
|
1.1
|
|
|
|
1.0
|
|
|
|
1.1
|
|
|
|
1.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
783.4
|
|
|
|
703.8
|
|
|
|
783.4
|
|
|
|
703.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total (2)
|
|
|
4,321.1
|
|
|
|
3,173.2
|
|
|
|
4,321.1
|
|
|
|
3,173.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net exposure (12):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian
reais
|
|
|
(190.2
|
)
|
|
|
(516.9
|
)
|
|
|
(190.2
|
)
|
|
|
(516.9
|
)
|
U.S. dollars
|
|
|
510.9
|
|
|
|
837.3
|
|
|
|
510.9
|
|
|
|
837.3
|
|
Euro
|
|
|
9.8
|
|
|
|
49.8
|
|
|
|
9.8
|
|
|
|
49.8
|
|
Other currencies
|
|
|
(86.2
|
)
|
|
|
(54.7
|
)
|
|
|
(86.2
|
)
|
|
|
(54.7
|
)
|
The Company has other financial assets and liabilities that are also influenced by foreign exchange variations
that are not included in the table above. They are used to minimize exposure in the currencies presented.
F-60
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
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, including derivatives, is presented below describing the effects on the monetary and foreign exchange variations on the financial income and expense determined
on the balances recorded at December 31, 2015, in the event of the occurrence of such variations in the risk component.
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.
Assuming that the balances remain constant, the Company calculates the
interest and exchange variation differential for each of the projected scenarios.
Evaluation of the amounts exposed to interest rate risk
considers only the risks for the financial statement. Operations subject to prefixed interest rates were not included. The probable scenario is based on the Companys estimates for each of the variables indicated, and positive and negative
variations of 25% and 50% were applied to the rates in force as of the reporting date.
In the sensitivity analysis of derivative
contracts, positive and negative variations of 25% and 50% were applied to the market yield curve (BM&FBOVESPA) as of the reporting date.
28.4.2
|
Interest risk factor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional variations in book balances (*)
|
|
|
|
Risk
factor
|
|
Amounts
exposed at
12.31.2015
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Cash equivalents and financial investments
|
|
CDI
|
|
|
565.8
|
|
|
|
(39.3
|
)
|
|
|
(19.0
|
)
|
|
|
1.4
|
|
|
|
21.8
|
|
|
|
42.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
CDI
|
|
|
565.8
|
|
|
|
(39.3
|
)
|
|
|
(19.0
|
)
|
|
|
1.4
|
|
|
|
21.8
|
|
|
|
42.1
|
|
Cash equivalents and financial investments
|
|
LIBOR
|
|
|
1,604.4
|
|
|
|
(3.9
|
)
|
|
|
(0.9
|
)
|
|
|
2.0
|
|
|
|
5.0
|
|
|
|
8.0
|
|
Loans and financing
|
|
LIBOR
|
|
|
280.0
|
|
|
|
0.7
|
|
|
|
0.2
|
|
|
|
(0.4
|
)
|
|
|
(0.9
|
)
|
|
|
(1.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
LIBOR
|
|
|
1,324.4
|
|
|
|
(3.2
|
)
|
|
|
(0.7
|
)
|
|
|
1.6
|
|
|
|
4.1
|
|
|
|
6.6
|
|
Loans and financing
|
|
TJLP
|
|
|
22.4
|
|
|
|
0.7
|
|
|
|
0.3
|
|
|
|
(0.1
|
)
|
|
|
(0.5
|
)
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
TJLP
|
|
|
(22.4
|
)
|
|
|
0.7
|
|
|
|
0.3
|
|
|
|
(0.1
|
)
|
|
|
(0.5
|
)
|
|
|
(0.9
|
)
|
Rates considered
|
|
CDI
|
|
|
14.15
|
%
|
|
|
7.20
|
%
|
|
|
10.80
|
%
|
|
|
14.40
|
%
|
|
|
18.00
|
%
|
|
|
21.60
|
%
|
Rates considered
|
|
LIBOR
|
|
|
0.61
|
%
|
|
|
0.37
|
%
|
|
|
0.56
|
%
|
|
|
0.74
|
%
|
|
|
0.93
|
%
|
|
|
1.11
|
%
|
Rates considered
|
|
TJLP
|
|
|
6.50
|
%
|
|
|
3.50
|
%
|
|
|
5.25
|
%
|
|
|
7.00
|
%
|
|
|
8.75
|
%
|
|
|
10.50
|
%
|
(*)
|
The positive and negative variations of 25% and 50% were applied on the rates in effect at 12.31.2015
|
28.4.3
|
Foreign exchange risk factor
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional variations in book balances (*)
|
|
|
|
Risk
factor
|
|
|
Amounts
exposed at
12.31.2015
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Assets
|
|
|
|
|
|
|
1,359.4
|
|
|
|
645.7
|
|
|
|
288.9
|
|
|
|
(68.0
|
)
|
|
|
(424.8
|
)
|
|
|
(781.6
|
)
|
Cash, cash equivalents and financial investments
|
|
|
BRL
|
|
|
|
1,015.9
|
|
|
|
482.5
|
|
|
|
215.9
|
|
|
|
(50.8
|
)
|
|
|
(317.5
|
)
|
|
|
(584.1
|
)
|
Other assets
|
|
|
BRL
|
|
|
|
343.5
|
|
|
|
163.2
|
|
|
|
73.0
|
|
|
|
(17.2
|
)
|
|
|
(107.3
|
)
|
|
|
(197.5
|
)
|
Liabilities
|
|
|
|
|
|
|
1,427.9
|
|
|
|
(678.2
|
)
|
|
|
(303.4
|
)
|
|
|
71.4
|
|
|
|
446.2
|
|
|
|
820.9
|
|
Loans and financing
|
|
|
BRL
|
|
|
|
807.6
|
|
|
|
(383.6
|
)
|
|
|
(171.6
|
)
|
|
|
40.4
|
|
|
|
252.4
|
|
|
|
464.3
|
|
Other liabilities
|
|
|
BRL
|
|
|
|
620.3
|
|
|
|
(294.6
|
)
|
|
|
(131.8
|
)
|
|
|
31.0
|
|
|
|
193.8
|
|
|
|
356.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net impact
|
|
|
|
|
|
|
(68.5
|
)
|
|
|
(32.5
|
)
|
|
|
(14.5
|
)
|
|
|
3.4
|
|
|
|
21.4
|
|
|
|
39.3
|
|
Exchange rate considered
|
|
|
|
3.9048
|
|
|
|
2.0500
|
|
|
|
3.0750
|
|
|
|
4.1000
|
|
|
|
5.1250
|
|
|
|
6.1500
|
|
(*)
|
The positive and negative variations of 25% and 50% were applied on the rates in effect at 12.31.2015
|
F-61
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
12.31.2015
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Interest swap
|
|
LIBOR
|
|
|
12.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest swapfair value hedge
|
|
CDI
|
|
|
(9.0
|
)
|
|
|
30.6
|
|
|
|
14.1
|
|
|
|
(0.9
|
)
|
|
|
(12.3
|
)
|
|
|
(23.0
|
)
|
Interest swap
|
|
CDI
|
|
|
(2.4
|
)
|
|
|
3.9
|
|
|
|
1.9
|
|
|
|
(0.1
|
)
|
|
|
(1.7
|
)
|
|
|
(3.4
|
)
|
Hedge designated as cash flow
|
|
US$/R$
|
|
|
0.8
|
|
|
|
117.9
|
|
|
|
36.5
|
|
|
|
(1.7
|
)
|
|
|
(11.1
|
)
|
|
|
(37.2
|
)
|
Foreign Exchange option
|
|
Object -price
|
|
|
0.3
|
|
|
|
(0.7
|
)
|
|
|
(0.6
|
)
|
|
|
(0.5
|
)
|
|
|
(0.3
|
)
|
|
|
(0.2
|
)
|
Other derivatives
|
|
Preço-objeto
|
|
|
(0.4
|
)
|
|
|
13.9
|
|
|
|
5.1
|
|
|
|
0.7
|
|
|
|
(1.9
|
)
|
|
|
(3.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
2.1
|
|
|
|
165.6
|
|
|
|
57.0
|
|
|
|
(2.5
|
)
|
|
|
(27.3
|
)
|
|
|
(67.4
|
)
|
Rate considered
|
|
LIBOR
|
|
|
0.61
|
%
|
|
|
0.37
|
%
|
|
|
0.56
|
%
|
|
|
0.74
|
%
|
|
|
0.93
|
%
|
|
|
1.11
|
%
|
Rate considered
|
|
CDI
|
|
|
14.15
|
%
|
|
|
7.20
|
%
|
|
|
10.80
|
%
|
|
|
14.40
|
%
|
|
|
18.00
|
%
|
|
|
21.60
|
%
|
Rate considered
|
|
US$/R$
|
|
|
3.9048
|
|
|
|
2.0500
|
|
|
|
3.0750
|
|
|
|
4.1000
|
|
|
|
5.1250
|
|
|
|
6.1500
|
|
Object-price considered
|
|
Object -price
|
|
|
1.09
|
|
|
|
0.53
|
|
|
|
0.80
|
|
|
|
1.06
|
|
|
|
1.33
|
|
|
|
1.59
|
|
(*)
|
The positive and negative variations of 25% and 50% were applied on the rates in effect at 12.31.2015
|
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 Companys expectation of recording the provisions on a statistical basis, and the positive and negative variations of 25% and 50% have been applied to the third party
appraisals at the balance sheet date.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional variations in book balances
|
|
|
|
Amounts
exposed at
12.31.2015
|
|
|
-50%
|
|
|
-25%
|
|
|
Probable
scenario
|
|
|
+25%
|
|
|
+50%
|
|
Financial guarantee of residual value
|
|
|
94.7
|
|
|
|
(165.9
|
)
|
|
|
(107.4
|
)
|
|
|
(0.7
|
)
|
|
|
56.2
|
|
|
|
69.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
94.7
|
|
|
|
(165.9
|
)
|
|
|
(107.4
|
)
|
|
|
(0.7
|
)
|
|
|
56.2
|
|
|
|
69.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If a provision is considered insufficient to cover the probable execution of the guarantees, it is increased
to adjust it to the Companys exposure at the reporting period.
The authorized capital is divided into 1,000,000,000 common shares. The
Companys subscribed and paid up capital at December 31, 2015 was US$ 1,438.0 and was comprised of 740,465,044 common shares, without par value, of which 3,513,740 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 Companys bylaws, including veto rights over decisions pertaining to the following
matters:
IChange of the Companys name or its corporate objective;
IIAlteration and/or application of the Companys logo;
F-62
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
IIICreation and/or modification of military programs (whether or not the Federal
Republic of Brazil is involved);
IVTraining third parties in technology for military programs;
VInterruption of the supply of maintenance and spare parts for military aircraft;
VITransfer of control of the Companys stock control; and
VIIAny changes in (i) article 9 of the Companys 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 Companys bylaws, or (ii) the rights attributed by the bylaws to the special class share.
Common shares acquired by April 4, 2008, using resources from the
investment reserve and working capital. This operation was conducted in accordance with rules approved by the Statutory Board of Directors in a meeting held on December 7, 2007 and corresponds to 3,513,740 common shares and US$ 38.4 as of
December 31, 2015. These shares lose voting and economic rights during the period in which they are held in Treasury.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USD
|
|
|
Quantity
|
|
|
Share
value
(USD)
|
|
In the beggining of the year
|
|
|
60.1
|
|
|
|
5,494,583
|
|
|
|
10.94
|
|
Used for share based compensation
(i)
|
|
|
(21.7
|
)
|
|
|
(1,980,843
|
)
|
|
|
10.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2015
|
|
|
38.4
|
|
|
|
3,513,740
|
|
|
|
10.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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, 2015, the market value of the shares held in Treasury was US$ 25.9 (December 31, 2014US$ 50.6).
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 the portion of retained earnings derived from government subsidies received by the Company, which cannot be distributed to shareholders in the form
of dividends, recognized in the statements of income in the same line as the investments.
These subsidies are not included in the
calculation of the minimum mandatory dividends.
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 own capital is allocated to dividends and approved
by the Statutory Board of Directors as follows:
|
|
|
In meeting held on March 03, 2015, the Statutory Board of Directors approved the distribution of interest on own capital for the first quarter of 2015 in the amount of US$ 9.2, corresponding to US$ 0.01 per
share. Payment of interest on own capital is subject to withholding tax at 15%. The payment was made on April 14, 2015.
|
|
|
|
In meeting held on June 11, 2015, the Statutory Board of Directors approved the distribution of interest on own capital for the second quarter of 2015 in the amount of US$ 9.5, corresponding to US$ 0.01 per
share. The interest on own capital payment is subject to 15% of income tax. The payment was made on July 13, 2015.
|
|
|
|
In meeting held on August 06, 2015, the Statutory Board of Directors approved the distribution of interest on own capital for the fourth quarter of 2015 in the amount of US$ 8.3, corresponding to US$ 0.01 per
share. The interest on own capital payment is subject to 15% of income tax. The payment was made on October 14, 2015.
|
F-63
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
In meeting held on December 10, 2015, the Statutory Board of Directors approved the distribution of interest on own capital for the fourth quarter of 2015 in the amount of US$ 7.6, corresponding to US$
0.01 per share. The interest on own capital payment is subject to 15% of income tax. The payment was made on January 13, 2016.
|
Interest on own capital approved or paid during the ínterim periods is treated as an advance on the mandatory dividends and is adjusted
in the last quarter of the year to total a 25% participation in the companys results in accordance with the bylaws.
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 actual amounts in the legal books, as shown below:
|
|
|
|
|
|
|
|
|
|
|
|
|
Brazilian million
Reais
|
|
31.12.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Net income for the year
|
|
|
241.6
|
|
|
|
796.1
|
|
|
|
777.7
|
|
Investment Subsidy
|
|
|
(2.5
|
)
|
|
|
(1.6
|
)
|
|
|
(6.2
|
)
|
Legal Reserve
|
|
|
(12.1
|
)
|
|
|
(39.8
|
)
|
|
|
(38.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
227.0
|
|
|
|
754.7
|
|
|
|
732.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Minimun mandatory dividend (25%)
|
|
|
56.7
|
|
|
|
188.7
|
|
|
|
183.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on own capital, net of tax
|
|
|
76.5
|
|
|
|
172.6
|
|
|
|
134.2
|
|
Proposed dividends
|
|
|
|
|
|
|
16.1
|
|
|
|
49.0
|
|
Interest on own capital, exceeding of the minimum required
(i)
|
|
|
25.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholder remuneration
|
|
|
102.0
|
|
|
|
188.7
|
|
|
|
183.2
|
|
Payments of the year
|
|
|
(76.5
|
)
|
|
|
(95.8
|
)
|
|
|
(76.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders remuneration of period
|
|
|
25.5
|
|
|
|
92.9
|
|
|
|
106.6
|
|
Total shareholders remuneration of previous period
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
0.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders remunerationin millions of Brazilian
reais
|
|
|
25.6
|
|
|
|
92.9
|
|
|
|
106.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total shareholders remunerationin millions of US$
|
|
|
6.6
|
|
|
|
35.0
|
|
|
|
45.5
|
|
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 Companys
working capital (iii) redeem, reimburse or purchase shares of the Company and (iv) be distributed to the shareholders.
29.7.2
|
Other Comprehensive Income
|
Consists of the following adjustments:
|
|
|
Profit or loss on operations with non-controlling interests: refers to non-controlling interests of the Companys subsidiaries.
|
|
|
|
Gains (losses) on post-employment benefits: refers to actuarial gains (losses) on healthcare plans sponsored by the Company;
|
|
|
|
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 other functional currencies to the Companys functional currency (dollar); and
|
|
|
|
Other comprehensive income: unrealized actuarial gains (losses) resulting from the healthcare plans sponsored by the Company and the fair value variation of financial instruments available for sale.
|
F-64
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
30.
|
Share-based compensation
|
In February 2014, the Board of Directors approved the revision
of the Executive Remuneration Policy (ERP), applicable to all executive officers and other Company executives. The elements of executive compensation include the Long Term Incentive (LTI) main objectives of which are (i) to maintain and attract
highly qualified personnel for the Company, (ii) assure people that can contribute to improving the Companys performance of the right to participate in the results of their contribution, (iii) in addition to ensuring the continuity
of the Companys management by aligning the interests of executives with those of shareholders. The Company currently has two LTI modes: stock options and virtual shares.
Program for the granting of stock options, for the
executives of the Company or its subsidiaries, who may exercise their right in two ways: grants awarded to 2011: I) 20% after 1 year, II) 30% after 2 years and III) 50% after 3 years; and grants awarded from 2012: I) 33% after 3 years, II) 33% after
4 years and III) 34% after 5 years, all in relation to the grant date of each option.
The exercise price of each option is set on the
grant date at the weighted average stock option price of the last sixty trading days, and may be adjusted by up to 30% to offset any speculation. The participant will have a maximum exercise period of five years for option granted to 2011 and seven
years for the others, starting from the grant date.
The grants awarded are summarized below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
in thousands of options
|
|
|
|
|
|
|
|
|
|
Grants
|
|
|
Exercised
|
|
|
Canceled (i)
|
|
|
Outstanding
|
|
|
Exercible
|
|
|
Weighted
average
exercise
Price (R$
|
|
|
Weighted
average
exercise
Price
(US$)
|
|
Grants on January 23, 2012
|
|
|
4,860,000
|
|
|
|
(1,335,260
|
)
|
|
|
(630,000
|
)
|
|
|
2,894,740
|
|
|
|
60,640
|
|
|
|
11.50
|
|
|
|
11.50
|
|
Grants on March 20, 2013
|
|
|
4,494,000
|
|
|
|
(270,000
|
)
|
|
|
(609,000
|
)
|
|
|
3,615,000
|
|
|
|
|
|
|
|
15.71
|
|
|
|
15.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
|
|
|
9,354,000
|
|
|
|
(1,605,260
|
)
|
|
|
(1,239,000
|
)
|
|
|
6,509,740
|
|
|
|
60,640
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
The cancellations refer to shares granted to executives or employees who no longer work for the Company. Additionally, on April 16, 2014, there was a cancellation of the grants awarded to members of the Board of
Directors, with payment of compensation to plan participants.
|
30.2.
|
Phantom shares plan
|
The new model is based on the granting of virtual shares to
directors and managers and the main objective is to attract and keep in the Company and its subsidiaries, highly qualified staff to ensure continuity of management and align the interests of directors and key personnel of the Company and controlled
entities to those of the Companys shareholders.
The value of the LTI will be converted at the average price of the Companys
shares considering the last 30 trading days by determining the quantity of virtual shares allocated to each participant, divided into two classes, with 50% in the form of restricted virtual shares and 50% in the form of virtual performance shares.
The Company will pay the LTI by converting the quantity of virtual shares into
Reais
at the average quoted price (weighted by trading volume) of the Companys shares in the last 10 trading days, as follows:
|
|
|
restricted virtual shares: (i) 33% on the third anniversary of the grant date; (ii) 33% on the fourth anniversary of the grant date, and (iii) 34% on the fifth anniversary of the grant date; and
|
|
|
|
Virtual performance AP: 100% on the third anniversary of the grant date, provided the economic value added EVA accumulated in the three preceding years is positive.
|
The amounts resulting from conversion of virtual shares will be added to the amounts equivalent to dividends and interest on own capital
effectively paid by the Company during the vesting period.
F-65
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The fair value of virtual shares is determined based on the average price (weighted by
trading volume) of the Companys shares for the last 10 trading days prior to the close of the period, applied to the number of virtual shares assigned to each participant in proportion to the vesting period.
|
|
|
On February 25, 2014, the Company granted an LTI of US$ 13.0, equivalent to 1,570,698 virtual shares, whose fair value at December 31, 2015 totaled US$ 6.6, equivalent to 892,567 virtual shares.
|
|
|
|
On March 03, 2015, the Company granted an LTI of US$ 10.4, equivalent to 1,237,090 virtual shares, whose fair value at December 31, 2015 totaled US$ 2.2, equivalent to 306,094 virtual shares.
|
Basic earnings per common share is computed by dividing
net income for the year by the weighted average number of shares outstanding during the period, excluding shares acquired by the Company and held in Treasury.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Net income attributable to owners of Embraer
|
|
|
69.2
|
|
|
|
334.7
|
|
|
|
342.0
|
|
Weighted average number of shares (in thousands)
|
|
|
730,205
|
|
|
|
733,677
|
|
|
|
729,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per shareU.S. dollars
|
|
|
0.0947
|
|
|
|
0.4562
|
|
|
|
0.4691
|
|
Diluted earnings per share are calculated by adjusting
the weighted average number of common shares outstanding to assume conversion of all potentially dilutive shares. The Company has only one category of potentially dilutive shares, with options to purchase shares, for which a calculation is made to
determine the number of shares that could be acquired at fair value (determined as the average market price of the Companys share), based on the monetary value of subscription rights attached options to purchase shares in circulation. The
number of shares calculated as described above is compared with the number of shares issued, assuming the exercise of share purchase options.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Net income attributable to owners of Embraer
|
|
|
69.2
|
|
|
|
334.7
|
|
|
|
342.0
|
|
Weighted average number of shares (in thousands)diluted
|
|
|
730,205
|
|
|
|
733,677
|
|
|
|
729,001
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dilution for the issuance of stock options (in thousands) (i)
|
|
|
3,364
|
|
|
|
3,786
|
|
|
|
4,795
|
|
Weighted average number of shares (in thousands)diluted
|
|
|
733,569
|
|
|
|
737,463
|
|
|
|
733,796
|
|
Diluted earnings per shareU.S. dollars
|
|
|
0.0943
|
|
|
|
0.4538
|
|
|
|
0.4661
|
|
(i)
|
Refers to the effect of potentially dilutive shares for December 31, 2015.
|
At
December 31, 2015, there were no anti-dilutive effects.
F-66
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
32.
|
Revenue (expenses) by type
|
The Company opted to present the statements of income by
function. The table below shows the detailed costs and expenses by nature:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
As presented as statements of Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
5,928.1
|
|
|
|
6,288.8
|
|
|
|
6,235.0
|
|
Cost of sales and services
|
|
|
(4,816.8
|
)
|
|
|
(5,038.3
|
)
|
|
|
(4,818.9
|
)
|
Administrative
|
|
|
(182.0
|
)
|
|
|
(207.5
|
)
|
|
|
(210.5
|
)
|
Selling
|
|
|
(361.6
|
)
|
|
|
(419.9
|
)
|
|
|
(454.4
|
)
|
Research
|
|
|
(41.7
|
)
|
|
|
(47.1
|
)
|
|
|
(74.7
|
)
|
Other income (expenses), net
|
|
|
(194.2
|
)
|
|
|
(32.6
|
)
|
|
|
36.9
|
|
Equity in losses on associates
|
|
|
(0.3
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before financial income
|
|
|
331.5
|
|
|
|
543.3
|
|
|
|
713.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue (expenses) by nature:
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from sales of goods
|
|
|
5,268.6
|
|
|
|
5,310.1
|
|
|
|
5,399.7
|
|
Revenue from sales of services
|
|
|
769.4
|
|
|
|
1,102.4
|
|
|
|
955.4
|
|
Sales deductions and tax on revenue
|
|
|
(109.9
|
)
|
|
|
(123.7
|
)
|
|
|
(120.1
|
)
|
Material cost
|
|
|
(4,500.0
|
)
|
|
|
(4,752.0
|
)
|
|
|
(4,528.3
|
)
|
Depreciation
|
|
|
(161.9
|
)
|
|
|
(168.9
|
)
|
|
|
(145.8
|
)
|
Amortization
|
|
|
(154.9
|
)
|
|
|
(117.4
|
)
|
|
|
(144.8
|
)
|
Personnel expenses
|
|
|
(294.9
|
)
|
|
|
(320.3
|
)
|
|
|
(340.0
|
)
|
Selling expenses
|
|
|
(66.4
|
)
|
|
|
(82.2
|
)
|
|
|
(113.3
|
)
|
Other operating (expense) income
|
|
|
(418.5
|
)
|
|
|
(304.7
|
)
|
|
|
(249.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit before financial income
|
|
|
331.5
|
|
|
|
543.3
|
|
|
|
713.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33.
|
Other operating income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Contractual fines revenue
(i)
|
|
|
17.3
|
|
|
|
31.6
|
|
|
|
40.8
|
|
Royalties
|
|
|
12.9
|
|
|
|
12.3
|
|
|
|
11.5
|
|
Recovery of expenses
|
|
|
10.4
|
|
|
|
12.1
|
|
|
|
11.0
|
|
Extemporaneous credits
(ii)
|
|
|
8.4
|
|
|
|
|
|
|
|
|
|
Other sales
|
|
|
7.9
|
|
|
|
7.3
|
|
|
|
6.4
|
|
Provision for contingencies
|
|
|
0.6
|
|
|
|
(4.0
|
)
|
|
|
(14.9
|
)
|
Post-retirement benefits
|
|
|
1.1
|
|
|
|
29.1
|
|
|
|
|
|
Aircraft maintenance third parties
|
|
|
|
|
|
|
|
|
|
|
(1.0
|
)
|
Refis Installments (tax recovery program)
|
|
|
|
|
|
|
|
|
|
|
(37.0
|
)
|
Environmental provision
|
|
|
(1.0
|
)
|
|
|
(2.1
|
)
|
|
|
(5.8
|
)
|
Pre operating expenses
|
|
|
(0.6
|
)
|
|
|
(0.2
|
)
|
|
|
(1.4
|
)
|
Product modifications
|
|
|
(3.3
|
)
|
|
|
(4.6
|
)
|
|
|
(3.7
|
)
|
Flight safety standards
|
|
|
(4.4
|
)
|
|
|
(5.2
|
)
|
|
|
(3.8
|
)
|
Aircraft maintenance and flights costsfleet
|
|
|
(4.7
|
)
|
|
|
(4.6
|
)
|
|
|
(2.9
|
)
|
Expenses system project
|
|
|
(9.5
|
)
|
|
|
(16.8
|
)
|
|
|
(17.6
|
)
|
Training and development
|
|
|
(10.8
|
)
|
|
|
(12.1
|
)
|
|
|
(14.1
|
)
|
Contractual fines
(iii)
|
|
|
(11.5
|
)
|
|
|
(17.1
|
)
|
|
|
(2.8
|
)
|
Gain on disposal of assets
(iv)
|
|
|
(22.4
|
)
|
|
|
|
|
|
|
(3.5
|
)
|
Taxes on other outputs
|
|
|
(33.5
|
)
|
|
|
(37.6
|
)
|
|
|
(30.8
|
)
|
Assets devaluation
(v)
|
|
|
(44.4
|
)
|
|
|
(10.4
|
)
|
|
|
(14.2
|
)
|
Corporate projects
|
|
|
(52.4
|
)
|
|
|
(21.4
|
)
|
|
|
(11.4
|
)
|
Financial guarantee
(vi)
|
|
|
(100.9
|
)
|
|
|
28.2
|
|
|
|
152.7
|
|
Others
|
|
|
46.6
|
|
|
|
(17.1
|
)
|
|
|
(20.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(194.2
|
)
|
|
|
(32.6
|
)
|
|
|
36.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(i)
|
Substantially fines charged to customers for cancellation of sales contracts, mainly in the executive segment, in accordance with the contract.
|
(ii)
|
Refers to extemporaneous PIS and Cofins tax credits which are recognized when the Company meets the legal and documentary conditions for such credits.
|
(iii)
|
Refers to contractual penalties to be paid to customers and suppliers due to failure to comply with contractual conditions.
|
(iv)
|
Refers to losses incurred in the monetization of assets of 16 aircraft in the subsidiary ECC Leasing. The operation relates to a realization of assets in the financial market for the sale of the lease cash flows and
transfer of the aircraft to the buyer.
|
(v)
|
Impairment of assets related to certain aircraft in fixed assets (Note 16.2.), with the residual value and minimum lease payments in collateralized accounts receivable (Note 10.1).
|
(vi)
|
In 2015 were made additional provision regarding financial guarantees because of exposure caused by customers in reorganization (Chapter 11) process as described on Note 25.
|
F-67
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
34.
|
Financial income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Financial income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest on cash and cash equivalents and financial investments
|
|
|
146.9
|
|
|
|
145.9
|
|
|
|
106.1
|
|
Interest on receivables
|
|
|
38.5
|
|
|
|
29.1
|
|
|
|
31.9
|
|
Taxes over financial revenue
|
|
|
(6.6
|
)
|
|
|
|
|
|
|
|
|
Other
|
|
|
2.0
|
|
|
|
2.6
|
|
|
|
19.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial income
|
|
|
180.8
|
|
|
|
177.6
|
|
|
|
157.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
IOF(tax on financial transactions)
|
|
|
(2.0
|
)
|
|
|
(3.1
|
)
|
|
|
(3.5
|
)
|
Financial restructuring costs
|
|
|
(0.7
|
)
|
|
|
(1.0
|
)
|
|
|
(1.9
|
)
|
Interest on taxes, social charges and contributions
|
|
|
(12.4
|
)
|
|
|
(52.1
|
)
|
|
|
(34.9
|
)
|
Residual value guarantee
|
|
|
(13.6
|
)
|
|
|
(19.1
|
)
|
|
|
(79.7
|
)
|
Interest on loans and financing
|
|
|
(164.6
|
)
|
|
|
(133.0
|
)
|
|
|
(128.3
|
)
|
Other
|
|
|
(10.6
|
)
|
|
|
15.0
|
|
|
|
(11.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total financial expenses
|
|
|
(203.9
|
)
|
|
|
(193.3
|
)
|
|
|
(259.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
|
|
|
0.2
|
|
|
|
(8.8
|
)
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial income (expenses), net
|
|
|
(22.9
|
)
|
|
|
(24.5
|
)
|
|
|
(96.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35.
|
Foreign exchange gains (losses), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Monetary and foreign exchange variations
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents and financial investments
|
|
|
(374.0
|
)
|
|
|
(164.6
|
)
|
|
|
(189.4
|
)
|
Tax credits
|
|
|
(67.9
|
)
|
|
|
(24.9
|
)
|
|
|
(24.2
|
)
|
Trade accounts receivable
|
|
|
(13.8
|
)
|
|
|
(28.5
|
)
|
|
|
(8.0
|
)
|
Other
|
|
|
(54.7
|
)
|
|
|
(26.5
|
)
|
|
|
(30.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(510.4
|
)
|
|
|
(244.5
|
)
|
|
|
(252.0
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans and financing
|
|
|
278.9
|
|
|
|
106.8
|
|
|
|
109.9
|
|
Advances from customers
|
|
|
63.9
|
|
|
|
10.8
|
|
|
|
48.6
|
|
Taxes and charges payable
|
|
|
71.8
|
|
|
|
37.2
|
|
|
|
52.5
|
|
Provisions
|
|
|
59.4
|
|
|
|
34.4
|
|
|
|
27.5
|
|
Accounts payable
|
|
|
39.3
|
|
|
|
33.4
|
|
|
|
(1.0
|
)
|
Suppliers
|
|
|
20.5
|
|
|
|
5.6
|
|
|
|
6.6
|
|
Provisions for contingencies
|
|
|
8.8
|
|
|
|
5.6
|
|
|
|
4.6
|
|
Deferred taxes
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
Other
|
|
|
(0.8
|
)
|
|
|
(1.2
|
)
|
|
|
1.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
541.7
|
|
|
|
232.6
|
|
|
|
250.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net monetary and foreign exchange variations
|
|
|
31.3
|
|
|
|
(11.9
|
)
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments
|
|
|
(3.7
|
)
|
|
|
(3.0
|
)
|
|
|
(12.7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss), net
|
|
|
27.6
|
|
|
|
(14.9
|
)
|
|
|
(14.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-68
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
36.
|
Responsibilities and Commitments
|
The Company has offered 31 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.
In the Parent Company the operating leases refer to
telephone and computer equipment and in the subsidiaries, to operating leases for buildings and land, machinery, vehicles and computer equipment. At December 31, 2015 the amounts recognized totaled US$ 17.3, at December 31, 2014 US$ 15.9
and at December 31, 2013 US$ 19.4. These leases expire at various dates through 2038.
At December 31, 2015, the Company has
operating leases with payments scheduled as follows:
|
|
|
|
|
Year
|
|
|
|
2016
|
|
|
13.7
|
|
2017
|
|
|
9.0
|
|
2018
|
|
|
5.6
|
|
2019
|
|
|
5.0
|
|
After 2019
|
|
|
5.3
|
|
|
|
|
|
|
Total
|
|
|
38.6
|
|
|
|
|
|
|
36.3
|
Financial Guarantees
|
The table below provides quantitative data on the Companys
financial guarantees provided to third parties. The maximum potential payments (off balance sheet exposure) represent the worst-case scenario and do not necessarily reflect the results expected by the Company. Estimated proceeds from performance
guarantees and underlying assets represent the anticipated values of assets the Company could liquidate or receive from other parties to offset its payments under guarantees.
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
Maximum financial guarantees
|
|
|
375.9
|
|
|
|
487.6
|
|
Maximum residual value guarantees
|
|
|
300.6
|
|
|
|
307.5
|
|
Mutually exclusive exposure
(i)
|
|
|
(107.4
|
)
|
|
|
(107.4
|
)
|
Provisions and liabilities recorded (Note 25)
|
|
|
(134.8
|
)
|
|
|
(156.2
|
)
|
|
|
|
|
|
|
|
|
|
Off-balance sheet exposure
|
|
|
434.3
|
|
|
|
531.5
|
|
|
|
|
|
|
|
|
|
|
Estimated proceeds from financial guarantees and underlying assets
|
|
|
559.6
|
|
|
|
725.2
|
|
|
|
|
|
|
|
|
|
|
(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.
F-69
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
The Company contracts different types of insurance policies to protect
assets in the event of any accident that might cause significant losses. Policies are also contracted for risks subject to compulsory insurance, either legally or contractually.
The Company and its subsidiaries have civil liability insurance for their operations in Brazil and abroad, with coverage and conditions that
management considers appropriate to the risks involved.
To cover substantial damage to assets and loss of earnings of its operations in
Brazil and abroad, the Company has insured an amount of US$ 6.8 billion.
37.
|
Supplemental Cash Flow information
|
37.1
|
Payments made during the year and transactions not affecting cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.31.2015
|
|
|
12.31.2014
|
|
|
12.31.2013
|
|
Payments made during the year:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
|
153.7
|
|
|
|
114.9
|
|
|
|
130.9
|
|
Income tax and social contribution
|
|
|
33.4
|
|
|
|
56.2
|
|
|
|
68.3
|
|
Non-cash financing and investing transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment, with transfer to inventory-aircrafr
|
|
|
|
|
|
|
9.1
|
|
|
|
|
|
Write off on Property, Plant and Equipment by transfer to pool parts inventory
|
|
|
(5.8
|
)
|
|
|
|
|
|
|
|
|
Disposals property, plant and equipment for providing for the sale of inventory
|
|
|
(45.9
|
)
|
|
|
(56.6
|
)
|
|
|
(42.1
|
)
|
Transfer of inventory to fixed assets
|
|
|
|
|
|
|
|
|
|
|
39.9
|
|
Government grants
(i)
|
|
|
(55.3
|
)
|
|
|
|
|
|
|
|
|
(i)
|
Refers to the grant received by subsidiaries of the group, initially recognized as debts to the moment that the conditions set by the grantor are met. At this time the amount were reclassified to deferred revenue.
|
Management defined the Companys operating segments based on
the reports used for strategic decision making, 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.
From a product perspective, the analysis considers the following market segments:
38.1
|
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 aircraft leases.
|
|
|
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 aircraftE175-E2 with capacity of up to 88 seats, E190-E2 with up to 106 seats and E195-E2 reaching up to 132
seats in a typical single-class configuration. The E190-E2 will enter service in the first half of 2018. The E195-E2 is scheduled to enter service in 2019 and the E175-E2 in 2020.
|
F-70
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
38.2
|
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, 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,
acquisitions and organic growth.
The Companys 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 as follows:
|
|
|
Light Attack and Advanced Training Aircraft (Super Tucano) the Super Tucano is a military turboprop that combines training and operational capacities with low acquisition and operation costs. The Super Tucano has
the operational capacities for frontier surveillance, proximity aerial support and counter insurgence missions (COIN). There are currently more than 230 firm orders for the Super Tucano, of which more than 190 aircraft have already been delivered.
|
|
|
|
Aircraft Modernization The company offers aircraft upgrade services and actually operates four contracted programs. The first is known as F-5BR, focused on the structural and electronic upgrading of the Brazilian
Air Forces F-5 jet. The second, A-1M, consists on upgrading of the AMX, an advanced ground attack jet, for the Brazilian Air Force. The third program, contracted by the Brazilian Navy, is to revitalize and incorporate new technologies to the
A-4 Skyhawk aircraft (denominated AF-1 by the customer). In the fourth program, with the Brazilian Air Force, the Company was contracted to upgrade the EMB 145 AEW&C aircraft.
|
|
|
|
The ISR family (Intelligence, Surveillance and Reconnaissance), based on the ERJ 145 platform, includes the EMB 145 AEW&C Anticipated Aerial Alert and Control, EMB 145 Multi Intel Remote Sensing and
Air-Ground Surveillance and EMB 145 MP Sea Patrol and Anti Submarine War models. Originally developed to serve the SIVAM program, versions have been ordered by the Greek, Mexican and Indian governments.
|
|
|
|
KC-390 is a joint project between the Brazilian Air Force and Embraer to develop and produce tactical military transportation and aerial refueling and represents a significant advance in terms of technology and
innovation for the airspace industry. The aircraft is designed to establish new standards in its category, with lower operating costs and the flexibility to execute a variety of missions, including troop carriage and transportation, air delivery,
aerial refueling, search and rescue and aerial fire-fighting and combat.
|
|
|
|
Transportation of Authorities and Special Missions Derived from the commercial and executive aircraft platforms, these are aircraft used to transport government authorities or to carry out special missions.
|
|
|
|
Radars solutions offered through Bradar, a technology-based industry specialized in developing and producing radars for Remote Sensing and Defense, include radar for anti-aircraft artillery, surveillance of
terrestrial activity, military and civil air traffic control, a communications intelligence system and synthetic aperture radar for cartography and precision monitoring services.
|
F-71
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
|
|
|
Software and Systems Development combining the expertise of Atech Negócios em Tecnologia S.A. and investments by Embraer in system development and integration, we provide specialized
engineering services for the development, installation, revitalization and maintenance of critical control, defense and monitoring systems, as well as the machinery and equipment required for the services.
|
|
|
|
Frontier monitoring and protection of strategic structures Based on its experience in systems integration, and through its wholly owned subsidiary Savis, Embraer is dedicated to developing, designing, certifying,
producing, integrating and implementing systems and services in the field of frontier monitoring and control and protection of critical infra-structures.
|
|
|
|
SatellitesVisiona Space Technology a joint venture between Embraer and Telebraswas hired to provide and integrate the Brazilian Geostationary Defense and Communications Satellite system (SGDC), to
meet the satellite communications requirements of the Brazilian government, including the National Broadband Program and a wide range of strategic defense transmissions, as well as the assimilation of technologies, marking Embraers presence in
this market. We also provide services of supply and analysis of satellite images with the objective of developing major sensing projects in Brazil and neighboring countries.
|
|
|
|
Support Servicesin addition to its experience in proposing support solutions to customer for products developed by Embraer, Ogma (Embraers subsidiary in Portugal) offers MRO services (Maintenance, Repair and
Overhaul) for a wide range of commercial, executive and defense aircraft, aircraft components and engines. It is also a significant supplier of steel and composite aviation structures to several aircraft manufacturers.
|
38.3
|
Executive Jet business
|
Executive Aviation market operations comprise the development,
production and sale of executive jets and the provision of support services and aircraft leases of the following product lines:
|
|
|
Legacy 600 and Legacy 650executive jets in the super midsize and large categories, deliveries of which started in 2002 and 2010, respectively.
|
|
|
|
Legacy 450 and Legacy 500executive jets in the Midlight and Midsize categories, deliveries of which started in 2014 and 2015, respectively.
|
|
|
|
Phenom familyexecutive jets in the Entry Jet and Light Jet categories, respectively. The first deliveries of the Phenom 100 were made in 2008, and deliveries of the Phenom 300 started in 2009.
|
|
|
|
Lineage 1000an ultra-large executive jet. Deliveries of this model started in 2009.
|
Operations in this segment relate to the supply of structural parts and
mechanical and hydraulic systems, and production of agricultural crop-spraying aircraft.
Statement of income data by operating segment
year ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Unallocated
|
|
|
Total
|
|
Revenue
|
|
|
3,348.7
|
|
|
|
811.1
|
|
|
|
1,718.6
|
|
|
|
49.7
|
|
|
|
|
|
|
|
5,928.1
|
|
Cost of sales and services
|
|
|
(2,565.7
|
)
|
|
|
(785.4
|
)
|
|
|
(1,440.3
|
)
|
|
|
(25.4
|
)
|
|
|
|
|
|
|
(4,816.8
|
)
|
Gross profit
|
|
|
783.0
|
|
|
|
25.7
|
|
|
|
278.3
|
|
|
|
24.3
|
|
|
|
|
|
|
|
1,111.3
|
|
Gross profit %
|
|
|
23.4
|
%
|
|
|
3.2
|
%
|
|
|
16.2
|
%
|
|
|
48.9
|
%
|
|
|
|
|
|
|
18.7
|
%
|
Operating income (expense)
|
|
|
(434.9
|
)
|
|
|
(119.1
|
)
|
|
|
(220.2
|
)
|
|
|
(5.6
|
)
|
|
|
|
|
|
|
(779.8
|
)
|
Operating profit before financial income (expense)
|
|
|
348.1
|
|
|
|
(93.4
|
)
|
|
|
58.1
|
|
|
|
18.7
|
|
|
|
|
|
|
|
331.5
|
|
Financial income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(22.9
|
)
|
|
|
(22.9
|
)
|
Foreign exchange gain (loss), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
27.6
|
|
|
|
27.6
|
|
Profit before taxes on income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
336.2
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(255.4
|
)
|
|
|
(255.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-72
Embraer S.A.
Notes to the Consolidated Financial Statements
In
millions of U.S. dollars, unless otherwise stated
In the Commercial Aviation segment, one customer individually contributed an share of 11% of
net revenue in 2015 with an approximate value of US$ 669.9.
Revenue by geographic area year ended December 31,2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Total
|
|
North America
|
|
|
2,452.7
|
|
|
|
177.2
|
|
|
|
1,226.6
|
|
|
|
30.1
|
|
|
|
3,886.6
|
|
Europe
|
|
|
316.5
|
|
|
|
84.8
|
|
|
|
218.3
|
|
|
|
7.3
|
|
|
|
626.9
|
|
Asia Pacific
|
|
|
307.8
|
|
|
|
33.2
|
|
|
|
149.2
|
|
|
|
|
|
|
|
490.2
|
|
Latin America, except Brazil
|
|
|
89.8
|
|
|
|
21.7
|
|
|
|
38.7
|
|
|
|
|
|
|
|
150.2
|
|
Brazil
|
|
|
145.3
|
|
|
|
479.3
|
|
|
|
72.6
|
|
|
|
12.3
|
|
|
|
709.5
|
|
Other
|
|
|
36.6
|
|
|
|
14.9
|
|
|
|
13.2
|
|
|
|
|
|
|
|
64.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,348.7
|
|
|
|
811.1
|
|
|
|
1,718.6
|
|
|
|
49.7
|
|
|
|
5,928.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets by operating segmentyear ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Unallocated
|
|
|
Total
|
|
Trade accounts receivable
|
|
|
157.3
|
|
|
|
552.7
|
|
|
|
66.9
|
|
|
|
6.5
|
|
|
|
|
|
|
|
783.4
|
|
Property, plant and equipment
|
|
|
848.1
|
|
|
|
413.5
|
|
|
|
730.3
|
|
|
|
35.5
|
|
|
|
|
|
|
|
2,027.4
|
|
Intangible assets
|
|
|
352.4
|
|
|
|
|
|
|
|
871.6
|
|
|
|
78.9
|
|
|
|
102.5
|
|
|
|
1,405.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,357.8
|
|
|
|
966.2
|
|
|
|
1,668.8
|
|
|
|
120.9
|
|
|
|
102.5
|
|
|
|
4,216.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets by geographic areayear ended December 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
Europe
|
|
|
Asia
Pacific
|
|
|
Brazil
|
|
|
Total
|
|
Trade accounts receivable
|
|
|
82.8
|
|
|
|
495.0
|
|
|
|
9.9
|
|
|
|
195.7
|
|
|
|
783.4
|
|
Property, plant and equipment
|
|
|
347.1
|
|
|
|
562.1
|
|
|
|
59.5
|
|
|
|
1,058.7
|
|
|
|
2,027.4
|
|
Intangible assets
|
|
|
15.8
|
|
|
|
3.0
|
|
|
|
0.1
|
|
|
|
1,386.5
|
|
|
|
1,405.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
445.7
|
|
|
|
1,060.1
|
|
|
|
69.5
|
|
|
|
2,640.9
|
|
|
|
4,216.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of income data by operating segment year ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Unallocated
|
|
|
Total
|
|
Revenue
|
|
|
3,163.3
|
|
|
|
1,456.4
|
|
|
|
1,591.5
|
|
|
|
77.6
|
|
|
|
|
|
|
|
6,288.8
|
|
Cost of sales and services
|
|
|
(2,542.2
|
)
|
|
|
(1,158.9
|
)
|
|
|
(1,299.6
|
)
|
|
|
(37.6
|
)
|
|
|
|
|
|
|
(5,038.3
|
)
|
Gross profit
|
|
|
621.1
|
|
|
|
297.5
|
|
|
|
291.9
|
|
|
|
40.0
|
|
|
|
|
|
|
|
1,250.5
|
|
Gross profit %
|
|
|
19.6
|
%
|
|
|
20.4
|
%
|
|
|
18.3
|
%
|
|
|
51.5
|
%
|
|
|
|
|
|
|
19.9
|
%
|
Operating income (expense)
|
|
|
(321.2
|
)
|
|
|
(148.0
|
)
|
|
|
(229.6
|
)
|
|
|
(8.4
|
)
|
|
|
|
|
|
|
(707.2
|
)
|
Operating profit before financial income (expense)
|
|
|
299.9
|
|
|
|
149.5
|
|
|
|
62.3
|
|
|
|
31.6
|
|
|
|
|
|
|
|
543.3
|
|
Financial income (expense), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(24.5
|
)
|
|
|
(24.5
|
)
|
Foreign exchange gain (loss), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(14.9
|
)
|
|
|
(14.9
|
)
|
Profit before taxes on income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
503.9
|
|
Income tax expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(156.2
|
)
|
|
|
(156.2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
347.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-73
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, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Total
|
|
North America
|
|
|
2,065.0
|
|
|
|
199.5
|
|
|
|
739.3
|
|
|
|
53.6
|
|
|
|
3,057.4
|
|
Europe
|
|
|
624.7
|
|
|
|
100.0
|
|
|
|
168.4
|
|
|
|
3.9
|
|
|
|
897.0
|
|
Asia Pacific
|
|
|
155.4
|
|
|
|
78.5
|
|
|
|
353.3
|
|
|
|
0.1
|
|
|
|
587.3
|
|
Latin America, except Brazil
|
|
|
64.7
|
|
|
|
47.3
|
|
|
|
110.7
|
|
|
|
|
|
|
|
222.7
|
|
Brazil
|
|
|
73.9
|
|
|
|
1,004.5
|
|
|
|
207.1
|
|
|
|
20.0
|
|
|
|
1,305.5
|
|
Other
|
|
|
179.6
|
|
|
|
26.6
|
|
|
|
12.7
|
|
|
|
|
|
|
|
218.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,163.3
|
|
|
|
1,456.4
|
|
|
|
1,591.5
|
|
|
|
77.6
|
|
|
|
6,288.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets by operating segmentyear ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
Aviation
|
|
|
Defense and
Security
|
|
|
Executive
Aviation
|
|
|
Other
|
|
|
Unallocated
|
|
|
Total
|
|
Trade accounts receivable
|
|
|
145.3
|
|
|
|
515.8
|
|
|
|
28.7
|
|
|
|
14.0
|
|
|
|
|
|
|
|
703.8
|
|
Property, plant and equipment
|
|
|
893.8
|
|
|
|
382.2
|
|
|
|
747.1
|
|
|
|
2.7
|
|
|
|
|
|
|
|
2,025.8
|
|
Intangible assets
|
|
|
242.0
|
|
|
|
|
|
|
|
836.3
|
|
|
|
89.6
|
|
|
|
93.0
|
|
|
|
1,260.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,281.1
|
|
|
|
898.0
|
|
|
|
1,612.1
|
|
|
|
106.3
|
|
|
|
93.0
|
|
|
|
3,990.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets by geographic areayear ended December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
|
|
Europe
|
|
|
Asia
Pacific
|
|
|
Brazil
|
|
|
Total
|
|
Trade accounts receivable
|
|
|
78.1
|
|
|
|
384.5
|
|
|
|
8.8
|
|
|
|
232.4
|
|
|
|
703.8
|
|
Property, plant and equipment
|
|
|
352.8
|
|
|
|
665.9
|
|
|
|
55.6
|
|
|
|
951.5
|
|
|
|
2,025.8
|
|
Intangible assets
|
|
|
12.7
|
|
|
|
3.0
|
|
|
|
0.1
|
|
|
|
1,245.1
|
|
|
|
1,260.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
443.6
|
|
|
|
1,053.4
|
|
|
|
64.5
|
|
|
|
2,429.0
|
|
|
|
3,990.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement of income data by operating segmentyear 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
F-74
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, 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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In February, 2016, Embraer trhough its whole owned subsidiary Embraer Defesa e Segurança Participações S.A. acquire the totality of the non-controlling interests of its subsidiary Bradar
Indústria S.A. Consenquently, the ownership of Bradar Indústria S.A. capital went from 95% to 100%.
|
|
|
|
In March, 2016 Embraer announced the consolidation of the operations for two of its wholly owned subsidiaries Bradar Indústria S.A. and Savis Tecnologias e Sistemas S.A., through its wholly owned subsidiary
Embraer Defesa e Segurança Participações S.A. The consolidation process will take place in 2016 and will allow the company to provide integrate solutions with great potential to the abroad and national market, contributing to
the diversification of customer basis for Embraer Defense and Security by widing its products and services portfolio.
|
F-75