Presentation of the Financial Statements and Accounting Practices (Tables)

12 Months Ended

Dec. 31, 2018

Summary of Company's Corporates Structure

2.1.3

Corporate structure

Below are informations regarding the Company’s consolidated subsidiaries and joint operations:


Entity	Participation Embraer Group	Country	Core activities
ELEB – Equipamentos Ltda.	100%	Brazil	Sale of hydraulic and mechanical equipment for the aviation industry
Embraer Aircraft Holding Inc.	100%	EUA	Concentrates corporate activities in the USA
Embraer Aircraft Customer Services, Inc.	100%	EUA	Sale of spare parts and support services in North America and the Caribbean
Embraer Aircraft Maintenance Services Inc.	100%	EUA	Maintenance of aircraft and components
Embraer Business Innovation Center, Inc.	100%	EUA	Develops technological innovation research in aviation and related areas
Embraer Executive Jet Services, LLC	100%	EUA	After sale support and aircraft maintenance
Embraer Executive Aircraft, Inc.	100%	EUA	Final assembly and delivery of executive jets
Embraer Engineering & Technology Center USA, Inc.	100%	EUA	Engineering services related to aircraft research and development
Embraer Aero Seating Technologies, LLC	100%	EUA	Production and maintenance of aircraft seats
Embraer Defense and Security Inc.	100%	EUA	Supply of Super Tucano aircraft to the American Air Force (LAS)
Embraer CAE Training Services LLC	51%	EUA	Pilot, mechanic and crew training
Embraer Aviation Europe - EAE	100%	France	Concentrates corporate activities abroad, specifically Europe
Embraer Aviation International - EAI	100%	France	Sale of parts and after sale services in Europe, Africa and the Middle East
Embraer Europe SARL	100%	France	Commercial representation of the Company in Europe, Africa and the Middle East
Embraer Defesa & Segurança Participações S.A.	100%	Brazil	Coordinates investments in the Defense & Security segments
Atech - Negócios em Tecnologias S.A.	100%	Brazil	Development and control, communications, computer and intelligence services
Visiona Tecnologia Espacial S.A.	51%	Brazil	Supply of the Brazilian Government’s Geostationary Defense and Strategic Communications Satellite System (SGDC)
Visiona Internacional B.V.	100%	Holanda	Integration and supply of the Brazilian Government’s (SGDC) System .
SAVIS Tecnologia e Sistemas S.A.	100%	Brazil	Operates in Defense and Security with the Brazilian Government
Embraer GPX Ltda	100%	Brazil	Aircraft maintenance services
Embraer Netherlands Finance B.V.	100%	Holland	Financial operations raising and investing funds of the Embraer Group
Embraer Netherlands B.V.	100%	Holland	Concentrates corporate activities abroad
Embraer Asia Pacific PTE. Ltd.	100%	Singapore	After sale services and support in Asia
Airholding SGPS S.A.	100%	Portugal	Coordinates investments in subsidiaries in Portugal
OGMA - Indústria Aeronáutica de Portugal S.A.	65%	Portugal	Aviation maintenance and production
Embraer CAE Training Services (UK) Limited	51%	United Kingdom	No operations
Embraer Portugal S.A.	100%	Portugal	Coordinates investments and economic activities in subsidiaries in Portugal
Embraer - Portugal Estruturas Metálicas S.A	100%	Portugal	Fabrication of steel parts and products for the aviation industry
Embraer - Portugal Estruturas em Compósitos S.A.	100%	Portugal	Fabrication of composite parts and products for the aviation industry
Embraer (China) Aircraft Technical Services Co. Ltd.	100%	China	Sales and maintenance for after sales support in China
EZ Air Interior Limited	50%	Ireland	Fabrication of interiors for commercial aircraft
Embraer Overseas Ltd.	100%	Cayman Islands	Financial operations raising and investing funds of the Embraer Group
Embraer Spain Holding Co. SL	100%	Spain	Concentrates corporate activities abroad
ECC Investment Switzerland AG	100%	Switzerland	Coordinates investments in subsidiaries abroad
ECC Insurance & Financial Company Limited.	100%	Cayman Islands	Covers financial guarantees offered in aircraft sale structuring
Embraer Finance Ltd.	100%	Cayman Islands	Support to the Company in structuring specific operations
Embraer Merco S.A.	100%	Uruguay	No operations -in the process of settlement

Summary of Impacts of Adoption of IFRS 9, IFRS 15 and IFRSIC 22 on Consolidated Financial Statements

Consolidated Statements of Financial Position


As of December 31, 2017	Published		IFRS 15 Adjustments			IFRS 9 Adjustments			Restated
Financial investments		2,365.6		—			0.5			2,366.1
Trade accounts receivables, net		717.2		(432.8	)		12.6			297.0
Contract assets		—		447.5			—			447.5
Other current assets		3,969.0		—			—			3,969.0
Total Current Assets		7,051.8		14.7			13.1			7,079.6
Financial investments		251.3		—			(0.1	)		251.2
Deferred income tax and social contribution		2.9		13.0			(2.5	)		13.4
Investments		5.6		—			—			5.6
Other non-current assets		4,624.8		—			—			4,624.8
Total Non-Current Assets		4,884.6		13.0			(2.6	)		4,895.0

TOTAL ASSETS		11,936.4		27.7			10.5			11,974.6

Contract liabilities		—		1,001.1			—			1,001.1
Advances from customers		799.2		(799.2	)		—			—
Provisions		141.4		(17.3	)		—			124.1
Unearned income		164.1		(164.1	)		—			—
Other current liabilities		1,678.0		—			—			1,678.0
Total Current Liabilities		2,782.7		20.5			—			2,803.2
Contract liabilities		—		125.5			—			125.5
Advances from customers		104.1		(104.1	)		—			—
Deferred income tax and social contribution		251.4		4.6			2.0			258.0
Unearned income		97.5		(5.8	)		—			91.7
Other non-current liabilities		4,518.7		—			—			4,518.7
Total Non-Current Liabilities		4,971.7		20.2			2.0			4,993.9
Equity		4,182.0		(13.0	)		8.5			4,177.5

TOTAL LIABILITIES		11,936.4		27.7			10.5			11,974.6


As of December 31, 2016	Published		IFRS 15 Adjustments			IFRS 9 Adjustments			Restated
Financial investments		1,775.5		—			0.1			1,775.6
Trade accounts receivables, net		665.3		(345.1	)		16.6			336.8
Contract assets		—		370.6			—			370.6
Other current assets		4,340.6		—			—			4,340.6
Total Current Assets		6,781.4		25.5			16.7			6,823.6
Financial investments		168.3		—			4.8			173.1
Deferred income tax and social contribution		3.6		10.7			(2.7	)		11.6
Other non-current assets		4,711.5		—			—			4,711.5
Total Non-Current Assets		4,883.4		10.7			2.1			4,896.2

TOTAL ASSETS		11,664.8		36.2			18.8			11,719.8

Contract liabilities		—		1,086.8			—			1,086.8
Advances from customers		716.4		(716.4	)		—			—
Provisions		135.8		(11.9	)		—			123.9
Unearned income		311.5		(311.5	)		—			—
Other current liabilities		2,017.2		—			—			2,017.2
Total Current Liabilities		3,180.9		47.0			—			3,227.9
Contract liabilities		—		157.9			—			157.9
Advances from customers		139.8		(139.8	)		—			—
Deferred income tax and social contribution		263.5		(1.3	)		3.0			265.2
Unearned income		113.9		(7.0	)		—			106.9
Other non-current liabilities		4,025.5		—			—			4,025.5
Total Non-Current Liabilities		4,542.7		9.8			3.0			4,555.5
Equity		3,941.2		(20.6	)		15.8			3,936.4

TOTAL LIABILITIES		11,664.8		36.2			18.8			11,719.8


As of January 1, 2016	Published		IFRS 15 Adjustments			IFRS 9 Adjustments			Restated
Trade accounts receivables, net		781.9		(360.6	)		8.9			430.2
Contract assets		—		387.7			—			387.7
Other current assets		5,629.7		—			—			5,629.7
Total Current Assets		6,411.6		27.1			8.9			6,447.6
Financial investments		749.6		—			(9.0	)		740.6
Deferred income tax and social contribution		4.5		14.2			(3.0	)		15.7
Other non-current assets		4,503.8		—			—			4,503.8
Total Non-Current Assets		5,257.9		14.2			(12.0	)		5,260.1

TOTAL ASSETS		11,669.5		41.3			(3.1	)		11,707.7

Contract liabilities		—		1,136.8			—			1,136.8
Advances from customers		743.8		(743.8	)		—			—
Provisions		95.7		(6.0	)		—			89.7
Unearned income		320.0		(320.0	)		—			—
Other current liabilities		1,920.9		—			—			1,920.9
Total Current Liabilities		3,080.4		67.0			—			3,147.4
Contract liabilities		—		—			—			—
Advances from customers		164.1		(164.1	)		—			—
Deferred income tax and social contribution		417.3		(2.2	)		(2.0	)		413.1
Unearned income		62.8		164.1			—			226.9
Other non-current liabilities		4,101.2		—			—			4,101.2
Total Non-Current Liabilities		4,745.4		(2.2	)		(2.0	)		4,741.2
Equity		3,843.7		(23.5	)		(1.1	)		3,819.1

TOTAL LIABILITIES		11,669.5		41.3			(3.1	)		11,707.7

Consolidated Statements of Income


Year ended December 31, 2017	Published			IFRS 15 Adjustments			IFRS 9 Adjustments			Restated
Revenue		5,839.3			20.1			—			5,859.4
Cost of sales and services		(4,773.3	)		9.2			—			(4,764.1	)
Gross Profit		1,066.0			29.3			—			1,095.3
Operating income (expense)		(736.7	)		(12.7	)		(4.0	)		(753.4	)
Operating profit		329.3			16.6			(4.0	)		341.9
Financial result		(41.0	)		—			7.0			(34.0	)
Profit before taxes on income		288.3			16.6			3.0			307.9
Income tax expense (income)		(25.5	)		(3.6	)		1.2			(27.9	)

Net income		262.8			13.0			4.2			280.0

Atributable to:
Owners of Embraer		246.8			13.0			4.2			264.0
Noncontrolling interest		16.0			—			—			16.0
Earnings per share-basic in US$		0.34									0.36
Earnings per share-diluted in US$		0.34									0.36

Year ended December 31, 2016	Published			IFRS 15 Adjustments			IFRS 9 Adjustments			Restated
Revenue		6,217.5			(13.6	)		—			6,203.9
Cost of sales and services		(4,980.7	)		(1.3	)		—			(4,982.0	)
Gross Profit		1,236.8			(14.9	)		—			1,221.9
Operating income (expense)		(1,030.8	)		14.9			7.7			(1,008.2	)
Operating profit		206.0			—			7.7			213.7
Financial result		(47.0	)		—			13.9			(33.1	)
Profit before taxes on income		159.0			—			21.6			180.6
Income tax expense (income)		8.7			(4.4	)		(4.6	)		(0.3	)

Net income		167.7			(4.4	)		17.0			180.3

Atributable to:
Owners of Embraer		166.1			(4.4	)		17.0			178.7
Noncontrolling interest		1.7			—			—			1.7
Earnings per share-basic in US$		0.23									0.24
Earnings per share-diluted in US$		0.23									0.24

Reconciliation of restated Consolidated Statements of Changes in Shareholders’ Equity


	Note			2018			2017			2016
As of December 31 of the previous year - originally published					4,182.0			3,941.2			3,843.7
IFRS 9 Adjustment
Decrease of accounts receivable impairment allowance		2.2.1.a)(ii	)		12.6			16.6			8.9
Adjustment to fair value due to change in classification		2.2.1.a) (i	)		0.4			4.9			(9.0	)
Financial asset reclassification from available for sale to fair value through P&L
- from Other cumulative translation adjustments (OCI)					(11.5	)		—			—
- to Retained earnings					11.5			—			—
Effect of deferred income tax over the adjustments					(4.5	)		(5.7	)		(1.0	)

					8.5			15.8			(1.1	)
IFRS 15 Adjustment
Increase (decrease) of development contracts results due to contracts		2.2.1.b) (i), (ii)
combinations and modifications					(2.5	)		(7.8	)		(16.1	)
Increase (decrease) of development contracts results due to changes in		2.2.1.b) (iii)
performance obligations identification					(20.8	)		(32.1	)		(23.8	)
Effect of foreign currency transactions in CTA					1.9			7.3			—
Effect of deferred income tax over the adjustments					8.4			12.0			16.4

					(13.0	)		(20.6	)		(23.5	)

As of January 1 - restated					4,177.5			3,936.4			3,819.1

Summary of Financial Assets and Liabilities in the Original Measurement Categories by IAS 39 as Previously and the New Measurement Categories by Adopting of IFRS 9

The following table sets forth the financial assets and liabilities in the original measurement categories by IAS 39 as previously disclosed on December 31, 2017 and January 1, 2017, and the new measurement categories by adopting of IFRS 9:

Financial instruments

Note

12.31.2017

Category IAS 39

Categoya IFRS 9

(Restated)

Assets

Cash and cash equivalents

1,270.8

Loans and receivables

Amortized cost

Financial investments

2,617.3

1,307.6

Loans and receivables (iv)

Fair value through other comprehensive income

1,199.5

Held to maturity (iv)

Fair value through profit or loss

50.5

Held to maturity (iv)

Amortized cost

58.8

Available for sale

Fair value through profit or loss

0.9

Fair value through profit or loss

Guarantee deposits

393.9

Loans and receivables

Amortized cost

Collateralized accounts receivable

288.7

Loans and receivables

Amortized cost

Contract assets

447.5

Loans and receivables

Amortized cost

Trade accounts receivable, net

297.0

Loans and receivables

Amortized cost

Customer and commercial financing

16.4

Loans and receivables

Amortized cost

Derivative financial instruments

34.3

Fair value through profit or loss

Other assets (i)

82.2

Loans and receivables

Amortized cost

Liabilities

Loans and financing

4,198.5

1,264.3

Liabilities measured at amortized cost and other liabilities (iv)

Amortized cost

2,934.2

Liabilities measured at amortized cost and other liabilities

Amortized cost

Trade accounts payable and others liabilities (ii)

1,502.5

Liabilities measured at amortized cost and other liabilities

Amortized cost

Financial guarantee and residual value (iii)

139.6

108.8

Fair value through profit or loss

30.8

Liabilities measured at amortized cost and other liabilities

Amortized cost

Derivative financial instruments

8.9

Fair value through profit or loss

(i)	Comprises amounts of court-mandated escrow deposits and loans with jointly controlled entity.

(i)	Comprises amounts of trade accounts payable, other payables and non-recourse and recourse debt.

(iii)

Comprises amounts of residual value guarantees and accounts payable of financial guarantee (Note 23).

(iv)

In Note 28.1 to the Company’s annual financial statements as of December 31, 2017, certain financial instruments measured as at amortized cost (held to maturity and loans and receivables) were incorrectly disclosed in the explanatory notes as measured at fair value through profit or loss. This correction does not affect the measurement of amounts previously disclosed considering that, despite the incorrect classification in said Note, the instruments were correctly valued according to their nature.

Financial instruments

Note

01.01.2017

Category IAS 39

Categoya IFRS 9

(Restated)

Assets

Cash and cash equivalents

1,241.5

Loans and receivables

Amortized cost

Financial investments

1,948.7

1,067.9

Loans and receivables (iv)

Fair value through other comprehensive income

620.9

Held to maturity (iv)

Fair value through other comprehensive income

173.8

Held to maturity (iv)

Fair value through profit or loss

51.1

Held to maturity (iv)

Amortized cost

35.0

Available for sale

Fair value through profit or loss

Guarantee deposits

511.4

Loans and receivables

Amortized cost

Collateralized accounts receivable

323.3

Loans and receivables

Amortized cost

Contract assets

370.6

Loans and receivables

Amortized cost

Trade accounts receivable, net

336.8

Loans and receivables

Amortized cost

Customer and commercial financing

37.4

Loans and receivables

Amortized cost

Derivative financial instruments

32.1

Fair value through profit or loss

Other assets (i)

79.4

Loans and receivables

Amortized cost

Liabilities

Loans and financing

3,759.9

1,357.4

Liabilities measured at amortized cost and other liabilities (iv)

Amortized cost

2,402.5

Liabilities measured at amortized cost and other liabilities

Amortized cost

Trade accounts payable and others liabilities (ii)

1,722.4

Liabilities measured at amortized cost and other liabilities

Amortized cost

Financial guarantee and residual value (iii)

188.0

122.2

Fair value through profit or loss

65.8

Liabilities measured at amortized cost and other liabilities

Amortized cost

Derivative financial instruments

8.4

Fair value through profit or loss

(i)	Comprises amounts of court-mandated escrow deposits and loans with jointly controlled entity.

(i)	Comprises amounts of trade accounts payable, other payables and non-recourse and recourse debt.

(iii)

Comprises amounts of residual value guarantees and accounts payable of financial guarantee (Note 23).

(iv)