Good afternoon, ladies and gentlemen, and welcome to the Audio Conference Call that will review Embraer’s Third Quarter 2013 results. Thank you for standing by. This conference call is being held during the Embraer day [ph] in New York with the presence of investor and market analyst. At this time, the company will present its third quarter 2013 results. Afterwards we will conduct the question-and-answer session and instruction to participate will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded and webcast at ri.embraer.com.br. This conference call includes forward-looking statements or statements about events or circumstances, which have not occurred. Embraer has based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the business and its future financial performance. These forward-looking statements are subject to risks, uncertainties, and assumptions, including, among other things, general economic, political and business conditions in Brazil and other markets where the company is present. The words believe, may, will, estimate, continue, anticipate, intend, expect, and similar words are intended to identify forward-looking statements. Embraer undertakes no obligations to update publicly or revise any forward-looking statements because of new information, future events, or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed on this conference call might not occur. The company's actual results could differ substantially from those anticipated in the forward-looking statements. Participants on today's conference call are Mr. Frederico Curado, President and CEO; Mr. Jose Filippo and Chief Financial Officer and IRO; Mr. Luciano Froes, Director of Investor Relations. I would now like to turn the conference over to Mr. Frederico Curado. Please go ahead, sir.

Good afternoon, people present here today and also people are in the web. It pleasure to have you here. This was not our best quarter for sure. As we have indicated in our last call we did not expect is teller quarter, but we did lose something around $150 million in revenues related to deliveries which will have in the fourth quarter and of course deteriorated into the lower margins. So at this stage we remain looking at as we also indicating in our last call at the lower end of our guidance certainly are challenge is have increased in the fourth of that’s what you ending that. So I will back at the end of the presentation Filippo will conduct the presentation and we will be back for Q&A. Thank you. José Antônio Filippo: Hello. Okay. Thank you – thank you Fred and so we will go through the presentation and then we will turn back to – for the questions. So in starting Page 3, in the corporate highlight we have starting with this important recognition being in the fourth consecutive year, in the balance on sustainability index, confirming our commitment to sustainability and corporate governance standards of the company. Following with an important highlight on the financial operation in August and concluded in September. The company enter into an exchange of notes, we exchange notes to mature 2017 and 2020 to new notes in 2023, so we are able to have acceptance for about $500 million, so that means that we have in terms of average terms of the debt and extension that will show you more detail later in this presentation. It is important for the management of the profile of the debt of the company. And in this page also, we have – we follow…

So I understand that the first question comes from the audience, is that right? Okay, so yes, we are at your disposal. Mikes, over here; one, two, three.

Now we will open for questions starting with participants from audience and followed by participants in the conference call.

I am little confused still about what impacted the gross margin this quarter. I mean it was the worst in quite a while. I know you mentioned you had two deferrals, but was it all commercial, was it across the segments. Was the price was a mix, could you be very clear about what drove it down this quarter?

It was – in fact it was all the business we had four. We partly look that from commercial. We have the margin of – we’re creating margin of 7.8%. Then the effective business was negative 2.4%.

This is operating not pretty well.

Okay. And the question is gross margin. And I will conclude that breaking that those are the gross margin. For Defense it was 8.6% margin. So in terms of gross margin, 19.1 in commercial, 16.2 in effective – and 20.9 in defense. That the blended margin 19.2.

It just adds on a commercial side, we lost couple of airplane, so that’s certainly, I don’t know how much of the impact, but certainly we have one point right there maybe.

Which one of the three segments was down the most from say the first quarter? You had pretty low volume in the first quarter.

From the first it’s commercial.

Commercial….

Comes from the first, yes, commercial.

And the business executive yes.

If I may add also just a little bit of color, if you look at the product mix, I think third quarter was I would say pretty unique when we think about the commercial aviation mix, we saw a pretty large number as it relates to the overall total of E-jets delivered going into the North American market. For instance, just for a little bit of color. If we look at fourth quarter, we certainly expect a much more balance weighing back into the 190, 195 platforms. So I think that’s also an important element to consider in terms of the uniqueness lets say of this quarter in terms of the gross margin of that segment.

Okay. I guess the implication I am trying to figure out is that I know your 175 mix is going to go up next year of course, so should we think about year-over-year margins for 2014 maybe being down, maybe more like 18.5% just on that powerful dynamics.

I am not ready to talk about actual guidance yet, but we certainly will see a reduction in the margins of commercial business, but we see it remaining pretty healthy. It’s probably the healthier, healthiest margin collaboration in our three businesses. Of course if you have I don’t know maybe two or three percentage points impact [indiscernible] something next year. And then of course we will make guidance in February. But each branch should be even with a lower mix, a mix of a lower side aircraft; it should be on the helping average of the company. So that’s a healthy business even going forward, even with a low risk U.S. market deliveries for U.S. markets.

Thank you.

Okay, just a follow up on that one. If you look to be in slide margins for the fourth quarter, what you’re kind of pointing towards is a pretty substantial growth year-on-year virtually no revenue growth. Is that just you’re trying to energize the workforce to pull off whatever they can or is there really some confidence that you can actually pull off that implied 13.5%, 14% EBIT margin in the fourth quarter.

I think it’s fair. It’s a very fair question. If you do the math, you’re going to arrive at something close to 13%, 14% EBIT to be up the average within those revenue. I think what it depends is fundamentally deliveries of larger cabin aircraft and executive jets. The airline business looks pretty consistent with the guidance of those [indiscernible] but looks pretty consistent with France as well. And we have a very large challenge in making sure that we deliver. I mean airplanes are input, there is no industrial challenge. It’s more, of course there are industrial challenges but the one that will make me [indiscernible], it’s really down to commercial risk, some customers build financing, some customers which are almost closing and things like this. So I think the plan calls for the lower end of the guidance, is there risk? Yes. There is a downside risk there, but I don’t think it’s a substantial amount. So at this stage, we have to stick to our plan which is to deliver those numbers. It would be a challenge for sure. We’ve done something pretty close to that last year and in previous year. So over $2 billion in the quarter and strong recovery of margins, so it’s not that far for something we have already done in the past.

Just one another clean-up question, the other expense turned into other income this quarter. I know in the press release you’ve talked about year-on-year basis in that line, but what happens sequentially that improves the other income line or other expense line?

Back to the comparison was that, we had some Kathleen [ph] of some – we had to return from the Kathleen penalty.

So sequentially that’s the differential.

Yes.

Okay.

Fred, just on the executive jet business with the negative margin in the quarter, what’s really driving it is it all pricing we have an aggressive competitor north of the border. Is that the whole problem or that plus the just the market in general or the manufacturing issues or if you could just walk us through sort of the issues. And then what your plan is to bring that back into profitability.

Thank you, Joe. There is a pricing pressure. I mean recently as everyone knows Cessna took an important decision not to take engage in entry of market share of freight, so and of course the Hawker jets are no longer into the market, so this mid to lower end side of the market is really down from settle down to seven Embraer. So I think both the airplane trying to hold pricing, I think the biggest competitor is not Cessna or we are to them. It’s the inventory of used aircraft which although it’s not growing, but the asking price is coming down. So that associate there is this small increase – no increase whatsoever for the business of that market is still kind of a flat shrinking. Really creates a lot of various health environment for pricing. Having said that Joe, we also had challenges on the cost side and obviously, with this strong investment program and even more important challenge on the cash flow side on that business. Next year as we took it Legacy 500 we should get some alleviation on the investment side, and I certainly speak I think Ernie and Mark will talk about this in more details. We certainly expect a strong turnaround if you will, as far as performance in this business. So even in an environment where the market is not still booming, has not cutting back early I’m afraid. We tend to have a strong recovery as far as our margins and our cash associated to that business as well.

And on the commercial side, you decided that they were few aircraft that slipped into Q4 from Q3. And then last quarter I think you’ve noted that we’re probably coming towards the lower end of the guidance for the year, could you characterize I’m sure it’s a host of different things, but is this predominately customer financing, that’s an issue. Or is it manufacturing or is it just simply demand.

It’s again it’s – we are talking about 11 handful of airplane and it’s more like commercial risks other than not nothing cash flow for sure. It’s really the ability of the customer to take delivery or not that’s on the [indiscernible], but it’s nothing to say lace of financing, it’s really more on the commercial side. That sort of…

And free cash flow guidance for the year finally, you had said, I think in the higher double-digits as EBIT, at this point you’re going to say it’s due – it’s basically whether we can get to delivery out of the door, it’s going to determine whether you can achieve the guidance or not.

Yes, and that’s correct.

And nothing we ever said higher double-digit have we? Double-digits starts with 10 right whether you can achieve the guidance, is that okay?

Yes. And that’s correct.

I don’t think you have said higher debt recovery. They were due to startup chain, right?

Maybe stay higher. Maybe our chance. Okay. That’s in our fleet. [indiscernible].

Thanks. It’s [indiscernible] RBC Capital Markets. With the just alluded deferrals that the 190 then take credit the seven in 2015, do you think you will be able to back all that with your current backlog or bring forward some of the deferrals from your existing orders?

I would say we expect to refill those lots with orders, not to rate anything. We talk about 24 airplanes, which they did not impact at all our 2013 or in 2014 for that sort deliveries there going. So 2016 and 2017, that’s we will frankly must fill those lots. So I mean we don’t feel that uncomfortable. It was not a big surprise to it, both accountable to do that situation. Sure.

I don’t know. Okay. Here we go. With the S&P expense reductions, is that reoccurring and do you see any other opportunity to take costs out of business and if so can you quantify that a little bit?

Yes. I think this is an ongoing program. We expect to see more benefits from this. Of course they did better to do to see that we have – this is revolution of the cost within the business. So we’re working on a lot and it’s good enough for self services platform and doing something common to support the business all the team at the back office activity, be that effective in the regions where we still expect to see of course reductions going forward and if not the reduction by at least as we can expect from growth in terms of revenues that this can be like the dilution also in the prospect, but the nominal cost should be reducing going forward. This is not – we’re not doing in the guidance necessarily for that, but it’s just a trend.

Okay. Thanks.

Before we get [indiscernible] please.

On the last question with regard to the effort to backfill interesting data, can you just update us on how exciting or not exciting current campaigning activity is maybe by geography or type of customers on commercial side?

Maybe Paulo, I think can elaborate a little bit better, but certainly we see that the largest demand for the next three years coming from the United States are originally around replacements of older RJ 50-seaters. But there are opportunities for larger aircraft popping up here and there and that’s no major event, potentially China, but I think Paulo can give a little bit better color to that. So again maybe advancing a little bit, 2014 looks very comfortable at this stage and also we have a very good sentiment about 2015 at this stage as well. I would say better sentiment about 2015 and that the states then ultimately have a bolt-on 2014 a year ago. So I think Paulo may give us some better color.

Okay. And just one follow-up. On the mix issue within commercial going more towards 175 from 190, 195, are there numbers or quantification that you can put around how difference that margin is from one aircraft to the other on how much pricing pressure there is the orders you’ve won over the last 12 months versus prior?

I don’t know if there is anything. I think the order of magnitude – Paulo has been running the business in double-digit operating margins. So Paulo would say, well, that’s a small increase next year to high single-digit arena more or less.

And what you would expect?

Of course we’re going to fine-tune that and give a better precision while issue guidance. On the slide maybe grow double-digit to high single-digit. It’s probably enough approximation.

That’s helpful. Thank you. George Ferguson – Bloomberg Research: George Ferguson with Bloomberg Industries. Switching gears and going to defense, can you talk to us about the KC-390 and how you position that airplane between C-130s, A-400 and the C-17, so where do you see the opportunity for that airplane and how you position it, how about the competitiveness?

Okay. So the KC-390 is actually a multi machine airplane, not only a cargo aircraft, but also has a tanker capability, also has some [indiscernible] operates in Antarctica, but let’s say as the size wise, it’s very, very direct competitor to the C-130, 23 tonne aircraft, actually a little bit bigger than the C-130 jet. We shift between if you think about Airbus, we shift between the C-295 and the [indiscernible] right in between, so we don’t compete it either, we are quite larger than the [indiscernible] and we are very smaller than the 8400 and we are much, much smaller in the [indiscernible]. So it’s a C-130 market, different concept of course of faster airplane or the three jet model [indiscernible] and obviously would benefit the clean chip design. The way we market this [indiscernible] talk about couple of milestones which are importantly showed slide before the end of next year and retention in the market, we can update [indiscernible]. So initially of course we have, we view as a potential main customer, but we also a few other countries with have investment participation that probably on and we do have LOIs also for their vessel. Hopefully next year, we will be able to execute the conflict within the Air force for the serial elevation of the KC-390 and from that, we will be able to negotiate with other customers. We see at least 700 aircraft markets, let’s call as open markets, so there is a much larger number of C-130s there and total markets much larger than that, but we understand that of course with Lockheed Martin and [indiscernible] let’s say influence in the sense of weakness, there are some markets which are very, very unlikely that we will be able to penetrate. So we see at least 700 airplanes in which we have a fair chance to compete for and that’s market share, whichever market share you can take there, 20%, 30%, that’s certainly a good result for us. And just to finalize, we do have an agreement with Boeing decides [ph] to market our KC-390 in a few of those markets in which we don’t see a possibility for sell directs and that may increase customer base of KC-390.

Fred, recently you have talked of the above average potential for profitability of Legacy 500 and then Legacy 450, with the delays you had on the program, with the cost you have seen with the difficult pricing you have had in the market, could you give us some color on how you see the profit potential of that program next year and into 2015?

We are about drops it to 16 months late in the program and it should be in the market right till end of the next year and is being, probably would most that can move this development that we have had or even better to this [indiscernible] production aircraft that we have designed. So we do expect a round of service move to ramp up next year. We are probably looking at maybe six or so 500 deliveries and we are ramping up of course in 2015, which is the year where the 450 will enter into production. So 14 next year, maybe six of the 515 ramp up and 450 coming up 16 we will see a more fully, full benefit of having both new markets. This is an add-on revenue for us. So we’re not in that segment at all. So we do not take any share at all from our Phenom 300 or our Legacy 600. So that’s going to be a really a step of function in terms of revenue for us, again, becoming more meaningful towards 2015.

And pricing?

Pricing as I said in our – I think it’s a very good question. I think there is a question of market share versus pricing. We’re not definitely that’s not the way we do business price flow. So we’ve been trying to price our aircrafts at the level the competitor levels but we have to bring our reasonable potential for margins. So at this stage, we see that segment with and I think Mark will also talk about it’s a segment which will grow and everybody’s forecast a little – proportionately a little bit better than other segments. So we should be able to have I don’t know 50, 60 airplanes a year, but that’s something which of course we have to fine tune as we go. And we think we’re going to have sounds and healthy price and margins. We do see a learning curve relatively fast with those two aircrafts. So we have this, we still have about 8 months to go or something in certification. How many hours we have logged in the flight campaign? 4% or 120 hours in flight campaign, so we are on a good track for certification of the airplane, so it has very flying qualities. And I think as far as passenger appeal and customer appeal it’s we do believe that’s the best-in-class and both will be winners.

So you mentioned that next year you will get relief from development on the Legacy 500 starting down with the build in the E2, does the total development level spending continuing up or do we get any relief in the quarter?

Probably we will have the Legacy will come down, the forfeiture is still there. And I think E2 whether the 175 or 175s later the call we just have a little bit next year, right most of it happened this year. So I think E2 business is a real demander of cash for next year. We don’t have those numbers yet, but I’ll say likely its going to go up in total investments likely.

Quick question for…

For sometime again thank you. And the quick question on working capital management is more difficult. For a long time, working capital management number has been not greater and free cash flow has been bumpy. Are you giving any initiatives now to focus on working capital management and to try to improve it?

Yes. I think that this is important which you mentioned. Of course the increase in unit cost that we saw in the end of last quarter was first of all by including in suppliers as well, that is not seeing effect in terms of pressure working capitals so it’s something also here. I think, I mentioned about also in terms of the Executive Aviation is still working on better capacity project that’s what pressure from working capital is something obviously that I think we can have some benefits going forward in terms of working capital. This is understood but we had to still demand it from working because of the type of the business, but we are working on trying to reduce this impact and we are going to find those points and trying to improve the way we manage that. Yes that is correct.

And do you have a good sense from your seat when you look around there that you kind of know where the cash is or cash is being used. I mean is it the enterprise reported system fine tuned enough that really you have a good idea of where you need to the cash out of it?

Yes, definitely yes, that has a little room for this, made this more or like viewed enough our potentials among the business of what impact does as we – effect of each action that in terms of cash, is the balance of like the economical impact and the financial impact which is under our ability very strongly among the organization.

If I may add Ron, I mean we’ve been the business jets business for I’ll say 12 years a little bit that more intensively for maybe 10 years. And in this period, we have made a significant commitment to our capital which was generated mostly by the airline business, but more recently in the last maybe five years also, but in the defense business. And not only those developments so you enter not only to seen the true legacies which are still under final certification, significant improvement in the Legacy 650 and the Lineage, but also a significant investment in the customers support infrastructure. And typically that's a kind of a need to have to be in the business and the return on capital and build the investments, they are a little bit far end of future, so. As in a nutshell that has been the big demand for investments. As we now enter into the each investment, a lot of debt of the funds, we are getting from the cash generation from its own on the airline business itself, so a lot will come from there. But we do expect we must, and we do expect that the business jets are part of the house. We have started to make a much more relevant contribution for that cash and this sense is a pretty kind of a self sustained and the contributor of cash as well. We don’t see at least and now we do have a 15-year plan, we don’t see in this horizon, moving what we know anything for raising capital, new capital. We are managing our debts, I think very confidently, extending term and keeping cost or even reducing cost a little. So absolutely cash is actually probably our number one point of attention even more in the business.

Thank you. Stephen Trent – Citigroup Global Markets Inc.: Thanks and good afternoon Freddy, and thanks for the time. Steve Trent from Citi. Just two questions from me if I may, the first you mentioned in 3Q the other income, the liquidity damages. Was there any particular geographic buyers to where that came from or was it fairly small, and then the second question, I wasn’t sure, but there seem to be a little bit of action from some employees on your production floor. As small as work stoppage and some sort and I was wondering if you can give us little color on what happens?

Sure thank you. The liquidity momentum was $16 million was just an isolated thing, one customer is not that something that occurs systematically. Stephen Trent – Citigroup Global Markets Inc.: If there any particular reason we are doing personally?

Yeah.

Steve on the labor sides, what we have, we do not have a stride for – as for as the given number and we are not having any strides. So what we have is a very diligent union, which have the practice of blocking roads, literally blocking the road and forcing our employees off the buses and so they, so what they do – have to get off the bus and walk so they get late to work. It’s a very embarrassing thing and so there is nobody stopped. Everybody is working and this issue is in Brazil the way this thing goes, if the truth you know there is a unit for the companies also the federation of companies, so they are negotiating on our behalf with the unions. And this thing’s is too worrying also, so what we have done to our employees that we have re-adjusted all the wages back to September for the inflation of last year. So I mean they are – they feel protected, the feel fine, it’s much more let’s say the attitude from the union and then really the internal concern. It’s certainly a disturbance, but not something which is, they worked for us pretty much with us with the company. Stephen Trent – Citigroup Global Markets Inc.: Okay, very helpful and thank you.

(Operator Instructions)

[Indiscernible] HSBC. My question is regarding again fourth quarter just wanted to understand this probably the first quarter where you’re going to see the FX kicking in more or less start of the depreciation of the real started in May. So it's probably going to begin in October, November. How does that play out in terms of margins especially for added margins first and second we’re talking about the lower range of the guidance maybe delivering 32 aircrafts in the fourth quarter, is this feasible first and what’s going to be the breakdown more or less between 175s and 190s?

Let me address the FX question it’s of course is what happens that we have to take the FX range when it comes if you see experience a variation it goes has to go through the inventories before then we are going to benefit to the margins if that’s the question but the start off in the second quarter, we have a more evaluation was it a bit more reduced in the third quarter actually. So we may see some of this impact most of them already in the quarter there but some we still may see going forward and in terms of the last quarter but then I think the major impact in the margins. To the share delivered in last quarter or this time is probably 66% probably maybe even more 190s and in general maybe 60% 195 and 4% 175.

Okay, thank you and yeah that’s doable, yeah. George Ferguson – Bloomberg Research: George Ferguson, again from Bloomberg Research, so I’m not sure looking those today Boeing announces they’re going to increase 737 production to 47 starting in 2017 which ends up being pretty down close to entry for E2, I’m wondering if you could talk to us about managing the risk of that customers that couldn’t get an airplane within five years or six years would move, would gauge down a bit to an E2 and now Boeing’s opening up slots for those the people potentially and perhaps making the 190 and 195 E2 a bit harder for you to sell.

And on the one perspective, one sides there is no direct competition between the 190 [Indiscernible] smaller aircrafts 50% inside us, so that is pretty much a very sizable difference. So whatever is then directly as a result of Boeing and Airbus moves, it does not have a direct impact and competition for us. Having said that, if you consider the overall commercial airline business, there is that capacity and number of passengers will be flowing, so of course the more the high projection rates of narrow-body aircraft that will put us on the whole industry, so in the sense the capacity taken, also the passenger to be also financing capacity. So the way we feel of course that we are safely enough away from where we competing with the 727, which the majority of that will be Dash 8 and Dash 9. So airplane which start around 60 seats and go up to almost 200 seats, same with the airbus return it to 21. So I think that the business trend of the E2 was based on – I think very solid even maybe conservative assumptions. Let’s keep in mind we have almost 70 customers around the world. We’ll have by around maybe 1,600 to 1,800 airplanes in service when E2 comes. So there is a very natural let’s say, customer base and follow on opportunity for the E2. And by the way, the airplanes will be extremely, extremely competitive. So there will be able to have a 100 seats or 125 seats in the 191, 195 with cost per seats very similar to larger aircraft. So that makes a very compelling case for us. So cost per [indiscernible] very lower and cost per seats very, very close. So that’s one of the let’s say of the assets that each of family we’ll have. So I don’t think we don’t see a direct impact. I did not know about this production rate increase. It’s a bit surprising that probably going to trigger response into lose. So a lot of passengers has to be our there to fly all these aircraft. And as I said we are in a different segment much, much smaller. But I think also in a strong position in that segment, which is at 120 seats. I think no one have a question, no, sorry.

By the way guys, we are finishing this I think that you can still go for desserts before they take everything else. So as soon as it done here encourage you to get some desserts outside into the lot of mortgage probably.

Hi, Fred. It’s [indiscernible] Morgan Stanley. My question is getting back on the defense business there was a deceleration on the revenue growth in the third quarter is it because of the BRL depreciation or what impact differences on third quarter?

Yeah it was just acquiring there for them that foreign exchange rate, exchange rates.

Yeah primarily the exchange really that…

And looking forward should we see a slow down in the growth given that the currency continues around 220 so something.

You have seen a double-digit growth for next year probably into the FX in dollars keeping in mind that we still have 50:50 exports in Brazil, it is 50% in dollars

The dollar denominated and 50% reais which of course helps the company to hedge natural hedge also.

I am sorry there was a gentlemen there, the gentlemen and I think we are then.

[Indiscernible] So just wondering I think in the beginning of the year you had said SG&A as a percentage of sales is going to come down and I think it was 12.3 last year that 10% or 11% this year, I know the SG&A lines come down on an absolute basis it looks like it’s going to come down in line with sales, so just wondering it was on the background get that us here but does that imply that there is further costs to come down in 2014?

Again we are not give any at this point for next year. But if you see this year, we had the SG&A in second quarter about 11% of sales and now 12% a little bit more because of the reduction of the revenues rather than it’s nominal cost. So I think we should expect this trend of reducing this two levels…

We should not see a material increase in the fourth quarter and we will see a very significant increase in revenues. So dilution will be a important for the year. You’ll see a better than what we had so far year-to-date.

Okay, and then just quick question, can you just give us what the combined services revenues were for the quarter?

So approximately $220 million, primarily half commercial and the rest between the other two businesses.

Thank you.

I think you have the last question.

Yeah, okay, thanks. And one we haven’t talked about much as M&A and in particularly aircraft seem to be backout in the market and is there you didn’t mention about that on that?

No.

No, we’re not interested in that. So we’re not looking to that. I have no idea who will have that cost [indiscernible]. We are not even looking to the numbers, and so not an attractive position for us.

Okay, thank you.

This concludes today’s question-and-answer session. I would like to invent Mr. Frederico Curado, to proceed with his closing statement. Please go ahead sir.

Thanks. I thank everyone for attending. There is a desserts served outside the room. There is a 10 minute break, so we will continue this, and so we don’t manipulate. Thank you.

That does conclude Embraer’s audio conference for today. Thank you very much for your participation. Have a good day.