**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC 20549**

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**FORM        20-F/A**

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**oREGISTRATION      STATEMENT      PURSUANT TO SECTION 12(b) OR 12(g)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**OR**

**xANNUAL      REPORT PURSUANT      TO SECTION 13 OR 15(d) OF THE **

**SECURITIES      EXCHANGE ACT OF 1934**

**For      the fiscal year ended: December 31, 2006**

**OR**

**oTRANSITION      REPORT      PURSUANT TO SECTION 13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**OR**

**oSHELL      COMPANY REPORT PURSUANT TO SECTION      13 OR 15(d) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**Date      of event requiring this shell company report o**

**For      the transition period from [    ] to [  ]**

**Commission      file number 333-132289**

**EMBRAER-EMPRESA      BRASILEIRA DE AERONÁUTICA S.A.**

**EMBRAER      - Brazilian Aviation Company Inc.**

**Federative      Republic of Brazil**

**Avenida      Brigadeiro Faria Lima, 2170**

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

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

| **Title                of each class:**                                                                                                                      |   | **Name                of each exchange on which registered:** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------|
| Common                shares, without par value                                                                                                              |   | New                York Stock Exchange*                       |
| American                Depositary Shares (as evidenced by American Depositary Receipts),                each                representing four common shares |   | New                York Stock Exchange                        |

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***      **

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

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

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**Number      of outstanding shares of each of the issuer’s classes of capital or common stock      as of December 31, 2006:**

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**Indicate      by check mark if the registrant is a well-known seasoned issuer, as defined      in      Rule 405 of the Securities Act.**

**o**

**If      this report is an annual or transition report, indicate by check mark if the      registrant is not required to file reports pursuant to Section 13 or 15(d)      of      the Securities Exchange Act of 1934.**

**Indicate      by check mark whether the registrant (1) has filed all reports required to      be      filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during      the      preceding 12 months (or for such shorter period that the registrant was required      to file such reports), and (2) has been subject to such filing requirements      for      the past 90 days.**

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

| Large                Accelerated Filer x | Accelerated                Filer o | Non-accelerated                filer o |
|------------------------------------------|------------------------------------|----------------------------------------|

**Indicate      by check mark which financial statement item the registrant has elected to      follow.**

**If      this is an annual report, indicate by check mark whether the registrant is      a      shell company (as defined in Rule 12b-2 of the Exchange      Act).**

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**TABLE      OF CONTENTS**

|                            |   |                                                                                        |                                                                                              |   | **Page** |
|---------------------------------|--------|---------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------|--------|----------|
|                            |
| **PART                    I**   |
|                            |
| **ITEM                    1.**  |   | **IDENTITY                  OF DIRECTORS, SENIOR MANAGEMENT AND                  ADVISERS** |                                                                                              | **1**  |
| **ITEM                    2.**  |   | **OFFER                  STATISTICS AND EXPECTED                  TIMETABLE**               |                                                                                              | **1**  |
| **ITEM                    3.**  |   | **KEY                  INFORMATION**                                                        |                                                                                              | **1**  |
|                            |   | **3A.**                                                                                     | **Selected                    Financial Data**                                                    |   | **1**    |
|                            |   | **3B.**                                                                                     | **Capitalization                    and Indebtedness**                                            |   | **5**    |
|                            |   | **3C.**                                                                                     | **Reasons                    for the Offer and Use of                    Proceeds**               |   | **5**    |
|                            |   | **3D.**                                                                                     | **Risk                    Factors**                                                               |   | **5**    |
| **ITEM                    4.**  |   | **INFORMATION                  ON THE COMPANY**                                             |                                                                                              | **16** |
|                            |   | **4A.**                                                                                     | **History                    and Development of the                    Company**                  |   | **16**   |
|                            |   | **4B.**                                                                                     | **Business                    Overview**                                                          |   | **19**   |
|                            |   | **4C.**                                                                                     | **Organizational                    Structure**                                                   |   | **36**   |
|                            |   | **4D.**                                                                                     | **Property,                    Plants and Equipment**                                             |   | **36**   |
| **ITEM                    4A.** |   | **UNRESOLVED                  STAFF COMMENTS**                                              |                                                                                              | **38** |
| **ITEM                    5.**  |   | **OPERATING                  AND FINANCIAL REVIEW AND                  PROSPECTS**          |                                                                                              | **38** |
|                            |   | **5A.**                                                                                     | **Operating                    Results**                                                          |   | **38**   |
|                            |   | **5B.**                                                                                     | **Liquidity                    and Capital Resources**                                            |   | **58**   |
|                            |   | **5C.**                                                                                     | **Research                    and Development**                                                   |   | **62**   |
|                            |   | **5D.**                                                                                     | **Trend                    Information**                                                          |   | **63**   |
|                            |   | **5E.**                                                                                     | **Off-Balance                    Sheet Arrangements**                                             |   | **66**   |
|                            |   | **5F.**                                                                                     | **Tabular                    Disclosure of Contractual                    Obligations**           |   | **69**   |
| **ITEM                    6.**  |   | **DIRECTORS,                  SENIOR MANAGEMENT AND                  EMPLOYEES**            |                                                                                              | **69** |
|                            |   | **6A.**                                                                                     | **Directors                    and Senior Management**                                            |   | **69**   |
|                            |   | **6B.**                                                                                     | **Compensation**                                                                                  |   | **74**   |
|                            |   | **6C.**                                                                                     | **Board                    Practices**                                                            |   | **75**   |
|                            |   | **6D.**                                                                                     | **Employees**                                                                                     |   | **77**   |
|                            |   | **6E.**                                                                                     | **Share                    Ownership**                                                            |   | **78**   |
| **ITEM                    7.**  |   | **MAJOR                  SHAREHOLDERS AND RELATED PARTY                  TRANSACTIONS**     |                                                                                              | **78** |
|                            |   | **7A.**                                                                                     | **Major                    Shareholders**                                                         |   | **78**   |
|                            |   | **7B.**                                                                                     | **Related                    Party Transactions**                                                 |   | **79**   |
|                            |   | **7C.**                                                                                     | **Interests                    of Experts and Counsel**                                           |   | **80**   |
| **ITEM                    8.**  |   | **FINANCIAL                    INFORMATION**                                                |                                                                                              | **80** |
|                            |   | **8A.**                                                                                     | **Consolidated                    Statements and Other Financial                    Information** |   | **80**   |
|                            |   | **8B.**                                                                                     | **Significant                    Changes**                                                        |   | **85**   |
| **ITEM                    9.**  |   | **THE                  OFFER AND LISTING**                                                  |                                                                                              | **85** |
|                            |   | **9A.**                                                                                     | **Offer                    and Listing Details**                                                  |   | **85**   |
|                            |   | **9B.**                                                                                     | **Plan                    of Distribution**                                                       |   | **87**   |
|                            |   | **9C.**                                                                                     | **Markets**                                                                                       |   | **87**   |
|                            |   | **9D.**                                                                                     | **Selling                    Shareholders**                                                       |   | **90**   |
|                            |   | **9E.**                                                                                     | **Dilution**                                                                                      |   | **90**   |
|                            |   | **9F.**                                                                                     | **Expenses                    of the Issue**                                                      |   | **90**   |
| **ITEM                    10.** |   | **ADDITIONAL                  INFORMATION**                                                 |                                                                                              | **90** |
|                            |   | **10A.**                                                                                    | **Share                    Capital**                                                              |   | **90**   |
|                            |   | **10B.**                                                                                    | **Memorandum                    and Articles of                    Association**                  |   | **90**   |
|                            |   | **10C.**                                                                                    | **Material                    Contracts**                                                         |   | **105**  |
|                            |   | **10D.**                                                                                    | **Exchange                    Controls**                                                          |   | **106**  |
|                            |   | **10E.**                                                                                    | **Taxation**                                                                                      |   | **107**  |
|                            |   | **10F.**                                                                                    | **Dividends                    and Paying Agents**                                                |   | **112**  |
|                            |   | **10G.**                                                                                    | **Statements                    by Experts**                                                      |   | **112**  |
|                            |   | **10H.**                                                                                    | **Documents                    on Display**                                                       |   | **112**  |
|                            |   | **10I.**                                                                                    | **Subsidiary                    Information**                                                     |   | **113**  |

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| **ITEM                      11.**  |   | **QUANTITATIVE                    AND QUALITATIVE DISCLOSURES ABOUT MARKET                    RISK**                   |   | **114** |
|------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------|--------|---------|
| **ITEM                      12.**  |   | **DESCRIPTION                    OF SECURITIES OTHER THAN EQUITY                    SECURITIES**                       |   | **117** |
|                               |
| **PART                      II**   |
|                               |
| **ITEM                      13.**  |   | **DEFAULTS,                    DIVIDEND ARREARAGES AND                    DELINQUENCIES**                              |   | **117** |
| **ITEM                      14.**  |   | **MATERIAL                    MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS                    AND USE OF PROCEEDS** |   | **117** |
| **ITEM                      15.**  |   | **CONTROLS                    AND PROCEDURES**                                                                         |   | **121** |
| **ITEM                      16A.** |   | **AUDIT                    COMMITTEE FINANCIAL EXPERT**                                                                |   | **122** |
| **ITEM                      16B.** |   | **CODE                    OF ETHICS**                                                                                  |   | **122** |
| **ITEM                      16C.** |   | **PRINCIPAL                    ACCOUNTANT FEES AND                    SERVICES**                                       |   | **122** |
| **ITEM                      16D.** |   | **EXEMPTIONS                    FROM THE LISTING STANDARDS FOR AUDIT                    COMMITTEES**                   |   | **123** |
| **ITEM                      16E.** |   | **PURCHASES                    OF EQUITY SECURITIES BY THE ISSUER AND                    AFFILIATED PURCHASERS**       |   | **123** |
|                               |
| **PART                      III**  |
|                               |
| **ITEM                      17.**  |   | **FINANCIAL                    STATEMENTS**                                                                            |   | **124** |
| **ITEM                      18.**  |   | **FINANCIAL                    STATEMENTS**                                                                            |   | **124** |
| **ITEM                      19.**  |   | **EXHIBITS**                                                                                                           |   | **124** |

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**EXPLANATORY        NOTE**

**INTRODUCTION**

*real*
*reais*
*real*

**Corporate      Reorganization**

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|  | · | Embraer                (formerly known as Rio Han Empreendimentos e Participações S.A. and                renamed Embraer-Empresa Brasileira de Aeronáutica S.A.) succeeded to all                rights and obligations of former                Embraer, |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | each                common share of former Embraer was exchanged for one common share                of                Embraer, |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------|

|  | · | each                preferred share of former Embraer was exchanged for one common share                of                Embraer, |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------|

|  | · | each                American Depositary Share, or ADS, of former Embraer, each of which                represented four preferred shares of former Embraer, was exchanged                for one                ADS of Embraer, each of which represents four common shares of Embraer,                and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                golden share, a special class of common shares of former Embraer                held by                the Federative Republic of Brazil, was exchanged for a special class                of                common shares of Embraer. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Presentation      of Financial and Other Data **

***Financial      Data***

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*Comissão      de Valores Mobiliários*

*Novo      Mercado*
*Bolsa      de Valores de São Paulo*

***Restatement        of our Financial Statements***

|   | · | Product                  warranty expenses: In accordance with SFAS 5, “*Accounting for                  Contingencies,*” we accrue a liability for the obligations associated                  with product warranties, which is recorded on the aircraft delivery                  date                  and estimated based on historical experience. We had previously                  recorded                  our expenses related to product warranties in the consolidated                  statements                  of income under “Selling Expenses” because we understood that the product                  warranties were associated with our sales efforts. As a result                  of the                  reassessment and modification discussed above, we have concluded                  that                  expenses related to product warranties should be recorded in the                  consolidated statement of income under “Cost of Sales and                  Services.” |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Revenue                  arrangements with multiple deliverables: We previously recognized                  revenue                  for all deliverables when the “risks and rewards” of the aircraft were                  transferred to the buyer (at delivery). Upon delivery of the aircraft,                  we                  also accrued a liability for the other services and products sold                  together                  with the aircraft (i.e., other deliverables) that would be delivered                  after                  the aircraft delivery date and we included the costs associated                  with such                  deliverables in “Selling Expenses,”                  because we                  considered such deliverables to be important elements of our sales                  efforts. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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*Revenue        arrangements with multiple deliverables*

*Accounting        by a Customer (including a reseller) for Certain Consideration Received from        vendors as revenue*

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***Other      Data and Backlog***

|  | · | some                of the financial data reflects the effect of                rounding; |
|--|--------|-------------------------------------------------------------------------------------------|

|  | · | aircraft                ranges are indicated in nautical                miles; |
|--|--------|--------------------------------------------------------------------------------|

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

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

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

|  | · | the                term “mid-capacity jets” refers to jet aircraft with 70-120 passenger                seats. All of our regional and mid-capacity jet aircraft are sold                in the                commercial aviation segment; |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

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

**Special      Note Regarding Forward-Looking Statements**

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|   | · | general                economic, political and business conditions, both in Brazil and in                our                markets; |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                in competitive conditions and in the general level of demand for                our                products; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|

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

|   | · | continued                successful development and marketing of the EMBRAER 170/190 jet family,                our line of executive jets (including our new executive jets, the                Phenom                100, Phenom 300 and Lineage 1000), and our defense                aircraft; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                level of debt; |
|--------|--------|-----------------------------------|

|   | · | anticipated                trends in our industry and of our short- and long-term outlook for                the                30-120 seat commercial airline                market; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | our                expenditure plans; |
|--------|--------|---------------------------------------|

|   | · | inflation                and fluctuations in exchange rates; |
|--------|--------|--------------------------------------------------------------|

|   | · | our                ability to develop and deliver our products on a timely                basis; |
|--------|--------|--------------------------------------------------------------------------------------------------|

|   | · | availability                of sales financing for our existing and potential                customers; |
|--------|--------|---------------------------------------------------------------------------------------------------------|

|   | · | existing                and future governmental regulation;                and |
|--------|--------|--------------------------------------------------------------------------------|

|   | · | other                risk factors as set forth under “Item 3D. Risk                Factors.” |
|--------|--------|----------------------------------------------------------------------------------------------------------|

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**PART      I**

| **ITEM                1.** | **IDENTITY                OF DIRECTORS, SENIOR MANAGEMENT AND                ADVISERS** |
|----------------------------|-----------------------------------------------------------------------------------------|

| **ITEM                2.** | **OFFER                STATISTICS AND EXPECTED                TIMETABLE** |
|----------------------------|---------------------------------------------------------------------------|

| **ITEM                3.** | **KEY                INFORMATION** |
|----------------------------|------------------------------------|

| **3A.** | **Selected                Financial                Data** |
|---------|-----------------------------------------------------------|

|                                                                                                                        |   | **At                  and for the year ended December 31,**      |         |
|-----------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------------|
|                                                                                                                        |   | **2002**                                                         |         | **2003** |   | **2004** |   | **2005** |   | **2006** |   |
|                                                                                                                        |   |                                                             |         |   |   | ***Restated(1)*** |   |   |   |   |   |
|                                                                                                                        |   | ***(in                  thousands, except per share/ADS data)*** |         |
| **Income                  Statement Data**                                                                                  |   |                                                             |         |   |   |   |   |   |   |   |   |
| Net                  sales                                                                                             |   |                                                             | US$2,522,750 |   |   | US$2,155,938 |   |   | US$3,352,143 |   |   | US$3,789,495 |   |   | US$3,759,519 |   |
| Cost                  of sales and services                                                                            |   |                                                             | (1,586,274   | ) |   | (1,374,637 | ) |   | (2,336,737 | ) |   | (2,738,907 | ) |   | (2,806,802 | ) |
| Gross                  profit                                                                                          |   |                                                             | 936,476      |   |   | 781,301 |   |   | 1,015,406 |   |   | 1,050,588 |   |   | 952,717 |   |
| *Operating                  expenses*                                                                                       |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling                  expenses                                                                                      |   |                                                             | US$(153,411  | ) |   | US$(179,119 | ) |   | US$(185,086 | ) |   | US$(159,799 | ) |   | US$(220,596 | ) |
| Research                  and development                                                                              |   |                                                             | (158,499     | ) |   | (173,216 | ) |   | (44,506 | ) |   | (93,166 | ) |   | (112,743 | ) |
| General                  and administrative expenses                                                                   |   |                                                             | (109,673     | ) |   | (114,743 | ) |   | (139,357 | ) |   | (205,202 | ) |   | (235,505 | ) |
| Employee                  profit sharing                                                                               |   |                                                             | (25,222      | ) |   | (20,399 | ) |   | (61,199 | ) |   | (56,051 | ) |   | (42,719 | ) |
| Other                  operating expense, net                                                                          |   |                                                             | (20,498      | ) |   | (29,060 | ) |   | (41,272 | ) |   | (26,079 | ) |   | 1,677 |   |
| Total                  operating expenses                                                                                   |   |                                                             | US$(467,303  | ) |   | US$(516,537 | ) |   | US$(471,420 | ) |   | US$(540,297 | ) |   | US$(609,886 | ) |
|                                                                                                                        |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Income                  from operations*                                                                              |   |                                                             | US$469,173   |   |   | US$264,764 |   |   | US$543,986 |   |   | US$510,291 |   |   | US$342,831 |   |
| *Non-operating                  income (expense)*                                                                      |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                  income (expenses), net                                                                  |   |                                                             | US$80,456    |   |   | US$(140,755 | ) |   | US$(38,000 | ) |   | US$(4,117 | ) |   | US$105,433 |   |
| Exchange                  loss, net                                                                                    |   |                                                             | (135,647     | ) |   | (16,500 | ) |   | (12,218 | ) |   | (15,218 | ) |   | (4,098 | ) |
| Other                  non-operating income (expenses), net                                                            |   |                                                             | (1,394       | ) |   | 711 |   |   | (117 | ) |   | 9,050 |   |   | — |   |
| Total                  non-operating income (expense)                                                             |   |                                                             | US$(56,585   | ) |   | US$(156,544 | ) |   | US$(50,335 | ) |   | US$(10,285 | ) |   | US$101,335 |   |
|                                                                                                                        |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Income                  before income taxes*                                                                          |   |                                                             | US$412,588   |   |   | US$108,220 |   |   | US$493,651 |   |   | US$500,006 |   |   | US$444,166 |   |
| Income                  tax benefit (expenses)                                                                         |   |                                                             | US$(188,502  | ) |   | US$27,990 |   |   | US$(112,139 | ) |   | US$(41,569 | ) |   | US$(44,412 | ) |
| *Income                  before minority interest and equity in income (loss) from                  affiliates*   |   |                                                             | US$224,086   |   |   | US$136,210 |   |   | US$381,512 |   |   | US$458,437 |   |   | US$399,754 |   |
| Minority                  interest                                                                                     |   |                                                             | (1,883       | ) |   | (217 | ) |   | (1,306 | ) |   | (9,622 | ) |   | (9,580 | ) |
| Equity                  in income (loss) from affiliates                                                               |   |                                                             | 389          |   |   | 51 |   |   | — |   |   | (3,096 | ) |   | (34 | ) |
| *Net                  income*                                                                                          |   |                                                             | US$222,592   |   |   | US$136,044 |   |   | US$380,206 |   |   | US$445,719 |   |   | US$390,140 |   |
|                                                                                                                        |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Earnings                  per share**                                                                                     |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  share - basic (1) (3) (6)                                                                      |   |                                                             | US$0.30      |   |   | US$0.18 |   |   | US$0.50 |   |   | US$0.58 |   |   | US$0.53 |   |
| Preferred                  share - basic (1) (3) (6)                                                                   |   |                                                             | 0.33         |   |   | 0.20 |   |   | 0.55 |   |   | 0.64 |   |   | — |   |
| ADS                  - basic (1) (3) (6)                                                                               |   |                                                             | 1.32         |   |   | 0.79 |   |   | 2.18 |   |   | 2.55 |   |   | 2.11 |   |
| Common                  share - diluted (2) (3) (6)                                                                    |   |                                                             | 0.30         |   |   | 0.18 |   |   | 0.49 |   |   | 0.58 |   |   | 0.53 |   |
| Preferred                  share - diluted (2) (3) (6)                                                                 |   |                                                             | 0.33         |   |   | 0.20 |   |   | 0.54 |   |   | 0.63 |   |   | — |   |
| ADS                  - diluted (2) (3) (6)                                                                             |   |                                                             | 1.31         |   |   | 0.78 |   |   | 2.17 |   |   | 2.54 |   |   | 2.10 |   |
| **Dividends                  per share**                                                                                    |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  share (3) (4) (5)                  (6)                                                         |   |                                                             | US$0.173256  |   |   | US$0.088174 |   |   | US$0.239678 |   |   | US$0.260803 |   |   | US$0.212420 |   |
| Preferred                  share (3) (4) (5)                  (6)                                                      |   |                                                             | 0.190578     |   |   | 0.096991 |   |   | 0.263645 |   |   | 0.286880 |   |   | — |   |
| ADS                  (3) (4) (5)                  (6)                                                                  |   |                                                             | 0.762312     |   |   | 0.387964 |   |   | 1.054580 |   |   | 1.147520 |   |   | 0.849680 |   |
| **Weighted                  averaged number of shares outstanding**                                                         |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Common                  share - basic (3) (6)                                                                          |   |                                                             | 242,544      |   |   | 242,544 |   |   | 242,544 |   |   | 242,544 |   |   | 739,904 |   |
| Preferred                  share - basic (3)                  (6)                                                      |   |                                                             | 454,414      |   |   | 471,228 |   |   | 474,994 |   |   | 479,288 |   |   | — |   |
| Common                  share - diluted (3)                  (6)                                                       |   |                                                             | 242,544      |   |   | 242,544 |   |   | 242,544 |   |   | 242,544 |   |   | 742,903 |   |
| Preferred                  share - diluted (3)                  (6)                                                    |   |                                                             | 459,415      |   |   | 474,840 |   |   | 479,217 |   |   | 482,739 |   |   | — |   |
|                                                                                                                        |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Balance                  Sheet Data**                                                                                     |   |                                                             |         |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash                  and cash equivalents                                                                             |   |                                                             | US$656,822   |   |   | US$1,265,820 |   |   | US$963,818 |   |   | US$1,339,159 |   |   | US$1,209,396 |   |
| Temporary                  cash investments                                                                            |   |                                                             | —      |   |   | 4,320 |   |   | 396,958 |   |   | 574,395 |   |   | 555,795 |   |
| Other                  current assets                                                                                  |   |                                                             | 1,856,301    |   |   | 2,076,726 |   |   | 2,514,733 |   |   | 2,701,968 |   |   | 2,994,530 |   |
| Property,                  plant and equipment, net                                                                    |   |                                                             | 436,715      |   |   | 402,663 |   |   | 381,265 |   |   | 388,362 |   |   | 412,244 |   |
| Other                  long-term assets                                                                                |   |                                                             | 1,335,626    |   |   | 2,331,006 |   |   | 1,825,625 |   |   | 1,928,561 |   |   | 2,143,736 |   |
| Total                  assets                                                                                               |   |                                                             | US$4,285,464 |   |   | US$6,080,535 |   |   | US$6,082,399 |   |   | US$6,932,445 |   |   | US$7,315,701 |   |
| Short-term                  loans and financing                                                                        |   |                                                             | 244,526      |   |   | 517,014 |   |   | 513,281 |   |   | 475,305 |   |   | 503,047 |   |
| Other                  current liabilities                                                                             |   |                                                             | 1,397,407    |   |   | 1,929,181 |   |   | 1,802,820 |   |   | 2,179,131 |   |   | 2,515,751 |   |
| Long-term                  loans and financing                                                                         |   |                                                             | 308,110      |   |   | 526,728 |   |   | 825,448 |   |   | 1,078,117 |   |   | 846,104 |   |
| Other                  long-term liabilities                                                                           |   |                                                             | 1,237,015    |   |   | 1,925,776 |   |   | 1,565,539 |   |   | 1,532,863 |   |   | 1,512,604 |   |
| Minority                  interest                                                                                     |   |                                                             | 8,226        |   |   | 12,611 |   |   | 21,443 |   |   | 46,775 |   |   | 63,914 |   |
| Shareholders’                  equity                                                                            |   |                                                             | 1,090,180    |   |   | 1,169,225 |   |   | 1,353,868 |   |   | 1,620,254 |   |   | 1,874,281 |   |
| Total                  liabilities and shareholders’ equity                                                           |   |                                                             | US$4,285,464 |   |   | US$6,080,535 |   |   | US$6,082,399 |   |   | US$6,932,445 |   |   | US$7,315,701 |   |

----

|                                                                 |   | **At                  and for the year ended December 31,**       |       |
|----------------------------------------------------------------------|--------|-------------------------------------------------------------------|------------|
|                                                                 |   | **2002**                                                          |       | **2003** |   | **2004** |   | **2005** |   | **2006** |   |
|                                                                 |   | ***(in                  thousands, except per share /ADS data)*** |       |
| **Other                  Financial Data**                            |   |                                                              |       |   |   | ***Restated(7)*** |   |   |   |   |   |
|                                                                 |   |                                                              |       |   |   |   |   |   |   |   |   |
| Net                  cash provided by (used in) operating activities |   |                                                              | US$575,653 |   |   | US$239,634 |   |   | US$(398,846 | ) |   | US$346,909 |   |   | US$386,933 |   |
| Net                  cash used in investing activities               |   |                                                              | (104,216   | ) |   | (72,667 | ) |   | (59,104 | ) |   | (50,496 | ) |   | (179,518 | ) |
| Net                  cash provided by (used in) financing activities |   |                                                              | (352,435   | ) |   | 403,791 |   |   | 105,220 |   |   | 24,916 |   |   | (395,103 | ) |
| Depreciation                  and amortization                       |   |                                                              | 55,602     |   |   | 58,877 |   |   | 59,685 |   |   | 61,491 |   |   | 63,859 |   |

----

|   | (1)  | Based on              weighted average number of shares outstanding.              See Note              25 to our restated consolidated financial              statements. |
|--------|-----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|
|   | (2) | Based                on weighted average number of shares outstanding and the effects                of                potentially dilutive securities. See Note 25 to our                consolidated financial statements. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|

|   | (3) | Restated                to give effect to the issuance on March 1, 2002, in the form of a                share                dividend, of 0.142106 new shares for each existing                share. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|

|   | (4) | Includes                interest on shareholders’ equity. |
|--------|-----|-----------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|

|   | (5) | Translated                from nominal *reais*                into U.S. dollars at the commercial selling rates in effect on the                last                date of the month in which distributions were approved during the                period.                The dividends to the ADSs were adjusted from the total amount paid                to the                shares multiplied by four. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|

|   | (6) | As                a result of the merger of former Embraer with and into Embraer approved                on                March 31, 2006, each common share and preferred share of former Embraer                was exchanged for one common share of Embraer and each ADS of former                Embraer was exchanged for one ADS of                Embraer. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |
|--------|--------|--------|

|   | (7) | See                  Note 2(b) to the consolidated financial statements included elsewhere                  in                  this annual report on Form 20-F/A for information related to the                  restatement of our consolidated financial                  statements. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                |   | **2002** |     | **2003** |   | **2004**             |   | **2005** |                 | **2006** |   |
|---------------------------------------------------------------------|--------|----------|----------|----------|--------|----------------------|--------|----------|----------------------|----------|--------|
| **Other                Data:**                                      |   |     |     |     |   |                 |   |     |                 |     |   |
| **Aircraft                delivered during period (1):**            |   |     |     |     |   |                 |   |     |                 |     |   |
| **To                the Commercial Aviation Market**                |   |     |     |     |   |                 |   |     |                 |     |   |
| EMB                120 Brasília                           |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | — |   |
| ERJ                145                                         |   |     | 82       |     |   | 57                   |   |     | 87                (5 | )        |   | 46 |   |   | 12 |   |
| ERJ                135                                         |   |     | 3        |     |   | 14                   |   |     | 1                (1  | )        |   | 2 |   |   | — |   |
| ERJ                140                                         |   |     | 36       |     |   | 16                   |   |     | —              |     |   | — |   |   | — |   |
| EMBRAER                170                                     |   |     | —  |     |   | —              |   |     | 46                   |     |   | 46(1 | ) |   | 32(2 | ) |
| EMBRAER                175                                     |   |     | —  |     |   | —              |   |     | —              |     |   | 14 |   |   | 11(1 | ) |
| EMBRAER                190                                     |   |     | —  |     |   | —              |   |     | —              |     |   | 12 |   |   | 40 |   |
| EMBRAER                195                                     |   |     | —  |     |   | —              |   |     | —              |     |   | 12 |   |   | 3 |   |
| **To                the Defense and Government Market**             |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| EMB                120 Brasília                           |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | — |   |
| Legacy                                                         |   |     | 1        |     |   | —              |   |     | —              |     |   | 6 |   |   | — |   |
| EMB                135                                         |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | — |   |
| EMB                145                                         |   |     | 1        |     |   | 1                    |   |     | 1                    |     |   | 1 |   |   | — |   |
| EMBRAER                170                                     |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | 4(1 | ) |
| EMBRAER                190                                     |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | 1 |   |
|    EMB                145 AEW&C/RS/MP       |   |     | 5        |     |   | 3                    |   |     | 6                    |     |   | 1 |   |   | — |   |
| EMB                312 Tucano / AL-X/ Super Tucano             |   |     | —  |     |   | —              |   |     | 7                    |     |   | 24 |   |   | 14 |   |
| AM-X                                                           |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | — |   |
| **To                the Executive Aviation Market**                 |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| Legacy                600                                      |   |     | 8        |     |   | 11                (2 | )      |     | 13                   |     |   | 14 |   |   | 27 |   |
| EMB                135                                         |   |     | —  |     |   | 2                    |   |     | —              |     |   | — |   |   | — |   |
| **To                the General Aviation Market**                   |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| Light                Propeller Aircraft                        |   |     | 25       |     |   | 46                   |   |     | 70                   |     |   | 31 |   |   | 10 |   |
| Total                delivered                                 |   |     | 161      |     |   | 150                  |   |     | 231                  |     |   | 197 |   |   | 154 |   |
| **Aircraft                in backlog at the end of period:**        |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| **In                the Commercial Aviation Market (2)**            |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| EMB                120 Brasília                           |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | 1 |   |
| ERJ                145                                         |   |     | 109      |     |   | 144                  |   |     | 66                   |     |   | 10 |   |   | 53 |   |
| ERJ                135                                         |   |     | 31       |     |   | 17                   |   |     | 17                   |     |   | 15 |   |   | 1 |   |
| ERJ                140                                         |   |     | 116      |     |   | 20                   |   |     | 20                   |     |   | 20 |   |   | — |   |
| EMBRAER                170                                     |   |     | 88       |     |   | 120                  |   |     | 112                  |     |   | 104 |   |   | 29 |   |
| EMBRAER                175                                          |   |     | —  |     |   | —              |   |     | 15                   |     |   | 8 |   |   | 74 |   |
| EMBRAER                190                                     |   |     | —  |     |   | 110                  |   |     | 155                  |     |   | 178 |   |   | 264 |   |
| EMBRAER                195                                     |   |     | 30       |     |   | 15                   |   |     | 15                   |     |   | 29 |   |   | 43 |   |
| **In                the Defense and Government Market**             |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| EMB                145 AEW&C/RS/MP                         |   |     | 10       |     |   | 7                    |   |     | 1                    |     |   | — |   |   | — |   |
| EMB                312 Tucano/EMB 314/EPSuper                Tucano |   |     | 86       |     |   | 76                   |   |     | 69                   |     |   | 93 |   |   | 80 |   |
| EMB                145                                         |   |     | —  |     |   | 1                    |   |     | —              |     |   | — |   |   | — |   |
| EMB                135 .                                       |   |     | —  |     |   | —              |   |     | —              |     |   | — |   |   | — |   |
| Legacy                600 .                                    |   |     | —  |     |   | 5                    |   |     | 5                    |     |   | — |   |   | 1 |   |
| EMBRAER                170/ EMBRAER 190.                       |   |     | —  |     |   | —              |   |     | —              |     |   | 3 |   |   | — |   |
| **In                the Executive Aviation Market**                 |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| Legacy                600/Phenom/Lineage                       |   |     | 58       |     |   | 27                   |   |     | 4                    |     |   | 15 |   |   | 384 |   |
| **In                the General Aviation Market**                   |   |     |     |     |   |                 |   |     |                 |     |   |   |   |   |   |   |
| Light                Propeller Aircraft                        |   |     | —  |     |   | 11                   |   |     | 25                   |     |   | 6 |   |   | 0 |   |
| Total                backlog (in aircraft)                     |   |     | 528      |     |   | 553                  |   |     | 504                  |     |   | 481 |   |   | 930 |   |
| Total                backlog (in millions)                     |   |     | US$9,034 |     |   | US$10,591            |   |     | US$10,097            |     |   | US$10,383 |   |   | US$14,806 |   |

----

| (1) | Deliveries                identified by parentheses were aircraft delivered under operating                leases. |
|-----|--------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|
| (2) | Since                December 31, 2006, we have received five additional firm orders for                our                EMBRAER 170/190 jet family and six options for the EMBRAER 190 aircraft                were converted into firm orders for that                aircraft. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Exchange      Rates**

----

|   | · | the                commercial rate exchange market,                and |
|--------|--------|------------------------------------------------------------------------|

|   | · | the                floating rate exchange market. |
|--------|--------|---------------------------------------------------|

*real*
*real*
*real*
*real*

*reais*

|                                       |   | **Exchange                Rate of*****Reais*****to US$1.00** |   |
|--------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                       |   | **Low**                                                      |   | **High** |   | **Average                (1)** |   | **Period-end** |   |
| **Year                ended December 31,** |   |                                                         |   |   |   |   |   |   |   |
| 2002                                       |   |                                                         | 2.2709 |   |   | 3.9552 |   |   | 2.9982 |   |   | 3.5333 |   |
| 2003                                       |   |                                                         | 2.8219 |   |   | 3.6623 |   |   | 3.0600 |   |   | 2.8892 |   |
| 2004                .                      |   |                                                         | 2.6544 |   |   | 3.2051 |   |   | 2.9171 |   |   | 2.6544 |   |
| 2005                                       |   |                                                         | 2.1633 |   |   | 2.7621 |   |   | 2.4125 |   |   | 2.3407 |   |
| 2006                                       |   |                                                         | 2.0586 |   |   | 2.3711 |   |   | 2.1771 |   |   | 2.1380 |   |
| 2007                (through April 18)     |   |                                                         | 2.0231 |   |   | 2.1556 |   |   | 2.0886 |   |   | 2.0365 |   |

|                                             |   | **Exchange                Rate of*****Reais*****to US$1.00** |   |
|--------------------------------------------------|--------|--------------------------------------------------------------|--------|
|                                             |   | **Low**                                                      |   | **High** |   | **Average(1)** |   | **Period-end** |   |
| **Month                ended**                   |   |                                                         |   |   |   |   |   |   |   |
| October                31, 2006                  |   |                                                         | 2.1331 |   |   | 2.1676 |   |   | 2.1504 |   |   | 2.1430 |   |
| November                30, 2006                 |   |                                                         | 2.1353 |   |   | 2.1870 |   |   | 2.1612 |   |   | 2.1668 |   |
| December                31, 2006                 |   |                                                         | 2.1380 |   |   | 2.1693 |   |   | 2.1537 |   |   | 2.1380 |   |
| January                31, 2007                  |   |                                                         | 2.1247 |   |   | 2.1556 |   |   | 2.1402 |   |   | 2.1247 |   |
| February                28, 2007                 |   |                                                         | 2.0766 |   |   | 2.1182 |   |   | 2.0974 |   |   | 2.1182 |   |
| March                31, 2007                    |   |                                                         | 2.0504 |   |   | 2.1388 |   |   | 2.0813 |   |   | 2.0504 |   |
| April                30, 2007 (through April 18) |   |                                                         | 2.0231 |   |   | 2.0478 |   |   | 2.0355 |   |   | 2.0365 |   |

----

*real*
*real*

----

| **3B.** | **Capitalization                and                Indebtedness** |
|---------|-------------------------------------------------------------------|

| **3C.** | **Reasons                for the Offer and Use of                Proceeds** |
|---------|-----------------------------------------------------------------------------|

| **3D.** | **Risk                Factors**** ** |
|---------|-------------------------------------------|

**Risks      Relating to Embraer**

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

----

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

*Commercial      aircraft*

*Defense      aircraft*

*Key      suppliers*

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

----

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

|   | · | failure                of a customer to receive financing, when required, with respect to                any                aircraft at the scheduled delivery date, in which case the customer                can                cancel the order for the particular aircraft to be delivered or terminate                the contract with respect to all undelivered aircraft;                or |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | production                rate shortfalls. |
|--------|--------|--------------------------------------------|

**Our      aircraft sales are subject to trade-in options and financial and residual value      guarantees that may require us to make significant cash disbursements in the      future.**

** **

----

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

*Programa      de Financiamento às Exportações*

**Brazilian      government budgetary constraints could reduce amounts available to our customers      under government-sponsored financing programs. **

*exim*
*exim*
*exim*
*exim*

----

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

**We      may have to refund cash contributions after the development of the EMBRAER      170/190 jet family, of the Phenom 100, and of the Phenom 300, if certification      for each of these aircraft is not obtained. **

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

----

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

**Risks      Relating to the Commercial Airline Industry**

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

**We      are subject to stringent certification requirements and regulation, which may      prevent or delay our obtaining certification in a timely      manner.**

----

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

**Risks      Relating to Brazil**

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

|   | · | interest                rates; |
|--------|--------|--------------------------------|

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

|   | · | currency                fluctuations; |
|--------|--------|---------------------------------------|

|   | · | inflation; |
|--------|--------|------------|

|   | · | liquidity                of domestic capital and lending                markets; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | tax                policies; and |
|--------|--------|----------------------------------|

|   | · | other                political, diplomatic, social and economic developments in or affecting                Brazil. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|

----

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

*Índice      Geral de Preços - Mercado*

*real*

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

*real*
*real*

*real*
*real*
*real*
*real*

*real*
*real*
*real*

**Developments      and perceptions of risk in other countries, especially emerging market      countries, may adversely affect the trading price of Brazilian securities,      including our common shares and ADSs.**

----

**Risks      Relating to our Common Shares and ADSs**
** **

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

**The      Brazilian government has veto power over, among other things, change of control,      change of corporate purpose and creation and alteration of defense programs,      and      its interests could conflict with the interests of the holders of our common      shares or ADSs.**

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

----

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

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

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

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

----

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

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

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

*reais.      *
*reais      *

----

| **ITEM                4.** | **INFORMATION                ON THE                COMPANY** |
|----------------------------|--------------------------------------------------------------|

| **4A.** | **History                and Development of the                Company** |
|---------|--------------------------------------------------------------------------|

**General**

**Corporate      Reorganization**

|  | · | Embraer                (formerly known as Rio Han Empreendimentos e Participações S.A. and                renamed Embraer-Empresa Brasileira de Aeronáutica S.A.) succeeded to all                rights and obligations of former                Embraer, |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | each                common share of former Embraer was exchanged for one common share                of                Embraer, |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | each                preferred share of former Embraer was exchanged for one common share                of                Embraer, |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------|

|  | · | each                American Depositary Share, or ADS, of former Embraer, each of which                represented four preferred shares of former Embraer, was exchanged                for one                ADS of Embraer, each of which represents four common shares of Embraer,                and |
|--|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | the                golden share, a special class of common shares of former Embraer                held by                the Federative Republic of Brazil, was exchanged for a special class                of                common shares of Embraer. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Strategic      Alliance and Growth Opportunities**

***Strategic      Alliance with European Aerospace and Defense Group***

----

***Joint      Ventur***
***es      and Acquisitions***

**Research      and Development Costs and Capital Expenditures**
** **

*real      *
*real*
*real*

----

| **4B.** | **Business                Overview** |
|---------|--------------------------------------|

**Our      Strengths**

*Leading      Commercial Aircraft Manufacturer with a Global Customer Base*

*Aircraft      Design; Cost and Operating Efficiency. *

*Strategic      Risk-Sharing Partners. *

----

*Benefits      of Funded Development of Defense Products. *

*Flexibility      of Production to Meet Market Demands*

*Experienced      and Highly Skilled Workforce*

**Business      Strategies**

*Continuing      to Market our Commercial Aircraft*

*Strengthening      our Position in the Executive Jet Market.*

*Continue      to Pursue Market Niche Opportunities in the Defense and Government Market.      *

*Continuing      Focus on Customer Satisfaction and Support. *

----

*Pursuing      Strategic Growth Opportunities and Enhancing Relationships with Significant      World Players in the Aerospace Industry. *

**Commercial      Aviation Business**

***Products***

***ERJ      145 Regional Jet Family***

----

***EMBRAER      170/190 Jet Family***

|   | · | *Performance.*All                four jets in the EMBRAER 170/190 jet family have a maximum cruising                speed                of Mach .82. The EMBRAER 170 and the EMBRAER 175 have maximum fully                loaded                ranges of 1,700 and 1,600 nautical miles, respectively, and each                is                available in LR versions, with maximum fully loaded ranges of 2,000                and                1,800 nautical miles, respectively. The EMBRAER 190 and EMBRAER 195                have                maximum fully loaded ranges of 1,700 and 1,500 nautical miles,                respectively, and will be available in LR versions with maximum fully                loaded ranges of 2,300 and 2,100 nautical miles, respectively. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | *Ground                servicing.*The                under-wing engine design and the existence of four doors, two in                the front                and two in the back, provide for enhanced accessibility and efficiency                of                ground services. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

***EMB      120 Brasília***

***Customers***

***Sales      and Marketing***

----

***Production,      New Orders and Options***

***Competition***

**30-60-seat      category**

|   | · | the                ATR-42, manufactured by ATR G.I.E., a joint project of Italy’s Alenia                Aerospaziale and EADS; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                DHC-8-200 and the DHC-8-300, manufactured by De Havilland,                Bombardier. |
|--------|--------|----------------------------------------------------------------------------------------------------------|

----

**61-90-seat      and 91-120-seat categories**

*We      currently compete with the following aircraft in these      categories:*

|   | · | De                Havilland’s DHC-8-400, a 72-seat turboprop, produced by                Bombardier; |
|--------|--------|------------------------------------------------------------------------------------------------------------|

|   | · | ATR’s                ATR72, a 72-seat turboprop; |
|--------|--------|--------------------------------------------------------|

|   | · | Bombardier’s                CRJ-700, a 70-seat regional jet, which was first delivered in January                2001, and its CRJ-900 aircraft, which seats 85 passengers and began                deliveries in January 2003; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Bombardier’s                CR-1000, an 100-seat regional jet launched in February 2007, with                first                deliveries scheduled to take place in the second half of                2009; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Airbus’                A318, a 100-plus-seat jet, which was certified by the EASA in December                2005; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------|

|   | · | Boeing’s                737-600, a 100-plus-seat jet. |
|--------|--------|-------------------------------------------------------------|

*We      expect to compete with the following aircraft in these      categories:*

|   | · | Sukhoi’s                RRJ, a 65-, 75- and 95-seat regional jet, which is scheduled to enter                into                service at the end of 2008; and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | AVIC                I’s ARJ21, a 90- to 110-seat regional jet, which is scheduled to enter                into service in 2009. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------|

**Defense      and Government Business**

***Products***

**Tucano      Family; AL-X**

*Aeronave      Leve de Ataque*
*Financiadora      de Estudos e Projetos*
*Sistema      de Vigilância da Amazônia*

----

***EMB      145 AEW&C; EMB 145 RS; EMB 145 MP***

***AM-X;      AMX-T***

***Government      Transport Aircraft***

----

***Other      Projects and Activities***

***Competition***

**Executive      Aviation Business**

----

**Other      Related Businesses**

***After-Sales      Customer Support; Spare Parts Business***

|   | · | field                support; |
|--------|--------|-------------------------------|

|   | · | material                support, which includes spare parts sales and                distribution; |
|--------|--------|----------------------------------------------------------------------------------------------------|

|   | · | product                warranty and repair administration; |
|--------|--------|------------------------------------------------------------|

|   | · | technical                support, which includes engineering support, maintenance engineering                and                technical publications; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | training. |
|--------|--------|-----------|

----

***Subcontracting***

***General      Aviation Aircraft***

**Aircraft      Operating Lease Activities **

----

**Markets**

|                                                  |   |   | **Year                    ended December 31,** |   |
|-------------------------------------------------------|--------|--------|------------------------------------------------|--------|
|                                                  |   |   | **2004**                                       |   |   | **2005** |   |   | **2006** |   |
|                                                  |   |   | *(in                    millions of dollars)*  |   |
|                                                  |   |   | ***Restated******(1)***                        |   |
| **Commercial                    Aviation**            |   |   |                                           |   |   |   |   |   |   |   |
| Americas                    (excluding Brazil)   |   | US$    | 2,073.7                                        |   | US$ | 2,176.4 |   | US$ | 1,407.0 |   |
| Europe                                           |   |   | 296.9                                          |   |   | 247.9 |   |   | 430.1 |   |
| Brazil                                           |   |   | —                                        |   |   | — |   |   | — |   |
| Other                                            |   |   | 93.2                                           |   |   | 207.7 |   |   | 516.1 |   |
| Total                                                 |   | US$    | 2,463.8                                        |   | US$ | 2,632.0 |   | US$ | 2,353.2 |   |
|                                                  |   |   |                                           |   |   |   |   |   |   |   |
| **Executive                    Aviation**             |   |   |                                           |   |   |   |   |   |   |   |
| Americas                    (excluding Brazil)   |   |   | 204.9                                          |   |   | 155.8 |   |   | 304.8 |   |
| Europe                                           |   |   | —                                        |   |   | 100.3 |   |   | 161.3 |   |
| Other                                            |   |   | 40.8                                           |   |   | 22.0 |   |   | 116.0 |   |
| Total                                                 |   | US$    | 245.7                                          |   | US$ | 278.1 |   | US$ | 582.1 |   |
|                                                  |   |   |                                           |   |   |   |   |   |   |   |
| **Defense                    and Government**         |   |   |                                           |   |   |   |   |   |   |   |
| Americas                    (excluding Brazil)   |   |   | 92.1                                           |   |   | 33.9 |   |   | 142.1 |   |
| Europe                                           |   |   | 20.9                                           |   |   | 8.3 |   |   | 13.4 |   |
| Brazil                                           |   |   | 246.1                                          |   |   | 230.3 |   |   | 71.2 |   |
| Other                                            |   |   | 6.6                                            |   |   | 151.2 |   |   | — |   |
| Total                                                 |   | US$    | 365.7                                          |   | US$ | 423.7 |   | US$ | 226.7 |   |
|                                                  |   |   |                                           |   |   |   |   |   |   |   |
| **Other                    Related Businesses**  |   |   |                                           |   |   |   |   |   |   |   |
| Americas                    (excluding Brazil)   |   |   | 157.4                                          |   |   | 179.3 |   |   | 272.9 |   |
| Europe                                           |   |   | 54.4                                           |   |   | 202.9 |   |   | 237.0 |   |
| Brazil                                           |   |   | 51.3                                           |   |   | 72.8 |   |   | 75.2 |   |
| Other                                            |   |   | 13.8                                           |   |   | 0.7 |   |   | 12.4 |   |
| Total                                            |   | US$    | 276.9                                          |   | US$ | 455.7 |   | US$ | 597.5 |   |

**Joint        Ventures**

----

**Suppliers        and Components; Risk-Sharing Arrangements**

***ERJ        145 Regional Jet Family***

*Risk-sharing        partners. *

|   | · | Grupo                  Auxiliar Metalúrgico S.A., or Gamesa, a Spanish company owned by Iberdrola                  S.A., a European power utility, and Banco Bilbao Vizcaya, a large                  Spanish                  financial institution, supplies the wings, engine nacelles and                  main                  landing-gear doors; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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

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

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

----

*Other        major suppliers. *

***EMBRAER        170/190 Jet Family***

|   | · | General                  Electric, which supplies CF34-8E/l0E turbofan engines and designs,                  develops and manufactures the engine                  nacelles; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Honeywell,                  which supplies the avionics                  systems; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | Liebherr,                  which is responsible for designing, developing and manufacturing                  the                  landing gear assemblies; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Kawasaki,                  a Japanese company, which develops and manufactures the aircraft                  wing                  stub, engine pylon, fixed landing and trailing edge assemblies,                  flaps,                  spoilers and the wing’s flight control                  surfaces; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Hamilton                  Sundstrand, a U.S. company and a wholly owned subsidiary of United                  Technologies Corp., which develops and produces the aircraft’s tail core,                  auxiliary power unit, electrical systems and the air management                  system; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Sonaca,                  which is responsible for the aircraft’s wing                  slats; |
|--------|--------|-----------------------------------------------------------------------------------------------------|

|   | · | Gamesa,                  which is responsible for the rear fuselage and the vertical and                  horizontal                  tail surfaces; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Latecoere,                  a French company, which manufactures two of the three fuselage                  sections; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | C&D                  Aerospace, which designs, develops and manufactures the aircraft                  interior;                  and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Grimes                  Aerospace Company, a U.S. company and a wholly owned subsidiary                  of                  AlliedSignal Inc., which develops and manufactures the exterior                  and                  cockpit lighting. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Executive        Jets***

***Cash        Contributions for the development of the EMBRAER 170/190 jet family and our        Phenom 100 and Phenom 300 aircraft***

**Customer        Service and Product Support**

----

**Aircraft        Financing Arrangements**
** **

*exim*
*exim*

**Intellectual        Property**

----

**Government        Regulation and Aircraft Certification**

*Departamento        de Aviação Civil*
*Centro        Técnico Aeroespacial*
*Agência        Nacional de Aviação Civil*

----

| **4C.** | **Organizational                    Structure**** ** |
|---------|-----------------------------------------------------------|

| **4D.** | **Property,                  Plants and                  Equipment** |
|---------|----------------------------------------------------------------------|

| **Location**                                                                                           |   | **Purpose**                                                                                                              |   | **Approximate****square****footage** |   | **Owned/****Leased** |   | **Lease****Expiration** |
|--------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|--------|----------------------|--------|-------------------------|
| São                    José dos Campos, SP, Brazil                                      |   | Headquarters,                    principalmanufacturing                    facilityand                    support center |   | 5,902,102                            |   | Owned                |   | —                 |
| São                    José dos Campos, SP, Brazil(Eugênio                    de Mello) |   |  Manufacturing                    facility                                                                          |   |  3,658,884                      |   |  Owned          |   |  —           |
| Botucatu,                    SP, Brazil                                                           |   | Manufacturingfacility                                                                                                    |   | 222,000                              |   | Owned                |   | —                 |
| Harbin,                    China                                                                  |   | Manufacturing                    facility                                                                                |   | 258,067                              |   | Owned(1)             |   | —                 |
| Gavião                    Peixoto, SP, Brazil                                                |   | Testing                    andmanufacturing                    facilities                                                |   | 191,648,512                          |   | (2)                  |   | —                 |
| São                    Paulo, SP, Brazil                                                     |   | Administrative                    offices                                                                                |   | 5,245                                |   | Leased               |   | 2007                    |
| Ft.                    Lauderdale, Florida, U.S.A.                                                |   | Support                    center                                                                                        |   | 91,500                               |   | Leased               |   | 2020                    |
| Nashville,                    Tennessee, U.S.A.                                                   |   | Aircraft                    maintenance and support center                                                               |   | 316,128                              |   | Leased               |   | 20182028                |
| Alverca,                    Portugal(3)                                                           |   | Aircraft                    maintenance and support center                                                               |   | 417,000                              |   | Leased               |   | 2035                    |
| Le                    Bourget, France                                                             |   | Support                    center                                                                                        |   | 33,500                               |   | Leased               |   | 2008                    |
| Villepinte,                    France                                                             |   | Representative                    offices                                                                                |   | 70,202                               |   | Leased               |   | 2014                    |
| Beijing,                    China                                                                 |   | Representative                    offices                                                                                |   | 3,444                                |   | Leased               |   | 2007                    |
| Singapore                                                                                         |   | Representative                    offices                                                                                |   | 2,303                                |   | Leased               |   | 2009                    |

----

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

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

| (3) | We                  acquired this facility in March                  2005. |
|-----|----------------------------------------------------------------------------|

**Production**

----

**Environmental        Matters**
** **

***OGMA***

**Insurance**
** **

----

| **ITEM                  4A.** | **UNRESOLVED                    STAFF                    COMMENTS** |
|-------------------------------|---------------------------------------------------------------------|

| **ITEM                  5.** | **OPERATING                  AND FINANCIAL REVIEW AND                  PROSPECTS** |
|------------------------------|------------------------------------------------------------------------------------|

| **5A.** | **Operating                  Results** |
|---------|----------------------------------------|

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

*The        following discussion is based largely upon our current expectations about        future        events and trends affecting our business, actual results for our industry        and        performance could differ substantially. See “Introduction —*
*Special        Note Regarding Forward-Looking Statements.”*

***Commercial        Aircraft***

----

|   | · | the                  30-60 seat segment has reached maturity, but will continue to play                  an                  important role in the North American and European air transportation                  systems and will develop in markets such as China, Mexico and Russia                  that                  have strong needs for regional                  aviation; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  61-90 seat segment will continue to explore the natural growth                  opportunities of regional airlines on high demand 50-seat regional                  jet                  routes, in order to sustain revenue growth and market share. In                  addition,                  it will help airlines to replace aging aircraft and will right-size                  aircraft capacity to market demand with improved service levels;                  and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | the                  91-120 seat segment will expand with more airlines matching aircraft                  capacity to market demand, through the replacement of aging aircraft,                  right-sizing of narrow body routes with excess capacity and low-cost                  carrier expansion into mid-size markets. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Executive        Jets***

*Expected        Market Trends*

----

*Our        Executive Jets*

**Brazilian        Economic Environment**

----

*real        *
* *
* *

*real*

*Certificados        de Depósito Interbancário*

*real*

----

*real        *

**Effects        of Inflation and Currency Exchange Fluctuations**

*Real*
*Fundação        Getulio Vargas*
*real*

|                                                                           |   | **2002** |   | **2003** |   | **2004** |   | **2005** |   | **2006** |   |
|--------------------------------------------------------------------------------|--------|----------|--------|----------|--------|----------|--------|----------|--------|----------|--------|
| Inflation                  (General Market  Price                  Index) |   |     | 25.3   | %        |   | 8.7      | %      |     | 12.4   | %        |   | 1.2 | % |   | 3.8 |   |
| Devaluation                  (appreciation) (R$ vs.US$)                        |   |     | 52.3   | %        |   | (18.2    | )%     |     | (8.1   | )%       |   | (11.8 | )% |   | (8.7 | )% |

*reais*
*real*
*real*
*real*
*real*
*real*

**Critical        Accounting Estimates **

***Sales        and Other Operating Revenues***

| (i) | the                      delivered item(s) has value to the client on a stand-alone                      basis; |
|-----|-----------------------------------------------------------------------------------------------------------------|

| (ii) | there                      is objective and reliable evidence of the fair value of the                      undelivered                      item(s); and |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii) | if                      the arrangement includes a general right of return relative                      to the                      delivered item(s), delivery or performance of the undelivered                      item(s) is                      considered probable and substantially in our control. |
|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

***Product        Warranties***

***Guarantees        and Trade-In Rights***

----

**Overview**

***Restatement          of our Financial Statements***

|   | · | Product                    warranty expenses: In accordance with SFAS 5, “*Accounting for                    Contingencies,*” we accrue a liability for the obligations associated                    with product warranties, which is recorded on the aircraft delivery                    date                    and estimated based on historical experience. We had previously                    recorded                    our expenses related to product warranties in the consolidated                    statements                    of income under “Selling Expenses” because we understood that the product                    warranties were associated with our sales efforts. As a result                    of the                    reassessment and modification discussed above, we have concluded                    that                    expenses related to product warranties should be recorded in                    the                    consolidated statement of income under “Cost of Sales and                    Services.” |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Revenue                    arrangements with multiple deliverables: We previously recognized                    revenue                    for all deliverables when the “risks and rewards” of the aircraft were                    transferred to the buyer (at delivery). Upon delivery of the                    aircraft, we                    also accrued a liability for the other services and products                    sold together                    with the aircraft (i.e., other deliverables) that would be delivered                    after                    the aircraft delivery date and we included the costs associated                    with such                    deliverables in “Selling Expenses,”                    because we                    considered such deliverables to be important elements of our                    sales                    efforts. |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*Revenue            arrangements with multiple deliverables*

*Accounting            by a Customer (including a reseller) for Certain Consideration Received            from            vendors as revenue,*

----

|                                                             |   |   | Year                      ended December 31,2004 |   |
|------------------------------------------------------------------|--------|--------|--------------------------------------------------|--------|
|                                                             |   |   | As                      Previously Reported      |   |   | Effect                      of Adjustments |   |   | As                      Restated |   |
|                                                             |   |   | (US$                      thousands)             |   |
| Income                      Statement Data                       |   |   |                                             |   |   |   |   |   |   |   |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Net                      Sales                                   |   |   | 3,440,533                                        |   |   | (88,390 | ) |   | 3,352,143 |   |
| Cost                      of Sales and Services                  |   |   | (2,267,330                                       | )      |   | (69,407 | ) |   | (2,336,737 | ) |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Gross                      Profit                                |   |   | 1,173,203                                        |   |   | (157,797 | ) |   | 1,015,406 |   |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Selling                      Expenses                            |   |   | (342,883                                         | )      |   | 157,797 |   |   | (185,086 | ) |
| R&D,                      G&A, Employee PS and Other     |   |   | (286,334                                         | )      |   | - |   |   | (286,334 | ) |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Income                      from Operations                      |   |   | 543,986                                          |   |   | - |   |   | 543,986 |   |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Interest                      Income ( Expenses), net            |   |   | (38,000                                          | )      |   | - |   |   | (38,000 | ) |
| Others                                                           |   |   | (12,335                                          | )      |   | - |   |   | (12,335 | ) |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Income                      before Income Taxes                  |   |   | 493,651                                          |   |   | - |   |   | 493,651 |   |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Income                      Tax (Expense)                        |   |   | (112,139                                         | )      |   | - |   |   | (112,139 | ) |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Income                      Before Minority Interest and Equity  |   |   | 381,512                                          |   |   | - |   |   | 381,512 |   |
| Loss                      from Affiliates                        |   |   |                                             |   |   |   |   |   |   |   |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Equity                      in loss from affiliates and Minority |   |   | (1,306                                           | )      |   | - |   |   | (1,306 | ) |
| Interest                                                         |   |   |                                             |   |   |   |   |   |   |   |
|                                                             |   |   |                                             |   |   |   |   |   |   |   |
| Net                      Income                                  |   |   | 380,206                                          |   |   | - |   |   | 380,206 |   |

----

|                                                           |   | Year                    ended December 31,2005 |       |
|----------------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                           |   | As                    Previously Reported      |       | Effect                    of Adjustments |   | As                    Restated |   |
|                                                           |   | (US$                    thousands)             |       |
| Income                    Statement Data                       |   |                                           |       |   |   |   |   |
| Net                    Sales                                   |   |                                           | 3,829,907  |   |   | (40,412 | ) |   | 3,789,495 |   |
| Cost                    of Sales and Services                  |   |                                           | (2,671,816 | ) |   | (67,091 | ) |   | (2,738,907 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Gross                    Profit                                |   |                                           | 1,158,091  |   |   | (107,503 | ) |   | 1,050,588 |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Selling                    Expenses                            |   |                                           | (269,747   | ) |   | 109,948 |   |   | (159,799 | ) |
| R&D,                    G&A, Employee PS and Other     |   |                                           | (380,498   | ) |   | - |   |   | (380,498 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    from Operations                      |   |                                           | 507,846    |   |   | 2,445 |   |   | 510,291 |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Interest                    Income ( Expenses), net            |   |                                           | (1,672     | ) |   | (2,445 | ) |   | (4,117 | ) |
| Others                                                         |   |                                           | (6,168     | ) |   | - |   |   | (6,168 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    before Income Taxes                  |   |                                           | 500,006    |   |   | - |   |   | 500,006 |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    Tax (expense)                        |   |                                           | (41,569    | ) |   | - |   |   | (41,569 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    Before Minority Interest and Equity  |   |                                           | 458,437    |   |   | - |   |   | 458,437 |   |
| Loss                    from Affiliates                        |   |                                           |       |   |   |   |   |   |   |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Equity                    in loss from affiliates and Minority |   |                                           | (12,718    | ) |   | - |   |   | (12,718 | ) |
| Interest                                                       |   |                                           |       |   |   |   |   |   |   |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Net                    Income                                  |   |                                           | 445,719    |   |   | - |   |   | 445,719 |   |

----

|                                                           |   | Year                    ended December 31,2006 |       |
|----------------------------------------------------------------|--------|------------------------------------------------|------------|
|                                                           |   | As                    Previously Reported      |       | Effect                    of Adjustments |   | AsRestated |   |
|                                                           |   | (US$                    thousands)             |       |
| Income                    Statement Data                       |   |                                           |       |   |   |   |   |
| Net                    Sales                                   |   |                                           | 3,807,403  |   |   | (47,884 | ) |   | 3,759,519 |   |
| Cost                    of Sales and Services                  |   |                                           | (2,736,234 | ) |   | (70,568 | ) |   | (2,806,802 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Gross                    Profit                                |   |                                           | 1,071,169  |   |   | (118,452 | ) |   | 952,717 |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Selling                    Expenses                            |   |                                           | (374,140   | ) |   | 153,544 |   |   | (220,596 | ) |
| R&D,                    G&A, Employee PS and O ther    |   |                                           | (389,290   | ) |   | - |   |   | (389,290 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    from O perations                     |   |                                           | 307,739    |   |   | 35,092 |   |   | 342,831 |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Interest                    Income ( Expenses), net            |   |                                           | 140,525    |   |   | (35,092 | ) |   | 105,433 |   |
| Others                                                         |   |                                           | (4,098     | ) |   | - |   |   | (4,098 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    before Income Taxes                  |   |                                           | 444,166    |   |   | - |   |   | 444,166 |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    Tax (expense)                        |   |                                           | (44,412    | ) |   | - |   |   | (44,412 | ) |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Income                    Before Minority Interest and Equity  |   |                                           | 399,754    |   |   | - |   |   | 399,754 |   |
| Loss                    from Affiliates                        |   |                                           |       |   |   |   |   |   |   |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Equity                    in loss from affiliates and Minority |   |                                           | (9,614     | ) |   | - |   |   | (9,614 | ) |
| Interest                                                       |   |                                           |       |   |   |   |   |   |   |   |
|                                                           |   |                                           |       |   |   |   |   |   |   |   |
| Net                    Income                                  |   |                                           | 390,140    |   |   | - |   |   | 390,140 |   |

----

|                                                                                                            |   | Year                      ended December 31,2004 |     |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|----------|
|                                                                                                            |   | As                      Previously Reported      |     | Effect                      of Adjustments |   | As                      Restated |   |
|                                                                                                            |   |  (US$                      thousands)       |     |
| Cash                      Flow Data                                                                             |   |                                             |     |   |   |   |   |
|                                                                                                            |   |                                             |     |   |   |   |   |
| Net                      cash provided by (used in) operating activities                                        |   |                                             |     |   |   |   |   |   |   |   |
| Trade                      accounts receivable and customer and commercial financing ,                      net |   |                                             | (266,652 | ) |   | (657 | ) |   | (267,309 | ) |
| Other                      assets                                                                               |   |                                             | (21,259  | ) |   | 657 |   |   | (20,602 | ) |

|                                                                                                            |   | Year                      ended December 31,2005 |     |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|----------|
|                                                                                                            |   | As                      Previously Reported      |     | Effect                      of Adjustments |   | As                      Restated |   |
|                                                                                                            |   | (US$                      thousands)             |     |
| Cash                      Flow Data                                                                             |   |                                             |     |   |   |   |   |
|                                                                                                            |   |                                             |     |   |   |   |   |
| Net                      cash provided by (used in) operating activities                                        |   |                                             |     |   |   |   |   |
| Trade                      accounts receivable and customer and commercial financing ,                      net |   |                                             | (241,606 | ) |   | (883 | ) |   | (242,489 | ) |
| Other                      assets                                                                               |   |                                             | (120,079 | ) |   | 883 |   |   | (119,196 | ) |

|                                                                                                            |   | Year                      ended December 31,2006 |    |
|-----------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                                                            |   | As                      Previously Reported      |    | Effect                      of Adjustments |   | As                      Restated |   |
|                                                                                                            |   | (US$                      thousands)             |    |
| Cash                      Flow Data                                                                             |   |                                             |    |   |   |   |   |
| Net                      cash provided by (used in) operating activities                                        |   |                                             |    |   |   |   |   |
| Trade                      accounts receivable and customer and commercial financing ,                      net |   |                                             | 186,612 |   |   | (890 | ) |   | 185,722 |   |
| Other                      assets                                                                               |   |                                             | 33,482  |   |   | 890 |   |   | 34,372 |   |

----

|                                                     |   | Year                      ended December 31,2004 |    |
|----------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                     |   | As                      Previously Reported      |    | Effect                      of Adjustments |   | As                      Restated |   |
|                                                     |   | (US$                      thousands)             |    |
| Balance                      Sheet Data                  |   |                                             |    |   |   |   |   |
|                                                     |   |                                             |    |   |   |   |   |
| CURRENT                      ASSETS                      |   |                                             |    |   |   |   |   |
| Trade                      accounts receivable, net      |   |                                             | 566,127 |   |   | 3,952 |   |   | 570,079 |   |
| Other                      assets                        |   |                                             | 108,459 |   |   | (3,952 | ) |   | 104,507 |   |
|                                                     |   |                                             |    |   |   |   |   |   |   |   |
| CURRENT                      LIABILITIES                 |   |                                             |    |   |   |   |   |   |   |   |
| Other                      payables, accrued liabilities |   |                                             | 310,269 |   |   | - |   |   | 310,269 |   |

|                                                     |   | Year                      ended December 31,2005 |    |
|----------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                     |   | As                      Previously Reported      |    | Effect                      of Adjustments |   | As                      Restated |   |
|                                                     |   | (US$                      thousands)             |    |
| Balance                      Sheet Data                  |   |                                             |    |   |   |   |   |
|                                                     |   |                                             |    |   |   |   |   |
| CURRENT                      ASSETS                      |   |                                             |    |   |   |   |   |
| Trade                      accounts receivable, net      |   |                                             | 445,520 |   |   | 4,835 |   |   | 450,355 |   |
| Other                      assets                        |   |                                             | 175,433 |   |   | (4,835 | ) |   | 170,598 |   |
|                                                     |   |                                             |    |   |   |   |   |   |   |   |
| CURRENT                      LIABILITIES                 |   |                                             |    |   |   |   |   |   |   |   |
| Other                      payables, accrued liabilities |   |                                             | 405,965 |   |   | - |   |   | 405,965 |   |

|                                                     |   | Year                      ended December 31,2006 |    |
|----------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                     |   | As                      Previously Reported      |    | Effect                      of Adjustments |   | As                      Restated |   |
|                                                     |   | (US$                      thousands)             |    |
| Balance                      Sheet Data                  |   |                                             |    |   |   |   |   |
|                                                     |   |                                             |    |   |   |   |   |
| CURRENT                      ASSETS                      |   |                                             |    |   |   |   |   |
| Trade                      accounts receivable, net      |   |                                             | 272,153 |   |   | 5,725 |   |   | 277,878 |   |
| Other                      assets                        |   |                                             | 153,369 |   |   | (5,725 | ) |   | 147,644 |   |
|                                                     |   |                                             |    |   |   |   |   |   |   |   |
| CURRENT                      LIABILITIES                 |   |                                             |    |   |   |   |   |   |   |   |
| Other                      payables, accrued liabilities |   |                                             | 433,291 |   |   | - |   |   | 433,291 |   |

----

***Operating        Data***

|                                                             |   | **2004** |                   | **2005** |   | **2006**               |   |
|------------------------------------------------------------------|--------|----------|------------------------|----------|--------|------------------------|--------|
| **Commercial                  Aviation**                         |   |     |                   |     |   |                   |   |
| Deliveries                  (1)                                  |   |     |                   |     |   |                   |   |
| ERJ                  145                                         |   |     | 87                  (5 | )        |   | 46                     |   |   | 12 |   |
| ERJ                  135                                         |   |     | 1                  (1  | )        |   | 2                      |   |   | — |   |
| ERJ                  140                                         |   |     | —                |     |   | —                |   |   | — |   |
| EMBRAER                  170                                     |   |     | 46                     |     |   | 46                  (1 | )      |   | 32                  (2 | ) |
| EMBRAER                  175                                     |   |     | —                |     |   | 14                     |   |   | 11 |   |
| EMBRAER                  190                                     |   |     | —                |     |   | 12                     |   |   | 40 |   |
| EMBRAER                  195                                     |   |     | —                |     |   | —                |   |   | 3 |   |
| **Defense                  and Government**                  (2) |   |     |                   |     |   |                   |   |   |   |   |
| Deliveries                                                       |   |     | 1                      |     |   | 7                      |   |   | 5(1 | ) |
| **Executive                  Aviation**                          |   |     |                   |     |   |                   |   |   |   |   |
| Deliveries                  (1)                                  |   |     | 13                     |     |   | 14                     |   |   | 27 |   |
| **Other                  Operating Information**                 |   |     |                   |     |   |                   |   |   |   |   |
| Total                  backlog (in millions) (3)                 |   | US$      | 10,097                 |     | US$    | 10,383                 |   | US$ | 14,806 |   |

----

| (1) | Deliveries                  identified by parentheses are aircraft delivered under operating                  leases. |
|-----|-----------------------------------------------------------------------------------------------------------------------|

| (2) | Includes                  only aircraft delivered to state-owned airlines and for government                  transportation. |
|-----|-------------------------------------------------------------------------------------------------------------------------------|

| (3) | Since                  December 31, 2006, we have received five additional firm orders                  for our                  EMBRAER 170/190 jet family and six options for the EMBRAER 190                  aircraft                  were converted into firm orders. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Net        Sales***

*reais*

----

***Cost        of Sales and Services***

|   | · | *Material*—These                  costs are primarily U.S. dollar-denominated. Substantially all                  of our                  materials costs are covered by contracts with our suppliers. Prices                  under                  these contracts are generally adjusted based on an escalation formula                  which reflects, in part, inflation in the United                  States. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | *Labor*—These                  costs are primarily*real*-denominated. |
|--------|--------|-----------------------------------------------------------------------------|

|   | · | *Depreciation*—We                  depreciate our property, plant and equipment over their useful                  lives,                  ranging from five to 48 years, on a straight-line basis. On average,                  our                  property, plant and equipment is depreciated over 16 years. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Recent        Developments**

----

**Results        of Operations**

**Summary        Financial Data by Business**

|                                              |   | **Operating                    Income**        |     |
|---------------------------------------------------|--------|------------------------------------------------|----------|
|                                              |   | **Year                    ended December 31,** |     |
|                                              |   | **2004**                                       |     | **2005** |   | **2006** |   |
|                                              |   | *(in                    millions of dollars)*  |     |
| Net                    sales:                     |   |                                           |     | *Restated(1)* |   |   |   |
| Commercial                    Aviation            |   | US$                                            | 2,463.7  |   | US$ | 2,631.9 |   | US$ | 2,353.2 |   |
| Defense                    and Government         |   |                                           | 365.8    |   |   | 423.8 |   |   | 226.7 |   |
| Executive                    Aviation             |   |                                           | 245.7    |   |   | 278.0 |   |   | 582.1 |   |
| Other                    related businesses       |   |                                           | 276.9    |   |   | 455.6 |   |   | 597.5 |   |
|                                              |   |                                           | 3,352.1  |   |   | 3,789.5 |   |   | 3,759.5 |   |
| Cost                    of sales and services:    |   |                                           |     |   |   |   |   |   |   |   |
| Commercial                    Aviation            |   |                                           | (1,647.8 | ) |   | (1,892.4 | ) |   | (1,780.5 | ) |
| Defense                    and Government         |   |                                           | (293.3   | ) |   | (322.0 | ) |   | (174.5 | ) |
| Executive                    Aviation             |   |                                           | (186.4   | ) |   | (194.0 | ) |   | (398.9 | ) |
| Other                    related businesses       |   |                                           | (209.2   | ) |   | (330.5 | ) |   | (452.8 | ) |
|                                              |   |                                           | (2,336.7 | ) |   | (2,738.9 | ) |   | (2,806.8 | ) |
|                                                   |   |                                           |     |   |   | *Restated* |   |   |   |   |
| Gross                    profit:                  |   |                                           |     |   |   |   |   |   |   |   |
| Commercial                    Aviation            |   |                                           | 815.9    |   |   | 739.6 |   |   | 572.7 |   |
| Defense                    and Government         |   |                                           | 72.4     |   |   | 101.8 |   |   | 52.2 |   |
| Executive                    Aviation             |   |                                           | 59.3     |   |   | 84.0 |   |   | 183.1 |   |
| Other                    related businesses       |   |                                           | 67.7     |   |   | 125.2 |   |   | 144.7 |   |
|                                              |   |                                           | 1,015.4  |   |   | 1,050.6 |   |   | 952.7 |   |
| Operating                    expenses:            |   |                                           |     |   |   |   |   |   |   |   |
| Commercial                    Aviation            |   |                                           | (190.3   | ) |   | (315.7 | ) |   | (303.4 | ) |
| Defense                    and Government         |   |                                           | (59.8    | ) |   | (50.3 | ) |   | (38.0 | ) |
| Executive                    Aviation             |   |                                           | (28.6    | ) |   | (44.5 | ) |   | (130.4 | ) |
| Other                    related businesses       |   |                                           | (36.5    | ) |   | (32.3 | ) |   | (25.6 | ) |
| Unallocated                    corporate expenses |   |                                           | (156.3   | ) |   | (97.5 | ) |   | (112.5 | ) |
|                                              |   |                                           | (471.4   | ) |   | (540.3 | ) |   | (609.9 | ) |
|                                              |   |                                           |     |   |   |   |   |   |   |   |
| Income                    from operations    |   | US$                                            | 544.0    |   | US$ | 510.3 |   | US$ | 342.8 |   |

|                                                                                                                  |   | **Year                      ended December 31,** |                                                                      |
|-----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------|---------------------------------------------------------------------------|
|                                                                                                                  |   |  **2004**                                   |                                                                      |  **2005** |   |  **2006** |   |
|                                                                                                                  |   |                                             | *(in                      millions of dollars, except percentages)*  |   |
|                                                                                                                  |   |                                             | *Restated(1)*                                                        |   |
|                                                                                                                  |   |                                             |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                      sales                                                                                        |   | US$                                              | 3,352.1                                                                   |   |   | 100.0 | % | US$ | 3,789.5 |   |   | 100.0 | % | US$ | 3,759.5 |   |   | 100.0 | % |
| Cost                      of sales and services                                                                       |   |                                             | (2,336.7                                                                  | ) |   | 69.7 |   |   | (2,738.9 | ) |   | 72.3 |   |   | (2,806.8 | ) |   | 74.7 |   |
| Gross                      profit                                                                                     |   |                                             | 1,015.4                                                                   |   |   | 30.3 |   |   | 1,050.6 |   |   | 27.7 |   |   | 952.7 |   |   | 25.3 |   |
| Operating                      expense                                                                                |   |                                             |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Selling                      expenses                                                                                 |   |                                             | (185.1                                                                    | ) |   | 5.6 |   |   | (159.8 | ) |   | 4.2 |   |   | (220.6 | ) |   | 5.9 |   |
| Research                      and development                                                                         |   |                                             | (44.5                                                                     | ) |   | 1.3 |   |   | (93.2 | ) |   | 2.5 |   |   | (112.7 | ) |   | 3.0 |   |
| General                      and administrative expenses                                                              |   |                                             | (139.4                                                                    | ) |   | 4.2 |   |   | (205.2 | ) |   | 5.4 |   |   | (235.5 | ) |   | 6.3 |   |
| Employee                      profit sharing                                                                          |   |                                             | (61.2                                                                     | ) |   | 1.8 |   |   | (56.1 | ) |   | 1.5 |   |   | (42.7 | ) |   | 1.1 |   |
| Other                      operating expenses, net                                                                    |   |                                             | (41.3                                                                     | ) |   | 1.2 |   |   | (26.1 | ) |   | 0.7 |   |   | 1.7 |   |   | — |   |
| Income                      from operations                                                                           |   |                                             | 544.0                                                                     |   |   | 16.2 |   |   | 510.3 |   |   | 13.5 |   |   | 342.8 |   |   | 9.1 |   |
|                                                                                                                  |   |                                             |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating                      income (expense)                                                                   |   |                                             |                                                                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest                      income (expenses), net                                                                  |   |                                             | (38.0                                                                     | ) |   | 1.1 |   |   | (4.1 | ) |   | 0.1 |   |   | 105.4 |   |   | 2.8 |   |
| Exchange                      loss, net                                                                               |   |                                             | (12.2                                                                     | ) |   | 0.4 |   |   | (15.2 | ) |   | 0.4 |   |   | (4.1 | ) |   | 0.1 |   |
| Other                      non-operating income (expenses), net                                                       |   |                                             | (0.1                                                                      | ) |   | — |   |   | 9.1 |   |   | 0.2 |   |   | — |   |   | — |   |
| Income                      before income taxes                                                                       |   |                                             | 493.7                                                                     |   |   | 14.7 |   |   | 500.0 |   |   | 13.2 |   |   | 444.2 |   |   | 11.8 |   |
| Income                      tax benefit (expenses)                                                                    |   |                                             | (112.1                                                                    | ) |   | 3.3 |   |   | (41.6 | ) |   | 1.1 |   |   | (44.4 | ) |   | 1.2 |   |
| Income                      before minority interest and equity in income (loss) from                      affiliates |   |                                             | 381.5                                                                     |   |   | 11.4 |   |   | 458.4 |   |   | 12.1 |   |   | 399.8 |   |   | 10.6 |   |
| Minority                      interest                                                                                |   |                                             | (1.3                                                                      | ) |   | — |   |   | (9.6 | ) |   | 0.3 |   |   | (9.6 | ) |   | 0.3 |   |
| Equity                      in income (loss) from affiliates                                                     |   |                                             | —                                                                   |   |   | — |   |   | (3.1 | ) |   | 0.1 |   |   | — |   |   | — |   |
| Net                      income                                                                                       |   | US$                                              | 380.2                                                                     |   |   | 11.3 | % | US$ | 445.7 |   |   | 11.8 | % | US$ | 390.1 |   |   | 10.4 | % |

----

***2006        Compared with 2005***

*Net          sales*

*** ***

*Cost          of sales and services.*
*real          *
*reais*

*Gross          profit.*
*real          *

*Operating          expenses. *

----

*real*
*real*
*reais*

*Financial          income (expense), net. *

*Foreign        exchange income (loss), net*

*Income        tax benefit (expense). *
* *

*Net        income. *

***2005        Compared with 2004***

*Net          sales. *

----

*Cost            of sales and services.*
*real            *

*Gross            profit.*
*real            *

*Operating            expenses. *

*real*
*real*
*reais*

*Interest          income (expenses), net. *

*Exchange        loss, net*

*Income        tax benefit (expenses). *

----

*Net          income. *

| **5B.** | **Liquidity                  and Capital Resources**** ** |
|---------|----------------------------------------------------------------|

**Working        Capital and Net Cash Provided by Operating Activities **

**Net        Cash Used in Investing Activities**

**Capital        Expenditures**

----

**Cash        Provided by (Used in) Financing Activities and Total Debt**

**Credit        Facilities and Lines of Credit**
** **

***Long-term        facilities***

----

----

*Financiadora        de Estudos e Projetos*

***Short-term        facilities***

**Capital        Contributions and Issuances of Capital Stock**

----

**Recently        Issued Accounting Pronouncements **

| **5C.** | **Research                  and Development**** ** |
|---------|---------------------------------------------------------|

----

*real*
*real*
*real*

| **5D.** | **Trend                  Information** |
|---------|----------------------------------------|

| **Commercial                  Aviation**     |   | **Firm                  Orders** |   | **Options** |   | **Deliveries** |   | **Firm                  Order Backlog** |   |
|----------------------------------------------|--------|----------------------------------|--------|-------------|--------|----------------|--------|-----------------------------------------|--------|
| EMB                  120 Brasília  |   |                             | 352    |        |   | —        |   |                                    | 352    |   |   | — |   |
| ERJ                  135                |   |                             | 108    |        |   | —        |   |                                    | 108    |   |   | — |   |
| ERJ                  140                |   |                             | 74     |        |   | —        |   |                                    | 74     |   |   | — |   |
| ERJ                  145                |   |                             | 732    |        |   | 132            |   |                                    | 679    |   |   | 53 |   |
| EMBRAER                  170                 |   |                             | 160    |        |   | 130            |   |                                    | 130    |   |   | 30 |   |
| EMBRAER                  175                 |   |                             | 99     |        |   | 136            |   |                                    | 29     |   |   | 70 |   |
| EMBRAER                  190            |   |                             | 327    |        |   | 241            |   |                                    | 65     |   |   | 262 |   |
| EMBRAER                  195            |   |                             | 44     |        |   | 51             |   |                                    | 5      |   |   | 39 |   |

----

| **ERJ                  135:**                        |   |                             |    |          |   |                                       |   |
|------------------------------------------------------|--------|----------------------------------|---------|---------------|--------|--------------------------------------------|--------|
| **Customer**                                         |   | **Firm                  Orders** |    | **Delivered** |   | **Firm                  Order****Backlog** |   |
| American                  Eagle (USA)                |   |                             | 40      |          |   | 40                                         |   |   | — |   |
| British                  Midland (UK)                |   |                             | 3       |          |   | 3                                          |   |   | — |   |
| City                  Airline AB (Sweden)            |   |                             | 2       |          |   | 2                                          |   |   | — |   |
| ExpressJet                  (USA)                    |   |                             | 30      |          |   | 30                                         |   |   | — |   |
| Flandair                  (France)                   |   |                             | 3       |          |   | 3                                          |   |   | — |   |
| Jet                  Magic (Ireland)                 |   |                             | 1       |          |   | 1                                          |   |   | — |   |
| Luxair                  (Luxembourg)                 |   |                             | 2       |          |   | 2                                          |   |   | — |   |
| Pan                  Européenne (France)        |   |                             | 1       |          |   | 1                                          |   |   | — |   |
| Proteus                  (France)                    |   |                             | 3       |          |   | 3                                          |   |   | — |   |
| Regional                  Airlines (France)          |   |                             | 3       |          |   | 3                                          |   |   | — |   |
| Republic                  Airways (USA)              |   |                             | 15      |          |   | 15                                         |   |   | — |   |
| South                  Africa Airlink (South Africa) |   |                             | 5       |          |   | 5                                          |   |   | — |   |
| **TOTAL**                                            |   |                             | **108** |          |   | **108**                                    |   |   | — |   |

| **ERJ                  140:**           |   |                             |   |          |   |                                    |   |
|-----------------------------------------|--------|----------------------------------|--------|---------------|--------|-----------------------------------------|--------|
| **Customer**                            |   | **Firm                  Orders** |   | **Delivered** |   | **Firm                  Order Backlog** |   |
| American                  Eagle (USA)   |   |                             | 59     |          |   | 59                                      |   |   | — |   |
| Republic                  Airways (USA) |   |                             | 15     |          |   | 15                                      |   |   | — |   |
| **TOTAL**                               |   |                             | **74** |          |   | **74**                                  |   |   | — |   |

| **ERJ                  145:**                   |   |                             |    |          |   |                                    |   |
|-------------------------------------------------|--------|----------------------------------|---------|---------------|--------|-----------------------------------------|--------|
| **Customer**                                    |   | **Firm                  Orders** |    | **Delivered** |   | **Firm                  Order Backlog** |   |
| Aerolitoral                  (Mexico)           |   |                             | 5       |          |   | 5                                       |   |   | — |   |
| Air                  Caraibes (Guadalupe)       |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| Alitalia                  (Italy)               |   |                             | 14      |          |   | 14                                      |   |   | — |   |
| American                  Eagle (USA)           |   |                             | 118     |          |   | 118                                     |   |   | — |   |
| Axon                  (Greece)                  |   |                             | 3       |          |   | 3                                       |   |   | — |   |
| British                  Midland (UK)           |   |                             | 9       |          |   | 9                                       |   |   | — |   |
| British                  Regional Airlines (UK) |   |                             | 23      |          |   | 23                                      |   |   | — |   |
| Brymon                  (UK)                    |   |                             | 7       |          |   | 7                                       |   |   | — |   |
| China                  Southern (China)         |   |                             | 6       |          |   | 6                                       |   |   | — |   |
| China                  Eastern Jiangsu (China)  |   |                             | 5       |          |   | 5                                       |   |   | — |   |
| China                  Eastern Wuhan (China)    |   |                             | 5       |          |   | 2                                       |   |   | 3 |   |
| Cirrus                  (Germany)               |   |                             | 1       |          |   | 1                                       |   |   | — |   |
| ExpressJet                  (USA)               |   |                             | 245     |          |   | 245                                     |   |   | — |   |
| ERA                  (Spain)                    |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| Flandre                  Air (France)           |   |                             | 5       |          |   | 5                                       |   |   | — |   |
| GECAS                  (PB Air - Thailand)      |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| NHA                  Group (China)              |   |                             | 50      |          |   | —                                 |   |   | 50 |   |
| KLM                  EXEL (Holand)              |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| Lot                  Polish (Poland)            |   |                             | 14      |          |   | 14                                      |   |   | — |   |
| Luxair                  (Luxembourg)            |   |                             | 9       |          |   | 9                                       |   |   | — |   |
| Mesa                  (USA)                     |   |                             | 36      |          |   | 36                                      |   |   | — |   |
| Portugalia                  (Portugal)          |   |                             | 8       |          |   | 8                                       |   |   | — |   |
| Proteus                  (France)               |   |                             | 8       |          |   | 8                                       |   |   | — |   |
| Regional                  (France)              |   |                             | 15      |          |   | 15                                      |   |   | — |   |
| Republic                  Airways (USA)         |   |                             | 60      |          |   | 60                                      |   |   | — |   |
| Rheintalflug                  (Austria)         |   |                             | 3       |          |   | 3                                       |   |   | — |   |
| Rio                  Sul (Brazil)               |   |                             | 16      |          |   | 16                                      |   |   | — |   |
| Satena                  (Colombia)              |   |                             | 3       |          |   | 3                                       |   |   | — |   |
| Sichuan                  (China)                |   |                             | 5       |          |   | 5                                       |   |   | — |   |
| Skyways                  (Sweden)               |   |                             | 4       |          |   | 4                                       |   |   | — |   |
| Swiss                  (Switzerland)            |   |                             | 25      |          |   | 25                                      |   |   | — |   |
| Transtates                  (USA)               |   |                             | 22      |          |   | 22                                      |   |   | — |   |
| **TOTAL**                                       |   |                             | **732** |          |   | **679**                                 |   |   | **53** |   |

----

| **EMBRAER                  170:**                      |   |                             |    |          |   |                                    |   |
|--------------------------------------------------------|--------|----------------------------------|---------|---------------|--------|-----------------------------------------|--------|
| **Customer**                                           |   | **Firm                  Orders** |    | **Delivered** |   | **Firm                  Order Backlog** |   |
| Alitalia                  (Italy)                      |   |                             | 6       |          |   | 6                                       |   |   | — |   |
| Cirrus                  (Germany)                      |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| Egypt                  Air                             |   |                             | 6       |          |   | —                                 |   |   | 6 |   |
| Finnair                  (Finland)                     |   |                             | 10      |          |   | 10                                      |   |   | — |   |
| Gecas                  (USA)                           |   |                             | 9       |          |   | 8                                       |   |   | 1 |   |
| Lot                  Polish (Poland)                   |   |                             | 6       |          |   | 6                                       |   |   | — |   |
| Paramount                  (India)                     |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| Republic                  Airline (USA)                |   |                             | 48      |          |   | 48                                      |   |   | — |   |
| Satena                  (Colombia)                     |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| Saudi                  Arabian Airlines (Saudi Arabia) |   |                             | 15      |          |   | 15                                      |   |   | — |   |
| Sirte                  Oil (Libya)                     |   |                             | 1       |          |   | 1                                       |   |   | — |   |
| South                  Africa Airlink (South Africa)   |   |                             | 2       |          |   | —                                 |   |   | 2 |   |
| Swiss                  (Switzerland)                   |   |                             | 15      |          |   | —                                 |   |   | 15 |   |
| TAME                  (Ecuador)                        |   |                             | 2       |          |   | 2                                       |   |   | — |   |
| US                  Airways (USA)                      |   |                             | 28      |          |   | 28                                      |   |   | — |   |
| Virgin                  Blue (Australia)               |   |                             | 6       |          |   | —                                 |   |   | 6 |   |
| **TOTAL**                                              |   |                             | **160** |          |   | **130**                                 |   |   | **30** |   |

| **EMBRAER                  175:**          |   |                             |   |          |   |                                    |   |
|--------------------------------------------|--------|----------------------------------|--------|---------------|--------|-----------------------------------------|--------|
| **Customer**                               |   | **Firm                  Orders** |   | **Delivered** |   | **Firm                  Order Backlog** |   |
| Air                  Canada (Canada)       |   |                             | 15     |          |   | 15                                      |   |   | — |   |
| Air                  Caraibes (Guadeloupe) |   |                             | 1      |          |   | 1                                       |   |   | — |   |
| Gecas                  (USA)               |   |                             | 5      |          |   | 5                                       |   |   | — |   |
| Lot                  Polish (Poland)       |   |                             | 4      |          |   | 4                                       |   |   | — |   |
| Northwest                  Airlines (USA)  |   |                             | 36     |          |   | —                                 |   |   | 36 |   |
| Republic                  Airlines (USA)   |   |                             | 30     |          |   | 4                                       |   |   | 26 |   |
| Undisclosed                                |   |                             | 8      |          |   | —                                 |   |   | 8 |   |
| **TOTAL**                                  |   |                             | **99** |          |   | **29**                                  |   |   | **70** |   |

----

| **EMBRAER                  190:**          |   |                             |    |          |   |                                    |   |
|--------------------------------------------|--------|----------------------------------|---------|---------------|--------|-----------------------------------------|--------|
| **Customer**                               |   | **Firm                  Orders** |    | **Delivered** |   | **Firm                  Order Backlog** |   |
| Air                  Canada (Canada)       |   |                             | 45      |          |   | 22                                      |   |   | 23 |   |
| Air                  Caraibes (Guadeloupe) |   |                             | 1       |          |   | —                                 |   |   | 1 |   |
| AeroRepublica                  (Colombia)  |   |                             | 5       |          |   | 4                                       |   |   | 1 |   |
| Copa                  (Panama)             |   |                             | 15      |          |   | 6                                       |   |   | 9 |   |
| Finnair                  (Finland)         |   |                             | 10      |          |   | 2                                       |   |   | 8 |   |
| Gecas                  (USA)               |   |                             | 17      |          |   | —                                 |   |   | 17 |   |
| Hainan                  (China)            |   |                             | 50      |          |   | —                                 |   |   | 50 |   |
| JetBlue                  (USA)             |   |                             | 101     |          |   | 25                                      |   |   | 76 |   |
| M1                  Travel (Switzerland)   |   |                             | 5       |          |   | —                                 |   |   | 5 |   |
| Regional                  (France)         |   |                             | 6       |          |   | 2                                       |   |   | 4 |   |
| TAME                  (Ecuador)            |   |                             | 1       |          |   | 1                                       |   |   | — |   |
| US                  Airways (USA)          |   |                             | 57      |          |   | 3                                       |   |   | 54 |   |
| Virgin                  Blue (Australia)   |   |                             | 14      |          |   | —                                 |   |   | 14 |   |
| **TOTAL**                                  |   |                             | **327** |          |   | **65**                                  |   |   | **262** |   |

| **EMBRAER                  195:**         |   |                             |   |          |   |                                    |   |
|-------------------------------------------|--------|----------------------------------|--------|---------------|--------|-----------------------------------------|--------|
| **Customer**                              |   | **Firm                  Orders** |   | **Delivered** |   | **Firm                  Order Backlog** |   |
| Alpi                  Eagles (Italy)      |   |                             | 5      |          |   | —                                 |   |   | 5 |   |
| Gecas                  (USA)              |   |                             | 6      |          |   | 2                                       |   |   | 4 |   |
| Flybe                  (UK)               |   |                             | 14     |          |   | 3                                       |   |   | 11 |   |
| Royal                  Jordanian (Jordan) |   |                             | 4      |          |   | —                                 |   |   | 4 |   |
| Swiss                  (Switzerland)      |   |                             | 15     |          |   | —                                 |   |   | 15 |   |
| **TOTAL**                                 |   |                             | **44** |          |   | 5                                       |   |   | **39** |   |

| **5E.** | **Off-Balance                  Sheet                  Arrangements** |
|---------|----------------------------------------------------------------------|

**Guarantees**

----

| **Description**                                                                             |   | **At                  December 31, 2005**  |      | **At                  December 31, 2006** |   |
|---------------------------------------------------------------------------------------------|--------|--------------------------------------------|-----------|-------------------------------------------|--------|
|                                                                                        |   | **(in                  thousands of US$)** |      |
| Maximum                  financial guarantees                                               |   |                                       | 1,768,030 |                                      |   | 1,741,559 |   |
| Maximum                  residual value guarantees                                          |   |                                       | 878,249   |                                      |   | 930,002 |   |
| Mutually                  exclusive exposure (1)                                            |   |                                       | (415,460  | )                                         |   | (433,112 | ) |
| Provisions                  and liabilities recorded                                        |   |                                       | (54,011   | )                                         |   | (116,402 | ) |
|                                                                                        |   |                                       |      |                                      |   |   |   |
| Off-balance                  sheet exposure                                                 |   |                                       | 2,176,808 |                                      |   | 2,122,047 |   |
| Estimated                  proceeds from performance guarantees and underlying assets  |   |                                       | 2,127,208 |                                      |   | 2,177,379 |   |

----

| (1) | In                  the event both guarantees were issued for the same underlying asset,                  the                  residual value guarantees can only be exercised if the financial                  guarantees have expired without having been triggered and, therefore,                  their distinct effects have not been combined to calculate the                  maximum                  exposure. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Trade-in        Obligations**

**Financial        and Residual Value Guarantees**

----

** **

----

| **5F.** | **Tabular                  Disclosure of Contractual                  Obligations** |
|---------|-------------------------------------------------------------------------------------|

| **Contractual                  Obligations** |   | **Total** |    | **Less                  than****1                  year** |   | **1                  - 3 years** |   | **3                  - 5 years** |    | **More                  than****5                  years** |   |
|----------------------------------------------|--------|-----------|---------|-----------------------------------------------------------|--------|----------------------------------|--------|----------------------------------|---------|------------------------------------------------------------|--------|
| Loans                  and Interest          |   | US$       | 1,759.3 |                                                      | US$    | 448.6                            |   | US$                              | 575.4   |                                                       | US$    | 165.8 |   | US$ | 569.5 |   |
| Pension                  Fund                |   |      | 107.6   |                                                      |   | 15.3                             |   |                             | 20.5    |                                                       |   | 20.5 |   |   | 56.3 |   |
| Capital                  lease obligations   |   |      | 7.1     |                                                      |   | 2.8                              |   |                             | 2.5     |                                                       |   | 1.0 |   |   | 0.8 |   |
| Operating                  leases            |   |      | 17.5    |                                                      |   | 3.0                              |   |                             | 3.3     |                                                       |   | 1.6 |   |   | 9.6 |   |
| Purchase                  obligations        |   |      | 917.6   |                                                      |   | 917.6                            |   |                             | -       |                                                       |   | - |   |   | - |   |
| Other                  long-term liabilities |   |      | 1,696.0 |                                                      |   | 348.9                            |   |                             | 706.2   |                                                       |   | 246.6 |   |   | 389.4 |   |
| Total                                        |   | US$       | 4,505.1 |                                                      | US$    | 1,741.1                          |   | US$                              | 1,307.9 |                                                       | US$    | 435.5 |   | US$ | 1,020.6 |   |

| **ITEM                  6.** | **DIRECTORS,                  SENIOR MANAGEMENT AND                  EMPLOYEES** |
|------------------------------|----------------------------------------------------------------------------------|

| **6A.** | **Directors                  and Senior                  Management** |
|---------|-----------------------------------------------------------------------|

*        Conselho de Administração*
*        Diretoria*
*Conselho        Fiscal*

**Board        of Directors**

----

*Novo        Mercado*
*Novo        Mercado*
*Termo        de Anuência dos Administradores*

| **Name**                                           |   | **Age** |   | **Position** |   | **Year                  First Elected**                                                                        |   |
|----------------------------------------------------|--------|---------|--------|--------------|--------|----------------------------------------------------------------------------------------------------------------|--------|
| Maurício                  Novis Botelho       |   |    | 64     |         |   | President                  and Chief Executive Officer and Chairman of the Board of                  Directors |   |   | 2000 |   |
| Vitor                  Sarquis Hallack             |   |    | 54     |         |   | Member                  of the Board of Directors                                                              |   |   | 1995 |   |
| José                  Reinaldo Magalhães |   |    | 51     |         |   | Member                  of the Board of Directors                                                              |   |   | 2006 |   |
| Wilson                  Carlos Duarte Delfino      |   |    | 60     |         |   | Member                  of the Board of Directors                                                              |   |   | 2004 |   |
| Neimar                  Dieguez Barreiro           |   |    | 62     |         |   | Member                  of the Board of Directors                                                              |   |   | 2004 |   |
| Boris                  Tabacof                     |   |    | 78     |         |   | Member                  of the Board of Directors                                                              |   |   | 2006 |   |
| Eduardo                  Salomão Neto         |   |    | 43     |         |   | Member                  of the Board of Directors                                                              |   |   | 2006 |   |
| Hermann                  Wever                     |   |    | 70     |         |   | Member                  of the Board of Directors                                                              |   |   | 2006 |   |
| Samir                  Zraick                 |   |    | 66     |         |   | Member                  of the Board of Directors                                                              |   |   | 2006 |   |
| Paulo                  Cesar de Souza Lucas        |   |    | 47     |         |   | Member                  of the Board of Directors                                                              |   |   | 1999 |   |
| Claudemir                  Marques de Almeida      |   |    | 54     |         |   | Member                  of the Board of Directors                                                              |   |   | 2004 |   |

*Maurício        Novis Botelho. *
* *

*Vitor        Sarquis Hallack*

*José        Reinaldo Magalhães*

----

*Wilson        Carlos Duarte Delfino*

*Neimar        Dieguez Barreiro.*

*Boris        Tabacof.*

*Eduardo        Salomão Neto*

*Hermann        Wever. *

*Samir        Zraick*

----

*Paulo        Cesar de Souza Lucas. *

*Claudemir        Marques de Almeida.*

**Executive        Officers**
** **

*Novo        Mercado*
*Novo        Mercado*
*Termo        de Anuência dos Administradores*

----

| **Name**                                                 |   | **Age** |   | **Position** |   | **Year                  First****Elected**                                                                  |   |
|----------------------------------------------------------|--------|---------|--------|--------------|--------|-------------------------------------------------------------------------------------------------------------|--------|
| Maurício                  Novis Botelho        |   |    | 64     |         |   | President                  and Chief Executive Officer                                                      |   |   | 1995 |   |
| Antonio                  Luiz Pizarro Manso         |   |    | 62     |         |   | Executive                  Vice-President Corporate and Chief Financial Officer                             |   |   | 1995 |   |
| Satoshi                  Yokota                     |   |    | 66     |         |   | Executive                  Vice-President—Technology                  Development and Advanced Design |   |   | 1997 |   |
| Luis                  Carlos Affonso                |   |    | 46     |         |   | Executive                  Vice-President—Executive                  Aviation                         |   |   | 2006 |   |
| Frederico                  Pinheiro Fleury Curado   |   |    | 45     |         |   | Executive                  Vice-President—Airline                  Market                             |   |   | 1995 |   |
| Luiz                  Carlos Siqueira Aguiar        |   |    | 44     |         |   | Executive                  Vice-President—Defense                  Market and Governments             |   |   | 2005 |   |
| Horácio                  Aragonés Forjaz  |   |    | 55     |         |   | Executive                  Vice-President—Corporate                  Communications                   |   |   | 1998 |   |
| Artur                  Aparecido V. Coutinho        |   |    | 58     |         |   | Executive                  Vice-President—Procurement                  and Industrial Operations      |   |   | 2005 |   |

*Mauricio        Novis Botelho*

*Antonio        Luiz Pizarro Manso*

*Satoshi        Yokota*

*Luis        Carlos Affonso*

*Frederico        Pinheiro Fleury Curado*

*Luiz        Carlos Siqueira Aguiar*

*Horácio        Aragonés Forjaz*

----

*Artur        Aparecido V. Coutinho*
* *

| **6B.** | **Compensation** |
|---------|------------------|

**Stock        Option **
**Plan**

**Profit        Sharing Plan**

----

| **6C.** | **Board                  Practices** |
|---------|--------------------------------------|

**Conselho        Fiscal **

|   | · | be                  responsible for the appointment, retention, compensation and oversight                  of                  the external auditors (including the resolution of disagreements                  between                  management and the external auditors regarding financial                  reporting); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | · | be                  responsible for establishing procedures for the receipt, retention                  and                  treatment of complaints regarding accounting, internal accounting                  controls                  or auditing matters, and procedures for the confidential, anonymous                  submission by employees of concerns regarding questionable accounting                  or                  auditing matters; |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | have                  the authority to engage independent counsel and other advisors                  as it                  determines necessary to carry out its duties;                  and |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | receive                  appropriate funding from the company for payment of compensation                  to the                  external auditors, for any advisors and ordinary administrative                  expenses. |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Novo        Mercado*
*Novo        Mercado*
*Termo        de Anuência do Conselho Fiscal*

----

| **Name**                                                |   | **Age** |   | **Position** |   | **Year                  First Elected** |   |
|---------------------------------------------------------|--------|---------|--------|--------------|--------|-----------------------------------------|--------|
| Jorge                  Khalil Miski                     |   |    | 47     |         |   | Effective                  member       |   |   | 2004 |   |
| Maria                  da Salete Medeiros               |   |    | 56     |         |   | Alternate                               |   |   | 2005 |   |
| Geraldo                  Humberto de Araujo (1)         |   |    | 55     |         |   | Effective                  member       |   |   | 2004 |   |
| Tarcísio                  Luiz Silva Fontenele (1) |   |    | 44     |         |   | Alternate                               |   |   | 2001 |   |
| José                  Mauro Laxe Vilela (2)        |   |    | 59     |         |   | Effective                  member       |   |   | 2003 |   |
| Alberto                  Carlos Monteiro dos Anjos (2)  |   |    | 44     |         |   | Alternate                               |   |   | 2003 |   |
| Taiki                  Hirashima                        |   |    | 66     |         |   | Effective                  member       |   |   | 2004 |   |
| Guillermo                  Oscar Braunbeck              |   |    | 34     |         |   | Alternate                               |   |   | 2005 |   |
| Rolf                  Von Paraski (3)                   |   |    | 55     |         |   | Effective                  member       |   |   | 2006 |   |
| José                  Roberto Gerbasi de Andrade   |   |    | 57     |         |   | Alternate                               |   |   | 2006 |   |

----

**Advisory        and Executive Committee**

| **6D.** | **Employees** |
|---------|---------------|

|                                                 |   | **At                  December 31,** |   |
|------------------------------------------------------|--------|--------------------------------------|--------|
|                                                 |   | **2004**                             |   | **2005** |   | **2006** |   |
| Production                  Process                  |   |                                 | 7,857  |   |   | 8,058 |   |   | 9,157 |   |
| Research                  and Development            |   |                                 | 3,179  |   |   | 3,279 |   |   | 3,627 |   |
| Customer                  Support                    |   |                                 | 1,074  |   |   | 2,697 |   |   | 2,808 |   |
| Administrative                  - Production Support |   |                                 | 879    |   |   | 1,045 |   |   | 1,472 |   |
| Administrative                  - Corporate          |   |                                 | 1,669  |   |   | 1,874 |   |   | 2,201 |   |
| Total                                                |   |                                 | 14,658 |   |   | 16,953 |   |   | 19,265 |   |

*        Instituto Tecnológico Aeronáutico*
*        Sindicato dos Metalúrgicos*
*Sindicato        dos Engenheiros do Estado de São Paulo*

----

| **6E.** | **Share                  Ownership** |
|---------|--------------------------------------|

| **ITEM                  7.** | **MAJOR                  SHAREHOLDERS AND RELATED PARTY                  TRANSACTIONS** |
|------------------------------|-----------------------------------------------------------------------------------------|

| **7A.** | **Major                  Shareholders** |
|---------|-----------------------------------------|

|                                                         |   | **Common                  Shares** |        |
|--------------------------------------------------------------|--------|------------------------------------|-------------|
|                                                         |   | **Shares**                         |        | **(%)** |   |
| PREVI                  (1)                                   |   |                               | 103,082,901 |   |   | 13.9 |   |
| SISTEL                  (2)                                  |   |                               | 22,612,297  |   |   | 3.0 |   |
| Bozano                  Group (3)                            |   |                               | 71,565,809  |   |   | 9.7 |   |
| BNDESPAR                  (4)                                |   |                               | 37,412,579  |   |   | 5.0 |   |
| Dassault                  Aviation (5)                       |   |                               | 6,671,360   |   |   | 0.9 |   |
| Safran                  (5)                                  |   |                               | 8,310,342   |   |   | 1.1 |   |
| União                  Federal/Brazilian Government (6) |   |                               | 2,349,911   |   |   | 0.3 |   |
| Officers                  and directors as a group (7)       |   |                               | 3,903,386   |   |   | 0.5 |   |
| Others                  (São Paulo Stock Exchange) (8)  |   |                               | 85,318,375  |   |   | 11.5 |   |
| Others                  (NYSE)                               |   |                               | 400,902,000 |   |   | 54.1 |   |
| Total                                                   |   |                               | 742,128,960 |   |   | 100.0 |   |

----

| (1) | Banco                  do Brasil Employee Pension Fund, also known as PREVI, was founded                  in 1904                  as a pension fund for the employees of Banco do Brasil S.A, which                  is                  controlled by the Brazilian government. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|
| (2) | SISTEL                  Social Security Foundation, also known as SISTEL, was founded in                  1977 as                  part of the Telebrás system, which, prior to its recent privatization,                  consisted of the Brazilian government-owned telecommunications                  companies. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|

| (3) | Shares                  belonging to the Bozano Group belong to both Cia. Bozano and Bozano                  Holdings Ltd., which ware owned and controlled by Julio Bozano.                  18,786,088                  of the shares owned by Cia. Bozano have been pledged in favor of                  Banco                  Santander Central Hispano, S.A. in connection with its acquistion                  from                  Cia. Bozano of substantially all of the capital stock of Banco                  Meridional                  S.A. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|
| (4) | BNDESPAR                  is a wholly owned subsidiary of Banco Nacional de Desenvolvimento                  Econômico e Social—BNDES, the government-owned national development bank                  of Brazil. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|
| (5) | The                  Brazilian government also holds the “golden                  share.” |
|-----|-------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|
| (6) | Includes                  859,470 shares underlying options which are exercisable until May                  2008. |
|-----|--------------------------------------------------------------------------------------------------------------------|

| (7) | Includes                  1,171,419 shares underlying options which are exercisable until                  May                  2008. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------|

----

| **7B.** | **Related                  Party                  Transactions** |
|---------|------------------------------------------------------------------|

**Brazilian        Government**

|  | · | a                  source for research and development debt financing through technology                  development institutions such FINEP and BNDES;                  and |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | an                  export support agency through                  BNDES. |
|--|--------|---------------------------------------------------------------------------|

*exim*

----

| **7C.** | **Interests                  of Experts and                  Counsel** |
|---------|------------------------------------------------------------------------|

| **ITEM                  8.** | **FINANCIAL                  INFORMATION** |
|------------------------------|--------------------------------------------|

| **8A.** | **Consolidated                  Statements and Other Financial                  Information** |
|---------|-----------------------------------------------------------------------------------------------|

**Legal        Proceedings**

**Dividends        and Dividend Policy**
** **
** **

***Amounts        Available for Distribution***

|   | · | the                  legal reserve; |
|--------|--------|-------------------------------------|

|   | · | a                  contingency reserve for anticipated losses;                  and |
|--------|--------|-------------------------------------------------------------------------------------|

|   | · | an                  unrealized revenue reserve. |
|--------|--------|-------------------------------------------------|

----

|   | · | the                  legal reserve; |
|--------|--------|-------------------------------------|

|   | · | the                  investment and working capital                  reserve; |
|--------|--------|-------------------------------------------------------------------------------|

|   | · | retained                  earnings; and |
|--------|--------|-----------------------------------------|

|   | · | the                  contingency reserve for anticipated                  losses, |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | price-level                  restatement of balance sheet                  accounts; |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | the                  share of equity earnings of affiliated companies;                  and |
|--------|--------|---------------------------------------------------------------------------------------------|

|   | · | profits                  from installment sales to be received after the end of the next                  succeeding                  fiscal year. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | in                  the deduction of accumulated losses, whenever                  necessary; |
|--------|--------|-----------------------------------------------------------------------------------------------|

|   | · | in                  the distribution of dividends, at any                  time; |
|--------|--------|----------------------------------------------------------------------------------|

|   | · | in                  the redemption, withdrawal, purchase or open market repurchase                  of shares,                  as authorized by law; and |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | to                  increase our capital, including by means of an issuance of new                  shares. |
|--------|--------|-------------------------------------------------------------------------------------------------------------|

----

***Mandatory        Distribution***

***Payment        of Dividends***
*** ***

----

***History        of Dividend Payments and Dividend Policy and Additional Payments on        Shareholders’ Equity***

*pro        rata*

|   | · | 50%                  of net income (after taking into account the provisions for                  the*Contribuição Social Sobre o Lucro Líquido*,                  or Social Contribution on Net Profits, or CSLL, but before taking                  into                  account such distribution and any deductions for income taxes)                  for the                  period in respect of which the payment is made;                  or |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | 50%                  of the sum of retained earnings and profit reserves as of the beginning                  of                  the year in respect of which the payment is                  made. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **Date                  of approval**         |   | **Period                  in which profits were generated** |                                            | **Total                  amount of Distribution** |   |
|-----------------------------------------------|--------|-------------------------------------------------------------|-------------------------------------------------|---------------------------------------------------|--------|
|                                          |   |                                                        |                                            | (*R$                  in millions*)               |   | (*US$in                  millions*)                  (3) |   |
| September                  18, 1998 (1)  |   |                                                        | First                  two quarters of 1998     |                                              |   | 21.3 |   |   | 17.9 |   |
| March                  30, 1999 (1)      |   |                                                        | Remaining                  two quarters of 1998 |                                              |   | 33.9 |   |   | 19.7 |   |
| September                  28, 1999 (1)  |   |                                                        | First                  two quarters of 1999     |                                              |   | 36.8 |   |   | 19.1 |   |
| January                  31, 2000 (1)    |   |                                                        | Remaining                  two quarters of 1999 |                                              |   | 86.7 |   |   | 48.1 |   |
| March                  24, 2000 (2)      |   |                                                        | First                  quarter of 2000          |                                              |   | 19.6 |   |   | 11.2 |   |
| June                  16, 2000 (2)       |   |                                                        | Second                  quarter of 2000         |                                              |   | 19.9 |   |   | 11.0 |   |
| July                  6, 2000 (1)        |   |                                                        | First                  two quarters of 2000     |                                              |   | 79.6 |   |   | 44.8 |   |
| September                  22, 2000 (2)  |   |                                                        | Third                  quarter of 2000          |                                              |   | 27.7 |   |   | 15.0 |   |
| December                  15, 2000 (2)   |   |                                                        | Fourth                  quarter of 2000         |                                              |   | 33.5 |   |   | 17.1 |   |
| March                  16, 2001 (1)      |   |                                                        | Remaining                  two quarters of 2000 |                                              |   | 107.5 |   |   | 49.7 |   |
| March                  16, 2001 (2)      |   |                                                        | First                  quarter of 2001          |                                              |   | 33.8 |   |   | 15.7 |   |
| June                  13, 2001 (2)       |   |                                                        | Second                  quarter of 2001         |                                              |   | 41.4 |   |   | 18.0 |   |
| September                  14, 2001 (1)  |   |                                                        | First                  two quarters of 2001     |                                              |   | 123.1 |   |   | 46.1 |   |
| September                  14, 2001 (2)  |   |                                                        | Third                  quarter of 2001          |                                              |   | 48.4 |   |   | 18.1 |   |
| December                  15, 2001 (2)   |   |                                                        | Fourth                  quarter of 2001         |                                              |   | 57.1 |   |   | 24.6 |   |
| March                  19, 2002 (1)      |   |                                                        | Remaining                  two quarters of 2001 |                                              |   | 100.0 |   |   | 43.0 |   |
| March                  19, 2002 (2)      |   |                                                        | First                  quarter of 2002          |                                              |   | 58.9 |   |   | 25.4 |   |
| June                  14, 2002 (2)       |   |                                                        | Second                  quarter of 2002         |                                              |   | 59.5 |   |   | 20.9 |   |
| September                  13, 2002 (2)  |   |                                                        | Third                  quarter of 2002          |                                              |   | 66.3 |   |   | 17.0 |   |
| December                  13, 2002 (2)   |   |                                                        | Fourth                  quarter of 2002         |                                              |   | 70.0 |   |   | 19.8 |   |
| December                  13, 2002 (2)   |   |                                                        | 1998                  and 1999                  |                                              |   | 72.5 |   |   | 20.5 |   |
| June 16,                  2003 (2)  |   |                                                        | First                  two quarters of 2003     |                                              |   | 76.7 |   |   | 26.7 |   |
| December                  12, 2003 (2)   |   |                                                        | Remaining                  two quarters of 2003 |                                              |   | 118.5 |   |   | 41.0 |   |
| March                  12, 2004 (2)      |   |                                                        | First                  quarter of 2004          |                                              |   | 101.0 |   |   | 34.7 |   |
| June                  25, 2004 (2)       |   |                                                        | Second                  quarter of 2004         |                                              |   | 160.0 |   |   | 51.5 |   |
| September                  20, 2004 (2)  |   |                                                        | Third                  quarter of 2004          |                                              |   | 160.0 |   |   | 55.9 |   |
| December                  17, 2004(2)    |   |                                                        | Fourth                  quarter of 2004         |                                              |   | 164.1 |   |   | 61.8 |   |
| March                  11, 200 (2)       |   |                                                        | First                  quarter of 2005          |                                              |   | 106.5 |   |   | 39.9 |   |
| June                  3, 2005 (2)        |   |                                                        | Second                  quarter of 2005         |                                              |   | 110.8 |   |   | 47.1 |   |
| September                  16, 2005 (2)  |   |                                                        | Third                  quarter of 2005          |                                              |   | 113.5 |   |   | 51.0 |   |
| December                  19, 2005 (2)   |   |                                                        | Fourth                  quarter of 2005         |                                              |   | 112.9 |   |   | 48.2 |   |
| June                  12, 2006 (2)       |   |                                                        | First                  two quarters of 2006     |                                              |   | 114.4 |   |   | 52.9 |   |
| June                  12, 2006 (1)       |   |                                                        | First                  two quarters of 2006     |                                              |   | 35.6 |   |   | 16.4 |   |
| September                  15, 2006 (2)  |   |                                                        | Third                  quarter of 2006          |                                              |   | 92.3 |   |   | 42.5 |   |
| December                  8,2006 (2)     |   |                                                        | Fourth                  quarter of 2006         |                                              |   | 85.0 |   |   | 39.8 |   |
| March                  9, 2007 (2)       |   |                                                        | First                  quarter of 2007          |                                              |   | 43.4 |   |   | 21.2 |   |

----

| (1) | Represents                  dividend payments. |
|-----|------------------------------------------------|

| (2) | Represents                  interest on shareholders’ equity. |
|-----|---------------------------------------------------------------------|

| (3) | Translated                  from nominal *reais*                  into U.S. dollars at the commercial selling rates in effect on                  the last                  date of the month in which the dividends were                  approved. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **8B.** | **Significant                  Changes** |
|---------|------------------------------------------|

| **ITEM                  9.** | **THE                  OFFER AND                  LISTING** |
|------------------------------|-------------------------------------------------------------|

| **9A.** | **Offer                  and Listing                  Details** |
|---------|-----------------------------------------------------------------|

|                                                     |   | **Price                  in U.S. dollars****per                  ADS** |   |
|----------------------------------------------------------|--------|------------------------------------------------------------------------|--------|
|                                                     |   | **High**                                                               |   | **Low** |   |
| 2002:                                                    |   |                                                                   |   |   |   |
| Year                  end                           |   |                                                                   | 25.01  |   |   | 12.85 |   |
| 2003:                                                    |   |                                                                   |   |   |   |   |   |
| Year                  end                           |   |                                                                   | 35.45  |   |   | 9.15 |   |
| 2004:                                                    |   |                                                                   |   |   |   |   |   |
| Year                  end                                |   |                                                                   | 36.81  |   |   | 23.28 |   |
| 2005:                                                    |   |                                                                   |   |   |   |   |   |
| First                  quarter                      |   |                                                                   | 35.00  |   |   | 29.70 |   |
| Second                  quarter                     |   |                                                                   | 33.95  |   |   | 28.71 |   |
| Third                  quarter                      |   |                                                                   | 39.00  |   |   | 30.37 |   |
| Fourth                  quarter                     |   |                                                                   | 41.78  |   |   | 36.20 |   |
| Year                  end                           |   |                                                                   | 41.78  |   |   | 28.71 |   |
| 2006:                                                    |   |                                                                   |   |   |   |   |   |
| First                  quarter                      |   |                                                                   | 41.63  |   |   | 37.00 |   |
| Second                  quarter                     |   |                                                                   | 39.04  |   |   | 31.99 |   |
| Third                  quarter                      |   |                                                                   | 41.78  |   |   | 33.53 |   |
| Fourth                  quarter                     |   |                                                                   | 43.50  |   |   | 39.59 |   |
| Year                  end                           |   |                                                                   | 43.50  |   |   | 31.99 |   |
| 2007                                                     |   |                                                                   |   |   |   |   |   |
| First                  quarter                      |   |                                                                   | 46.23  |   |   | 39.01 |   |
| Second                  quarter (through April 18)  |   |                                                                   | 47.83  |   |   | 45.85 |   |
| Month                  ended:                            |   |                                                                   |   |   |   |   |   |
| October                  31, 2006                   |   |                                                                   | 43.50  |   |   | 39.59 |   |
| November                  30, 2006                  |   |                                                                   | 42.87  |   |   | 40.49 |   |
| December                  31, 2006                  |   |                                                                   | 43.46  |   |   | 40.27 |   |
| January                  31, 2007                   |   |                                                                   | 41.36  |   |   | 39.01 |   |
| February                  28, 2007                  |   |                                                                   | 46.23  |   |   | 41.04 |   |
| March                  31, 2007                     |   |                                                                   | 45.86  |   |   | 44.10 |   |
| April                  30, 2007 (through April 18)  |   |                                                                   | 47.83  |   |   | 45.85 |   |

----

*reais*

|                                                   |   | **Nominal*****reais*****per****preferred                  share** |   |
|--------------------------------------------------------|--------|-------------------------------------------------------------------|--------|
|                                                   |   | **High**                                                          |   | **Low** |   |
| 2001:                                                  |   |                                                              |   |   |   |
| Year                  end                         |   |                                                              | 25.45  |   |   | 7.65 |   |
| 2002:                                                  |   |                                                              |   |   |   |   |   |
| Year                  end                    |   |                                                              | 15.30  |   |   | 11.20 |   |
| 2003:                                                  |   |                                                              |   |   |   |   |   |
| Year                  end                         |   |                                                              | 25.70  |   |   | 8.10 |   |
| 2004:                                                  |   |                                                              |   |   |   |   |   |
| First                  quarter                    |   |                                                              | 26.43  |   |   | 20.30 |   |
| Second                  quarter                   |   |                                                              | 23.50  |   |   | 18.30 |   |
| Third                  quarter                    |   |                                                              | 22.20  |   |   | 18.20 |   |
| Fourth                  quarter                   |   |                                                              | 22.50  |   |   | 17.10 |   |
| Year                  end                         |   |                                                              | 26.43  |   |   | 17.10 |   |
| 2005:                                                  |   |                                                              |   |   |   |   |   |
| First                  quarter                    |   |                                                              | 23.30  |   |   | 19.80 |   |
| Second                  quarter                   |   |                                                              | 20.75  |   |   | 17.90 |   |
| Third                  quarter                    |   |                                                              | 22.19  |   |   | 18.50 |   |
| Fourth                  quarter                   |   |                                                              | 23.73  |   |   | 20.12 |   |
| Year                  end ...                 |   |                                                              | 23.73  |   |   | 17.90 |   |
| 2006:                                                  |   |                                                              |   |   |   |   |   |
| First                  quarter                    |   |                                                              | 23.68  |   |   | 19.86 |   |
| Second                  quarter (through June 2)  |   |                                                              | 20.50  |   |   | 18.55 |   |
| Month                  ended:                          |   |                                                              |   |   |   |   |   |
| January                  31, 2006                 |   |                                                              | 23.68  |   |   | 21.55 |   |
| February                  28, 2006                |   |                                                              | 22.51  |   |   | 19.90 |   |
| March                  31, 2006                   |   |                                                              | 21.86  |   |   | 19.86 |   |
| April                  30, 2006                   |   |                                                              | 20.50  |   |   | 19.20 |   |
| May                  31, 2006                     |   |                                                              | 20.17  |   |   | 18.55 |   |
| June                  30, 2006 (through June 2)   |   |                                                              | 19.70  |   |   | 19.55 |   |

*reais*
*Novo        Mercado*

|                                               |   |  **Nominal*****reais*****per****common                  share** |   |
|----------------------------------------------------|--------|----------------------------------------------------------------------|--------|
|                                               |   | **   High   **                         |   | **   Low   ** |   |
| 2002:                                              |   |                                                                 |   |   |   |
| Year                  end                          |   |                                                                 | 14.00  |   |   | 9.82 |   |
| 2003:                                              |   |                                                                 |   |   |   |   |   |
| Year                  end                          |   |                                                                 | 19.30  |   |   | 7.00 |   |
| 2004:                                              |   |                                                                 |   |   |   |   |   |
| Year                  end                          |   |                                                                 | 20.30  |   |   | 12.31 |   |
| 2005:                                              |   |                                                                 |   |   |   |   |   |
| First                  quarter                     |   |                                                                 | 17.90  |   |   | 14.40 |   |
| Second                  quarter                    |   |                                                                 | 16.00  |   |   | 13.50 |   |
| Third                  quarter                     |   |                                                                 | 16.50  |   |   | 14.18 |   |
| Fourth                  quarter                    |   |                                                                 | 18.50  |   |   | 14.90 |   |
| Year                  end                          |   |                                                                 | 18.50  |   |   | 13.50 |   |
| 2006:                                              |   |                                                                 |   |   |   |   |   |
| First                  quarter                     |   |                                                                 | 22.90  |   |   | 17.41 |   |
| Second                  quarter                    |   |                                                                 | 20.54  |   |   | 18.38 |   |
| Third                  quarter                     |   |                                                                 | 22.51  |   |   | 18.08 |   |
| Fourth                  quarter                    |   |                                                                 | 23.50  |   |   | 21.31 |   |
| Year                  end                          |   |                                                                 | 23.50  |   |   | 17.41 |   |
| 2007:                                              |   |                                                                 |   |   |   |   |   |
| First                  quarter                     |   |                                                                 | 24.00  |   |   | 20.86 |   |
| Second                  quarter (through April 18) |   |                                                                 | 24.10  |   |   | 23.40 |   |
| Month                  ended:                      |   |                                                                 |   |   |   |   |   |
| October                  31, 2006                  |   |                                                                 | 23.12  |   |   | 21.31 |   |
| November                  30, 2006                 |   |                                                                 | 23.08  |   |   | 21.72 |   |
| December                  31, 2006                 |   |                                                                 | 23.50  |   |   | 21.55 |   |
| January                  31, 2007                  |   |                                                                 | 22.08  |   |   | 20.86 |   |
| February                  28, 2007                 |   |                                                                 | 24.00  |   |   | 21.42 |   |
| March                  31, 2007                    |   |                                                                 | 23.99  |   |   | 22.65 |   |
| April                  30, 2007 (through April 18) |   |                                                                 | 24.10  |   |   | 23.40 |   |

----

| **9B.** | **Plan                  of                  Distribution** |
|---------|------------------------------------------------------------|

| **9C.** | **Markets** |
|---------|-------------|

**Trading        on the São Paulo Stock Exchange**
** **

*Novo        Mercado *
*CBLC—Companhia        Brasileira de Liquidação e Custódia*

----

***Novo        Mercado***
**        Corporate Governance Practices**

*Novo        Mercado*

*Nível*

*Nível*

*Novo        Mercado*
*Novo        Mercado*

----

**Regulation        of Brazilian Securities Markets**
** **

*companhia        aberta*
*companhia        fechada*
*Novo        Mercado*

**Disclosure        Requirements**

|   | · | establish                  the concept of a material fact that gives rise to reporting requirements.                  Material facts include decisions made by the controlling shareholders,                  resolutions of the general meeting of shareholders and of management                  of                  the company, or any other facts related to the company’s business (whether                  occurring within the company or otherwise somehow related thereto)                  that                  may influence the price of its publicly traded securities, or the                  decision                  of investors to trade such securities or to exercise any of such                  securities’ underlying rights; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | specify                  examples of facts that are considered to be material, which include,                  among                  others, the execution of shareholders’ agreements providing for the                  transfer of control, the entry or withdrawal of shareholders that                  maintain                  any managing, financial, technological or administrative function                  with or                  contribution to the company, and any corporate restructuring undertaken                  among related companies; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | oblige                  the investor relations officer, controlling shareholders, other                  officers,                  directors, members of the audit committee and other advisory boards                  to                  disclose material facts; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | · | require                  simultaneous disclosure of material facts to all markets in which                  the                  corporation’s securities are admitted for                  trading; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | require                  the acquirer of a controlling stake in a corporation to publish                  material                  facts, including its intentions as to whether or not to de-list                  the                  corporation’s shares, within one                  year; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | establish                  rules regarding disclosure requirements in the acquisition and                  disposal of                  a material stockholding stake; and |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | restrict                  the use of insider information. |
|--------|--------|-----------------------------------------------------------|

| **9D.** | **Selling                  Shareholders** |
|---------|-------------------------------------------|

| **9E.** | **Dilution** |
|---------|--------------|

| **9F.** | **Expenses                  of the                  Issue** |
|---------|-------------------------------------------------------------|

| **ITEM                  10.** | **ADDITIONAL                  INFORMATION** |
|-------------------------------|---------------------------------------------|

| **10A.** | **Share                  Capital** |
|----------|------------------------------------|

| **10B.** | **Memorandum                  and Articles of                  Association** |
|----------|------------------------------------------------------------------------------|

*Novo        Mercado*

**Corporate        Purposes**

**Description        of Capital Stock**

***General***

----

***Common        Shares***
*** ***

*Novo        Mercado*

*Diário        Oficial do Estado de São Paulo*
*ValeParaibano*
*Gazeta        Mercantil*

|   | · | the                  right to participate in the distribution of                  profits; |
|--------|--------|--------------------------------------------------------------------------------------------|

|   | · | the                  right to participate equally and proportionally in any remaining                  residual                  assets in the event of liquidation of the                  company; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | preemptive                  rights in the event of issuance of shares, convertible debentures                  or                  warrants, except in some specific circumstances under Brazilian                  law                  described in “Item 10D. Exchange Controls—Preemptive                  Rights”; |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  right to supervise our management in accordance with Article 109                  of the                  Brazilian Corporate Law; and |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | the                  right to appraisal rights in the cases specified in the Brazilian                  Corporate Law, which are described in “Item 10D. Exchange                  Controls—Redemption and Right of                  Withdrawal.” |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

***Golden        Share***
*** ***

----

***Voting        Rights***
***of Shares***

***Common        Shares***

*Novo        Mercado*

*Limitations        on the Voting Rights of Certain Holders of Common Shares*

|  | · | they                  are parties in a voting agreement; |
|--|--------|----------------------------------------------------------|

|  | · | one                  of them is, directly or indirectly, a controlling shareholder or                  controlling parent company of the other, or the                  others; |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | they                  are companies directly or indirectly controlled by the same person/entity,                  or group of persons/entities, which may or may not be shareholders;                  or |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | they                  are companies, associations, foundations, cooperatives and trusts,                  investment funds or portfolios, universalities of rights or any                  other                  forms of organization or undertaking (a) with the same administrators                  or                  managers, or further (b) whose administrators or managers are companies                  that are directly or indirectly controlled by the same person/entity,                  or                  group of persons/entities, which may or may not be                  shareholders. |
|--|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| **Equity                    Interest of Shareholder or Group of Shareholders** |   | **Voting                    Rights as a Percentage of our Capital Stock** |
|--------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|
| 1%                                                                             |   | 1%                                                                        |
| 2%                                                                             |   | 2%                                                                        |
| 3%                                                                             |   | 3%                                                                        |
| 4%                                                                             |   | 4%                                                                        |
| 5%                                                                             |   | 5%                                                                        |
| >                    5%                                                     |   | 5%                                                                        |

----

*Limitation        on the Voting Rights of Non-Brazilian Shareholders*

*edital*

|   | · | Brazilian                  individuals, whether native or naturalized, resident in Brazil                  or abroad; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------|

|   | · | legal                  private entities organized under the laws of Brazil that have their                  administrative head offices in Brazil and (a) do not have a foreign                  controlling parent company, unless the parent company meets the                  requirements of clause (b) of this item, and (b) are controlled,                  directly                  or indirectly, by one or more Brazilian individuals, whether native                  or                  naturalized, resident in Brazil or abroad;                  and |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | investment                  funds or clubs organized under the laws of Brazil that have their                  administrative head office in Brazil and whose managers and/or                  quotaholders holding the majority of their quotas are persons/entities                  referred to above. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| **Brazilian                  Shareholder Participation****(%                  of capital stock)** |   | **Non-Brazilian                  Shareholder Participation****(%                  of capital stock)** |   | **Non-Brazilian                  Shareholder Participation****(1)** |
|---------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------|
| 90%                                                                                               |   | 10%                                                                                                   |   | 10%                                                                 |
| 80%                                                                                               |   | 20%                                                                                                   |   | 20%                                                                 |
| 70%                                                                                               |   | 30%                                                                                                   |   | 30%                                                                 |
| 60%                                                                                               |   | 40%                                                                                                   |   | 40%                                                                 |
| 59%                                                                                               |   | 41%                                                                                                   |   | 39.33%                                                              |
| 50%                                                                                               |   | 50%                                                                                                   |   | 33.33%                                                              |
| 40%                                                                                               |   | 60%                                                                                                   |   | 26.67%                                                              |
| 30%                                                                                               |   | 70%                                                                                                   |   | 20%                                                                 |
| 20%                                                                                               |   | 80%                                                                                                   |   | 13.33%                                                              |
| 10%                                                                                               |   | 90%                                                                                                   |   | 6.67%                                                               |

----

***Example        1***

| **Shareholder**                   |   | **%                  Shares Attending** |   | **Effective                  Votes After 5% Vote Restriction** |   | **Effective                  Votes After Non-Brazilian Restriction** |   | **%                  of Valid Votes** |   | **Vote                  Ratio (Votes/Share)** |
|-----------------------------------|--------|-----------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------------|
| Brazilian                  A      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  B      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  C      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  D      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  E      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  F      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  G      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  H      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  I      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  J      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  K      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Brazilian                  L      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 5%                                    |   | 1.00                                          |
| Total                  Brazilians |   | 60                                      |   | 60                                                             |   | 60                                                                   |   | 60%                                   |   | 1.00                                          |
| Non-Brazilians1                   |   | 40                                      |   | 40                                                             |   | 402                                                                  |   | 40%                                   |   | 1.00                                          |
| Total                             |   | 100                                     |   | 100                                                            |   | 100                                                                  |   | 100%                                  |   | 1.00                                          |

----

----

***Example        2***

| **Shareholder**                   |   | **%                  Shares Attending** |   | **Effective                  Votes After 5% Vote Restriction** |   | **Effective                  Votes After Non-Brazilian Restriction** |   | **%                  of Valid Votes** |   | **Vote                  Ratio (Votes/Share)** |
|-----------------------------------|--------|-----------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------------|
| Brazilian                  A      |   | 20                                      |   | 5                                                              |   | 5                                                                    |   | 8.57%                                 |   | 0.25                                          |
| Brazilian                  B      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 8.57%                                 |   | 1.00                                          |
| Brazilian                  C      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 8.57%                                 |   | 1.00                                          |
| Brazilian                  D      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 8.57%                                 |   | 1.00                                          |
| Brazilian                  E      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 8.57%                                 |   | 1.00                                          |
|                              |   |                                    |   |                                                           |   |                                                                 |   |                                  |   |                                          |
| Brazilian                  F      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 8.57%                                 |   | 1.00                                          |
| Brazilian                  G      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 8.57%                                 |   | 1.00                                          |
| Total                  Brazilians |   | 50                                      |   | 35                                                             |   | 35                                                                   |   | 60%                                   |   | 1.00                                          |
| Non-Brazilians1                   |   | 50                                      |   | 50                                                             |   | 23.32                                                                |   | 40%                                   |   | 0.47                                          |
| Total                             |   | 100                                     |   | 85                                                             |   | 58.3                                                                 |   | 100%                                  |   | 0.58                                          |

----

***Example        3***

| **Shareholder**                   |   | **%                  Shares Attending** |   | **Effective                  Votes After 5% Vote Restriction** |   | **Effective                  Votes After Non-Brazilian Restriction** |   | **%                  of Valid Votes** |   | **Vote                  Ratio (Votes/Share)** |
|-----------------------------------|--------|-----------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------|--------|-----------------------------------------------|
| Brazilian                  A      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 10%                                   |   | 1.00                                          |
| Brazilian                  B      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 10%                                   |   | 1.00                                          |
| Brazilian                  C      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 10%                                   |   | 1.00                                          |
| Brazilian                  D      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 10%                                   |   | 1.00                                          |
| Brazilian                  E      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 10%                                   |   | 1.00                                          |
| Brazilian                  F      |   | 5                                       |   | 5                                                              |   | 5                                                                    |   | 10%                                   |   | 1.00                                          |
| Total                  Brazilians |   | 30                                      |   | 30                                                             |   | 30                                                                   |   | 60%                                   |   | 1.00                                          |
| Non-Brazilian                  A  |   | 30                                      |   | 5                                                              |   | 2.22                                                                 |   | 4.4%                                  |   | 0.07                                          |
| Non-Brazilians1                   |   | 40                                      |   | 40                                                             |   | 17.82                                                                |   | 35.6%                                 |   | 0.44                                          |
| Total                             |   | 100                                     |   | 75                                                             |   | 50                                                                   |   | 100%                                  |   | 0.50                                          |

----

***Example        4***

|  **Shareholder**             |   |  **%                  Shares Attending** |   | **Effective                  Votes After 5% Vote Restriction** |   | **Effective                  Votes After Non-Brazilian Restriction** |   |  **%                  of Valid Votes** |   |  **Vote                  Ratio (Votes/Share)** |
|-----------------------------------|--------|-----------------------------------------------|--------|----------------------------------------------------------------|--------|----------------------------------------------------------------------|--------|---------------------------------------------|--------|-----------------------------------------------------|
| Brazilian                  A      |   | 30                                            |   | 5                                                              |   | 5                                                                    |   | 12%                                         |   | 0.17                                                |
| Brazilian                  B      |   | 25                                            |   | 5                                                              |   | 5                                                                    |   | 12%                                         |   | 0.20                                                |
| Brazilian                  C      |   | 5                                             |   | 5                                                              |   | 5                                                                    |   | 12%                                         |   | 1.00                                                |
| Brazilian                  D      |   | 5                                             |   | 5                                                              |   | 5                                                                    |   | 12%                                         |   | 1.00                                                |
| Brazilian                  E      |   | 5                                             |   | 5                                                              |   | 5                                                                    |   | 12%                                         |   | 1.00                                                |
| Total                  Brazilians |   | 70                                            |   | 25                                                             |   | 25                                                                   |   | 60%                                         |   | 1.00                                                |
| Non-Brazilians1                   |   | 30                                            |   | 30                                                             |   | 16.72                                                                |   | 40%                                         |   | 0.56                                                |
| Total                             |   | 100                                           |   | 55                                                             |   | 41.7                                                                 |   | 100%                                        |   | 0.42                                                |

----

----

***Shareholders’        Agreement***
* *

***Golden        Share***

|   | · | change                  of our name and corporate purpose; |
|--------|--------|------------------------------------------------------------|

|   | · | amendment                  and/or application of our logo; |
|--------|--------|------------------------------------------------------------|

|   | · | creation                  and/or alteration of military programs (whether or not involving                  Brazil); |
|--------|--------|----------------------------------------------------------------------------------------------------------------------|

|   | · | development                  of third party skills’ in technology for military                  programs; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------|

|   | · | discontinuance                  of the supply of spare parts and replacement parts for military                  aircraft; |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------|

|   | · | transfer                  of our control; |
|--------|--------|-------------------------------------------|

|   | · | any                  amendments to the list of corporate actions over which the Golden                  Share                  carries veto rights, including the right of the Brazilian Government                  to                  appoint one member and alternate to our Board of Directors and                  the right                  of our employees to appoint two members and their respective alternates                  to                  our Board of Directors, and to the rights conferred to the Golden                  Share;                  and |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | changes                  to certain provisions of our bylaws pertaining to voting restrictions,                  rights of the Golden Share and the mandatory tender offer requirements                  applicable to holders of 35% or more of our outstanding                  shares. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Disclosure        of Significant Interest**

*Brazilian        Requirements*

*Certain        U.S. Legal Requirements*

***Form        and Transfer***

**Board        of Directors**
** **

----

**Election        of Board of Directors**

**Preemptive        Rights**

----

**Redemption        and Right of Withdrawal**

|   | · | reduce                  the mandatory distribution of                  dividends; |
|--------|--------|-----------------------------------------------------------------------------------|

|   | · | change                  our corporate purpose; |
|--------|--------|------------------------------------------------|

|   | · | merge                  into or consolidate with another company, subject to the conditions                  set                  forth in the Brazilian Corporate                  Law; |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | transfer                  all of our shares to another company or receive shares of another                  company                  in order to make the company whose shares were transferred a wholly                  owned                  subsidiary of such other company, known as*incorporação de ações*; |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | acquire                  control of another company at a price which exceeds the limits                  set forth                  in the Brazilian Corporate Law; |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | participate                  in a centralized group of companies as defined under the Brazilian                  Corporate Law and subject to the conditions set forth therein;                  or |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | conduct                  a spin-off that results in (a) a change of our corporate purposes,                  except                  if the assets and liabilities of the spun-off company are contributed                  to a                  company that is engaged in substantially the same activities, (b)                  a                  reduction in the mandatory dividend or (c) any participation in                  a                  centralized group of companies, as defined under the Brazilian                  Corporate                  Law. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*incorporação        de ações*

*incorporação        de ações*
* *

----

**Mechanism        to Promote Dispersed Ownership of Our Shares**

|   | · | Tender                  Offer Price = Value of the Share +                  Premium, |
|--------|--------|--------------------------------------------------------------------------------------|

|   | · | “Tender                  Offer Price” corresponds to the acquisition price for each share issued by                  us in the public offering of shares provided                  hereunder. |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Value                  of the Share” corresponds to the greater                  of: |
|--------|--------|---------------------------------------------------------------------------------------------------|

|  | (i) | the                  highest unit quotation obtained for the shares issued by us during                  the                  12-month period prior to the tender offer among values recorded                  on any                  stock exchange on which the shares were                  traded; |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | the                  highest price paid by the Acquiring Shareholder, during the 36-month                  period prior to the tender offer, for a share or tranche of shares                  issued                  by us; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | the                  amount equivalent to 14.5 times our Consolidated Average EBITDA,                  as                  defined below, reduced by our net consolidated indebtedness, divided                  by                  the total number of shares issued by us;                  or |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | (iv) | the                  amount equivalent to 0.6 times the amount of our firm backlog orders,                  according to the last information disclosed by the latter, reduced                  by our                  net consolidated indebtedness, divided by the total number of shares                  issued by us. |
|--------|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Premium”                  corresponds to 50% of the Value of the                  Share. |
|--------|--------|-------------------------------------------------------------------------------------------------------|

|   | · | “Consolidated                  EBITDA” is our consolidated operating profit before net financial                  expenses, income tax and social contribution, depreciation, depletion                  and                  amortization, as assessed based on the audited restated statements                  for our                  most recent complete fiscal year. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | “Average                  Consolidated EBITDA” is the arithmetic average of our consolidated EBITDA                  for the two most recent complete fiscal                  years. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Arbitration**

*Novo        Mercado*

**Going        Private Process**
** **

*Novo        Mercado*

----

**Delisting        from the **
***Novo        Mercado***

*Novo        Mercado*
*Novo        Mercado*
*Novo        Mercado*

*Novo        Mercado*
*Novo        Mercado*
*Novo        Mercado*

*Novo        Mercado*
*Novo        Mercado*

*Novo        Mercado*
*Novo        Mercado*

*Novo        Mercado*
*Novo        Mercado*
*Novo        Mercado*

*Novo        Mercado*
*Novo        Mercado*

----

*Novo        Mercado*
*Novo        Mercado*
*Novo        Mercado*

*Novo        Mercado*

**Significant        Differences between our Corporate Governance Practices and NYSE Corporate        Governance Standards**

*Majority        of Independent Directors*

*Novo        Mercado*
*Novo        Mercado *
*Novo        Mercado*
*Novo        Mercado*

*Novo        Mercado*
*Novo        Mercado*

*Executive        Sessions*
* *

----

*Nominating/Corporate        Governance Committee*

*Compensation        Committee*

*Audit        Committee*

----

*Shareholder        Approval of Equity Compensation Plans*

*Corporate        Governance Guidelines*

*Novo        Mercado*

*Code        of Business Conduct and Ethics*

*Internal        Audit Function*
* *

**Sarbanes        Oxley Act of 2002**

| **10C.** | **Material                  Contracts** |
|----------|-----------------------------------------|

**Issuance        of US$400 million 6.375% Guaranteed Notes due 2017**

----

**Merger        Agreement related to Merger of former Embraer with and into        Embraer**

| **10D.** | **Exchange                  Controls** |
|----------|----------------------------------------|

----

| **10E.** | **Taxation** |
|----------|--------------|

**Material        Brazilian Tax Consequence**
**s        **

*General*

*Taxation        of Dividends*

*Taxation        of Gains*

----

*reais*
*reais*

|  | · | are                  exempt from income tax when assessed by a non-Brazilian holder                  is 2,689                  holder and is not a tax haven holder; or |
|--|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | · | are                  subject to income tax at a rate of 15% in any other case, including                  the                  gains assessed by a non-Brazilian holder than (i) is not a 2,689                  holder;                  or (ii) is a 2,689 holder but a tax haven holder. In these cases,                  a                  withholding income tax of 0.005% on the sale value shall be applicable                  and                  can be offset with the eventual income tax due on the capital                  gain. |
|--|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*reais*

*Taxation        on Interest on Shareholders’ Equity*

----

*Taxation        on Foreign Exchange Transactions (“IOF/Câmbio”)*

*Taxation        on Bonds and Securities Transactions (“IOF/Titulos”)*

*Other        Brazilian Taxes*

*Transaction        on Bank Accounts*
*Contribuição        Provisória sobre Movimentação Financeira*

**Material        U.S. Federal Income Tax Consequences**
** **

----

**Shareholders        are urged to consult their own independent tax advisors concerning the U.S.        federal income tax consequences of the ownership of Embraer common shares        and        ADSs in light of their particular situations, as well as any consequences        arising under the laws of any other taxing jurisdiction.**

*Distributions        on Embraer Common Shares or ADSs*

*reais*
*reais*
*reais*
*reais*
*reais*
*reais*

----

*pro        rata*

*Sale,        Exchange or Other Taxable Disposition of Embraer Common Shares or        ADSs*

----

*Passive        Foreign Investment Company Rules*

*pro        rata*

*Information        Reporting and Backup Withholding *

| **10F.** | **Dividends                  and Paying                  Agents** |
|----------|-------------------------------------------------------------------|

| **10G.** | **Statements                  by                  Experts** |
|----------|-------------------------------------------------------------|

| **10H.** | **Documents                  on                  Display** |
|----------|------------------------------------------------------------|

----

| **10I.** | **Subsidiary                  Information** |
|----------|---------------------------------------------|

----

| **ITEM                  11.** | **QUANTITATIVE                AND QUALITATIVE                DISCLOSURES ABOUT MARKET                RISK** |
|-------------------------------|-------------------------------------------------------------------------------------------------------------|

**Interest        Rate Risk**

*real*

*reais*
*reais*

|                                              |   |                                                                      |   |                                                        |   |                                                                 |   | **Outstanding                      Amount By Year of Maturity**  |           |
|---------------------------------------------------|--------|--------------------------------------------------------------------------------|--------|------------------------------------------------------------------|--------|---------------------------------------------------------------------------|--------|-----------------------------------------------------------------------|----------------|
|                                              |   |  **Weighted                      Average Interest****Rate****2006**  |   |  **Total                      Outstanding****Amount**  |   |  **2007**                                                       |   | **2008**                                                         |           |  **2009**  |   |  **2010**  |   | **2011**  |   |  **2012**  |   |  **Thereafter**  |   |  **Total                      Fair Value**  |   |
|                                              |   |                                                                      |   |                                                        |   |   (in                      thousands, except percentages)  |   |
| **Short                      Term Debt**          |   |                                                                           |   |                                                             |   |                                                                      |   |                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                      dollars (LIBOR indexed) |   |                                                                           | 8.10   | %                                                                |   | **US$**49,491                                                             |   |                                                                  | US$49,491      |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$67,984 |   |
| U.S.                      dollars (fixed rate)    |   |                                                                           | 6.25   | %                                                                |   | 164,396                                                                   |   |                                                                  | 164,396        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 185,113 |   |
| *Reais*                      (TJLP indexed)       |   |                                                                           | 8.89   | %                                                                |   | 262,088                                                                   |   |                                                                  | 262,088        |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 304,921 |   |
| *Reais*                      (CDI indexed)        |   |                                                                           | 12.61  | %                                                                |   | 6,327                                                                     |   |                                                                  | 6,327          |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 6,514 |   |
| Euro                      (fixed rate)            |   |                                                                           | 3.97   | %                                                                |   | 20,593                                                                    |   |                                                                  | 20,593         |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 20,511 |   |
| Euro                      (EURIBOR indexed)       |   |                                                                           | 4.63   | %                                                                |   | 152                                                                       |   |                                                                  | 152            |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 2,186 |   |
| Total                      short-term debt        |   |                                                                           |   |                                                             |   | **US$503,047**                                                            |   |                                                                  | **US$503,047** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **US$587,229** |   |
|                                              |   |                                                                           |   |                                                             |   |                                                                      |   |                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long                      Term Debt**           |   |                                                                           |   |                                                             |   |                                                                      |   |                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                              |   |                                                                           |   |                                                             |   |                                                                      |   |                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                      dollars (LIBOR indexed) |   |                                                                           | 8.10   | %                                                                |   | US$205,624                                                                |   |                                                                  | -              |   |   | US$47,362 |   |   | US$42,544 |   |   | US$34,049 |   |   | US$25,555 |   |   | US$25,555 |   |   | US$30,559 |   |   | US$204,648 |   |
| U.S.                      dollars (fixed rate)    |   |                                                                           | 6.25   | %                                                                |   | 597,512                                                                   |   |                                                                  | -              |   |   | 97,041 |   |   | 20,352 |   |   | 50,000 |   |   | 119 |   |   | - |   |   | 430,000 |   |   | 584,944 |   |
| *Reais*                      (TJLP indexed)       |   |                                                                           | 8.89   | %                                                                |   | 29,798                                                                    |   |                                                                  | -              |   |   | 4,495 |   |   | 6,468 |   |   | 5,811 |   |   | 5,287 |   |   | 3,891 |   |   | 3,846 |   |   | 29,037 |   |
| *Reais*                      (CDI indexed)        |   |                                                                           | 12.61  | %                                                                |   | -                                                                         |   |                                                                  | -              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Euro                      (fixed rate)            |   |                                                                           | 3.97   | %                                                                |   | -                                                                         |   |                                                                  | -              |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Euro                      (EURIBOR indexed)       |   |                                                                           | 4.63   | %                                                                |   | 13,170                                                                    |   |                                                                  | **-**          |   |   | 5,670 |   |   | 2,500 |   |   | 2,500 |   |   | 2,500 |   |   | - |   |   | - |   |   | 10,974 |   |
| Total                      long-term debt         |   |                                                                           |   |                                                             |   | **US$846,104**                                                            |   |                                                                  | **-**          |   |   | **154,568** |   |   | **71,864** |   |   | **92,360** |   |   | **33,461** |   |   | **29,446** |   |   | **464,405** |   |   | **US$829,603** |   |
|                                              |   |                                                                           |   |                                                             |   |                                                                      |   |                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                      debt**               |   |                                                                           |   |                                                             |   | **US$1,349,151**                                                          |   |                                                                  | **US$503,047** |   |   | **US$154,568** |   |   | **US$71,864** |   |   | **US$92,360** |   |   | **US$33,461** |   |   | **US$29,446** |   |   | **US$464,405** |   |   | **US$1,416,832** |   |
|                                              |   |                                                                           |   |                                                             |   |                                                                      |   |                                                                  |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

*reais*

|                                          |   |                                                        |   |                                             |   |   **Outstanding                  Amount By Year of Maturity** |   |
|-----------------------------------------------|--------|-------------------------------------------------------------|--------|--------------------------------------------------|--------|-------------------------------------------------------------------------|--------|
|                                          |   | **Weighted                  Average Interest****Rate 2006** |   | **Total                  Outstanding****Amount** |   | **2007**                                                                |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **2012** |   | **Thereafter** |   | **Total                  Fair Value** |   |
| **Short                  Term Debt**          |   |                                                        |   |                                             |   | (in                  thousands, except percentages)                     |   |
|                                          |   |                                                        |   |                                             |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  dollars (LIBOR indexed) |   |                                                        | 8.03   | %                                                |   | US$12,396                                                               |   |   | US$12,396 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$12,370 |   |
| U.S.                  dollars (fixed rate)    |   |                                                        | 6.53   | %                                                |   | 186,537                                                                 |   |   | 186,537 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 226,915 |   |
| *Reais*                  (TJLP indexed)       |   |                                                        | 8.89   | %                                                |   | 262,089                                                                 |   |   | 262,089 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 304,921 |   |
| *Reais*                  (CDI indexed)        |   |                                                        | 10.87  | %                                                |   | 21,280                                                                  |   |   | 21,280 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 20,326 |   |
| Euro                  (fixed rate)            |   |                                                        | 3.97   | %                                                |   | 20,593                                                                  |   |   | 20,593 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 20,511 |   |
| Euro                  (EURIBOR indexed)       |   |                                                        | 4.63   | %                                                |   | 152                                                                     |   |   | 152 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 2,186 |   |
|                                          |   |                                                        |   |                                             |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  short-term debt        |   |                                                        |   |                                             |   | **US$503,047**                                                          |   |   | **US$503,047** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **-** |   |   | **US$587,229** |   |
|                                          |   |                                                        |   |                                             |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Long                  Term Debt**           |   |                                                        |   |                                             |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                          |   |                                                        |   |                                             |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S.                  dollars (LIBOR indexed) |   |                                                        | 8.03   | %                                                |   | US$50                                                                   |   |   | - |   |   | US$50 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$175 |   |
| U.S.                  dollars (fixed rate)    |   |                                                        | 6.53   | %                                                |   | 798,486                                                                 |   |   | - |   |   | 139,753 |   |   | 62,895 |   |   | 84,049 |   |   | 25,674 |   |   | 25,555 |   |   | 460,560 |   |   | 783,835 |   |
| *Reais*                  (TJLP indexed)       |   |                                                        | 8.89   | %                                                |   | 29,798                                                                  |   |   | - |   |   | 4,495 |   |   | 6,469 |   |   | 5,811 |   |   | 5,287 |   |   | 3,891 |   |   | 3,845 |   |   | 29,037 |   |
| *Reais*                  (CDI indexed)        |   |                                                        | 10.87  | %                                                |   | 4,600                                                                   |   |   | - |   |   | 4,600 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 5,582 |   |
| Euro                  (fixed rate)            |   |                                                        | 3.97   | %                                                |   | -                                                                       |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Euro                  (EURIBOR indexed)       |   |                                                        | 4.63   | %                                                |   | 13,170                                                                  |   |   | **-** |   |   | 5,670 |   |   | 2,500 |   |   | 2,500 |   |   | 2,500 |   |   | - |   |   | - |   |   | 10,974 |   |
|                                          |   |                                                        |   |                                             |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  long-term debt         |   |                                                        |   |                                             |   | **US$846,104**                                                          |   |   | **-** |   |   | **154,568** |   |   | **71,864** |   |   | **92,360** |   |   | **33,461** |   |   | **29,446** |   |   | **464,405** |   |   | **US$829,603** |   |
|                                          |   |                                                        |   |                                             |   |                                                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  debt**               |   |                                                        |   |                                             |   | **US$1,349,151**                                                        |   |   | **US$503,047** |   |   | **US$154,568** |   |   | **US$71,864** |   |   | **US$92,360** |   |   | **US$33,461** |   |   | **US$29,446** |   |   | **US$464,405** |   |   | **US$1,416,832** |   |

**Foreign        Currency Risk**

*reais*

----

|                                                                    |   | **Total**                 |         | **Outstanding                  Amount by Year of Maturity** |   |
|-------------------------------------------------------------------------|--------|---------------------------|--------------|-------------------------------------------------------------|--------|
|                                                                    |   | **Outstanding****Amount** |         | **2007**                                                    |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **Thereafter** |   | **Total                  Fair Value** |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **ASSETS**                                                              |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Cash                  and cash equivalents***                        |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                             |   |                      | US$343,442   |                                                        |   | US$343,442 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$343,442 |   |
| In                  Euro                                                |   |                      | 19,136       |                                                        |   | 19,136 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 19,136 |   |
| In                  Chinese Yuan                                        |   |                      | 33,590       |                                                        |   | 33,590 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 33,590 |   |
| ***Investments                  and temporary cash investments***       |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                             |   |                      | 555,795      |                                                        |   | 555,795 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 555,795 |   |
|  ***Trade                  accounts receivable***                  |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *Rreais*                                            |   |                      | 33,267       |                                                        |   | 33,267 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 33,267 |   |
| In                  Euro                                                |   |                      | 65,927       |                                                        |   | 65,927 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 65,927 |   |
|  ***Deferred                  income tax assets***                 |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                             |   |                      | 252,857      |                                                        |   | 107,304 |   |   | 89,343 |   |   | 24,756 |   |   | 10,117 |   |   | 8,469 |   |   | 12,869 |   |   | 252,857 |   |
| In                  Euro                                                |   |                      | 11,932       |                                                        |   | 11,932 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 11,932 |   |
| ***Other                  assets***                                     |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                             |   |                      | 56,765       |                                                        |   | 42,611 |   |   | 14,154 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 56,765 |   |
| In                  Euro                                                |   |                      | 23,596       |                                                        |   | 8,430 |   |   | 15,166 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 23,596 |   |
| In                  CNY                                                 |   |                      | 8,734        |                                                        |   | 8,734 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 8,734 |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  Assets in*****reais***** **               |   |                      | US$1,242,126 |                                                        |   | US$1,082,419 |   |   | US$103,496 |   |   | US$24,756 |   |   | US$10,117 |   |   | US$8,469 |   |   | US$12,869 |   |   | US$1,242,126 |   |
| **-**                                                                   |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  Assets in Euro**                               |   |                      | US$120,590   |                                                        |   | US$105,424 |   |   | 15,166 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$120,590 |   |
| **-**                                                                   |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  Assets in Chinese Yuan**                       |   |                      | US$42,323    |                                                        |   | US$42,323 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$42,323 |   |
| **-**                                                                   |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **LIABILITIES**                                                         |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                                                                   |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                             |   |                      | US$298,213   |                                                        |   | US$268,415 |   |   | US$4,495 |   |   | US$6,468 |   |   | US$5,811 |   |   | US$5,287 |   |   | US$7,735 |   |   | US$340,472 |   |
| In                  Euro                                                |   |                      | 33,915       |                                                        |   | 20,745 |   |   | 5,670 |   |   | 2,500 |   |   | 2,500 |   |   | 2,500 |   |   | - |   |   | 33,671 |   |
| In                  Japanese Yen                                        |   |                      | -            |                                                        |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
|  ***Accounts                  payable to suppliers***              |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| In                  *reais*                                             |   |                      | 57,637       |                                                        |   | 57,637 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 57,637 |   |
| In                  Euro                                                |   |                      | 37,812       |                                                        |   | 37,812 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 37,812 |   |
|  ***Customer                  advances***                          |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| In                  *reais*                                        |   |                      | 22,171       |                                                        |   | 22,171 |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 22,171 |   |
| ***Other                  accounts payable & accrued liabilities*** |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| In                  *reais*                                             |   |                      | 129,965      |                                                        |   | 129,077 |   |   | 888 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 129,965 |   |
| In                  Euro                                                |   |                      | 35,263       |                                                        |   | 27,575 |   |   | 7,688 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 35,263 |   |
| In                  CNY                                                 |   |                      | 5,789        |                                                        |   | 5,789 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 5,789 |   |
|  ***Taxes                  and payroll charges payable***          |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| In                  *reais*                                             |   |                      | 575,795      |                                                        |   | 244,424 |   |   | 203,511 |   |   | 56,392 |   |   | 23,045 |   |   | 19,290 |   |   | 29,313 |   |   | 575,975 |   |
| In                  Euro                                                |   |                      | 5,238        |                                                        |   | 5,238 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 5,238 |   |
| In                  Chinese Yuan                                        |   |                      | 8,442        |                                                        |   | 8,442 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 8,442 |   |
| ***Accrued                  taxes on income***                          |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| In                  *reais*                                        |   |                      | 192          |                                                        |   | 192 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 192 |   |
| In                  Euro                                                |   |                      | 3,341        |                                                        |   | 3,341 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 3,341 |   |
|  ***Deferred                  income tax liabilities***            |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                             |   |                      | 208,517      |                                                        |   | 24,079 |   |   | 29,381 |   |   | 31,084 |   |   | 30,081 |   |   | 30,438 |   |   | 63,454 |   |   | 208,517 |   |
| In                  Euro                                                |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| ***Accrued                  dividends***                                |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                        |   |                      | 35,555       |                                                        |   | 35,555 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 35,555 |   |
|  ***Contingencies***                                               |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| In                  *reais*                                             |   |                      | 48,955       |                                                        |   | 20,775 |   |   | 17,297 |   |   | 4,793 |   |   | 1,959 |   |   | 1,640 |   |   | 2,491 |   |   | 48,955 |   |
| In                  Euro                                                |   |                      | 15,589       |                                                        |   | 15,024 |   |   | 565 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | 15,589 |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| **Total                  liabilities in*****reais***                    |   |                      | US$1,377,180 |                                                        |   | US$802,326 |   |   | US$255,572 |   |   | US$98,736 |   |   | US$60,896 |   |   | US$56,655 |   |   | US$102,994 |   |   | US$1,419,439 |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| **Total                  liabilities in Euro**                          |   |                      | US$131,158   |                                                        |   | US$109,735 |   |   | US$13,923 |   |   | US$2,500 |   |   | US$2,500 |   |   | US$2,500 |   |   | - |   |   | US$130,914 |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| **Total                  liabilities in Japanese Yen**                  |   |                      | -            |                                                        |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| **Total                  liabilities in Chinese Yuan**                  |   |                      | US$14,231    |                                                        |   | US$14,231 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$14,231 |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Total                  exposure in*****reais***                       |   |                      | US$(135,055  | )                                                           |   | US$280,093 |   |   | US$(152,075 | ) |   | US$(73,980 | ) |   | US$(50,779 | ) |   | US$(48,187 | ) |   | US$(90,125 | ) |   | US$(177,314 | ) |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| **Total                  exposure in Euro**                             |   |                      | US$(10,568   | )                                                           |   | US$(4,311 | ) |   | US$1,243 |   |   | US$(2,500 | ) |   | US$(2,500 | ) |   | US$(2,500 | ) |   | - |   |   | US$(10,324 | ) |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| **Total                  exposure in Japanese Yen**                     |   |                      | -            |                                                        |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                    |   |                      |         |                                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | - |   |
| **Total                  exposure in Chinese Yuan**                     |   |                      | US$28,092    |                                                        |   | US$28,092 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$28,092 |   |

----

|                                                                                                                                                     |   | **Total**                 |                             | **Outstanding                    Amount by Year of Maturity** |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|----------------------------------|---------------------------------------------------------------|--------|
|                                                                                                                                                     |   | **Outstanding****Amount** |                             | **2007**                                                      |   | **2008** |   | **2009** |   | **2010** |   | **2011** |   | **Thereafter** |   | **Total                    Fair Value** |   |
|                                                                                                                                                     |   |                      |                             |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **DERIVATIVE                    INSTRUMENTS**                                                                                                            |   |                      |                             |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| *Cross-currency                    interest rate swap contracts (US$Floating v. US$Fixed)*                                                               |   |                      |                             |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notional                    amount                                                                                                                       |   |                      | US$239,371                       |                                                          |   | US$38,566 |   |   | US$42,544 |   |   | US$42,544 |   |   | US$34,049 |   |   | US$25,555 |   |   | US$56,114 |   |   | US$2,937 |   |
| Average                    interest paid in US$                                                                                                          |   |                      | 7.36                             | %                                                             |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Average                    interest received in US$                                                                                                      |   |                      | Libor                    + 2.68  | %                                                             |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| *Cross-currency                    interest rate swap contracts (US$v. R$)*                                                                              |   |                      |                             |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notional                    amount                                                                                                                       |   |                      | US$16,434                        |                                                          |   | US$11,646 |   |   | US$4,788 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$(15,236 | ) |
| Average                    interest paid in *eais*                                                                                                  |   |                      | 58.61%                    of CDI |                                                          |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Average                    interest received in US$                                                                                                      |   |                      | 5.14                             | %                                                             |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| *Dual-currency                    interest rate swap contracts CDI v. the greater than exchange                    variation or                    CDI)* |   |                      |                             |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Notional                    amount                                                                                                                       |   |                      | US$6,289                         |                                                          |   | US$6,289 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | US$7 |   |
| Average                    interest paid in US$                                                                                                          |   |                      | 9.88                             | %                                                             |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Average                    interest received in JPY                                                                                                      |   |                      | 15.29                            | %                                                             |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
|                                                                                                                                                     |   |                      |                             |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Net                    exposure of assets/liabilities**                                                                                                |   |                      |                             |                                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| -                    In                    *reais*                                                                                                       |   |                      | US$(157,778                      | )                                                             |   | US$262,158 |   |   | US$(156,863 | ) |   | US$(73,980 | ) |   | US$(50,779 | ) |   | US$(48,187 | ) |   | US$(90,125 | ) |   | - |   |
| -                    In                    Euro                                                                                                          |   |                      | US$(10568                        | )                                                             |   | US$(4,311 | ) |   | US$1,243 |   |   | US$(2,500 | ) |   | US$(2,500 | ) |   | US$(2,500 | ) |   | - |   |   | - |   |
| -                    In                    Japanese Yen                                                                                                  |   |                      | -                                |                                                          |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |
| -                    In                    Chinese Yuan                                                                                                  |   |                      | US$28,092                        |                                                          |   | US$28,092 |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |   | - |   |

| **ITEM                  12.** | **DESCRIPTION                  OF SECURITIES OTHER THAN EQUITY                  SECURITIES** |
|-------------------------------|----------------------------------------------------------------------------------------------|

**PART        II**

| **ITEM                  13.** | **DEFAULTS,                  DIVIDEND ARREARAGES AND                  DELINQUENCIES** |
|-------------------------------|---------------------------------------------------------------------------------------|

| **ITEM                  14.** | **MATERIAL                  MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND                  USE OF PROCEEDS** |
|-------------------------------|--------------------------------------------------------------------------------------------------------------------|

**Material        Modifications to the Rights of Security Holders**

*Novo        Mercado*

----

***Comparison        of Rights of Holders of Former Embraer Common Shares and Embraer Common        Shares***

|                                                           |   | **Rights                  of Holders of Former Embraer****Common                  Shares**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |   | **Rights                  of Holders of Embraer****Common                  Shares**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|----------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Voting                                                         |   | Each                  former Embraer common share entitled its holder to one vote in                  the                  resolutions of a general meeting.  Certain                  resolutions and acts of the shareholders and management of former                  Embraer                  were subject to the veto of the Brazilian                  Government, as holder of the Golden Share.                                                                                                                                                                                                                                                                                                                                           |   | Each                  of our common shares entitles its holder to one vote in the resolutions                  of                  a general meeting. In                  the resolutions of the general meeting: (1) no shareholder or group                  of                  shareholders, whether Brazilian or non-Brazilian, including brokers                  acting                  on behalf of one or more holders of ADSs, may exercise voting rights                  representing more than 5% of the number of shares into which the                  capital                  stock is divided; and (2) non-Brazilian shareholders and groups                  of                  non-Brazilian shareholders may not exercise voting rights representing                  more than 2⁄3 of the total of the votes conferred on the entirety of                  Brazilian shareholders present. Certain                  resolutions and acts of our shareholders and management will be                  subject to                  the veto of the Brazilian Government, as holder of the Golden                  Share. |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Maximum                  Shareholder Votes                     |   | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | No                  shareholder or group of shareholders, whether Brazilian or non-Brazilian,                  may exercise voting rights representing more than 5% of our total                  capital                  stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Non-Brazilian                  Shareholder Voting              |   | Ownership                  of former Embraer common shares by non-Brazilians was limited to                  40% of                  all former Embraer common shares. Non-Brazilian shareholders holding                  former Embraer common shares, within the 40% limitation, had full                  voting                  rights.                                                                                                                                                                                                                                                                                                                                                                                                           |   | Non-Brazilian                  shareholders and groups of non-Brazilian shareholders may not exercise                  voting rights representing more than 2⁄3 of the total of the votes conferred                  on the entirety of Brazilian shareholders present at the general                  meeting                  of our shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Dividends                                                      |   | Shareholders                  were entitled to receive, in each fiscal year, a mandatory dividend                  corresponding to a percentage equivalent to 25% of the net income                  for the                  fiscal year, subject to certain adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Shareholders                  are entitled to receive, in each fiscal year, a mandatory dividend                  corresponding to a percentage equivalent to 25% of the net income                  for the                  fiscal year, subject to certain adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Number                  of Directors; Qualifications           |   | The                  Board of Directors consisted of at least nine and no more than                  18                  directors and their respective alternates, all of whom had to be                  shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   | The                  Board of Directors consists of 11 members and their respective                  alternates,                  all of whom must be shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Term                  of Directors                             |   | The                  directors were elected at a general meeting for a term of three                  years,                  reelection being permitted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |   | The                  transition Board of Directors has a term of office of three years,                  until                  the annual general meeting in 2009 that approves the financial                  statements                  for the fiscal year ended December 31, 2008. After such meeting,                  the term                  of office of the Board of Directors will be for two years, reelection                  being allowed.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Removal                  of Directors and Filling of Vacancies |   | In                  the event of impairment or a vacancy in the office of a member                  of the                  Board of Directors, his alternate assumed office until such impairment                  ceased or, in the event of a vacancy,                  until the first general meeting subsequent thereto was held, which                  general                  meeting established a definitive alternate                  for the remaining term of office. In case of simultaneous or successive                  vacancies in the offices of an effective director and his respective                  alternate,                  the Board of Directors convened a general meeting to fill such                  offices. |   | As                  already provided by the Brazilian Corporate Law and, therefore,                  applicable                  to holders of our common shares, whenever the election is conducted                  under                  the cumulative voting process, the dismissal of any member of the                  Board of                  Directors at a general meeting will immediately result in the dismissal                  of                  all the other members, thus requiring a new election; in other                  cases of                  vacancy, if there is no alternate, the entire Board of Directors                  will                  stand for election at the next general meeting. Any                  vacant offices that have not been filled, due to a tie, will be                  subject to                  a new voting, under the same process, after adjustment is made                  to the                  number of votes entitled to each shareholder based on the number                  of seats                  to be filled.                                             |
|                                                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

----

|   |   | **Rights                  of Holders of Former Embraer****Common                  Shares** |   | **Rights                  of Holders of Embraer****Common                  Shares** |
|--------|--------|--------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------|

| Election                  of Directors                            |   | In                  the election of the directors, the general meeting first established,                  by a                  majority vote, the number of directors to be elected that were                  not                  otherwise allocated as representatives of a certain person or group.                  If                  the process of cumulative voting had not been requested, the general                  meeting voted by means of a candidates roll previously registered                  with the                  presiding board, which candidates roll assured the shareholders                  that held,                  whether individually or in block, 20% or more of the former Embraer                  common                  shares had the right to appoint two effective directors and their                  respective alternates. |   | Unless                  a 5% shareholder invokes the cumulative voting provision, the election                  of                  directors will be conducted under a system of slate voting, whereby                  voting                  on individual candidates will not be allowed; provided, however,                  that any                  shareholder who wishes to do so must appoint candidates at least                  ten days                  prior to the general meeting of shareholders at which the members                  of the                  Board of Directors will be elected. As                  already provided by the Brazilian Corporate Law and, therefore,                  applicable                  to holders of our common shares, shareholders representing at least                  5% of                  the corporate capital may request the election of directors by                  cumulative                  voting if notice is given to the company no later than 48 hours                  prior to                  the date for which the general meeting has been called. Each                  shareholder will have the right to cumulate their votes for one                  candidate                  and the respective alternate, or to distribute them among several                  candidates. The candidate(s) and respective alternate(s) that receive                  the                  higher number of votes will be declared elected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Quorum                  of Shareholders for a General Meeting     |   | The                  quorum for convening a general meeting on first call was the presence                  of                  shareholders representing at least 25% of the voting capital; on                  second                  call, it was convened with the presence of any number of                  shares.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |   | The                  quorum for convening a general meeting on first call is the presence                  of                  shareholders representing at least 35% of the capital stock, except                  if the                  law requires a higher quorum; and on second call is the presence                  of                  shareholders representing at least 25% of the capital stock; and,                  on third                  call, the presence of any number of shareholders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Notice                  of Shareholders’ Meetings           |   | The                  first call of a general meeting was made 15 days in advance, and                  the                  second call was eight days in advance of the general                  meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | A                  general meeting is called by the Board of Directors or, as provided                  by                  law, by shareholders or by the Conselho Fiscal, the first call                  being                  published at least 30 days in advance of the general meeting counting                  from                  the date of the first publication of the notice; if the meeting                  is not                  held because of a lack of quorum, a notice of second call will                  be                  published at least 15 days in advance of the general meeting; and,                  if                  again the meeting is not held, the third call will be published                  at least                  eight days in advance of the general meeting.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                              |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| Compulsory                  Acquisition of a Majority Shareholder |   | None.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   | Any                  shareholder or group of shareholders that acquires or becomes the                  holder,                  for any reason of: (i) 35% or more or the total shares issued by                  us; or                  (ii) of other rights, including beneficial ownership and trust,                  over                  shares issued by us that represent more than 35% of our capital,                  or an                  Acquiring Shareholder, will submit to the Brazilian Government,                  as holder                  of the Golden Share, through the Brazilian Ministry of Finance,                  a request                  to make a public tender offer for acquisition of all shares issued                  by us.                  If the request is denied, the Acquiring Shareholder, within a period                  of 30                  days as of communication of the denial, must sell all of the shares                  that                  exceed the 35% limit. During the period between the request to                  make the                  public tender offer and the reply from the Brazilian Government,                  the                  Acquiring Shareholder may not acquire or sell any shares or convertible                  securities issued by us. The                  price to be paid for each of our common shares in the public tender                  offer                  must be equal to or greater than the amount obtained by the following                  formula: “Acquisition                  Price” = Value of the Share + 50% PremiumValue                  of the Share” = the greater value between: (i) the highest unit                  quotation of the shares issued by us during the 12-month period                  prior to                  conducting the public tender offer recorded on any stock exchange                  in which                  the shares were traded; (ii) the highest price paid by the Acquiring                  Shareholder during the 36-month period prior to the public tender                  offer                  for a share or tranche of shares issued by us; (iii) the amount                  equivalent to 14.5 times our consolidated average EBITDA (determined                  in                  accordance with the bylaws), reduced by our net consolidated indebtedness,                  divided by the total number of shares issued; and (iv) the amount                  equivalent to 0.6 times the amount of our firm backlog orders,                  according                  to the last information disclosed by us, reduced by our net consolidated                  indebtedness, divided by the total number of shares issued by                  us. |

----

***Comparison        of Rights of Holders of Former Embraer Preferred Shares and Embraer Common        Shares***

|                                                      |   |  **Rights                  of Holders of Former Embraer****Preferred                  Shares**                                                                                                                                                                                                                                                                                                                                                                                 |   |  **Rights                  of Holders of Embraer****Common                  Shares**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|-----------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Voting                                                    |   | Preferred                  shares were not entitled to vote at a general meeting. Preferred                  shareholders could attend a general meeting and take part in the                  discussion of matters presented at the meeting.                                                                                                                                                                                                                                      |   | Each                  of our common shares entitles its holder to one vote in the resolutions                  of                  a general meeting.                   In                  the resolutions of the general meeting: (1) no shareholder or group                  of                  shareholders, whether Brazilian or non-Brazilian, including brokers                  acting                  on behalf of one or more holders of ADSs, may exercise voting rights                  representing more than 5% of the number of shares into which the                  capital                  stock is divided; and (2) the set of non-Brazilian shareholders                  and groups                  of shareholders may not exercise voting rights representing more                  than                  two-thirds of the total of the votes conferred on the entirety                  of                  Brazilian shareholders present. Certain                  resolutions and acts of our shareholders and management are subject                  to the                  veto of the Brazilian Government, as holder of the Golden                  Share. |
|                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Dividends                                                 |   | Preferred                  shares were entitled to the receipt of dividends per share at least                  10%                  higher than those conferred to each common share. Shareholders                  were                  entitled to receive, in each fiscal year, a mandatory dividend                  corresponding to a percentage equivalent to 25% of the net income                  for the                  fiscal year, subject to certain adjustments. |   | There                  is no dividend preference among shareholders. The shareholders                  will be                  entitled to receive, in each fiscal year, a mandatory dividend                  corresponding to a percentage equivalent to 25% of the net income                  for the                  fiscal year, subject to certain adjustments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                      |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| Priority                  in Capital Stock Reimbursements |   | Preferred                  shares were entitled to at least a 10% premium over that received                  by                  common shares in the event of a reimbursement of capital.                                                                                                                                                                                                                                                                                         |   | There                  is no preference among shareholders in the event of a reimbursement                  of                  capital.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |

**Use        of Proceeds**

----

| **ITEM                  15.** | **CONTROLS                  AND                  PROCEDURES** |
|-------------------------------|---------------------------------------------------------------|

**Disclosure        Controls and Procedures**

**Management’s        Report on Internal Control over Financial Reporting**

----

**Changes        in Internal Controls**

| **ITEM                          16A.** | **AUDIT                                COMMITTEE FINANCIAL                                EXPERT** |
|----------------------------------------|----------------------------------------------------------------------------------------------------|

| **ITEM                      16B.** | **CODE                          OF                          ETHICS** |
|------------------------------------|----------------------------------------------------------------------|

| **ITEM                        16C.** | **PRINCIPAL                            ACCOUNTANT FEES AND                            SERVICES** |
|--------------------------------------|--------------------------------------------------------------------------------------------------|

|                                |   | **2005**                          |     | **2006** |   |
|-------------------------------------|--------|-----------------------------------|----------|----------|--------|
|                                |   | (*in                  thousands*) |     |
| Audit                  Fees         |   |                              | US$1,093 |     |   | US$1,886 |   |
| Audit-Related                  Fees |   |                              | 621      |     |   | 434 |   |
| Tax                  Fees           |   |                              | 508      |     |   | 807 |   |
| All                  Other Fees     |   |                              | 68       |     |   | 148 |   |
| Total                               |   |                              | US$2,290 |     |   | US$3,275 |   |

**Audit        Fees **

**Audit-Related        Fees **

**Tax        Fees **

----

**All        Other Fees **

**Pre-Approval        Policies and Procedures**

*de        minimis *
*de        minimis*

| **ITEM                          16D.** | **EXEMPTIONS                              FROM THE LISTING STANDARDS FOR AUDIT                              COMMITTEES** ** ** |
|----------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------|

| **ITEM                                    16E.** | **PURCHASES                                          OF EQUITY SECURITIES BY THE ISSUER AND                                          AFFILIATED                                          PURCHASERS** |
|--------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**PART        III**

| **ITEM                  17.** | **FINANCIAL                  STATEMENTS** |
|-------------------------------|-------------------------------------------|

| **ITEM                  18.** | **FINANCIAL                  STATEMENTS** |
|-------------------------------|-------------------------------------------|

| **ITEM                  19.** | **EXHIBITS**** ** |
|-------------------------------|------------------------|

| ExhibitNumber  | Description  |
|---------------------|-------------------|
|   |   |
|--------|--------|
| 1.1 | Bylaws                  of Embraer (English translation) incorporated herein by reference                  from                  Exhibit 3.2 to Embraer’s Registration Statement No.                  333-132289. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.1 | Form                  of Amended and Restated Deposit Agreement among Embraer, Morgan                  Guaranty                  Trust Company of New York, as depositary, and the Holders from                  time to                  time of American Depositary Shares issued thereunder, including                  the Form                  of American Depositary Receipts, incorporated herein by reference                  to                  Exhibit 99(a) to Embraer’s Registration Statement                  No. 333-133162. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2 | Indenture,                  dated as of October 25, 2006, among Embraer Overseas Limited,                  Embraer-Empresa Brasileira de Aeronáutica S.A., The Bank of New York, as                  Trustee, Registrar, Transfer Agent, and Principal Paying Agent,                  and The                  Bank of New York (Luxembourg) S.A., as Luxembourg Paying Agent                  and                  Transfer Agent, incorporated herein by reference from Exhibit 4.1                  to                  Embraer’s Registration Statement No.                  333-141629. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.3 | The                  registrant hereby agrees to furnish to the SEC, upon request, copies                  of                  certain instruments defining the rights of holders of long-term                  debt of                  the kind described in Item 2(b)(i) of the Instructions as to Exhibits                  in                  Form 20-F. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1* | Shareholders’                  Agreement executed by Embraer and Liebherr International AG on                  May 22, 2000, incorporated herein by reference from Exhibit 10.5                  to Embraer’s Registration Statement No.                  333-12220. |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Protocol                  of Merger and Justification of Embraer-Empresa Brasileira de Aeronáutica                  S.A. with and into Rio Han Empreendimentos e Participações S.A., dated as                  of January 19, 2006, and exhibits thereto, or Merger Agreement                  (English                  translation), incorporated herein by reference from Exhibit 2.1                  to                  Embraer’s Registration Statement No.                  333-132289. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | Lease                  Agreement, as amended, between Howard County and Embraer Aircraft                  Corporation, dated as of April 21, 1998, incorporated herein by                  reference                  from Exhibit 10.6 to Embraer’s Registration Statement No.                  333-12220. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | Lease                  Agreement, as amended, between the Paris Airport and Embraer, dated                  as of                  January 1, 1999, together with an English translation,                  incorporated herein by reference from Exhibit 10.6 to Embraer’s                  Registration Statement No.                  333-12220. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.1** | List                    of Embraer’s subsidiaries. |
|-------|----------------------------------------------------------|

----

| 11.1 | Code                  of Ethics and Conduct, incorporated herein by reference from Exhibit                  11.1                  to Embraer’s Annual Report on Form 20-F for the fiscal year ended December                  31, 2003. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.1 | Rule                  13a-14(a)/15d-14(a) Certification of Chief Executive                  Officer. |
|------|------------------------------------------------------------------------------------------------------|

| 12.2 | Rule                  13a-14(a)/15d-14(a) Certification of Chief Financial                  Officer. |
|------|------------------------------------------------------------------------------------------------------|

| 13.1 | Section                  1350 Certification of Chief Executive                  Officer. |
|------|------------------------------------------------------------------------------------------|

| 13.2 | Section                  1350 Certification of Chief Financial                  Officer. |
|------|------------------------------------------------------------------------------------------|

----

----

**SIGNATURES**

|                    |                                                                                    |                                                       |
|-------------------------|-----------------------------------------------------------------------------------------|------------------------------------------------------------|
|                    | EMBRAER                  - EMPRESA                  BRASILEIRA DE AERONÁUTICA S.A. |
|               |                                                                               |                                                  |
| Date: November 26, 2007 | By:                                                                           | /s/ FREDERICO                  PINHEIRO FLEURY CURADO |
|                    | Name: Frederico                  Pinheiro Fleury Curado                            |
|                    | Title: President                  and Chief Executive Officer                      |

|                    |                                                                                                                                    |                                                       |
|-------------------------|-----------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|
|                    |                                                                                                                                         |
|               |                                                                                                                               |                                                  |
| Date: November 26, 2007 | By:                                                                                                                           | /s/ ANTONIO                  LUIZ PIZARRO MANSO  |
|                    | Name: Antonio                  Luiz Pizarro Manso                                                                                  |
|                    | Title: Executive                  Vice**-**President                  Corporate and  Chief                  Financial Officer |

----

**EXHIBIT        INDEX**

| 1.1 | Bylaws                  of Embraer (English translation) incorporated herein by reference                  from                  Exhibit 3.2 to Embraer’s Registration Statement No.                  333-132289. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.1 | Form                  of Amended and Restated Deposit Agreement among Embraer, Morgan                  Guaranty                  Trust Company of New York, as depositary, and the Holders from                  time to                  time of American Depositary Shares issued thereunder, including                  the Form                  of American Depositary Receipts, incorporated herein by reference                  to                  Exhibit 99(a) to Embraer’s Registration Statement                  No. 333-133162. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.2 | Indenture,                  dated as of October 25, 2006, among Embraer Overseas Limited,                  Embraer-Empresa Brasileira de Aeronáutica S.A., The Bank of New York, as                  Trustee, Registrar, Transfer Agent, and Principal Paying Agent,                  and The                  Bank of New York (Luxembourg) S.A., as Luxembourg Paying Agent                  and                  Transfer Agent, incorporated herein by reference from Exhibit 4.1                  to                  Embraer’s Registration Statement No.                  333-141629. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.4 | The                  registrant hereby agrees to furnish to the SEC, upon request, copies                  of                  certain instruments defining the rights of holders of long-term                  debt of                  the kind described in Item 2(b)(i) of the Instructions as to Exhibits                  in                  Form 20-F. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1* | Shareholders’                  Agreement executed by Embraer and Liebherr International AG on                  May 22,                  2000, incorporated herein by reference from Exhibit 10.5 to Embraer’s                  Registration Statement No.                  333-12220. |
|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.2 | Protocol                  of Merger and Justification of Embraer-Empresa Brasileira de Aeronáutica                  S.A. with and into Rio Han Empreendimentos e Participações S.A., dated as                  of January 19, 2006, and exhibits thereto, or Merger Agreement                  (English                  translation), incorporated herein by reference from Exhibit 2.1                  to                  Embraer’s Registration Statement No.                  333-132289. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.3 | Lease                  Agreement, as amended, between Howard County and Embraer Aircraft                  Corporation, dated as of April 21, 1998, incorporated herein by                  reference                  from Exhibit 10.6 to Embraer’s Registration Statement No.                  333-12220. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.4 | Lease                  Agreement, as amended, between the Paris Airport and Embraer, dated                  as of                  January 1, 1999, together with an English translation, incorporated                  herein                  by reference from Exhibit 10.6 to Embraer’s Registration Statement No.                  333-12220. |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 8.1** | List                  of Embraer’s subsidiaries. |
|-------|--------------------------------------------------------|

| 11.1 | Code                  of Ethics and Conduct, incorporated herein by reference from Exhibit                  11.1                  to Embraer’s Annual Report on Form 20-F for the fiscal year ended December                  31, 2003. |
|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 12.1 | Rule                  13a-14(a)/15d-14(a) Certification of Chief Executive                  Officer. |
|------|------------------------------------------------------------------------------------------------------|

| 12.2 | Rule                  13a-14(a)/15d-14(a) Certification of Chief Financial                  Officer. |
|------|------------------------------------------------------------------------------------------------------|

| 13.1 | Section                  1350 Certification of Chief Executive                  Officer. |
|------|------------------------------------------------------------------------------------------|

| 13.2 | Section                  1350 Certification of Chief Financial                  Officer. |
|------|------------------------------------------------------------------------------------------|

----

----

**INDEX            TO FINANCIAL STATEMENTS**

|                                                                                                                                                                                                            |   | Page   |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
|                                                                                                                                                                                                            |   |   |   |
| Index                      to Financial Statements                                                                                                                                                              |   |   | F-1    |   |
| Report                      of Independent Registered Public Accounting Firm                                                                                                                                    |   |   | F-2    |   |
| Consolidated                      Balance Sheets at December 31, 2005 (Restated) and 2006                      (Restated)                                                                                       |   |   | F-5    |   |
| Consolidated                      Statements of Income and Comprehensive Income for the Years                      Ended December 31, 2004 (Restated), 2005 (Restated) and 2006                      (Restated) |   |   | F-7    |   |
| Consolidated                      Statements of Cash Flows for theYears                      Ended December 31, 2004 (Restated), 2005 (Restated) and 2006                      (Restated)                       |   |   | F-8    |   |
| Consolidated                      Statements of Shareholders’ Equity for the Years                      Ended December 31, 2004, 2005 and 2006                                                            |   |   | F-9    |   |
| Notes                      to Consolidated Financial Statements for the                                                                                                                                         |   |   | F-10   |   |

----

** **
*Internal              Control—Integrated Framework *

----

*Internal                Control—Integrated Framework *
*Internal                Control—Integrated Framework *
*.*

----

----

|                                                    |   |   |   |                               |         |
|---------------------------------------------------------|--------|--------|--------|------------------------------------|--------------|
| ASSETS                                                  |   | Notes  |   | 2005                               |         | 2006 |   |
|                                                    |   |   |   | (As                      Restated) |         | (As                      Restated) |   |
| CURRENT                      ASSETS                     |   |   |   |                               |         |   |   |   |   |   |
| Cash                      and cash equivalents          |   |   | 5      |                               |         | 1,339,159 |   |   | 1,209,396 |   |
| Temporary                      cash investments         |   |   | 6      |                               |         | 574,395 |   |   | 555,795 |   |
| Trade                      accounts receivable, net     |   |   | 7      |                               |         | 450,355 |   |   | 277,878 |   |
| Customer                      and commercial financing  |   |   | 8      |                               |         | 147,118 |   |   | 16,215 |   |
| Collateralized                      accounts receivable |   |   | 9      |                               |         | 65,440 |   |   | 70,980 |   |
| Inventories                                             |   |   | 10     |                               |         | 1,477,559 |   |   | 2,047,244 |   |
| Deferred                      income taxes              |   |   | 27     |                               |         | 121,376 |   |   | 116,510 |   |
| Guarantee                      deposits                 |   |   | 11     |                               |         | 269,522 |   |   | 318,059 |   |
| Other                      assets                       |   |   | 11     |                               |         | 170,598 |   |   | 147,644 |   |
| Total                      current assets               |   |   |   |                               |         | 4,615,522 |   |   | 4,759,721 |   |
|                                                    |   |   |   |                               |         |   |   |   |   |   |
| LONG                      TERM ASSETS                   |   |   |   |                               |         |   |   |   |   |   |
| Trade                      accounts receivable          |   |   | 7      |                               |         | 5,304 |   |   | 22,109 |   |
| Customer                      and commercial financing  |   |   | 8      |                               |         | 460,044 |   |   | 552,751 |   |
| Collateralized                      accounts receivable |   |   | 9      |                               |         | 788,780 |   |   | 748,742 |   |
| Property,                      plant and equipment, net |   |   | 13     |                               |         | 388,362 |   |   | 412,244 |   |
| Investments                                             |   |   | 12     |                               |         | 31,433 |   |   | 33,844 |   |
| Deferred                      income taxes              |   |   | 27     |                               |         | 302,304 |   |   | 340,659 |   |
| Guarantee                      deposits                 |   |   | 11     |                               |         | 273,181 |   |   | 289,050 |   |
| Other                      assets                       |   |   | 11     |                               |         | 67,515 |   |   | 156,581 |   |
| Total                      long-term assets             |   |   |   |                               |         | 2,316,923 |   |   | 2,555,980 |   |
|                                                    |   |   |   |                               |    |     |   |   |                                 |   |
| TOTAL                      ASSETS                       |   |   |   |                               |         | 6,932,445 |   |   | 7,315,701 |   |

----

|                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |                               |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------------------|--------|
| LIABILITIES                      AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                      |   | Notes  |   | 2005                               |   | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                 |   |   |   | (As                      Restated) |   |  (As                      Restated) |   |
| CURRENT                      LIABILITIES                                                                                                                                                                                                                                                                                                                             |   |   |   |                               |   |   |   |
| Loans                      and financing                                                                                                                                                                                                                                                                                                                             |   |   | 19     |                               |   | 475,305 |   |   | 503,047 |   |
| Non-recourse                      and recourse debt                                                                                                                                                                                                                                                                                                                  |   |   | 9      |                               |   | 321,172 |   |   | 388,380 |   |
| Capital                      lease obligations                                                                                                                                                                                                                                                                                                                       |   |   | 20     |                               |   | 2,753 |   |   | 2,388 |   |
| Trade                      accounts payable                                                                                                                                                                                                                                                                                                                          |   |   |   |                               |   | 728,011 |   |   | 912,753 |   |
| Advances                      from customers                                                                                                                                                                                                                                                                                                                         |   |   | 16     |                               |   | 485,958 |   |   | 544,802 |   |
| Other                      payables, accrued liabilities                                                                                                                                                                                                                                                                                                             |   |   | 15     |                               |   | 405,965 |   |   | 433,291 |   |
| Taxes                      and payroll charges payable                                                                                                                                                                                                                                                                                                               |   |   | 17     |                               |   | 113,360 |   |   | 136,950 |   |
| Contingencies                                                                                                                                                                                                                                                                                                                                                        |   |   | 18     |                               |   | 19,826 |   |   | 31,175 |   |
| Deferred                      income taxes                                                                                                                                                                                                                                                                                                                           |   |   | 27     |                               |   | 22,153 |   |   | 23,609 |   |
| Accrued                      taxes on income                                                                                                                                                                                                                                                                                                                         |   |   |   |                               |   | 37,122 |   |   | 6,848 |   |
| Dividends                      payable                                                                                                                                                                                                                                                                                                                               |   |   |   |                               |   | 42,811 |   |   | 35,555 |   |
| Total                      current liabilities                                                                                                                                                                                                                                                                                                                       |   |   |   |                               |   | 2,654,436 |   |   | 3,018,798 |   |
|                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |                               |   |   |   |   |   |   |
| LONG-TERM                      LIABILITIES                                                                                                                                                                                                                                                                                                                           |   |   |   |                               |   |   |   |   |   |   |
| Loans                      and financing                                                                                                                                                                                                                                                                                                                             |   |   | 19     |                               |   | 1,078,117 |   |   | 846,104 |   |
| Non-recourse                      and recourse debt                                                                                                                                                                                                                                                                                                                  |   |   | 9      |                               |   | 498,081 |   |   | 441,378 |   |
| Capital                      lease obligations                                                                                                                                                                                                                                                                                                                       |   |   | 20     |                               |   | 2,216 |   |   | 3,453 |   |
| Advances                      from customers                                                                                                                                                                                                                                                                                                                         |   |   | 16     |                               |   | 97,024 |   |   | 183,639 |   |
| Contribution                      from suppliers                                                                                                                                                                                                                                                                                                                     |   |   | 14     |                               |   | 97,852 |   |   | 92,217 |   |
| Taxes                      and payroll charges payable                                                                                                                                                                                                                                                                                                               |   |   | 17     |                               |   | 513,743 |   |   | 455,048 |   |
| Other                      payables and accrued liabilities                                                                                                                                                                                                                                                                                                          |   |   | 15     |                               |   | 125,006 |   |   | 107,512 |   |
| Deferred                      income taxes                                                                                                                                                                                                                                                                                                                           |   |   | 27     |                               |   | 165,250 |   |   | 195,988 |   |
| Contingencies                                                                                                                                                                                                                                                                                                                                                        |   |   | 18     |                               |   | 33,691 |   |   | 33,369 |   |
| Total                      long-term liabilities                                                                                                                                                                                                                                                                                                                     |   |   |   |                               |   | 2,610,980 |   |   | 2,358,708 |   |
|                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |                               |   |   |   |   |   |   |
| MINORITY                      INTEREST                                                                                                                                                                                                                                                                                                                               |   |   |   |                               |   | 46,775 |   |   | 63,914 |   |
|                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |                               |   |   |   |   |   |   |
| SHAREHOLDERS’                      EQUITY                                                                                                                                                                                                                                                                                                                      |   |   |   |                               |   |   |   |   |   |   |
| Statutory                      capital-                                                                                                                                                                                                                                                                                                                              |   |   |   |                               |   |   |   |   |   |   |
| Preferred                      (without par value, 1,000,000,000 shares authorized; 479,287,609                      shares                      issued and outstanding at December 31, 2005)                                                                                                                                                                        |   |   |   |                               |   | 882,627 |   |   | — |   |
| Common                      (at December 31, 2005, 500,000,000 shares authorized and 242,544,447                      shares issued and outstanding ; without par value, 1,000,000,000                      shares                      authorized and 739,903,913 shares issued and outstanding as                      of December                      31, 2006;) |   |   |   |                               |   | 298,397 |   |   | 1,434,406 |   |
| Special                      common share (R$ 1 par value, 1 share authorized, issued and                      outstanding                      at December 31, 2006 and 2005)                                                                                                                                                                                       |   |   |   |                               |   | — |   |   | — |   |
| Additional                      paid-up capital                                                                                                                                                                                                                                                                                                                      |   |   |   |                               |   | 8,353 |   |   | — |   |
| Legal                      reserve                                                                                                                                                                                                                                                                                                                                   |   |   |   |                               |   | 126,711 |   |   | 13,797 |   |
| Appropriate                      retained earnings                                                                                                                                                                                                                                                                                                                   |   |   |   |                               |   | 305,914 |   |   | 422,334 |   |
| Accumulated                      other comprehensive income (loss)                                                                                                                                                                                                                                                                                                   |   |   |   |                               |   | (1,748 | ) |   | 3,744 |   |
| Total                      shareholders’ equity                                                                                                                                                                                                                                                                                                                |   |   |   |                               |   | 1,620,254 |   |   | 1,874,281 |   |
|                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |                               |   |   |   |   |   |   |
| TOTAL                      LIABILITIES AND SHAREHOLDERS’ EQUITY                                                                                                                                                                                                                                                                                                |   |   |   |                               |   | 6,932,445 |   |   | 7,315,701 |   |

----

|                                                                                 |   |   |   |                               |                     |
|--------------------------------------------------------------------------------------|--------|--------|--------|------------------------------------|--------------------------|
|                                                                                 |   | Notes  |   | 2004                               |                     | 2005 |   | 2006 |   |
|                                                                                 |   |   |   | (As                      Restated) |                     | (As                      Restated) |   | (As                      Restated) |   |
| GROSS                      SALES                                                     |   |   |   |                               |                     |   |   |   |   |
| Foreign                      market                                                  |   |   |   |                               |                     | 3,152,010 |   |   | 3,508,796 |   |   | 3,682,830 |   |
| Domestic                      market                                                 |   |   |   |                               |                     | 282,287 |   |   | 312,507 |   |   | 146,063 |   |
| Sales                      deductions                                                |   |   |   |                               |                     |                         (82,154 | ) |   |                        (31,808 | ) |   |                         (69,374 | ) |
|                                                                                 |   |   |   |                               |      |   |   |    |   |   |    |   |   |
| NET                      SALES                                                       |   |   |   |                               |                     | 3,352,143 |   |   | 3,789,495 |   |   | 3,759,519 |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Cost                      of sales and services                                      |   |   |   |                               |                     | (2,336,737 | ) |   | (2,738,907 | ) |   | (2,806,802 | ) |
|                                                                                 |   |   |   |                               |                     |   |   |   |    |   |   |   |   |
| GROSS                      PROFIT                                                    |   |   |   |                               |                     | 1,015,406 |   |   | 1,050,588 |   |   | 952,717 |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| OPERATING                      INCOME (EXPENSES)                                     |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Selling                      expenses                                                |   |   |   |                               |                     | (185,086 | ) |   | (159,799 | ) |   | (220,596 | ) |
| Research                      and development                                        |   |   |   |                               |                     | (44,506 | ) |   | (93,166 | ) |   | (112,743 | ) |
| General                      and Administrative expenses                             |   |   |   |                               |                     | (139,357 | ) |   | (205,202 | ) |   | (235,505 | ) |
| Employee                      profit sharing                                         |   |   |   |                               |                     | (61,199 | ) |   | (56,051 | ) |   | (42,719 | ) |
| Other                      operating income (expenses), net                          |   |   | 28     |                               |                     | (41,272 | ) |   | (26,079 | ) |   | 1,677 |   |
| INCOME                      FROM OPERATIONS                                          |   |   |   |                               |                     | 543,986 |   |   | 510,291 |   |   | 342,831 |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Interest                      income (expenses), net                                 |   |   | 21     |                               |                     | (38,000 | ) |   | (4,117 | ) |   | 105,433 |   |
| Exchange                      loss, net                                              |   |   | 29     |                               |                     | (12,218 | ) |   | (15,218 | ) |   | (4,098 | ) |
| Other                      non-operating income (expenses), net                      |   |   |   |                               |                     | (117 | ) |   | 9,050 |   |   | — |   |
|                                                                                 |   |   |   |                               |      |   |   |    |   |   |   |   |   |
| INCOME                      BEFORE INCOME TAXES                                      |   |   |   |                               |                     | 493,651 |   |   | 500,006 |   |   | 444,166 |   |
| Income                      tax (expense)                                            |   |   | 27     |                               |                     | (112,139 | ) |   | (41,569 | ) |   | (44,412 | ) |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| INCOME                      BEFORE MINORITY INTEREST AND EQUITY LOSS FROM AFFILIATES |   |   |   |                               |                     | 381,512 |   |   | 458,437 |   |   | 399,754 |   |
| Minority                      interest                                               |   |   |   |                               |                     | (1,306 | ) |   | (9,622 | ) |   | (9,580 | ) |
| Equity                      in loss from affiliates                                  |   |   |   |                               |                     | — |   |   | (3,096 | ) |   | (34 | ) |
|                                                                                 |   |   |   |                               |           |   |   |   |   |   |   |   |   |
| NET                      INCOME                                                      |   |   |   |                               |                     | 380,206 |   |   | 445,719 |   |   | 390,140 |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| OTHER                      COMPREHENSIVE INCOME                                      |   |   |   |                               |                     | 5,174 |   |   | (4,632 | ) |   | 9,287 |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| COMPREHENSIVE                      INCOME                                            |   |   |   |                               |                     | 385,380 |   |   | 441,087 |   |   | 399,427 |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| EARNINGS                      PER SHARE                                              |   |   | 25     |                               |                     |   |   |   |   |   |   |   |   |
| Basic-                                                                               |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Common                                                                               |   |   |   |                               |                     | 0.4970 |   |   | 0.5790 |   |   | 0.5273 |   |
| Preferred                                                                            |   |   |   |                               |                     | 0.5467 |   |   | 0.6369 |   |   |   |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Diluted-                                                                             |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Common                                                                               |   |   |   |                               |                     | 0.4940 |   |   | 0.5762 |   |   | 0.5252 |   |
| Preferred                                                                            |   |   |   |                               |                     | 0.5434 |   |   | 0.6338 |   |   |   |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| WEIGHTED                      AVERAGE SHARES (in thousands )                         |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Basic-                                                                               |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Common                                                                               |   |   |   |                               |                     | 242,544 |   |   | 242,544 |   |   | 739,904 |   |
| Preferred                                                                            |   |   |   |                               |                     | 474,994 |   |   | 479,288 |   |   |   |   |
|                                                                                 |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Diluted-                                                                             |   |   |   |                               |                     |   |   |   |   |   |   |   |   |
| Common                                                                               |   |   |   |                               |                     | 242,544 |   |   | 242,544 |   |   | 742,903 |   |
| Preferred                                                                            |   |   |   |                               |                     | 479,217 |   |   | 482,739 |   |   |   |   |

----

|                                                                                                              |   |                               |               |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------------------------|--------------------|
|                                                                                                              |   | 2004                               |               | 2005 |   | 2006 |   |
|                                                                                                              |   | (As                      Restated) |               | (As                      Restated) |   | (As                      Restated) |   |
| CASH                      FLOWS FROM OPERATING ACTIVITIES                                                         |   |                               |               |   |   |   |   |
| Net                      income                                                                                   |   |                               | 380,206            |   |   | 445,719 |   |   | 390,140 |   |
| Adjustments                      to reconcile net income to net cash                                              |   |                               |               |   |   |   |   |   |   |   |
| provided                      by (used in) operating activities:                                                  |   |                               |               |   |   |   |   |   |   |   |
| Depreciation                                                                                                      |   |                               | 59,685             |   |   | 61,491 |   |   | 63,859 |   |
| Allowance                      for doubtful accounts                                                              |   |                               | 908                |   |   | 2,109 |   |   | 8,231 |   |
| Write                      down for inventory obsolescence                                                        |   |                               | 28,827             |   |   | 21,851 |   |   | 16,569 |   |
| Loss                      on property, plant and equipment disposals                                              |   |                               | 178                |   |   | 750 |   |   | 885 |   |
| Deferred                      income taxes                                                                        |   |                               | 4,511              |   |   | (42,270 | ) |   | (1,295 | ) |
| Accrued                      interest in excess of interest paid (paid in excess of                      accrued) |   |                               | (30,276            | ) |   | 5,123 |   |   | 551 |   |
| Equity                      in loss from affiliates                                                               |   |                               | —            |   |   | 3,096 |   |   | 34 |   |
| Minority                      interest                                                                            |   |                               | 1,306              |   |   | 9,622 |   |   | 9,580 |   |
| Exchange                      loss, net                                                                           |   |                               | 12,218             |   |   | 15,218 |   |   | 4,098 |   |
| Other                                                                                                             |   |                               | (3,508             | ) |   | (154 | ) |   | (1,546 | ) |
| Changes                      in assets and liabilities:                                                           |   |                               |               |   |   |   |   |   |   |   |
| Temporary                      cash investments                                                                   |   |                               | (402,147           | ) |   | (179,676 | ) |   | 18,600 |   |
| Trade                      accounts receivable and customer and commercial financing ,                      net   |   |                               | (267,309           | ) |   | (242,489 | ) |   | 185,722 |   |
| Inventories                                                                                                       |   |                               | (340,608           | ) |   | (90,802 | ) |   | (583,269 | ) |
| Other                      assets                                                                                 |   |                               | (20,602            | ) |   | (119,196 | ) |   | 34,372 |   |
| Trade                      accounts payable                                                                       |   |                               | 136,554            |   |   | 172,591 |   |   | 181,639 |   |
| Other                      payables and accrued liabilities                                                       |   |                               | 45,791             |   |   | 41,555 |   |   | (24,663 | ) |
| Accrued                      taxes on income                                                                      |   |                               | 10,497             |   |   | 24,305 |   |   | (32,321 | ) |
| Contribution                      from suppliers                                                                  |   |                               | (94,921            | ) |   | (42,185 | ) |   | (5,635 | ) |
| Advances                      from customers                                                                      |   |                               | (80,024            | ) |   | 103,819 |   |   | 145,460 |   |
| Taxes                      and payroll charges payable                                                            |   |                               | 167,096            |   |   | 124,756 |   |   | (35,105 | ) |
| Contingencies                                                                                                     |   |                               | (7,228             | ) |   | 31,676 |   |   | 11,027 |   |
| Net                      cash provided by (used in) operating activities                                          |   |                               | (398,846           | ) |   | 346,910 |   |   | 386,933 |   |
|                                                                                                              |   |                               |               |   |   |   |   |   |   |   |
| CASH                      FLOWS FROM INVESTING ACTIVITIES                                                         |   |                               |               |   |   |   |   |   |   |   |
| Proceeds                      from sales of property, plant and equipment                                         |   |                               | 163                |   |   | 557 |   |   | 697 |   |
| Escrow                      deposits                                                                              |   |                               | (15,417            | ) |   | (164 | ) |   | (88,554 | ) |
| Additions                      to property, plant and equipment                                                   |   |                               | (50,075            | ) |   | (51,766 | ) |   | (90,761 | ) |
| Additions                      to investments                                                                     |   |                               | —            |   |   | — |   |   | (808 | ) |
| Write                      Down of investments                                                                    |   |                               | 6,225              |   |   | 1,699 |   |   | - |   |
| Other                                                                                                             |   |                               | —            |   |   | (822 | ) |   | (92 | ) |
|                                                                                                              |   |                               |               |   |   |   |   |   |   |   |
| Net                      cash used in investing activities                                                        |   |                               | (59,104            | ) |   | (50,496 | ) |   | (179,518 | ) |
|                                                                                                              |   |                               |               |   |   |   |   |   |   |   |
| CASH                      FLOWS FROM FINANCING ACTIVITIES                                                         |   |                               |               |   |   |   |   |   |   |   |
| Repayment                      of loans                                                                           |   |                               | (1,295,315         | ) |   | (1,308,817 | ) |   | (1,497,751 | ) |
| Proceeds                      from borrowings                                                                     |   |                               | 1,587,504          |   |   | 1,523,261 |   |   | 1,258,249 |   |
| Dividends                      and/or interest on capital paid                                                    |   |                               | (185,537           | ) |   | (198,945 | ) |   | (157,771 | ) |
| Proceeds                      from issuance of shares                                                             |   |                               | 3,250              |   |   | 12,104 |   |   | 5,116 |   |
| Payments                      of capital lease obligations                                                        |   |                               | (4,682             | ) |   | (2,687 | ) |   | (2,946 | ) |
| Net                      cash provided by financing activities                                                    |   |                               | 105,220            |   |   | 24,916 |   |   | (395,103 | ) |
|                                                                                                              |   |                               |               |   |   |   |   |   |   |   |
| Effect                      of exchange rate changes on cash and cash equivalents                                 |   |                               | 50,728             |   |   | 54,012 |   |   | 57,924 |   |
|                                                                                                              |   |                               |     |   |   |     |   |   |      |   |
| Net                      increase (decrease) in cash and cash equivalents                                         |   |                               | (302,002           | ) |   | 375,341 |   |   | (129,763 | ) |
|                                                                                                              |   |                               |               |   |   |   |   |   |   |   |
| Cash                      and cash equivalents, at beginning of year                                              |   |                               | 1,265,820          |   |   | 963,818 |   |   | 1,339,159 |   |
|                                                                                                              |   |                               |               |   |   |    |   |   |    |   |
| Cash                      and cash equivalents, at end of year                                                    |   |                               | 963,818            |   |   | 1,339,159 |   |   | 1,209,396 |   |
|                                                                                                              |   |                               |               |   |   |   |   |   |   |   |
| SUPPLEMENTAL                      DISCLOSURE OF CASH FLOW INFORMATION                                             |   |                               |               |   |   |   |   |   |   |   |
| Please                      see note 36.                                                                          |   |                               |               |   |   |   |   |   |   |   |

----

|                                                                                   |   |    |         |       |   |                                 |   |         |         |     |   |          |   |     |         | Accumulated                        |   |         |   |
|----------------------------------------------------------------------------------------|--------|---------|--------------|------------|--------|--------------------------------------|--------|--------------|--------------|----------|--------|---------------|--------|----------|--------------|------------------------------------|--------|--------------|--------|
|                                                                                   |   | Capital |         | Additional |   |                                 |   | Appropriated |         | other    |   |          |   |
|                                                                                   |   | Common  |         | Preferred  |   | paid-up                      capital |   | Legal        |         | Retained |   | comprehensive |   |     |         |
|                                                                                   |   | Shares  |         | Amount     |   | Shares                               |   | Amount       |         | earnings |   | reserve       |   | Earnings |         | (loss)                      income |   | Total        |   |
|                                                                                   |   |    |         |       |   |                                 |   |         |         |     |   |          |   |     |         |                               |   |         |   |
| BALANCE                      AT DECEMBER 31, 2003                                      |   |    | 242,544,448  |       |   | 207,014                              |   |         | 473,501,135  |     |   | 688,039       |   |     | 8,353        |                               |   | 87,368       |   |   | 180,741 |   |   | (2,290 | ) |   | 1,169,225 |   |
|                                                                                   |   |    |         |       |   |                                 |   |         |         |     |   |          |   |     |         |                               |   |         |   |   |   |   |   |   |   |   |   |   |
| Capital                      increase                                                  |   |    | —      |       |   | —                              |   |         | 2,296,285    |     |   | 3,250         |   |     | —      |                               |   | —      |   |   | — |   |   | — |   |   | 3,250 |   |
| Capitalization                      of reserves                                        |   |    | —      |       |   | 33,187                               |   |         | —      |     |   | 64,849        |   |     | —      |                               |   | —      |   |   | (98,036 | ) |   | — |   |   | — |   |
| Net                      income                                                        |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | 380,206 |   |   | — |   |   | 380,206 |   |
| Legal                      reserve                                                     |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | 24,075       |   |   | (24,075 | ) |   | — |   |   | — |   |
| Dividends                      / Interest on equity                                    |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | (203,998 | ) |   | — |   |   | (203,998 | ) |
| Expired                      dividends                                                 |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | 11 |   |   | — |   |   | 11 |   |
| Currency                      translation adjustment                                   |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | — |   |   | 5,174 |   |   | 5,174 |   |
|                                                                                   |   |    |         |       |   |                                 |   |         |         |     |   |          |   |     |         |                               |   |         |   |   |   |   |   |   |   |   |   |   |
| BALANCE                      AT DECEMBER 31, 2004                                      |   |    | 242,544,448  |       |   | 240,201                              |   |         | 475,797,420  |     |   | 756,138       |   |     | 8,353        |                               |   | 111,443      |   |   | 234,849 |   |   | 2,884 |   |   | 1,353,868 |   |
|                                                                                   |   |    |         |       |   |                                 |   |         |         |     |   |          |   |     |         |                               |   |         |   |   |   |   |   |   |   |   |   |   |
| Capital                      increase                                                  |   |    | —      |       |   | —                              |   |         | 3,490,189    |     |   | 12,104        |   |     | —      |                               |   | —      |   |   | — |   |   | — |   |   | 12,104 |   |
| Capitalization                      of reserves                                        |   |    | —      |       |   | 58,196                               |   |         | —      |     |   | 114,385       |   |     | —      |                               |   | —      |   |   | (172,581 | ) |   | — |   |   | — |   |
| Net                      income                                                        |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | 445,719 |   |   | — |   |   | 445,719 |   |
| Legal                      reserve                                                     |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | 15,268       |   |   | (15,268 | ) |   | — |   |   | — |   |
| Dividends                      / Interest on equity                                    |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | (186,837 | ) |   | — |   |   | (186,837 | ) |
| Expired                      dividends                                                 |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | 32 |   |   | — |   |   | 32 |   |
| Currency                      translation adjustment                                   |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | — |   |   | (4,632 | ) |   | (4,632 | ) |
|                                                                                   |   |    |    |       |   |                            |   |         |    |     |   |     |   |     |    |                               |   |    |   |   |    |   |   |    |   |   |    |   |
| BALANCE                      AT DECEMBER 31, 2005                                      |   |    | 242,544,448  |       |   | 298,397                              |   |         | 479,287,609  |     |   | 882,627       |   |     | 8,353        |                               |   | 126,711      |   |   | 305,914 |   |   | (1,748 | ) |   | 1,620,254 |   |
|                                                                                   |   |    |         |       |   |                                 |   |         |         |     |   |          |   |     |         |                               |   |         |   |   |   |   |   |   |   |   |   |   |
| Capital                      increase                                                  |   |    | 1,292,094    |       |   | 5,116                                |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | — |   |   |   |   |   | 5,116 |   |
| Restructuring                      of the company                                      |   |    | 16,779,763   |       |   | 248,266                              |   |         | —      |     |   | —       |   |     | (8,353       | )                                  |   | (126,711     | )      |   | (109,407 | ) |   | (3,795 | ) |   | — |   |
| Conversion                      preferred shares into common shares                    |   |    | 479,287,609  |       |   | 882,627                              |   |         | (479,287,609 | )        |   | (882,627      | )      |     | —      |                               |   | —      |   |   | — |   |   | — |   |   | — |   |
| Net                      income                                                        |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | 390,140 |   |   | — |   |   | 390,140 |   |
| Legal                      Reserve                                                     |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | 13,797       |   |   | (13,797 | ) |   | — |   |   | — |   |
| Dividends                      / Interest on equity                                    |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | (150,516 | ) |   | — |   |   | (150,516 | ) |
| Currency                      translation adjustment                                   |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | — |   |   | 8,533 |   |   | 8,533 |   |
| Post-retirement                      benefits - Adoption SFAS 158 (net of tax of $476) |   |    | —      |       |   | —                              |   |         | —      |     |   | —       |   |     | —      |                               |   | —      |   |   | — |   |   | 754 |   |   | 754 |   |
|                                                                                   |   |    |    |       |   |                                 |   |         |         |     |   |          |        |     |         |                                    |   |         |        |   |   |  |   |   |  |   |   |  |
| BALANCE                      AT DECEMBER 31, 2006                                      |   |    | 739,903,914  |       |   | 1,434,406                            |   |         | —      |     |   | —       |   |     | —      |                               |   | 13,797       |   |   | 422,334 |   |   | 3,744 |   |   | 1,874,281 |   |

----

| 1.                       | THE                      COMPANY AND ITS OPERATIONS |
|------------------------------------|-----------------------------------------------------|

----

| 2.                       | PRESENTATION                      AND CONSOLIDATION OF RESTATED                      FINANCIAL STATEMENTS; |
|------------------------------------|------------------------------------------------------------------------------------------------------------|

|  | a) | Presentation                      and Consolidation |
|--|----|-----------------------------------------------------|

|  | (i) | The                      financial statements have been prepared in accordance with                      accounting                      principles generally accepted in the United States of America                      (“US GAAP”),                      which differ in certain respects from accounting principles                      applied by the                      Company in its financial statements prepared in accordance                      with Brazilian                      accounting practices (“BR                      GAAP”). |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | The                      consolidated financial statements include the accounts of (i)                      the Company                      and all majority-owned                      subsidiaries in which the Company directly or indirectly has                      either a                      majority of the equity of the subsidiary or otherwise has management                      control and (ii) special purpose entities - SPEs for which                      the Company was                      considered to be the primary beneficiary according to FIN 46-R                      -                      “Consolidation of Variable Interest Entities”.                      All intercompany accounts and transactions arising from consolidated                      entities have been eliminated.  |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iii) | A                      substantial portion of the Company’s sales is destined to export markets                      and a substantial level of                      financing, manufacturing and other costs is denominated in                      U.S. dollars                      (US$). The Company presents its financial statements in accordance                      with                      Statement of Financial Accounting Standards (“SFAS”) No. 52 - “Foreign                      Currency Translation”. The Company’s Board of Directors and management                      have historically considered that the U.S. dollar has been,                      and remains in                      their opinion, the currency in which the Company principally                      operates.                      Accordingly, the Company’s management has concluded that its functional                      currency is currently the U.S.                      dollar. |
|--|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iv) | For                      US GAAP purposes, the Company has elected the U.S. dollar as                      its reporting                      currency, as it believes such presentation is more meaningful                      to                      readers. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | (v) | For                      subsidiaries whose particular functional currency is other                      than the U.S.                      dollar, asset and liability accounts are translated into the                      Company’s                      reporting currency using                      exchange rates in effect at the date of the balance sheet,                      and income and                      expense items are translated using weighted average exchange                      rates.                      Resulting translation adjustments are reported in a separate                      component of                      shareholders’ equity, as a cumulative translation adjustment -                      CTA. |
|--|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | b) | Restatement |
|--|----|-------------|

| ·   | Product                      warranty expenses: In accordance with SFAS 5, “*Accounting for                      Contingencies,*” the                      Company                      accrues a                      liability                      for the obligations associated                      with product warranties, which is                      recorded on the aircraft delivery date and estimated based                      on historical                      experience. The Company                      had previously recorded its expenses                      related to product                      warranties                      in                      the consolidated statements                      of                      income                      under “Selling Expenses” because the                      Company                      understood that the product warranties were associated with                      its sales                      efforts. As a result of the reassessment                      and modification discussed above, the Company                      has concluded that expenses related to product warranties should                      be                      recorded in the consolidated statement of income under “Cost of Sales and                      Services.” |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Revenue                      arrangements with multiple deliverables: The                      Company previously recognized                      revenue for all deliverables when the “risks                      and rewards”                      of                      the aircraft were transferred to the buyer (at delivery).                      Upon delivery of the aircraft, the                      Company                      also accrued a liability for the other                      services                      and products sold together with the aircraft (i.e., other                      deliverables) that would be delivered after the aircraft delivery                      date and                      the                      Company included                      the costs associated with such deliverables                      in                      “Selling                      Expenses,”                      because it                      considered such deliverables to be important elements of its                      sales                      efforts. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

*“Revenue arrangements with multiple            deliverables.”*

----

| ·   | Commercial                      concessions                      - The                      Company                      offers contractual concessions that provide its                      customers with a                      reduction in                      the                      amount                      paid its                      aircraft.                      The contractual concessions granted by the                      Company to its customers                      may be partially or fully recovered through                      an export incentive program of                      the Brazilian Government. The                      Company previously                      recorded these contractual concessions as “Selling Expenses” because                      the Company                      believed that the contractual concessions were part of the                      sales efforts                      for its aircraft. The amount                      of                      contractual                      concessions                      recovered by the                      Company through                      the export incentive program was                      previously                      recorded as financial                      income,                      because the                      Company                      received the incentive through the issuance of Brazilian treasury                      bonds                      under the program.                      However, the                      Brazilian Government is not one                      of its                      supplier and                      does not participate in the sale process of the aircraft, and                      accordingly,                      EITF                      02-16, “Accounting by a Customer (including a reseller) for Certain                      Consideration Received from vendors as revenue,” does not apply. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Accounting for Consideration Given by a            Vendor to a Customer*

----

|                                                               |   | Year                        ended December 31,2004 |       |
|--------------------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                               |   | As                                                 |       | Effect                        of |   | As |   |
|                                                               |   | Previously                                         |       | Adjustments |   | Restated |   |
| Income                        Statement Data                       |   | Reported                                           |       |   |   |   |   |
|                                                               |   |                                               |       | (US$                        thousands) |   |   |   |
| Net                        Sales                                   |   |                                               | 3,440,533  |   |   | (88,390 | ) |   | 3,352,143 |   |
| Cost                        of Sales and Services                  |   |                                               | (2,267,330 | ) |   | (69,407 | ) |   | (2,336,737 | ) |
| Gross                        Profit                                |   |                                               | 1,173,203  |   |   | (157,797 | ) |   | 1,015,406 |   |
| Selling                        Expenses                            |   |                                               | (342,883   | ) |   | 157,797 |   |   | (185,086 | ) |
| R&D,                        G&A, Employee PS and Other     |   |                                               | (286,334   | ) |   | — |   |   | (286,334 | ) |
| Income                        from Operations                      |   |                                               | 543,986    |   |   | — |   |   | 543,986 |   |
| Interest                        Income ( Expenses), net            |   |                                               | (38,000    | ) |   | — |   |   | (38,000 | ) |
| Others                                                             |   |                                               | (12,335    | ) |   | — |   |   | (12,335 | ) |
| Income                        before Income Taxes                  |   |                                               | 493,651    |   |   | — |   |   | 493,651 |   |
| Income                        Tax (Expense)                        |   |                                               | (112,139   | ) |   | — |   |   | (112,139 | ) |
| Income                        Before Minority Interest and Equity  |   |                                               | 381,512    |   |   | — |   |   | 381,512 |   |
| Loss                        from Affiliates                        |   |                                               |       |   |   |   |   |   |   |   |
| Equity                        in loss from affiliates and Minority |   |                                               | (1,306     | ) |   | — |   |   | (1,306 | ) |
| Interest                                                           |   |                                               |       |   |   |   |   |   |   |   |
| Net                        Income                                  |   |                                               | 380,206    |   |   | — |   |   | 380,206 |   |

----

|                                                               |   | Year                        ended December 31,2005 |       |
|--------------------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                               |   | As                                                 |       | Effect                        of |   | As |   |
|                                                               |   | Previously                                         |       | Adjustments |   | Restated |   |
| Income                        Statement Data                       |   | Reported                                           |       |   |   |   |   |
|                                                               |   |                                               |       | (US$                        thousands) |   |   |   |
| Net                        Sales                                   |   |                                               | 3,829,907  |   |   | (40,412 | ) |   | 3,789,495 |   |
| Cost                        of Sales and Services                  |   |                                               | (2,671,816 | ) |   | (67,091 | ) |   | (2,738,907 | ) |
| Gross                        Profit                                |   |                                               | 1,158,091  |   |   | (107,503 | ) |   | 1,050,588 |   |
| Selling                        Expenses                            |   |                                               | (269,747   | ) |   | 109,948 |   |   | (159,799 | ) |
| R&D,                        G&A, Employee PS and Other     |   |                                               | (380,498   | ) |   | — |   |   | (380,498 | ) |
| Income                        from Operations                      |   |                                               | 507,846    |   |   | 2,445 |   |   | 510,291 |   |
| Interest                        Income ( Expenses), net            |   |                                               | (1,672     | ) |   | (2,445 | ) |   | (4,117 | ) |
| Others                                                             |   |                                               | (6,168     | ) |   | — |   |   | (6,168 | ) |
| Income                        before Income Taxes                  |   |                                               | 500,006    |   |   | — |   |   | 500,006 |   |
| Income                        Tax (expense)                        |   |                                               | (41,569    | ) |   | — |   |   | (41,569 | ) |
| Income                        Before Minority Interest and Equity  |   |                                               | 458,437    |   |   | — |   |   | 458,437 |   |
| Loss                        from Affiliates                        |   |                                               |       |   |   |   |   |   |   |   |
| Equity                        in loss from affiliates and Minority |   |                                               | (12,718    | ) |   | — |   |   | (12,718 | ) |
| Interest                                                           |   |                                               |       |   |   |   |   |   |   |   |
| Net                        Income                                  |   |                                               | 445,719    |   |   | — |   |   | 445,719 |   |

----

|                                                               |   | Year                        ended December 31,2006 |       |
|--------------------------------------------------------------------|--------|----------------------------------------------------|------------|
|                                                               |   | As                                                 |       | Effect                        of |   | As |   |
|                                                               |   | Previously                                         |       | Adjustments |   | Restated |   |
| Income                        Statement Data                       |   | Reported                                           |       |   |   |   |   |
|                                                               |   |                                               |       | (US$                        thousands) |   |   |   |
| Net                        Sales                                   |   |                                               | 3,807,403  |   |   | (47,884 | ) |   | 3,759,519 |   |
| Cost                        of Sales and Services                  |   |                                               | (2,736,234 | ) |   | (70,568 | ) |   | (2,806,802 | ) |
| Gross                        Profit                                |   |                                               | 1,071,169  |   |   | (118,452 | ) |   | 952,717 |   |
| Selling                        Expenses                            |   |                                               | (374,140   | ) |   | 153,544 |   |   | (220,596 | ) |
| R&D,                        G&A, Employee PS and O ther    |   |                                               | (389,290   | ) |   | — |   |   | (389,290 | ) |
| Income                        from O perations                     |   |                                               | 307,739    |   |   | 35,092 |   |   | 342,831 |   |
| Interest                        Income ( Expenses), net            |   |                                               | 140,525    |   |   | (35,092 | ) |   | 105,433 |   |
| O                        thers                                     |   |                                               | (4,098     | ) |   | — |   |   | (4,098 | ) |
| Income                        before Income Taxes                  |   |                                               | 444,166    |   |   | — |   |   | 444,166 |   |
| Income                        Tax (expense)                        |   |                                               | (44,412    | ) |   | — |   |   | (44,412 | ) |
| Income                        Before Minority Interest and Equity  |   |                                               | 399,754    |   |   | — |   |   | 399,754 |   |
| Loss                        from Affiliates                        |   |                                               |       |   |   |   |   |   |   |   |
| Equity                        in loss from affiliates and Minority |   |                                               | (9,614     | ) |   | — |   |   | (9,614 | ) |
| Interest                                                           |   |                                               |       |   |   |   |   |   |   |   |
| Net                        Income                                  |   |                                               | 390,140    |   |   | — |   |   | 390,140 |   |

----

|                                                                                                                                       |   | Year                        ended December 31,2004 |     |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------|----------|
|                                                                                                                                       |   | As                                                 |     | Effect                        of |   | As |   |
|                                                                                                                                       |   | Previously                                         |     | Adjustments |   | Restated |   |
| Cash                        Flow Data                                                                                                      |   | Reported                                           |     |   |   |   |   |
|                                                                                                                                       |   |                                               |     | (US$                        thousands) |   |   |   |
| Net                        cash provided by (used in) operating activities                                                                 |   |                                               |     |   |   |   |   |
| Trade                        accounts receivable and customer and commercial financing                        ,                        net |   |                                               | (266,652 | ) |   | (657 | ) |   | (267,309 | ) |
| Other                        assets                                                                                                        |   |                                               | (21,259  | ) |   | 657 |   |   | (20,602 | ) |

|                                                                                                                                       |   | Year                        ended December 31,2005  |       |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|------------|
|                                                                                                                                       |   |                                                     | As    |   |   | Effect                        of |   |   | As |   |
|                                                                                                                                       |   |                                                     | Previously |   |   | Adjustments |   |   | Restated |   |
| Cash                            Flow Data                                                                                                  |   |                                                     | Reported   |   |   |   |   |   |   |   |
|                                                                                                                                       |   |                                                     |       |   |  (US$                        thousands) |   |   |   |   |
| Net                        cash provided by (used in) operating activities                                                                 |   |                                                     |       |   |   |   |   |   |   |   |
| Trade                        accounts receivable and customer and commercial financing                        ,                        net |   |                                                     | (241,606   | ) |   | (883 | ) |   | (242,489 | ) |
| Other                        assets                                                                                                        |   |                                                     | (120,079   | ) |   | 883 |   |   | (119,196 | ) |

|                                                                                                                                       |   | Year                        ended December 31,2006  |             |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------|------------------|
|                                                                                                                                       |   |                                                     | As               |   |   | Effect                          of |   |   | As |   |
|                                                                                                                                       |   |                                                     | Previously  |   |   | Adjustments |   |   | Restated |   |
|                                                                                                                                       |   |                                                     | Reported         |   |   |   |   |   |   |   |
| Cash                        Flow Data                                                                                                      |   |                                                     |             |   | (US$                        thousands)  |   |   |   |   |
|                                                                                                                                       |   |                                                     |             |   |   |   |   |   |   |   |
| Net                        cash provided by (used in) operating activities                                                                 |   |                                                     |             |   |   |   |   |   |   |   |
| Trade                        accounts receivable and customer and commercial financing                        ,                        net |   |                                                     | 186,612          |   |   | (890 | ) |   | 185,722 |   |
| Other                        assets                                                                                                        |   |                                                     | 33,482           |   |   | 890 |   |   | 34,372 |   |

----

|                                                               |   | Year                                ended December 31,2004 |    |
|--------------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                               |   | As                                                         |    | Effect                                of |   |  As |   |
|                                                               |   | Previously                                                 |    | Adjustments |   | Restated |   |
| Balance                                Sheet Data                  |   | Reported                                                   |    |   |   |   |   |
|                                                               |   |                                                       |    | (US$                                thousands) |   |   |   |
| CURRENT                                ASSETS                      |   |                                                       |    |   |   |   |   |
| Trade                                accounts receivable, net      |   |                                                       | 566,127 |   |   | 3,952 |   |   | 570,079 |   |
| Other                                assets                        |   |                                                       | 108,459 |   |   | (3,952 | ) |   | 104,507 |   |
|                                                               |   |                                                       |    |   |   |   |   |   |   |   |
| CURRENT                                LIABILITIES                 |   |                                                       |    |   |   |   |   |   |   |   |
| Other                                payables, accrued liabilities |   |                                                       | 310,269 |   |   | — |   |   | 310,269 |   |

|                                                               |   | Year                                ended December 31,2005 |    |
|--------------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                               |   | As                                                         |    | Effect                                of |   |  As |   |
|                                                               |   | Previously                                                 |    | Adjustments |   | Restated |   |
| Balance                                Sheet Data                  |   | Reported                                                   |    |   |   |   |   |
|                                                               |   |                                                       |    | (US$                                thousands) |   |   |   |
| CURRENT                                ASSETS                      |   |                                                       |    |   |   |   |   |
| Trade                                accounts receivable, net      |   |                                                       | 445,520 |   |   | 4,835 |   |   | 450,355 |   |
| Other                                assets                        |   |                                                       | 175,433 |   |   | (4,835 | ) |   | 170,598 |   |
|                                                               |   |                                                       |    |   |   |   |   |   |   |   |
| CURRENT                                LIABILITIES                 |   |                                                       |    |   |   |   |   |   |   |   |
| Other                                payables, accrued liabilities |   |                                                       | 405,965 |   |   | — |   |   | 405,965 |   |

|                                                               |   | Year                                ended December 31,2006 |    |
|--------------------------------------------------------------------|--------|------------------------------------------------------------|---------|
|                                                               |   | As                                                         |    | Effect                                of |   |  As |   |
|                                                               |   | Previously                                                 |    | Adjustments |   | Restated |   |
| Balance                                Sheet Data                  |   | Reported                                                   |    |   |   |   |   |
|                                                               |   |                                                       |    | (US$                                thousands) |   |   |   |
| CURRENT                                ASSETS                      |   |                                                       |    |   |   |   |   |
| Trade                                accounts receivable, net      |   |                                                       | 272,153 |   |   | 5,725 |   |   | 277,878 |   |
| Other                                assets                        |   |                                                       | 153,369 |   |   | (5,725 | ) |   | 147,644 |   |
|                                                               |   |                                                       |    |   |   |   |   |   |   |   |
| CURRENT                                LIABILITIES                 |   |                                                       |    |   |   |   |   |   |   |   |
| Other                                payables, accrued liabilities |   |                                                       | 433,291 |   |   | — |   |   | 433,291 |   |

----

| 3.                         | SUMMARY                        OF SIGNIFICANT ACCOUNTING POLICIES |
|--------------------------------------|-------------------------------------------------------------------|

|  | a) | Cash                        and cash equivalents |
|--|----|--------------------------------------------------|

|  | b) | Temporary                        cash investments |
|--|----|---------------------------------------------------|

|  | c) | Allowance                        for doubtful accounts |
|--|----|--------------------------------------------------------|

|  | d) | Inventories |
|--|----|-------------|

|  | e) | Spare                          part exchange pools |
|--|----|----------------------------------------------------|

|  | f) | Customer                        and commercial financing |
|--|----|----------------------------------------------------------|

----

|  | g) | Property,                          plant and equipment |
|--|----|--------------------------------------------------------|

----

|  | h) | Marketing                          and advertising expenses |
|--|----|-------------------------------------------------------------|

|  | i) | Investments |
|--|----|-------------|

|  | j) | Product                          warranties |
|--|----|---------------------------------------------|

----

|  | k) | Contingencies                          and guarantees |
|--|----|-------------------------------------------------------|

|  | l) | Post-retirement                          benefits |
|--|----|---------------------------------------------------|

----

|  | m) | Employee                          profit sharing plan |
|--|----|-------------------------------------------------------|

|  | n) | Revenue                          recognition |
|--|----|----------------------------------------------|

----

|  | o) | Research                          and development |
|--|----|---------------------------------------------------|

|  | p) | Stock                          compensation |
|--|----|---------------------------------------------|

----

|  | q) | Income                          taxes |
|--|----|---------------------------------------|

| Federal                      income tax rate      |   |   | 25 | % |
|---------------------------------------------------|--------|--------|----|---|
| Social                      contribution tax rate |   |   | 9  | % |
| Combined                      tax rate            |   |   | 34 | % |

*reais            *

----

|  | r) | Derivative                      financial instruments |
|--|----|-------------------------------------------------------|

|  | s) | Comprehensive                      income |
|--|----|-------------------------------------------|

|  | t) | Compensated                      absences |
|--|----|-------------------------------------------|

|  | u) | Use                      of estimates |
|--|----|---------------------------------------|

| v)   | Adoption                      of Securities and Exchange Commission Staff Accounting Bulletin                      No. 108.                      In September 2006, the Securities and Exchange Commission issued                      Staff                      Accounting Bulletin No. 108, “Considering the Effects of Prior Year                      Misstatements when Quantifying Misstatements in Current Year                      Financial                      Statements” (“SAB 108”). SAB 108 provides guidance on how prior year                      misstatements should be taken into consideration when quantifying                      misstatements in current year financial statements for purposes                      of                      determining whether the current year’s financial statements are materially                      misstated. SAB 108 is effective for fiscal years ending after                      November 15,                      2006. The adoption of SAB 108 did not have a material impact                      on the                      Company’s consolidated financial position, annual results of operations                      or                      cash flows. |
|----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 4.                       | RECENTLY                      ISSUED ACCOUNTING PRONOUNCEMENTS - NOT YET                      ADOPTED |
|------------------------------------|-------------------------------------------------------------------------------------------------------|

----

|                                                                |   | At                      December 31, |      |
|---------------------------------------------------------------------|--------|--------------------------------------|-----------|
|                                                                |   | 2005                                 |      | 2006 |   |
|                                                                |   |                                 |      |   |   |
| Cash                      and bank balances                         |   |                                 |      |   |   |
| In                      Brazilian *reais                      - R$* |   |                                 | 21,925    |   |   | 10,231 |   |
| In                      U.S. dollar - US$                           |   |                                 | 14,359    |   |   | 24,441 |   |
| In                      other currencies                            |   |                                 | 37,979    |   |   | 79,737 |   |
| Cash                      equivalents                               |   |                                 |      |   |   |   |   |
| Denominated                      in US$ (i)                         |   |                                 | 1,064,935 |   |   | 751,331 |   |
| Denominated                      in *R$*                      (ii)  |   |                                 | 188,814   |   |   | 333,211 |   |
| Denominated                      in other currencies                |   |                                 | 11,147    |   |   | 10,445 |   |
|                                                                |   |                                 | 1,339,159 |   |   | 1,209,396 |   |

|  | (i) | Represents                      time deposits and overnight funds deposited overseas by consolidated                      subsidiaries; the average annualized interest rate for the                      year ended                      December 31, 2006 was 5.29% (2005 - 3.27%). |
|--|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | Mainly                      represented by money market funds at several financial institutions,                      primarily comprised of debt instruments classified as held                      for trading                      purposes under SFAS 115. These funds are exclusively for the                      benefit of                      the Company and managed by third parties who charge a monthly                      commission                      fee. The funds are comprised of investments that have daily                      liquidity and                      are marked-to-market on a daily basis with changes in fair                      value reflected                      in results of operations. The target returns are specified                      with each                      financial institution based on a percentage of the CDI (Brazilian                      Interbank Deposit Rate). In 2006, the weighted average annualized                      interest                      income rate was 15.38% (2005 - 19.15%) compared to 15.04% of                      the CDI in                      the same period (2005 -                      18.99%). |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                            |   | At                      December 31, |    |
|-------------------------------------------------|--------|--------------------------------------|---------|
|                                            |   | 2005                                 |    | 2006 |   |
|                                            |   |                                 |    |   |   |
| Temporary                      cash investments |   |                                 | 574,395 |   |   | 555,795 |   |
|                                            |   |                                 | 574,395 |   |   | 555,795 |   |

----

|                                                                 |   | At                      December 31, |    |
|----------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                 |   | 2005                                 |    | 2006 |   |
|                                                                 |   |                                 |    |   |   |
| Commercial                      Aviation                             |   |                                 | 99,515  |   |   | — |   |
| Defense                      and Government                          |   |                                 |    |   |   |   |   |
| -                      Brazilian Air Force                           |   |                                 | 120,910 |   |   | 87,268 |   |
| -                      Other                                         |   |                                 | 49,673  |   |   | 26,103 |   |
| Customer                      Services and others                    |   |                                 | 210,807 |   |   | 218,590 |   |
|                                                                 |   |                                 | 480,905 |   |   | 331,961 |   |
| Less                      allowance for doubtful accounts receivable |   |                                 | (25,246 | ) |   | (31,974 | ) |
|                                                                 |   |                                 | 455,659 |   |   | 299,987 |   |
|                                                                 |   |                                 |    |   |   |   |   |
| Less                      - current portion                          |   |                                 | 450,355 |   |   | 277,878 |   |
| Long-term                      portion                               |   |                                 | 5,304   |   |   | 22,109 |   |

|                                   |   | Year                      ended at December 31, |   |
|----------------------------------------|--------|-------------------------------------------------|--------|
|                                   |   | 2004                                            |   | 2005 |   | 2006 |   |
|                                   |   |                                            |   |   |   |   |   |
| Beginning                      balance |   |                                            | 24,259 |   |   | 23,497 |   |   | 25,246 |   |
| Write-offs                             |   |                                            | (6,033 | ) |   | (360 | ) |   | (1,503 | ) |
| Additions                              |   |                                            | 5,271  |   |   | 2,109 |   |   | 8,231 |   |
| Ending                      balance    |   |                                            | 23,497 |   |   | 25,246 |   |   | 31,974 |   |

----

|                                     |   |                        Net Sales (%)   |    |
|------------------------------------------|--------|--------------------------------------------------|---------|
|                                     |   | 2004                                             |    | 2005 |   | 2006 |   |
| Commercial                      Aviation |   |                                             |    |   |   |   |   |
| Continental/ExpressJet                   |   |                                             | 12.4    |   |   | 11.7 |   |   | 4.6 |   |
| American                      Eagle      |   |                                             | 19.8    |   |   | 10.3 |   |   | — |   |
| Republic/Chautauqua                      |   |                                             | 14.3    |   |   | 17.5 |   |   | 6.7 |   |
| US                      Airways          |   |                                             | 13.6    |   |   | 1.7 |   |   | 1.5 |   |
| Air                      Canada          |   |                                             | — |   |   | 11.4 |   |   | 11.5 |   |
| Jet                      Blue            |   |                                             | — |   |   | — |   |   | 11.1 |   |

|                                                                                                                                                      |   | At                      December 31, |    |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                                                                      |   | 2005                                 |    | 2006 |   |
|                                                                                                                                                      |   |                                 |    |   |   |
| Notes                      receivable (i)                                                                                                                 |   |                                 | 287,926 |   |   | 217,393 |   |
| Operating                      lease equipment, at cost, less accumulated depreciation of$29,127                      and $36,081 as of December 31, (ii) |   |                                 | 319,236 |   |   | 351,573 |   |
|                                                                                                                                                      |   |                                 | 607,162 |   |   | 568,966 |   |
| Current                      portion                                                                                                                      |   |                                 | 147,118 |   |   | 16,215 |   |
| Long-term                      portion                                                                                                                    |   |                                 | 460,044 |   |   | 552,751 |   |

| Year  |   | 2006   |    |
|------------|--------|--------|---------|
|       |   |   |    |
| 2007       |   |   | 16,215  |   |
| 2008       |   |   | 14,883  |   |
| 2009       |   |   | 9,362   |   |
| 2010       |   |   | 9,887   |   |
| 2011       |   |   | 10,445  |   |
| 2012       |   |   | 11,038  |   |
| Thereafter |   |   | 145,563 |   |
| Total      |   |   | 217,393 |   |

----

| Year  |   | 2006   |   |
|------------|--------|--------|--------|
|       |   |   |   |
| 2007       |   |   | 42,660 |   |
| 2008       |   |   | 41,247 |   |
| 2009       |   |   | 31,424 |   |
| 2010       |   |   | 21,000 |   |
| 2011       |   |   | 9,347  |   |

|                                                           |   | 2005   |     | 2006   |   |
|----------------------------------------------------------------|--------|--------|----------|--------|--------|
|                                                           |   |   |     |   |   |
| Minimum                      lease payments receivable         |   |   | 842,222  |   |   | 773,015 |   |
| Estimated                      residual value of leased assets |   |   | 570,818  |   |   | 587,238 |   |
| Unearned                      income                           |   |   | (558,820 | )      |   | (540,531 | ) |
| Investments                      in sales-type lease           |   |   | 854,220  |   |   | 819,722 |   |
| Less                      - current portion                    |   |   | 65,440   |   |   | 70,980 |   |
| Long-term                      portion                         |   |   | 788,780  |   |   | 748,742 |   |

----

|                        Year   |   | At                      December 31, 2006 |    |
|-----------------------------------------|--------|-------------------------------------------|---------|
|                                    |   |                                      |    |
| 2007                                    |   |                                      | 70,980  |   |
| 2008                                    |   |                                      | 68,923  |   |
| 2009                                    |   |                                      | 57,977  |   |
| 2010                                    |   |                                      | 56,929  |   |
| 2011                                    |   |                                      | 54,020  |   |
| 2012                                    |   |                                      | 57,753  |   |
| After                      2012         |   |                                      | 406,433 |   |
|                                    |   |                                      | 773,015 |   |

|                                       |   | At                      December 31, |      |
|--------------------------------------------|--------|--------------------------------------|-----------|
|                                       |   | 2005                                 |      | 2006 |   |
|                                       |   |                                 |      |   |   |
| Finished                      goods        |   |                                 | 86,635    |   |   | 289,212 |   |
| Work-in-process                      (i)   |   |                                 | 677,174   |   |   | 744,284 |   |
| Raw                      materials         |   |                                 | 599,667   |   |   | 825,235 |   |
| Inventory                      in transit  |   |                                 | 103,425   |   |   | 171,289 |   |
| Advances                      to suppliers |   |                                 | 10,658    |   |   | 17,224 |   |
|                                       |   |                                 | 1,477,559 |   |   | 2,047,244 |   |

----

|                                                                                                                                               |   | At                      December 31, |    |
|----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                                                               |   | 2005                                 |    | 2006 |   |
|                                                                                                                                               |   |                                 |    |   |   |
| Guarantee                      deposits (i)                                                                                                        |   |                                 | 520,794 |   |   | 590,720 |   |
| Restricted                      cash from consolidated sales type lease                                                                            |   |                                 | 10,851  |   |   | 9,717 |   |
| Credits                      with suppliers (ii)                                                                                                   |   |                                 | 8,530   |   |   | 17,492 |   |
| Prepaid                      expenses                                                                                                              |   |                                 | 9,829   |   |   | 15,395 |   |
| Taxes                      recoverable (iv)                                                                                                        |   |                                 | 45,981  |   |   | 54,283 |   |
| Advances                      to employees                                                                                                         |   |                                 | 7,156   |   |   | 9,321 |   |
| Compulsory                      loans and bank guarantee deposits                                                                                  |   |                                 | 17,317  |   |   | 16,322 |   |
| Commission                      advances                                                                                                           |   |                                 | 2,853   |   |   | 5,361 |   |
| Escrow                      deposits                                                                                                               |   |                                 | 20,316  |   |   | 108,870 |   |
| Prepaid                      insurance                                                                                                             |   |                                 | 16,544  |   |   | 14,479 |   |
| Exchange                      pools                                                                                                                |   |                                 | 33,746  |   |   | 29,889 |   |
| Unrealized                      gains on derivatives (Note 31)                                                                                     |   |                                 | 330     |   |   | 4,122 |   |
| Accounts                      Receivable-National Bank for Economic and Social Development                      - BNDES                      (iii) |   |                                 | 63,725  |   |   | 1,809 |   |
| Other                                                                                                                                              |   |                                 | 22,844  |   |   | 33,554 |   |
|                                                                                                                                               |   |                                 | 780,816 |   |   | 911,334 |   |
| Less-                      Current portion                                                                                                         |   |                                 | 440,120 |   |   | 465,703 |   |
| Long-term                      portion                                                                                                             |   |                                 | 340,696 |   |   | 445,631 |   |

|  | (i) | Guarantee                        deposits are mainly represented                        by: |
|--|-----|---------------------------------------------------------------------------------------------|

| (a)   | $272,661                      refers to amounts deposited in guarantee deposits as collateral                      for                      financing and residual value guarantees of certain aircraft                      sold (see note                      34) (2005 - $249,673). If the guarantor of the debt (an unrelated                      third                      party) is required to pay the creditors of such financing arrangement                      or                      the residual value guarantee, the guarantor has the right to                      withdraw from                      the escrow account. The deposited amounts will be released                      when the                      financing contracts mature (from 2013 to 2021) if no default                      by the buyers                      of the aircraft occurs or the aircraft market price is above                      the residual                      value guarantee. The interest earned on the escrow funds is                      added to the                      balance in escrow and is recorded as interest income by the                      Company. In                      order to earn a better interest rate on such guarantee deposits,                      in 2004,                      the Company structured notes in the face amount of $123,400                      with the                      depositary bank which generated interest in the amount of $7,581                      in 2006                      (2005 - $6,940), which was added to the principal amount and                      recognized in                      the consolidated statements of income and comprehensive income.                      This yield                      enhancement was obtained through a credit default swap (CDS)                      transaction                      which provides to the note holder the right of early redemption                      of the                      note in case of a credit event by the Company. Upon such credit                      event, the                      note may be redeemed by the holder at the greater of the note’s market                      value or its original face amount, which would result in a                      loss of all                      interest accrued on such note to                      date. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | (b) | $318,059                        (2005 -$260,764) relates to amounts deposited with a third                        party financial                        institution as a pledge under a specific sale financing                        structure. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (ii) | Credits                        with suppliers represent price discounts, rebates and free                        aircraft parts                        to be received from suppliers in connection with purchases                        made. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | (iii) | Refers                        to credits derived from financing pending receipt from the                        BNDES. |
|--|-------|------------------------------------------------------------------------------------------------------------------------|

|  | (iv) | Refers                        mainly to PIS/COFINS and ICMS tax credits recoverable on                        purchases of                        production inputs. |
|--|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   | At                      December 31, |   |
|-------------------------------------------------------------|--------|--------------------------------------|--------|
|                                                        |   | 2005                                 |   | 2006 |   |
|                                                        |   |                                 |   |   |   |
| Held-to-maturity                      securities - NTNs (i) |   |                                 | 31,269 |   |   | 32,840 |   |
| Other                                                       |   |                                 | 164    |   |   | 1,004 |   |
|                                                        |   |                                 | 31,433 |   |   | 33,844 |   |

|  | (i) | Refers                        to debt securities, represented by National Treasury Notes,                        acquired by                        the Company from customers, related to the equalization of                        interest rates                        to be paid by the Export Financing Program - PROEX between                        the                        11th                        and 15th                        year after the sale of the related aircraft, recorded at                        its present                        value. The interest earned is added to the balance and recorded                        as                        interest income, as the Company has the intent to hold these                        securities                        until maturity. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                |   | As                      of March 9, |    |
|-----------------------------------------------------|--------|-------------------------------------|---------|
|                                                |   | 2005                                |    |
|                                                |   |                                |    |
| Net                      Assets                     |   |                                | 52,724  |   |
| Percentage                      acquired            |   |                                | 65      | % |
| Historical                      net assets acquired |   |                                | 34,271  |   |
| Purchase                      Price                 |   |                                | 15,417  |   |
| Net                      Value to be allocated      |   |                                | 18,854  |   |
|                                                |   |                                |    |   |
| Allocation                                          |   |                                |    |   |
| Fiscal                      and Legal Contingencies |   |                                | (3,129  | ) |
| Warranties                                          |   |                                | (411    | ) |
| Dismissal                                           |   |                                | (6,960  | ) |
| Commitment                      Investments         |   |                                | (2,556  | ) |
| Accounts                      payable to seller     |   |                                | (2,405  | ) |
| Total                      Allocation               |   |                                | (15,461 | ) |
|                                                |   |                                |    |   |
| Excess                      of fair value           |   |                                | (3,393  | ) |

----

|                                                 |   |                                                     |   | At                      December 31, |
|------------------------------------------------------|--------|----------------------------------------------------------|--------|--------------------------------------|
|                                                 |   |                                                     |   | 2005                                 |   | 2006 |
|                                                 |   | Estimateduseful                        life(years)  |   | Cost                            |   | Accumulateddepreciation |   | Net |   | Cost |   | Accumulateddepreciation |   | Net |
|                                                 |   |                                                     |   |                                 |   |   |   |   |   |   |   |   |   |   |
| Land                                                 |   | —                                                  |   | 2,512                                |   | — |   | 2,512 |   | 2,483 |   | — |   | 2,483 |
| Buildings                      and land improvements |   | 10                      to 48                            |   | 222,925                              |   | 68,938 |   | 153,987 |   | 234,407 |   | 71,312 |   | 163,095 |
| Installations                                        |   | 10                      to 31                            |   | 84,963                               |   | 59,545 |   | 25,418 |   | 84,552 |   | 62,552 |   | 22,000 |
| Machinery                      and equipment         |   | 5                      to 17                             |   | 266,437                              |   | 203,902 |   | 62,535 |   | 290,377 |   | 223,713 |   | 66,664 |
| Tooling                                              |   | 10                                                       |   | 124,229                              |   | 52,912 |   | 71,317 |   | 148,781 |   | 66,699 |   | 82,083 |
| Furniture                      and fixtures          |   | 5                      to 10                             |   | 25,574                               |   | 18,072 |   | 7,502 |   | 28,233 |   | 19,435 |   | 8,798 |
| Vehicles                                             |   | 5                      to 14                             |   | 9,613                                |   | 7,471 |   | 2,142 |   | 10,556 |   | 8,234 |   | 2,322 |
| Aircraft                      (i)                    |   | 5                      to 20                             |   | 14,191                               |   | 7,683 |   | 6,508 |   | 18,650 |   | 10,799 |   | 7,851 |
| Computers                      and peripherals       |   | 5                                                        |   | 102,776                              |   | 83,721 |   | 19,055 |   | 94,978 |   | 83,728 |   | 11,250 |
| Software                                             |   | 5                                                        |   | 78,157                               |   | 60,962 |   | 17,195 |   | 84,355 |   | 67,580 |   | 16,775 |
| Other                                                |   | 5                                                        |   | 21,813                               |   | 14,988 |   | 6,825 |   | 16,703 |   | 7,911 |   | 8,791 |
| Construction                      in progress        |   | —                                                  |   | 13,366                               |   | — |   | 13,366 |   | 20,132 |   | — |   | 20,132 |
|                                                 |   |                                                     |   | 966,556                              |   | 578,194 |   | 388,362 |   | 1,034,207 |   | 621,963 |   | 412,244 |

|  | (i) | These                      aircraft are used for external demonstration and for internal                      use                      purposes. |
|--|-----|--------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                       |   | At                        December 31, |    |
|----------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                       |   | 2005                                   |    | 2006 |   |
|                                                                       |   |                                   |    |   |   |
| Accounts                        payable                                    |   |                                   | 41,666  |   |   | 68,663 |   |
| Deferred                        income (i)                                 |   |                                   | 56,377  |   |   | 51,060 |   |
| Product                        warranties (ii)                             |   |                                   | 90,904  |   |   | 97,354 |   |
| Product                        improvement liabilities (ii)                |   |                                   | 40,350  |   |   | 43,509 |   |
| Unearned                        income (iii)                               |   |                                   | 61,240  |   |   | 83,541 |   |
| Accrued                        payroll and related charges                 |   |                                   | 79,701  |   |   | 90,335 |   |
| Accrued                        employee profit sharing                     |   |                                   | 33,662  |   |   | 29,097 |   |
| Post-retirement                        benefits (Note 22)                  |   |                                   | 3,637   |   |   | 4,963 |   |
| Insurance                                                                  |   |                                   | 5,313   |   |   | 4,857 |   |
| Provision                        related to financial guarantees (Note 34) |   |                                   | 54,011  |   |   | 32,402 |   |
| Unrealized                        losses on derivatives (Note 31)          |   |                                   | 18,450  |   |   | 15,236 |   |
| Other                                                                      |   |                                   | 45,660  |   |   | 19,786 |   |
|                                                                       |   |                                   | 530,971 |   |   | 540,803 |   |
| Less-Current                        portion                                |   |                                   | 405,965 |   |   | 433,291 |   |
| Long-term                        portion                                   |   |                                   | 125,006 |   |   | 107,512 |   |

| (i)   | Refers                      to certain aircraft sales that, due to contractual contingent                      obligations,                      are accounted for as operating                      leases. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (ii)   | Represent                      accruals for product liability programs including warranty                      and contractual                      obligations to implement improvements in aircraft sold to meet                      contractual                      performance indices. |
|------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (iii)   | Amounts                      represent unearned income for spare parts, services related                      to technical                      assistance and training of mechanics and crews. This amount                      will be                      recognized when the product or service is provided to the customer. |
|-------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                      |   | At                      December 31, |    |
|-------------------------------------------|--------|--------------------------------------|---------|
|                                      |   | 2005                                 |    | 2006 |   |
|                                      |   |                                 |    |   |   |
| Denominated                      in:      |   |                                 |    |   |   |
| US$                                       |   |                                 | 566,422 |   |   | 706,270 |   |
| Brazilian                      *reais*    |   |                                 | 16,560  |   |   | 22,171 |   |
|                                      |   |                                 | 582,982 |   |   | 728,441 |   |
| Less-Current                      portion |   |                                 | 485,958 |   |   | 544,802 |   |
| Long-term                      portion    |   |                                 | 97,024  |   |   | 183,639 |   |

*reais*

|                                                                                                                                     |   | At                      December 31, |    |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------|
|                                                                                                                                     |   | 2005                                 |    | 2006 |   |
|                                                                                                                                     |   |                                 |    |   |   |
| Refinanced                      INSS / FUNRURAL (social security contribution on rural worker’s                      compensation) |   |                                 | 56,415  |   |   | 16,014 |   |
| Current                      taxes (other than taxes on income)                                                                          |   |                                 | 27,939  |   |   | 43,464 |   |
| Disputed                      taxes and social charges (i)                                                                               |   |                                 | 542,749 |   |   | 532,520 |   |
|                                                                                                                                     |   |                                 | 627,103 |   |   | 591,998 |   |
| Less-current                      portion                                                                                                |   |                                 | 113,360 |   |   | 136,950 |   |
| Long-term                      portion                                                                                                   |   |                                 | 513,743 |   |   | 455,048 |   |

| ·   | The                      Company is questioning in Court certain changes in rates and                      tax basis of                      PIS (Social Contribution on Gross Revenue) and COFINS (Social                      Contribution                      on Billing), determined by Law no 9.718/98 fromJanuary 1, 1999 (PIS                      and COFINS) and Law 10.637/02 from December 30, 2002 (PIS).                      Total amount                      accrued amounts to $214,160 as of December 31, 2006 ($178,838                      as of                      December 31, 2005). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                      Company is required to pay to the government a tax called SAT                      (Workers                      Compensation Insurance) at a rate of 3% of wages. In December                      1998, the                      Company obtained a preliminary injunction to reduce the tax rate from                      3% to 1%, and the difference has been accrued and amounts to                      $61,648 at                      December 31, 2006 ($45,280 as of December 31,                      2005). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | In                      April 1999, the Company obtained a Writ of Mandamus that authorized                      the                      offset of tax payments (INSS - social security contribution),                      which were                      made in August, September and October 1989,against future payments,                      due to a rate increase from 10% to 20%, which the Company believes                      was                      unconstitutional. The amount of $25,587 was accrued as of December                      31,                      2006 ($21,585 as of December 31, 2005). |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | IPI                      (Federal VAT) - The Company is claiming the right to offset                      IPI credits on                      the acquisition of non-taxable or zero-rate raw materials against                      income                      and social contribution taxes. The amount of taxesaccrued but not paid                      related to this claim as of December 31, 2006 was $43,992 ($147,522                      as of                      December 31, 2005). Such reduction was originated by the partial                      payment                      of the IPI tax under dispute, which was benefited with a reduction in                      the interest and fines amounts, based on Provisional Measure                      303, of June                      29, 2006, resulting in reversals of provisions shown in the                      consolidated                      statements of                      income and comprehensive income in the Financial Expense and                      Other                      Operating Income respectively. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                      Company is challenging the payment of the social contribution                      incurred on                      export sales revenues. The amount of taxes accrued but not                      paid related to                      this claim was $178,179 as of December 31, 2006 ($140,977                      as of December 31, 2005). |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                         |   | At                      December 31, |    |
|----------------------------------------------|--------|--------------------------------------|---------|
|                                         |   | 2005                                 |    | 2006 |   |
|                                         |   |                                 |    |   |   |
| Labor                      contingencies (i) |   |                                 | 24,561  |   |   | 32,244 |   |
| Tax                      contingencies (ii)  |   |                                 | 26,682  |   |   | 21,667 |   |
| Civil                      disputes          |   |                                 | 2,274   |   |   | 2,582 |   |
| Other                      contingencies     |   |                                 | — |   |   | 8,051 |   |
|                                         |   |                                 | 53,517  |   |   | 64,544 |   |
| Less-current                      portion    |   |                                 | 19,826  |   |   | 31,175 |   |
| Long-term                      portion       |   |                                 | 33,691  |   |   | 33,369 |   |

|  | (i) | The                      labor lawsuits relate to claims brought by unions on behalf                      of employees                      or by individuals, in which former employees are individually                      claiming                      overtime, productivity premiums, reinstatement, allowances                      and retroactive                      salary increases and                      adjustments. |
|--|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*Plano            Collor” *
*“Plano            Verão” (Brazilian economic recovery plans)*

----

| (ii)   | This                      provision relates to income tax and social contributions contingencies                      resulted from notices of assessment received from Brazilian                      Federal                      Revenue Department. The company is challenging de applicability                      of                      these assessments and waits for a final                      decision. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                        |   |          |   |                              |   | At                      December 31,       |
|-------------------------------------------------------------|--------|---------------|--------|-----------------------------------|--------|-------------------------------------------------|
| Description                                                 |   | FinalMaturity |   | Currency                          |   | Annual                      interest rate - %   |   | 2005 |   | 2006 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| **Foreign                      Currency**                   |   |          |   |                              |   |                                            |   |   |   |   |
| Materials                      acquisition                  |   | 2011          |   | U.S.                      dollar  |   | 4.12                      to 8.05;              |   |   |   |   |
|                                                        |   |          |   |                              |   | LIBOR                      plus 1.75 to 2.70(1) |   | 526,224 |   | 229,049 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
|                                                        |   | 2006          |   | Japanese                      yen |   | JIBOR                      plus 1.05(2)         |   | 31,443 |   | — |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Export                      financing                       |   | 2010          |   | U.S.                      dollar  |   | 7.81                                            |   | 50,846 |   | 50,824 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Advances                      on foreign exchange contracts |   | 2007          |   | U.S.                      dollar  |   | 5.42                      to 5.98               |   |  96,763 |   |  7,265 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Project                      development                    |   | 2016          |   | U.S.                      dollar  |   | LIBOR                      plus 2.50 to 3.50    |   | 182,360 |   | 182,353 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Working                      capital                        |   | 2011          |   | Euro                              |   | Euribor                      plus 1.5(3)        |   | 25,324 |   | 33,915 |
|                                                        |   |          |   |                              |   | 3.65%                      a 6.00%              |   |   |   |   |
|                                                        |   | 2017          |   | U.S.                      dollar  |   | LIBOR                      plus 2,70%           |   | 416,677 |   | 536,906 |
|                                                        |   |          |   |                              |   | 3.65                      to 7.7;               |   |   |   |   |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Property                      and Equipment Additions       |   | 2008          |   | U.S.                      dollar  |   | Libor                      plus 3.40            |   | — |   | 10,626 |
|                                                        |   |          |   |                              |   | 2.39                      to 3.27               |   |   |   |   |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Subtotal                                                    |   |          |   |                              |   |                                            |   | 1,329,637 |   | 1,050,938 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| **Local                      Currency**                     |   |          |   |                              |   |                                            |   |   |   |   |
| Project                      development                    |   | 2013          |   |                              |   | TJLP                      plus 1.00 to 6.00(4)  |   | 13,891 |   | 34,526 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Export                      financing                       |   | 2008          |   |                              |   | TJLP                      plus 2.20             |   | 201,277 |   | 257,360 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Working                      capital                        |   | 2007          |   |                              |   | 115%                      of the CDI(5)         |   | 5,775 |   | 6,327 |
|                                                        |   |          |   |                              |   |                                            |   |   |   |   |
| Property                      and equipment additions       |   | 2006          |   |                              |   | TJLP                      plus 3.00 to 4.35     |   | 2,842 |   | — |
| Subtotal                                                    |   |          |   |                              |   |                                            |   | 223,785 |   | 298,213 |
| Total                      debt                             |   |          |   |                              |   |                                            |   | 1,553,422 |   | 1,349,151 |
| Less-Current                      portion                   |   |          |   |                              |   |                                            |   | 475,305 |   | 503,047 |
| Long-term                      portion                      |   |          |   |                              |   |                                            |   | 1,078,117 |   | 846,104 |

----

|                                   |   | At                      December 31, |     |
|----------------------------------------|--------|--------------------------------------|----------|
|                                   |   | 2005                                 |     | 2006 |   |
|                                   |   |                                 |     |   |   |
| Brazilian                      *reais* |   |                                 | 2.3407   |   |   | 2.1380 |   |
| Euro                                   |   |                                 | 1.1830   |   |   | 1.3191 |   |
| Japanese                      yen      |   |                                 | 118.0205 |   |   | 119.110 |   |

| Year                                     |   | 2006   |    |
|------------------------------------------|--------|--------|---------|
|                                     |   |   |    |
| 2008                                     |   |   | 154,568 |   |
| 2009                                     |   |   | 71,864  |   |
| 2010                                     |   |   | 92,360  |   |
| 2011                                     |   |   | 33,461  |   |
| 2012                                     |   |   | 29,446  |   |
| 2013                      and thereafter |   |   | 464,405 |   |
|                                     |   |   | 846,104 |   |

|                                   |   |   |   |
|----------------------------------------|--------|--------|--------|
|                                   |   | 2005   |   | 2006 |   |
|                                   |   |   |   |   |   |
| U.S.                      dollars      |   |   | 6.53   | % |   | 6.63 | % |
| Brazilian                      *reais* |   |   | 12.28  | % |   | 9.12 | % |
| Japanese                      yen      |   |   | 1.17   | % |   | — |   |
| Euro                                   |   |   | 3.67   | % |   | 3.84 | % |

----

|                        Year   |   | 2006   |   |
|-----------------------------------------|--------|--------|--------|
|                                    |   |   |   |
| 2007                                    |   |   | 3,240  |   |
| 2008                                    |   |   | 2,420  |   |
| 2009                                    |   |   | 1,252  |   |
| 2010                                    |   |   | 862    |   |
| 2011                                    |   |   | 744    |   |
| Thereafter                              |   |   | 9,606  |   |
|                                    |   |   | 18,124 |   |

----

|                        Year          |   | 2006   |   |
|------------------------------------------------|--------|--------|--------|
|                                           |   |   |   |
| 2007                                           |   |   | 2,765  |   |
| 2008                                           |   |   | 1,694  |   |
| 2009                                           |   |   | 805    |   |
| 2010                                           |   |   | 512    |   |
| 2011                                           |   |   | 473    |   |
| Thereafter                                     |   |   | 829    |   |
| Total                                          |   |   | 7,078  |   |
| Less-Implicit                      interest    |   |   | (1,237 | ) |
| Capital                      lease obligations |   |   | 5,841  |   |
| Less-Current                      portion      |   |   | 2,388  |   |
| Long-term                      portion         |   |   | 3,453  |   |

----

|                                                                                                                                                                                                                |   | Year                      ended at December 31, |     |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|----------|
|                                                                                                                                                                                                                |   | 2004                                            |     | 2005 |   | 2006 |   |
|                                                                                                                                                                                                                |   |                                            |     | (Restated) |   | (Restated) |   |
| Interest                      expenses:                                                                                                                                                                             |   |                                            |     |   |   |   |   |
| Interest                      and commissions on loans                                                                                                                                                              |   |                                            | (56,234  | ) |   | (73,145 | ) |   | (87,623 | ) |
| Interest                      on taxes and payroll charges under litigation (Notes 17 and                      18) and                      Interest on refinanced taxes                                            |   |                                            | (32,845  | ) |   | (63,174 | ) |   | (40,921 | ) |
| CPMF                      (tax on bank account transactions)                                                                                                                                                        |   |                                            | (13,919  | ) |   | (17,197 | ) |   | (23,625 | ) |
| Structured                      financing costs                                                                                                                                                                     |   |                                            | (47,220  | ) |   | (12,481 | ) |   | (4,707 | ) |
| Other                                                                                                                                                                                                               |   |                                            | (14,952  | ) |   | (6,933 | ) |   | (4,770 | ) |
|                                                                                                                                                                                                                |   |                                            | (165,170 | ) |   | (172,930 | ) |   | (161,647 | ) |
|                                                                                                                                                                                                                |   |                                            |     |   |   |   |   |   |   |   |
| Interest                      income:                                                                                                                                                                               |   |                                            |     |   |   |   |   |   |   |   |
| Temporary                      cash investments                                                                                                                                                                     |   |                                            | 104,002  |   |   | 109,659 |   |   | 161,956 |   |
| Gain                      on early repayment of loans                                                                                                                                                               |   |                                            | 8,128    |   |   | 36,417 |   |   | 46,970 |   |
| Interest                      on NTN, trade accounts receivable, collateralized accounts                      receivable                      and guarantee                      deposits (Notes 9, 11 and 12) |   |                                            | 44,333   |   |   | 35,977 |   |   | 58,339 |   |
| Other                                                                                                                                                                                                               |   |                                            | 4,636    |   |   | 8,792 |   |   | 2,470 |   |
|                                                                                                                                                                                                                |   |                                            | 161,099  |   |   | 190,845 |   |   | 269,735 |   |
|                                                                                                                                                                                                                |   |                                            |     |   |   |   |   |   |   |   |
| Gain                      (loss) on derivatives                                                                                                                                                                     |   |                                            | (10,083  | ) |   | (6,434 | ) |   | 7,634 |   |
| Monetary                      and exchange variations of long-term debt                                                                                                                                             |   |                                            | (23,846  | ) |   | (15,598 | ) |   | (10,289 | ) |
| Interest                      income (expenses), net                                                                                                                                                                |   |                                            | (38,000  | ) |   | (4,117 | ) |   | 105,433 |   |
|                                                                                                                                                                                                                |   |                                            |     |   |   |   |   |   |   |   |

----

|                                                        |   |   | Pension                      benefits |   |   | Other                      post-retirement benefits |   |
|-------------------------------------------------------------|--------|--------|---------------------------------------|--------|--------|----------------------------------------------------------|--------|
|                                                        |   |   | 2005                                  |   |   | 2006                                                     |   |   | 2005 |   |   | 2006 |   |
| Benefit                      obligation - beginning of year |   |   | 7,716                                 |   |   | 8,607                                                    |   |   | 7,120 |   |   | 8,868 |   |
| Amendments                                                  |   |   | —                               |   |   | —                                                  |   |   | — |   |   | (2,628 | ) |
| Service                      cost                           |   |   | —                               |   |   | —                                                  |   |   | 836 |   |   | 801 |   |
| Interest                      cost                          |   |   | 435                                   |   |   | 103                                                      |   |   | 436 |   |   | 420 |   |
| Actuarial                      (gain) loss                  |   |   | 749                                   |   |   | 835                                                      |   |   | 577 |   |   | (367 | ) |
| Participant                      contributions              |   |   | —                               |   |   | —                                                  |   |   | 14 |   |   | 18 |   |
| Benefits                      paid to participants          |   |   | (293                                  | )      |   | (5                                                       | )      |   | (115 | ) |   | (155 | ) |
| Settlement                                                  |   |   | —                               |   |   | (9,540                                                   | )      |   | — |   |   | — |   |
| Benefit                      obligations - end of year      |   |   | 8,607                                 |   |   | —                                                  |   |   | 8,868 |   |   | 6,957 |   |

----

|                                                                                    |   | Pension                      benefits |    | Other                      post-retirement benefits  |   |
|-----------------------------------------------------------------------------------------|--------|---------------------------------------|---------|-----------------------------------------------------------|--------|
|                                                                                    |   | 2005                                  |    | 2006                                                      |   | 2005 |   | 2006 |   |
|                                                                                    |   |                                  |    |                                                      |   |   |   |   |   |
| Fair                      value of plan assets - beginning of                      year |   |                                  | 9,217   |                                                      |   | 8,775 |   |   | 1,968 |   |   | 1,965 |   |
| Employer                      contributions                                             |   |                                  | — |                                                      |   | 598 |   |   | 44 |   |   | — |   |
| Actual                      return on plan assets                                       |   |                                  | (149    | )                                                         |   | 173 |   |   | 54 |   |   | 166 |   |
| Participant                      contributions                                          |   |                                  | — |                                                      |   | — |   |   | 14 |   |   | 18 |   |
| Benefits                      paid to participants                                      |   |                                  | (293    | )                                                         |   | (5 | ) |   | (115 | ) |   | (155 | ) |
| Settlements                                                                             |   |                                  | — |                                                      |   | (9,540 | ) |   | — |   |   | — |   |
| 401(h)                      receivable                                                  |   |                                  | — |                                                      |   | (1 | ) |   | — |   |   | — |   |
| Fair                      value of plan assets - end of year                            |   |                                  | 8,775   |                                                      |   | — |   |   | 1,965 |   |   | 1,994 |   |

|                                                |   | Pension                      benefits |    | Other                      post-retirement benefits |   |
|-----------------------------------------------------|--------|---------------------------------------|---------|-----------------------------------------------------|--------|
|                                                |   | 2005                                  |    | 2006                                                |   | 2005 |   | 2006 |   |
|                                                |   |                                  |    |                                                |   |   |   |   |   |
| Funded                      status                  |   |                                  | 167     |                                                |   | — |   |   | (6,903 | ) |   | (4,963 | ) |
| Unamortized                      prior service cost |   |                                  | — |                                                |   | — |   |   | (577 | ) |   | — |   |
| Unrecognized                      net (gain) loss   |   |                                  | 1,377   |                                                |   | — |   |   | 2,299 |   |   | — |   |
| Prepaid                      (accrued) benefit cost |   |                                  | 1,544   |                                                |   | — |   |   | (5,181 | ) |   | (4,963 | ) |

|                                                |   | Pension                      benefits (%) |   | Other                      post-retirement benefits (%) |   |
|-----------------------------------------------------|--------|-------------------------------------------|--------|---------------------------------------------------------|--------|
|                                                |   | 2005                                      |   | 2006                                                    |   | 2005 |   | 2006 |   |
|                                                |   |                                      |   |                                                    |   |   |   |   |   |
| Average                      discount rate          |   |                                      | 4.89   |                                                    |   | 4.73 |   |   | 5.75 |   |   | 5.75 |   |
| Expected                      return on plan assets |   |                                      | 6.00   |                                                    |   | 6.00 |   |   | 7.75 |   |   | 7.75 |   |

|                             |   | Other                      post-         |   |
|----------------------------------|--------|------------------------------------------|--------|
|                             |   | retirement                      benefits |   |
| 2007                             |   |                                     | 224    |   |
| 2008                             |   |                                     | 235    |   |
| 2009                             |   |                                     | 238    |   |
| 2010                             |   |                                     | 272    |   |
| 2011                             |   |                                     | 306    |   |
| 2012                      - 2015 |   |                                     | 2,209  |   |

----

|                                                       |   | Pension                      benefits |    |  Other                      post-retirement benefits  |   |
|------------------------------------------------------------|--------|---------------------------------------|---------|-----------------------------------------------------------------|--------|
|                                                       |   | 2004                                  |    | 2005                                                            |   | 2006 |   | 2004 |   | 2005 |   | 2006 |   |
|                                                       |   |                                  |    |                                                            |   |   |   |   |   |   |   |   |   |
| Service                      cost                          |   |                                  | — |                                                            |   | — |   |   | — |   |   | 691 |   |   | 836 |   |   | 801 |   |
| Interest                      cost                         |   |                                  | 479     |                                                            |   | 435 |   |   | 103 |   |   | 362 |   |   | 436 |   |   | 420 |   |
| Expected                      return on plan assets        |   |                                  | (655    | )                                                               |   | (541 | ) |   | (129 | ) |   | (144 | ) |   | (149 | ) |   | (144 | ) |
| Amortization                      of transition obligation |   |                                  | — |                                                            |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Amortization                      of prior service cost    |   |                                  | — |                                                            |   | — |   |   | — |   |   | (46 | ) |   | (45 | ) |   | (169 | ) |
| Amortization                      of loss                  |   |                                  | — |                                                            |   | — |   |   | 36 |   |   | 69 |   |   | 100 |   |   | 103 |   |
| Effect                      of curtailment                 |   |                                  | — |                                                            |   | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Net                      periodic benefit cost (benefit)   |   |                                  | (176    | )                                                               |   | (106 | ) |   | 10 |   |   | 932 |   |   | 1,178 |   |   | 1,011 |   |

|                                                                         |   | One                      percentage point |   |
|------------------------------------------------------------------------------|--------|-------------------------------------------|--------|
|                                                                         |   | Increase                                  |   | Decrease |   |
|                                                                         |   |                                      |   |   |   |
| Effect                      on total of service and interest cost components |   |                                      | 250    |   |   | (198 | ) |
| Effect                      on the post-retirement benefit obligation   |   |                                      | 1,195  |   |   | (972 | ) |

----

| i)   | Change                      of the Company’s name or its corporate                      objective. |
|----------------|----------------------------------------------------------------------------------------------------------|

| ii)   | Alteration                      and/or application of the Company’s                      logo; |
|-----------------|------------------------------------------------------------------------------------------------------|

| iii)   | Creation                      and/or alteration of military programs, whether or not the                      Federal                      Republic of Brazil is                      involved. |
|------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| iv)   | Training                      third parties in technology for military                      programs. |
|-----------------|-------------------------------------------------------------------------------------------------------|

| v)   | Interruption                      of the supply of maintenance and spare parts for military                      aircraft; |
|----------------|----------------------------------------------------------------------------------------------------------------------------|

| vi)   | Transfer                      of the Company’s stock                      control; |
|-----------------|------------------------------------------------------------------------------------------|

| vii)   | Any                      changes in (1) the provisions of the above-mentioned article                      or of article                      4, the main clause of art. 11, arts 12, 15 and 16, sub-item                      III of art.                      19, paragraphs 1 and 2 of art. 28, sub-item X of art. 34, sub-item                      XII of                      art. 40 or Chapter VII; or (2) the rights attributed by the                      bylaws to the                      special class share. |
|------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| ·   | Research                      and development - Development of the EMBRAER 170/190 family                      and a new                      family of executive jets. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | New                      technologies, processes and management models in order to improve                      the                      Company’s results, competencies and productivity, and investments in                      subsidiaries. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

*reais*

|                                                          |   |                                |    |                        Dividends per share   |   |
|---------------------------------------------------------------|--------|-------------------------------------|---------|--------------------------------------------------------|--------|
|                                                          |   | Amounts                             |    |                                                   |   |
| Approval                      date                            |   | (in                      thousands) |    |                        Common                |   |                        Preferred   |   |
|                                                          |   | US$                                 |    | R$                                                     |   | US$ |   | R$ |   | US$ |   | R$ |   |
|                                                          |   |                                |    |                                                   |   |   |   |   |   |
| **2004:**                                                     |   |                                |    |                                                   |   |   |   |   |   |   |   |   |   |
| March                      12, 2004 - interest on capital     |   |                                | 34,723  |                                                   |   | 100,998 |   |   | 0.0455 |   |   | 0.1322 |   |   | 0.0500 |   |   | 0.1454 |   |
| June                      25, 2004 - interest on capital      |   |                                | 51,489  |                                                   |   | 160,002 |   |   | 0.0673 |   |   | 0.2092 |   |   | 0.0741 |   |   | 0.2301 |   |
| September                      20, 2004 - interest oncapital  |   |                                | 55,959  |                                                   |   | 160,058 |   |   | 0.0731 |   |   | 0.2091 |   |   | 0.0805 |   |   | 0.2300 |   |
| December                      17, 200 - interest oncapital    |   |                                | 61,827  |                                                   |   | 164,115 |   |   | 0.0807 |   |   | 0.2143 |   |   | 0.0888 |   |   | 0.2357 |   |
| Total                      dividends in 2004                  |   |                                | 203,998 |                                                   |   | 585,173 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                                |    |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **2005:**                                                     |   |                                |    |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| March                      11, 2005 - interest on capital     |   |                                | 39,959  |                                                   |   | 106,542 |   |   | 0.0521 |   |   | 0.1389 |   |   | 0.0573 |   |   | 0.1528 |   |
| June                      3, 2005 - interest on capital       |   |                                | 47,156  |                                                   |   | 110,836 |   |   | 0.0615 |   |   | 0.1445 |   |   | 0.0676 |   |   | 0.1590 |   |
| September                      16, 2005 - interest oncapital  |   |                                | 51,097  |                                                   |   | 113,551 |   |   | 0.0665 |   |   | 0.1478 |   |   | 0.0731 |   |   | 0.1625 |   |
| December                      19, 2005 - interest oncapital   |   |                                | 48,247  |                                                   |   | 112,932 |   |   | 0.0627 |   |   | 0.1469 |   |   | 0.0690 |   |   | 0.1616 |   |
| Total                      dividends in 2005                  |   |                                | 186,459 |                                                   |   | 443,861 |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                          |   |                                |    |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **2006:**                                                     |   |                                |    |                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| June                      12, 2006 - interest on capital      |   |                                | 51,868  |                                                   |   | 114,440 |   |   | 0.0702 |   |   | 0.1549 |   |   | — |   |   | — |   |
| September                      15, 2006 - interest on capital |   |                                | 42,370  |                                                   |   | 92,337 |   |   | 0.0574 |   |   | 0.1250 |   |   | — |   |   | — |   |
| September                      15, 2006 - dividends           |   |                                | 16,318  |                                                   |   | 35,561 |   |   | 0.0221 |   |   | 0.0481 |   |   | — |   |   | — |   |
| December                      15, 2006 - interest on capital  |   |                                | 39,960  |                                                   |   | 84,993 |   |   | 0.0537 |   |   | 0.1149 |   |   | — |   |   | — |   |
| Total                      dividends in 2006                  |   |                                | 150,516 |                                                   |   | 327,331 |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                                                                                   |   | Years                      Ended December 31 (in thousands, except per share data) |    |
|------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------|---------|
|                                                                                                                   |   | 2004                                                                          |    | 2005 |   | 2006 |   |
|                                                                                                                   |   | Common                                                                             |    | Preferred |   | Total |   | Common |   | Preferred |   | Total |   | Common |   |
| Basic                      numerator:                                                                                  |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                      dividends declared/paid                                                                    |   |                                                                               | 64,675  |   |   | 139,323 |   |   | 203,998 |   |   | 58,870 |   |   | 127,965 |   |   | 186,835 |   |   | 150,516 |   |
| Basic                      allocated undistributed earnings                                                            |   |                                                                               | 55,864  |   |   | 120,344 |   |   | 176,208 |   |   | 81,572 |   |   | 177,312 |   |   | 258,884 |   |   | 239,624 |   |
| Allocated                      net income available for common and preferred shareholders                              |   |                                                                               | 120,539 |   |   | 259,667 |   |   | 380,206 |   |   | 140,442 |   |   | 305,277 |   |   | 445,719 |   |   | 390,140 |   |
| Basic                      denominator:                                                                                |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                      average shares                                                                           |   |                                                                               | 242,544 |   |   | 474,994 |   |   |   |   |   | 242,544 |   |   | 479,288 |   |   |   |   |   | 739,904 |   |
|                                                                                                                   |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Basic                      earnings per share                                                                          |   |                                                                               | 0.4970  |   |   | 0.5467 |   |   |   |   |   | 0.5790 |   |   | 0.6369 |   |   |   |   |   | 0,5273 |   |
|                                                                                                                   |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                      numerator:                                                                                |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Actual                      dividends declared/paid                                                                    |   |                                                                               | 64,284  |   |   | 139,714 |   |   | 203,998 |   |   | 58,581 |   |   | 128,254 |   |   | 186,835 |   |   | 150,516 |   |
| Diluted                      allocated undistributed earnings                                                          |   |                                                                               | 55,527  |   |   | 120,681 |   |   | 176,208 |   |   | 81,172 |   |   | 177,712 |   |   | 258,884 |   |   | 239,624 |   |
|                                                                                                                   |   |                                                                               | 119,811 |   |   | 260,395 |   |   | 380,206 |   |   | 139,753 |   |   | 305,966 |   |   | 445,719 |   |   | 390,140 |   |
|                                                                                                                   |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Allocated                      net income available for common and preferred shareholders                              |   |                                                                               | 119,811 |   |   | 260,395 |   |   | 380,206 |   |   | 139,753 |   |   | 305,966 |   |   | 445,719 |   |   | 390,140 |   |
| Allocated                      diluted net income available for common and preferred                      shareholders |   |                                                                               | 119,811 |   |   | 260,395 |   |   | 380,206 |   |   | 139,753 |   |   | 305,966 |   |   | 445,719 |   |   | 390,140 |   |
| Diluted                      denominator:                                                                              |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Weighted                      average shares outstanding                                                               |   |                                                                               | 242,544 |   |   | 474,994 |   |   |   |   |   | 242,544 |   |   | 479,288 |   |   |   |   |   | 739,904 |   |
| Dilutive                      effects of stock options                                                                 |   |                                                                               | -       |   |   | 4,223 |   |   |   |   |   | — |   |   | 3,451 |   |   |   |   |   | 2,999 |   |
| Diluted                      weighted average shares                                                                   |   |                                                                               | 242,544 |   |   | 479,217 |   |   |   |   |   | 242,544 |   |   | 482,739 |   |   |   |   |   | 742,903 |   |
| Diluted                      earnings per share                                                                        |   |                                                                               | 0.4940  |   |   | 0.5434 |   |   |   |   |   | 0.5762 |   |   | 0.6338 |   |   |   |   |   | 0,5250 |   |
|                                                                                                                   |   |                                                                               |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|                                                  |   | 2004                                     |   | 2005                                                  |   | 2006                                     |   |
|-------------------------------------------------------|--------|------------------------------------------|--------|-------------------------------------------------------|--------|------------------------------------------|--------|
|                                                  |   | Thousandsof                      options |   | Weightedaverageexerciseprice                      R$) |   | Thousandsof                      options |   | Weightedaverageexerciseprice                      (R$) |   | Thousandsof                      options |   | Weightedaverageexerciseprice                      (R$) |   |
|                                                  |   |                                     |   |                                                  |   |                                     |   |   |   |   |   |   |   |
| Outstanding                      at beginning of year |   |                                     | 9,985  |                                                  |   | 10.55                                    |   |   | 7,639 |   |   | 12.37 |   |   | 3,761 |   |   | 15.14 |   |
| Exercised                                             |   |                                     | (2,296 | )                                                     |   | 4.15                                     |   |   | (3,490 | ) |   | 8.29 |   |   | (1,292 | ) |   | 8.61 |   |
| Canceled                      or expired              |   |                                     | (50    | )                                                     |   | 23.00                                    |   |   | (388 | ) |   | 22.00 |   |   | (243 | ) |   | 20.87 |   |
| Outstanding                      at end of year       |   |                                     | 7,639  |                                                  |   | 12.37                                    |   |   | 3,761 |   |   | 15.14 |   |   | 2,225 |   |   | 18.30 |   |
| Exercisable                      at end of year       |   |                                     | 3,946  |                                                  |   | 10.22                                    |   |   | 3,167 |   |   | 13.85 |   |   | 2,225 |   |   | 18.30 |   |

*Black-Scholes            *

| Exercise                      price                      (R$) |   | Number                      ofoutstandingstock                      options |   | Optionsexercisable |   | Weightedaverageremainingcontractual                      life                      (years) |   |
|---------------------------------------------------------------|--------|-----------------------------------------------------------------------------|--------|--------------------|--------|--------------------------------------------------------------------------------------------|--------|
|                                                          |   |                                                                        |   |               |   |                                                                                       |   |
| 8.11                                                          |   |                                                                        | 280    |               |   | 280                                                                                        |   |   | 0.3 |   |
| 13.70                                                         |   |                                                                        | 450    |               |   | 450                                                                                        |   |   | 0.8 |   |
| 14.99                                                         |   |                                                                        | 260    |               |   | 260                                                                                        |   |   | 1.1 |   |
| 23.00                                                         |   |                                                                        | 1.235  |               |   | 1.235                                                                                      |   |   | 1.4 |   |
|                                                          |   |                                                                        |   |               |   |                                                                                       |   |   |   |   |

----

| Grant                      dates       |   |                        Vesting date   |   | Expiration                      date   |   | Weightedaverageexerciseprice                      (R$) |   | Number                      ofoutstandingstock                      options(thousands) |
|----------------------------------------|--------|-------------------------------------------------|--------|----------------------------------------|--------|--------------------------------------------------------|--------|----------------------------------------------------------------------------------------|
|                                   |   |                                            |   |                                   |   |                                                   |   |                                                                                   |
| May                      2000          |   | May                      2003                   |   | May                      2007          |   | 9.15                                                   |   | 71                                                                                     |
| November                      2000     |   | November                      2003              |   | November                      2007     |   | 13.86                                                  |   | 120                                                                                    |
| May                      2000 and 2001 |   | May                      2004                   |   | May                      2007 and 2008 |   | 20.97                                                  |   | 448                                                                                    |
| November                      2000     |   | November                      2004              |   | November                      2007     |   | 13.85                                                  |   | 142                                                                                    |
| May                      2000 and 2001 |   | May                      2005                   |   | May                      2007 and 2008 |   | 17.69                                                  |   | 628                                                                                    |
| November                      2000     |   | November                      2005              |   | November                      2007     |   | 13.86                                                  |   | 251                                                                                    |
| May                      2001          |   | May                      2006                   |   | May                      2008          |   | 22.07                                                  |   | 565                                                                                    |
| Total                                  |   |                                            |   |                                   |   |                                                   |   | 2,225                                                                                  |

|                                        |   | For                      the year ended December 31, |     |
|---------------------------------------------|--------|------------------------------------------------------|----------|
|                                        |   | 2004                                                 |     | 2005 |   | 2006 |   |
|                                        |   |                                                 |     |   |   |   |   |
| Current                                     |   |                                                 | (107,628 | ) |   | (83,839 | ) |   | (45,707 | ) |
| Deferred-                                   |   |                                                 |     |   |   |   |   |   |   |   |
| Temporary                      differences- |   |                                                 |     |   |   |   |   |   |   |   |
| Additions                                   |   |                                                 | 1,505    |   |   | 40,844 |   |   | 189 |   |
| Tax                      loss carryforwards |   |                                                 |     |   |   |   |   |   |   |   |
| Additions                      (reversions) |   |                                                 | (6,016   | ) |   | 1,426 |   |   | 1,106 |   |
| Total                      deferred         |   |                                                 | (4,511   | ) |   | 42,270 |   |   | 1,295 |   |
| Income                      tax expense     |   |                                                 | (112,139 | ) |   | (41,569 | ) |   | (44,412 | ) |

|                                                                                                                            |   | For                      the year ended December 31, |    |
|---------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------|---------|
|                                                                                                                            |   | 2004                                                 |    | 2005 |   | 2006 |   |
|                                                                                                                            |   |                                                 |    |   |   |   |   |
| Income                      before taxes as reported in the accompanying consolidated                      financial statements |   |                                                 | 493,651 |   |   | 500,006 |   |   | 444,166 |   |
| Combined                      statutory income tax rate                                                                         |   |                                                 | 34      | % |   | 34 | % |   | 34 | % |
| Tax                      expense at statutory income tax rate                                                                   |   |                                                 | 167,841 |   |   | 170,002 |   |   | 151,016 |   |
|                                                                                                                            |   |                                                 |    |   |   |   |   |   |   |   |
| Permanent                      differences:                                                                                     |   |                                                 |    |   |   |   |   |   |   |   |
| Nondeductible                      expenses                                                                                     |   |                                                 | 1,548   |   |   | 1,882 |   |   | 6,397 |   |
| Translation                      effects                                                                                        |   |                                                 | 10,238  |   |   | (45,587 | ) |   | (48,077 | ) |
| Dividends                      paid as interest on capital                                                                      |   |                                                 | (69,359 | ) |   | (63,524 | ) |   | (45,627 | ) |
| Change                      in valuation allowance for deferred tax assets                                                      |   |                                                 | 366     |   |   | (9,292 | ) |   | 491 |   |
| Reversal                      of tax incentives                                                                                 |   |                                                 | (1,029  | ) |   | (1,221 | ) |   | — |   |
| Research                      and Development                                                                                   |   |                                                 | — |   |   | — |   |   | (16,943 | ) |
| Equity                      in loss from affiliates                                                                             |   |                                                 | — |   |   | (1,053 | ) |   | (12 | ) |
| Other                                                                                                                           |   |                                                 | 2,534   |   |   | (9,638 | ) |   | (2,833 | ) |
|                                                                                                                            |   |                                                 |    |   |   |   |   |   |   |   |
| Income                      tax expense as reported in the income statement                                                     |   |                                                 | 112,139 |   |   | 41,569 |   |   | 44,412 |   |

----

|                                                                        |   | At                      December 31, |     |
|-----------------------------------------------------------------------------|--------|--------------------------------------|----------|
|                                                                        |   | 2005                                 |     | 2006 |   |
| Deferred                      tax assets on:                                |   |                                 |     |   |   |
| Tax                      loss carryforwards (i)                             |   |                                 | 7,300    |   |   | 8,897 |   |
| Temporary                      differences:                                 |   |                                 |     |   |   |   |   |
| Accrual                      for product warranties and improvements        |   |                                 | 44,192   |   |   | 46,538 |   |
| Accrued                      taxes other than taxes on income               |   |                                 | 86,596   |   |   | 95,450 |   |
| Deferred                      charges, except research and development      |   |                                 | 144,591  |   |   | 162,587 |   |
| Other                      accrued expenses not deductible for tax purposes |   |                                 | 70,661   |   |   | 65,630 |   |
| Differences                      in bases of property, plant and equipment  |   |                                 | 9,346    |   |   | 9,634 |   |
| Differences                      in inventory basis                         |   |                                 | 31,999   |   |   | 35,637 |   |
| Post-retirement                      benefits accrual                       |   |                                 | 1,255    |   |   | 1,943 |   |
| Other                                                                  |   |                                 | 30,975   |   |   | 34,579 |   |
| Valuation                      allowance (ii)                               |   |                                 | (3,235   | ) |   | (3,726 | ) |
| Total                      deferred tax assets                              |   |                                 | 423,680  |   |   | 457,169 |   |
|                                                                        |   |                                 |     |   |   |   |   |
| Deferred                      tax liabilities on:                           |   |                                 |     |   |   |   |   |
| Temporary                      differences:                                 |   |                                 |     |   |   |   |   |
| Differences                      in bases of property, plant and equipment  |   |                                 | (18,175  | ) |   | (14,390 | ) |
| Research                      and development                               |   |                                 | (157,392 | ) |   | (195,878 | ) |
| Other                                                                       |   |                                 | (11,836  | ) |   | (9,329 | ) |
| Total                      deferred tax liabilities                         |   |                                 | (187,403 | ) |   | (219,597 | ) |
| Net                      deferred tax asset                                 |   |                                 | 236,276  |   |   | 237,572 |   |

| (i)   | Tax                      loss carryforwards are derived                      from: |
|-----------------|------------------------------------------------------------------------------------|

|                                      |   | At                      December 31, |   |
|-------------------------------------------|--------|--------------------------------------|--------|
|                                      |   | 2005                                 |   | 2006 |   |
|                                      |   |                                 |   |   |   |
| Brazilian                      entities   |   |                                 | 2,972  |   |   | 3,371 |   |
| Foreign                      subsidiaries |   |                                 | 4,328  |   |   | 5,526 |   |
| Total                                     |   |                                 | 7,300  |   |   | 8,897 |   |

|  | (ii) | The                      recorded valuation allowance relates to tax loss carryforwards                      of foreign                      subsidiaries, which cannot be offset against taxable income                      in Brazil. The                      recorded valuation allowance reduces deferred tax assets to                      the amount                      that is more likely than not to be realized. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                                                            |   | For                      the year ended                       December 31,   |    |
|-----------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------|---------|
|                                                                                                            |   | 2004                                                                                   |    | 2005 |   | 2006 |   |
|                                                                                                            |   |                                                                                   |    |   |   |   |   |
| Product                      modifications                                                                      |   |                                                                                   | (50     | ) |   | (253 | ) |   | (1,622 | ) |
| Employee                      education, training and professional development                                  |   |                                                                                   | (3,536  | ) |   | (4,064 | ) |   | (6,771 | ) |
| Provision                      for contingencies and disputed taxes                                             |   |                                                                                   | (22,342 | ) |   | (17,183 | ) |   | 3,775 |   |
| Contractual                      fines                                                                          |   |                                                                                   | 3,680   |   |   | 7,340 |   |   | 12,709 |   |
| Other                      operating expenses from consolidated sales-type leases, net                      (i) |   |                                                                                   | (20,766 | ) |   | (9,938 | ) |   | (11,666 | ) |
| Net                      Gain (loss) on sale of investments in sale-type leaseinvestments                       |   |                                                                                   | 3,645   |   |   | (294 | ) |   | (924 | ) |
| Sale                      of pre-series aircraft                                                                |   |                                                                                   | — |   |   | — |   |   | 9,891 |   |
| Other                                                                                                           |   |                                                                                   | (1,903  | ) |   | (1,686 | ) |   | (3,715 | ) |
|                                                                                                            |   |                                                                                   | (41,272 | ) |   | (26,078 | ) |   | 1,677 |   |

| (i)   | Represents                      a loss from recognized valuation allowance on sales-type lease                      investments. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------|

|                                           |   | For                      the year ended                       December 31,   |   |
|------------------------------------------------|--------|----------------------------------------------------------------------------------------|--------|
|                                           |   | 2004                                                                                   |   | 2005 |   | 2006 |   |
|                                           |   |                                                                                   |   |   |   |   |   |
| Assets:                                        |   |                                                                                   |   |   |   |   |   |
| Cash                      and cash equivalents |   |                                                                                   | 50,728 |   |   | 54,715 |   |   | 23,812 |   |
| Trade                      accounts receivable |   |                                                                                   | 136    |   |   | (1,704 | ) |   | (700 | ) |
| Other                      assets              |   |                                                                                   | (354   | ) |   | 7,237 |   |   | 11,078 |   |
| Exchange                      gain on assets   |   |                                                                                   | 50,510 |   |   | 60,248 |   |   | 34,190 |   |

| Liabilities:                                      |   |   |    |   |   |    |   |
|---------------------------------------------------|--------|--------|---------|--------|--------|---------|--------|
| Trade                      accounts payable       |   |   | (51,304 | )      |   | (63,352 | )      |   | (8,086 | ) |
| Income                      taxes                 |   |   | (548    | )      |   | (58     | )      |   | (12,274 | ) |
| Provisions                                        |   |   | (6,798  | )      |   | (11,018 | )      |   | (3,887 | ) |
| Other                      liabilities            |   |   | (4,078  | )      |   | (1,038  | )      |   | (14,041 | ) |
| Exchange                      loss on liabilities |   |   | (62,728 | )      |   | (75,466 | )      |   | (38,288 | ) |
| Exchange                      loss, net           |   |   | (12,218 | )      |   | (15,218 | )      |   | (4,098 | ) |

----

|                                                                                                       |   | December                      31, 2006 |    |
|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                       |   | Brazilian                              |    | Banco                      do |   |   |   |   |   |
|                                                                                                       |   | Air                      Force         |    | Brasil                      S.A. |   | BNDES |   | Total |   |
|                                                                                                       |   |                                   |    |   |   |   |   |   |   |
| **Assets**                                                                                                 |   |                                   |    |   |   |   |   |   |   |
| Cash                      and cash equivalents                                                             |   |                                   | — |   |   | 78,747 |   |   | — |   |   | 78,747 |   |
| Trade                      accounts receivable                                                             |   |                                   | 87,268  |   |   | — |   |   | — |   |   | 87,268 |   |
| Other                      assets                                                                          |   |                                   | — |   |   | 327,776 |   |   | 1,809 |   |   | 329,585 |   |
|                                                                                                       |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| **Liabilities**                                                                                            |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| Loans                      and financing                                                                   |   |                                   | — |   |   | 66,745 |   |   | 292,318 |   |   | 359,063 |   |
| Recourse                      and non-recourse debt                                                        |   |                                   | — |   |   | 318,577 |   |   | 511,181 |   |   | 829,758 |   |
| Advances                      from customers                                                               |   |                                   | 17,450  |   |   | — |   |   | — |   |   | 17,450 |   |
| Other                      payables and accrued liabilities                                                |   |                                   | — |   |   | — |   |   | — |   |   | — |   |
|                                                                                                       |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| **Results                      of operations (for the year ended December 31,                      2006)** |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| Net                      sales                                                                             |   |                                   | 70,806  |   |   | — |   |   | — |   |   | 70,806 |   |
| Interest                      income                                                                       |   |                                   | — |   |   |   |   |   |   |   |   |   |   |
| Interest                      expenses                                                                     |   |                                   | — |   |   | 19,954 |   |   | 18,075 |   |   | 38,029 |   |

----

|                                                                                                       |   | December                      31, 2005 |    |
|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                       |   | Brazilian                              |    | Banco                      do |   |   |   |   |   |
|                                                                                                       |   | Air                      Force         |    | Brasil                      S.A. |   | BNDES |   | Total |   |
|                                                                                                       |   |                                   |    |   |   |   |   |   |   |
| **Assets**                                                                                                 |   |                                   |    |   |   |   |   |   |   |
| Cash                      and cash equivalents                                                             |   |                                   | — |   |   | 203,587 |   |   | — |   |   | 203,587 |   |
| Trade                      accounts receivable                                                             |   |                                   | 120,910 |   |   | — |   |   | — |   |   | 120,910 |   |
| Other                      assets                                                                          |   |                                   | — |   |   | 260,764 |   |   | 63,725 |   |   | 324,489 |   |
|                                                                                                       |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| **Liabilities**                                                                                            |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| Loans                      and financing                                                                   |   |                                   |    |   |   | 119,783 |   |   | 209,293 |   |   | 329,076 |   |
| Recourse                      and non-recourse debt                                                        |   |                                   | — |   |   | 260,844 |   |   | 558,409 |   |   | 819,253 |   |
| Advances                      from customers                                                               |   |                                   | 18,881  |   |   | — |   |   | — |   |   | 18,881 |   |
| Other                      payables and accrued liabilities                                                |   |                                   | 524     |   |   | — |   |   | — |   |   | 524 |   |
|                                                                                                       |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| **Results                      of operations (for the year ended December 31,                      2005)** |   |                                   |    |   |   |   |   |   |   |   |   |   |   |
| Net                      sales                                                                             |   |                                   | 237,342 |   |   | — |   |   | — |   |   | 237,342 |   |
| Interest                      income                                                                       |   |                                   | — |   |   | 27,364 |   |   | — |   |   | 27,364 |   |
| Interest                      expenses                                                                     |   |                                   | — |   |   | 16,503 |   |   | 3,431 |   |   | 19,934 |   |

|                                                                                                       |   | December                      31, 2004 |    |
|------------------------------------------------------------------------------------------------------------|--------|----------------------------------------|---------|
|                                                                                                       |   | Brazilian                              |    | Banco                      do |   |   |   |   |   |
|                                                                                                       |   | Air                      Force         |    | Brasil                      S.A. |   | BNDES |   | Total |   |
| **Results                      of operations (for the year ended December 31,                      2004)** |   |                                   |    |   |   |   |   |   |   |
| Net                      sales                                                                             |   |                                   | 246,104 |   |   | — |   |   | — |   |   | 246,104 |   |
| Interest                      income                                                                       |   |                                   | — |   |   | 23,186 |   |   | — |   |   | 23,186 |   |
| Interest                      expenses                                                                     |   |                                   | — |   |   | 10,264 |   |   | 6,213 |   |   | 16,477 |   |

*real-*
*reais*

*reais*
*euro.*
*real-*
*euro*

----

| 2006                                                          |
|---------------------------------------------------------------|
| UnderlineTransactions                                         |   | Type |   |                              Notionalamount  |   |                              Maturitydate   |   |                              Agreedaveragerate   |   | Gain/(loss)Fairvalue  |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Import                            financing                   |   | Swap                                ( interest + US$ intoR$ + CDI +Fixed interest                                rate) |   | 16,434 |   | 2007                              to 2008 |   | 58,61%                              of CDI |   | (15,236) |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Working                            capital / Import financing |   | Swap                            (variable interestinto fixed interest - US$) |   | 239,371 |   | 2007                            to 2016 |   | 7,36% |   | 2,937 |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Working                              capital                  |   | Swap                              (CDI into dual currency- the greater than exchange variation or                              CDI) |   | 6,289 |   | 2007 |   | 100%                              exchange variation (US$-R$) or 75% CDI |   | 7 |
|                                                          |   |   |   |   |   |   |   |   |   |   |
| Total                                                         |   |   |   |   |   |   |   |   |   | (12,292) |

| 2006                                             |
|--------------------------------------------------|
| UnderlineTransactions                            |   | Type |   |   OriginalCurrency  |   | NegotiatedCurrency   |   |   NationalAmount  |   | Gain/(loss)Fairvalue  |
|                                             |   |   |   |   |   |   |   |   |   |   |
| Suppliers                                        |   | NDF |   | GBP |   | BRL |   | 7,402 |   | 409 |
|                                             |   |   |   |   |   |   |   |   |   |   |
| Accounts                              Receivable |   | NDF |   | USD |   | BRL |   | 100,000 |   | 769 |
|                                             |   |   |   |   |   |   |   |   |   |   |
| Total                                            |   |   |   |   |   |   |   |   |   | 1,178 |

----

| 2005                                                    |
|---------------------------------------------------------|
| UnderlineTransactions                                   |   | Type |   |                        Notionalamount  |   |                        Maturitydate                        |   |                        Agreedaveragerate   |   | Gain/(loss)Fairvalue  |
|                                                    |   |   |   |   |   |   |   |   |   |   |
| Import                      financing                   |   | Swap                      ( interest + US$into R$ + CDI+Fixed interest rate) |   | 37,904 |   | 2006                      to 2008 |   | 59.82%                      of CDI |   | (19,629) |
|                                                    |   |   |   |   |   |   |   |   |   |   |
| Working                      capital / Import financing |   | Swap                      (variable interestinto fixed interest - US$) |   | 605,901 |   | 2007                      to 2016 |   | 8.05% |   | 3,050 |
|                                                    |   |   |   |   |   |   |   |   |   |   |
| Import                      financing                   |   | Swap                      (JIBOR + JPY intoUS$ + fixed interest rate) |   | 33,541 |   | 2006 |   | 4.35% |   | (1,541) |
|                                                    |   |   |   |   |   |   |   |   |   |   |
| Total                                                   |   |   |   |   |   |   |   |   |   | (18,120) |

----

----

|                                                |   | 2005     |      | 2006   |   |
|-----------------------------------------------------|--------|----------|-----------|--------|--------|
|                                                |   | Carrying |      | Fair   |   | Carrying |   | Fair |   |
|                                                |   | amounts  |      | value  |   | amounts |   | value |   |
|                                                |   |     |      |   |   |   |   |   |   |
| Financial                      assets:              |   |     |      |   |   |   |   |   |   |
| Cash                      and cash equivalents      |   |     | 1,339,159 |   |   | 1,339,159 |   |   | 1,209,396 |   |   | 1,209,396 |   |
| Temporary                      cash investments     |   |     | 574,395   |   |   | 574,395 |   |   | 555,795 |   |   | 555,795 |   |
| Trade                      accounts receivable, net |   |     | 450,824   |   |   | 450,824 |   |   | 294,262 |   |   | 294,262 |   |
| Guarantee                      deposits (Note 11)   |   |     | 546,806   |   |   | 546,806 |   |   | 607,109 |   |   | 607,109 |   |
| Held-to-maturity                      securities    |   |     | 31,269    |   |   | 30,311 |   |   | 32,932 |   |   | 31,785 |   |
| Derivatives                                         |   |     | 330       |   |   | 330 |   |   | 4,122 |   |   | 4,122 |   |
|                                                |   |     |      |   |   |   |   |   |   |   |   |   |   |
| Financial                      liabilities:         |   |     |      |   |   |   |   |   |   |   |   |   |   |
| Loans                      and financing            |   |     | 1,553,422 |   |   | 1,554,905 |   |   | 1,349,151 |   |   | 1,416,832 |   |
| Trade                      accounts payable         |   |     | 731,384   |   |   | 731,384 |   |   | 912,753 |   |   | 912,753 |   |
| Derivatives                                         |   |     | 18,450    |   |   | 18,450 |   |   | 15,236 |   |   | 15,236 |   |

----

|                                                                                      |   |   |      |
|-------------------------------------------------------------------------------------------|--------|--------|-----------|
| Description                                                                               |   | 2005   |      | 2006 |   |
|                                                                                      |   |   |      |   |   |
| Maximum                      financial guarantees                                         |   |   | 1,768,030 |   |   | 1,741,559 |   |
| Maximum                      residual value guarantees                                    |   |   | 878,249   |   |   | 930,002 |   |
| Mutually                      exclusive exposure (*)                                      |   |   | (415,460  | ) |   | (433,112 | ) |
| Provisions                      and liabilities recorded                                  |   |   | (54,011   | ) |   | (116,402 | ) |
|                                                                                      |   |   |      |   |   |   |   |
| Off-balance                      sheet exposure                                           |   |   | 2,176,807 |   |   | 2,122,047 |   |
| Estimated                      proceeds from performance guarantees and underlying assets |   |   | 2,127,208 |   |   | 2,177,379 |   |

|  | (*) | In                      the event both guarantees were issued for the same underlying                      asset, the                      residual value guarantees can only be exercised if the financial                      guarantees have expired without having been triggeredand,                      therefore,                      their distinct effects have not been combined to calculate                      the maximum                      exposure. |
|--|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| (US$                      million)                   |   | AtDecember 31,                      2005 |   |  Additions |   | Reductions                      forpaymentsmade/reversals |   | At                      December 31,                      2006 |    |
|------------------------------------------------------|--------|-----------------------------------------------|--------|-----------------|--------|-----------------------------------------------------------|--------|---------------------------------------------------------------------|---------|
|                                                 |   |                                          |   |            |   |                                                      |   |                                                                |    |
| Product                      warranties              |   |                                          | 90,904 |            |   | 34,431                                                    |   |                                                                | (27,981 | ) |   | 97,354 |   |
| Product                      improvement liabilities |   |                                          | 40,350 |            |   | 13,330                                                    |   |                                                                | (10,172 | ) |   | 43,509 |   |

----

| ·   | The                        Super Tucano - a light attack and training aircraft also                        know as                        AL-X, |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | The                        AMX, an advanced ground attack jet, developed and manufactured                        through an                        industrial cooperation agreementbetween                        Brazil and Italy. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Intelligence                        surveillance, and reconnaissance special mission aircraft                        based on the                        platform of the ERJ 145. These                        aircraft include the EMB 145 AEW&C - Airborne Early Warning and                        Control, the EMB 145 RS - Remote Sensing, and the EMB 145                        MP - Marine                        Remote Sensing. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                          |   |   |      |
|---------------------------------------------------------------|--------|--------|-----------|
|  Net                      sales by geographic area  |   | 2004   |      | 2005 |   | 2006 |   |
|                                                          |   |   |      |   |   |   |   |
| The                      Americas without Brazil-             |   |   |      |   |   |   |   |
| Commercial                      Aviation                      |   |   | 2,073,660 |   |   | 2,176,369 |   |   | 1,407,041 |   |
| Defense                      and Government                   |   |   | 92,135    |   |   | 33,927 |   |   | 142,099 |   |
| Executive                      Aviation                       |   |   | 204,914   |   |   | 155,764 |   |   | 304,756 |   |
| Customer                      Services and Others             |   |   | 157,409   |   |   | 179,310 |   |   | 272,908 |   |
|                                                          |   |   | 2,528,118 |   |   | 2,545,370 |   |   | 2,126,804 |   |
| Brazil-                                                       |   |   |      |   |   |   |   |   |   |   |
| Defense                      and Government                   |   |   | 246,104   |   |   | 230,286 |   |   | 71,203 |   |
| Customer                      Services and Others             |   |   | 51,332    |   |   | 72,773 |   |   | 75,191 |   |
|                                                          |   |   | 297,436   |   |   | 303,059 |   |   | 146,394 |   |
| Europe-                                                       |   |   |      |   |   |   |   |   |   |   |
| Commercial                      Aviation                      |   |   | 296,885   |   |   | 247,976 |   |   | 430,080 |   |
| Defense                      and Government                   |   |   | 20,906    |   |   | 8,347 |   |   | 13,405 |   |
| Executive                      Aviation                       |   |   | —   |   |   | 100,253 |   |   | 161,314 |   |
| Customer                      Services and Others             |   |   | 54,372    |   |   | 202,862 |   |   | 237,002 |   |
|                                                          |   |   | 372,163   |   |   | 559,438 |   |   | 841,801 |   |
| Others-                                                       |   |   |      |   |   |   |   |   |   |   |
| Commercial                      Aviation                      |   |   | 93,159    |   |   | 207,652 |   |   | 516,098 |   |
| Defense                      and Government                   |   |   | 6,622     |   |   | 151,237 |   |   | - |   |
| Executive                      Aviation                       |   |   | 40,800    |   |   | 22,036 |   |   | 116,010 |   |
| Customer                      Services and Others             |   |   | 13,845    |   |   | 703 |   |   | 12,412 |   |
|                                                          |   |   | 154,426   |   |   | 381,628 |   |   | 644,520 |   |
| Total                                                         |   |   | 3,352,143 |   |   | 3,789,495 |   |   | 3,759,519 |   |

----

|                        Operating income   |   | 2004   |       | 2005   |   | 2006       |   |
|-----------------------------------------------------|--------|--------|------------|--------|--------|------------|--------|
|                                                |   |   |       |   |   |       |   |
| Net                      sales-                     |   |   |       |   |   |       |   |
| Commercial                      Aviation            |   |   | 2,463,704  |   |   | 2,631,997  |   |   | 2,353,219 |   |
| Defense                      and Government         |   |   | 365,767    |   |   | 423,796    |   |   | 226,707 |   |
| Executive                      Aviation             |   |   | 245,714    |   |   | 278,054    |   |   | 582,080 |   |
| Customer                      Services and Others   |   |   | 276,958    |   |   | 455,648    |   |   | 597,513 |   |
|                                                |   |   | 3,352,143  |   |   | 3,789,495  |   |   | 3,759,519 |   |
| Cost                      of sales and services-    |   |   |       |   |   |       |   |   |   |   |
| Commercial                      Aviation            |   |   | (1,647,814 | )      |   | (1,892,401 | )      |   | (1,780,509 | ) |
| Defense                      and Government         |   |   | (293,324   | )      |   | (322,013   | )      |   | (174,479 | ) |
| Executive                      Aviation             |   |   | (186,416   | )      |   | (193,995   | )      |   | (398,964 | ) |
| Customer                      Services and Others   |   |   | (209,183   | )      |   | (330,498   | )      |   | (452,850 | ) |
|                                                |   |   | (2,336,737 | )      |   | (2,738,907 | )      |   | (2,806,802 | ) |
| Gross                      profit-                  |   |   |       |   |   |       |   |   |   |   |
| Commercial                      Aviation            |   |   | 815,890    |   |   | 739,596    |   |   | 572,710 |   |
| Defense                      and Government         |   |   | 72,443     |   |   | 101,784    |   |   | 52,228 |   |
| Executive                      Aviation             |   |   | 59,298     |   |   | 84,058     |   |   | 183,116 |   |
| Customer                      Services and Others   |   |   | 67,775     |   |   | 125,150    |   |   | 144,663 |   |
|                                                |   |   | 1,015,406  |   |   | 1,050,588  |   |   | 952,717 |   |
|                                                |   |   |       |   |   |       |   |   |   |   |
| Operating                      expenses-            |   |   |       |   |   |       |   |   |   |   |
| Commercial                      Aviation            |   |   | (190,318   | )      |   | (315,711   | )      |   | (303,404 | ) |
| Defense                      and Government         |   |   | (59,782    | )      |   | (50,267    | )      |   | (37,988 | ) |
| Executive                      Aviation             |   |   | (28,556    | )      |   | (44,474    | )      |   | (130,390 | ) |
| Customer                      Services and Others   |   |   | (36,455    | )      |   | (32,339    | )      |   | (25,602 | ) |
| Unallocated                      corporate expenses |   |   | (156,309   | )      |   | (97,505    | )      |   | (112,502 | ) |
|                                                |   |   | (471,420   | )      |   | (540,297   | )      |   | (609,886 | ) |
|                                                |   |   |            |   |   |            |   |   |  |   |
| Income                      from operations         |   |   | 543,986    |   |   | 510,291    |   |   | 342,831 |   |

----

| Property,                      plant and equipment, net |   | 2005   |                                                                                                                                   | 2006   |   |
|---------------------------------------------------------|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|
|                                                    |   |   |                                                                                                                                   |   |   |
| Commercial                      Aviation                |   |   | 59,456                                                                                                                                 |   |   | 117,655 |   |
| Defense                      and Government             |   |   | 51,326                                                                                                                                 |   |   | 50,791 |   |
| Customer                      Services and Others       |   |   | 17,148                                                                                                                                 |   |   | 42,625 |   |
| Unallocated                                             |   |   |                                                               260,432 |   |   |  201,173 |   |
| Total                                                   |   |   | 388,362                                                                                                                                |   |   | 412,244 |   |

| Trade                      accounts receivable, net |   | 2005   |    | 2006   |   |
|-----------------------------------------------------|--------|--------|---------|--------|--------|
|                                                |   |   |    |   |   |
| Commercial                      Aviation            |   |   | 99,515  |   |   | - |   |
| Defense                      and Government         |   |   | 170,583 |   |   | 113,371 |   |
| Customer                      Services and Others   |   |   | 185,561 |   |   | 186,616 |   |
| Total                                               |   |   | 455,659 |   |   | 299,987 |   |

| Advances                      from customers      |   | 2005   |    | 2006   |   |
|---------------------------------------------------|--------|--------|---------|--------|--------|
|                                              |   |   |    |   |   |
| Commercial                      Aviation          |   |   | 440,157 |   |   | 403,706 |   |
| Defense                      and Government       |   |   | 85,562  |   |   | 92,548 |   |
| Executive                      Aviation           |   |   | 29,540  |   |   | 195,746 |   |
| Customer                      Services and Others |   |   | 27,723  |   |   | 36,441 |   |
| Total                                             |   |   | 582,982 |   |   | 728,441 |   |

----

|                                                                       |   | 2004   |    | 2005   |   | 2006   |   |
|----------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|
| Cash                      paid during the year for:                        |   |   |    |   |   |   |   |
| Income                      taxes                                          |   |   | 11,032  |   |   | 21,698 |   |   | 89,899 |   |
| Interest                                                                   |   |   | 53,488  |   |   | 65,964 |   |   | 99,611 |   |
|                                                                       |   |   |    |   |   |   |   |   |   |   |
| Non-cash                      financing and investing transactions:        |   |   |    |   |   |   |   |   |   |   |
| Assets                      acquired as capital lease                      |   |   | 427     |   |   | 3,754  |   |   | 3,918 |   |
| Dividends                      payable                                     |   |   | 54,959  |   |   | 42,811 |   |   | 35,555 |   |
| Property,                      plant and equipment, net (OGMA acquisition) |   |   | — |   |   | 10,286 |   |   | — |   |
| Loans                      and financing (OGMA acquisition)                |   |   | — |   |   | 31,730 |   |   | — |   |

----