Good morning, ladies and gentlemen, and welcome to the audio conference call that will review Embraer’s Third Quarter 2011 Results. Thank you for standing by. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions to participate will be given at that time. (Operator Instructions) As a reminder, this conference is being recorded and webcasted at www.embraer.com. This conference call includes forward-looking statements, or statements about events or circumstances which have not occurred. Embraer have based these forward-looking statements largely on its current expectations and projections about future events and financial trends affecting the business and its future financial performance. These forward-looking statements are subject to risks, uncertainties and assumptions, including among other things, general economic, political and business conditions in Brazil and in other markets where the company is present. The words belief, may, will, estimate, continue, anticipate, intend, expect and similar words are intended to identify forward-looking statements. Embraer undertakes no obligations to update publicly or revise any forward-looking statements because of new information, future events, or other factors. In light of these risks and uncertainties, the forward-looking events and circumstances discussed on this conference call might not occur. The company’s actual results could differ substantially from those anticipated in the forward-looking statements. Participants on today’s conference call are Mr. Frederico Curado, President and CEO; Mr. Paulo Penido, Chief Financial Officer; Mr. André Gaia, Head of IR; and Mr. Rodrigo Rosa, Controller. I would now like to turn the conference over to Mr. Curado. Please go ahead, sir. Frederico Curado – President and Chief Executive Officer: Good morning, everyone. Thank you for participating in our earnings call. I’ll just start by saying a few words about the quarter and also a little bit of the outlook as we see…

Excuse me. Ladies and gentlemen, we’ll now begin the question-and-answer session. (Operator Instructions) Our first question comes from Mr. Nicolai Sebrell from Morgan Stanley. Nicolai Sebrell – Morgan Stanley: Hi, gentlemen. Two questions from me. First, I know there’s only a limited amount you can say about the investigation that you announced with your earnings release. But we’ve heard a couple and read a couple of different things that this might be part of a broader effort that doesn’t just involve you, might be a wider sweep. And I was wondering if there’s anything you could say to put this in context that might be more general in scope, to help us understand whether this is something that targeted, Embraer specifically, maybe more general effort? And then the second question is, if you could talk about executive jets a little bit more. If we look forward to 2012, and you had to estimate the risk, upside or downside relative to this numbers, I mean, you said it was holding steady, which seems to indicate that may be deliveries could be steady or may be up slightly next year. Any elaboration on that would be helpful.

Okay. Good morning, Nicolas. Well, we obviously are not in a position to say much more than what we have disclosed. And not only we are under the confidentiality of the subpoena, but also we are passive in the process. Our attitude is of full collaboration, the company has never – this is unchartered water for us, it has never leave that situation same as that before. So we are learning as it grows. So of course as – we just thought it was important to bring it to the attention of the public, to disclose it. And we have no information whatsoever about whether this is just us or a broader investigation. So I apologize, but this is exactly where we are. And as I said, we remain with serenity, knowing the seriousness of what the process like that is, the serenity of a company that has voluntarily adopted all the processes, the code ethics, adhere to the Global Compact of the United Nations following with follow-up reports. So we just have to wait and in an orderly way. As far as executive jet, we probably – I mean, this is not a guidance, the guidance we’ll provide early next year. But, I mean, we probably should have more revenues than this estimated $1 billion of this year, so would be more flat towards what we should have achieved in 2011, the $1.2 billion. So again, although, I’m not in a position to say it’s going to be $1.2 billion next year, we do expect to be more than the just $1 billion of this year. So we have a diversive component. We have had cancellations that did result – we were able to resell the aircraft, but we would not be able to deliver the aircraft this year. So part of that’s reflected in our inventories. Nicolai Sebrell – Morgan Stanley: Thank you. Much appreciated.

Excuse me. Our next question comes from Mr. Caio Dias from Santander. Caio Dias – Santander: Good morning, everyone. My first question is on the strategic decision regarding whether or not to launch a new family and or the enhancement of E-jets. As you mentioned during the presentation, the enhancement became a more likely scenario, you have not taken the final decision yet, but it’s clear that is the most likely scenario at this point. So my first question is, when are you going to take the final decision, if the end of the year is still the deadline for announcing the market – further announcement for the market? And second, if you decide to go ahead with the enhancement of E-jets, what is the expected level of CapEx and R&D involved in the program? And I have one third question related to the investigation. I understand you guys are not allowed to provide further information on the investigation, but I’d like only to confirm two information, I got from the press this morning. In one specific newspaper, they mentioned that this kind of investigation leads to fine of $2 million for the companies involved. Is that true that the limit is only $2 million? And another newspaper said that this investigation could threat your participation in the bidding process to sell Super Tucanos to the American government. Is that true or you are able to participate in the bidding process independently to the result of the investigation?

Okay. So your question with the three parts of that and three big ones. Okay. New family of commercial jets, we do not anticipate any splash announcement, big bang announcements at all, we’re going to do this and that. We’re actually starting to communicate, which is our strategic direction. So as you correctly said, it is unlikely that we pursue at this moment. So the question is when to engage, we’re not abandoning the possibility of coming to the largest segment eventually. We just do not see a window of opportunity at this stage, which it may be a different five years from now or some more time from now, it may be different. The relative position of the competitive landscape, so we just think now it’s not a – so the next few months, we will be detailing with our customers what could be the evolution of the E-Jets. We are improving the airplanes anyway, we have been doing that year by year and we’ll continue to do that. But that’s a step function – would really to adapt to new engines. The engines Caio are responsible for this new generation of engines are responsible for probably 80%, 90% of the benefit of the fuel-burn benefit that a new airplane may have. So that’s why I think the market was so much appreciative of the solutions that Boeing and Airbus adopted, because they really brought solutions of continuity to the market and also combines with continuous and seamless commonality of the cockpit and no need to train pilots, it’s the same cockpit airplane with the benefits of the new engines. Obviously, any new aircraft, blank sheet of paper aircraft tends to be a few percentage points better than an existing one. Technology evolves by the day, but the real…

Excuse me. Our next question comes from (indiscernible) from JPMorgan.

Hello, guys. My question has been answered. Thank you.

(Operator Instructions) Excuse me. Our next question comes from Mr. Caio Dias from Santander. Caio Dias – Santander: Hi, everyone. Sorry for asking so many questions. My question now is about the facility in China. What is the current status of the negotiation with the Chinese government regarding the production of the potential production of the legacies over there? Do you have a new one on that front?

Yeah. I referred that famous passage where, Chinese was asked about the French revolution and the answer was too early to tell. So we are trying to have Chinese patience, we are making progress, Caio. We are indeed making progress, it’s always challenging to put a date target to the conclusion. But we have an agreement with our partner there with AVIC. And with government, Chinese government has to formalize what has been already turned public several months ago, which is a formal approval of this venture. So I think we are in the final sprint. How long is that, it’s hard to estimate, but I think we are really coming closer to a positive outcome now. Caio Dias – Santander: Okay, thank you again.

Excuse me. Our next question comes from Mr. Augusto Ensiki from Morgan Stanley. Augusto Ensiki – Morgan Stanley: Good morning, gentlemen. A question from the third quarter results actually. Could you give us a little more detail in the other gains? How much of that was from cancellations – how much was from the two South African Airlink E170 cancels? And second to that, how much can we expect for, I mean, can we expect something similar from the JetBlue cancellations in the fourth quarter? Thank you.

The cancellation number we have included in our press release, which is US$28 million in the quarter. It was spread among different parts of our sequence but mostly in the Executive Aviation sector, where as was mentioned before, there is a type of clean up in some orders that were not very firm. So that’s the size, Augusto of the cancellation rather. Augusto Ensiki – Morgan Stanley: So the full $28 million was from cancels?

Sorry. Augusto Ensiki – Morgan Stanley: The full $28 million?

Yeah, $28 million, that’s cancellations, yes. Augusto Ensiki – Morgan Stanley: Okay. And so then the JetBlue cancellation won’t have a material impact on 4Q?

No as you saw, as a coincidence there was a sea from the new planes in terms of deliveries, there was no impact in terms of consolation, in terms of production, in terms of hopefully delivery of planes.

Azul was the airline that’s confirmed 11 new orders. So the answer is no, there would be no – there’s no revenue coming in the fourth quarter due to the JetBlue cancellations. Augusto Ensiki – Morgan Stanley: Understood. Thank you very much.

Excuse me. Our next question comes from (indiscernible) from Future Capital.

Yes sir, good morning. I just had sort of one question on, I’m wondering if there’s any possibility in providing some initial thoughts on what you’re thinking about margins in ‘12? Particularly as it relates to the mix?

I’m sorry we just could not understand the question?

Sorry, I’m just wondering if it’s possible to provide some initial thoughts on what we should be looking at for margins in 2012? I’m wondering, I guess, mix might be slightly negative than 2012 based on what you’re talking about in terms of delivery?

Well, again it’s a bit premature to make any guidances there. So on a positive side all the efforts on the P3E and the lean manufacturing all that they are there. They are continuous, they’re growing. We – one comment that I have to need to make that’s couple of tail – a couple of headwinds which are important one is the labor cost in Brazil. It is probably going up in reais, something around 9% to 10% from this month on. So this is a tremendous challenge for us, of course, if the exchange rate goes up and compensates for debt. This is good, this is great news. If it doesn’t it’s just another, it’s stronger headwind for us as far as costs. Also, I think it’s reasonable to expect some pricing pressure, I have a very, very clear effort from Boeing and Airbus to really keep their situation in the narrow body scenario and against new entrants, so that puts the pricing pressure on everybody else and the whole competitive scenario. Having said that, I mean we were definitely working towards, you know continuous improvement, so quantification of that we’ll probably disclose early next year when we provide guidance for 2012 of fiscal year.

Thank you. That’s helpful and just one quick clarification on Legacy 500, I think you mentioned in your presentation that there was some small delay I guys in terms of first plane. Just wondering we’re still okay for EIS for the next year is that right, Q4?

I did not understand the last part of the question?

We’re still okay for an increase in service next year?

As instead no, no well we’re not next year, never next year. We are – we will, 2013, so we – I mean, we’re going to also – as soon as we determine more precisely, what is the – the issue we have which is with the softness of flight control. So, our supplier – they found out this late. So, we’re debating, probably going to bring that development in-house. So, there will be inevitably a delay on the first flight, which will not happen this year, will happen in the first half – towards the middle of next year, probably. So, that of course pushes the program a little bit. But as far as, let’s say, contribution to revenue in a meaningful way, probably 2014 is the year where you’d see the ramp-up of those airplanes. So, certification time may be, let’s say, end of 2013 or so, but just a few months of delay. But this as we – again, as we determinate exactly what’s the impact, we would give more precise data. 2014 is when we should have the Legacy 500 really bringing contribution to the business as far as quantities and the ramp-up in production. And about 12 months later, the four-seater standard, same design as today, just about a year later, the four-seater should be in a service.

That’s great. Thank you very much.

Okay.

Excuse me. Our next question comes from Mr. (indiscernible) from Morgan Stanley.

Hello and congratulations on results. And I know that you can’t comment very – I mean, on a limited basis regarding the situation right now in the U.S., but can you point out what’s the size of your contracts here in the U.S. and I mean the three countries mentioned on your disclosure, total size in billion of future contracts?

I think I’m obliterated. Can anybody help me? André Gaia: To break down the cost that you are at.

Has anybody understood?

Sorry.

Sorry. Could you repeat the question please? We just could not understand.

Total size of your contracts in the U.S. and the three countries mentioned on your disclosure?

Total size, what? André Gaia: The three countries.

What – which contract you asked?

Your revenue exposure…

I’m sorry.

You future backlog, revenue exposure in the U.S. and in the three countries?

Anyway, well, we do not foresee any change to our, let’s say, any participation in the United States, via our commercial activity, via our executive activity, via our possibility in the LAS contracts, we do not see any change to that at all. And then, obviously, we’re not in a position to disclose the three countries, again, because of the confidentiality of the whole process. So, this is where we are today, as soon as we are able again – we are passive in this investigation. Investigation is independent. The very nature of the investigation is independent. So, we are not in control. We are passive in the process. Our role is to support it the best way we can.

Okay. I understand that point. But at least, can you disclose I mean the total size of your exposure to the U.S. market or is that already disclosed in your statement?

Well, we do not have exposure to the U.S. market. I mean, the U.S. market is an important market to us. We do not have any specific exposure to the United States market. It’s – if you take – if you’re looking after – if you’re looking for the amount of revenue of Embraer through United States, we are about 15%, used to be 50%, now about 15%. But again, this is not an exposure, this is a market share and there is no exposure to talk about at this stage.

Okay, thank you.

(Operator Instructions)

Good morning.

Hello, (Joe).

A couple of questions. First of all, on free cash flow, you’re minus $275 million year-to-date, and I think we can understand why inventories are higher and you’re going release some of those, I imagine, in Q4 and then going into next year. But then there’s two other items that has been impacting the cash flow this year. One is the spare parts pools and one is aircraft that you are leasing. I’m wondering if you can talk a little bit about, first of all, the outlook for overall cash flow, are you going to have a big fourth quarter? What’s the cash flow opportunity next year for the company? And then, maybe a little bit of color on each of those three items?

Okay, Joe. I’ll just start answering, then Paulo and Gaia can help in more details. Yeah. Fundamentally, if you look at our inventories, Joe, we started the year with something around $2.2 billion. As we are growing some 5%, 7% in revenue this year, it’d be let’s say natural to have a little of a growth. And if you just apply that ratio to the inventory, maybe another $100 million, adding work in process. So, we are probably $400 million to $500 million above where we should be in inventory. So, hopefully, as we delivered something close to $1.82 billion in the last quarter, we have to critically reduce our inventory of the same amount. So, outlook is a positive free cash flow this year. You mentioned the two point, but also we have to take into account that we spent $85 million this year in acquisitions, which is not something which is regularly in our activity. So – but both of the reason of this negative is inventory and our expectation is that in the last quarter, this inventory will be reduced and therefore we have a positive – as we invoice those aircraft, positive trends or positive free cash flow. Now, Paulo, this is from third-parties.

You can say, yeah. André Gaia: Regard to the – that’s André Gaia. Regard to the spare part pools, we’ve got a couple more investments this year, as we got minute momentum in terms of selling those type of programs. We expect those investments on inventories – bringing up inventories for spare parts to decrease next year. But, of course, if we keep selling more, well, we have to adjust to that. But the expectation right now is to have the – is more investments in the spare part pools going forward next year. Regards to the aircraft, I think Joe that we – it’s a little bit open opportunity, as you cut the deal. So, it’s hard to be very precise, but we don’t expect to keep buying aircraft back. So, we don’t have, nothing in the backlog, in the pipeline right now, and I think that’s where we are.

Okay. André Gaia: Okay?

Yes. A second question is just on to the executive jet area. You had more cancellations or at least more income from cancellations in the third quarter than you’ve had for certainly a while, and you lowered your revenue guidance this quarter. So, I know the market has been tough for a long time, but is it getting worse? Are you seeing any implications of what’s been going on in the market since August really impacting your business or is this just you ran out of time to sell the aircraft? Which is really the bigger driver?

No, I don’t think it’s getting worst. It was actually getting better in the, let’s say, July, August, September timeframe. And we actually started to go a little bit more upbeat about our sales prospect. We….

Excuse me, ladies and gentlemen, please hold. We’ll soon resume the conference call. Thanks you. Excuse me, ladies and gentlemen, please hold. We’ll soon resume the conference call. Thank you. Excuse me, ladies and gentlemen, please hold. We’ll soon resume the conference call. Thank you.

Is that cash that’s likely to – some of that goes back to shareholders in some way or do you increase your investments in defense or executive jet, or how do you think about where that cash that you made in six or twelve months ago, that might be going to commercial, where does it go?

Yeah. I think that question is not in the short term. I think the commitments that we have in existing development programs and the stuff with the new – the curve of investments on the – let’s say, on the range in E-Jets, vis-à-vis in new aircraft. The first part of the curve will be very similar, the peak will be less. So, the demand on capital for development in the next year let’s say timeframe we said of three to five years, I don’t think, will be fundamentally different than what it would be if we were going to a larger investment. Going to a larger investment maybe would require us to…

Excuse me, ladies and gentlemen. Please hold. We’ll soon resume the conference call. Thank you. Excuse me, ladies and gentlemen. Please hold. We’ll soon resume the conference call. Thank you.

That can be an opportunity too early to decide that and too early to decide a reasonable strategy to get there. With organic, with the combination with somebody else, that answer, I think it’s a few years down the road. Defense only, of course, if we have – if we find a suitable acquisition opportunity because we’re not going to invest capital at risk on a defense contract. So, by definition, we are totally conservative. As far as defense development have to be self-funded, so capital with the acquisition that as we did this year, $85 million. So you should not see – the company cash flow will be sufficient in the next, let’s say, two years, three years, four years, five years to sustain our research and development effort. That’s I think where the bulk of the investment will be and again keeping the dividends at a reasonably high level – where they have been for the last several years.

Good morning, gentlemen. Two questions from me, if I may. The first is on the 50-seat jet market. How are you seeing that now with American Airlines and some of the U.S. carriers, for example, telegraphing that they’re having some financial strain? How are you seeing residual values on the 50 seaters, down the line, holding up and how is your outlook holding up, maybe re-marketing these aircraft to carriers in the former Soviet Union, etcetera? And the second question very quickly, I was intrigued with your JV with the Elbit Systems guys, the market for unmanned aerial vehicles. Longer term, who are you thinking is going to be your end customer? Are we talking about large NATO countries? Are we talking about smaller governments within the Americas that have drug cartel problems or something like this or you see more of a domestic application for your UAV?

Okay, well 50 seaters. Of course, the higher the price, the volume becomes the tertiary economics work. They are gradually leaving the U.S. market and going towards other sectors there and markets in the world. They are still an attractive solution for airlines – the second tier airlines that currently flies total for us or perhaps smaller aircraft upgrading to ERJ 145s, for example, flying in countries where they never flew before. The ERJ 145 is holding value, better than the other corner or the other products of the same category. So, we feel relatively confident about the market is relatively organized in that sense of secondary market. I mean we are not, let’s say, totally involved in that but we are a player in that market, so we do have a few of those airplanes in our portfolio and they are in lease operations throughout the world. So we are making sure that we have a very strong customer support, parts availability, technical support and the aircraft engineering support even in the aircraft. So I think we are as good as we can be in an obviously challenging economic scenario for any figure, including total aircraft. The future productivity of new airplanes has been due for a long, long time. About the UAV joint venture, Brazil has virtually n – so the focus is Brazil clearly. The focus is Brazil, so in the country armed forces and also potentially some police forces. Brazil is absolutely, I think, almost virgin as far as UAVs. There is one prototype in test today, so they’re big enough for the Air Force for sure. There is federal police, which is equivalent of the FBI in Brazil, the federal police, Polícia Federal. They also are a potential user of UAV. So there our focus being Brazil and the countries where Brazil may have some geopolitical influence, but it’s not to mention the, let’s say, at least not in the short-term, but a global player to compete with Global Hawks or the federal police. And we are more humble that at present we’re really focusing more with the domestic markets and the opportunities.

Good morning. Wanted to ask you about the pace of order demand in the Commercial Aviation segment? You started the year saying book-to-bill above 1. Looks like you’re tracking pretty much right through that, but you’ve kind of exited ‘10 and started ‘11 at a much faster pace. Think that if we included everything you announced at Paris in the first half of the year looks like you are maybe going to a service book-to-bill of two. I just wonder if you could talk about the degree to which potential customers have kind of backed up because of all the macro headlines we’re seeing or not? And just what you see for new orders through the end of the year and maybe into the first half of ‘12 as well based on conversations you’re having today?

No, there was no major back-off. The airplane sales, at least for us, have always been something which is not steady, so it’s pretty randomic. Sometimes you have a very good quarter. By the way it’s very difficult to try to follow an aerospace company, an aerospace and defense company on a quarterly basis because, especially on the commercial side. Defense is more stable. These are really like in – they are really an event. So one contract for 50 airplanes is a major event and we’ll concentrate there. So the activity – well, we still have things that we have announced as MoUs which have not yet come to fruition, especially in China. I think we still have – Paulo can confirm that later, but we still have 10 airplanes in China which are done but not in our backlog yet, for now it’s not there. And the ad campaigns are just about to finish. We probably will be announcing a new leasing company anytime today, Paulo, tomorrow, I mean Monday?

Monday.

Monday, we’ll be announcing a new. Let me – if you allow me now to take your question – answer your question to talk a little bit about the strategy there with the leasing companies. We see a potential constraint in credit for financing aircraft. The capital market is too pretty much close for financing of aircraft. The ECA, they have an intake capacity and they cannot finance 100% of their exports, of course. And the lower leasing – and the banks were very active in leasing with multi-year – yes, which we have to believe they have at least more difficult to engage into a large amount of credit going forward. So the role of leasing companies is increasing in financing airplanes. So this is one aspect. The second aspect is the markets and capital average of those leasing companies, which in the end you cannot enjoy wider competing with the assured leasing companies. If you consider current leasing companies, your job is done. Then you’re probably heading towards the competition of the leasing term for a given customer. If you work like the way we do which well, it’s almost as a market environment of all operations. We actually work together and we have two examples. We have examples of airlines that we are working through and later on a short came and had a follow-on business and vice versa. Airlines have started with leasing our business, with our aircraft and then eventually acquiring then directly from Embraer. So I would dare to say that we still have relatively low participation of a leasing company in our backlog. This should be the numbers. Boeing and Airbus typically are 25%, 30% to 40% in a given moment, especially in the A327. In our case it’s something like 10%, 12%,…

Yeah, that’s helpful. Just one follow-up on Defense, your prepared remarks stand very positive on the prospects there, the segments down 11%. How fast do you expect your Defense segment to grow in 2012?

Again, without committing to a guidance, it may be even double-digit. We are going to be more specific early next year, but we have to run back of the KC-39 development, so let me put it in this way. If the existing, by the way, we have not – the increasing revenues on the Defense side and our revenue reports saying that the Brazilian government is helping Embraer, this is actually not accurate because fundamentally we are ramping that existing program as far as the budgetary allocation. So KC-39 has been the main progress. This – next year is the engagement of engineering and that program will be higher. So unless there is a budgetary constraint or a reduction or anything there of that nature, if everything goes as planned, we should have a robust growth next year.

Thank you.

Good morning. (Indiscernible) with Bloomberg Research. Question for you, starting with the commercial side of the business, can you talk to me about the production capability on the commercial side? It looks like you’ve produced about six 195s per quarter and this quarter you delivered 22 190s, which looks a pretty good result. Can you talk to me about what the capability is to produce aircraft on the commercial side especially per quarter?

Sure. The installed capacity of the company is probably something about 15 airplanes a month, which will translate into 180 airplanes a year. Our peak year was 2008, that was 165 airplanes. So this 180 – 15 a month probably the installed capacity with no further investments. Of course, variable cost, more people obviously you would need. We’re running around 9 today so we have plenty of capacity to grow. And the production – the investment structure is totally flexible, it’s totally agnostic, it’s the 170, 190, 175, 195, so it depends a lot on how the demand goes. That’s the beauty of having this family. So it’s, let me rephrase, let me correct a little bit. It cannot be like 180, 190, 195, 170, 175. Some jigs are specific, wing jigs for example. But as far as the assembly process is identical and standardized. So, we have downscaled our production, trying to keep the efficiency and it was successful in the challenge. We were successful in doing so. If we have any tailwind as far as demand, we can react very soon.

Thank you. Is there a limit as to 195s per month?

I just would not know by heart, just in order of magnitude maybe two-thirds of those 180 a year so might be 10 a month. So capacity is not an issue for us. Our challenge is to move the capacity that we have. And we are that this will be more precise. We used to use 4 jigs for assembly 190 wings. 195 has the same wing. And we have gone to 2 now. So we can come close to the total production of 15, maybe not the whole, maybe a year in a specific model, but close to that. So again, this is not on my topic of concerns at all. Capacity is there and if we have to start using – jig that we’re not using we can do like that. And we can also add people relatively easy, and ramp up. So the real challenge is on the market side, the demand side.

Okay. Last question, can you help us understand how that works on the executive aviation side of the business. What’s your flexibility there in your production capability?

We also have plenty of flexibility on the Phenom family, like everybody else. We were expecting maybe significantly higher demand for small jets. We were never a believer of this blacken the skies type of thing, the air taxi, we were never. But we did believe that the clear demand for small business jet will be much higher than what it is today. And again, we had a good company everybody saw that. So for example in the Phenom family we have two assembly lines. One in Brazil and one in Melbourne in U. S., and so we again we have overcapacity in that sense. We’re probably going to – we have to concentrate our production as much as possible to get efficiency, but it’s not a concern. On the Legacy 650, Legacy 650 is the assembly line of the 145 which capacity in the past, long past was 10 a month. So we’re technically way below that capacity and furthermore with the line in China. So the capacity is a (indiscernible) but integration of assets is my concern, rather than the ability to grow. We can grow really in low risk way, if the demand is there.

Thanks.

Oh, sorry.

In terms of cash flow first, let me start of there. The inventory reduction in the fourth quarter, do you anticipate that to be of similar magnitudes as you saw last year’s fourth quarter?

Yeah. We did this at the end results, the end figure. Yeah, it’s probably higher than the $2.2 billion that we started the year. If we just extrapolate the growth in revenue, that’s 6%, 7%. And if you extrapolate that the inventory that would naturally take us from $2.2 billion to $2.4 billion. This is not really acceptable because of course we should be more effective, more efficient in there. But in the current environment, I don’t know it will be $200 million to $300 million above, so from the $2.8 billion down to $2.5 billion, $2.4 billion. This is where our estimates are.

In the development expense, last quarter you said it’s down to $160 million net, $210 million gross. It looks like you’re even under running that. Is the $160 million still the right number for you?

No it will be little less. It will be less than that probably. Yeah.

And moving to the guidance just a clarification, was the default payments of $28 million expected in the prior guidance, because you didn’t change the EBIT number and obviously the sales in executive aviation came down, but the gross margin in executive aviation wouldn’t look to be enough to offset?

Yeah, that’s a good question. It was not expected. We expected to deliver the aircraft and get some margins. So no, delivering, of course, being there happened to clip the actual operational profit, absolute number, but that was not the way we thought it would be.

It looks like there’s some upside to that number given the default numbers came in.

Hopefully.

And then the last one from me, in terms of executive aviation backlog, can you give a picture of where it fits today relative to year-end last year, where you think it will fit at year-end relative to last year’s year-end. And what the mix is between light and non-Phenom’s at this point?

I may ask Gaia to help me on that. I don’t see a major change into the mix of Phenom and non-Phenom. There is a change the Phenom 300 is outselling the Phenom 100. This is, let’s say, obviously a positive surprise and development for us, it’s a $9 million airplane, versus a $4 million airplane, but it’s outselling. And we’re seeing more let’s say cancelations in 100 area than in the 300 area. André do you think the 100 in the Phemoms and the Legacy will see any major shift of the combination of the two going forward? André Gaia: No. I don’t see any major shift and I do support Fred’s comment there that there are less cancellations in the Phenom 300 line than there are on the 100 line.

Back to on the overall business jets, yes, executive aviation overall aviation business. Yeah, do not know by product but the business jet.

Paulo or Fred, can you give us little more color on gross margins in the quarter, they declined from the second quarter. I’m just wondering if you could talk to kind of the puts and takes that drove out compression decline?

Paulo will give that figure.

Will be the mix of the products, different mix, different margin. Of course, we can go bit in details, but well it’s not appropriate to do it. Rightly, let’s fix on it, different mix?

More on the revenue than on the cost?

That’s right. Costs somewhat stable and mix a little bit different than the reduction in the margin, which is not a meaningful one from 22.4%, 21.2%, 1% reduction.

Thank you.

A question here.

I guess you can’t talk too much about it, you did mention a leasing company and that will be a total new business for you and I guess there’d be some risk involved with that and it probably would be a consumer of capital. Correct me if I’m thinking right but are you going to get a big thing just kind of a backup to move your product?

Which company for?

Talking about the leasing company before?

I mentioned the one for satellite and the one for UAVs?

Right, yeah. So are those going to be very limited just to that product area?

Yeah.

You have no plans of going into leasing the 170s.

Leasing, no, no.

Okay.

We’re, no, no, sorry. No, no, we have no – we have very let’s say conservative to say the lease about financing sales.

Yeah.

It’s like, we’re, it could turn to be a good investor company, we’re not in the financing business.

I got you. Why would you, just the satellite and the other product, there is no way to financing that, are you thinking about doing that?

Which products?

The products that you’re thinking about doing leasing for?

No, nothing about doing leasing. What I mentioned was to get leasing companies to buy our aircraft.

Okay.

So, for example the Air Lease Company, the ALC we signed, that’s a great example, because we signed a contract for ten airplanes in the Farnborough last – at Farnborough last year. And in a year they went from 10 airplanes to 31 airplanes. And good news is to our knowledge all of them are placed in the marketplace. (Indiscernible) if you take our backlog, the participation of the source of leading companies buying airplanes speculatively from us to push them into the market. It’s very small compared to Boeing and Airbus. So our strategy is leasing focused in that segment on the airlines which is the normal marketing but also to diversify our customer base and have a modern marketing arm, we wanted to have from day one. We just could not, not only to convince the leasing companies to invest in our aircraft because the customer base was very small. Regional jet is sort of not a good place for a result to be. The same cost that a leasing company has to man the 777 the same cost to manage say 145 fundamentally is the same task. The 190 family really proved to be a mainline aircraft. It’s not a regional jet. And this is why we’re now having 50 customers, probably at least two thirds of them leasing the aircraft side by side with the Boeing or Airbus products, which proved our rightsizing strategy which from day one, which if you have markets with lower density of passengers, the 190 is the right answer for that instead of 320 or 737. So BA, British Airways, Lufthansa, KLM, Air France, Finnair, China Southern, many are corporate, 50 plus customers. Have the airlines incorporated business. So 190 is recognized the third mainliner there and we are doing everything we can to get the leading companies more and more excited about that I believe. We have plans to create a (indiscernible).

You’re not hinting towards you might be moving towards the 140, 150 seaters, are you?

Not – probably not at this stage, maybe down the road, maybe.

Excuse me. This concludes today’s question-and-answer session. I would like to invite Mr. Curado to proceed with his closing statement. Please go ahead sir. Frederico Curado – President and Chief Executive Officer: I’d like to thank you again for participating and wish everyone a nice weekend. Thank you.

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