|Financing arrangements and residual value guarantees (i)||263,6||308,9||299,8|
|Sales financing structure guarantees (ii)||199,1||194,6||185,4|
|Less – current portion||-||-||-|
|Long – term portion||464,8||505,6||493,2|
(i) U.S. dollar amounts deposited in an escrow account as collateral for the financing of certain aircraft sold if the guarantor of the debt (unrelated party) is required to pay the lender, the guarantor will be entitled to the amount in the escrow account. The amount deposited will be released at maturity of the financing contracts (between 2013 and 2021) if the aircraft purchaser does not default on the loan. The interest on the escrow account is added to the principal and recognized by the Company as financial income.
Seeking to ensure profitability compatible with the term of the guarantee, in 2004 Embraer invested principal equivalent, to US$123.4 thousand in structured notes. In the event of default by Embraer, the maturity dates of these notes would be brought forward and they would be realized at market value, limited to a minimum of the amounts originally invested. Any amount by which the market value exceeds the amount invested will be paid to the Company in the form of bonds, or loans of that amount Events of default that could result in early maturity of the notes include: (a) insolvency of Embraer or filing for reorganization proceedings; and (b) default or restructuring of the Embraer debt in financing agreements. The interest received monthly is added to the principal and recorded as financial income for the period.
In 2010, US$35.3 (principal of US$26.4) was transferred to noncurrent investments, as the lien on that amount had been released;
(ii) Financial investments denominated in U.S. dollars with third party financial institutions as a pledge under a specific sale financing structure. These investments earn interest at the annual LIBOR rate.