• 
  • Consolidated Balance Sheets
  • Consolidated Statements of income Yeares Ended
  • Consolidated Statements of Comprehensive Income Years Ended
  • Consolidated Statements of Shareholders' Equity
  • Consolidated Statements of Cash Flow Years Ended
  • Notes To the Consolidated Financial Statements
    • 1. Operations
    • 2. Presentation of the Financial Statements and Accounting Practices
    • 3. Critical Accounting Estimates
    • 4. Accounting Pronouncements not yet Adopted
    • 5. First-time Adoption of IFRS
    • 6. Financial Instruments
    • 7. Cash and Cash Equivalents
    • 8. Financial Assets
    • 9. Trade Accounts Receivable, Net
    • 10. Customer and Commercial Financing
    • 11. Collateralized Accounts Receivable and Recourse and Non Recourse Debt
    • 12. Inventories
    • 13. Other Assets
    • 14. Guarantee Deposits
    • 15. Related Party Transactions
    • 16. Property, Plant and Equipment
    • 17. Intangible Assets
    • 18. Financial Liabilities by Category
    • 19. Loans and Financing
    • 20. Trade Accounts Payable
    • 21. Other Payables
    • 22. Contribution from Suppliers
    • 23. Advances from Customers
    • 24. Axes and Payroll Charges Payable and Income Tax Social Contribution
    • 25. Other Provisions
    • 26. Provisions for Contingencies
    • 27. Post-retirement Benefits
    • 28. Shareholders' Equity
    • 29. Stock Compensation
    • 30. Earnings Per Share
    • 31. Employee Profit Sharing-plan
    • 32. Other Operating (expense) Income, Net
    • 33. Revenue and (expenses) by Nature
    • 34. Financial Income (expense)
    • 35. Foreign Exchange Gains (losses), Net
    • 36. Income Taxesincome Taxes
    • 37. Impairment Test
    • 38. Financial Guarantees
    • 39. Financial Instruments
    • 40. Responsibilities and Commitments
    • 41. Insurance (unaudited)
    • 42. Additional Information of Cash Flow
    • 43. Segment Information
    • 44. Events After the Balance Sheet Date
  • Proposal to the Board of Directors
  • ANNUAL REPORT

Notes to the Consolidated Financial Statements
In millions of U.S. dollars, unless otherwise stated

16. PROPERTY, PLANT AND EQUIPMENT

(i) Changes in estimates of the useful lives of property, plant and equipment

During 2010, the Company reviewed its estimate of the useful lives of property, plant and equipment, which resulted in a reduction in the depreciation rates and lengthening of the economic useful lives of the assets.

Estimates were based on internal specialists report and key assumptions made by those specialists which included: (i) the Company's operating plans; (ii) past experience; and (iii) the maintenance and utilization plans of the assets. External elements were also taken into consideration for comparison, such as available technologies, manufacturers' recommendations and manuals and durability rates of the assets. The Company determines residual value for certain aircraft and spare parts included in the Exchange Pool Program. Others items of property, plant and equipment does not have residual value attributed as the Company does not intend to sell or dispose of these assets, other than for scrap.

The new estimated useful lives were applied prospectively as from April 1, 2010, on the carrying balances of the assets. As a result of changes in estimated useful lives of the assets, the depreciation charges recognized in the consolidated statement of income at December 31, 2010 were US$19.2 less than the amount that would have been recorded based on the criteria used previously. The Company estimates that the effect of this change in accounting estimate in future years is approximately US$25.6.
New average useful life applied since April 1, 2010.

Class of assets	Average usefull life (years)
Buldings and improvements	29
Installations	20,5
Machinery and equipment	11
Furniture and fixtures	7,5
Vehicles	9,5
Aircraft	12,5
Computers and peripherals	5
Tooling	10
Other assets	5
Exchange pool program assets	11

(ii) Non-use of deemed cost on initial adoption of the IFRS

Although recommended by the Brazilian Securities Commission – CVM, the Company did not attribute a new deemed cost to its assets. This decision was based on a detailed analysis, as follows:

• The Company's functional currency is the U.S. dollar. Accordingly, its assets were measured in U.S. dollars on acquisition, eliminating the impact of the inflationary effects generated over the years of high inflation;


• The Company has a low level of incentives for acquisition of its assets which could result in lower values on recording these assets;


• The majority of the Company's assets are buildings or constructions connected to airport facilities and which the Company' does not expect to sell;


• The nature of the Company's business is very specialized which creates barriers to sale; and


• In the case of its aircraft, these are maintained at market value

Changes in property, plant and equipment:

	Land	Buildings land improvements	Installations	Machinery and equipment	Furniture and fixtures	Vehicles
Cost
At December 31,2009	11.1	389.8	122.3	459.2	43.9	13.2
Additions	-	1.7	-	22.8	1.5	0.1
Disposals	-	-	-	(31.0)	(1.0)	(0.3)
Impairment	-	-	-	-	-	-
Reclassifications*	-	3.4	2.6	(5.0)	0.9	0.5
Translation adjustments	-	(0.5)	-	(7.3)	(0.4)	(0.3)
At December 31,2010	11.1	394.4	124.9	438.7	44.9	13.2
Accumulated depreciation
At December 31,2009	-	(108.6)	(80.4)	(281.4)	(25.6)	(10.2)
Depreciation	-	(9.2)	(2.2)	(13.5)	(2.2)	(0.5)
Disposals	-	-	-	9.6	0.8	0.3
Impairment	-	-	-	-	-	-
Reclassifications*	-	-	-	-	-	-
Translation adjustments	-	0.2	-	6.8	0.3	0.1
At December 31,2010	-	(117.6)	(82.6)	(278.5)	(26.7)	(10.3)
Net
At December 31,2009	11.1	281.2	41.9	177.8	18.3	3.0
At December 31,2010	11.1	276.8	42.3	160.2	18.2	2.9

	Aircraft (i)	Computers and peripherals	Tooling	Other assets	Exchange pool program assets	Construction in progress (ii)	Total
Cost
At December 31,2009	375.8	108.8	264.2	2.5	132.5	16.0	1,939.3
Additions	29.0	12.3	10.1	0.4	47.1	24.6	149.6
Disposals	(17.5)	(0.6)	-	(2.3)	-	-	(52.7)
Impairment	(13.3)	-	-	-	-	-	(13.3)
Reclassifications*	98.3	(4.8)	-	3.0	-	(0.6)	98.3
Translation adjustments	-	(0.6)	-	(0.4)	-	-	(9.5)
At December 31,2010	472.3	115.1	274.3	3.2	179.6	40.0	2,111.7
Accumulated depreciation
At December 31,2009	(76.3)	(93.4)	(108.8)	(1.1)	(52.2)	-	(838.0)
Depreciation	(25.3)	(6.9)	(20.6)	-	(22.6)	-	(103.0)
Disposals	9.7	0.6	-	-	-	-	21.0
Impairment	-	-	-	-	-	-	-
Reclassifications*	0.9	-	-	-	-	-	0.9
Translation adjustments	-	1.0	-	-	-	-	8.4
At December 31,2010	(91.0)	(98.7)	(129.4)	(1.1)	(74.8)	-	(910.7)
Net
At December 31,2009	299.5	15.4	155.4	1.4	80.3	16.0	1,101.3
At December 31,2010	381.3	16.4	144.9	2.1	104.8	40.0	1,201.0

* Non cash transactions.

	Land	Buildings land improvements	Installations	Machinery and equipment	Furniture and fixtures	Vehicles
Cost
At January 1st,2009	9.0	335.8	102.5	407.8	41.8	12.6
Additions	2.0	20.1	0.3	33.6	2.2	0.7
Disposals	-	-	-	(12.8)	(0.7)	(0.6)
Impairment	-	-	-	-	-	-
Reclassifications*	0.1	32.7	19.1	28.7	0.4	0.4
Translation adjustments	-	1.2	0.4	1.9	0.2	0.1
At December 31,2009	11.1	389.8	122.3	459.2	43.9	13.2
Accumulated depreciation
At January 1st,2009	-	(93.9)	(72.8)	(258.5)	(23.4)	(9.7)
Depreciation	-	(14.5)	(7.5)	(34.3)	(2.7)	(0.8)
Disposals	-	-	-	13.5	0.7	0.4
Reclassifications*	-	-	-	-	-	-
Translation adjustments	-	(0.2)	(0.1)	(2.1)	(0.2)	(0.1)
At December 31,2009	-	(108.6)	(80.4)	(281.4)	(25.6)	(10.2)
Net
At January 1st,2009	9.0	241.9	29.7	149.3	18.4	2.9
At December 31,2009	11.1	281.2	41.9	177.8	18.3	3.0

	Aircraft (i)	Computers and peripherals	Tooling	Other assets	Exchange pool program assets	Construction in progress (ii)	Total
Cost
At January 1st,2009
Additions	338.0	105.7	253.9	2.5	114.2	74.4	1.798.2
Disposals	69.3	4.6	10.3	18.7	18.3	4.6	184.7
Impairment	(30.0)	(1.7)	-	(0.6)	-	(1.5)	(47.9)
Reclassifications*	-	-	-	-	-	-	-
Translation adjustments	(1.5)	(0.1)	-	(18.1)	-	(61.7)	-
At December 31,2009	-	0.3	-	-	-	0.2	4.3
Accumulated depreciation	375.8	108.8	264.2	2.5	132.5	16.0	1.939.3
At January 1st,2009
Depreciation	(60.3)	(88.0)	(92.0)	(1.1)	(38.9)	-	(738.6)
Disposals	(19.2)	(6.1)	(16.8)	-	(13.3)	-	(115.2)
Reclassifications*	-	-	-	-	-	-	-
Translation adjustments	-	(0.9)	-	-	-	-	(3.6)
At December 31,2009	(76.3)	(93.4)	(108.8)	(1.1)	(52.2)	-	(838.0)
Net
At January 1st,2009	277.7	17.7	161.9	1.4	75.3	74.4	1.059.6
At December 31,2009	299.5	15.4	155.4	1.4	80.3	16.0	1.101.3

* Non cash transactions.

(i) These aircraft are used for testing, shuttle and operational leasing and are adjusted to the fair value, when applicable. The following number of aircrafts are included:

• December, 31, 2010: 5 EMB 120, 28 ERJ 145, 6 EMBRAER 170, 1 EMBRAER 175, 1 EMBRAER 190, 2 Phenom 100 and 2 other models.


• December, 31, 2009: 5 EMB 120, 26 ERJ 145, 4 EMBRAER 170, 1 EMBRAER 190 and 2 other models.


• January, 1, 2009: 5 EMB 120, 21 ERJ 145, 4 EMBRAER 170, 1 EMBRAER 175, 1 EMBRAER 190 and 3 other models.

Of the aircraft above, 29 aircraft were under operating lease, two are used for testing and one for Company use.

(ii) Refers mainly to construction works to expand the manufacturing plants and aircraft maintenance centers.

At December 31, 2010, US$46.6 of property, plant and equipment were related to loans and financing guarantees and labor contingencies.

Depreciation expenses of US$77.3 (2009 – US$101.4) were charged to Cost of sales, US$9.2 (2009 – US$5.7) to Selling expenses and US$7.2 (2009 – US$8.1) to Administrative expenses.

Equipment lease cost total US$49.9 (2009 – US$65.1 and January 1st, 2009 US$47.9) and depreciation of US$49.9 (2009 – US$50.7 and January 1st, 2009 US$44.3).

Depreciation are related to leasing, respectively, are included in the statement of income.

In 2010, the finance expenses capitalized totaled US$0.1 (2009 – US$1.0 and January 1st, 2009 – US$3.0), applying a weighted average capitalization rate of 4.1% (2009 – 5.3% and January 1st, 2009 – 7.0%).

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