News Release

India Becomes the US’s Largest Defense Market – IHS Balance of Trade Study

Middle East represents one-third of global arms market; UK overtakes Germany to become the world’s fourth largest exporter

LONDON (27 February, 2014) – India is currently the United States’ largest defense export market, jumping 23 places in just one year, according to the Balance of Trade study from IHS Inc. (NYSE: IHS), the leading global source of critical information and insight. “In 2013, we are seeing trade patterns fundamentally change for the dominant players,” said Ben Moores, the study’s author, senior analyst with IHS Jane’s Aerospace & Defense Forecasting. “The most notable change is the spectacular level of imports from India. China, Indonesia, Egypt and Taiwan all saw imports increase by around one billion. When we look at India, those figures in 2013 were $5.9 billion. By 2015, our forecasts show that number jumping to about $8.16 billion.” Key highlights from the Balance of Trade study:

India becomes the US’s largest defense market

China becomes East Asia’s largest defense equipment importer supplanting South Korea

South Korea breaks into the top 10 of global national exporters and is forecast to overtake China by 2015

East Asian imports surge by over 25 percent to $12.2 billion

Raytheon jumps over Lockheed Martin for second place in global export rankings

Thales leaps from 10th to seventh place in global export rankings

Global trade in military vehicles is forecast to drop by one-third over three years

US tops the export table despite a dip in growth rate

The Middle East represents one-third of the global arms market

Venezuela secures the largest number of defense imports in Latin America, with Russia dominating trade in the country and in the Latin America region

India becomes the US’s largest defense market

“India’s growth has been dramatic. In 2009, India imported $237 million in defense kit from the US,” said IHS Defense Content Director Paul Burton, now based out of Singapore. “That number skyrocketed to about $1.89 billion in 2013. With an additional $3.4 billion booked in 2015, India has become a major player for the US, and in 2013, the US’s largest defense market. This is against a backdrop of a huge expansion in Indian imports, cementing them as the world’s largest importer,” he continued. East Asia’s imports soar; South Korea breaks into the top ten of global exporters “East Asian Imports surged from 2012 to 2013 by nearly a quarter, from $9.8 billion to $12.2 billion,” Burton said. “Major regional importers such as Taiwan, Indonesia and Thailand saw very significant increases in imports over 2012 to some $2.3 billion more. But, East Asia’s major player, China, saw its imports surge over 50 percent. China’s imports, bolstered by growing ties with Russia, increased from about $1.5 billion in 2012 to $2.29 billion in 2013, making it the region’s largest importer. While the US remains the primary exporter to East Asia, Russia increased its exports from roughly $3.5 billion to $4.5 billion, mostly due to increased engine and fighter jet trade with China,” he said. Burton continued, “South Korea not only increased its exports regionally but also managed to export at a global level. We saw deals with Iraq, Indonesia, Turkey, United Kingdom, Azerbaijan and the Philippines to name a few. South Korea increased its exports from $0.3 billion to $0.6 billion this year and by 2015 it will be exporting $1.5 billion a year in defence equipment. This will likely supplant some of the major Western companies in the process.” US tops export table, despite dip “The primary export strength of the United States is in its aerospace product offering, with C-17’s, AH-64’s, B737’s, H-47’s and F-16’s. This dominance is assured with the upcoming deliveries of the JSF fighter aircraft in coming years,” said Moores. “In 2013, the United States continued to easily top the export table with $25.2 billion worth of exports compared to $24.9 billion in 2012. The growth

rate between 2012 and 2013 has fallen significantly from the past couple of years when military aerospace exports were expanding rapidly,” he said. Middle East imports rapidly accelerate, worth about one-third of global

defense market “In 2013, the Middle East defense market was worth about $18 billion, almost one-third of the global defense trade market total. What is notable is that American companies account for half of all defense exports to the region,” Moores said. “Countries in the Middle East are importing more than they ever have, and that trend shows no signs of slowing down. Saudi Arabia, Oman and UAE together imported more than Western Europe as a whole, ($9.3 billion compared to $8.7 billion, respectively),” Moores said. “When we look at Saudi Arabia on its own, it is clear that the market is booming. In 2009, the country imported $2.22 billion in defense equipment. In 2013, that number more than doubled to $5.39 billion and by 2015 that number will spike to $7.84 billion. The UAE’s import program is also expected to more than double. By 2015, imports are forecast to total about $3.13 billion, up from approximately $ 1.4 billion in 2009.” Ground vehicle shipments to drop by one-third in three years According to the study, “ground vehicles, which account for a sixth of the world market, fell by seven percent in 2013. This fall is an ongoing trend as emerging countries seek to develop local vehicle assembly capability, compounded by the end of operational requirements in Iraq and Afghanistan. “The Middle East currently accounts for nearly half of all the global trade in ground vehicles but we expect this to fall based on booked orders. Orders for heavily armored vehicles are falling particularly fast. The scale of the fall of demand in the Middle East will cause a 10 percent annual fall in exports of military vehicles over the coming years. Radar and missile markets could well supplant military vehicles as the second largest market by 2015,” Moores forecast.

Tables

Top Global Company

Exporters 2013

(in Millions USD)

Top Country

Exporters 2013

Top Country

Exporters 2012

Boeing 5,038 1 United States United States

Raytheon 4,452 2 Russian Federation Russian Federation

Lockheed Martin 4,268 3 France France

Airbus Group 3,963 4 Germany United Kingdom

BAE Systems 2,542 5 United Kingdom Germany

Thales 2,023 6 Italy Israel

UAC 1,926 7 Israel China

United Tech Corp

1,848 8 China Spain

Russian Helicopters

1,690 9 Canada Italy

General Dynamics

1,689 10 Sweden Sweden

Total Global Defense

Trade (in Millions

USD)

Top Country

Importers 2013

Top Country

Importers 2012

2009 55,996 1 India India

2010 56,391 2 Saudi Arabia Saudi Arabia

2011 62,572 3 Turkey United Arab Emirates

2012 65,649 4 United Arab Emirates China

2013 67,593 5 South Korea Egypt

6 Australia Taiwan

7 United States Indonesia

8 Algeria South Korea

9 Iraq United Kingdom

10 China Australia

Total Global Defense

Trade (in Millions

USD)

Top East Asian

Importers 2013 (in

Millions USD)

Top East Asian

Importers 2014 (in

Millions USD)

2009 55,996 1 China – $2,284 China – $2,622

2010 56,391 2 Taiwan – $1,993 South Korea – $1,898

2011 62,572 3 Indonesia – $1,667 Taiwan – $1,813

2012 65,649 4 South Korea – $1,627 Indonesia – $1,585

2013 67,593 5 Japan – $1,004 Vietnam – $1,308

6 Vietnam – $928 Japan – $1,280

7 Thailand – $884 Thailand – $576

8 Singapore – $702 Singapore – $530

9 Malaysia – $610 Philippines – $324

10 Brunei – $177 Malaysia – $309

About The Balance of Trade Study The Balance of Trade study is not available in full for the general public. It is used to alert clients about specific issues and opportunities in the defense sector. Constant US dollars are used as the base for the study. The study was created using the IHS Jane’s DS Forecast dataset, a publicly sourced global forecasting tool that tracks current and future programs from the bottom up, looking at deliveries and funds released to industry rather than budgets. The study covers production, R&D, logistic support and service revenues were there is an export. The entire market is covered except for munitions and small arms; anything under 58mm caliber has not been included in this study. The study only tracked programs with a primarily military function removing homeland security and Intelligence programs. For additional information visit: www.ihs.com/jdsf About IHS (www.ihs.com)

IHS (NYSE: IHS) is the leading source of information, insight and analytics in critical areas that shape today's business landscape. Businesses and governments in more than 165 countries around the globe rely on the comprehensive content, expert independent analysis and flexible delivery methods of IHS to make high-impact decisions and develop strategies with speed and confidence. IHS has been in business since 1959 and became a publicly traded company on the New York Stock Exchange in 2005. Headquartered in Englewood, Colorado, USA, IHS is committed to sustainable, profitable growth and employs 8,000 people in 31 countries around the world.

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Top Middle East Importers (in Millions USD)

2014 2013 2012

Saudi Arabia $7,059 $5,385 $3,700

United Arab Emirates $2,512 $3,124 $3,002

Iraq $2,172 $1,596 $1,992

Israel $1,951 $1,322 $851

Qatar $1,444 $354 $650

Algeria $1,386 $1,378 $1,894

Oman $931 $976 $505

Egypt $843 $2,124 $1,100

Kuwait $801 $579 $479

Morocco $263 $558 $1,385