GMS 149-A05 Defense Market Scenario GMS 149-A05 Product Line Defense Products and Market Segments Intelligence, Surveillance and Reconaissance Transport Training Systems & Services Combat GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 3 GMS 149-A05 Super Tucano Super Tucano High-performance evolution of the proven EMB 312 Tucano State-of-the-art systems and advanced avionics Optimized for basic, advanced training and operational applications in hostile environments Can operate from unprepared runways, during day or night The only aircraft in its class capable of employing diversified conventional and smart weapons. GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 5 Super Tucano GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 6 Super Tucano GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 7 Super Tucano Operation COLBRA I GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 8 GMS 149-A05 Transport Derivatives Transport Derivatives Belgium Greece India Colombia Brazil Ecuador Brazil Nigeria GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 10 Transport Derivatives Indian Air Force GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 11 Transport Derivatives TAME GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 12 Transport Derivatives Brazilian Air Force National Air Mail GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 13 GMS 149-A05 ISR Systems ISR Systems EMBRAER offers cost effective solutions for the Intelligence, Surveillance and ISR Reconnaissance Market Intelligence – Surveillance – Reconnaissance EMB 145 AGS EMB 145 MP EMB 145 AEW&C Airborne Maritime Patrol Ground Surveillance GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 15 ISR Systems “Roadmap” GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 16 EMB 145 AEW&C The EMB 145 AEW&C (Airborne Early Warning & Control) is the most advanced Airborne Early Warning & Control System in operation today. It is fitted with an advanced electronic scanning radar capable of detecting air targets at long distances while controling the airspace GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 17 EMB 145 RS/AGS An advanced asset capable of providing real-time imagery and electronic intelligence over ground objectives It features an advanced Synthetic Aperture Radar (SAR), for day or night, and all-weather radar imagery of the ground over large areas, plus other sophisticated sensors GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 18 P-99 New generation Maritime Patrol and Anti-Submarine Warfare aircraft Features maritime and ground surveillance radar, Electro-Optics, Acoustics and Electronic Surveillance sensors GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 19 Brazilian Air Force Amazon Surveillance System R-99A - EMB 145 AEW&C - Airborne Early Warning & Control R-99B - EMB 145 RS - Remote Sensing and Ground Surveillance. GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 20 Hellenic Air Force EMB 145 AEW&C GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 21 Mexican Air Force EMB 145 AEW&C EMB 145 MP C4I Center GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 22 Mexican Air Force June 2nd, 2005 – 11 p.m. One small twin engine aircraft crashed into the jungle in southern Mexico (Quintana Roo) while trying a landing in the mid of the night after being detected and identified by Mexican Surveillance Aircraft. More than 3,000 lb of cocaine has been found inside the wrekage. GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 23 ACS – Aerial Common Sensor In August, 2004, Embraer was selected to supply the new Inteligence and Reconnaissance Aircraft to the U.S. Army and U.S.Navy (Program under review) GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 24 GMS 149-A05 Market Vision Worldwide Defense Procurement Procurement by Region - 2005-2012 Total 2005 -2012 : US$ 1,5 trillion 250.0 US$ billion Australasia 200.0 Asia Pacific Latin America 150.0 Africa Middle East East Europe 100.0 Average West Europe growth of North America 2.6% between 50.0 2005-2012 0.0 2005 2006 2007 2008 2009 2010 2011 2012 Source: Frost & Sullivan 2004 GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 26 US Military expenditures US Department of Defense Budget * (US$ Billion) FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 Personnel 107.2 108.9 108.6 108.6 108.9 109.1 109.1 Operations & Maintenance 139.9 147.8 150.5 153.4 155.5 155.7 156.2 Acquisitions 79.7 78.0 89.7 97.3 98.9 102.4 106.9 Research & Development 70.2 69.4 65.4 63.8 68.0 63.3 53.8 Others 12.4 15.2 18.2 17.5 16.5 15.3 17.5 Total 409.5 419.3 432.5 440.6 447.8 445.7 443.5 US Department of Defense Budget Acquisitions and P&D (US$ billion) 170 160 150 140 130 FY2005 FY2006 FY2007 FY2008 FY2009 FY2010 FY2011 Source: Congressional Research Service * Iraq and Afghanistan operations not included 2006 US Dollars GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 27 US ISR Market US ISR Market Growth Trend (US$ billion) 60 50 40 US$ 30 billion 20 10 2000 2002 2004 2006 2008 2010 2012 2014 Between 2005 and 2010 ISR systems will increase participation from 22% to 27% of total acquision and R&D spending of the U.S. DoD budget Source : Frost & Sullivan, 2003 GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 28 Department of Homeland Security US$ Total 2004-2008E : US$ 247 billion billion 60 50 53 55 40 48 50 30 41 20 10 0 2004 2005 2006 2007 2008 Source : DHS GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 29 Defense Market Evolving Scenario Restricted Budgetary scenario Different military threats prompt to warfare Information transformation Superiority Changing force structure Armed Forces Knowledge based, full- spectrum operations Transformation Reduction of human exposure to threat situations GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 30 Defense Market Trends Information Superiority Shorter reaction times and shorter sensor to shooter cycles. Network centric approach instead of platform centric. Expansion of ISTAR (Intelligence, Surveillance, Target Acquisition and Reconnaissance Systems Expansion of advanced communication and network based systems Armed Forces Transformation Higher mobility and flexibility Multi-forces integration Faster command cycles GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 31 GMS 149-A05 Market Positioning Defense Market Trends Significant growth in new requirements for airborne ISR Systems Most requirements consider major improvements in operational performance, mission reliability and economics compared with legacy system Jets x Turboprops Regional Jets x Business Jets EMBRAER is very well positioned in this market segment with the ERJ 145 ISR derivatives GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 33 Business Development Italy Greece Turkey UAE India USA Mexico Venezuela Colombia Oman Saudi Arabia Singapore Equator Thailand Malaysia Brazil GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 34 Operation Guardian (Guardião) November 16th – December 9th First EMB 145 AEW&C overseas deployment Participation in the Dubai Air Show and LIMA (Malaysia) Autonomous operation (no support aircraft) Dubai Malaysia GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 35 Defense Market Strategy Embraer´s Defense Product Line is well positioned to compete in the evolving market scenario. Defense Segment is expected to represent up to 15% of Embraer’s total revenue in the next 5 years. Growth coming mostly from ISR - Intelligence Surveillance and Reconnaissance Systems Today almost 50% of defense revenues are derived from ISR contracts Embraer expects this number to reach 80% in the next 5 years GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 36 GMS 149-A05 EMBRAER PROPRIETARY INFORMATION 37.