IAI and Gulfstream Aerospace Rolled Out All-New Super Mid-Size Gulfstream G250

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1 Israel Aerospace newsindustries Ltd. Information on Israel s Largest Aerospace Concern November 2009 Issue 28 IAI and Gulfstream Aerospace Rolled Out All-New Super Mid-Size Gulfstream G250 Large-Cabin, Mid-Range Business Jet On Track For Customer Deliveries in 2011 Inside This Edition: IAI s Financial Figures for the Second Quarter of 2009 IAI Unveiled Robotic Platform Designed for Ground Forces The 3rd Annual Latrun Conference Please visit our website:

2 2 IAI s Financial Figures for the Second Quarter of 2009: An increase of 16% in the net profit In the second quarter of 2009 Israel Aerospace Industries (IAI) reported a net profit of $22 million, compared to $19 million during the second quarter of 2008, an increase of 16%. IAI s backlog stood at a healthy $8 billion as of , which is equivalent to approximately 2.6 years worth of sales. Company sales for the second quarter of 2009 reached $667 million, compared to sales of $891 million during the same period last year. This decrease of 25% is a result of the financial crisis in the global civilian market. It is important to note that sales in the military market increased by 4% compared to the same quarter in In response to the approval and publication of IAI s financial statements for the second quarter of 2009, IAI s Chairman of the Board of Directors, Mr. Yair Shamir, said: The global financial crisis has affected our activity in the civilian market. The severity of the crisis is reflected in the 68% decrease in sales to the civilian market compared to the same quarter in It is important to note that IAI s commercial civilian market is characterized by a high level of value added content, which provides employment for a large number of households, contributing significantly to the Israeli economy. IAI s equity capital stands at $667 million, after a dividend payment of 87 million shekel ($22.5 million) to the State of Israel. The President and CEO of IAI, Mr. Itzhak Nissan, said: In the first half of 2009, IAI booked new orders worth approximately $3 billion, including a significant contract for the sale of air defense systems to an overseas customer, driving the company backlog to a record $8 billion. Approximately 80% of IAI s sales are composed of a wide variety of technologies produced for customers worldwide. Despite the worldwide economic downturn, IAI not only maintained but increased its sales within its military markets. The company continues to achieve increased operating efficiencies in all its current activities, Itzhak Nissan: Despite the worldwide economic downturn, IAI not only maintained but increased its sales within its military markets. The company continues to achieve increased operating efficiencies in all its current activities, leading to a gross profit of 16% in sales in the first half of 2009, compared to a 14% gross profit in sales in the first half of 2008 Yair Shamir Chairman Itzhak Nissan President & CEO l Second quarter net profit is $22 million, an increase of 16% compared to the same quarter in 2008 l Second quarter sales reached $667 million, a decrease of 25% compared to the same quarter in 2008 l Backlog is $8.0 billion, equivalent to approximately 2.6 years worth of sales l Positive cash flow of $203 million Yair Shamir: The global financial crisis has affected our activity in the civilian market. The severity of the crisis is reflected in the 68% decrease in sales to the civilian market compared to the same quarter in It is important to note that IAI s commercial civilian market is characterized by a high level of value added content, which provides employment for a large number of households, contributing significantly to the Israeli economy leading to a gross profit of 16% in sales in the first half of 2009, compared to a 14% gross profit in sales in the first half of Chief Financial Officer of IAI, Mr. Menashe Sagiv, said: Positive cash flow, an indicator of a company s financial strength, grew to a total of $203 million. During the second quarter the company earned $12 million in interest income, compared to $31 million in financial expenses in the same quarter in In the first half of 2009, interest income reached $2 million, compared to $38 million in financial expenses during the first half of IAI has a current ratio of 1.11, which reflects its financial strength in comparison to similar companies both in Israel and worldwide. The company has a large cash and cash equivalent surplus of $1.25 billion.

3 NEWS 3 The Seoul International Aerospace and Defense Exhibition: IAI Unveiled Robotic Platform Designed for Ground Forces REX platform IAI displayed for the first time REX, a small robotic platform designed to accompany ground forces on operations, carrying up to 200 kilograms of weight. IAI unveiled the REX platform at the 2009 Seoul International Aerospace and Defense Exhibition, that took place in Seoul, Korea on October 20th, REX is designed to assist groups of 3-10 ground soldiers on operational and logistical missions for up to 72 hours without refueling, and acts as a robotic beast of burden for the modern soldier. Experts at IAI estimate that the demand for such a product could amount to tens of thousands of orders, worth hundreds of millions of dollars, in both the local and the international market, for a wide variety of military and civil applications. The REX platform is unique in its state-of-the-art operational capabilities and its user-friendly interface, both of which are central to the platform s superior performance, explained Ofer Glazer, head of the innovation team at IAI s Military Aircraft Group. The robotic vehicle follows the lead soldier from a given distance, utilizing technology developed and patented by IAI. Using simple commands, including stop, fetch, and heel, the lead soldier controls the robot without being distracted from the mission at hand. Controlling the robot in this way allows for intuitive interaction and rapid integration of the product on the field within a short time frame, Glazer added. The development of the system is a result of IAI s awareness of the urgent operational need for such a device. It integrates various already existent robotic capabilities, ensuring a low target price, a short development period, and low-risk development. REX was developed in the innovation department of the LAHAV Division, a part of IAI s Military Aircraft Group. This is a diverse department, composed of a team of young, dynamic entrepreneurs responsible for developing products in the newest fields of interest, with particular emphasis placed on business and technology innovation. The team utilizes creative thinking and academic and industry-based joint projects, both in Israel and worldwide, to lead IAI in the achievement of many important milestones. One such joint project has resulted in the Guardium - a robotic patrol vehicle (produced by the company GNIUS); another example is the Taxibot, a semi-robotic aircraft towing system (developed as part of a cooperative endeavor with Airbus). A number of products and technologies produced by IAI were displayed at the Seoul exhibition, including multiple radar applications - fire control radar, maritime patrol radar, artillery radar, The Korean President Mr. Lee Myung-Bak visited IAI s chalet and was impressed by the array of advanced air, land, and maritime systems. IAI s President and CEO, Itzhak Nissan, who greeted President Lee Myung-Bak at IAI s chalet, emphasized the fruitful collaboration between IAI and Korea. Most recently, IAI signed a contract with Korea to supply an air defense radar system. Mr. Nissan also expressed his confidence in the future of the relationship between IAI and the Korean defense industry. Our display reflects the vision, singularity, and innovation for which IAI is known, said Mr. Nissan. IAI is at the frontline of technology. and others. In addition, unmanned aerial vehicles (UAVs) were displayed, carrying a variety of payloads for ISR (Intelligence, Surveillance and Reconnaissance) missions.the Plug-In Optronic Payload (POP) family - POP300LR Observer, POP 300D Designator, Mini-POP, and Micro-POP and Navigation & Inertial Measuring Units (NIMU) for both land and aerial missions were also presented.

4 4 G250: The Next Generation of Executive Business Jets is Already Here IAI and Gulfstream Aerospace, a wholly owned subsidiary of General Dynamics (NYSE: GD), rolled out the all-new, super mid-size Gulfstream G250 at Ben Gurion International Airport in Israel. First announced in October 2008, the large-cabin, mid-range G250 remains on schedule for skills, said Itzhak Nissan, President and CEO of IAI. The teams have produced the best mid-size aircraft of its kind, and I want to join Joe in thanking everyone who worked on the G250. They have proven that such collaboration leads to great success and achievement. In the picture from left to right: Mr. Yair Shamir, IAI s Chairman of the Board; Mr. Itzhak Nissan, IAI s President and CEO; Mr. Pres Henne, Gulfstream s Sr. VP Programs, Eng & Test; Mr. David Dagan, IAI s Corp. VP and GM of Commercial Aircraft Group; Mr. Dan Nale, Gulfstream s VP, Mid-Cabin Programs customer deliveries in Some 600 people gathered at the manufacturing facility for the aircraft s debut. The audience included certifying authorities, supplier representatives and members of the Gulfstream G250 development team, many of whom worked in Tel Aviv with IAI to oversee the building of the all-new Gulfstream G250 aircraft. The Gulfstream and IAI teams have done an outstanding job not only designing this all-new aircraft but overseeing the building of it as well, said Joe Lombardo, president, Gulfstream Aerospace. I want to thank everyone involved for their continued cooperation and collaboration. As you can see, they have created a true Gulfstream, and we re delighted to welcome it into the family. The G250 presents another example of what is possible when two great companies collaborate, combining their state of the art engineering with cutting edge production The G250 offers the largest cabin and the longest range at the fastest speed in its class. It is capable of traveling 3,400 nautical miles at 0.80 Mach and has a maximum operating speed of 0.85 Mach. With an initial cruise altitude of 41,000 feet, the G250 can climb to a maximum altitude of 45,000 feet.

5 G250 5 Our customers played a significant role in the design of this aircraft, said Pres Henne, senior vice president, Programs, Engineering and Test, Gulfstream. Because of their input, this aircraft features increased speed and range, excellent takeoff performance, an all-new Gulfstream wing, the signature Gulfstream T tail, best-in-class Honeywell engines and the PlaneView 250TM cockpit based on Rockwell Collins Pro Line Fusion avionics. Together, these elements make the G250 a best-in-class aircraft and one its owners can appreciate and fly with pride. David Dagan, Corporate VP & General Manager of Commercial Aircraft Group in IAI, said: The collaboration of the manufacturing with the design using the IPT (Integrated Product Teams) approach made one and one equal three, and I would like to thank everyone who contributed to this success. In terms of passenger comfort, the G250 features the largest cabin in its class, with 17 percent to 35 percent more floor area than any other super mid-size business jet. The additional space provides for a larger lavatory, an improved galley and increased storage. The aircraft also features 19 panoramic windows, industryleading sound levels, a vacuum toilet system and in-flight access to 120 cubic feet of usable volume in the baggage The Israeli Minister of Transport & Road Safety, Israel Katz, at the rollout ceremony compartment. Gulfstream announced the G250 on Oct. 5, 2008, at the National Business Aviation Association (NBAA) Annual Meeting and Convention in Orlando, Fla. The aircraft is on schedule for first flight later this year and is expected to be certified in Entry-intoservice of the G250 is also planned for Itzhak Nissan: The G250 presents another example of what is possible when two great companies collaborate, combining their state of the art engineering with cutting edge production skills. The teams have produced the best mid-size aircraft of its kind, and I want to join Joe in thanking everyone who worked on the G250. They have proven that such collaboration leads to great success and achievement

6 6 The 3rd Annual Latrun Conference: IAI Introduced various New Land-Based Products & Technologies Introduction of the Jumper - Autonomous Artillery for Ground Forces n The Micro-UAV Mosquito was demonstrated in flight for the first time IAI introduced various landbased products and technologies at the third annual Latrun Conference in Israel. The conference was organized by The Institute for Land Warfare Studies, the Israeli Ground Forces, and the Armored Corps Memorial Site and Museum Association at Latrun. IAI s VP of Marketing, Yair Ramati, noted that IAI, continuing its long-standing tradition of delivering solutions for scenarios in a variety of different arenas, has displayed some of the most advanced tactical intelligence gathering systems in the world - radar systems, signal intelligence (SIGINT), electro-optic systems, satellite communications, and more. These systems operate on the ground, in the air, and in space. In addition, various offensive systems were exhibited, including laser-guided weapons and the Jumper - an autonomous artillery system for ground forces, which was displayed for the first time. The Jumper is a new member of IAI s surface-to-surface missiles family, which also includes Robotic MTL & D9T the Long-Range Artillery (LORA). The JUMPER includes 8 canistered missiles and an integrated command and control unit. The system requires During the Latrun Conference, IAI gave the first flight demonstration of its micro Unmanned Aerial Vehicle (UAV), the Mosquito. This UAV is used by a battalion/company. Its small size and capabilities allow for its use in a variety of scenarios and in challenging battlefield conditions, including urban warfare and Low Intensity Conflict (LIC) situations The Mosquito Micro UAV

7 Latrun Conference 7 no special launcher platform, and can vertically launch missiles to engage targets in all directions. During the Latrun Conference, IAI gave the first flight demonstration of its micro Unmanned Aerial Vehicle Harop Advanced Loitering Munition Yair Ramati: IAI, continuing its long-standing tradition of delivering solutions for scenarios in a variety of different arenas, has displayed some of the most advanced tactical intelligence gathering systems in the world - radar systems, signal intelligence (SIGINT), electro-optic systems, satellite communications, and more Jumper : Autonomous Artillery for Ground Forces (UAV), the Mosquito. This UAV is used by a battalion/ company. Its small size and capabilities allow for its use in a variety of scenarios and in challenging battlefield conditions, including urban warfare and Low Intensity Conflict (LIC) situations. In addition, IAI presented advanced tactical UAVs for use by ground troops of every rank. These tactical UAVs can search, identify and pinpoint targets for precision weapons. The I-View 50, part of a new generation of UAVs, launched from the battlefield, was presented, as was the Heron, a strategic UAV carrying multiple payloads, which can remain airborne for an extended period of time and is in use by the Israeli Air Force and other air forces worldwide.

8 8 Successful Demonstration of IAI s Heron UAV in Brazil, El Salvador and the USA Heron UAV in Brazil during the demonstration Demonstration In Brazil: A successful demonstration of Israel Aerospace Industries (IAI) Heron Unmanned Aerial Vehicle (UAV) System took place recently in Brazil. The demonstration was done at the request of the Brazilian federal police, which is testing UAV use for several purposes, including border security, smuggling, natural resource theft and drug trafficking concerns. The demonstration took place under challenging, unpredictable weather conditions in one of the most difficult areas of Brazil to fly in: the state of Parana, and the region of San Miguel de Iguacu. Despite this, the system performed flawlessly in all its tasks, and was able to fulfill the customer s requests. It is especially important to note that the Heron was the first UAV system in the world to fly in this region of southern Brazil. The Heron was easily integrated into the demonstration airspace, which sees a lot of commercial air traffic, and was fully coordinated with the local Air Traffic Control. The IAI s Heron UAV is best suited to the needs of the Brazilian federal police: relaying data and intelligence in real time, carrying a number of sensors simultaneously, and employing satellite communications and Automatic Takeoff and Landing (ATOL). Several ministers of the Brazilian government and Brazilian armed forces officials, as well as high-ranking military and civilian representatives from a number of Latin American countries who were invited by the Brazilian federal police, were in attendance at the demonstration. IAI recently founded a joint venture with the Brazilian corporation Synergy Group, EAE, which will be active in the Brazilian market as well as in other potential Latin American markets. Demonstration in El Salvador: IAI s Heron Unmanned Aerial System (UAS) recently successfully displayed its capabilities in El Salvador as part of Proyecto Monitoreo - a joint project between the United States Southern Command (SOUTHCOM) and the El Salvadorian government, to fight the war on illicit drug trafficking. This is the first time that a Medium Altitude Long Endurance (MALE) UAV has been used in El Salvador. The maritime configuration of the Heron UAS was smoothly integrated into El Salvador s civilian airspace, conducting several missions jointly with manned aircrafts. During a press conference held at Comalapa, El Salvador Lieutenant General Glenn F. Spears, Deputy Commander, U.S. Southern Command, said: This is the first time that sophisticated, advanced technology and equipment such as UAVs that operates day/night electro-optic payloads and satellite communication have been used in El Salvador to cover a wide stretch and to patrol areas in which it is normally not feasible to do so The UAV can fly for over 20 consecutive hours without needing to refuel, providing intelligence, surveillance, and reconnaissance (ISR). Demonstration in USA: As part of the Association of Unmanned Vehicle Systems International s Exhibition in Washington DC, IAI s Maritime Heron Unmanned Aerial Vehicle (UAV) system performed in a demonstration of the Heron UAV. The demonstration was led by Stark Aerospace based in Stark, Mississippi, a subsidiary of the IAI-owned American company, IAI North America. The Heron UAV was the largest UAV to participate in the demonstration, and was carrying a number of IAI-made payloads, including a Maritime Patrol Radar (MPR) and an electro-optic Multi-Purpose Optical Stabilized Payload (MOSP). Heron UAV at the dual airport in El Salvador

9 NEWS 9 Super Dvora Mk III fast patrol boat IAI Completed Deliveries of Super Dvora Mk III Fast Patrol Boat to Israel Navy IAI delivered the Super Dvora Mk III Fast Patrol Boat to the Israel Navy. This is the last boat in a batch of deliveries, all part of a contract between IAI s Ramta Division and the Israel Ministry of Defense (IMOD) in This contract was designed to provide newer, more advanced loitering vessels for the Israel Navy. The Super Dvora Mk III were developed in cooperation with the Israel Navy, and include various technological improvements which were chosen for their operational superiority. The boat that was delivered utilizes advanced Articulating Surface Drive (ASD) propulsion technology, as do the other delivered boats which are in operational use. Some of the already operational boats are being used to fight terrorism in areas where the Navy is involved in such activities. Itzhak Nissan, President and CEO of Israel Aerospace Industries (IAI): We are proud to be supplying the Israel Navy with the high-quality, advanced Super Dvora Mk III. Hard work, knowledge, and experience went into the design and production of this boat, and the result is an excellent asset for the defense of Israel s maritime borders President Nissan, said that IAI s advanced technological capabilities, combined with its products and systems provide solutions for the most challenging battlefield scenarios Yair Gilboa, General Manager of Ramta, said that the Super Dvora is considered to be one of the most advanced of its kind, as part of the new generation of fast patrol boats. The boat has proven battle capabilities, and can complete maritime surveillance and search and rescue missions under any weather conditions, defend against a variety of threats, and coordinate operations with other air, maritime, and land systems. The boat has excellent maneuvering capabilities, even under adverse sea conditions, and includes various precise stabilized weapon systems and the most advanced command, control, and detection technologies. Ramta is one of the few divisions in the world which can offer the choice between ASD propulsion systems and the water jet, which allows for fast maneuvering and more parts than previous models. Mr. Gilboa added that Ramta has recently been awarded a contract worth tens of millions of dollars to deliver 6 Super Dvora Mk III boats to a customer in Asia.

10 10 IAI Exhibited Its Products and Technologies at the International Aviation & Space Salon MAKS 2009 IAI participated in the International Aviation and Space Salon MAKS 2009, that was held in Zhukovsky, near Moscow. IAI featured a broad range of products and technologies that demonstrate the company s leadership in developing solutions to meet current and future aerospace requirements. Itzhak Nissan, President and CEO of IAI said: We see a lot of potential in the Russian and Eastern European markets. The integration of our wide range of technologies and products creates complex, cutting-edge systems, enabling us to provide our customers with the best solutions available. We look forward to further strengthening our ties in the region. MALAT Division presented its globally recognized UAVs, including the mini UAV Bird Eye 400 and the Searcher. ELTA Systems Ltd., a group and IAI subsidiary exhibited some of its core activities in various technologies, such as the Surveillance and Threat Alert Radar (STAR), which provides surveillance and automatic air threat alerts aboard naval vessels ranging in size from corvettes to frigates (EL/M 2238). ELTA also presented its airborne Missile Approach Warning System- Flight Guard (EL/M-2160) which ensures reliable warning of missile attack for timely activation of the chaff/flare dispenser to protect airborne platforms, its satellite communication network mobile station (EL/K-1891) and its movement detection & security radar (EL/M-2129). TAMAM Division presented some of its Plug-In Optronic Payload (POP) family, including the Mini- POP and the Micro-POP. About MAKS 2009 MAKS is primarily a demonstration of advantages and development trends of Russian science and industry in high-tech areas such as aviation, space and missile engineering. MAKS shows domestic market openness to joint ventures with the use of foreign partners cutting-edge advances. MAKS provides participants with the most comprehensive understanding of the Russian aerospace industry s priorities and advances. IAI and Airbus to Develop Environmentally Conscious Taxiing System MoU signed between the companies at the 2009 International Paris Air Show IAI and Airbus have signed a Memorandum of Understanding (MoU) at the 2009 International Paris Air Show to jointly develop and test an innovative environmentally friendly pilot-controlled towing semi-robotic system. The Taxibot Mr. Christian Scherer (left), Airbus Executive Vice President, Strategy & Future Programs with Mr. Shuki Eldar, IAI s Corporate VP, Business Development and Subsidiaries Dispatch Towing system, designed by IAI, allows both wide and narrow body commercial airplanes to taxi to and from the gate and the runway without the use of their jet engines. The revolutionary Taxibot Dispatch Towing concept represents a potential to reduce annual fuel costs from $8 billion to less than $2 billion, CO2 emissions from 18 billion tons to less than 2 million tons per year, and noise emissions by a significant margin. Yehushua (Shuki) Eldar, IAI s Corporate VP, Business Development and Subsidiaries said: We are excited to work on the development of this eco-efficient taxiing dispatch system. The project demonstrates our commitment to the environment and utilizes IAI s robotics capabilities

11 NEWS 11 IAI s Presentation at the Association of Unmanned Vehicle Systems International (AUVSI) Exhibition IAI presented various platforms, technologies, and developments pertaining to UAV systems at the AUVSI exhibition. In addition, IAI presented, for the first time, a concept of integrated UAS solutions, including operational solutions, trainings, and superior control over UAV tasks. This integration includes an advanced ground control station (the iucs - Innovative Unified Control Segment), a command and control system for multi-sensor operations (TWISTER) with Service-Oriented Architecture, and a UAV Mission Trainer (UMT). The iucs ground control station meets the standards of NATO s STANAG This standard allows for joint military support operations, which increases interoperability and allows data and information to be shared in real time. The iucs is in the advanced stages of integration and offers the user modular use of various kinds of UAVs, which IAI provides for its customers in Israel and abroad. The TWISTER system is based on the modern idea of Network Centric Warfare (NCW). NCW allows for more effective management of simultaneous missions, using information gathered from a unified situation picture based on platforms, sensors and effectors, and a collective operational environment to support divisions, managers, and decision-makers. The UMT system provides training for operational flights, use of payloads, and completion of complex scenarios by UAVs, using High Fidelity simulations, which allow for training, drills, and accreditment at all levels, and replaces flight hours. IAI s concept of integrated UAS solutions exhibited at the show is based on operational experience, an advanced systematic understanding and new technological improvements. These improvements are made possible by field knowledge, superior control, and training, and are based on the customers requests. They allow the customer to leverage the extensive capabilities provided by the aerial platforms through the advanced user experience and the effective interoperability between the various aspects of any mission. and technological experience. IAI and Airbus are studying the performance, operational, commercial, and safety aspects of the system on a series of ground taxiing tests on Airbus A airplane in Toulouse. The companies have agreed that following successful test period results, they may establish a Joint Venture (JV) to develop and certify the Taxibot and market the program. According to plans, the Taxibot operational system is expected to be ready for first deliveries by the third quarter of The special design of the Taxibot gives the pilot full control of the system during the taxiing process, and uses the existing airplane controls in the same way that the pilot is accustomed to when taxiing using the airplane s engines. The use of the Taxibot system requires no modification to the airplane and minimal modifications to the airport infrastructure which will not affect existing taxiways and runways. For the last three years, IAI has invested R&D resources in environmentally conscious programs, including the development of renewable energy technologies, as part of a strategic plan to increase its civilian activities. Taxibot is a significant step forward that can modify the taxiing process in airports to save fuel, decrease noise levels and air pollution in comparison with today s ground operational processes.

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