1 Introduction 1.1. Definitions and abbreviations 1.2. Methodology and sample size 1.3. Respondent profile 2 Economic state, growth prospects and customer confidence 2.1. Existing economic environment 2.1.1. Over one-third of respondents highlight the current global economic conditions as stable 2.1.2. In total, 43% of industry executives indicate favorable or very favorable economic condition in North America 2.1.3. Respondents who operate in North America and Asia-Pacific have more favorable opinion about their region 2.2. Industry and company growth outlook 2.2.1. The majority of respondents expect an optimistic outlook for company and industry growth prospects in H1 2016 2.2.2. Overall, 29% of industry executives are neither optimistic nor pessimistic over growth prospects for the industry in H1 2016 2.2.3. Positive outlook towards company growth is highest among respondents with business operations in Asia-Pacific 2.3. Expected change in customer confidence 2.3.1. In total, 54% of executives project positive or very positive change in customer confidence over the next six months 2.3.2. The majority of respondents with business operations in Asia-Pacific and Europe anticipate a significant increase in customer confidence in H1 2016 3 Supplier prices, staff headcount and sales performance 3.1. Supplier prices expectations 3.1.1. Overall, power and energy is anticipated to record the highest increase in supplier prices in the next six months 3.1.2. On an average, defense industry respondents project an increase of 3.0% in supplier prices for technology during H1 2016 3.1.3. Over one-third of defense industry executives foresee an increase of 0.1% to 3.99% in supplier prices for power and energy during the next six months 3.1.4. The majority of respondents anticipate an increase of 0.1% to 5.99% in supplier prices for equipment and components in H1 2016 3.1.5. Defense industry executives with business operations in North America project highest growth in sales during the next six months 3.1.6. Expenditure will increase on new product development and, mergers and acquisitions in H1 2016 4 Business concerns and organizational priorities 4.1. Level of concerns and expected impact 4.1.1. Economic, industrial, and societal issues can adversely impact business prospects, limit profitability and force changes in existing business strategy 4.1.2. Executives who operate in North America highlight cyber crime as the biggest concern for H1 2016 4.1.3. Respondents operating in the Rest of the World are most concerned about social unrest in countries of operation during the next six months 4.1.4. The levels of defense buyers' confidence and the performance of North American economies are the key concerns for defense executives 4.1.5. The majority of defense industry survey respondents are concerned over cyber crime and social unrest in country/countries of operation in H1 2016 4.2. Significance of potential business priorities 4.2.1. Globally, operational efficiency and customer retention are the most preferred priorities for defense executives 4.2.2. Executives operating in Europe and Asia-Pacific are least focused on corporate and social responsibility initiatives in H1 2016 4.2.3. Improving operational efficiency and customer retention are the two most preferred priorities for global defense industry over the next six months 5 Appendix 5.1. About SDI 5.2. Disclaimer

Figure 1: Profile of Respondents - By Company Type and Turnover Figure 2: Profile of Respondents - By Designation and Region Figure 3: State of the Economy: Key Takeouts Figure 4: Current economic condition - Overall Figure 5: Current economic condition - Region Figure 6: Current economic condition - Those who operate and do not operate in a region Figure 7: State of the economy: In their words-1 Figure 8: State of the economy: In their words-2 Figure 9: Growth Prospects and Customer Confidence: Key Takeouts Figure 10: Industry and company growth prospects - Overall Figure 11: Industry and company growth prospects - Overall - In detail Figure 12: Industry and company growth prospects - Region Figure 13: Anticipated variation in customer confidence - Overall Figure 14: Anticipated variation in customer confidence - Region Figure 15: Supplier prices and Customer Confidence: In Their Words - 1 Figure 16: Supplier prices and Customer Confidence: In Their Words - 2 Figure 17: Defense Products and Services Price and Expenditure: Key Takeouts Figure 18: Category wise supplier prices highlights Figure 19: Projected change in supplier prices - Technology - Overall and regional Figure 20: Projected change in supplier prices - Power and Energy - Overall and regional Figure 21: Projected change in supplier prices - Equipment and Components - Overall and regional Figure 22: Staff headcount and sales outlook - Regional Figure 23: Expenditure projection on key activities - Overall Figure 24: Priorities and Concerns: Key Takeouts Figure 25: Concerns: Overview Figure 26: Top five business concerns - Region Figure 27: Business concerns - Regional highlights Figure 28: Business concerns - Overall and regional - A Figure 29: Business concerns - Overall and regional - B Figure 30: Top five organizational priorities - Region Figure 31: Organizational priorities - Regional highlights Figure 32: Organizational priorities - Overall and region

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