Revenues Increased by 11.5% YoY to $728.3 Million; Net Income
Increased by 91.7% YoY to $59.7 Million; Diluted Net Earnings per
Share Increased to $1.39 HAIFA, Israel, August 12
/PRNewswire-FirstCall/ -- Elbit Systems Ltd. (the "Company")
(NASDAQ:ESLTNASDAQ:TASE:NASDAQ:ESLT), the international defense
electronics company, today reported its consolidated financial
results for the second quarter ended June 30, 2009. (Logo:
http://www.newscom.com/cgi-bin/prnh/20080408/300441 ) Revenues
increased by 11.5% to $728.3 million in the second quarter of 2009,
as compared to $653.2 million in the second quarter of 2008. This
increase was primarily due to an increase in revenues from C4ISR
systems as a result of increased sales of communication equipment
and unmanned air vehicle systems mainly in Israel, and was partly
offset by a reduction in land systems related equipment sales,
mainly in the U.S. Gross profit increased by 7.2% to $211.9 million
(29.1% of revenues) in the second quarter of 2009, as compared with
gross profit of $197.7 million (30.3% of revenues) in the second
quarter of 2008. The lower gross profit percentage primarily
resulted from a significant reduction in revenues from short
turn-around orders, mainly in the U.S. during the second quarter of
2009 as compared to the second quarter of 2008. Short turn-around
orders generally have contributed to improvement in overall gross
margins. Net research and development ("R&D") expenses were
$53.0 million (7.3% of revenues) in the second quarter of 2009, as
compared to $38.1 million (5.8% of revenues) in the second quarter
of 2008. The higher level of R&D expenses in the current
quarter reflects increased spending on R&D projects to maintain
and further advance the Company's technologies, in accordance with
its long-term plans. Marketing and selling expenses were $67.5
million (9.3% of revenues) in the second quarter of 2009, as
compared to $55.2 million (8.4% of revenues) in the second quarter
of 2008. The increase in marketing and selling expenses was due to
increased marketing activities in pursuit of business opportunities
in the U.S. and other international markets. General and
administrative ("G&A") expenses were $29.4 million (4.0% of
revenues) in the second quarter of 2009, as compared to $44.4
million (6.8% of revenues) in the second quarter of 2008. The
decrease in G&A expense reflects the Company's continued focus
on efficiency and cost reduction efforts. Also, the second quarter
2008 expenses included expenses related to a legal settlement of a
subsidiary in the U.S. Net financial income was $11.4 million in
the second quarter of 2009, as compared to net financial expenses
of $12.4 million in the second quarter of 2008. The net financial
income was mainly due to the Company's hedging activity, which
reduced the Company's exposure to changes in the value of U.S.
Dollar versus the Israeli Shekel. While the weakening of the U.S.
Dollar against the Israeli Shekel negatively impacted the Company's
gross and operating income, it increased the value of the Company's
currency hedge derivatives in Israeli Shekels. Taxes on income were
$14.0 million (effective tax rate of 19.3%) in the second quarter
of 2009, as compared to taxes on income of $3.8 million (effective
tax rate of 7.9%) in the second quarter of 2008. The change in the
effective tax rate was attributable mainly to the mix of the tax
rates in the various jurisdictions in which the Company's entities
generate taxable income. Net income attributable to non-controlling
interests was $2.5 million in the second quarter of 2009, as
compared to $16.2 million in the second quarter of 2008. The
decrease in net income attributable to non-controlling interests
was mainly a result of the Company's purchase during the second
quarter of 2009 of the remaining 49% of Kinetics shares not then
owned by the Company. Net income attributable to the Company's
ordinary shareholders increased by 91.7% to $59.7 million (8.2% of
revenues) for the second quarter of 2009, as compared with $31.2
million (4.8% of revenues) in the second quarter of 2008. It should
also be noted that according to SFAS No. 160, which is applicable
to the Company's results starting from the beginning of 2009,
consolidated net income attributable to the Company's ordinary
shareholders is calculated after eliminating net income or loss
attributable to non-controlling interests. Diluted net earnings per
share attributable to the Company's ordinary shareholders were
$1.39 for the second quarter of 2009, as compared with $0.73 for
the second quarter of 2008, an increase of 90.4%. The Company's
backlog of orders totaled $5,096 million as of June 30, 2009, as
compared with $5,030 million as of December 31, 2008. Approximately
66% of the current backlog is due to orders from outside Israel.
Approximately 69% of the current backlog is scheduled to be
performed during the second half of 2009 and 2010. Operating cash
flow was $93.6 million in the first half of 2009, as compared to
$129.8 million in the first half of 2008. The decrease in the
operating cash flow was mainly a result of a reduction in the
overall amount of advances received from customers. Recent Events:
The following events occurred subsequent to the announcement of the
financial results for the quarter ended March 31, 2009. Each event
is described in greater detail in the separate announcements made
for each such event. On June 1, 2009, together with Alliant
Techsystems (ATK), the Company successfully conducted flight tests
of the Guided Advanced Tactical Rocket (GATR) from a helicopter
using a "lock-on before launch" method to engage an off-boresight
target. ATK and Elbit Systems validated flight worthiness, safe
separation launch and autonomous laser designated guided flight
through a series of tests. On June 15, 2009, together with Sikorsky
Aircraft Corp., the Company successfully completed the test phase
for the Armed Black Hawk helicopter. The demonstrator configuration
includes the Company's cockpit displays, a Mission Management
system with Digital Map, Forward-Looking Infrared (FLIR) equipment
and ANVIS/HUD(R) helmet systems. On June 15, 2009, the Company
invested $18 million in Mikal Ltd. in the form of a loan, which
following receipt of applicable government approvals will be
converted into shares of Mikal's capital stock representing
approximately 19% of Mikal's shares, and the Company will have an
option to purchase all of the remaining shares of Mikal from its
shareholders at a valuation to be determined by an independent
appraisal. The Mikal group is engaged in the fields of artillery,
armored fighting vehicles and optronics. On June 16, 2009, Vision
Systems International, LLC (VSI), the Company's joint venture with
Rockwell Collins, received several new contracts worth more than
$54.1 million from Lockheed Martin Corporation, for the delivery of
52 F-35 Helmet Mounted Displays and 30 additional aircraft systems.
VSI also received initial funding for the Pilot Fit Facility
Standup at Eglin Air Force Base for the F-35 Helmet Mounted Display
System program. On June 25, 2009, the Israeli Ministry of
Transportation awarded the Company a $76 million contract for
C-MUSIC, a commercial multi-spectral infrared countermeasure
system. C-MUSIC is a direct infra-red countermeasure technology for
military and commercial aircraft and helicopters that disrupts
missiles fired at aircraft and causes them to veer off course. On
July 7, 2009, the Company was awarded a contract by the Israeli
Ministry of Defense for the operation and maintenance of the
Israeli Air Force's new trainer, the Beechcraft T-6 "Effroni". On
July 15, 2009, the Company was awarded a $55 million contract from
the Israeli Ministry of Defense for the establishment of a mission
training center for the Israeli Air Force's F-16 pilots. The center
will be operated through a Private Financing Initiative concept and
will include a development phase as well as instruction and
maintenance services over a 15-year period. On July 20, 2009, the
Company signed a contract to purchase all of BVR Systems (1998)
Ltd.'s assets for $34 million, which may be subject to adjustment
depending on the outcome of various conditions in the coming
months. The closing of the transaction is subject to the
fulfillment of certain conditions including receipt of all
approvals required by law. BVR Systems is engaged in the area of
development and production of training, simulation and debriefing
systems for air, sea and ground forces. On August 11, 2009, Yael
Efron was elected by the Company's shareholders to a three-year
term as an External Director on the Company's Board of Directors.
Mrs. Efron replaces Yaacov Lifshitz, whose second term as an
External Director has expired. Management Comment: The President
and CEO of Elbit Systems, Joseph Ackerman, commented: "We are
pleased to report another strong quarter, with improved financial
performance. This improvement in profitability and reduction in
general expenses attests to the success of our efficiency processes
and to the creation of synergies between the Company's business
units." Ackerman added: "We have made significant investments in
developing new markets while enhancing the potential in existing
key markets, such as our recent joint venture with General Dynamics
aimed at capturing the great potential of the UAV market in the
U.S. In addition, consistent with our long-term M&A strategy,
we recently entered into agreements to acquire interests in Mikal
and BVR. These acquisitions will contribute to the Company's growth
and support our continued participation in large-scale projects
that offer our customers more comprehensive and advanced
solutions." "We also continue to pursue our R&D strategy in
order to maintain our technological edge. The Israeli Ministry of
Transportation's recent decision to equip all of the Israeli
commercial aviation fleets with C-MUSIC systems, which we developed
for protection from enemy missiles, represents a successful example
of our R&D strategy. We see market potential for installation
of C-MUSIC systems aboard the commercial aircraft fleets of other
countries as well." "We believe all of these measures will help
maintain the Company's continued growth." Dividend: The Board of
Directors declared a dividend of $0.36 per share for the second
quarter of 2009. The dividend's record date is August 30, 2009, and
the dividend will be paid on September 15, 2009, net of taxes and
levies, at the rate of 16.03%. Conference Call The Company will
also be hosting a conference call today, Wednesday, August 12, 2009
at 9:00am ET. On the call, management will review and discuss the
Company's second quarter 2009 results and will be available to
answer questions. To participate, please call one of the
teleconferencing numbers that follow. Please begin placing your
calls at least 10 minutes before the conference call commences. If
you are unable to connect using the toll-free numbers, please try
the international dial-in number. US Dial-in Numbers:
1-866-345-5855 UK Dial-in Number: 0-800-404-8418 ISRAEL Dial-in
Number: 03-918-0609 INTERNATIONAL Dial-in Number: +972-3-918-0609
at: 9:00am Eastern Time; 6:00am Pacific Time; 2:00pm UK Time;
4:00pm Israel Time This call will also be broadcast live on Elbit
Systems' web-site at http://www.elbitsystems.com/. An online replay
will be available from 24 hours after the call ends. Alternatively,
for two days following the end of the call, investors will be able
to dial a replay number to listen to the call. The dial-in numbers
are: 1-888-269-0005 (US) or +972-3-925-5951 (Israel and
International). About Elbit Systems Elbit Systems Ltd. is an
international defense electronics company engaged in a wide range
of defense-related programs throughout the world. The Company,
which includes Elbit Systems and its subsidiaries, operates in the
areas of aerospace, land and naval systems, command, control,
communications, computers, intelligence surveillance and
reconnaissance ("C4IS"), unmanned air vehicle (UAV) systems,
advanced electro-optics, electro-optic space systems, EW suites,
airborne warning systems, ELINT systems, data links and military
communications systems and radios. The Company also focuses on the
upgrading of existing military platforms and developing new
technologies for defense, homeland security and commercial aviation
applications . For additional information, visit:
http://www.elbitsystems.com/ Attachments: Consolidated balance
sheet Consolidated statements of income Condense consolidated
statements of cash flow Consolidated revenue distribution by areas
of operation and by geographical regions This press release
contains forward-looking statements (within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of
the Securities Exchange Act of 1934, as amended) regarding Elbit
Systems Ltd. And/or its subsidiaries (collectively the Company), to
the extent such statements do not relate to historical or current
fact. Forward Looking Statements are based on management's
expectations, estimates, projections and assumptions.
Forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995,
as amended. These statements are not guarantees of future
performance and involve certain risks and uncertainties, which are
difficult to predict. Therefore, actual future results, performance
and trends may differ materially from these forward-looking
statements due to a variety of factors, including, without
limitation: scope and length of customer contracts;governmental
regulations and approvals; changes in governmental budgeting
priorities; general market, political and economic conditions in
the countries in which the Company operates or sells, including
Israel and the United States among others; differences in
anticipated and actual program performance, including the ability
to perform under long-term fixed-price contracts; and the outcome
of legal and/or regulatory proceedings. The factors listed above
are not all-inclusive, and further information is contained in
Elbit Systems Ltd.'s latest annual report on Form 20-F, which is on
file with the U.S. Securities and Exchange Commission. All
forward-looking statements speak only as of the date of this
release. The Company does not undertake to update its
forward-looking statements. (FINANCIAL TABLES TO FOLLOW) ELBIT
SYSTEMS LTD. CONSOLIDATED BALANCE SHEETS (In thousands of US
Dollars) June 30 December 31 2009 2008 Unaudited Audited Assets
Current assets: Cash and Cash equivalents 174,361 204,670 Short
term bank deposits 90,410 69,642 Available for sale marketable
securities 28,355 3,731 Trade receivables, net 482,378 477,010
Other receivables and pre-paid expenses 175,689 203,990
Inventories, net of advances 626,097 644,107 Total current assets
1,577,290 1,603,150 Investment in affiliated companies and a 66,893
62,300 partnership Long-term deposits and marketable securities
51,219 34,355 Long-term receivables 7,821 6,390 Deferred income
taxes 6,538 9,201 Severance pay fund 248,728 236,928 381,199
349,174 Property and equipment, net 391,880 384,086 Goodwill and
other intangible assets, net 590,820 594,283 Total assets 2,941,189
2,930,693 Liabilities and Shareholders' Equity Short-term bank
credit and loans 1,027 15,413 Trade payables 291,040 340,315 Other
payables and accrued expenses 527,594 468,224 Advances from
customers, net 383,405 489,192 1,203,066 1,313,144 Long-term loans
431,455 269,760 Accrued termination liability 336,054 332,236
Deferred income taxes 68,430 70,068 Advances from customers 111,499
115,470 Other long-term liabilities 32,129 29,707 979,567 817,241
Elbit Systems Ltd.'s shareholders' equity 738,127 723,833
Non-controlling interests(*) 20,429 76,475 Total shareholders'
equity 758,556 800,308 Total liabilities and shareholders' equity
2,941,189 2,930,693 (*) The Company has adopted SFAS No. 160,
"Non-controlling Interests in Consolidated Financial Statements, an
amendment to ARB No. 51," as of January 1, 2009. Pursuant to SFAS
No. 160, net income attributable to non-controlling interests is
presented in the statement of income as part of consolidated net
income and then shown on a separate line item as a reduction to
arrive at net income attributable to Elbit Systems Ltd., which is
the equivalent of "net income" presented in previous statements of
income. Cumulative net income attributable to non-controlling
interests is presented on the balance sheets as part of total
shareholders' equity and is else shown on a separate line item.
Total shareholders equity ,net of the comulative net income
attributable to non-controling interests,represents the
shareholders' equity attributable to the company's ordinary
shareholders equity,which is the equivalent of "shareholders
equity" presented in previous balance sheets. ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF INCOME (In thousands of US Dollars,
except for share and per share amounts) Six Months Ended Three
Months Ended Year Ended June 30 June 30 December 31 2009 2008 2009
2008 2008 Unaudited Audited Revenues 1,385,221 1,269,230 728,289
653,167 2,638,271 Cost of revenues 965,084 902,635 516,420 455,494
1,870,830 Gross profit 420,137 366,595 211,869 197,673 767,441
Operating expenses: Research and development, net 98,888 76,124
53,008 38,089 184,984 Marketing and selling 124,465 106,059 67,549
55,153 198,274 General and administrative 58,286 75,924 29,398
44,448 134,182 Acquired IPR&D - - - - 1,000 Total operating
expenses 281,639 258,107 149,955 137,690 518,440 Operating income
138,498 108,488 61,914 59,983 249,001 Financial income (expenses),
net (7,602) (16,973) 11,437 (12,373) (36,815) Other income
(expenses), net (646) 4,213 (551) 117 94,294 Income before taxes on
income 130,250 95,728 72,800 47,727 306,480 Taxes on income 26,248
11,684 14,036 3,762 54,367 104,002 84,044 58,764 43,965 252,113
Equity in net earnings of affiliated companies and partnership
8,193 5,946 3,417 3,382 14,435 Consolidated net income 112,195
89,990 62,181 47,347 266,548 Less: net income attributable to
non-controlling interests(*) (9,221) (26,682) (2,461)(16,191)
(62,372) Net income attributable to Elbit Systems Ltd. 102,974
63,308 59,720 31,156 204,176 Earnings per share attributable to
Elbit Systems Ltd.'s Ordinary shareholders: Basic net earnings per
share 2.44 1.50 1.42 0.74 4.85 Diluted net earnings per share 2.41
1.48 1.39 0.73 4.78 Weighted average number of shares used in
computation of basic earnings per share 42,149 42,071 42,200 42,074
42,075 Weighted average number of shares used in computation of
diluted earnings per share 42,729 42,876 42,924 42,867 42,758 (*)
The Company has adopted SFAS No. 160, "Non-controlling Interests in
Consolidated Financial Statements, an amendment to ARB No. 51," as
of January 1, 2009. Pursuant to SFAS No. 160, net income
attributable to non-controlling interests is presented in the
statement of income as part of consolidated net income and then
shown on a separate line item as a reduction to arrive at net
income attributable to Elbit Systems Ltd., which is the equivalent
of "net income" presented in previous statements of income.
Cumulative net income attributable to non-controlling interests is
presented on the balance sheets as part of total shareholders'
equity and is else shown on a separate line item. Total
shareholders equity ,net of the comulative net income attributable
to non-controling interests,represents the shareholders' equity
attributable to the company's ordinary shareholders equity,which is
the equivalent of "shareholders equity" presented in previous
balance sheets. ELBIT SYSTEMS LTD. CONSOLIDATED STATEMENTS OF CASH
FLOW (In thousands of US Dollars) Six Months Ended Year Ended June
30, December 31, 2009 2008 2008 Unaudited Audited CASH FLOWS FROM
OPERATING ACTIVITIES Net income 102,974 63,308 204,176 Adjustments
to reconcile net income to net cash provided by operating
activities: Depreciation and amortization 63,196 60,832 129,437
Write-off impairment - - 10,514 Acquired IPR&D - - 1,000
Other-than-temporary impairment of available for sale marketable
securities - 2,964 17,885 Stock based compensation 2,563 2,569
5,067 Deferred income taxes and reserve (4,321) (4,293) (8,488)
Severance, pension and termination indemnities, net (8,900) 15,787
15,211 Gain on sale of investments 208 1,165 (100,031) Minority
interests in earnings (loss) of subsidiaries 9,221 26,682 62,372
Equity in net losses (earnings) of affiliated companies and
partnership, net of dividend received (*) (1,630) 1,001 (1,866)
Changes in operating assets and liabilities: Decrease (increase) in
short and long-term receivables and prepaid expenses 17,103 (2,781)
(39,698) Decrease (increase) in inventories, net 10,672 (137,052)
(169,482) Increase in trade payables, other payables and accrued
expenses 4,046 139,474 120,734 Decrease in advances received from
customers (101,543) (40,273) (37,403) Other adjustments - 430 - Net
cash provided by operating activities 93,589 129,813 209,428 CASH
FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and
equipment (47,065) (64,923) (129,241) Acquisition of a subsidiary
(Schedule A) (124,033) (2,685) (20,637) Investments in affiliated
companies (2,552) (602) (4,001) Proceeds from sale of property,
plant and equipment 4,240 3,252 8,779 Proceeds from sale of
investment - - 50,254 Investment in short-term and long-term bank
deposits, net (57,541) (26,741) (76,861) Net cash used in investing
activities (226,951) (91,699) (171,707) CASH FLOWS FROM FINANCING
ACTIVITIES Proceeds from exercise of options 5,692 209 188
Repayment of long-term bank loans (20,113) (63,969) (333,590)
Receipt of long-term bank loans 170,167 83,561 183,211 Dividends
paid (45,839) (15,226) (32,770) Tax benefit in respect of options
exercised - - 116 Change in short-term bank credit and loans, net
(6,854) (10,396) (13,008) Net cash provided by (used in) financing
activities 103,053 (5,821) (195,853) NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (30,309) 32,293 (158,132) CASH AND CASH
EQUIVALENTS AT THE BEGINNING OF THE PERIOD 204,670 362,802 362,802
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 174,361 395,095
204,670 * Dividend received 7,324 6,947 12,569 ELBIT SYSTEMS LTD.
DISTRIBUTION OF REVENUES Consolidated revenue by areas of
operation: Six Months Ended June 30 2009 2008 $ millions % $
millions % Airborne systems 346.5 25.0 312.8 24.6 Land systems
252.2 18.2 309.4 24.4 C4ISR systems 530.1 38.3 416.5 32.8
Electro-optics 190.4 13.7 161.5 12.7 Other (mainly non-defense
engineering and production services) 66.0 4.8 69.0 5.5 Total
1,385.2 100.0 1,269.2 100.0 (Table Continued...) Three Months Ended
June 30 2009 2008 $ millions % $ millions % Airborne systems 173.7
23.8 157.6 24.1 Land systems 110.3 15.2 153.4 23.5 C4ISR systems
300.0 41.2 234.6 36.0 Electro-optics 107.7 14.8 73.4 11.2 Other
(mainly non-defense engineering and production services) 36.6 5.0
34.2 5.2 Total 728.3 100.0 653.2 100.0 Consolidated revenues by
geographical regions: Six Months Ended June 30 2009 2008 $ millions
% $ millions % Israel 300.8 21.7 226.8 17.9 United States 393.5
28.4 432.8 34.1 Europe 349.6 25.3 336.5 26.5 Other countries 341.3
24.6 273.1 21.5 Total 1,385.2 100.0 1,269.2 100.0 (Table
Continued...) Three Months Ended June 30 2009 2008 $ millions % $
millions % Israel 176.3 24.2 103.7 15.9 United States 182.7 25.1
217.7 33.3 Europe 187.4 25.7 199.4 30.5 Other countries 181.9 25.0
132.4 20.3 Total 728.3 100.0 653.2 100.0 Company Contact: Joseph
Gaspar, Executive VP & CFO Dalia Rosen, Head of Corporate
Communications Elbit Systems Ltd Tel: +972-4 831-6663 Fax:
+972-4-831-6944 E-mail: IR Contact: Ehud Helft / Kenny Green GK
Investor Relations Tel: +1-646-201-9246 E-mail:
http://www.newscom.com/cgi-bin/prnh/20080408/300441DATASOURCE:
Elbit Systems Ltd CONTACT: Company Contact: Joseph Gaspar,
Executive VP & CFO, Dalia Rosen, Head of Corporate
Communications, Elbit Systems Ltd, Tel: +972-4 831-6663, Fax:
+972-4-831-6944, E-mail: , ; IR Contact: Ehud Helft / Kenny Green,
GK Investor Relations, Tel: +1-646-201-9246, E-mail:
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