HAIFA, Israel, May 16, 2011 /PRNewswire-FirstCall/ -- Elbit
Systems Ltd. (the "Company") (NASDAQ: ESLT, TASE: ESLT), the
international defense company, reported today its consolidated
financial results for the first quarter ended March 31, 2011.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080408/300441 )
In this release, the Company is providing its usual US-GAAP
("GAAP") results as well as additional non-GAAP financial data,
which are intended to provide investors a more comprehensive
understanding of the Company's business results and trends. Unless
otherwise stated, all financial data presented is GAAP financial
data.
First quarter 2011 results:
Revenues were $620.3 million in
the first quarter of 2011, as compared to $618.2 million in the first quarter of 2010. The
leading contributor to the Company's revenues was the airborne
systems area of operations.
Gross profit was $185.6 million
(29.9% of revenues) for the first quarter of 2011, as compared with
gross profit of $184.5 million (29.9%
of revenues) in the first quarter of 2010.
Research and development expenses, net were $54.2 million (8.7% of revenues) in the first
quarter of 2011, as compared to $52.7
million (8.5% of revenues) in the first quarter of 2010.
Marketing and selling expenses were $55.0
million (8.9% of revenues) in the first quarter of 2011, as
compared to $54.6 million (8.8% of
revenues) in the first quarter of 2010.
General and administrative expenses were $35.5 million (5.7% of revenues) in the first
quarter of 2011, as compared to $28.1
million (4.5% of revenues) in the first quarter of 2010. The
increase was mainly a result of consolidation of expenses from
recently acquired subsidiaries.
Financial expenses, net were $10.7
million in the first quarter of 2011, as compared to
$3.1 million in the first quarter of
2010. Financial expenses were comparatively higher in the first
quarter of 2011 due to currency hedging related expenses as well as
due to higher expenses related to the Series A Notes that the
Company issued during the second quarter of 2010.
Taxes on income were $5.3 million
(effective tax rate of 17.4%) in the first quarter of 2011,
compared to taxes on income of $10.3
million (effective tax rate of 17.5%) in the first quarter
of 2010.
Equity in net earnings of affiliated companies and partnership
was $3.8 million (0.6% of revenues)
in the first quarter of 2011, as compared to $3.9 million (0.6% of revenues) in the first
quarter of 2010.
Net income attributable to non-controlling interests was
$1.0 million in the first quarter of
2011, as compared with $2.8 million
in the first quarter of 2010.
Net income attributable to the Company's ordinary shareholders'
was $27.9 million (4.5% of revenues)
in the first quarter of 2011, as compared to $49.8 million (8.1% of revenues in the first
quarter of 2010. Net income in the first quarter of 2010 included
$9.6 million in income from the sale
of Mediguide shares.
Diluted net earnings per share attributable to the Company's
ordinary shareholders were $0.65 for
the first quarter of 2011, as compared with $1.15 for the first quarter of 2010.
The Company's backlog of orders increased to $5,603 million as of March
31, 2011, as compared with $5,446
million as of December 31,
2010 and $5,247 million as of
March 31, 2010. Approximately 77% of
the backlog relates to orders outside of Israel. Approximately 68% of the Company's
backlog as of March 31, 2011, is
scheduled to be performed during the upcoming three quarters of
2011 and during 2012.
Operating cash flow was $40.1
million during the first quarter of 2011, as compared to
$64.0 million in the first quarter of
2010. The reduction in the operating cash flow was a result of
reduced net profit and increased inventories.
Non-GAAP financial data:
The following non-GAAP financial data is presented to enable
investors to have additional information on the Company's business
performance as well as a further basis for periodical comparisons
and trends relating to the Company's financial results. The Company
believes such data provides useful information to investors by
facilitating more meaningful comparisons of the Company's financial
results over time. Such non-GAAP information is used by our
management to make strategic decisions, forecast future results and
evaluate the Company's current performance. However, investors are
cautioned that, unlike financial measures prepared in accordance
with GAAP, non-GAAP measures may not be comparable with the
calculation of similar measures for other companies.
The non-GAAP financial data below includes reconciliation
adjustments regarding non-GAAP gross profit, operating income, net
income and diluted EPS. In arriving at non-GAAP presentations,
companies generally factor out items such as those that have a
non-recurring impact on the income statements, various non-cash
items, significant effects of retroactive tax legislation and
changes in accounting guidance and other items which, in
management's judgment, are items that are considered to be outside
of the review of core operating results. In the Company's non-GAAP
presentation below, the Company made the following adjustments: (1)
amortization of purchased intangible assets, (2) significant
reorganization, restructuring and other related expenses, (3)
impairment of investments, including impairment of auction rate
securities, (4) gain from changes in holdings, including
revaluation of the previously held shares at the acquisition date
when a business combination is achieved in stages (step-up) and (5)
the income tax effects of the foregoing.
These non-GAAP measures are not based on any comprehensive set
of accounting rules or principles. The Company believes that
non-GAAP measures have limitations in that they do not reflect all
of the amounts associated with the Company's results of operations,
as determined in accordance with GAAP, and that these measures
should only be used to evaluate the Company's results of operations
in conjunction with the corresponding GAAP measures. Investors
should consider non-GAAP financial measures in addition to, and not
as replacements for or superior to, measures of financial
performance prepared in accordance with GAAP.
Reconciliation of GAAP to Non-GAAP (Unaudited) Supplemental Financial
Data:
(US Dollars in millions)
Three Months Ended Year
March 31 Ended
December
31
2011 2010 2010
GAAP gross profit 185.6 184.5 797.9
Adjustments:
Amortization of purchased intangible 7.6 4.3 25.0
assets
Reorganization, restructuring and other - - 12.8
related expenses(1)
Non-GAAP gross profit 193.2 188.8 835.7
Percent of revenues 31.1% 30.5% 31.3%
GAAP operating income 40.9 49.2 207.4
Adjustments:
Amortization of intangible assets 14.0 10.5 47.7
Reorganization, restructuring and other - - 16.4
related expenses(1)
Impairment of investments(2) - - 1.3
Gain from changes in holdings(3) - - (4.8)
Non-GAAP operating income 54.9 59.7 268.0
Percent of revenues 8.9% 9.7% 10.0%
GAAP net income attributable to Elbit 27.9 49.8 183.5
Systems' shareholders
Adjustments:
Amortization of intangible assets 14.0 10.5 47.7
Reorganization, restructuring and other - - 16.4
related expenses(1)
Impairment of investments(2) - - 1.3
Gain from changes in holdings(3) - (12.8) (17.6)
Related tax benefits (3.3) 0.6 (8.9)
Non-GAAP net income attributable to Elbit 38.6 48.1 222.4
Systems' shareholders
Percent of revenues 6.3% 7.8% 8.3%
Non-GAAP diluted net EPS 0.9 1.1 5.1
(1) Adjustment of reorganization, restructuring and other
related expenses in 2010, were mainly due to write-off of
inventories in the amount of approximately $13 million related to the acquisitions of Soltam
and ITL.
(2) Adjustment of impairment of investments in 2010 was due to
the impairment of ICI intangible assets.
(3) Adjustment of gain from changes in holdings in 2010 included
income of $12.8 million before tax
from the sale of Mediguide shares and a gain of $4.8 million from a "step-up" in an investment in
2010.
Recent Events:
On March 16, 2011, the Company
announced the signing of a founder's agreement (the "Agreement")
with Israel Aerospace Industries Ltd. ("IAI") to establish a joint
company and a limited partnership (collectively the "Joint Entity")
to perform a potential project of purchasing and maintenance of
advanced training aircraft, as well as additional services (the
"Project"), for the Israeli Ministry of Defense (the "MoD"). The
Joint Entity established under the Agreement, will be equally owned
(subject to required regulatory approvals), and will supply the MoD
with the products and services required for the Project's
execution. Certain portions of the Project's work scope will be
acquired from IAI and Elbit Systems, respectively, in accordance
with a work sharing plan determined by the two sides.
On March 28, 2011, the Company
announced that its wholly-owned U.S. subsidiary, Elbit Systems of
America, was awarded a $9.6 million
contract by the United States
Marine Corps System Command at Quantico Marine Base, Virginia to build the Joint Terminal Attack
Controller Laser Target Designator (JTAC LTD). The project will be
performed over a period of one year time, including production of
the units, supplying spares, and conducting training. The contract
also contains options for logistics support, which if exercised,
will bring its value to $10.8
million.
On March 30, 2011, the Company
announced, further to its announcement of February 22, 2011, that it completed the
acquisition of the balance of the shares of Elisra Electronic
Systems Ltd. held by Elta Systems Ltd. a subsidiary of Israel
Aerospace Industries Ltd.
On April 6, 2011, the Company
announced that it was awarded a contract to supply self-propelled
artillery and accompanying systems to an African country. The
contract, valued at approximately $24
million, will be performed over the next two years. This was
the first contract announcement regarding Soltam Systems Ltd.
("Soltam") since its recent acquisition by the Company. The
contract calls for the supply of a complete solution, including
Soltam's ATMOS self-propelled artillery, command stations,
observation and target acquisition systems, as well as fire control
and command and control systems. In addition, the Company will
manage the training and maintenance during the project's
duration.
On April 8, 2011, the Company
announced that it filed a lawsuit in the High Court of Justice of
the United Kingdom against the
Government of Georgia (the
"Government"), in an amount of approximately $100 million. The lawsuit was filed as a result
of the Government's failure to pay amounts due to the Company in
connection with deliverable items under several contracts signed in
2007.
On April 11, 2011, the Company
announced that its Brazilian subsidiary, AEL Sistemas S.A ("AEL")
was awarded a follow-on contract from a subsidiary of Embraer S.A.
("Embraer Defense and Security") for the upgrade of eleven F-5
aircraft. AEL is the main subcontractor to Embraer Defense and
Security, the prime contractor for the project. The contract is
valued at $85 million, to be
performed through 2013. The upgrade contract, which is follow-on to
contracts awarded in 2001 and 2007, will include engineering
services and the delivery of all system equipment, including the
mission computer, display systems, radar, EW system, ammunition
management system and other avionics products. In addition, as part
of the contract, AEL will supply a flight simulator, spares and
ground support equipment.
On April 11, 2011, the Company
announced that Elbit Systems of America's recently acquired
subsidiary, M7 Aerospace LP ("M7"), was awarded a $15.6 million contract by the Naval Air Systems
Command (NAVAIR) in Patuxent River,
Maryland to perform Contractor Logistics Support (CLS) and
maintenance for a mixed fleet of seven RC/EC/C-26D and 12 UC-35C/D
utility aircraft. The five-year contract is for a base year with
four one-year renewal options.
On April 13, 2011, the Company
announced that its Brazilian subsidiary, AEL signed a strategic
agreement with Embraer Defense and Security, a subsidiary of
Embraer, during the Latin American Aerospace & Defense (LAAD)
Exhibition 2011. The agreement envisages the evaluation of joint
exploration of unmanned aircraft systems ("UAS"), including the
anticipated creation of a jointly owned company with majority
participation of Embraer Defense and Security to work in the
segment.
On May 11, 2011, the Company
announced that it has been awarded a contract for the establishment
of a Helicopter Pilot Training Center for Macedonia's Defense and Security Forces. The
project, valued at 43 million Euros,
will be operated under a PFI (Private Financing Initiative)
concept, under which the Company will provide a comprehensive
solution, including the setting up of the training center,
acquisition of aircraft, supply of full mission simulators and
operation of the center for a period of eight years. The Pilot
Training Center will prepare and qualify new pilots for the
Macedonian Defense and Security forces, as well as provide training
of active pilots.
Management Comment:
Joseph Ackerman, President and
CEO of Elbit Systems, commented: "We are encouraged by the
continuous growth in our backlog, for the fourth consecutive
quarter. The trend of improvement testifies to the relevance of our
systems to the market's evolving needs, and highlights our ability
to supply cutting-edge solutions to our customers". Ackerman added:
"Over the past year, we have made significant strategic advances,
completing numerous important acquisitions, both in Israel and internationally, which broaden the
basis for our long-term strategic growth. We expect to see the
fruits resulting from the synergy within our recent acquisitions,
and we believe these efforts will help us maintain our continued
growth and market leadership".
Dividend:
The Board of Directors declared a dividend of $0.36 per share for the first quarter of 2011.
The dividend's record date is May 24,
2011, and the dividend will be paid on June 6, 2011, net of taxes and levies, at the
rate of 20%. Conference Call:
The Company will be hosting a conference call today,
Monday, May 16, 2011 at 9:00am Eastern Time. On the call, management will
review and discuss the results and will be available to answer
questions.
To participate, please call one of the teleconferencing numbers
that follow. If you are unable to connect using the toll-free
numbers, please try the international dial-in number.
US Dial-in Numbers: 1-888-668-9141
UK Dial-in Number: 0-800-917-5108
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 the same link a few hours after the call ends.
Alternatively, for two days following the call, investors will
be able to dial a replay number to listen to the call. The dial-in
numbers are:
1-888-326-9310 (US) or +972-3-925-5901 (Israel and International).
About Elbit Systems
Elbit Systems Ltd. is an international defense electronics
company engaged in a wide range of 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 ("C4ISR"), unmanned aircraft
systems ("UAS"), 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,
developing new technologies for defense, homeland security and
commercial aviation applications and providing a range of support
services.
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.
ELBIT SYSTEMS LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands of US Dollars)
March 31 December 31
2011 2010
Unaudited Audited
Assets
Current assets:
Cash and cash equivalents 138,641 151,059
Short-term bank deposits 99,732 62,662
Available for sale and trading marketable securities - 824
Trade and unbilled receivables, net 686,474 702,364
Other receivables and prepaid expenses 168,696 166,124
Inventories, net of customers advances 723,176 665,270
Total current assets 1,816,719 1,748,303
Investment in affiliated companies,
partnership and other companies 91,171 88,116
Available for sale marketable securities 7,122 7,179
Long-term trade and unbilled receivables 74,140 90,343
Long-term bank deposits and other receivables 40,442 44,401
Deferred income taxes, net 27,361 29,892
Severance pay fund 310,867 302,351
551,103 562,282
Property, plant and equipment, net 517,830 503,851
Goodwill and other intangible assets, net 786,572 796,664
Total assets 3,672,224 3,611,100
Liabilities and Shareholders' Equity
Short-term bank credit and loans 92,829 15,115
Current maturities of long-term loans and Series A 42,755 43,093
Notes
Trade payables 329,620 360,736
Other payables and accrued expenses 647,815 645,146
Customer advances in excess of costs incurred on 332,494 302,691
contracts in progress 1,445,513 1,366,781
Long-term loans, net of current maturities 312,448 292,039
Series A Notes and convertible debentures, net of 269,281 273,357
current maturities
Accrued termination liabilities 407,397 395,303
Deferred income taxes and tax liabilities, net 56,231 55,936
Customer advances in excess of costs incurred on 169,927 177,191
contracts in progress
Other long-term liabilities 48,747 45,042
1,264,031 1,238,868
Elbit Systems Ltd.'s shareholders' equity 937,230 966,693
Non-controlling interests 25,450 38,758
Total shareholders' equity 962,680 1,005,451
Total liabilities and shareholders' equity 3,672,224 3,611,100
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US Dollars, except for share and per share
amounts)
Three Months Ended Year Ended
March 31 December 31
2011 2010 2010
Unaudited Audited
Revenues 620,258 618,201 2,670,133
Cost of revenues 434,613 433,656 1,872,263
Gross profit 185,645 184,545 797,870
Operating expenses:
Research and development, net 54,214 52,665 234,131
Marketing and selling 54,987 54,595 229,942
General and administrative 35,510 28,085 131,200
Other income, net - - (4,756)
144,711 135,345 590,517
Operating income 40,934 49,200 207,353
Financial expenses, net (10,662) (3,135) (21,251)
Other income, net 194 12,981 13,259
Income before taxes on income 30,466 59,046 199,361
Income taxes (5,300) (10,327) (24,037)
25,166 48,719 175,324
Equity in net earnings of affiliated 3,751 3,912 19,343
companies and partnership
Net income 28,917 52,631 194,667
Less: net income attributable to (988) (2,849) (11,169)
non-controlling interests
Net income attributable to Elbit 27,929 49,782 183,498
Systems Ltd.'s shareholders
Earnings per share attributable to
Elbit Systems Ltd.'s
shareholders:
Basic net earnings per share 0.65 1.17 4.30
Diluted net earnings per share 0.65 1.15 4.25
Weighted average number of shares used
in computation of
basic earnings per share 42,732 42,577 42,645
Weighted average number of shares used
in computation of
diluted earnings per share 43,223 43,286 43,217
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of US Dollars)
Three Months Ended Year
Ended
March 31 December
31
2011 2010 2010
Unaudited Audited
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 28,917 52,631 194,667
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 37,155 29,683 132,141
Write-off impairment - - 1,284
Stock based compensation 356 1,335 5,211
Amortization of Series A Notes (152) - (258)
discounts and related issuance costs
Deferred income taxes and reserve, 622 (9,371) (28,162)
net
Gain on sale of property, plant and (502) (806) (2,600)
equipment
Gain on sale of investment 67 (12,977) (19,151)
Equity in net earnings of affiliated 7,812 (811) (8,418)
companies and partnership, net of
dividend received (*)
Change in operating assets and
liabilities:
Decrease (increase) in short and 29,328 72,990 (84,708)
long-term trade receivables, and
prepaid expenses
Increase in inventories, net (58,248) (5,276) (49,724)
Increase (decrease) in trade (27,386) (18,266) 76,808
payables, other payables and accrued
expenses
Severance, pension and termination 3,145 1,735 4,160
indemnities, net
Increase (decrease) in advances 18,949 (46,887) (36,396)
received from customers
Net cash provided by operating 40,063 63,980 184,854
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and (37,830) (26,151) (138,644)
equipment
Acquisition of subsidiaries and - - (229,556)
business operations
Investments in affiliated companies (6,786) - (4,956)
and other companies
Proceeds from sale of property, plant 2,417 2,355 11,841
and equipment
Proceeds from sale of investment - 12,751 27,941
Investment in long-term deposits, net 1,616 4,063 15,756
Investment in (proceeds from sale of)
short-term deposits and available for
sale securities, net (37,104) (18,920) 63,205
Net cash used in investing activities(77,687) (25,902) (254,413)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options 1,496 1,912 3,590
Purchase of non-controlling interests(73,455) - -
Repayment of long-term bank loans (2,680) (46,585) (488,657)
Proceeds from long-term bank loans 24,252 34,990 387,692
Proceeds from issuance of Series A - - 283,213
Notes
Series A Notes issuance costs - - (2,530)
Early redemption of convertible (2,121) - -
debentures
Dividends paid - (1,653) (63,137)
Tax benefit in respect of options - - 710
exercised
Change in short-term bank credit and 77,714 - (40,972)
loans, net
Net cash provided by (used in) 25,206 (11,336) 79,909
financing activities
NET INCREASE (DECREASE) IN CASH AND (12,418) 26,742 10,350
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE 151,059 140,709 140,709
BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE END 138,641 167,451 151,059
OF THE PERIOD
* Dividend received from affiliated 11,563 3,101 10,925
companies and partnership
ELBIT SYSTEMS LTD.
DISTRIBUTION OF REVENUES
CONSOLIDATED REVENUE BY AREAS OF OPERATION:
Three Months Ended Year Ended
March 31 December 31
2011 2010 2010
$ millions % $ millions % $ millions %
Airborne systems 251.1 40.5 183.4 29.7 791.1 29.6
Land systems 83.4 13.4 81.5 13.2 363.2 13.6
C4ISR systems 193.7 31.2 245.3 39.7 1,019.1 38.2
Electro-optics 64.8 10.5 81.3 13.2 368.8 13.8
Other (mainly
non-defense engineering
and production 27.3 4.4 26.7 4.2 127.9 4.8
services)
Total 620.3 100.0 618.2 100.0 2,670.1 100.0
CONSOLIDATED REVENUES BY GEOGRAPHICAL REGIONS:
Three Months Ended Year Ended
March 31 December 31
2011 2010 2010
$ millions % $ millions % $ millions %
Israel 170.1 27.4 142.8 23.1 651.0 24.4
United States 209.1 33.7 187.7 30.4 844.0 31.6
Europe 111.2 17.9 156.2 25.2 541.7 20.3
Other countries 129.9 21.0 131.5 21.3 633.4 23.7
Total 620.3 100.0 618.2 100.0 2,670.1 100.0
Company Contact:
Joseph Gaspar, Executive VP & CFO
Tel: +972-4-8316663
j.gaspar@elbitsystems.com
Dalia Rosen, VP, Head of Corporate
Communications
Tel: +972-4-8316784
dalia.rosen@elbitsystems.com
Elbit Systems Ltd.
IR Contact:
Ehud Helft
Kenny Green
CCG Investor Relations
Tel: 1-646-201-9246
elbitsystems@ccgisrael.com
SOURCE Elbit Systems Ltd