HAIFA, Israel, March 19,
2019 /PRNewswire/ -- Elbit Systems Ltd. (the "Company")
(NASDAQ: ESLT) (TASE: ESLT), the international high technology
company, reported today its consolidated results for the fourth
quarter and full year ended December 31, 2018.
In this release, the Company is providing US-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. For a description of the
Company's non-GAAP definitions see page 7 below, "Non-GAAP
financial data". Unless otherwise stated, all financial data
presented is US-GAAP financial data.
Management Comment:
Bezhalel (Butzi) Machlis, President and CEO of Elbit
Systems, commented: "I am pleased with our
performance in 2018, in which we reported 9% revenue growth and
positive cash flow of over $190
million. The fourth quarter of 2018 was an unusual and
important strategic quarter for Elbit Systems with a few one-time
events impacting our results, primarily due to the fact that we
closed the acquisition of IMI."
Mr. Machlis added: "As we move into 2019, Elbit
Systems is a much larger company with a revenue run rate of over
$4 billion per year and backlog
approaching the $10 billion mark. The
integration of IMI into our organization is progressing, and we are
excited about the potential it brings us. We have a long and
successful track record of integrating acquisitions, and we look
forward to an accelerated and fruitful process. We are confident
that this acquisition will bring many synergies across the
organization that will improve our position globally and will
further increase value to our shareholders over the long term."
Acquisition of IMI and Reorganization of Company
Businesses
On November 25, 2018, the Company
completed the acquisition of IMI Systems Ltd. ("IMI") for a
purchase price of approximately $495
million (NIS 1.8 billion),
with an additional payment of up to approximately $27 million (NIS 100
million) contingent upon IMI meeting agreed performance
goals. The financial results of IMI were included in the Company's
consolidated reports, commencing the date of the acquisition.
Following the completion of the acquisition of IMI and a
reorganization in connection with the IMI acquisition, the Company
recorded in the fourth quarter of 2018 expenses of
$69.5 million, of which $66.6 million were recorded in Cost of Revenues
and the rest in Other Expenses, net. The expenses include mainly
inventory write- offs and employees related costs. Those expenses
were eliminated in the non-GAAP results due to the non-recurring
nature of the expense.
The Company reorganized a number of its activities, in
connection with the IMI acquisition. This reorganization included,
among other measures, the establishment of two business
divisions:
a. The Land Systems Division focused on land-based systems,
including military vehicle systems, artillery systems
and the IMI activities; and
b. The C4I and Cyber Division focused on command & control,
radio, communication, homeland security and cyber intelligence
activities.
This reorganization is intended to improve the synergy within
the Company with respect to the acquired activities and better
address market requirements and customer support. The Company
believes that the acquisition of IMI and the reorganization will
positively affect the future business of Elbit Systems.
Fourth quarter 2018 results:
Revenues in the fourth quarter of 2018
were $1,077.8 million,
as compared to $1,009.6 million in
the fourth quarter of 2017.
Non-GAAP(*) gross profit amounted to
$306.7 million (28.5% of revenues) in
the fourth quarter of 2018, as compared to $293.8 million (29.1% of revenues) in the fourth
quarter of 2017. GAAP gross profit in the fourth quarter of
2018 was $234.9 million (21.8% of
revenues), as compared to $288.6
million (28.6% of revenues) in the fourth quarter of 2017.
The gross profit in the fourth quarter of 2018 reflects expenses of
$66.6 million related to the IMI
acquisition.
Research and development expenses, net were
$73.0 million (6.8% of revenues) in
the fourth quarter of 2018, as compared to $72.5 million (7.2% of revenues) in the fourth
quarter of 2017.
Marketing and selling expenses, net were $73.5 million (6.8% of revenues) in the fourth
quarter of 2018, as compared to $81.2
million (8.0% of revenues) in the fourth quarter of
2017.
General and administrative expenses, net were
$49.8 million (4.6% of revenues) in
the fourth quarter of 2018, as compared to $26.2 million (2.6% of revenues) in the fourth
quarter of 2017. The lower level of general and administrative
expenses in the fourth quarter of 2017 resulted mainly from
revaluation of liabilities related to assets and activities
acquired in prior years.
Non-GAAP(*) operating income was $112.5 million (10.4% of revenues) in the fourth
quarter of 2018, as compared to $115.6
million (11.5% of revenues) in the fourth quarter of 2017.
GAAP operating income in the fourth quarter of 2018 was
$38.6 million (3.6% of revenues), as
compared to $108.7 million (10.8% of
revenues) in the fourth quarter of 2017. GAAP operating income in
the fourth quarter of 2018 was reduced by $66.6 million in expenses related to the
acquisition of IMI.
Financial expenses, net were $14.9 million in the fourth quarter of 2018, as
compared to $9.7 million in the
fourth quarter of 2017. The increase in financial
expenses in the fourth quarter of 2018 was mainly a result of
higher debt and interest rates.
Other expenses net were $6.4
million in the fourth quarter of 2018, as compared to
$5.1 million in the fourth quarter
of 2017. Other expenses includes mainly non-service cost
components of pension plans that were reclassified from operating
income in accordance with ASU 2017-07, "Compensation - Retirement
benefits" that was adopted on January 1,
2018, retrospectively.
__________
* see page 8
Taxes on income were $3.9
million (effective tax rate of 22.5%) in the fourth quarter
of 2018, as compared to $25.4 million
(effective tax rate of 27.1%) in the fourth quarter of 2017.
Taxes in the fourth quarter of 2017 included a $10.9 million adjustment to deferred tax assets
as a result of the tax reform in the U.S.
Equity in net earnings (losses) of affiliated companies and
partnerships was a net loss $11.4
million in the fourth quarter of 2018, as compared to net
earnings of $1.4 million in the
fourth quarter of 2017. The loss in the fourth quarter of 2018 was
mainly a result of a fair value re-evaluation of holdings in an
affiliated company.
Net income attributable to non-controlling
interests was $0.9
million in the fourth quarter of 2018, as compared to
$0.5 million in the fourth quarter of
2017.
Non-GAAP(*) net income attributable to the
Company's shareholders in the fourth quarter of 2018 was
$81.8 million (7.6% of revenues), as
compared to $86.1 million (8.5% of
revenues) in the fourth quarter of 2017. GAAP net income
attributable to the Company's shareholders in the fourth
quarter of 2018 was $1.1 million
(0.1% of revenues), as compared to $69.4
million (6.9% of revenues) in the fourth quarter of 2017.
The net income in the fourth quarter of 2018 reflects expenses (net
of taxes) of $64.8 million
related to the IMI acquisition.
Non GAAP(*) diluted net earnings per share
attributable to the Company's shareholders were
$1.91 for the fourth quarter of 2018,
as compared to $2.01 for the fourth
quarter of 2017. GAAP diluted earnings per share attributable to
the Company's shareholders in the fourth quarter of 2018 were
$0.03, as compared to $1.62 in the fourth quarter of 2017. GAAP diluted
earnings per share in the fourth quarter of 2018 were reduced by
$1.52 as a result of the net expenses
related to the IMI acquisition.
Full year 2018 results:
Revenues for the year ended December 31, 2018 were $3,683.7 million, as compared to $3,377.8 million in the year ended December 31, 2017.
For distribution of revenues by areas of operation and by
geographic regions see the tables on page 16.
The leading contributors to our revenues were the airborne
systems and C4ISR systems areas of operation. The increase in
revenues in the airborne systems area of operation was primarily
due to increased sales of commercial avionics equipment in the U.S.
of a new subsidiary that was acquired in the second quarter of
2018. Revenues from land systems increased primarily due to an
increase in sales of land electronic warfare systems and armored
vehicle systems in Europe and the
revenues of IMI that was acquired in November 2018.
On a geographic basis, the increase in North America was mainly a result of higher
sales of airborne systems and revenues of a new U.S. subsidiary
acquired in April 2018 in the area of
commercial avionics. The increase in Asia-Pacific was mainly a result of higher
sales of tank fire control systems and UAS. The increase in
the "Other" geographical region was mainly due to an increase in
sales of UAS, artillery and command and control systems.
Cost of revenues for the year ended December 31, 2018 was $2,707.5 million (73.5% of revenues), as compared
to $2,374.8 million (70.3% of
revenues) in the year ended December 31,
2017. Cost of revenues in 2018 included $66.6 million in expenses related to the
acquisition of IMI.
Non-GAAP(*) gross profit for the year ended
December 31, 2018 was
$1,061.9 million (28.8% of revenues),
as compared to $1,025.3 million
(30.4% of revenues) in the year ended December 31, 2017. GAAP gross profit in
2018 was $976.2 million (26.5%
of revenues), as compared to $1,003.1
million (29.7% of revenues) in 2017. The gross profit in
2018 reflects expenses of $66.6
million related to the IMI acquisition.
__________
* see page 8
Research and development expenses, net for the year
ended December 31, 2018 were
$287.4 million (7.8% of revenues), as
compared to $265.1 million (7.8% of
revenues) in the year ended December 31,
2017.
Marketing and selling expenses, net for the year ended
December 31, 2018 were
$281.0 million (7.6% of revenues), as
compared to $280.2 million (8.3% of
revenues) in the year ended December 31,
2017.
General and administrative expenses, net for the year
ended December 31, 2018 were
$160.3 million (4.4% of revenues), as
compared to $133.3 million (3.9% of
revenues) in the year ended December 31,
2017. The lower level of general and administrative expenses
in 2017 was mainly a result of revaluation of liabilities related
to assets and activities acquired in prior years.
Other operating income, net for the year ended
December 31, 2018 amounted to
$45.4 million. This was the result of
net gains related to deconsolidation of two of our Israeli
subsidiaries in the commercial cyber and medical instrumentation
areas, due to third party investments.
Non-GAAP(*) operating income for the year ended
December 31, 2018 was $340.7 million (9.2% of revenues), as compared to
$353.0 million (10.5% of revenues) in
the year ended December 31, 2017.
GAAP operating income in 2018 was $292.8 million (7.9% of revenues), as compared to
$324.4 million (9.6% of revenues) in
2017.
GAAP operating income in 2018 was reduced by expenses of
$66.6 million related to the
acquisition of IMI.
Financial expenses, net for the year ended
December 31, 2018 were
$44.1 million, as compared to
$34.5 million in the year ended
December 31, 2017. The increase in
financial expenses in 2018 was mainly a result of higher debt and
higher interest rates.
Other expenses, net were $11.5 million in 2018 as compared to $5.1 million in 2017. Other expenses in 2018
included write-off impairment of $7.8
million in investments in two affiliated Israeli companies.
Other expenses also included expenses of $3.8 million in 2018 as compared to $5.1 million in 2017, related to non-service cost
components of pension plans that were reclassified from operating
income, according to ASU 2017-07, "Compensation - Retirement
benefits" that was adopted on January 1,
2018, retrospectively.
Taxes on income for the year ended December 31, 2018 were $26.4 million (effective tax rate of 11.1%), as
compared to $55.6 million (effective
tax rate of 19.5%) in the year ended December 31, 2017. The effective tax rate was
affected by the mix of the tax rates in the various jurisdictions
in which the Company's entities generate taxable income and
other income that is not part of the taxable income mainly related
to non-cash elements such as impairment of assets. Taxes on income
in 2017 included a $10.9 million
adjustment to deferred tax assets as a result of the tax reform in
the U.S.
Equity in net earnings (losses) of affiliated companies and
partnerships for the year ended December
31, 2018 was a loss of $2.2
million (0.1% of revenues), as compared to earnings of
$11.4 million (0.3% of revenues) in
the year ended December 31, 2017. The
loss in 2018 was mainly a result of a $9.7
million re-evaluation of the fair value of an investment in
an affiliated company.
Net income attributable to non-controlling
interests for the year ended December 31, 2018 was $1.9
million, as compared to $1.5
million in the year ended December
31, 2017.
__________
* see page 8
Non-GAAP(*) net income attributable to the
Company's shareholders for the year ended December 31, 2018 was $264.1 million (7.2% of revenues), as compared to
$273.9 million (8.1% of revenues) in
the year ended December 31, 2017.
GAAP net income attributable to the Company's
shareholders in the year ended December
31, 2018 was $206.7 million
(5.6% of revenues), as compared to $239.1
million (7.1% of revenues) in the year ended December 31, 2017. GAAP net income was
reduced by expenses (net of taxes) of $64.8
million related to the acquisition of IMI as mentioned
above.
Non-GAAP(*) diluted net earnings per
share attributable to the Company's
shareholders for the year ended December 31, 2018 were $6.18, as compared to $6.41 for the year ended December 31, 2017. GAAP diluted net
earnings per share attributable to the Company's
shareholders in the year ended December
31, 2018 were $4.84, as
compared to $5.59 in the year ended
December 31, 2017. GAAP diluted
earnings per share in 2018 were reduced by $1.52 as a result of the net expenses related to
the IMI acquisition.
Backlog of orders for the year ended December 31, 2018 totaled $9,399 million, as compared to $7,561 million as of December 31, 2017. Approximately 61% of the
current backlog is attributable to orders from outside Israel. Approximately 64% of the current
backlog is scheduled to be performed during 2019 and 2020.
Operating cash flow for the year ended December 31, 2018 was $191.7 million, as compared to $100.9 million in the year ended December 31, 2017. The higher level of operating
cash flow in 2018 was mainly a result of higher collection of
receipts and advances received from customers.
Adoption of New Revenue Standard:
The Company adopted the new revenue recognition accounting
standard ASC 606, effective January 1,
2018, using the modified retrospective approach. Financial
results for reporting periods during 2018 are presented in
compliance with ASC 606. Historical financial results for the
reporting periods prior to 2018 are presented in conformity with
amounts previously disclosed under the prior revenue recognition
standard, ASC 605.
The adoption of ASC 606 primarily impacts the Company's
contracts where revenue is recognized using the percentage of
completion units of delivery method, which under ASC 606 can be
recognized over time because control is transferred continuously to
the customer over the performance period for contracts recognized
over time. As a result, the adoption of ASC 606 influenced part of
the revenue growth in 2018.
The effects of the new standard on the balance sheet as of
December 31, 2018, included the
following main adjustments: an increase of approximately
$189.7 million in trade receivables
and contract assets, a decrease of approximately $98.0 million in inventories, net, an increase of
approximately $62.7 million in
customer advances and other contract liabilities, an increase of
approximately $1.1 million in other
long-term liabilities and an increase of approximately $30.1 million in retained earnings.
__________
* see page 8
The following schedules quantify the impact of adopting the new
revenue standard on the statements of operations for the quarter
and the year ended December 31, 2018,
(US Dollars in millions):
|
Three Months Ended
December 31,
|
|
Previous
standard
|
|
Effect of new
standard
|
|
As
reported
|
Revenues
|
$
|
1,079.7
|
|
$
|
(1.9)
|
|
$
|
1,077.8
|
Cost of
revenues
|
841.5
|
|
1.5
|
|
843.0
|
Gross
profit
|
238.2
|
|
(3.4)
|
|
234.9
|
Operating
expenses:
|
|
|
|
|
|
Research and
development, net
|
73.0
|
|
—
|
|
73.0
|
Marketing and
selling, net
|
73.4
|
|
0.1
|
|
73.5
|
General and
administrative, net
|
49.8
|
|
—
|
|
49.8
|
Total operating
expenses
|
196.2
|
|
0.1
|
|
196.2
|
Operating
income
|
42.1
|
|
(3.5)
|
|
38.6
|
Finance expense,
net
|
(14.9)
|
|
—
|
|
(14.9)
|
Other income,
net
|
(6.4)
|
|
—
|
|
(6.4)
|
Income before taxes
on income
|
20.8
|
|
(3.5)
|
|
17.3
|
Taxes on
income
|
(3.3)
|
|
(0.6)
|
|
(3.9)
|
Income after taxes on
income
|
17.5
|
|
(4.1)
|
|
13.4
|
Equity in net
earnings of affiliated companies and partnerships
|
(11.4)
|
|
—
|
|
(11.4)
|
Net income
attributable to non-controlling interests
|
(0.9)
|
|
—
|
|
(0.9)
|
Net income
attributable to the consolidated company's shareholders
|
$
|
5.2
|
|
$
|
(4.1)
|
|
$
|
1.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended
December 31,
|
|
Previous
standard
|
|
Effect of new
standard
|
|
As
reported
|
Revenues
|
$
|
3,567.9
|
|
$
|
115.8
|
|
$
|
3,683.7
|
Cost of
revenues
|
2,633.2
|
|
74.3
|
|
2,707.5
|
Gross
profit
|
934.7
|
|
41.5
|
|
976.2
|
Operating
expenses:
|
|
|
|
|
|
Research and
development, net
|
287.4
|
|
—
|
|
287.4
|
Marketing and
selling, net
|
275.8
|
|
5.3
|
|
281.1
|
General and
administrative, net
|
160.3
|
|
—
|
|
160.3
|
Other operating
income, net
|
(45.4)
|
|
—
|
|
(45.4)
|
Total operating
expenses
|
678.1
|
|
5.3
|
|
683.4
|
Operating
income
|
256.6
|
|
36.2
|
|
292.8
|
Finance expense,
net
|
(44.1)
(11.4)
|
|
—
|
|
(44.1)
|
Other income,
net
|
|
—
|
|
(11.4)
|
Income before taxes
on income
|
201.1
|
|
36.2
|
|
237.3
|
Taxes on
income
|
(20.3)
|
|
(6.1)
|
|
(26.4)
|
Income after taxes on
income
|
180.8
|
|
30.1
|
|
210.9
|
Equity in net
earnings of affiliated companies and partnerships
|
(2.2)
|
|
—
|
|
(2.2)
|
Net income
attributable to non-controlling interests
|
(1.9)
|
|
—
|
|
(1.9)
|
Net income
attributable to the consolidated company's shareholders
|
$
|
176.6
|
|
$
|
30.1
|
|
$
|
206.7
|
* 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 the
Company's 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 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, the Company made certain
adjustments, as indicated in the table below.
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
ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
GAAP gross
profit
|
$
|
234.9
|
|
|
$
|
288.6
|
|
|
$
|
976.2
|
|
|
$
|
1,003.1
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
purchased intangible assets
|
5.2
|
|
|
5.2
|
|
|
19.1
|
|
|
22.2
|
|
Expenses related to
IMI acquisition
|
66.6
|
|
|
—
|
|
|
66.6
|
|
|
—
|
|
Non-GAAP
gross profit
|
$
|
306.7
|
|
|
$
|
293.8
|
|
|
$
|
1,061.9
|
|
|
$
|
1,025.3
|
|
Percent of
revenues
|
28.5
|
%
|
|
29.1
|
%
|
|
28.8
|
%
|
|
30.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP operating
income
|
$
|
38.6
|
|
|
$
|
108.7
|
|
|
$
|
292.8
|
|
|
$
|
324.4
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
purchased intangible assets
|
7.1
|
|
|
6.9
|
|
|
26.5
|
|
|
28.6
|
|
Expenses related to
IMI acquisition
|
66.8
|
|
|
—
|
|
|
66.8
|
|
|
—
|
|
Changes in
holdings
|
—
|
|
|
—
|
|
|
(45.4)
|
|
|
—
|
|
Non-GAAP operating
income
|
$
|
112.5
|
|
|
$
|
115.6
|
|
|
$
|
340.7
|
|
|
$
|
353.0
|
|
Percent of
revenues
|
10.4
|
%
|
|
11.5
|
%
|
|
9.2
|
%
|
|
10.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net income
attributable to Elbit Systems'
shareholders
|
$
|
1.1
|
|
|
$
|
69.4
|
|
|
$
|
206.7
|
|
|
$
|
239.1
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
purchased intangible assets
|
7.1
|
|
|
6.9
|
|
|
26.5
|
|
|
28.6
|
|
Expenses related to
IMI acquisition
|
66.8
|
|
|
—
|
|
|
66.8
|
|
|
—
|
|
Impairment of
investments
|
12.4
|
|
|
—
|
|
|
17.6
|
|
|
—
|
|
Changes in
holdings
|
—
|
|
|
—
|
|
|
(45.4)
|
|
|
—
|
|
Tax effect and other
tax items, net*
|
(5.6)
|
|
|
9.8
|
|
|
(8.1)
|
|
|
6.2
|
|
Non-GAAP net
income attributable to Elbit Systems'
shareholders
|
$
|
81.8
|
|
|
$
|
86.1
|
|
|
$
|
264.1
|
|
|
$
|
273.9
|
|
Percent of
revenues
|
7.6
|
%
|
|
8.5
|
%
|
|
7.2
|
%
|
|
8.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted net
EPS
|
$
|
0.03
|
|
|
$
|
1.62
|
|
|
$
|
4.84
|
|
|
$
|
5.59
|
|
Adjustments,
net
|
1.88
|
|
|
0.39
|
|
|
1.34
|
|
|
0.82
|
|
Non-GAAP diluted
net EPS
|
$
|
1.91
|
|
|
$
|
2.01
|
|
|
$
|
6.18
|
|
|
$
|
6.41
|
|
|
* Tax effect in 2017
includes $10.9 million related to the tax reform in the
U.S.
|
Recent Events:
On November 25, 2018, the
Company announced that it completed the acquisition of IMI Systems
Ltd. (IMI) for a purchase price of approximately $495 million (NIS 1.8
billion), with an additional payment of up to approximately
$27 million (NIS 100 million) contingent upon IMI meeting
agreed performance goals.
On December 3, 2018, the
Company announced that it was awarded a $112 million contract to supply a country in
Asia-Pacific with advanced
airborne intelligence systems. The contract will be performed over
a six-year period.
On January 3, 2019, the
Company announced that its subsidiary, Elbit Systems of
America, LLC, was awarded a contract by Raytheon Company to provide
the Two Color Laser System for the Multi-Spectral Targeting System.
The initial contract is in an amount not material to Elbit Systems
and will be performed during 2019.
On January 6, 2019, the
Company announced that it was awarded a contract by the
Directorate of Production and Procurement of the Israeli Ministry
of Defense (IMOD) valued at approximately $333 million (NIS 1.25
billion) for the supply of ammunition to the Israeli Defense
Forces. This five-year contract, the work on which will commence in
2026, will be a continuation of a multi-year contract entered into
with the IMOD.
On January 6, 2019, the
Company announced that following the closing of the
transaction for the acquisition of IMI by the Company, Midroog
Ltd., an Israeli rating agency (Midroog), issued its monitoring
report regarding the Series "A" Notes issued by the Company in 2010
and in 2012 (the Notes) and reaffirmed the Notes' "Aa1.il" (on a
local scale) rating, while changing the rating outlook to
negative.
On January 7, 2019, the
Company announced that it was awarded a $15
million contract from Energean Israel Ltd., a subsidiary of
Energean Oil and Gas plc, to supply a comprehensive solution for
the Floating Production Storage and Offloading platform of the
offshore Karish-Tanin gas fields. The contract will be performed
over an approximately two-year period, with warranty and logistic
support continuing for an additional 10 years.
On 29 January
2019, the Company announced that, following the
completion of the acquisition of IMI's shares on November 25, 2018, and a reorganization in
connection with the IMI acquisition, the Company expects to record
in the fourth quarter of 2018 expenses estimated in the range of
$65 - $75
million. These costs will be recorded mainly in the Cost of
Revenues line item in the Consolidated Statement of Income and will
be eliminated in the non-GAAP results due to the non-recurring
nature of the expense.
On February 4, 2019, the
Company announced that its subsidiary, Elbit Systems of
America, LLC, was awarded an initial $5
million contract from Support Systems Associates, Inc. to
provide an avionics refresh for the U.S. Air National Guard's
fixed-wing aircraft used for Intelligence, Surveillance and
Reconnaissance operations - the RC-26B. If all options are
exercised, the total contract would be valued at $22 million. The program will be performed by
2021 in San Antonio, Texas.
On March 5, 2019, the
Company announced that its subsidiary, Elbit Systems of America,
LLC, was awarded a five-year Indefinite Delivery/Indefinite
Quantity contract by the United States Army to provide a wide
field-of-view Common Helmet Mounted Display system. The contract,
which is in an amount that is not material to Elbit Systems, will
be performed in Fort Worth, Texas,
with deliveries starting within 15 months.
On March 5, 2019, the
Company announced that it was awarded a contract from Cantiere
Navale Vittoria SpA to supply combat suites and perform systems
integration for three new patrol vessels of the Hellenic Coast
Guard. The contract, which is in amount that is not material to
Elbit Systems, will be performed over a two-year period with
warranty and logistic support continuing for an additional
five-year period.
Dividend:
The Board of Directors declared a dividend of $0.44 per share for the fourth quarter of 2018.
The dividend's record date is April 1,
2019. The dividend will be paid from income generated as
Preferred Income (as defined under Israeli tax laws), on
April 15, 2019, net of taxes, at the
rate of 20%.
Conference Call:
The Company will be hosting a conference call today,
Tuesday, March 19, 2019, at
10:00 a.m. 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 Number: 1-888-668-9141
Canada Dial-in Number: 1-888-604-5839
UK Dial-in Number: 0-800-917-5108
ISRAEL Dial-in Number:
03-918-0610
INTERNATIONAL Dial-in Number: +972-3-918-0610
at: 10:00 am Eastern Time;
7:00 am Pacific Time; 2:00 pm UK Time; 4:00
pm 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 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 and Canada)
or +972-3-925-5925 (Israel and
International).
About Elbit Systems
Elbit Systems Ltd. is an international high technology company
engaged in a wide range of defense, homeland security and
commercial 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, advanced
electro-optics, electro-optic space systems, EW suites, signal
intelligence systems, data links, communications systems, radios,
cyber-based systems and munitions. The Company also
focuses on the upgrading of existing platforms, developing new
technologies for defense, homeland security and commercial
applications and providing a range of support services, including
training and simulation systems.
For additional information, visit: www.elbitsystems.com or
follow us on Twitter.
Attachments:
Consolidated balance sheets
Consolidated statements of income
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 1943, 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., its logo, brand, product, service and
process names appearing in this Press Release are the trademarks or
service marks of Elbit Systems Ltd. or its affiliated companies.
All other brand, product, service and process names appearing are
the trademarks of their respective holders. Reference to or use of
a product, service or process other than those of Elbit Systems
Ltd. does not imply recommendation, approval, affiliation or
sponsorship of that product, service, or process by Elbit Systems
Ltd. Nothing contained herein shall be construed as conferring by
implication, estoppel or otherwise any license or right under any
patent, copyright, trademark or other intellectual property right
of Elbit Systems Ltd. or any third party, except as expressly
granted herein.
(FINANCIAL TABLES TO FOLLOW)
ELBIT SYSTEMS
LTD.
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands of US
Dollar)
|
|
As of December
31,
|
|
2018
|
|
2017
|
|
Audited
|
Assets
|
|
|
|
Cash and cash
equivalents
|
$
|
208,479
|
|
|
$
|
156,074
|
|
Short-term bank
deposits and restricted deposits
|
16,447
|
|
|
3,126
|
|
Available-for-sale
marketable securities
|
—
|
|
|
13,371
|
|
Trade and unbilled
receivables and contract assets, net
|
1,712,915
|
|
|
1,406,563
|
|
Other receivables and
prepaid expenses
|
199,148
|
|
|
128,946
|
|
Inventories,
net
|
1,141,996
|
|
|
902,954
|
|
Total current
assets
|
3,278,985
|
|
|
2,611,034
|
|
|
|
|
|
Investments in
affiliated companies, partnerships and other companies
|
196,180
|
|
|
172,338
|
|
Long-term trade and
unbilled receivables and contract assets
|
297,145
|
|
|
295,396
|
|
Long-term bank
deposits and other receivables
|
42,962
|
|
|
38,082
|
|
Premises evacuation
grants
|
365,436
|
|
|
—
|
|
Deferred income
taxes, net
|
42,804
|
|
|
51,358
|
|
Severance pay
fund
|
278,732
|
|
|
298,590
|
|
|
1,223,259
|
|
|
855,764
|
|
|
|
|
|
Property, plant and
equipment, net
|
686,620
|
|
|
495,716
|
|
Goodwill and other
intangible assets, net
|
1,261,921
|
|
|
752,403
|
|
Total
assets
|
$
|
6,450,785
|
|
|
$
|
4,714,917
|
|
|
|
|
|
Liabilities and
Equity
|
|
|
|
Short-term bank
credit and loans
|
$
|
208,821
|
|
|
$
|
133,750
|
|
Current maturities of
long-term loans and Series A Notes
|
62,546
|
|
|
67,556
|
|
Trade
payables
|
776,100
|
|
|
633,689
|
|
Other payables and
accrued expenses
|
1,081,992
|
|
|
835,394
|
|
Contract liabilities
(customer advances)
|
780,994
|
|
|
418,560
|
|
|
2,910,453
|
|
|
2,088,949
|
|
|
|
|
|
Long-term loans, net
of current maturities
|
467,649
|
|
|
119,514
|
|
Series A Notes, net
of current maturities
|
56,303
|
|
|
124,865
|
|
Employee benefit
liabilities
|
736,798
|
|
|
413,117
|
|
Deferred income taxes
and tax liabilities, net
|
78,677
|
|
|
68,159
|
|
Contract liabilities
(customer advances)
|
175,890
|
|
|
133,649
|
|
Other long-term
liabilities
|
170,607
|
|
|
48,692
|
|
|
1,685,924
|
|
|
907,996
|
|
|
|
|
|
Elbit Systems Ltd.'s
equity
|
1,832,453
|
|
|
1,708,310
|
|
Non-controlling
interests
|
21,955
|
|
|
9,662
|
|
Total
equity
|
1,854,408
|
|
|
1,717,972
|
|
Total liabilities and
equity
|
$
|
6,450,785
|
|
|
$
|
4,714,917
|
|
ELBIT SYSTEMS
LTD.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(In thousands of US
Dollars, except for share and per share amounts)
|
|
|
|
|
|
Year
Ended
|
|
Three Months
Ended
|
|
December
31,
|
|
December
31,
|
|
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Audited
|
|
Unaudited
|
Revenues
|
$
|
3,683,684
|
|
$
|
3,377,825
|
|
$
|
1,077,840
|
|
$
|
1,009,604
|
Cost of
revenues
|
2,707,505
|
|
2,374,775
|
|
842,988
|
|
721,013
|
Gross
profit
|
976,179
|
|
1,003,050
|
|
234,852
|
|
288,591
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Research and
development, net
|
287,352
|
|
265,060
|
|
72,986
|
|
72,462
|
Marketing and
selling, net
|
281,014
|
|
280,246
|
|
73,455
|
|
81,244
|
General and
administrative, net
|
160,348
|
|
133,314
|
|
49,767
|
|
26,157
|
Other operating
income, net
|
(45,367)
|
|
—
|
|
—
|
|
—
|
Total operating
expenses
|
683,347
|
|
678,620
|
|
196,208
|
|
179,863
|
|
|
|
|
|
|
|
|
Operating
income
|
292,832
|
|
324,430
|
|
38,644
|
|
108,728
|
|
|
|
|
|
|
|
|
Financial expenses,
net
|
(44,061)
|
|
(34,502)
|
|
(14,919)
|
|
(9,693)
|
Other expense,
net
|
(11,449)
|
|
(5,082)
|
|
(6,386)
|
|
(5,119)
|
Income before income
taxes
|
237,322
|
|
284,846
|
|
17,339
|
|
93,916
|
Taxes on
income
|
(26,445)
|
|
(55,585)
|
|
(3,902)
|
|
(25,434)
|
|
210,877
|
|
229,261
|
|
13,437
|
|
68,482
|
Equity in net
earnings (losses) of affiliated companies and
partnerships
|
(2,222)
|
|
11,361
|
|
(11,362)
|
|
1,443
|
Net
income
|
$
|
208,655
|
|
$
|
240,622
|
|
$
|
2,075
|
|
$
|
69,925
|
|
|
|
|
|
|
|
|
Less: net income
attributable to non-controlling interests
|
(1,917)
|
|
(1,513)
|
|
(948)
|
|
(517)
|
Net income
attributable to Elbit Systems Ltd.'s shareholders
|
$
|
206,738
|
|
$
|
239,109
|
|
$
|
1,127
|
|
$
|
69,408
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to Elbit Systems Ltd.'s shareholders:
|
|
|
|
|
|
|
Basic net earnings
per share
|
$
|
4.84
|
|
$
|
5.59
|
|
$
|
0.03
|
|
$
|
1.62
|
Diluted net earnings
per share
|
$
|
4.84
|
|
$
|
5.59
|
|
$
|
0.03
|
|
$
|
1.62
|
|
|
|
|
|
|
|
|
Weighted average
number of shares used in computation of:
|
|
|
|
|
|
|
|
Basic earnings per
share (in thousands)
|
42,753
|
|
42,750
|
|
42,753
|
|
42,751
|
Diluted earnings per
share (in thousands)
|
42,753
|
|
42,753
|
|
42,753
|
|
42,753
|
ELBIT SYSTEMS
LTD.
|
CONSOLIDATED
STATEMENTS OF CASH FLOW
|
(In thousands of US
Dollars)
|
|
Year Ended
December 31,
|
|
2018
|
|
2017
|
|
Audited
|
CASH FLOWS FROM
OPERATING ACTIVITIES
|
|
|
|
Net income
|
$
|
208,655
|
|
|
$
|
240,622
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
118,205
|
|
|
114,017
|
|
Write-off
impairment
|
13,334
|
|
|
—
|
|
Stock-based
compensation
|
1,387
|
|
|
13
|
|
Amortization of Series
A Notes discount (premium) and related issuance costs,
net
|
(92)
|
|
|
(92)
|
|
Deferred income taxes
and reserve, net
|
13,724
|
|
|
28,774
|
|
Loss (gain) on sale of
property, plant and equipment
|
2,080
|
|
|
(2,440)
|
|
Loss (gain) on sale of
investment and deconsolidation of subsidiary
|
(41,822)
|
|
|
1,358
|
|
Equity in net
(earnings) losses of affiliated companies and partnerships, net of
dividend
received(*)
|
17,929
|
|
|
(1,987)
|
|
Changes in operating
assets and liabilities, net of amounts acquired:
|
|
|
|
Increase in short and
long-term trade and unbilled receivables and prepaid
expenses
|
(89,099)
|
|
|
(315,236)
|
|
Increase in
inventories, net
|
(117,221)
|
|
|
(59,699)
|
|
Increase
(decrease) in trade payables and other payables and accrued
expenses
|
(89,956)
|
|
|
63,273
|
|
Severance, pension and
termination indemnities, net
|
(31,363)
|
|
|
2,003
|
|
Increase in contract
liabilities (customer advances)
|
185,898
|
|
|
30,287
|
|
Net cash provided by
operating activities
|
191,659
|
|
|
100,893
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES
|
|
|
|
Purchase of property,
plant and equipment and other assets
|
(102,301)
|
|
|
(107,880)
|
|
Acquisition of
subsidiaries and business operations
|
(504,447)
|
|
|
(25,440)
|
|
Investments in
affiliated companies and other companies
|
(7,538)
|
|
|
(4,964)
|
|
Deconsolidation of
subsidiary
|
(2,873)
|
|
|
—
|
|
Proceeds from sale of
property, plant and equipment
|
4,388
|
|
|
6,270
|
|
Proceeds from sale of
investments
|
—
|
|
|
12,067
|
|
Investment in long-term
deposits
|
(183)
|
|
|
(1,396)
|
|
Proceeds from sale of
long-term deposits
|
82
|
|
|
176
|
|
Investment in
short-term deposits and available-for-sale marketable
securities
|
(10,361)
|
|
|
(40,893)
|
|
Proceeds from sale of
short-term deposits and available-for-sale marketable
securities
|
30,363
|
|
|
46,491
|
|
Net cash used in
investing activities
|
(592,870)
|
|
|
(115,569)
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES
|
|
|
|
Proceeds from exercise
of options
|
48
|
|
|
119
|
|
Repayment of long-term
loans
|
(775)
|
|
|
(167,425)
|
|
Proceeds from long-term
loans
|
342,528
|
|
|
118,623
|
|
Repayment of Series A
Notes
|
(55,532)
|
|
|
(55,532)
|
|
Dividends
paid
|
(75,305)
|
|
|
(75,300)
|
|
Change in short-term
bank credit and loans, net
|
242,652
|
|
|
127,455
|
|
Net cash used in
financing activities
|
453,616
|
|
|
(52,060)
|
|
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
52,405
|
|
|
(66,736)
|
|
CASH AND CASH
EQUIVALENTS AT THE BEGINNING OF THE YEAR
|
$
|
156,074
|
|
|
$
|
222,810
|
|
CASH AND CASH
EQUIVALENTS AT THE END OF THE YEAR
|
$
|
208,479
|
|
|
$
|
156,074
|
|
|
|
|
|
* Dividend received
from affiliated companies and partnerships
|
$
|
15,707
|
|
|
$
|
9,374
|
|
ELBIT SYSTEMS
LTD.
|
DISTRIBUTION OF
REVENUES
|
|
Consolidated
Revenues by Areas of Operation:
|
|
Year
Ended
|
|
Three Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
$
millions
|
|
%
|
|
$
millions
|
|
%
|
|
$
millions
|
|
%
|
|
$
millions
|
|
%
|
Airborne
systems
|
$
|
1,470.1
|
|
|
39.9
|
|
|
$
|
1,272.1
|
|
|
37.7
|
|
|
$
|
436.7
|
|
|
40.5
|
|
|
$
|
374.9
|
|
|
37.1
|
|
C4ISR
systems
|
1,130.1
|
|
|
30.7
|
|
|
1,144.8
|
|
|
33.9
|
|
|
275.0
|
|
|
25.5
|
|
|
330.6
|
|
|
32.7
|
|
Land
systems
|
649.1
|
|
|
17.6
|
|
|
503.9
|
|
|
14.9
|
|
|
239.4
|
|
|
22.2
|
|
|
166.7
|
|
|
16.5
|
|
Electro-optic
systems
|
333.9
|
|
|
9.1
|
|
|
341.2
|
|
|
10.1
|
|
|
102.4
|
|
|
9.5
|
|
|
88.8
|
|
|
8.8
|
|
Other (mainly
non-defense engineering and production services)
|
100.5
|
|
|
2.7
|
|
|
115.9
|
|
|
3.4
|
|
|
24.3
|
|
|
2.3
|
|
|
48.6
|
|
|
4.9
|
|
Total
|
$
|
3,683.7
|
|
|
100.0
|
|
|
$
|
3,377.8
|
|
|
100.0
|
|
|
$
|
1,077.8
|
|
|
100.0
|
|
|
$
|
1,009.6
|
|
|
100.0
|
|
Consolidated
Revenues by Geographical Regions:
|
|
|
Year
Ended
|
|
Three Months
Ended
|
|
December
31,
|
|
December
31,
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
$
millions
|
|
%
|
|
$
millions
|
|
%
|
|
$
millions
|
|
%
|
|
$
millions
|
|
%
|
Israel
|
$
|
740.2
|
|
|
20.1
|
|
|
$
|
741.9
|
|
|
22.0
|
|
|
$
|
227.5
|
|
|
21.1
|
|
|
$
|
232.5
|
|
|
23.0
|
|
North
America
|
979.2
|
|
|
26.6
|
|
|
827.6
|
|
|
24.5
|
|
|
287.8
|
|
|
26.7
|
|
|
236.2
|
|
|
23.4
|
|
Europe
|
737.1
|
|
|
20.0
|
|
|
764.0
|
|
|
22.6
|
|
|
249.8
|
|
|
23.2
|
|
|
235.5
|
|
|
23.3
|
|
Asia-Pacific
|
791.8
|
|
|
21.5
|
|
|
670.5
|
|
|
19.8
|
|
|
203.6
|
|
|
18.9
|
|
|
160.0
|
|
|
15.8
|
|
Latin
America
|
192.4
|
|
|
5.2
|
|
|
193.4
|
|
|
5.7
|
|
|
41.0
|
|
|
3.8
|
|
|
44.1
|
|
|
4.4
|
|
Other
countries
|
243.0
|
|
|
6.6
|
|
|
180.4
|
|
|
5.4
|
|
|
68.1
|
|
|
6.3
|
|
|
101.3
|
|
|
10.1
|
|
Total
|
$
|
3,683.7
|
|
|
100.0
|
|
|
$
|
3,377.8
|
|
|
100.0
|
|
|
$
|
1,077.8
|
|
|
100.0
|
|
|
$
|
1,009.6
|
|
|
100.0
|
|
Company
Contact:
Joseph Gaspar,
Executive VP & CFO
Tel:
+972-772946663
j.gaspar@elbitsystems.com
David Vaaknin,
VP, Head of Corporate Communications
Tel:
+972-772946691
david.vaaknin@elbitsystems.com
Elbit Systems
Ltd.
|
IR
Contact:
Ehud
Helft
Kenny
Green
GK Investor
Relations
Tel:
1-646-201-9246
elbitsystems@gkir.com
|
View original
content:http://www.prnewswire.com/news-releases/elbit-systems-reports-fourth-quarter-and-full-year-2018-results-300814608.html
SOURCE Elbit Systems Ltd.