HAIFA, Israel,
August 12 /PRNewswire-FirstCall/ -- Elbit Systems Ltd.
(the "Company") (NASDAQ: ESLT, TASE: 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: j.gaspar@elbitsystems.com
dalia.rosen@elbitsystems.com
IR Contact:
Ehud Helft / Kenny Green
GK Investor Relations
Tel: +1-646-201-9246
E-mail: info@gkir.com
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