Elbit Systems Reports First Quarter 2010 Results
Backlog of orders at $5.25 billion;Revenues at $618.2 million; Net income at $49.8 million;Diluted net earnings per share increased by 12.7% to $1.15
HAIFA, Israel, May 13, 2010 /PRNewswire-FirstCall/ -- Elbit Systems Ltd. (the "Company") (NASDAQ: ESLT, TASE: ESLT), the international defense company, today reported its consolidated financial results for the first quarter ended March 31, 2010.
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Revenues decreased by 5.9% to $618.2 million in the first quarter of 2010, as compared to $656.9 million in the first quarter of 2009. The decrease in revenues during the first quarter of 2010 was mainly in the land vehicle systems and C4I systems area of operations due to delays in receipt of orders and reduction in short-term projects, compared with the first quarter of 2009.
Gross profit decreased by 11.4% to $184.5 million (29.9% of revenues) for the first quarter of 2010, as compared with gross profit of $208.3 million (31.7% of revenues) in the first quarter of 2009, which was mainly impacted by the strong U.S. dollar vs. the Israeli Shekel and some short turn-around revenues in the first quarter of 2009.
Net research and development ("R&D") expenses were $52.7 million (8.5% of revenues) in the first quarter of 2010, as compared to $45.9 million (7.0% of revenues) in the first quarter of 2009. The higher level of R&D expenses in the first quarter of 2010 reflected increased efforts on development and adaptations of our products to market requirements.
Marketing and selling expenses were $54.6 million (8.8% of revenues) in the first quarter of 2010, as compared to $56.9 million (8.7% of revenues) in the first quarter of 2009.
General and administrative ("G&A") expenses were $28.1 million (4.5% of revenues) in the first quarter of 2010, as compared to $28.9 million (4.4% of revenues) in the first quarter of 2009.
Net financial expenses were $3.1 million in the first quarter of 2010, as compared to $19 million in the first quarter of 2009. The higher level of financial expenses in the first quarter of 2009 was mainly a result of hedging activities related to the strong U.S. dollar vs. the Israeli Shekel.
Other income of $12.8 million was recorded by the Company in the first quarter of 2010, due to the final payment from the sale of Mediguide Inc. This is compared to expenses of $0.1 million in the first quarter of 2009.
Taxes on income were $10.3 million (effective tax rate of 17.5%) in the first quarter of 2010, compared to taxes on income of $12.2 million (effective tax rate of 21.3%) in the first quarter of 2009. The change in the effective tax rate was attributable mainly to the mix of the tax rates in the various tax jurisdictions in which the Company's entities generate taxable income.
Equity in net earnings of affiliated companies and partnership was $3.9 million (0.6% of revenues) in the first quarter of 2010, compared to $4.8 million (0.7% of revenues) in the first quarter of 2009.
Net income attributable to non-controlling interests was $2.8 million in the first quarter of 2010, as compared with $6.8 million in the first quarter of 2009. 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 Ltd.'s shares, making Kinetics a wholly-owned subsidiary of Elbit Systems.
Net income attributable to the Company's ordinary shareholders increased in the first quarter of 2010 by 15.1% to $49.8 million (8.1% of revenues), as compared with $43.3 million (6.6% of revenues) in the first quarter of 2009.
Diluted net earnings per share attributable to the Company's ordinary shareholders were $1.15 for the first quarter of 2010, as compared with $1.02 for the first quarter of 2009, an increase of 12.7%. Earnings per share net of the income recorded from the sale of Mediguide Inc. were $0.93.
The Company's backlog of orders totaled $5,247 million as of March 31, 2010, as compared with $5,044 million as of December 31, 2009. Approximately 73% of the backlog relates to orders outside of Israel. Approximately 68% of the Company's backlog as of March 31, 2010, is scheduled to be performed during the upcoming three quarters of 2010 and during 2011.
Operating cash flow was $64 million during the first quarter of 2010, as compared to $5.4 million in the first quarter of 2009.
Recent Events:
On March 15, 2010, the Company announced that it was awarded a contract from the Department of Defence of the Commonwealth of Australia in the amount of approximately $298 million U.S. dollars for the supply, integration, installation and support of a Battle Group and Below Command, Control and Communications (BGC3) system for the Australian Army's Land 75/125 program. The BGC3 comprises a Battle Management System (BMS) for soldiers, Vehicle Mounted Commanders and Headquarters/Command Post Staff. This project, to be performed over the next three years, will enable the Australian Army to achieve a major portion of its defence network centric warfare milestone of a networked brigade with cutting edge technology in battle management and communications systems.
On March 24, 2010, the Company announced that its subsidiary, Elisra Electronic Systems Ltd., was awarded contracts to supply airborne and ground electronic warfare (EW) systems, for a customer in Asia, at an aggregate value of approximately $147 million. The systems will be delivered over the next three years.
On April 15, 2010, the Company announced that UAS Tactical Systems Ltd. (U-TacS), its Leicester-based joint company with Thales UK, was awarded a $70 million contract by Thales UK to provide Contractor Logistics Support (CLS) services for the Watchkeeper project to be undertaken over the next three years.
On May 2, 2010, the Company announced that it was awarded an Unmanned Aircraft System (UAS) contract from the Israeli Ministry of Defense, valued at approximately $50 million. Under the contract, the Company will supply the Israeli Defense Forces (IDF) with its new Hermes(R) 900 unmanned systems along with additional Hermes(R) 450 unmanned systems to expand the IDF's current Hermes(R) 450 fleet. In addition, the Company will supply the IDF with an enhancement of its existing UAS intelligence capabilities. The contract will be carried out over a three-year period.
On May 10, 2010, the Company announced, further to its announcements on January 25, 2010, November 12, 2008 and October 28, 2008, that it completed the acquisition of the balance of shares in Azimuth Technologies Ltd. ("Azimuth") pursuant to the merger agreement signed by Azimuth and the Company's wholly owned subsidiary, Elbit Security Systems Ltd., in January 2010. In November 2008, the Company purchased 19% of Azimuth's shares. The purchase price for the balance of Azimuth's shares following certain adjustments made in accordance with the merger agreement was approximately $41.5 million. Under the terms of the merger agreement an amount of approximately $1.6 million of the purchase price will be held in trust, to be released to Azimuth's shareholders subject to the terms of the merger agreement.
Management Comment:
"We are encouraged by our renewed growth in backlog and although we experienced somewhat slower revenues in the first quarter of 2010, we did see overall good performance," commented Joseph Ackerman, President and CEO of Elbit Systems. "We recently were awarded several important contracts. These include the BGC3 system for the Australian army, orders that Elisra received for EW systems from an Asian customer, an order received by U-tacS, our JV with Thales in the U.K., and an order for our UAS from the Israeli Ministry of Defense."
Mr. Ackerman continued, "Elbit Systems remains well positioned strategically, operationally, and financially. We have a very broad product range; our operations and customer base are becoming even more global and we are well-known as one of the leaders in defense electronics, a critical niche of the defense industry."
Dividend:
The Board of Directors declared a dividend of $0.36 per share for the first quarter of 2010. The dividend's record date is May 25, 2010, and the dividend will be paid on June 7, 2010, net of taxes and levies, at the rate of 16.03%.
Conference Call:
The Company will also be hosting a conference call today, Thursday, May 13, 2010 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 Numbers: 1 888 407 2553
UK Dial-in Number: 0 800 917 9141
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; 3:00 pm UK
Time; 5:00 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) 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
2010 2009
Unaudited Audited
Assets
Current assets:
Cash and cash equivalents $ 167,451 $ 140,709
Short-term bank deposits 133,646 115,924
Available for sale marketable securities 18,198 23,639
Trade receivables, net 562,068 659,524
Other receivables and pre-paid expenses 123,278 115,856
Inventories, net of customer advances 575,124 569,848
Total current assets 1,579,765 1,625,500
Investment in affiliated companies,
partnership and other companies 90,955 88,759
Available for sale marketable securities 16,940 12,941
Long-term bank deposits and other receivables 56,292 36,338
Deferred income taxes, net 11,906 7,992
Severance pay fund 275,168 274,136
451,261 420,166
Property, plant and equipment, net 410,243 404,675
Goodwill and other intangible assets, net 591,107 603,336
Total assets $ 3,032,376 $ 3,053,677
Liabilities and Shareholders' Equity
Current maturities of long-term loans $ 2,558 $ 2,663
Trade payables 286,603 299,238
Other payables and accrued expenses 556,498 552,806
Customer advances in excess of costs
incurred on contracts in progress 337,104 367,137
Total current liabilities 1,182,763 1,221,844
Long-term loans, net of current maturities 376,148 386,534
Accrued termination liability 354,448 351,278
Deferred income taxes and tax liabilities, net 57,412 59,602
Customer advances in excess of costs incurred
on contracts in progress 125,712 142,566
Other long-term liabilities 35,435 34,659
949,155 974,639
Elbit Systems Ltd.'s shareholders' equity 874,671 832,868
Non-controlling interests 25,787 24,326
Total shareholders' equity 900,458 857,194
Total liabilities and shareholders' equity $ 3,032,376 $ 3,053,677
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
2010 2009 2009
Unaudited Audited
Revenues $ 618,201 $ 656,932 $ 2,832,437
Cost of revenues 433,656 448,664 1,982,954
Gross profit 184,545 208,268 849,483
Operating expenses:
Research and development, net 52,665 45,880 216,752
Marketing and selling 54,595 56,916 250,963
General and administrative 28,085 28,888 119,311
Total operating expenses 135,345 131,684 587,026
Operating income 49,200 76,584 262,457
Financial expenses, net (3,135) (19,039) (15,585)
Other income (expenses), net 12,981 (95) 458
Income before taxes on income 59,046 57,450 247,330
Taxes on income (10,327) (12,212) (38,109)
48,719 45,238 209,221
Equity in net earnings of affiliated 3,912 4,776 19,292
companies and partnership
Consolidated net income $ 52,631 $ 50,014 $ 228,513
Less: net income attributable to (2,849) (6,760) (13,566)
non-controlling interests
Net income attributable to Elbit $ 49,782 $ 43,254 $ 214,947
Systems Ltd.
Earnings per share attributable to
Elbit Systems Ltd.'s
ordinary shareholders:
Basic net earnings per share $ 1.17 $ 1.03 $ 5.08
Diluted net earnings per share $ 1.15 $ 1.02 $ 5.00
Weighted average number of shares
used in computation of basic
earnings per share 42,577 42,097 42,305
Weighted average number of shares
used in computation of diluted
earnings per share 43,286 42,534 42,983
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of US Dollars)
Three Months Ended Year
Ended
March 31, December
31,
2010 2009 2009
Unaudited Audited
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 52,631 $ 50,014 $ 228,513
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 29,683 30,031 123,473
Write-off impairment - - 3,017
Stock based compensation 1,335 1,251 5,134
Deferred income taxes and reserve,
net (9,371) (2,319) 7,606
Severance, pension and termination
indemnities, net 1,735 (7,749) (16,773)
Gain on sale of property, plant and
equipment (806) (332) (723)
Gain on sale of investment (12,977) - (2,734)
Equity in net earnings of affiliated
companies and partnership, net of
dividend received (*) (811) (1,188) (1,824)
Change in operating assets and
liabilities:
Decrease (increase) in short and
long-term trade receivables, and
prepaid expenses 72,990 8,796 (136,224)
Decrease (increase) in inventories,
net (5,276) (16,701) 75,431
Increase (decrease) in trade
payables, other payables and accrued
expenses (18,266) (14,766) 20,223
Decrease in advances received from
Customers (46,887) (41,588) (95,397)
Net cash provided by operating
Activities 63,980 5,449 209,722
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and
equipment (26,151) (23,011) (107,893)
Acquisition of subsidiaries and
business operations - (13,783) (48,234)
Investments in affiliated companies
and other companies - (218) (19,415)
Proceeds from sale of property,
plant and equipment 2,355 2,868 9,055
Proceeds from sale of investments 12,751 - 33,026
Investment in long-term deposits, net 4,063 (11,552) (11,010)
Investment in short-term deposits
and available for sale securities,
net (18,920) (54,137) (52,832)
Net cash used in investing
Activities (25,902) (99,833) (197,303)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options 1,912 1,107 9,871
Purchase of non-controlling
interests - - (110,250)
Repayment of long-term bank loans (46,585) (17,499) (148,652)
Proceeds from long-term bank loans 34,990 45,000 256,354
Dividends paid (1,653) (823) (76,172)
Change in short-term bank credit
and loans, net - (3,684) (7,531)
Net cash provided by (used in)
financing activities (11,336) 24,101 (76,380)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 26,742 (70,283) (63,961)
CASH AND CASH EQUIVALENTS AT THE
BEGINNING OF THE PERIOD 140,709 204,670 204,670
CASH AND CASH EQUIVALENTS AT THE
END OF THE PERIOD $ 167,451 $ 134,387 $ 140,709
* Dividend received $ 3,101 $ 5,964 $ 17,468
ELBIT SYSTEMS LTD.
DISTRIBUTION OF REVENUES
Consolidated revenue by areas of operation:
Three Months Ended Year Ended
March 31 December 31
2010 2009 2009
$ millions % $ millions % $ millions %
Airborne systems 179.8 29.1 172.9 26.3 716.9 25.3
Land systems 114.7 18.6 141.8 21.6 520.0 18.4
C4ISR systems 206.5 33.4 230.1 35.0 1,058.7 37.4
Electro-optics 81.7 13.2 82.7 12.6 406.2 14.3
Other (mainly
non-defense engineering
and production
services) 35.5 5.7 29.4 4.5 130.6 4.6
Total 618.2 100.0 656.9 100.0 2,832.4 100.0
Consolidated revenues by geographical regions:
Three Months Ended Year Ended
March 31 December 31
2010 2009 2009
$ millions % $ millions % $ millions %
Israel 142.8 23.1 124.5 18.9 627.3 22.2
United States 187.7 30.4 210.7 32.1 813.4 28.7
Europe 156.2 25.2 162.2 24.7 728.2 25.7
Other countries 131.5 21.3 159.5 24.3 663.5 23.4
Total 618.2 100.0 656.9 100.0 2,832.4 100.0
Company Contact:
Joseph Gaspar, Executive VP & CFO
Dalia Rosen, VP & Head of Corporate Communications
Elbit Systems Ltd.
Tel: +972-4-831-6663
Fax: +972-4-831-6944
E-mail: [email protected]
[email protected]
IR Contact:
Ehud Helft / Kenny Green
CCG Investor Relations
Tel: +1-646-201-9246
E-mail: [email protected]
SOURCE Elbit Systems Ltd
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