Elbit Systems Reports Third Quarter 2010 Results
Backlog of Orders Increased to $5.38 Billion; Revenues at $649.9 Million; Net Income at $45.3 Million; Diluted Net Earnings Per Share at $1.05
HAIFA, Israel, November 16, 2010 /PRNewswire-FirstCall/ -- Elbit Systems Ltd. (the "Company") (NASDAQ and TASE: ESLT), the international defense electronics company, today reported its consolidated financial results for the third quarter ended September 30, 2010.
(Logo: http://www.newscom.com/cgi-bin/prnh/20080408/300441 )
Revenues in the third quarter of 2010 were $649.9 million, as compared to $732.5 million in the third quarter of 2009. The decrease in revenues during the third quarter of 2010, compared with that of the third quarter last year, was mainly in the electro-optics and armored vehicle systems areas of operations, primarily in Europe.
Gross profit amounted to $197.9 million (30.5% of revenues) in the third quarter of 2010, as compared to $217.3 million (29.7% of revenues) in the third quarter of 2009. The decrease in the amount of gross profit from that of the corresponding quarter last year primarily resulted from the reduction in revenues. The improvement in margins was mainly a result of mix of the programs sold in the quarter and improvements in operations.
Research and development expenses, net were $56.1 million (8.6% of revenues) in the third quarter of 2010, as compared to $56.0 million (7.6% of revenues) in the third quarter of 2009.
Marketing and selling expenses were $59.1 million (9.1% of revenues) in the third quarter of 2010, as compared to $67.1 million (9.2% of revenues) in the third quarter of 2009.
General and administrative expenses were $30.2 million (4.7% of revenues) in the third quarter of 2010, as compared to $28.5 million (3.9% of revenues) in the third quarter of 2009.
Financial expenses, net were $5.5 million in the third quarter of 2010, as compared to net financial expenses of $0.6 million in the third quarter of 2009, which were relatively low due to currency hedging related gains.
Taxes on income were $4.8 million (effective tax rate of 10.1%) in the third quarter of 2010, as compared to taxes on income of $11.4 million (effective tax rate of 17.6%) in the third quarter of 2009. 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.
Equity in net earnings of affiliated companies and partnerships was $3.9 million (0.6% of revenues) in the third quarter of 2010, as compared to $6.2 million (0.8% of revenues) in the third quarter of 2009.
Net income attributable to non-controlling interests was $1.1 million in the third quarter of 2010, as compared to $1.4 million in the third quarter of 2009.
Net income attributable to the Company's ordinary shareholders in the third quarter of 2010 amounted to $45.3 million (7.0% of revenues), as compared to $58.3 million (8.0% of revenues) for the third quarter of 2009.
Diluted net earnings per share attributable to the Company's ordinary shareholders were $1.05 for the third quarter of 2010, as compared with $1.35 for the third quarter of 2009.
The Company's backlog of orders increased to $5,381 million as of September 30, 2010, as compared with $5,044 million as of December 31, 2009. Approximately 72% of the backlog relates to orders outside of Israel. Approximately 52% of the Company's backlog as of September 30, 2010, is scheduled to be performed during the last quarter of 2010 and in 2011.
Operating cash flow was $73.6 million in the first nine months of 2010, as compared to $127.0 million in the first nine months of 2009.
Recent Events:
On October 3, 2010, the Company announced that it was awarded an approximately $56 million tank upgrade contract from a customer in Asia. Under the contract, the tank upgrade project will include the installation of advanced battle management systems, as well as cutting edge observation and surveillance systems. The project will be completed within two years.
On October 13, 2010, the Company announced that its wholly-owned U.S. subsidiary, Elbit Systems of America, LLC ("ESA"), was awarded a five-year, $68 million Indefinite Delivery/Indefinite Quantity ("ID/IQ") contract from the U.S. Army Contracting Command in Huntsville, Alabama to supply the U.S. Army, Navy, Marine Corps and Coast Guard with AN/AVS-7 Head-Up Display components including the Company's latest Flat Panel Day and Night Head-Up Display units. Initial delivery orders totaling $23 million were awarded under the ID/IQ contract. This is a follow-on contract to a $75M ID/IQ contract awarded in September 2005.
On October 17, 2010, the Company announced, further to its announcements of June 15, 2009, September 14, 2009 and September 2, 2010, that it completed the acquisition of all the shares of Soltam Systems Ltd. ("Soltam"), Saymar Ltd. ("Saymar") and ITL Optronics Ltd. ("ITL") that were held by Mikal Ltd. ("Mikal") and its subsidiaries. With the completion of the acquisition, the Company now holds a 100% interest in Soltam and Saymar, and an 87.85% interest in ITL. The balance of ITL's shares, which are traded on the Tel Aviv Stock Exchange, is held by the public. An amount of approximately $26 million of the purchase price payable by the Company for the acquisition was placed in escrow with respect to various matters pursuant to the purchase agreement.
Simultaneously to the completion of the acquisition, the Company sold its holdings in Mikal (approximately 19%) to the other Mikal's shareholders.
On October 24, 2010, the Company announced that its UK Company with Thales UK - UAS Tactical Systems Ltd. ("U-TacS"), was awarded by Thales UK a follow-on Urgent Operating Capability ("UOR") contract worth approximately $70 million to provide an Intelligence, Surveillance, Target Acquisition and Reconnaissance support capability for the UK Armed Forces. The contract will be performed over the next one and a half years. As was the case with the previous U-TacS UOR contracts, awarded in 2007 and 2009, this contract also includes the provision and support of Hermes(R) 450 UAS, as well as training for UK Ministry of Defence staff in the use and maintenance of the system, and the provision of contractor logistic support and program management services. This work will be managed by U-TacS located in Leicester, UK.
On October 26, 2010, the Company announced that its wholly-owned U.S. subsidiary, ESA, was awarded a $45.5 million ID/IQ contract from the Naval Surface Warfare Center, Crane Division, Crane, Indiana for the supply of the Night Targeting System Upgrade (NTSU) and associated line items for AH - 1W Cobra helicopters. Work will be performed in Merrimack, New Hampshire and is expected to be completed over the next five years.
Management Comment:
The President and CEO of Elbit Systems, Joseph Ackerman, commented: "2010 has been a challenging year, reflecting the influence of the changing financial climate on our end-customers. Throughout this year, we have invested in our longer-term growth strategy through mergers and acquisitions, which provide us access to new markets and allow us to sell increasingly integrated systems. We have recently completed the acquisition of Soltam, Saymar and ITL, adding to our capabilities in artillery platforms and electro-optics. We will continue to look globally for similar opportunities, in strategic target markets such as the U.S. and others."
Ackerman added, "Over the past challenging months, we have focused our efforts and have successfully maintained and even improved our gross margins, and have also resumed our backlog growth. We believe that these efforts and investments will support renewed growth in future years."
Dividend:
The Board of Directors declared a dividend of $0.36 per share for the third quarter of 2010. The dividend's record date is November 30, 2010, and the dividend will be paid on December 13, 2010, net of taxes and levies, at the rate of 20%.
Conference Call:
The Company will be hosting a conference call later the same day, Tuesday November 16, 2010 at 09:00a.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: 1-888-668-9141
UK Dial-in Number: 0-800-917-9141
ISRAEL Dial-in Number: 03-918-0644
INTERNATIONAL Dial-in Number: +972-3-918-0644
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 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, SIGINT 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 sheets
Consolidated statements of income
Condensed 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)
September 30, December 31,
2010 2009
Unaudited Audited
Assets
Cash and cash equivalents $ 255,046 $ 140,709
Short-term bank deposits 117,837 115,924
Available for sale marketable securities 15,707 23,639
Trade receivables, net 653,082 659,524
Other receivables and pre-paid expenses 169,307 115,856
Inventories, net of customer advances 620,891 569,848
Total current assets 1,831,870 1,625,500
Investment in affiliated companies, 100,047 88,759
partnership and other companies
Available for sale marketable securities 8,161 12,941
Long-term bank deposits and other receivables 71,795 36,338
Deferred income taxes, net 13,052 7,992
Severance pay fund 287,241 274,136
480,296 420,166
Property, plant and equipment, net 445,167 404,675
Goodwill and other intangible assets, net 614,976 603,336
Total assets $ 3,372,309 $ 3,053,677
Liabilities and Shareholders' Equity
Current maturities of long-term loans and $ 39,484 $ 2,663
Series A Notes
Trade payables 317,005 299,238
Other payables and accrued expenses 547,831 552,806
Customer advances in excess of costs 333,618 367,137
incurred on contracts in progress
Total current liabilities 1,237,938 1,221,844
Long-term loans, net of current maturities 295,089 386,534
Series A Notes 270,045 -
Accrued termination liability 368,321 351,278
Deferred income taxes and tax liabilities, net 59,024 59,602
Customer advances in excess of costs 139,353 142,566
incurred on contracts in progress
Other long-term liabilities 33,987 34,659
1,165,819 974,639
Elbit Systems Ltd.'s shareholders' equity 938,040 832,868
Non-controlling interests 30,512 24,326
Total shareholders' equity 968,552 857,194
Total liabilities and shareholders' equity $ 3,372,309 $ 3,053,677
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US Dollars, except for share and per share
amounts)
Nine Months Ended Three Months
Ended
September 30
September 30
2010 2009 2010 2009
Unaudited
Revenues $ $ $ $
1,871,384 2,117,741 649,906 732,520
Cost of revenues 1,305,372 1,480,302 452,000 515,219
Gross profit 566,012 637,439 197,906 217,301
Operating expenses:
Research and development, net 165,660 154,910 56,149 56,022
Marketing and selling 164,053 191,561 59,122 67,096
General and administrative 90,369 86,805 30,228 28,519
Other income, net (4,756) - - -
Total operating expenses 415,326 433,276 145,499 151,637
Operating income 150,686 204,163 52,407 65,664
Financial expenses, net (9,658) (8,165) (5,521) (564)
Other income (expenses), net 13,439 (868) 350 (222)
Income before taxes on income 154,467 195,130 47,236 64,878
Taxes on income 21,606 37,696 4,791 11,448
132,861 157,434 42,445 53,430
Equity in net earnings of affiliated
companies and partnership 13,205 14,395 3,905 6,202
Consolidated net income $146,066 $171,829 $46,350 $59,632
Less: net income attributable to non-
controlling interests (6,254) (10,598) (1,099) (1,377)
Net income attributable to Elbit
Systems Ltd.'s shareholders $139,812 $161,231 $45,251 $58,255
Earnings per share attributable to
Elbit Systems Ltd.'s ordinary shareholders:
Basic net earnings per share $3.27 $3.82 $1.06 $1.37
Diluted net earnings per share $3.23 $3.76 $1.05 $1.35
Weighted average number of shares
used in computation of basic earnings
per share 42,631 42,241 42,671 42,426
Weighted average number of shares
used in computation of diluted
earnings per share 43,226 42,897 43,165 43,233
Table Continues:
Year Ended
December 31
2009
Audited
Revenues $ 2,832,437
Cost of revenues 1,982,954
Gross profit 849,483
Operating expenses:
Research and development, net 216,752
Marketing and selling 250,963
General and administrative 119,311
Other income, net -
Total operating expenses 587,026
Operating income 262,457
Financial expenses, net (15,585)
Other income (expenses), net 458
Income before taxes on income 247,330
Taxes on income 38,109
209,221
Equity in net earnings of affiliated companies
and partnership 19,292
Consolidated net income $ 228,513
Less: net income attributable to non-
controlling interests (13,566)
Net income attributable to Elbit Systems
Ltd.'s shareholders $ 214,947
Earnings per share attributable to Elbit
Systems Ltd.'s ordinary shareholders:
Basic net earnings per share $ 5.08
Diluted net earnings per share $ 5.00
Weighted average number of shares used in
computation of basic earnings per share 42,305
Weighted average number of shares used in
computation of diluted earnings per share 42,983
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of US Dollars)
Nine Months Ended Year
Ended
September 30, December
31,
2010 2009 2009
(Unaudited) (Audited)
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 146,066 $ 171,829 $ 228,513
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 93,669 93,189 123,473
Write-off impairment 717 - 3,017
Stock based compensation 4,254 3,839 5,134
Amortization of Series A Notes 103 - -
discount and deferred financing
costs
Deferred income taxes and (9,068) (4,824) 7,606
reserve
Severance, pension and 2,129 (13,203) (16,773)
termination indemnities, net
Gain on sale of property, plant (1,978) (468) (723)
and equipment
Gain on sale of investments (19,178) (120) (2,734)
Equity in net earnings of (4,735) (2,668) (1,824)
affiliated companies and
partnership, net of dividend
received(*)
Change in operating assets and
liabilities:
Increase in short and long-term (65,959) (41,871) (136,224)
trade receivables, and prepaid
expenses
Decrease (increase) in (48,282) 44,913 75,431
inventories, net
Decrease (increase) in trade 12,745 (8,233) 20,223
payables, other payables and
accrued expenses
Decrease in advances received (36,843) (115,360) (95,397)
from customers
Net cash provided by operating 73,640 127,023 209,722
activities
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of property, plant and (105,397) (78,054) (107,893)
equipment
Acquisition of subsidiaries and (34,566) (124,033) (48,234)
business operations
Investments in affiliated (1,192) (21,794) (19,415)
companies and other companies
Proceeds from sale of property, 7,732 6,972 9,055
plant and equipment
Proceeds from sale of 12,751 - 33,026
investments
Investment in available for 5.006 (11,272) (11,010)
sales debt-securities and
long-term deposits, net
Investment in short-term 6,387 (40,946) (52,832)
deposits, net
Net cash used in investing (109,279) (269,127) (197,303)
activities
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from exercise of 4,084 11,340 9,871
options
Purchase of non-controlling - - (110,250)
interests
Repayment of long-term bank (246,146) (68,159) (148,652)
loans
Proceeds from issuance of Series 283,213 - -
A Notes, net
Deferred financing costs related (2,185) - -
to issuance of Senior A Notes
Receipt of long-term bank loans 159,000 217,115 256,354
Dividends paid (47,990) (60,897) (76,172)
Change in short-term bank credit - (7,436) (7,531)
and loans, net
Net cash provided by (used in) 149,976 91,963 (76,380)
financing activities
NET INCREASE (DECREASE) IN CASH 114,337 (50,141) (63,961)
AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT THE 140,709 204,670 204,670
BEGINNING OF THE PERIOD
CASH AND CASH EQUIVALENTS AT THE $ 255,046 $ 154,529 $ 140,709
END OF THE PERIOD
* Dividend received $ 8,689 $ 11,727 $ 17,468
ELBIT SYSTEMS LTD. DISTRIBUTION OF REVENUES
CONSOLIDATED REVENUE BY AREAS OF OPERATION:
Nine Months Ended Three Months Ended
September 30 September 30
2010 2009 2010 2009
$ % $ % $ % $ %
millions millions millions millions
Airborne 552.3 29.5 513.3 24.2 194.2 29.9 166.7 22.8
systems
Land systems 312.7 16.7 384.4 18.2 94.2 14.5 132.2 18.0
C4ISR systems 674.1 36.0 819.7 38.7 266.8 41.1 289.6 39.6
Electro-optics 243.3 13.0 307.9 14.5 75.0 11.5 117.5 16.0
Other (mainly 89.0 4.8 92.4 4.4 19.7 3.0 26.5 3.6
non-defense
engineering
and production
services)
Total 1,871.4 100.0 2,117.7 100.0 649.9 100.0 732.5 100.0
CONSOLIDATED REVENUES BY GEOGRAPHICAL REGIONS:
Nine Months Ended Three Months Ended
September 30 September 30
2010 2009 2010 2009
$ % $ % $ % $ %
millions millions millions millions
Israel 458.8 24.5 468.3 22.1 182.5 28.1 167.5 22.9
United States 589.6 31.5 603.1 28.5 187.8 28.9 209.7 28.6
Europe 390.2 20.9 550.8 26.0 116.4 17.9 201.2 27.5
Other 432.8 23.1 495.5 23.4 163.2 25.1 154.1 21.0
countries
Total 1,871.4 100.0 2,117.7 100.0 649.9 100.0 732.5 100.0
Company Contact IR Contact
Joseph Gaspar, Executive VP & CFO Ehud Helft
Dalia Rosen, VP, Head of Corporate Kenny Green
Communications
Elbit Systems Ltd. CCG Investor Relations
Tel: +972-4-831-6663 Tel: +1-646-201-9246
Fax +972-4-831-6944 E-mail: [email protected]
E-mail: [email protected]
[email protected]
SOURCE Elbit Systems Ltd
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article