SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For the Month of November 2002
-----------------------
ELBIT SYSTEMS LTD.
(Translation of Registrant's Name into English)
Advanced Technology Center, P.O.B. 539, Haifa 31053, Israel
(Address of Principal Corporate Offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F:
|X| Form 20-F |_| Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934:
|_| Yes |X| No
Attached hereto as Exhibit 1 and incorporated by reference herein are
the Registrant's financial statements for the quarter ended September 30, 2002.
Attached hereto as Exhibit 2 and incorporated by reference herein is a
report of the Registrant's management for the three and nine-month periods ended
September 30, 2002.
Attached hereto as Exhibit 3 and incorporated by reference herein is
the Registrant's press release dated November 6, 2002.
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ELBIT SYSTEMS LTD.
(Registrant)
By: /s/ Arie Tal
-----------------------------
Name: Arie Tal
Title: Corporate Secretary
Dated: November 6, 2002.
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Financial statements for the quarter ended September 30, 2002.
2. Management report for the three and nine-month periods ended
September 30, 2002.
3. Press release dated November 6, 2002.
EXHIBIT 1
---------
ELBIT SYSTEMS LTD.
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2002
------------------------
(Unaudited)
------------------
ELBIT SYSTEMS LTD.
------------------
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2002
------------------------
(Unaudited)
C O N T E N T S
---------------
P A G E
-------
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Operations 4
Consolidated Statements of Changes in Shareholder's Equity 5 - 6
Consolidated Statements of Cash Flows 7 - 8
Notes to the Consolidated Financial Statements 9 - 12
# # # # # #
ELBIT SYSTEMS LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
SEPTEMBER 30 DECEMBER 31
2002 2001
(UNAUDITED) (AUDITED)
----------- ---------
CURRENT ASSETS
Cash and cash equivalents 48,163 44,064
Deposits with banks and others 3,624 2,940
Trade receivables, net of allowance for doubtful
accounts of $3,118 and $3,200 as of September
30, 2002 and December 31, 2001, respectively 232,320 241,827
Other receivables and prepaid expenses 38,589 34,779
Inventories, net of advances (Note 3) 219,587 185,090
------- -------
Total current assets 542,283 508,700
------- -------
INVESTMENTS AND LONG-TERM
RECEIVABLES
Affiliated companies and other investments 37,923 31,492
Accounts receivable 31,046 64,804
Deposits and loans 2,910 3,433
Severance pay fund 5,613 5,984
------- -------
Total long-term assets 77,492 105,713
------- -------
PROPERTY, PLANT AND EQUIPMENT, NET 194,828 184,774
------- -------
OTHER ASSETS, net of accumulated amortization
of $20,136 and $14,416 at September 30, 2002
and December 31, 2001, respectively 106,488 105,283
------- -------
Total assets 921,091 904,470
======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
-2-
ELBIT SYSTEMS LTD.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
SEPTEMBER 30 DECEMBER 31
2002 2001
(UNAUDITED) (AUDITED)
----------- ---------
CURRENT LIABILITIES
Loans and short-term credit 32,998 46,894
Accounts payable - trade 85,874 111,182
Sundry accruals 128,688 133,355
Advances from customers, net of inventories 100,308 93,342
------- ------
Total current liabilities 347,868 384,773
------- ------
LONG TERM LIABILITIES
Long-term loans 77,840 69,202
Advances from customers, net 46,800 29,840
Deferred taxes 24,156 21,989
Employee termination obligations 16,238 14,687
------- ------
Total long-term liabilities 165,034 135,718
------- ------
MINORITY INTEREST 6,382 5,994
------- ------
SHAREHOLDERS' EQUITY
Share capital 11,099 11,054
Additional paid-in capital 245,665 244,625
Retained earnings 149,364 126,627
------- ------
406,128 382,306
Less - treasury stock 4,321 4,321
------- ------
Total shareholders' equity 401,807 377,985
------- ------
Total liabilities and shareholders' equity 921,091 904,470
======= ======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
-3-
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except for per share amounts)
FOR THE FOR THE
NINE MONTHS ENDED THREE MONTHS ENDED FOR THE
SEPTEMBER 30 SEPTEMBER 30 YEAR ENDED
---------------------- ------------------------------- DECEMBER 31
2002 2001 2002 2001 2001
---- ---- ---- ---- ----
(UNAUDITED) (UNAUDITED) (AUDITED)
----------- ----------- ---------
Revenues 589,143 539,731 210,155 187,957 764,501
Cost of revenues 424,415 389,153 150,738 136,090 553,957
Expense in respect of Chief Scientist (Note 5) 9,801 -- -- -- --
------- ------- ------ ------ -------
Gross profit 154,927 150,578 59,417 51,867 210,544
------- ------- ------ ------ -------
Research and development expenses, net 40,949 41,032 15,185 15,302 60,103
Marketing and selling expenses 47,353 38,126 17,366 13,338 54,923
General and administrative expenses 31,046 28,810 10,860 10,836 43,524
------- ------- ------ ------ -------
119,348 107,968 43,411 39,476 158,550
------- ------- ------ ------ -------
Operating income 35,579 42,610 16,006 12,391 51,994
Finance expenses, net (690) (688) (595) (134) (2,618)
Other income (expenses), net (524) (475) (115) (312) 774
------- ------- ------ ------ -------
Income before income taxes 34,365 41,447 15,296 11,945 50,150
Income taxes (Note 6) 6,810 8,875 1,565 2,099 11,003
------- ------- ------ ------ -------
27,555 32,572 13,731 9,846 39,147
Equity in net gains (losses) of affiliated
companies and partnership 2,554 (429) 1,114 593 (598)
Minority interest 1,877 984 659 898 2,247
------- ------- ------ ------ -------
Net income 31,986 33,127 15,504 11,337 40,796
======= ======= ====== ====== =======
Earnings per share
Basic earnings per share 0.83 0.87 0.40 0.30 1.07
======= ======= ====== ====== =======
Number of shares used in computation
(in thousands) 38,459 37,892 38,515 38,004 37,975
======= ======= ====== ====== =======
Diluted earnings per share 0.80 0.85 0.39 0.29 1.04
======= ======= ====== ====== =======
Number of shares used in computation
(in thousands) 39,896 39,087 39,772 39,579 39,359
======= ======= ====== ====== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
-4-
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands of U.S. dollars, except number of shares)
ADDITIONAL
NUMBER OF SHARE PAID-IN RETAINED GROSS TREASURY NET
SHARES CAPITAL CAPITAL EARNINGS TOTAL STOCK TOTAL
---------- ------- ---------- -------- ----- -------- -----
UNAUDITED
BALANCE AS OF JANUARY 1, 2002 38,739,093 11,054 244,625 126,627 382,306 (4,321) 377,985
Net income -- -- -- 31,986 31,986 --
Warrants exercised 205,093 45 1,866 -- 1,911 --
Tax benefit in respect of options exercised -- -- 390 -- 390 --
Amortization of deferred stock compensation -- -- (1,216) -- (1,216) --
Dividend -- -- -- (9,249) (9,249) --
---------- ------ ------- ------- ------- ------ -------
BALANCE AS OF SEPTEMBER 30, 2002 38,944,186 11,099 245,665 149,364 406,128 (4,321) 401,807
========== ====== ======= ======= ======= ====== =======
BALANCE AS OF JANUARY 1, 2001 38,153,233 10,916 235,462 97,963 344,341 (3,613) 340,728
Net income -- -- -- 33,127 33,127 --
Warrants exercised 309,061 74 1,101 -- 1,175 --
Tax benefit in respect of options exercised -- -- 931 -- 931 --
Adjustment of capital reserve -- -- (3,874) -- (3,874) --
Amortization of deferred stock compensation -- -- 2,472 -- 2,472 --
Treasury stock -- -- -- -- -- (708)
Dividend -- -- -- (9,088) (9,088) --
---------- ------ ------- ------- ------- ------ -------
BALANCE AS OF SEPTEMBER 30, 2001 38,462,294 10,990 236,092 122,002 369,084 (4,321) 364,763
========== ====== ======= ======= ======= ====== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
-5-
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Cont.)
(In thousands of U.S. dollars, except number of shares)
ADDITIONAL
NUMBER OF SHARE PAID-IN RETAINED GROSS TREASURY NET
SHARES CAPITAL CAPITAL EARNINGS TOTAL STOCK TOTAL
---------- ------- ---------- -------- ----- -------- -----
UNAUDITED
BALANCE AS OF JULY 1, 2002 38,905,182 11,090 245,902 136,940 393,932 (4,321) 389,611
Net income -- -- -- 15,504 15,504 --
Warrants exercised 39,004 9 312 -- 321 --
Tax benefit in respect of options exercised -- -- 54 -- 54 --
Amortization of deferred stock compensation -- -- (603) -- (603) --
Dividend -- -- -- (3,080) (3,080) --
---------- ------ ------- ------- ------- ------ -------
BALANCE AS OF SEPTEMBER 30, 2002 38,944,186 11,099 245,665 149,364 406,128 (4,321) 401,807
========== ====== ======= ======= ======= ====== =======
BALANCE AS OF JULY 1, 2001 38,307,701 10,953 237,255 113,697 361,905 (4,321) 357,584
Net income -- -- -- 11,337 11,337 --
Warrants exercised 154,593 37 515 -- 552 --
Tax benefit in respect of options exercised -- -- 514 -- 514 --
Adjustment of capital reserve -- -- (3,874) -- (3,874) --
Amortization of deferred stock compensation -- -- 1,682 -- 1,682 --
Dividend -- -- -- (3,032) (3,032) --
---------- ------ ------- ------- ------- ------ -------
BALANCE AS OF SEPTEMBER 30, 2001 38,462,294 10,990 236,092 122,002 369,084 (4,321) 364,763
========== ====== ======= ======= ======= ====== =======
AUDITED
BALANCE AS OF JANUARY 1, 2001 38,153,233 10,916 235,462 97,963 344,341 (3,613) 340,728
Net income -- -- -- 40,796 40,796 --
Warrants exercised 585,860 138 3,162 -- 3,300 --
Tax benefit in respect of options exercised -- -- 1,363 -- 1,363 --
Adjustment of capital reserve -- -- (3,874) -- (3,874) --
Amortization of deferred stock compensation -- -- 8,512 -- 8,512 --
Treasury stock -- -- -- -- -- (708)
Dividend -- -- -- (12,132) (12,132) --
---------- ------ ------- ------- ------- ------ -------
BALANCE AS OF DECEMBER 31, 2001 38,739,093 11,054 244,625 126,627 382,306 (4,321) 377,985
========== ====== ======= ======= ======= ====== =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
-6-
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
FOR THE NINE
MONTHS ENDED FOR THE
SEPTEMBER 30 YEAR ENDED
--------------- DECEMBER 31
2002 2001 2001
(UNAUDITED) (AUDITED)
--------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 31,986 33,127 40,796
------- ------- -------
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation, amortization and non-cash compensation 24,382 28,174 41,377
Deferred taxes 382 (4,250) (2,694)
Deposits for severance pay 371 161 167
Provision for severance pay 1,551 101 (800)
Loss (gain) on sale of fixed assets and investments 372 87 (327)
Equity in net losses (gains) of affiliates and partnership (2,554) 429 103
Minority interests and other adjustments (1,855) (497) (960)
Changes in operating assets and liabilities:
Receivables and prepaid expenses 41,428 (232) (10,007)
Inventories (54,826) (59,495) (72,165)
Accounts payable and accrued expenses (30,081) (5,310) 38,013
Chief Scientist 9,935 -- --
Advances received from customers 41,755 (4,847) 6,489
------- ------- -------
30,860 (45,679) (804)
------- ------- -------
Net cash provided by (used in) operating activities 62,846 (12,552) 39,992
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed and other assets (30,416) (33,439) (45,296)
Investment grants received -- 392 1,334
Purchase of subsidiaries and business (Schedule A) (5,280) -- (3,344)
Investments in affiliated company and subsidiary (2,684) (2,700) (801)
Proceeds from sale of fixed assets and investments 805 1,560 3,010
Long-term loans granted to employees (555) (1.868) (1,872)
Long-term loans repaid by employees 818 2,279 2,376
Short-term loans, net (612) (100) (111)
------- ------- -------
Net cash used in investing activities (37,924) (33,876) (44,704)
------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options 1,911 1,175 3,300
Repayment of long-term credit for purchase of a building -- (3,000) (3,000)
Company's shares acquired by a subsidiary -- (708) (708)
Proceeds from issuance of shares in a subsidiary -- 2,782 3,722
Receipt on account of shares in a subsidiary 1,000 -- --
Long-term loans repaid (1,634) (9,909) (13,049)
Long-term loans received 2,241 424 25,444
Dividends paid (9,249) (9,088) (12,132)
Changes in short-term credit, net (15,092) 50,340 (6,517)
------- ------- -------
Net cash provided by (used in) financing activities (20,823) 32,016 (2,940)
------- ------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,099 (14,412) (7,652)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 44,064 51,716 51,716
------- ------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD 48,163 37,304 44,064
======= ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
-7-
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
(In thousands of U.S. dollars)
FOR THE
NINE MONTHS ENDED FOR THE
SEPTEMBER 30 YEAR ENDED
----------------- DECEMBER 31
2002 2001 2001
(UNAUDITED) (AUDITED)
--------------- -----------
Income taxes paid 17,878 7,245 9,469
======= ======= =======
Interest paid 2,778 6,130 6,649
======= ======= =======
SCHEDULE A:
Purchase of subsidiaries and business
Assets and liabilities on date of acquisition:
Working capital (except cash) -- -- 888
Fixed assets (275) -- (1,886)
Other assets (5,078) -- (3,800)
Long-term liabilities -- -- 1,454
Purchase of assets in credit 73 -- --
------- ------- -------
(5,280) -- (3,344)
======= ======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS
-8-
ELBIT SYSTEMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(In thousands of U.S. dollars)
NOTE 1 - GENERAL
The accompanying financial statements have been prepared in a
condensed format as of September 30, 2002, and for the nine months and
three months then ended in accordance with generally accepted
accounting principles in the United States (U.S. GAAP) relating to the
preparation of financial statements for interim periods. See Note 7
for the reconciliation from US GAAP to accounting principles generally
accepted in Israel (Israeli GAAP).
These statements should be read in conjunction with the Company's
annual financial statements and accompanying notes as of December 31,
2001.
The interim financial statements reflect all adjustments which are, in
the opinion of management, necessary for a fair presentation. All such
adjustments were of a normal recurring nature.
Operating results for the nine months ended September 30, 2002, are
not necessarily indicative of the results that may be expected for the
year ending December 31, 2002.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed in the preparation of
these financial statements are identical to those applied in
preparation of the latest annual financial statements, except as
described in Note 4.
The accompanying financial statements have been prepared in U.S.
dollars since the functional currency of the primary economic
environment in which the operations of the Group (which includes the
Company and its subsidiaries) are conducted is the U.S. dollar.
-9-
ELBIT SYSTEMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(In thousands of U.S. dollars)
NOTE 3 - INVENTORIES, NET OF ADVANCES
September 30 DECEMBER 31
2002 2001
------------ -----------
UNAUDITED AUDITED
Work-in-progress 193,082 155,712
Materials 76,396 70,133
Advances and payments on account 39,677 30,955
------- -------
309,155 256,800
Less-
Inventories deducted from advances 8,896 10,961
------- -------
300,259 245,839
Less -
Advances received from customers 72,363 49,969
Provision for losses 8,309 10,780
------- -------
219,587 185,090
NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS
On January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142, Goodwill and Other Intangible Assets
(SFAS 142) and accordingly goodwill is no longer being amortized as of
January 1, 2002. In accordance with SFAS 142, the Company has also
evaluated the useful lives of its other intangible assets and has
concluded that no change in the period of amortization is necessary.
The annual amortization expense relating to intangibles existing as of
September 30, 2002 for each of the five years in the period ending
December 31, 2006 is estimated to be approximately $7,000.
As of January 1, 2002, the Company has unamortized goodwill in the
amount of $36,000.
In connection with SFAS No. 142's transitional goodwill impairment
evaluation, the Company, based on an independent valuation of the fair
value of each reporting unit, has determined that the carrying amount
of each reporting unit does not exceed its fair value as of January 1,
2002. Accordingly, the Company concluded that as of January 1, 2002 no
goodwill impairment loss should be recorded.
-10-
ELBIT SYSTEMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(In thousands of U.S. dollars)
NOTE 4 - GOODWILL AND OTHER INTANGIBLE ASSETS (CONT.)
The following transitional information is presented to reflect net
income and earnings per share for all prior periods adjusted to
exclude amortization of goodwill.
FOR THE NINE FOR THE THREE
MONTHS ENDED MONTHS ENDED FOR THE
------------------ ------------------ YEAR ENDED
SEPTEMBER 30 SEPTEMBER 30 DECEMBER 31
2002 2001 2002 2001 2001
---- ---- ---- ---- ----
Reported net income 31,986 33,127 15,504 11,337 40,796
Goodwill amortization -- 2,070 -- 690 2,760
------ ------ ------ ------ ------
Adjusted net income 31,986 35,197 15,504 12,027 43,556
====== ====== ====== ====== ======
Earnings per share
Reported basic earnings
per share 0.83 0.87 0.40 0.30 1.07
Goodwill amortization -- 0.06 -- 0.02 0.08
------ ------ ------ ------ ------
Adjusted basic earnings
per share 0.83 0.93 0.40 0.32 1.15
====== ====== ====== ====== ======
Reported diluted earnings per share 0.80 0.85 0.39 0.29 1.04
Goodwill amortization -- 0.05 -- 0.01 0.07
------ ------ ------ ------ ------
Adjusted diluted
earnings per share 0.80 0.90 0.39 0.30 1.11
====== ====== ====== ====== ======
NOTE 5 - ARRANGEMENT WITH THE CHIEF SCIENTIST
In May 2002 El-Op's Board of Directors approved an arrangement,
proposed by the Chief Scientist in Israel, according to which El-Op
will pay commencing in 2002 an agreed amount of $10,632 in exchange
for a release from all obligations to pay royalties in the future.
This amount has been recorded as of September 30, 2002. As a result
the Company recorded an expense for the agreed amount net of the
accrual for royalties, previously recorded by El-OP.
-11-
ELBIT SYSTEMS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
(In thousands of U.S. dollars)
NOTE 6 - INCOME TAXES
The provision for taxes made in the third quarter of 2002 includes a
reduction of tax expenses in the amount of $2,800 due to adjustments
of estimated taxes and completion of tax assessments for prior years
in respect of various group companies.
NOTE 7 - RECONCILIATION TO ISRAELI GAAP
As described in Note 1, the Company prepares its financial statements
in accordance with U.S. GAAP. The effects of the differences between
US GAAP and Israeli GAAP on the Company's financial statements are
detailed below.
1. EFFECT ON NET INCOME AND EARNINGS PER SHARE
FOR THE NINE
MONTHS ENDED FOR THE
SEPTEMBER 30 YEAR ENDED
-------------------------- DECEMBER 31
2002 2001 2001
(UNAUDITED) (AUDITED)
-------------------------- ------------
A) Net income as reported
according to U.S. GAAP 31,986 33,127 40,796
Adjustments to Israeli GAAP (3,163) 1,234 1,767
------- ------- -------
Net income according to Israeli GAAP 28,823 34,361 42,563
======= ======= =======
B) Earnings per share
Basic net income per share
As reported according to U.S. GAAP 0.83 0.87 1.07
As per Israeli GAAP 0.75 0.91 1.11
Diluted net income per share
As reported according to U.S. GAAP 0.80 0.85 1.04
As per Israeli GAAP 0.72 0.88 1.11
2. EFFECT ON SHAREHOLDERS' EQUITY
AS PER
ISRAELI
AS REPORTED ADJUSTMENTS GAAP
----------- ----------- -------
AS OF SEPTEMBER 30, 2002 (UNAUDITED)
Shareholders' equity 401,807 (12,636) 389,171
======= ======= =======
AS OF DECEMBER 31, 2001 (AUDITED)
Shareholders' equity 377,985 (12,149) 365,836
======= ======= =======
# # # # # # #
-12-
EXHIBIT 2
---------
ELBIT SYSTEMS LTD.
------------------
MANAGEMENT'S REPORT
-------------------
FOR THE THREE AND NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2002
-------------------------------------------------------------
THIS REPORT SHOULD BE READ TOGETHER WITH THE COMPANY'S UNAUDITED
FINANCIAL STATEMENTS FOR THE QUARTER ENDED SEPTEMBER 30, 2002 AND THE
COMPANY'S FORM 20-F FOR THE YEAR ENDED DECEMBER 31, 2001, FILED BY THE
COMPANY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION AND THE
ISRAELI SECURITIES AUTHORITY.
A. THE COMPANY AND ITS BUSINESS ENVIRONMENT
----------------------------------------
Elbit Systems Ltd. ("Elbit Systems") and its subsidiary companies
(together the "Company") operate in the area of upgrading existing
airborne, ground and naval defense platforms and are engaged in
projects involving the design, development, manufacture, integration
and marketing of advanced integrated defense systems, electronic
systems, electro-optic systems and products, software intensive
programs and products for the defense and homeland security sectors.
In addition, the Company provides support and services for such
platforms, systems and products.
The Company is engaged in the design, development, manufacture and
integration of electronic and electro-optic systems and products for
various leading projects in Israel and worldwide, in areas such as
ground and naval command, control, communication, computers and
intelligence ("C4I") systems, digital maps, night vision systems,
pilot helmet mounted systems, display and data processing systems,
unmanned air vehicles ("UAVs"), computerized simulators, communication
systems, thermal imaging products, laser products, optical systems for
space applications, airborne reconnaissance systems, optic
communication systems and products, security systems and products,
surveillance products and systems and electric drive systems. The
Company often cooperates with industries in Israel, as well as in
various other countries.
B. BACKLOG OF ORDERS
-----------------
On September 30, 2002, the Company's backlog of orders reached $1,677
million, of which 66% were for orders outside Israel. On December 31,
2001, the Company's backlog was $1,566 million, out of which 68% were
for orders outside Israel.
Approximately 55% of the Company's backlog as of September 30, 2002 is
scheduled to be performed during the fourth quarter of 2002 and during
2003.
-13-
C. MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
-------------------------------------------
|_| Elop Electro-Optics Industries Ltd. ("El-Op") - a wholly owned
subsidiary registered in Israel, is engaged in the field of advanced
electro-optical products for defense, homeland security and civil
applications. El-Op's main business areas include development and
production of thermal imaging products, laser products, optical
systems for space applications, airborne reconnaissance systems,
optical communications systems, fire control systems for combat
vehicles, homeland security products and other systems for defense
applications.
|_| EFW Inc. ("EFW") - a wholly owned subsidiary registered in the United
States, serves as the base for the Elbit Systems group's activities in
the United States, mainly in the area of development, production and
maintenance of advanced defense products and systems.
|_| Cyclone Aviation Products Ltd. ("Cyclone") - a wholly owned subsidiary
registered in Israel, provides logistic support and maintenance
services for aircraft and helicopters and manufactures structure
components and sub-assemblies for aircraft.
|_| Silver Arrow - a wholly owned limited partnership registered in
Israel, is engaged in the business of UAV systems and products.
|_| Ortek Ltd. ("Ortek") - a wholly owned subsidiary registered in Israel,
is engaged mainly in the area of security products and systems and
night vision equipment. On January 7, 2002, the Company increased its
holdings in Ortek from 75% to 100%.
|_| Kinetics Ltd. ("Kinetics") - a 51% owned subsidiary registered in
Israel, is involved mainly in the development and production of
systems and components for armored vehicles.
|_| Semi-Conductor Devices ("SCD") - an affiliated Israeli partnership,
owned 50% each by the Company and Rafael Armaments Development
Authority Ltd. ("Rafael"), is engaged in the development and
production of infrared detectors and laser diodes.
|_| Opgal Optronic Industries Ltd. ("Opgal") - an affiliated Israeli
company, owned 50.1% by the Company and 49.9% by Galram Technologies
Ltd., a wholly owned subsidiary of Rafael, is engaged mainly in the
area of thermal imaging systems for commercial applications.
|_| The Company also has holdings, directly and indirectly, in several
technology spin-off companies whose activities are based on
technologies that were developed by the Company and its subsidiaries.
The spin-off companies are involved primarily in the areas of optical
communications, space satellites and medical diagnostic equipment.
-14-
D. NEW ACCOUNTING STANDARDS AFFECTING THE BUSINESS RESULTS
-------------------------------------------------------
On January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142 ("SFAS 142"). In accordance with SFAS
142, commencing January 1, 2002 the Company no longer amortizes
goodwill.
Also in accordance with SFAS 142, the Company evaluated the need to
record goodwill impairment loss. As of January 1, 2002, based on the
results of this evaluation, the Company concluded that no impairment
loss was required to be recorded.
E. EVENTS IN 2002
--------------
|_| On May 23, 2002, Elbit Systems announced that its wholly-owned
subsidiary, El-Op, reached an agreement to join the new program
offered by the Office of the Chief Scientist of the Israeli Ministry
of Industry and Trade ("OCS"), aimed at major R&D intensive Israeli
companies.
According to the agreement, El-Op will pay the OCS, over a period of
five years commencing in 2002, an agreed amount of $10.6 million, in
exchange for a release by the OCS from all obligations to pay
royalties in the future.
The agreed upon amount, net of cost of accrued royalties previously
recorded by El-Op, was recorded with cost of revenues as a one-time
charge of approximately $9.8 million (before tax) in the Company's
statement of operations for the second quarter of 2002. The Company
estimates that the cost of the agreement will be recovered through
reduction of future royalty expenses within a period of approximately
four years.
|_| On July 24, 2002, the Israeli Parliament (Knesset) approved an
amendment to the Income Tax Ordinance (Amendment No. 132), 2002. The
amendment includes certain provisions that change the taxation
treatment of employee stock options and expand the Israeli corporate
tax base by changing the taxation of certain passive income deriving
from sources outside of Israel. The Company is currently evaluating
the impact of the new amendment on its future financial results.
-15-
F. SUMMARY OF FINANCIAL RESULTS
----------------------------
The following table sets forth the consolidated statements of
operations of the Company and its subsidiaries for the three and
nine-month periods ended September 30, 2002 and September 30, 2001.
For the nine months For the three months
ended on September 30 ended on September 30
----------------------------- -----------------------------
2002 2001 2002 2001
---- ---- ---- ----
$ % $ % $ % $ %
--- --- --- --- --- --- --- ---
(In thousands of U.S. dollars except per share data)
Total revenues 589,143 100.0 539,731 100.0 210,155 100.0 187,957 100.0
Cost of revenues 424,415 72.0 389,153 72.1 150,738 71.7 136,090 72.4
------- ---- ------- ---- ------- ---- ------- ----
Gross profit before OCS
non-recurring charge 164,728 28.0 150,578 27.9 59,417 28.3 51,867 27.6
------- ---- ------- ---- ------- ---- ------- ----
OCS non-recurring charge 9,801 1.7 -- -- -- -- -- --
------- ---- ------- ---- ------- ---- ------- ----
Gross profit as reported 154,927 26.3 150,578 27.9 59,417 28.3 51,867 27.6
------- ---- ------- ---- ------- ---- ------- ----
Research and development expenses, net 40,949 7.0 41,032 7.6 15,185 7.2 15,302 8.1
Marketing and selling expenses 47,353 8.0 38,126 7.1 17,366 8.3 13,338 7.1
General and administrative expenses 31,046 5.3 28,810 5.3 10,860 5.2 10,836 5.8
------- ---- ------- ---- ------- ---- ------- ----
119,348 20.3 107,968 20.0 43,411 20.7 39,476 21.0
------- ---- ------- ---- ------- ---- ------- ----
Operating income 35,579 6.0 42,610 7.9 16,006 7.6 12,391 6.6
Financing expenses, net (690) (0.1) (688) (0.1) (595) (0.3) (134) (0.1)
Other expenses, net (524) (0.1) (475) (0.1) (115) 0.0 (312) (0.2)
------- ---- ------- ---- ------- ---- ------- ----
Income before income taxes 34,365 5.8 41,447 7.7 15,296 7.3 11,945 6.3
Provision for income taxes 6,810 1.1 8,875 1.6 1,565 0.8 2,099 1.1
------- ---- ------- ---- ------- ---- ------- ----
27,555 4.7 32,572 6.0 13,731 6.5 9,846 5.2
Minority interest 1,877 0.3 984 0.2 659 0.3 898 0.5
Company's share of income (loss) of
affiliated companies and partnerships 2,554 0.4 (429) (0.1) 1,114 0.5 593 0.3
------- ---- ------- ---- ------- ---- ------- ----
Net earnings 31,986 5.4 33,127 6.1 15,504 7.4 11,337 6.0
======= ==== ======= ==== ======= ==== ======= ====
Diluted earnings per share 0.80 0.85 0.39 0.29
======= ======= ======= =======
Weighted average number of shares
used in computation 39,896 39,087 39,772 39,579
======= ======= ======= =======
-16-
The following tables sets forth the Company's results of operations,
excluding the non-recurring charge of $9.8 million related to the
agreement reached by El-Op with the OCS in the second quarter of 2002,
and the effect of SFAS 142 on the net earnings and earnings per share
in 2001.
1. Excluding non-recurring OCS charge:
-----------------------------------
For the nine months For the three months
ended on September 30 ended on September 30
----------------------------- -----------------------------
2002 2001 2002 2001
---- ---- ---- ----
$ % $ % $ % $ %
--- --- --- --- --- --- --- ---
(In thousands of U.S. dollars except per share data)
Gross profit 164,728 28.0 150,578 27.9 59,417 28.3 51,867 27.6
Operating income 45,380 7.7 42,610 7.9 16,006 7.6 12,391 6.6
Net earnings 39,826 6.8 33,127 6.1 15,504 7.4 11,337 6.0
======= ======= ======= =======
Diluted earnings per share
excluding OCS charge and
including goodwill amortization 1.00 0.85 0.39 0.29
==== ==== ==== ====
2. Excluding non-recurring OCS charge in 2002 and amortization of goodwill in 2001:
-------------------------------------------------------------------------------
For the nine months For the three months
ended on September 30 ended on September 30
----------------------------- -----------------------------
2002 2001 2002 2001
---- ---- ---- ----
$ % $ % $ % $ %
--- --- --- --- --- --- --- ---
(In thousands of U.S. dollars except per share data)
Net earnings 39,826 6.8 35,197 6.5 15,504 7.4 12,027 6.4
====== ====== ====== ======
Diluted earnings per share
excluding OCS charge and
goodwill amortization 1.00 0.90 0.39 0.30
==== ==== ==== ====
-17-
REVENUE
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
The Company's consolidated revenues increased by 9.2%, from $539.7
million in the first nine months of 2001 to $589.1 million in the
first nine months of 2002.
The following table sets forth the Company's revenue distribution by
business lines:
Nine-month period ended
-----------------------
September 30, 2002 September 30, 2001
------------------ -------------------
(In $ millions)
Airborne systems 274.8 239.1
Armored vehicle systems 96.2 94.0
C4I systems 86.1 74.6
Electro-Optics 101.1 104.0
Other 30.9 28.0
----- -----
Total 589.1 539.7
===== =====
The following table sets forth the Company's distribution of revenues
by geographical regions:
Nine-month period ended
-----------------------
September 30, 2002 September 30, 2001
------------------ -------------------
Israel 26% 28%
United States 33% 28%
Europe 17% 23%
Other Countries 24% 21%
Three Months Ended on September 30, 2002, Compared to Three Months
----------------------------------------------------------------------
Ended on September 30, 2001
----------------------------------------------------------------------
The consolidated revenues increased by 11.8% from $188.0 million in
the third quarter of 2001 to $210.2 million in the third quarter of
2002.
The following table sets forth the Company's distribution of revenues
by business lines:
Three-month period ended
--------------------------
September 30, 2002 September 30, 2001
------------------ -------------------
(In $ millions)
Airborne systems 104.9 83.8
Armored vehicle systems 26.1 32.9
C4I systems 30.1 24.9
Electro-Optics 36.9 37.8
Other 12.2 8.6
----- -----
Total 210.2 188.0
===== =====
-18-
The following table sets forth the Company's distribution of revenues
by geographical regions:
Three-month period ended
--------------------------
September 30, 2002 September 30, 2001
------------------ -------------------
Israel 25% 31%
United States 33% 27%
Europe 18% 16%
Other Countries 24% 26%
GROSS PROFIT
------------
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
Gross profit in the nine months ended on September 30, 2002 was $154.9
million, and the gross profit margin was 26.3%.
Excluding the non-recurring charge related to the OCS program
amounting to $9.8 million, the gross profit and gross profit margin in
the first nine months of 2002 were $164.7 million and 28.0%,
respectively, as compared to $150.6 million and 27.9% in the
nine-month period ended on September 30, 2001.
The Company's gross profit for the nine-month period ended on
September 30, 2002 was effected by the write-off in the amount of
approximately $6.3 million (before tax) for potential losses related
to the Fairchild-Dornier GmbH ("Dornier") project that was included in
its results for the second quarter of 2002. The write-off was made in
view of the insolvency proceedings that were instituted against
Dornier, with whom Cyclone had a risk sharing contract for the supply
of certain parts for Dornier's "728" aircraft project, and in view of
the uncertain future of the "728" project.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
Gross profit in the three-month period ended September 30, 2002 was
$59.4 million, as compared to $51.9 million in the comparable period
last year. The gross profit margin in the third quarter of 2002 was
28.3% as compared to 27.6% in the comparable period last year.
Cost of revenues in 2001 included amortization of goodwill, which
following the adoption of SFAS 142 effective January 1, 2002, is no
longer amortized.
RESEARCH AND DEVELOPMENT ("R&D")
--------------------------------
The Company continually invests in R&D in order to maintain and
further advance its technologies, in accordance with a long-term plan,
based on estimated market needs.
-19-
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
Gross R&D expenses in the nine-month period ended September 30, 2002
totaled $43.9 million (7.5% of revenues), as compared with $48.9
million (9.1% of revenues) in the nine-month period ended September
30, 2001.
Net R&D expenses (after deduction of the OCS participation) in the
nine-month period ended September 30, 2002 totaled $40.9 million (7.0%
of revenues), as compared to $41.0 million (7.6% of revenues) in the
comparable period in 2001.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
Gross R&D expenses in the three-month period ended September 30, 2002
were $16.3 million (7.7% of revenues), as compared with $18.1 million
(9.6% of revenues) in the three-month period ended September 30, 2001.
Net R&D expenses (after deduction of the OCS participation) in the
three-month period ended September 30, 2002 totaled $15.2 million
(7.2% of revenues), as compared with $15.3 million (8.1% of revenues)
in the comparable period in 2001.
The Company's investments in R&D in the reported periods were in
accordance with the Company's long-term plan.
The OCS' participation in the Company's R&D expenses in the nine-month
period ended September 30, 2002 has been lower than in the comparable
periods in 2001, and the Company estimates that the total level of
participation by the OCS for the year of 2002 will be lower than in
2001.
MARKETING AND SELLING EXPENSES
------------------------------
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
Marketing and selling expenses in the nine-month period ended
September 30, 2002 were $47.4 million (8.0% of revenues), as compared
to $38.1 million (7.1% of revenues) in the comparable period ended
September 30, 2001.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
In the third quarter of 2002 marketing and selling expenses were $17.4
million (8.3% of revenues) as compared to $13.3 million (7.1% of
revenues) in the comparable period in 2001.
The reasons for the increase in the Company's marketing and selling
expenses were mainly the increased level of revenues, as well as the
need to invest a higher level of resources in generating new business
and the increased length of time required for marketing efforts until
orders are received.
-20-
GENERAL AND ADMINISTRATIVE ("G&A") EXPENSES
-------------------------------------------
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
G&A expenses in the nine-month period ended September 30, 2002 were
$31.0 million (5.3% of revenues), as compared to $28.8 million (5.3%
of revenues) in the comparable period in 2001.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
In the third quarter of 2002 G&A expenses were $10.9 million (5.2% of
revenues) as compared to $10.8 million (5.8% of revenues) in the third
quarter of 2001.
In the first three quarters of 2002 G&A expenses included G&A expenses
and amortization of intangible assets related to companies that were
not consolidated in the same period last year.
In the first three quarters of 2001 the G&A expenses included
approximately $0.5 million amortization of goodwill expenses per
quarter, which following the adoption of SFAS 142 effective January 1,
2002, is no longer amortized.
OPERATING INCOME
----------------
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
As a result of all of the above, operating income in the nine-month
period ended September 30, 2002, amounted to $35.6 million (6.0% of
revenues).
Excluding the non-recurring charge related to the OCS program in 2002,
the Company's operating income and operating margin (as a percentage
of revenues) in the first nine months of 2002 were $45.4 million and
7.7%, respectively, compared to $42.6 million and 7.9% in the
comparable period in 2001.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
Operating income amounted to $16.0 million (7.6% of revenues) in the
third quarter of 2002, as compared to $12.4 million (6.6% of revenues)
in the third quarter of 2001.
FINANCE EXPENSES, NET
---------------------
Finance expenses (net) in the nine-month period ended September 30,
2002 were $0.7 million, similar to the finance expense in the
nine-month period ended September 30, 2001.
In the third quarter of 2002 the Company had finance expenses (net) of
$0.6 million, as compared to $0.1 million finance expenses (net) in
the third quarter of 2001.
-21-
INCOME BEFORE TAX
-----------------
Nine Months ended on September 30, 2002, Compared to Nine Months ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
As a result of all of the above, income before income tax for the
nine-month period ended September 30, 2002 was $34.4 million (5.8 % of
revenues).
Excluding the non-recurring charge related to the OCS program in 2002,
the Company's income before tax was $44.2 million (7.5% of revenues),
compared to $41.5 million (7.7% of revenues) in the nine-month period
ended September 30, 2001.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
In the third quarter of 2002 income before tax amounted to $15.3
million (7.3% of revenues), as compared to $11.9 million (6.3% of
revenues) in the comparable period in 2001.
TAXES ON INCOME
---------------
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
Provision for taxes for the nine-month period ended September 30, 2002
was $6.8 million as compared to $8.9 million in the nine-month period
ended September 30, 2001. The Company's effective tax rate for the
first nine months of 2002 was 19.8%, as compared to 21.4% in the first
nine months of 2001.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
Provision for taxes in the third quarter of 2002 was $1.6 million as
compared to $2.1 million in the third quarter of 2001. The Company's
effective tax rate in the third quarter of 2002 was 10.2% as compared
to 17.6% in the third quarter of 2001.
The provision for taxes in the third quarter of 2002 included
reduction of tax expenses in the amount of $2.8 million due to
adjustments of estimated taxes and completion of tax assessments for
prior years in respect of various group companies.
NET EARNINGS AND EARNINGS PER SHARE (EPS)
-----------------------------------------
Nine Months Ended on September 30, 2002, Compared to Nine Months Ended
----------------------------------------------------------------------
on September 30, 2001
---------------------
Net earnings in the nine months ended on September 30, 2002 were $32.0
million (5.4% of revenues). Diluted EPS in the nine months ended
September 30, 2002 was $0.80.
Excluding the non-recurring charge related to the OCS program, the
Company's net earnings in the nine months ended on September 30, 2002
were $39.8 million, (6.8%, of
-22-
revenues), and diluted EPS was $1.00, as compared to $33.1 million
(6.1% of revenues) and $0.85 in the nine month ended on September 30,
2001.
Excluding amortization of goodwill, net earnings and diluted EPS were
$35.2 million and $0.90, respectively, in the nine-month period ending
September 30, 2001.
Third Quarter of 2002, Compared to Third Quarter of 2001
--------------------------------------------------------
Net earnings in the third quarter of 2002 were $15.5 million (7.4% of
revenues), and diluted EPS was $0.39, as compared to net earnings of
$11.3 million (6.0% of revenues) and diluted EPS of $0.29 in the third
quarter of 2001.
Excluding amortization of goodwill, net earnings and diluted EPS were
$12.0 million and $0.30, respectively, in the three-month period
ending September 30, 2001.
The number of shares used for computation of diluted EPS in the nine
and three-month periods ended September 30, 2002 was approximately
39.9 million shares and 39.8 million shares, respectively, as compared
to 39.1 million shares and 39.6 million shares in the nine and
three-month periods ended September 30, 2001. The increase in the
number of shares was due mainly to the exercise of options during the
period.
G. LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's cash flow is affected by the cumulative cash flows of
its various projects in the reported periods. Projects' cash flows are
affected by the timing of the receipt of advances and the collection
of accounts receivable from customers, which relate to specific events
during the project, while expenses are on-going. As a result, the
Company's cash flows may vary from one period to another.
The Company's policy is to invest its cash surplus primarily in
interest bearing deposits in accordance with its projected needs.
The resources available to the Company include mainly profits,
collection of accounts receivable, advances from customers, as well as
Government of Israel grants and participation and bank financing in
Israel and abroad based on its capital, assets and activities. In
addition, the Company has the ability to raise funds through the
offering of shares and debentures to the public from time to time.
The Company's net cash flow derived from ongoing operations in the
nine months ended September 30, 2002 was $62.8 million, resulting
mainly from collection of customers receivables and receipt of
advances from customers, which were partially offset by an increase in
inventories and decrease in trade accounts payable.
Net cash flow used for investment activities in the nine months ended
September 30, 2002 was $37.9 million, which was used mainly for
procurement of fixed assets and the acquisition of the Government
Division of Elron Telesoft.
-23-
Net cash flow used for financing activities in the nine months ended
September 30, 2002 was $20.8 million, resulting from a decrease in
short-term borrowing and payment of dividends.
As of September 30, 2002, the Company had working capital of $194.4
million, and its current ratio was 1.56. The Company's ratio of equity
to total assets was 43.6%.
H. DIVIDENDS
---------
The Board of Directors declared on November 5, 2002 a dividend of
$0.09 per share for the third quarter of 2002.
* * *
----------------------------------------------------------------------
Forward looking statements with respect to the Company's business,
financial condition and results of operations in this document are
subject to risks and uncertainties that could cause actual results to
differ materially from those contemplated in such forward looking
statements, including, but not limited to, product demand, pricing,
market acceptance, changing economic conditions, risks in product and
technology development, the effect of the Company's accounting
policies as well as certain other risk factors which are detailed from
time to time in the Company's SEC filings.
-24-
EXHIBIT 3
---------
ELBIT SYSTEMS REPORTS RESULTS FOR THIRD QUARTER 2002
------------------------------------
o Revenues increase by 12% to $210 million
o Net income increases by 37%
o Backlog of orders reaches $1.68 billion
HAIFA, ISRAEL, NOVEMBER 6, 2002 - ELBIT SYSTEMS LTD. ("THE COMPANY") (NASDAQ:
ESLT), the international defense company, today reported its consolidated
results for the third quarter of 2002 and for the nine months ended September
30, 2002.
CONSOLIDATED REVENUES FOR THE THIRD QUARTER OF 2002 increased by approximately
12% to $210.2 million from $188.0 million in the corresponding quarter in 2001.
CONSOLIDATED REVENUES FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002 increased by
approximately 9% to $589.1 million from $539.7 million in the corresponding
period in 2001.
NET INCOME FOR THE THIRD QUARTER OF 2002 increased by approximately 37% to $15.5
million (7.4% of revenues) from $11.3 million (6.0% of revenues) in the same
period in 2001. Diluted earnings per share for the third quarter of 2002 were
$0.39 as compared with $0.29 for the third quarter of 2001.
The net income for the third quarter of 2002 included reduction of tax expenses
in the amount of $ 2.8 million, due to adjustments of estimated taxes and
completion of tax assessments for prior years with respect to various companies
in the Elbit Systems group.
CONSOLIDATED NET INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002, before the
one-time charge included in the Company's results for the second quarter of 2002
due to an agreement reached with the Israeli Office of the Chief Scientist
("OCS"), increased to $39.8 million (6.8% of revenues) from $33.1 million (6.1%
of revenues) in the same period in 2001. Diluted earnings per share for the
nine- month period ended September 30, 2002, before the one-time charge for the
OCS, were $1.00 as compared with $0.85 for the corresponding period of 2001.
NET INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002, AFTER THE ONE-TIME
CHARGE FOR THE OCS, was $32.0 million (5.4% of revenues) or diluted earnings per
share of $0.80.
GROSS PROFIT FOR THE THIRD QUARTER OF 2002 was $59.4 million (28.3% of
revenues), as compared with gross profit of $51.9 million (27.6% of revenues) in
the third quarter of 2001.
GROSS PROFIT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002, BEFORE THE ONE-TIME
CHARGE FOR THE OCS, was $164.7 million (28% of revenues), as compared with gross
profit of $150.6 million (27.9% of revenues) in the corresponding period of
2001.
GROSS PROFIT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002, AFTER THE ONE-TIME
CHARGE FOR THE OCS, was $154.9 million (26.3% of revenues).
-25-
BACKLOG OF ORDERS as of September 30, 2002 reached $1,677 million, as compared
with $1,566 million at the end of 2001. 66% of the backlog relates to orders
outside of Israel. As of September 30, 2002, approximately 55% of the Company's
backlog is scheduled to be performed in the last quarter of 2002 and during
2003.
The President and CEO of Elbit Systems, Joseph Ackerman, commented: "We are
pleased to report the Company's third quarter 2002 results which demonstrate
Elbit Systems' continued growth. These results reflect the Company's intensive
marketing efforts; continued investment in developing advanced technologies;
dedicated employees in Israel and worldwide; and steps taken to improve
efficiency. We reiterate our expectation that the growth will continue and
anticipate revenues in 2002 to exceed $800 million."
The Board of Directors has declared a dividend of $0.09 per share for the third
quarter of 2002. The dividend will be paid on December 16, 2002, net of taxes
and levies at the rate of 17%. The record date of the dividend is December 3,
2002.
CONFERENCE CALL
Elbit Systems cordially invites you to participate in our interactive conference
call on WEDNESDAY, NOVEMBER 7, 2002 AT 10:30 AM ET. To take part in the
conference call, please dial 1-866-500-4965 (U.S. AND CANADA) OR 1-877-332-1104
(U.S.) OR +972-3-925-5910 (INTERNATIONAL) a few minutes before the 10:30 AM ET
start time. For your convenience, an instant replay will be available Wednesday,
November 7, 2002 at 12:30 PM ET until Friday, November 9, 2002 at 5:00 PM ET.
The replay telephone number is 1-866-500-4965 (U.S. AND CANADA) OR
+972-3-925-5945 (INTERNATIONAL).
ABOUT ELBIT SYSTEMS LTD.
Elbit Systems Ltd. is an international defense electronics company engaged in a
wide range of defense-related programs throughout the world, in the areas of
aerospace, ground and naval systems, command, control, communications, computers
and intelligence (C4I) and advanced electro-optic technologies. The Company
focuses on the upgrading of existing military platforms and developing new
technologies for defense applications. For further information, please visit the
Company web site at www.elbit.co.il.
STATEMENTS IN THIS PRESS RELEASE WHICH ARE NOT HISTORICAL DATA ARE
FORWARD-LOOKING STATEMENTS WHICH INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES
OR OTHER FACTORS NOT UNDER THE COMPANY'S CONTROL, WHICH MAY CAUSE ACTUAL
RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT
FROM THE RESULTS, PERFORMANCE OR OTHER EXPECTATIONS IMPLIED BY THESE
FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DETAILED IN THE COMPANY'S PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(FINANCIAL TABLES TO FOLLOW)
-26-
ELBIT SYSTEMS LTD.
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands of US Dollars)
September December
30 30
2002 2001
--------- --------
Unaudited Audited
ASSETS
------
Current Assets:
Cash and short term deposits 51,787 47,004
Trade receivable and others 270,909 276,606
Inventories, net of advances 219,587 185,090
Total current assets 542,283 508,700
------- -------
Affiliated Companies & other Investments 37,923 31,492
Long-term receivables & others 39,569 74,221
Fixed Assets, net 194,828 184,774
Other assets, net 106,488 105,283
------- -------
921,091 904,470
======= =======
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Current liabilities 347,868 384,773
Long-term liabilities 165,034 135,718
Minority Interest 6,382 5,994
Shareholder's equity 401,807 377,985
------- -------
921,091 904,470
======= =======
-27-
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousands of US Dollars, except for per share amounts)
Year Ended
Nine Months Ended Three Months Ended December
September 30 September 30 31
-------------------- -------------------- ----------
2002 2001 2002 2001 2001
---- ---- ---- ---- ----
Unaudited Unaudited Audited
Revenues: 589,143 539,731 210,155 187,957 764,501
Cost of revenues 424,415 389,153 150,738 136,090 553,957
Non-recurring charge 9,801 - - - -
------- ------- ------- ------- -------
Gross Profit 154,927 150,578 59,417 51,867 210,544
Operating expenses:
Research and development, net 40,949 41,032 15,185 15,302 60,103
Marketing and selling 47,353 38,126 17,366 13,338 54,923
General and administrative 31,046 28,810 10,860 10,836 43,524
------- ------- ------- ------- -------
Total operating expenses 119,348 107,968 43,411 39,476 158,550
------- ------- ------- ------- -------
Operating income 35,579 42,610 16,006 12,391 51,994
Financial expenses, net (690) (688) (595) (134) (2,618)
Other income (expenses), net (524) (475) (115) (312) 774
------- ------- ------- ------- -------
Income before income taxes 34,365 41,447 15,296 11,945 50,150
Provisions for income taxes 6,810 8,875 1,565 2,099 11,003
------- ------- ------- ------- -------
27,555 32,572 13,731 9,846 39,147
Company's share of partnerships and affiliated
companies income (loss), net 2,554 (429) 1,114 593 (598)
Minority rights 1,877 984 659 898 2,247
------- ------- ------- ------- -------
Net income 31,986 33,127 15,504 11,337 40,796
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Basic Earnings per share $0.83 $0.87 $0.40 $0.30 $ 1.07
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Weighted average number of shares used in
computation equivalents outstanding (in
thousands) 38,459 37,892 38,515 38,004 37,975
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Diluted net earnings per share $0.80 $0.85 $0.39 $0.29 $ 1.04
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Weighted average number of shares used in
computation (in thousands) 39,896 39,087 39,772 39,579 39,359
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Net earnings excluding Goodwill amortization expenses 35,197 12,027 43,556
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Diluted earnings per share excluding Goodwill amortization
expenses $0.90 $0.30 $1.11
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