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 May 2003
-----------------------
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 herein by reference is
the Registrant's press release dated May 20, 2003.
Attached hereto as Exhibit 2 and incorporated herein by reference is
the Registrant's Management Report for the quarter ended March 31, 2003.
Attached hereto as Exhibit 3 and incorporated herein by reference is
the Registrant's condensed interim consolidated financial statements as of March
31, 2003.
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: May 20, 2003.
EXHIBIT INDEX
-------------
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Press release dated May 20, 2003.
2. Registrant's Management Report for the quarter ended March
31, 2003.
3. Registrant's condensed interim consolidated financial
statements as of March 31, 2003
-3-
EXHIBIT 1
---------
[GRAPHIC OMITTED]
[GRAPHIC OMITTED]
EARNINGS RELEASE
----------------
ELBIT SYSTEMS REPORTS FIRST QUARTER 2003 RESULTS
------------------------------------------------
REVENUES INCREASE 8.8%; BACKLOG OF ORDERS $1,691 MILLION
Earnings per Share $0.31
HAIFA, ISRAEL, MAY 20, 2003 - ELBIT SYSTEMS LTD. (THE "COMPANY") (NASDAQ: ESLT),
the international defense company, today reported its consolidated results for
the first quarter ended March 31, 2003.
CONSOLIDATED REVENUES FOR THE FIRST QUARTER OF 2003 increased 8.8% to $202.2
million from $185.8 million in the corresponding quarter in 2002.
CONSOLIDATED NET INCOME FOR THE FIRST QUARTER OF 2003 was $12.3 million (6.1% of
revenues) as compared with $11.7 million (6.3% of revenues) in the same period
in 2002. Diluted earnings per share for the first quarter of 2003 were $0.31 as
compared with $0.29 for the first quarter of 2002.
GROSS PROFIT FOR THE FIRST QUARTER OF 2003 was $56.9 million (28.1% of
revenues), as compared with gross profit of $52.3 million (28.1% of revenues) in
the first quarter of 2002.
BACKLOG OF ORDERS as of March 31, 2003 reached $1,691 million, as compared with
$1,689 million at the end of 2002. 63% of the backlog relates to orders outside
of Israel. Approximately 80% of the Company's backlog as of March 31, 2003, is
scheduled to be performed in the next three quarters of 2003 and during 2004.
The President and CEO of Elbit Systems, Joseph Ackerman, commented: "Our first
quarter results demonstrate the continued implementation of our business
strategy in today's evolving defense environment as both our revenues and
earnings grow, while maintaining a solid backlog of orders.
Recent world events have highlighted the growing demand for new technologies in
the areas of Command, Control and Communications (C(3)), Intelligence,
Surveillance and Reconnaissance (ISR), Unmanned Airborne Vehicles (UAV) and
Security. Our capabilities across these areas, which have become in recent years
an increasingly important segment of our core business, in addition to our other
business areas, position us well to take advantage of this trend in the global
defense market," concluded Mr. Ackerman.
The Board of Directors declared a dividend of $0.09 per share for the first
quarter of 2003. The dividend will be paid on June 16, 2003, net of taxes and
levies, at the rate of 17%. The record date of the dividend is June 3, 2003.
CONFERENCE CALL
Elbit Systems cordially invites you to participate in our interactive conference
call on Tuesday, May 20, 2003 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
Exh 1-1
start time. For your convenience, an instant replay will be available starting
at 12:30 PM ET the same day until Thursday, May 22, 2003 at 5:00 PM ET. The
replay telephone number is 1-866-500-4965 (U.S. and Canada) or +972-3-925-5945
(International).
This call will also be broadcasted live on: WWW.ELBIT.CO.IL and an online replay
will be available for 30 days.
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.
CONTACT
-------
Arie Tal, Corporate Secretary, Marilena LaRosa
Ilan Pacholder, VP Finance Investor Relations
Elbit Systems Ltd. The Anne McBride Company
Tel: 972-4 831-6632 1212-983-1702
Fax: 972-4 831-6659 mlarosa@annemcbride.com
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.
Exh 1-2
ELBIT SYSTEMS LTD.
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousand of US Dollars)
March 31 December 31
2003 2002
UNAUDITED AUDITED
--------------- --------------
ASSETS
------
Current Assets:
Cash and short term deposits 71,598 77,930
Trade receivable and others 251,912 262,100
Inventories, net of advances 240,891 220,399
--------------- --------------
Total current assets 564,401 560,429
Affiliated Companies & other Investments 36,090 33,051
Long-term receivables & others 17,861 31,186
Fixed Assets, net 208,854 202,961
Other assets, net 104,035 105,769
--------------- --------------
931,241 933,396
=============== ==============
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Current liabilities 359,926 362,835
Long-term liabilities 144,860 154,483
Minority Interest 4,460 4,717
Shareholder's equity 421,995 411,361
--------------- --------------
931,241 933,396
=============== ==============
Exh 1-3
ELBIT SYSTEMS LTD.
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In thousand of US Dollars, except for per share amounts)
Three Months Ended Year Ended
March 31 December 31
2003 2002 2002
------------- ------------ -----------------
Unaudited Audited
Revenues 202,190 185,783 827,456
Cost of revenues 145,291 133,530 595,512
Non-recurring charge - - 9,801
------------- ------------ -----------------
Gross Profit 56,899 52,253 222,143
Research and development, net 14,852 12,632 57,010
Marketing and selling 16,153 14,688 65,691
General and administrative 10,984 9,715 41,651
------------- ------------ -----------------
Total operating expenses 41,989 37,035 164,352
------------- ------------ -----------------
Operating income 14,910 15,218 57,791
Financial income (expenses), net (1,276) 8 (3,035)
Other income (expenses), net 109 (146) (462)
------------- ------------ -----------------
Income before income taxes 13,743 15,080 54,294
Provisions for income taxes 3,646 3,914 9,348
------------- ------------ -----------------
10,097 11,166 44,946
Company's share of partnerships and affiliated
Companies income (loss), net 1,901 (4) 675
Minority rights 257 548 (508)
------------- ------------ -----------------
Net income 12,255 11,710 45,113
============= ============ =================
Basic Earnings per share 0.32 0.30 1.17
============= ============ =================
Diluted net earnings per share 0.31 0.29 1.13
============= ============ =================
Net earnings excluding OCS charge and tax
adjustment 12,255 11,710 50,153
============= ============ =================
Diluted earnings per share excluding OCS charge and
tax adjustment 0.31 0.29 1.26
============= ============ =================
Exh 1-4
EXHIBIT 2
---------
ELBIT SYSTEMS LTD.
------------------
MANAGEMENT'S REPORT
-------------------
FOR THE QUARTER ENDED MARCH 31, 2003
------------------------------------
This report should be read together with the Company's unaudited financial
statements for the quarter ended March 31, 2003, the Company's audited
consolidated financial statements and related notes for the year ended December
31, 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 with the
Israeli Securities Authority.
A. The Company's Business Overview
-------------------------------
Elbit Systems Ltd. ("Elbit Systems") and its subsidiary companies (together
the "Company" or the "Group") 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 air,
ground and naval Command, Control, Communication, Computers, Intelligence,
Surveillance and Reconnaissance ("C4ISR") 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 provides a wide range of logistic support services, including
operation of pilot training services for the Israeli Air Force on a private
financing initiative ("PFI") basis. Several of the Group's companies also
provide advanced engineering and manufacturing services to various
customers, utilizing their advanced manufacturing capabilities. The Company
often cooperates with industries in Israel and in various other countries.
B. BACKLOG OF ORDERS
-----------------
The Company's backlog of orders as of March 31, 2003 reached $1,691
million, of which 63% were for orders outside Israel. The Company's backlog
as of December 31, 2002 was $1,689 million, out of which 62% were for
orders outside Israel.
Approximately 80% of the Company's backlog as of March 31, 2003 is
scheduled to be performed in the following three quarters of 2003 and
during 2004. The majority of the 20% balance is scheduled to be performed
in 2005 and 2006.
Exh 2-1
C. MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
-------------------------------------------
o 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 areas of activity 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.
o EFW Inc. ("EFW") - a wholly owned subsidiary registered in the United
States, serves as the base for the Group's activities in the United
States, mainly in the area of development, production and maintenance
of advanced defense products and systems.
o Vision Systems International LLC ("VSI") - an affiliated company in
the United States, owned 50% each by EFW and Rockwell Collins Inc., is
engaged in the area of helmet mounted systems primarily for fighter
aircraft.
o 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.
o Silver Arrow LP - a wholly owned limited partnership registered in
Israel, is engaged in the business of UAV systems and products.
o 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.
o 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.
o Semi-Conductor Devices ("SCD") - an Israeli affiliated 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.
o Opgal Optronic Industries Ltd. ("Opgal") - an Israeli affiliated
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.
o The Company has holdings, directly and indirectly, in several
relatively small companies in various countries. These companies are
engaged mainly in the manufacturing, marketing and servicing of
defense avionics and electronics as well as defense related software.
o 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. The spin-off
companies are involved primarily in the areas of optical
communications, space satellites and medical equipment.
On May 16, 2003 the Company announced that MediGuide Inc., a privately
funded venture in which the Company is a majority shareholder, has signed
an agreement with Boston Scientific Corporation ("BSC") to develop and
commercialize technology platforms in the field of 3-D
Exh 2-2
intravascular imaging and intrabody navigation. The agreement includes an
equity investment in MediGuide by BSC, co-development responsibilities,
exclusive global distribution by BSC and an option for BSC to acquire
MediGuide at a future date.
The Company evaluates investments in affiliates, partnerships and other
companies, and when relevant factors indicate other than temporary decline
in the fair value of the investments below their carrying value, the
Company adjusts the investment to the estimated fair value. The value of
these companies is subject to ongoing changes resulting from their business
conditions.
D. CRITICAL ACCOUNTING POLICIES AND ESTIMATES
------------------------------------------
The Company's significant accounting policies are described in Note 2 to
the audited consolidated financial statements for the year ended December
31, 2002.
The Company's results of operations and financial condition are based on
the preparation of consolidated financial statements in conformity with
generally accepted accounting principles in the U.S. ("U.S. GAAP"). The
preparation of the consolidated financial statements requires management to
select accounting policies for critical accounting areas as well as
estimates and assumptions that affect the amounts reported in the
consolidated financial statements. Significant changes in assumptions
and/or conditions and changes in critical accounting policies could
materially impact the Company's operating results and financial condition.
In the Company's opinion, its most critical accounting policy relates to
revenue recognition based on SOP 81-1 "Accounting for Performance of
Construction Type and Certain Production Type Contracts", which is relevant
to most of its revenues.
Under SOP 81-1, the Company has adopted the "percentage of completion"
accounting method. Under this method, the Company recognizes revenues and
profits on long-term fixed price contracts generally based on the ratio of
costs incurred to estimates of costs to be incurred for the total contract.
Under this approach, the Company compares estimated costs to complete an
entire contract to total revenues for the term of the contract to arrive at
an estimated gross margin percentage for each contract. The estimated gross
margin percentage is applied to the cumulative revenue recognized on the
contract to arrive at cost of sales for the period.
Management reviews these estimates periodically and the effect of any
change in the estimated gross margin percentage for a contract is reflected
in cost of sales in the period in which the change becomes known. If
increases in projected costs to complete are sufficient to create a loss
contract, the entire estimated loss is charged to operations in the period
the loss first becomes known.
A number of internal and external factors affect the Company's cost
estimates, including labor rates, estimated future material prices, revised
estimates of uncompleted work, efficiency variances, linkage to indices and
exchange rates, customer specifications and testing requirement changes. If
any of the above factors were to change, or if different assumptions were
used in the application of this and other accounting policies, it is likely
that materially different amounts would be reported in the Company's
consolidated financial statements.
E. IMPAIRMENT OF GOODWILL AND OTHER LONG-LIVED ASSETS
--------------------------------------------------
Consistent with Statement of Financial Accounting Standards ("SFAS") No.
142, "Goodwill and Other Intangible Assets," goodwill is not amortized, and
is tested at least annually for
Exh 2-3
impairment. As of March 31, 2003, the Company's goodwill and assembled work
force amounted to $32.2 million.
Consistent with SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," the Company evaluates long-lived assets for impairment
and assesses their recoverability based upon anticipated future cash flows.
As of March 31, 2003, the Company's long-lived assets amounted to $280.7
million, including $71.9 million in intangible assets, and the Company
concluded that no assessment of impairment loss was necessary.
Should future impairment tests made by the Company determine that
impairment has occurred in the value of the Company's goodwill or
long-lived assets exists, such impairment may have a material effect on the
financial results of the Company in the period in which the impairment is
determined.
F. SUMMARY OF FINANCIAL RESULTS
----------------------------
The following table sets forth the consolidated statements of operations of
the Company and its subsidiaries for the three-month periods ended March
31, 2003 and March 31, 2002.
For the three months ended
March 31
-------------------------------------------------------
2003 2002
------------------------ -----------------------
$ % $ %
--------- --------- ---------- ---------
(In thousands of U.S. dollars except per share data)
Total revenues 202,190 100.0 185,783 100.0
Cost of revenues 145,291 71.9 133,530 71.9
--------- --------- ---------- ---------
Gross profit 56,899 28.1 52,253 28.1
--------- --------- ---------- ---------
Research and development expenses, net 14,852 7.3 12,632 6.8
Marketing and selling expenses 16,153 8.0 14,688 7.9
General and administrative expenses 10,984 5.4 9,715 5.2
--------- --------- ---------- ---------
41,989 20.7 37,035 19.9
--------- --------- ---------- ---------
Operating income 14,910 7.4 15,218 8.2
Finance income (expenses), net (1,276) (0.6) 8 0.0
Other income (expenses), net 109 0.1 (146) (0.1)
--------- --------- ---------- ---------
Income before income taxes 13,743 6.9 15,080 8.1
Taxes on income 3,646 1.8 3,914 2.1
--------- --------- ---------- ---------
10,097 5.1 11,166 6.0
Minority interest in losses of subsidiaries 257 0.0 548 0.3
Equity in net earnings (losses) of affiliated
companies and partnerships 1,901 1.0 (4) (0.0)
--------- --------- ---------- ---------
Net earnings 12,255 6.1 11,710 6.3
====== === ====== ===
Diluted earnings per share 0.31 0.29
==== ====
Exh 2-4
FIRST QUARTER OF 2003 COMPARED WITH THE FIRST QUARTER OF 2002
-------------------------------------------------------------
REVENUES
--------
The Company's consolidated revenues increased by 8.8%, from $185.8 million
in the first quarter of 2002 to $202.2 million in the first quarter of
2003.
The following table sets forth the Company's revenue distribution by areas
of operation:
Three-Month Period ended
------------------------------------------------
March 31, 2003 March 31, 2002
---------------------- ---------------------
$ millions % $ millions %
Airborne systems 98.9 48.9 92.3 49.7
Armored vehicle systems 32.3 16.0 27.2 14.6
C4I systems 32.0 15.8 28.6 15.4
Electro-optics 27.2 13.5 29.2 15.7
Other (mainly non-defense engineering and
production services) 11.8 5.8 8.5 4.6
---- --- --- ---
Total 202.2 100.0 185.8 100.0
===== ===== ===== =====
The following table sets forth the Company's distribution of revenues
by geographical regions:
Three-Month Period ended
------------------------------------------------
March 31, 2003 March 31, 2002
---------------------- ---------------------
$ millions % $ millions %
Israel 50.4 24.9 49.4 26.6
United States 77.1 38.1 49.3 26.5
Europe 21.4 10.6 40.6 21.8
Other countries 53.3 26.4 46.5 25.1
---- ---- ---- ----
Total 202.2 100.0 185.8 100.0
===== ===== ===== =====
The Company's sales are primarily to governmental entities and prime
contractors under government defense programs. Accordingly, the level of
the Company's revenues is subject to governmental budgetary constraints.
The recent economic situation in Israel has created some uncertainty with
respect to the Israeli Government's general and defense budgets.
Revenues in the United States increased by 56.4%, from $49.3 million to
$77.1 million. Revenues also increased in Other Countries, mainly in Latin
America and Asia, while revenues in Europe declined as deliveries under
certain major programs entered final phases.
GROSS PROFIT
------------
Reported gross profit in the quarter ended March 31, 2003 was $56.9 million
as compared to $52.3 in the quarter ended March 31, 2002. The gross profit
margin in both periods was 28.1%.
The Company's gross profit represents the aggregate results of the
Company's activities and projects, and is based on the mix of programs in
which the Company is engaged during the reported period.
Exh 2-5
The Company's cost of goods sold included in the first quarter of 2003 $0.5
million in non cash expenses associated with its "phantom" option plan, as
compared to an immaterial amount in the first quarter of 2002.
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 its
estimate of future market needs.
Gross R&D expenses in the quarter ended March 31, 2003 totaled $15.7
million (7.8% of revenues), as compared to $13.9 million (7.5% of revenues)
in the quarter ended March 31, 2002.
Net R&D expenses (after deduction of the Government of Israel Chief
Scientist ("OCS") participation) in the quarter ended March 31, 2003
totaled $14.9 million (7.3% of revenues), as compared to $12.6 million
(6.8% of revenues) in the quarter ended March 31, 2002. The OCS'
participation in the Company's R&D expenses in the first quarter of 2003
was lower than in the comparative period in 2002.
The Company's R&D activities in the reported period were in accordance with
its plans.
MARKETING AND SELLING EXPENSES
------------------------------
Marketing and selling expenses in the quarter ended March 31, 2003 were
$16.2 million (8.0% of revenues), as compared to $14.7 million (7.9% of
revenues) in the quarter ended March 31, 2002.
The Company invests significantly in developing new markets and pursues at
any given time various business opportunities. The continued investment in
developing new business opportunities, as well as the increased level of
revenues and the increased length of time required for marketing efforts
until orders are received, generated a higher level of sales and marketing
expenses in the first quarter of 2003 as compared to the first quarter of
2002.
GENERAL AND ADMINISTRATIVE ("G&A") EXPENSES
-------------------------------------------
G&A expenses were $11.0 million (5.4% of revenues) in the quarter ended
March 31, 2003, as compared to $9.7 million (5.2% of revenues) in the
quarter ended March 31, 2002.
During the first quarter of 2003, the Company's G&A expenses included $0.9
million in non cash expenses associated with the Company's "phantom" option
plan, as compared to an immaterial amount in the first quarter of 2002.
OPERATING PROFIT
----------------
As a result of all of the above, reported operating income in the quarter
ended March 31, 2003 was $14.9 million (7.4% of revenues), as compared to
$15.2 million (8.2% of revenues) in the quarter ended March 31, 2002.
The majority of the Company's operating expenses were related to the
Company's investment in the development of future technologies and
products, and in generating new business. These expenses are included in
the Company's R&D and marketing and sales expenses, which together account
for 74% of the operating expenses.
Exh 2-6
FINANCE EXPENSE (NET)
---------------------
Net finance expense in the quarter ended March 31, 2003 was $1.3 million,
as compared to an immaterial amount of finance income in the quarter ended
March 31, 2002.
The increase in the net finance expense resulted mainly from a lower level
of finance income generated in the first quarter of 2003 as compared to the
first quarter of 2002.
TAXES ON INCOME
---------------
Provision for taxes in the quarter ended March 31, 2003 was $3.6 million
(effective tax rate of 26.5%), as compared to a provision for taxes of $3.9
million (effective tax rate of 26.0%) in the quarter ended March 31, 2002.
The Company's tax rate represents a weighted average of the tax rates to
which the various companies in the Group are subject. The change in the
effective tax rate is attributable mainly to the mix of the tax rates in
the various tax jurisdictions in which the Group's companies generating the
taxable income operate.
COMPANY'S SHARE IN EARNINGS OF AFFILIATED COMPANIES AND PARTNERSHIPS
--------------------------------------------------------------------
In the first quarter of 2003 the Company had net income of $1.9 million
from its share in earnings of affiliated companies and partnerships, as
compared to an immaterial loss in the first quarter of 2002. These
companies, in which the Company holds 50% or less in shares or voting
rights and are therefore not consolidated in its financial statements,
operate in the Company's core business areas, including electro-optics and
airborne systems.
NET EARNINGS AND EARNINGS PER SHARE ("EPS")
-------------------------------------------
Reported net earnings in the quarter ended March 31, 2003 was $12.3 million
(6.1% of revenues), as compared to reported net earnings of $11.7 million
(6.3% of revenues) in the quarter ended March 31, 2002. Diluted EPS in the
quarter ended March 31, 2003 was $0.31, as compared to $0.29 per share in
the quarter ended March 31, 2002.
The number of shares used for computation of diluted EPS in the quarter
ended March 31, 2003 was 39,793 thousand shares, as compared to 40,128
thousand shares in the quarter ended March 31, 2002. The decrease in the
number of shares was due mainly to the change in the average share price
during the first quarter of 2003 which, due to the impact of the Company's
stock options plan, affects the number of shares calculated on a diluted
basis.
G. LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's cash flows are affected by the cumulative cash flows of its
various projects in the reported periods. Project 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.
Exh 2-7
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 elsewhere
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 flows generated from operating activities in the
quarter ended March 31, 2003 were $22.7 million, resulting mainly from net
income for the period and collection of accounts receivables. The cash
inflows were partially offset, mainly by an increase in inventories and a
decrease in advances received from customers.
Net cash flows used for investment activities in the quarter ended March
31, 2003 were $13.9 million, which were used mainly for procurement of
property, plant and equipment. The investments were made primarily in
equipment for the Group's various manufacturing plants and in buildings
being constructed at Elbit Systems' facility in Haifa, Israel and El-Op's
site in Rehovot, Israel. The buildings are planned to house employees
currently located in various leased locations in the industrial parks in
which the respective companies are located.
Net cash flows used for financing activities in the quarter ended March 31,
2003 were $14.9 million, which were used mainly for reduction of short and
long-term borrowings.
On March 31, 2003, the Company had total borrowings in the amount of $89.1
million, including $68.4 million in long-term loans, and $374 million in
guarantees issued on its behalf by banks, mainly in respect of advance
payment and performance guarantees provided in the regular course of
business. On March 31, 2003, the Company had a cash balance amounting to
$70.2 million.
As of March 31, 2003, the Company had working capital of $204.5 million,
and its current ratio was 1.57. The Company's ratio of equity to total
assets was 45.3%.
H. DERIVATIVES AND HEDGES
----------------------
Market risks relating to the Company's operations result primarily from
changes in interest rates and exchange rates. The Company typically uses
financial instruments to limit exposure. The Company also typically enters
into forward contracts in connection with transactions that are denominated
in currencies other than US dollars and New Israeli Shekels ("NIS"). The
Company may enter from time to time into forward contracts related to NIS,
based on market conditions.
On March 31, 2003, the Company's liquid assets were comprised of bank
deposits, and it had no investments in liquid equity securities that were
subject to market fluctuations. The Company's deposits and loans are based
on variable interest rates, and their value as of March 31, 2003 was
therefore not exposed to changes in interest rates. Should interest rates
either increase or decrease, such change may affect the Company's results
of operations due to changes in the cost of the liabilities and the return
on the assets that are based on variable rates.
The Company's functional currency is the U.S. dollar. On March 31, 2003,
the Company had exposure due to liabilities denominated in NIS of $41.6
million in excess of its NIS denominated assets. These liabilities
represent mostly wages, trade payables and the debt to the OCS resulting
from the OCS agreement entered into in 2002 (See Note 16 to the audited
consolidated financial statements for the year ended December 31, 2002).
The amount of the Company's exposure to the value of the NIS changes from
time to time. On March 31, 2003, the Company had forward contracts covering
NIS exposure in the amount of $15.0 million.
Exh 2-8
Most of the Company's assets and liabilities which are denominated in
currencies other than the NIS and the U.S. dollar were covered as of March
31, 2003 by forward contracts. On March 31, 2003, the Company had contracts
for the sale and purchase of such foreign currencies totaling $20.7
million. The results of financial derivative activities in this quarter
were not material.
I. DIVIDENDS
---------
The Board of Directors declared on May 19, 2003 a dividend of $0.09 per
share.
* * *
-----------------------------------------------------------------
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.
Exh 2-9
EXHIBIT 3
---------
---------------------------------------
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
---------------------------------------
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2003
--------------------
(Unaudited)
(In thousands of U.S. dollars)
Exh 3-1
---------------------------------------
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
---------------------------------------
C O N T E N T S
Page
----
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 3 - 4
Consolidated Statements of Operations 5
Consolidated Statements of Changes in Shareholder's Equity 6
Consolidated Statements of Cash Flows 7 - 8
Notes to the Consolidated Financial Statements 9 - 12
# # # # # #
Exh 3-2
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
MARCH 31, DECEMBER 31,
2003 2002
------------- -------------
UNAUDITED AUDITED
CURRENT ASSETS
Cash and cash equivalents $70,237 $76,280
Short-term bank deposits 1,361 1,650
Trade receivables, net of allowance for doubtful
accounts of $3,509 and $3,411 as of March 31, 2003
and December 31, 2002, respectively. 212,006 227,724
Other receivables and prepaid expenses 39,906 34,376
Inventories, net of advances 240,891 220,399
------------- -------------
Total current assets 564,401 560,429
------------- -------------
INVESTMENTS AND LONG-TERM RECEIVABLES
Investments in affiliated companies and partnership 24,986 21,947
Investments in other companies 11,104 11,104
Long-term receivables 7,511 20,859
Long-term bank deposits and loan 3,579 3,686
Severance pay fund 6,771 6,641
------------- -------------
53,951 64,237
------------- -------------
PROPERTY, PLANT AND EQUIPMENT, NET 208,854 202,961
------------- -------------
OTHER ASSETS, NET
Goodwill and assembled work-force, net 32,185 32,162
Know-how and other intangible assets, net 71,850 73,607
------------- -------------
104,035 105,769
------------- -------------
$931,241 $933,396
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
Exh 3-3
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars except share data)
MARCH 31, DECEMBER 31,
2003 2002
------------- -------------
UNAUDITED AUDITED
CURRENT LIABILITIES
Short-term bank credit and loans $20,737 $30,915
Dividend payable 3,492 -
Trade payables 82,888 82,521
Other payables and accrued expenses 147,180 140,981
Customer advances and amounts in excess of
costs incurred 105,629 108,418
------------- -------------
Total current liabilities 359,926 362,835
------------- -------------
LONG-TERM LIABILITIES
Long-term loans 68,407 73,173
Advances from customers 35,436 40,411
Deferred income taxes 15,894 16,413
Accrued severance pay 25,123 24,486
------------- -------------
144,860 154,483
------------- -------------
MINORITY INTEREST 4,460 4,717
------------- -------------
SHAREHOLDERS' EQUITY
Share capital
Ordinary shares of NIS1 par value; Authorized - 80,000,000
shares as of March 31, 2003 and December 31, 2002,
respectively; Issued - 39,252,083 and 39,212,328 shares as of
March 31, 2003 and December 31, 2002, respectively;
Outstanding - 38,843,262 and 38,803,507 shares as of March 31,
2003 and December 31, 2002, respectively 11,162 11,154
Accumulated other comprehensive loss (2,882) (2,882)
Additional paid-in capital 250,250 248,387
Retained earnings 167,786 159,023
Treasury stock- 408,821 shares as of March 31, 2003
and December 31, 2002, respectively (4,321) (4,321)
------------- -------------
421,995 411,361
------------- -------------
$931,241 $933,396
============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
Exh 3-4
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except per share data)
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
2003 2002 2002
------------ ------------ --------------
UNAUDITED AUDITED
Revenues $202,190 $185,783 $827,456
Cost of revenues 145,291 133,530 605,313
------------ ------------ --------------
Gross profit 56,899 52,253 222,143
------------ ------------ --------------
Research and development costs, net 14,852 12,632 57,010
Marketing and selling expenses 16,153 14,688 65,691
General and administrative expenses 10,984 9,715 41,651
------------ ------------ --------------
41,989 37,035 164,352
------------ ------------ --------------
Operating income 14,910 15,218 57,791
Financial income (expenses), net (1,276) 8 (3,035)
Other income (expenses), net 109 (146) (462)
------------ ------------ --------------
Income before taxes on income 13,743 15,080 54,294
Taxes on income 3,646 3,914 9,348
------------ ------------ --------------
10,097 11,166 44,946
Equity in net earnings (losses) of affiliated companies and
partnership 1,901 (4) 675
Minority interest 257 548 (508)
------------ ------------ --------------
Net income $12,255 $11,710 $45,113
============ ============ ===============
Earnings per share
Basic net earnings per share $0.32 $0.30 $1.17
============ ============ ===============
Weighted average number of shares used in computation (in
thousand) 38,823 38,401 38,489
============ ============ ===============
Diluted net earnings per share $0.31 $0.29 $1.13
============ ============ ===============
Weighted average number of shares used in computation (in
thousand) 39,793 40,128 39,863
============ ============ ===============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
Exh 3-5
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES
IN SHARHOLDER'S EQUITY
(In thousands of U.S. dollars)
Accumulated
Number of Additional other
outstanding paid-in comprehensive Retained
shares Share capital capital loss earnings
-------------- ------------- ------------- --------------- -------------
BALANCE AS OF JANUARY 1, 2002 (AUDITED) 38,330,272 11,054$ 244,625 $ - 126,627$
Exercise of options 473,235 100 4,040 - -
Tax benefit in respect of options exercised - - 648 - -
Amortization of stock compensation - - (926) - -
Dividends paid - - - - (12,717)
Net income - - - - 45,113
Minimum pension liability - - - (2,882) -
-------------- ------------- ------------- --------------- -------------
BALANCE AS OF DECEMBER 31, 2002 (AUDITED) 38,803,507 11,154 248,387 (2,882) 159,023
Exercise of options 39,755 8 420 - -
Tax benefit in respect of options exercised - - 52 - -
Amortization of stock compensation - - 1,391 - -
Dividends paid - - - - (3,492)
Net income - - - - 12,255
-------------- ------------- ------------- --------------- -------------
BALANCE AS OF MARCH 31, 2003 (UNAUDITED) 38,843,262 11,162$ 250,250 (2,882) $167,786
============== ============= ============= =============== ==============
BALANCE AS OF JANUARY 1, 2002 (AUDITED) 38,330,272 $11,054 $244,625 - $126,627
Exercise of options 114,657 25 1,099 - -
Tax benefit in respect of options exercised 270 - -
Amortization of stock compensation - - (299) - -
Dividends paid - - - - (3,066)
Net income - - - - 11,710
-------------- ------------- ------------- --------------- -------------
BALANCE AS OF MARCH 31, 2002 (UNAUDITED) 38,444,929 $11,079 $245,695 - $135,271
============== ============= ============= =============== ==============
Total Total
Treasury shareholders' comprehensive
Shares equity income
-------------- ------------ -------------
BALANCE AS OF JANUARY 1, 2002 (AUDITED) (4,321) $ 377,985 $
Exercise of options - 4,140
Tax benefit in respect of options exercised - 648
Amortization of stock compensation - (926)
Dividends paid - (12,717)
Net income - 45,113 $45,113
Minimum pension liability - (2,882) (2,882)
-------------- ------------ -------------
BALANCE AS OF DECEMBER 31, 2002 (AUDITED) (4,321) 411,361 $42,231
Exercise of options - 428 =============
Tax benefit in respect of options exercised - 52
Amortization of stock compensation - 1,391
Dividends paid - (3,492)
Net income - 12,255 $12,255
-------------- ------------ -------------
BALANCE AS OF MARCH 31, 2003 (UNAUDITED) $(4,321) $421,995 $12,255
============== ============= =============
BALANCE AS OF JANUARY 1, 2002 (AUDITED) $(4,321) $377,985
Exercise of options - 1,124
Tax benefit in respect of options exercised - 270
Amortization of stock compensation - (299)
Dividends paid - (3,066)
Net income - 11,710 $11,710
-------------- ------------ -------------
BALANCE AS OF MARCH 31, 2002 (UNAUDITED) $(4,321) $387,724 $11,710
============== ============= =============
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
Exh 3-6
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
2003 2002 2002
----------- ------------ ------------
(UNAUDITED) (AUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $12,255 $11,710 $45,113
Adjustments to reconcile net income to net cash provided by (used in) operating
activities:
Depreciation and amortization 9,601 7,543 32,937
Amortization of deferred stock compensation 1,391 (299) (926)
Deferred income taxes (637) (817) (5,620)
Severance pay fund (130) 266 (113)
Accrued severance pay 637 524 6,373
Loss on disposal of property and equipment 128 29 743
Tax benefit in respect of options exercised 52 270 648
Other adjustments (25) (23) 683
Minority interests (257) (548) 508
Equity in net losses (earnings) of affiliated companies and partnership (1,901) 4 (675)
Changes in operating assets and liabilities:
Decrease in trade receivables, other receivables and prepaid expenses 23,904 18,416 58,554
Increase in inventories (19,505) (15,763) (55,106)
Increase (decrease) in trade payable and accrued expenses 5,879 (29,840) (19,321)
Increase (decrease) in advances received from customers (9,002) (3,368) 42,999
Liabilities to Chief Scientist 337 - 9,197
----------- ------------ ------------
Net cash provided by (used in) operating activities 22,727 (11,896) 115,994
----------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment and other assets (14,594) (8,430) (46,003)
Investment grants received for property, plant and equipment - - 119
Acquisition of activity (Schedule A) - (2,950) (5,280)
Investments in affiliated companies and subsidiaries - (775) (1,681)
Proceeds from sale of property, plant and equipment and investments 706 346 956
Long-term loan granted - - (714)
Short-term loan repaid (granted) (250) - 1,371
Long-term bank deposits made (820) (335) (1,228)
Long-term bank deposits redeemed 826 557 1,689
Short-term bank deposits, net 250 (195) (204)
----------- ------------ ------------
Net cash used in investing activities (13,882) (11,782) (50,975)
----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options 428 1,124 4,140
Repayment of long-term bank loans (5,315) (423) (3,249)
Proceeds from long-term bank loans - 1,603 2,233
Dividends paid - - (12,717)
Change in short-term bank credit and loans, net (10,001) 32,826 (19,729)
----------- ------------ ------------
Net cash provided by (used in) financing activities (14,888) 35,130 (29,322)
----------- ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,043) 11,452 35,697
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 76,280 40,583 40,583
----------- ------------ ------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $70,237 $52,035 $76,280
=========== ============ ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
Exh 3-7
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)
(In thousands of U.S. dollars)
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
------------------------------ ----------------
2003 2002 2002
------------- ------------- ----------------
UNAUDITED AUDITED
SUPPLEMENTARY CASH FLOWS ACTIVITIES:
Cash paid during the year for:
Income taxes $4,631 $3,960 $21,730
============== ============= ================
Interest $872 $1,149 $2,947
============== ============= ================
SCHEDULE A:
Activity acquired
Estimated net fair value of assets acquired and liabilities
assumed at the date of acquisition was as follows:
Property, plant and equipment $(275) $(275)
Know-how and other intangible assets (5,225) (5,078)
------------- -----------------
(5,500) (5,353)
------------- -----------------
Less- Short term debt incurred on acquisition 2,550 73
------------- -----------------
$(2,950) $(5,280)
============= ================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
CONSOLIDATED FINANCIAL STATEMENTS.
Exh 3-8
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
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 March 31, 2003, and for the 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 5 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, 2002.
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. Reclassifications have been
made to comparative data in the balance sheet as of December 31, 2002 in
order to conform with the current year's presentation.
Operating results for the three months ended March 31, 2003, are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2003.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed in the preparation of these
statements are identical to those applied in preparation of the latest
annual financial statements.
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 Elbit Systems Ltd. and its
subsidiaries) are conducted is the U.S. dollar.
Exh 3-9
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED (CONT.)
(In thousands of U.S. dollars)
NOTE 3 - INVENTORIES, NET OF ADVANCES
MARCH 31, DECEMBER 31,
2003 2002
-------------- -------------
UNAUDITED AUDITED
Cost of long-term contracts in progress $225,551 $210,418
Raw materials 80,402 75,579
Advances to suppliers and subcontractors 25,829 25,047
-------------- -------------
331,782 311,044
Less-
Cost of contracts in progress deducted
from customer advances 12,900 10,658
-------------- -------------
318,882 300,386
Less -
Advances received from customers 64,395 67,624
Provision for losses 13,596 12,363
-------------- -------------
$240,891 $220,399
============== =============
Exh 3-10
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED (CONT.)
(In thousands of U.S. dollars)
NOTE 4 - STOCK-BASED COMPENSATION
Pro forma information under SFAS 123 Accounting for Stock Based
Compensation is as follows:
THREE MONTHS THREE MONTHS YEAR
ENDED ENDED ENDED DECEMBER
MARCH 31, MARCH 31, 31,
2003 2002 2002
------------- ------------- --------------
UNAUDITED UNAUDITED AUDITED
Net income as reported $12,255 $11,710 $45,113
Stock based compensation expense
(income), related net of tax affect as
reported 1,022 (221) (767)
Stock based compensation (expense)
under fair value bases of SFAS 123
related net of tax affect as reported (679) (681) (3,059)
------------- ------------- --------------
Pro forma net income $12,598 $10,808 $41,287
============= ============= ==============
Basic net income per share as reported $0.32 $0.30 $1.17
============= ============= ==============
Pro forma basic net income per share $0.32 $0.28 $1.07
============= ============= ==============
Diluted net income per share as reported $0.31 $0.29 $1.13
============= ============= ==============
Pro forma diluted net income per share $0.32 $0.27 $1.04
============= ============= ==============
NOTE 5 - RECONCILIATION TO ISRAELI GAAP
As described in Note 1, the Company prepares its financial statements in
accordance with U.S. GAAP. See Note 26 to the 2002 annual financial
statements for a description of the differences between US GAAP and Israeli
GAAP in respect to the Company. The effects of the differences between US
GAAP and Israeli GAAP on the Company's financial statements are detailed
below.
Exh 3-11
ELBIT SYSTEMS LTD.
AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED (CONT.)
(In thousands of U.S. dollars)
NOTE 5 - RECONCILIATION TO ISRAELI GAAP (CONT)
1. EFFECT ON NET INCOME AND EARNINGS PER SHARE
FOR THE THREE FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, DECEMBER 31,
2003 2002 2002
---------- ---------- ----------------
UNAUDITED AUDITED
A) Net income as reported
according to U.S. GAAP $12,255 $11,710 $45,113
Adjustments to Israeli GAAP (756) (1,387) (4,227)
---------- ---------- ----------------
Net income according to Israeli
GAAP $11,499 $10,323 $40,886
========== =========== ================
B) Earnings per share
Basic net income per share
As reported according to U.S. GAAP $0.32 $0.30 $1.17
As per Israeli GAAP $0.30 $0.27 $1.03
Diluted net income per share
As reported according to U.S. GAAP $0.31 $0.29 $1.13
As per Israeli GAAP $0.29 $0.26 $0.96
2. EFFECT ON SHAREHOLDERS' EQUITY
AS PER
ISRAELI
AS REPORTED ADJUSTMENTS GAAP
----------- ----------------- ------------
AS OF MARCH 31, 2003 (UNAUDITED)
Shareholders' equity $421,995 $(11,884) $410,111
============== ================= =============
AS OF DECEMBER 31, 2002 (AUDITED)
Shareholders' equity $411,361 $(11,076) $400,285
============== ================= =============
# # # # # # #
Exh 3-12