Elbit Systems Reports Second Quarter Of 2014 Results

             Elbit Systems Reports Second Quarter Of 2014 Results  Backlog of orders at $6.2 billion; Revenues at $703 million; Net income of $44 million; EPS of $1.03  PR Newswire  HAIFA, Israel, Aug. 6, 2014  HAIFA, Israel, Aug.6, 2014 /PRNewswire/ --Elbit Systems Ltd. (the "Company") (NASDAQ and TASE: ESLT), the international defense electronics company, reported today its consolidated results for the quarter ended June30, 2014.  In this release, the Company is providing US-GAAP results as well as additional non-GAAP financial data, which are intended to provide investors a more comprehensive understanding of the Company's business results and trends. Unless otherwise stated, all financial data presented is GAAP financial data.  Management Comment:  Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented: "Our second quarter results demonstrate continued solid performance. These achievements are a result of our ongoing efforts to focus on efficiently managing our operations while increasingly leveraging our global inter company resources and synergies. We are pleased with the continued growth in our backlog, which is a good indicator of potential revenue growth in the future. We remain committed to maintaining our electronic defense leadership, by investing in the development of new technologies and markets with the aim of ensuring continued stability and long-term growth."  Second quarter 2014 results:  Revenues in the second quarter of 2014were $702.6 million, as compared to $702.9 million in the second quarter of 2013.  Gross profit amounted to $199.4 million (28.4% of revenues) in the second quarter of 2014, as compared to $203.1 million (28.9% of revenues) in the second quarter of 2013. The non-GAAP gross profit in the second quarter of 2014 was $204.8 million (29.1% of revenues), as compared to $208.5 million (29.7% of revenues) in the second quarter of 2013. The decrease in the gross profit rate was mainly due to the mix of programs sold in the quarter and the stronger Israeli shekel versus the US dollar in the second quarter of 2014 compared to last year.  Research and development expenses, net, were $52.2 million (7.4% of revenues) in the second quarter of 2014, as compared to $51.5 million (7.3% of revenues) in the second quarter of 2013.  Marketing and selling expenses were $50.3 million (7.2% of revenues) in the second quarter of 2014, as compared to $57.1 million (8.1% of revenues) in the second quarter of 2013. The decrease in the quarter was mainly a result of lower selling expenses related to the mix of marketing efforts in the quarter.  General and administrative expenses were $34.3 million (4.9% of revenues) in the second quarter of 2014, as compared to $27.8 million (4.0% of revenues) in the second quarter of 2013. General and administrative expenses in the second quarter of 2013 benefited from income related to a legal settlement, net of expenses, of $7.6 million.  Operating income was $62.6 million (8.9% of revenues) in the second quarter of 2014, as compared to operating income of $66.7 million (9.5% of revenues) in the second quarter of 2013. The non-GAAP operating income in the second quarter of 2014 was $73.1 million (10.4% of revenues), as compared to $70.5 million (10.0% of revenues) in the second quarter of 2013.  Financial expenses, net, were $8.3 million in the second quarter of 2014, as compared to $12.7 million in the second quarter of 2013. Financial expenses, net, in the second quarter of 2013 were comparatively high due to fluctuations in foreign currencies.  Taxes on income were $9.9 million (effective tax rate of 18.1%) in the second quarter of 2014, as compared to $5.1 million (effective tax rate of 9.4%) in the second quarter of 2013. The effective tax rate was affected by the mix of the tax rates in the various jurisdictions in which the Company's entities generate taxable income.  Equity in net earnings of affiliated companies and partnerships was $1.7 million (0.2% of revenues) in the second quarter of 2014, as compared to $2.5 million (0.4% of revenues) in the second quarter of 2013.  Net income attributable to non-controlling interests was $2.3 million in the second quarter of 2014, as compared to $3.0 million in the second quarter of 2013.  Net income attributable to the Company's shareholders in the second quarter of 2014 was $43.9 million (6.2% of revenues), as compared to $49.6 million (7.1% of revenues) in the second quarter of 2013. Net income in the second quarter of 2013 benefited from income related to a legal settlement, net of expenses, of $7.6 million. The non-GAAP net income in the second quarter of 2014 was $52.6 million (7.5% of revenues), as compared to $50.4 million (7.2% of revenues) in the second quarter of 2013.  Diluted net earnings per share attributable to the Company's shareholders were $1.03 for the second quarter of 2014, as compared with diluted net earnings per share of $1.17 for the second quarter of 2013. The non-GAAP diluted earnings per share in the second quarter of 2014 were $1.23, as compared with diluted net earnings per share of $1.19 for the second quarter of 2013.  The Company's backlog of orders as of June30, 2014 totaled $6,174 million, as compared to $5,804 million as of June30, 2013. Approximately 72% of the current backlog is attributable to orders from outside Israel. Approximately 59% of the current backlog is scheduled to be performed during the second half of 2014 and 2015.  Operating cash flow was $15.8 million for the first half of 2014, as compared to $60.9 million in the first half of 2013. The Company's cash flow was negatively affected mainly by the delay in payments from the Israeli Ministry of Defense. The Company does not foresee a risk in the collection of these payments.  Non-GAAP financial data:  The following non-GAAP financial data is presented to enable investors to have additional information on the Company's business performance as well as a further basis for periodical comparisons and trends relating to the Company's financial results. The Company believes such data provides useful information to investors by facilitating more meaningful comparisons of the Company's financial results over time. Such non-GAAP information is used by the Company's management to make strategic decisions, forecast future results and evaluate the Company's current performance. However, investors are cautioned that, unlike financial measures prepared in accordance with GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies.  The non-GAAP financial data includes reconciliation adjustments regarding non-GAAP gross profit, operating income, net income and diluted EPS. In arriving at non-GAAP presentations, companies generally factor out items such as those that have a non-recurring impact on the income statements, various non-cash items, significant effects of retroactive tax legislation and changes in accounting guidance and other items which, in management's judgment, are items that are considered to be outside of the review of core operating results.  In the Company's non-GAAP presentation, the Company made certain adjustments, as indicated in the table below.  These non-GAAP measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with the Company's results of operations, as determined in accordance with GAAP, and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP measures. Investors should consider non-GAAP financial measures in addition to, and not as replacements for or superior to, measures of financial performance prepared in accordance with GAAP.  Reconciliation of GAAP to Non-GAAP (Unaudited) Supplemental Financial Data  (US Dollars in millions)                             Six Months Ended  Three Months Ended  Year Ended                             June 30,          June 30,           December 31,                             2014     2013     2014       2013     2013 GAAP gross profit           392.6    395.9    199.4      203.1    824.8 Adjustments: Amortization of intangible  10.8     11.0     5.4        5.4      22.2 assets Impairment of long-lived    —        —        —          —        0.9 assets Non-GAAP gross profit      403.4    406.9    204.8      208.5    847.9 Percent of revenues         29.1  %  29.4  %  29.1   %   29.7  %  29.0     % GAAP operating income       122.5    120.5    62.6       66.7     239.4 Adjustments: Amortization of intangible  21.6     23.0     10.5       11.4     45.9 assets Impairment of long-lived    —        —        —          —        0.9 assets Legal settlement, net       —        (7.6)    —          (7.6)    (7.6) Gain from changes in        (6.0)    —        —          —        — holdings Non-GAAP operating income   138.1    135.9    73.1       70.5     278.6 Percent of revenues         10.0  %  9.8   %  10.4   %   10.0  %  9.5      % GAAP net income attributable to Elbit       92.0     91.0     43.9       49.6     183.4 Systems' shareholders Adjustments: Amortization of intangible  21.6     23.0     10.5       11.4     45.9 assets Impairment of long-lived    —        —        —          —        0.9 assets Legal settlement, net       —        (7.6)    —          (7.6)    (7.6) Gain from changes in        (6.0)    —        —          —        (0.9) holdings Adjustment of gain from discontinued operations,    —        (0.8)    —          (1.0)    (0.8) net Related tax benefits        (3.2)    (4.0)    (1.8)      (2.0)    (10.1) Non-GAAP net income attributable to             104.4    101.6    52.6       50.4     210.8 Elbit Systems' shareholders Percent of revenues         7.5   %  7.3   %  7.5    %   7.2   %  7.2      % Non-GAAP diluted net EPS    2.45     2.41     1.23       1.19     4.99    Recent Events:  On May 18, 2014 the Company announced that its wholly-owned U.S. subsidiary, Elbit Systems of America, LLC, was awarded two contracts, totaling $14.1 million, to support the upgrade of the U.S. Marine Corps' Bell AH-1W attack helicopter fleet.  On May 28, 2014 the Company announced that it was awarded a contract to supply systems in an amount of $133 million for homeland security applications to a customer in the Latin American region. The systems are based on highly advanced and unique technologies, including command, control and intelligence capabilities to be operated via dedicated control centers intended to play a major role in fighting crime, preventing violence and improving citizens' safety and security. The contract will be performed over a one-year period.  On June 8, 2014 the Company announced that it was selected by the Swiss Federal Department of Defence, Civil Protection and Sport, as the preferred supplier for the UAS 15 new reconnaissance drone program.  On June 12, 2014 the Company announced that its subsidiary, Elbit Systems Electro-Optics-Elop Ltd., decided to withdraw its lawsuit filed against the Government of Israel in November 2012 for damages and expenses caused in connection with the cancellation of export licenses for a project of a foreign customer.  On June 22, 2014 the Company announced that it was awarded a contract, valued at approximately $20 million, for the supply of upgraded armored personnel carriers ("APCs") to the Philippines Armed Forces. The upgrade will include 25 mm unmanned turrets, 12.7 mm remote controlled weapon stations and fire control systems for 90 mm turrets. The APCs will be supplied over a one-year period.  Dividend:  The Board of Directors declared a dividend of $0.32 per share for the second quarter of 2014. The dividend's record date is August 19, 2014. The dividend will be paid from income generated as Preferred Income (as defined under Israeli tax laws), on September 1, 2014, net of taxes and levies, at the rate of 20%.  Conference Call:  The Company will be hosting a conference call today, Wednesday, August6, 2014 at 9:00 a.m. Eastern Time. On the call, management will review and discuss the results and will be available to answer questions.  To participate, please call one of the teleconferencing numbers that follow. If you are unable to connect using the toll-free numbers, please try the international dial-in number.  US Dial-in Numbers: 1 888 668 9141 UK Dial-in Number: 0 800 917 5108 ISRAEL Dial-in Number: 03 918 0609 INTERNATIONAL Dial-in Number: +972 3 918 0609  at: 9:00 am Eastern Time; 6:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm Israel Time  This call will also be broadcast live on Elbit Systems' web-site at http://www.elbitsystems.com. An online replay will be available from 24 hours after the call ends.  Alternatively, for two days following the call, investors will be able to dial a replay number to listen to the call. The dial-in numbers are:  1 888 326 9310 (US) or +972 3 925 5901 (Israel and International).  About Elbit Systems Elbit Systems Ltd. is an international defense electronics company engaged in a wide range of programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance ("C4ISR"), unmanned aircraft systems ("UAS"), advanced electro-optics, electro-optic space systems, EW suites, signal intelligence ("SIGINT") systems, data links and communications systems and radios.The Company also focuses on the upgrading of existing military platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services, including training and simulation systems.  For additional information, visit: www.elbitsystems.comor follow us on Twitter.  Attachments: Consolidated balance sheets Consolidated statements of income Consolidated statements of cash flow Consolidated revenue distribution by areas of operation and by geographical regions  Company Contact:                                                     IR Contact:                                                       Joseph Gaspar, Executive VP & CFO                                                     Ehud Helft Tel: +972-4-8316663                                                     Kenny Green j.gaspar@elbitsystems.com                                                     GK Investor Relations Dalia Rosen, VP, Head of Corporate Communications                                                     Tel: 1-646-201-9246 Tel: +972-4-8316784                                                     elbitsystems@gkir.com dalia.rosen@elbitsystems.com                                                      Elbit Systems Ltd.  This press release contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1943, as amended) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current fact. Forward-looking statements are based on management's expectations, estimates, projections and assumptions. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results, performance and trends may differ materially from these forward-looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States among others; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; and the outcome of legal and/or regulatory proceedings. The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.'s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward-looking statements speak only as of the date of this release. The Company does not undertake to update its forward-looking statements.  Elbit Systems Ltd., its logo, brand, product, service and process names appearing in this Press Release are the trademarks or service marks of Elbit Systems Ltd. or its affiliated companies. All other brand, product, service and process names appearing are the trademarks of their respective holders. Reference to or use of a product, service or process other than those of Elbit Systems Ltd. does not imply recommendation, approval, affiliation or sponsorship of that product, service or process by Elbit Systems Ltd. Nothing contained herein shall be construed as conferring by implication, estoppal or otherwise any license or right under any patent, copyright, trademark or other intellectual property right of Elbit Systems Ltd. or any third party, except as expressly granted herein.    ELBIT SYSTEMS LTD.  CONSOLIDATED BALANCE SHEETS  (In thousands of US Dollars)                                                     June 30,      December 31,                                                     2014          2013                                                     Unaudited     Audited Assets Current assets: Cash and cash equivalents                           $ 173,842     $ 193,737 Short-term bank deposits and marketable securities  102,776       71,625 Trade and unbilled receivables, net                 906,640       823,245 Other receivables and prepaid expenses              159,526       151,367 Inventories, net of customers advances              820,992       756,032 Total current assets                                2,163,776     1,996,006 Investments in affiliated companies and             123,914       131,362 partnerships Long-term trade and unbilled receivables            235,082       242,576 Long-term bank deposits and other receivables       63,856        52,983 Deferred income taxes, net                          40,790        35,695 Severance pay fund                                  318,057       323,388                                                     781,699       786,004 Property, plant and equipment, net                  461,668       481,408 Goodwill and other intangible assets, net           663,461       669,750 Total assets                                        $ 4,070,604   $ 3,933,168 Liabilities and Equity Short-term bank credit and loans                    $ 398         $ — Current maturities of long-term loans and Series A  66,168        63,111 Notes Trade payables                                      328,565       301,480 Other payables and accrued expenses                 689,073       720,544 Customer advances in excess of costs incurred on    396,964       349,998 contracts in progress                                                     1,481,168     1,435,133 Long-term loans, net of current maturities          329,363       224,209 Series A Notes, net of current maturities           327,960       377,812 Employee benefit liabilities                        400,454       407,855 Deferred income taxes and tax liabilities, net      78,913        73,502 Customer advances in excess of costs incurred on    133,332       164,854 contracts in progress Other long-term liabilities                         61,618        55,634                                                     1,331,640     1,303,866 Elbit Systems Ltd.'s equity                         1,242,485     1,177,012 Non-controlling interests                           15,311        17,157 Total equity                                        1,257,796     1,194,169 Total liabilities and equity                        $ 4,070,604   $ 3,933,168    ELBIT SYSTEMS LTD.  CONSOLIDATED STATEMENTS OF INCOME  (In thousands of US Dollars, except for share and per share amount)                 Six Months Ended            Three Months Ended      Year Ended                                             June 30,               December 31,                 June 30,                 2014          2013          2014        2013        2013                 Unaudited                   Unaudited               Audited Revenues        $ 1,385,260   $ 1,383,063   $ 702,647   $ 702,876   $ 2,925,151 Cost of         992,706       987,206       503,291     499,727     2,100,304 revenues Gross profit    392,554       395,857       199,356     203,149     824,847 Operating expenses: Research and development,    101,161       102,543       52,219      51,494      220,482 net Marketing and   105,261       112,849       50,283      57,095      235,466 selling General and administrative, 69,583        59,981        34,269      27,815      129,507 net Other income,   (5,951)       —             —           —           — net                 270,054       275,373       136,771     136,404     585,455 Operating       122,500       120,484       62,585      66,745      239,392 income Financial       (12,933)      (20,640)      (8,271)     (12,718)    (37,310) expenses, net Other income,   122           44            88          53          937 net Income before   109,689       99,888        54,402      54,080      203,019 income taxes Taxes on income (16,045)      (9,668)       (9,859)     (5,064)     (25,313)                 93,644        90,220        44,543      49,016      177,706 Equity in net earnings of affiliated      2,751         4,174         1,654       2,482       13,032 companies and partnerships Income from continuing      96,395        94,394        46,197      51,498      190,738 operations Income from discontinued    —             681           —           1,022       681 operations, net  Net income   96,395        95,075        46,197      52,520      191,419 Less: net income attributable to (4,360)       (4,113)       (2,315)     (2,965)     (8,002) non-controlling interests Net income attributable to Elbit Systems   $ 92,035      $ 90,962      $ 43,882    $ 49,555    $ 183,417 Ltd.'s shareholders Earnings per share attributable to Elbit Systems Ltd.'s shareholders: Basic net earnings per share Continuing      $ 2.16        $ 2.15        $ 1.03      $ 1.16      $ 4.34 operations Discontinued    —             0.02          —           0.02        0.01 operations Total           $ 2.16        $ 2.17        $ 1.03      $ 1.18      $ 4.35 Diluted net earnings per share Continuing      $ 2.16        $ 2.14        $ 1.03      $ 1.15      $ 4.33 operations Discontinued    —             0.02          —           0.02        0.01 operations Total           $ 2.16        $ 2.16        $ 1.03      $ 1.17      $ 4.34 Weighted average number of shares (in thousands)  used in computation of Basic earnings 42,636        41,977        42,658      42,047      42,139 per share Diluted earnings per    42,661        42,146        42,682      42,217      42,295 share Amounts attributable to Elbit Systems Ltd.'s shareholders Income from continuing      $ 92,035      $ 90,143      $ 43,882    $ 48,533    $ 182,598 operations, net of income tax Discontinued operations, net —             819           —           1,022       819 of income tax Net income attributable to Elbit Systems   $ 92,035      $ 90,962      $ 43,882    $ 49,555    $ 183,417 Ltd.'s shareholders    ELBIT SYSTEMS LTD.  CONSOLIDATED STATEMENTS OF CASH FLOW  (In thousands of US Dollars)                                           Six Months Ended        Year Ended                                           June 30,               December 31,                                           2014        2013        2013                                           Unaudited               Audited CASH FLOWS FROM OPERATING ACTIVITIES Net income                                $ 96,395    $ 95,075    $  191,419 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization             62,605      64,475      129,348 Write-off impairment and discontinued     —           (681)       254 operations, net Stock-based compensation                  184         252         440 Amortization of Series A Notes premium    (46)        (46)        (92) and related issuance costs, net Deferred income taxes and reserve, net    (1,054)     13,476      221 Loss (gain) on sale of property, plant    (1,259)     175         (147) and equipment Loss (gain) on sale of investment         (5,879)     (514)       873 Equity in net loss (earnings) of affiliated companies and partnerships,    7,247       (2,674)     468 net of dividend received (*) Changes in operating assets and liabilities, net of amounts acquired: Increase in short and long-term trade     (83,440)    (113,820)   (108,337) receivables, and prepaid expenses Increase in inventories, net              (64,941)    (36,085)    (4,785) Increase (decrease) in trade payables,    (5,211)     437         55,935 other payables and accrued expenses Severance, pension and termination        (1,587)     4,128       (3,595) indemnities, net Increase (decrease) in advances received  12,745      36,696      (95,027) from customers Net cash provided by operating activities 15,759      60,894      166,975 CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (26,988)    (32,950)    (63,019) and other assets Acquisition of a subsidiary               787         —           — Investments in affiliated companies and   (3,536)     (4,975)     (6,222) other companies Proceeds from sale of property, plant and 7,817       3,041       3,755 equipment Proceeds from sale of investments         110         2,000       3,550 Investment in long-term deposits          (403)       (494)       (2,076) Proceeds from sale of long-term deposits  602         94          795 Investment in short-term deposits and     (69,109)    (20,050)    (50,975) marketable securities Proceeds from sale of short-term deposits 40,427      15,710      42,899 and marketable securities Net cash used in investing activities     (50,293)    (37,624)    (71,293) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from exercise of options         3,005       6,455       18,364 Repayment of long-term loans              (95,000)    (23,547)    (230,532) Proceeds from long-term loans             196,500     10,060      242,247 Repayment of Series A Notes               (55,532)    (55,535)    (55,535) Dividends paid (**)                       (34,732)    (34,254)    (75,549) Change in short-term bank credit and      398         8,988       (181) loans, net Net cash provided by (used in) financing  14,639      (87,833)    (101,186) activities NET DECREASE IN CASH AND CASH EQUIVALENTS (19,895)    (64,563)    (5,504) Cash and cash equivalents at the          193,737     199,241     199,241 beginning of the year Cash and cash equivalents at the end of   $ 173,842   $ 134,678   $  193,737 the period * Dividend received from affiliated       $ 9,998     $ 1,500     $  13,500 companies and partnerships ** Dividends paid to the Company's shareholders and minority shareholders of a subsidiary.    ELBIT SYSTEMS LTD.  DISTRIBUTION OF REVENUES  (In millions of US Dollars) Consolidated Revenues by Areas of Operation:               Six Months Ended                    Three Months Ended               June 30,                            June 30,               2014              2013              2014              2013               $         %       $         %       $         %       $         %               millions          millions          millions          millions Airborne      579.1     41.8    562.1     40.6    289.1     41.1    278.8     39.7 systems Land systems  123.4     8.9     119.8     8.7     65.1      9.3     63.5      9.0 C4ISR systems 511.1     36.9    498.5     36.0    260.9     37.1    258.3     36.7 Electro-optic 125.3     9.0     159.5     11.5    59.7      8.5     78.4      11.2 systems Other (mainly non-defense engineering   46.4      3.4     43.2      3.2     27.9      4.0     23.9      3.4 and production services) Total         1,385.3   100.0   1,383.1   100.0   702.7     100.0   702.9     100.0 Consolidated Revenues by Geographic Regions:               Six Months Ended                    Three Months Ended               June 30,                            June 30,               2014              2013              2014              2013               $         %       $         %       $         %       $         %               millions          millions          millions          millions Israel        331.6     23.9    288.9     20.9    168.6     24.0    150.3     21.4 North America 410.5     29.6    413.9     29.9    215.6     30.7    194.8     27.7 Europe        204.5     14.8    270.7     19.6    96.8      13.8    150.6     21.4 Latin America 171.0     12.3    132.6     9.6     101.7     14.5    67.3      9.5 Asia-Pacific  235.4     17.0    260.5     18.8    117.9     16.8    130.7     18.6 Other         32.3      2.4     16.5      1.2     2.1       0.2     9.2       1.4 countries Total         1,385.3   100.0   1,383.1   100.0   702.7     100.0   702.9     100.0    SOURCE Elbit Systems Ltd.  Website: http://www.elbitsystems.com  
Press spacebar to pause and continue. Press esc to stop.