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 2006
-----------------------
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 if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(1): |_|
NOTE: Regulation S-T Rule 101(b)(1) only permits the submission in paper
of a Form 6-K if submitted solely to provide an attached annual report to
security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in
paper as permitted by Regulation S-T Rule 101(b)(7): |_|
NOTE: Regulation S-T Rule 101(b)(7) only permits the submission in paper
of a Form 6-K submitted to furnish a report or other document that the
registrant foreign private issuer must furnish and make public under the
laws of the jurisdiction in which the registrant is incorporated,
domiciled or legally organized (the registrant's "home country"), or
under the rules of the home country exchange on which the registrant's
securities are traded, as long as the report or other document is not a
press release, is not required to be and has not been distributed to the
registrant's security holders, and, if discussing a material event, has
already been the subject of a Form 6-K submission or other Commission
filing on EDGAR.
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
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-______________
Attached hereto as Exhibit 1 and incorporated herein by reference is
the Registrant's press release, dated May 16, 2006.
Attached hereto as Exhibit 2 and incorporated herein by reference is
the Registrant's Management Report with respect to the results of operations of
the Registrant for the quarter ended March 31, 2006.
Attached hereto as Exhibit 3 and incorporated herein by reference is
the Registrant's condensed interim consolidated financial statements for the
quarter ended March 31, 2006.
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/ Ilan Pacholder
--------------------------------------
Name: Ilan Pacholder
Title: Corporate Secretary
Dated: May 16, 2006
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
1. Press release dated May 16, 2006
2. Management's Report
3. Financial Statements
EXHIBIT 1
[LOGO OF ELBIT SYSTEMS LTD.]
EARNINGS RELEASE
----------------
ELBIT SYSTEMS REPORTS FIRST QUARTER 2006 RESULTS
------------------------------------------------
REVENUES INCREASED BY 45% YEAR OVER YEAR TO $334.4 MILLION
BACKLOG OF ORDERS INCREASED BY $176 MILLION TO A NEW RECORD OF $ 3.5 BILLION
DILUTED EPS INCREASED TO $0.35 AS COMPARED TO $0.30 LAST YEAR
HAIFA, ISRAEL, MAY 16, 2006 - ELBIT SYSTEMS LTD. (THE "COMPANY") (NASDAQ: ESLT),
the international defense company, today reported its consolidated results for
the first quarter ended March 31, 2006. This is the first full quarter in which
the Company consolidates the financial results of Elisra Electronic Systems, a
leading company in the areas of EW Suites, airborne warning systems, ELINT
systems and data links, in which the Company acquired a 70% interest on November
30, 2005.
THE COMPANY'S BACKLOG OF ORDERS AS OF MARCH 31, 2006 reached $3,523 million, as
compared with $3,347 million at the end of 2005. 73% of the backlog relates to
orders outside of Israel. Approximately 62% of the Company's backlog as of March
31, 2006 is scheduled to be performed over the next three quarters of 2006 and
during 2007.
CONSOLIDATED REVENUES FOR THE FIRST QUARTER OF 2006 increased by 45% to $334.4
million from $230.7 million in the corresponding quarter in 2005.
CONSOLIDATED NET INCOME FOR THE FIRST QUARTER OF 2006 was $14.5 million (4.3% of
revenues), as compared with $12.7 million (5.5% of revenues) in the same period
in 2005. Diluted earnings per share for the first quarter of 2006 were $0.35, as
compared with $0.30 for the first quarter of 2005.
GROSS PROFIT FOR THE FIRST QUARTER OF 2006 was $87.5 million (26.2% of
revenues), as compared with gross profit of $61.6 million (26.7% of revenues) in
the first quarter of 2005.
During the first quarter of 2006 the Company produced operating cash flow of
$75.4 million.
--------------------------------------------------------------------------------
HAIFA P.O.B 539 ISRAEL 31053 TEL. 972-4-8315315 FAX. 972-4-8550002
KARMIEL P.O.B 650 ISRAEL 20101 TEL. 972-4-9901111 FAX. 972-4-9986522
[LOGO OF ELBIT SYSTEMS LTD.]
The President and CEO of Elbit Systems, Joseph Ackerman, commented: "We are
pleased to report our first quarterly results for 2006, in which we continue to
demonstrate growth in revenues, profits, backlog and cash flow. During the first
quarter we won several important projects in new markets and based on new
technologies. We intend to continue our efforts in expanding our portfolio of
products and markets while improving profitability. In the first quarter we
achieved double digit organic growth that was complemented by consolidating
Elisra's full quarter revenues for the first time and we are successfully
proceeding with the integration of the newly acquired businesses into the Elbit
Systems Group."
The Board of Directors declared a dividend of $0.15 per share for the first
quarter of 2006. The dividend's record date is June 6, 2006, and the dividend
will be paid on June 19, 2006, net of taxes and levies, at the rate of 18.5%.
CONFERENCE CALL
The Company will be hosting a webcast and conference call today, Tuesday, May
16th at 10.30am EST. On the call, management will review and discuss the
results, and will be available to answer investor questions.
To participate, please access Elbit Systems' investor relations web-site at
http://www.elbitsystems.com. An online replay will be available 2 hours after
the call end, and will be available for 30 days.
Alternatively, please call one of the teleconferencing numbers that follow.
Please begin placing your calls at least 5 minutes before the conference call
commences. If you are unable to connect using one of the toll-free numbers,
please try the international dial-in number.
US Dial-in Numbers: 1 866 744 5399
UK Dial-in Number: 0 800 917 9141
ISRAEL Dial-in Number: 03 918 0610
INTERNATIONAL Dial-in Number: +972 3 918 0610
At: 10:30am Eastern Standard Time, 7:30am Pacific Standard Time, 3:30pm UK Time
or 5:30pm Israel Time.
--------------------------------------------------------------------------------
HAIFA P.O.B 539 ISRAEL 31053 TEL. 972-4-8315315 FAX. 972-4-8550002
KARMIEL P.O.B 650 ISRAEL 20101 TEL. 972-4-9901111 FAX. 972-4-9986522
[LOGO OF ELBIT SYSTEMS LTD.]
In addition, a replay of the call will be available by telephone starting two
hours after the call ends until Thursday, May 19, 10:00 am EST. To access the
replay please dial:
1-877-332-1104 (US) or +972-3-925-5945 (international and Israel)
Elbit Systems Ltd. is an international defense electronics company engaged in a
wide range of defense-related programs throughout the world. The Elbit Systems
Group, which includes the company and its subsidiaries, operates in the areas of
aerospace, land and naval systems, command, control, communications, computers,
intelligence, surveillance and reconnaissance ("C4ISR"), advanced electro-optic
and space technologies, EW suites, airborne warning systems, ELINT systems, data
links and military communications systems and equipment. The Group also focuses
on the upgrading of existing military platforms and developing new technologies
for defense and homeland security applications. For further information, please
visit the Company web site at www.elbitsystems.com
COMPANY CONTACT: IR CONTACT:
Ilan Pacholder Ehud Helft / Kenny Green
V.P. Finance & Capital Markets
and Corporate Secretary
Elbit Systems Ltd GK International
Tel: +972-4 831-6632 Tel: 1-866-704-6710
Fax: +972-4 831-6659 Fax: + 972-3-607- 4711
E-mail: pacholder@elbit.co.il E-mail: Kenny@gk-biz.com
--------------------- ----------------
E-mail: Ehud@gk-biz.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.
(FINANCIAL TABLES TO FOLLOW)
--------------------------------------------------------------------------------
HAIFA P.O.B 539 ISRAEL 31053 TEL. 972-4-8315315 FAX. 972-4-8550002
KARMIEL P.O.B 650 ISRAEL 20101 TEL. 972-4-9901111 FAX. 972-4-9986522
ELBIT SYSTEMS LTD.
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousand of US Dollars)
March 31 December 31
2006 2005
--------- ---------
Unaudited Audited
ASSETS
------
Current Assets:
Cash and short term deposits 88,023 94,629
Trade receivable and others 421,560 416,067
Inventories, net of advances 350,493 328,428
--------- ---------
Total current assets 860,076 839,124
Affiliated Companies & other Investments 203,841 201,339
Long-term receivables & others 156,827 151,557
Fixed Assets, net 285,979 284,997
Other assets, net 140,658 142,728
--------- ---------
1,647,381 1,619,745
========= =========
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
Current liabilities 678,851 612,168
Long-term liabilities 496,897 543,893
Minority Interest 13,570 12,907
Shareholder's equity 458,063 450,777
--------- ---------
1,647,381 1,619,745
========= =========
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
2006 2005 2005
---------- ---------- ----------
Unaudited Audited
Revenues 334,370 230,688 1,069,876
Cost of revenues 246,830 169,126 786,616
Restructurirng expenses - - 3,488
---------- ---------- ----------
Gross Profit 87,540 61,562 279,772
---------- ---------- ----------
Research and development, net 21,438 15,166 71,903
Marketing and selling 26,248 16,646 78,648
General and administrative 19,007 12,772 54,417
IPR&D write-off - - 7,490
---------- ---------- ----------
Total operating expenses 66,693 44,584 212,458
---------- ---------- ----------
Operating income 20,847 16,978 67,314
Financial expenses, net (4,241) (1,732) (11,472)
Other income (expenses), net 908 169 (5,326)
---------- ---------- ----------
Income before income taxes 17,514 15,415 50,516
Provisions for income taxes 4,604 3,987 16,335
---------- ---------- ----------
12,910 11,428 34,181
Equity in net earnings (losses) of affiliated companies
and partnership * 2,267 1,042 (1,636)
Minority rights (709) 220 (58)
---------- ---------- ----------
Net income 14,468 12,690 32,487
========== ========== ==========
Earnings per share
Basic net earnings per share 0.35 0.31 0.80
========== ========== ==========
Diluted net earnings per share 0.35 0.30 0.78
========== ========== ==========
* Includes IPR&D write-off of $8,500 in 2005
EXHIBIT 2
ELBIT SYSTEMS LTD.
------------------
MANAGEMENT'S REPORT
-------------------
FOR THE QUARTER ENDED MARCH 31, 2006
------------------------------------
THIS REPORT SHOULD BE READ TOGETHER WITH THE UNAUDITED FINANCIAL
STATEMENTS FOR THE QUARTER ENDED MARCH 31, 2006 OF ELBIT SYSTEMS LTD.
("ELBIT SYSTEMS" OR THE "COMPANY"), THE COMPANY'S AUDITED CONSOLIDATED
FINANCIAL STATEMENTS AND RELATED NOTES FOR THE YEAR ENDED DECEMBER 31,
2005, THE COMPANY'S MANAGEMENT REPORT FOR THE YEAR ENDED DECEMBER 31,
2005 AND THE COMPANY'S FORM 20-F FOR THE YEAR ENDED DECEMBER 31, 2004,
FILED BY THE COMPANY WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION
AND WITH THE ISRAELI SECURITIES AUTHORITY.
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.
A. EXECUTIVE OVERVIEW
------------------
BUSINESS DESCRIPTION
--------------------
Elbit Systems and its subsidiaries (the "Group") operate in the areas
of aerospace, land and naval systems, command, control, communications,
computers, intelligence, surveillance and reconnaissance ("C(4)ISR"),
advanced electro-optic and space technologies, EW suites, airborne
warning systems, ELINT systems, data links and military communications
systems and equipment. The Group also focuses on the upgrading of
existing military platforms and developing new technologies for defense
and homeland security applications.
The Group provides support services for the platforms it upgrades as
well as the systems and products it supplies. In addition, the Group
provides a wide range of logistic support services, including operation
of pilot training services for the Israeli Air Force on a private
financing initiative basis. Several of the Group's companies also
provide advanced engineering and manufacturing services to various
customers, utilizing their significant manufacturing capabilities. The
Group often cooperates with industries in Israel and in various other
countries.
The Group tailors and adapts its technologies, integration skills,
market knowledge and battle-proven systems to each customer's
individual requirements in both existing and new platforms. By
upgrading existing platforms with advanced electronic and electro-optic
technologies, the Group provides customers with cost-effective
solutions, and its customers are able to improve their technological
and operational capabilities within limited defense budgets.
The Group operates in a competitive environment for most of its
projects, systems and products. Competition is based on product and
program performance, price, reputation, reliability, maintenance costs
and responsiveness to customer requirements. This includes the ability
to respond to rapid changes in technology. In addition, its competitive
position sometimes is affected by specific requirements in particular
markets.
1
FINANCIAL HIGHLIGHTS
--------------------
The financial statements of the Company include consolidation of
Elisra's financial results, commencing December 1, 2005.
The Company's revenues increased by 44.9% and reached $334.4 million in
the first quarter of 2006, as compared to $230.7 million in the first
quarter of 2005.
Net earnings in the first quarter of 2006 were $14.5 million and the
diluted earnings per share were $0.35, as compared to $12.7 million and
$0.30 in the first quarter of 2005.
The Company's backlog increased by 5% and reached $3.52 billion as of
March 31, 2006, as compared to $3.35 billion as of December 31, 2005.
The Company's cash flow generated from operations in the quarter ended
March 31, 2006 was $75.4 million, as compared to $49.6 million in the
quarter ended March 31, 2005.
The Board of Directors declared a dividend of $0.15 per share for the
first quarter of 2006.
B. BACKLOG OF ORDERS
-----------------
The Company's backlog of orders as of March 31, 2006 reached $3,523
million, of which 73% were for orders outside of Israel. The Company's
backlog as of December 31, 2005 was $3,347 million, of which 72% were
for orders outside of Israel.
Approximately 62% of the Company's backlog as of March 31, 2006 is
scheduled to be performed in the following three quarters of 2006 and
during 2007. The majority of the 38% balance is scheduled to be
performed in 2008 and 2009.
C. 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, 2005. See also the Company's management report for the
year ended December 31, 2005.
2
D. 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, 2006 and March 31, 2005.
For the three months ended
March 31
----------------------------------------------
2006 2005
------------------ -------------------
$ % $ %
------- ---- ------- ----
(In thousands of U.S. dollars, except per share data)
Total revenues 334,370 100.0 230,688 100.0
Cost of revenues 246,830 73.8 169,126 73.3
------- ---- ------- ----
Gross profit 87,540 26.2 61,562 26.7
------- ---- ------- ----
Research and Development (R&D) expenses 28,578 8.5 19,900 8.6
Less - participation (7,140) (2.1) (4,734) (2.0)
------- ---- ------- ----
R&D expenses, net 21,438 6.4 15,166 6.6
Marketing and selling expenses 26,248 7.8 16,646 7.2
General and administrative expenses 19,007 5.7 12,772 5.5
------- ---- ------- ----
66,693 19.9 44,584 19.3
------- ---- ------- ----
Operating income 20,847 6.2 16,978 7.4
Finance expenses, net (4,241) (1.3) (1,732) (0.8)
Other income, net 908 0.3 169 0.1
------- ---- ------- ----
Income before taxes on income 17,514 5.2 15,415 6.7
Taxes on income 4,604 1.3 3,987 1.7
------- ---- ------- ----
12,910 3.9 11,428 5.0
Minority interest in losses (gains)
of subsidiaries (709) (0.2) 220 0.1
Equity in net earnings of affiliated companies
and partnership 2,267 0.7 1,042 0.5
------- ---- ------- ----
Net earnings 14,468 4.3 12,690 5.5
======= ==== ======= ====
Diluted earnings per share 0.35 0.30
==== ====
3
FIRST QUARTER OF 2006 COMPARED WITH THE FIRST QUARTER OF 2005
-------------------------------------------------------------
REVENUES
--------
The Company's consolidated revenues increased by 44.9%, from $230.7
million in the first quarter of 2005 to $334.4 million in the first
quarter of 2006. The increase in revenues was partly as a result of
consolidating Elisra's reports, starting December 1, 2005.
The following table sets forth the Company's revenue distribution by
areas of operation:
Three-Month Period ended
------------------------------------------------
March 31, 2006 March 31, 2005
---------------------- ---------------------
$ millions % $ millions %
Airborne systems 138.6 41.5 101.0 43.8
Land systems 41.8 12.5 26.0 11.2
C(4)ISR systems 83.0 24.8 44.0 19.1
Electro-optics 44.1 13.2 43.2 18.7
Other (mainly non-defense engineering and
production services) 26.9 8.0 16.5 7.2
----- ----- ----- -----
Total 334.4 100.0 230.7 100.0
===== ===== ===== =====
The changes in revenues distribution by areas of operation, other than
ordinary quarterly fluctuations, were in the area of C(4)ISR systems
sales, which increased mainly as a result of the revenues derived from
the Watchkeeper project in the first quarter of 2006. The revenues
derived from Elisra are included in the Company's various areas of
operation. Elisra's EW systems revenues are included in the Airborne
systems area of operation.
The following table sets forth the Company's distribution of revenues
by geographical regions:
Three-Month Period ended
------------------------------------------------
March 31, 2006 March 31, 2005
---------------------- ---------------------
$ millions % $ millions %
Israel 94.2 28.2 67.2 29.1
United States 111.0 33.2 89.5 38.8
Europe 54.6 16.3 16.2 7.0
Other countries 74.6 22.3 57.8 25.1
---- ---- ---- ----
Total 334.4 100.0 230.7 100.0
===== ===== ===== =====
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 changes in revenues by geographic distribution, other than standard
quarterly fluctuations, were in the revenues from customers in Europe,
which increased from $16.2 million to $54.6 million, due mainly as a
result of the revenues derived from the Watchkeeper project in the
first quarter of 2006.
4
GROSS PROFIT
------------
Gross profit in the quarter ended March 31, 2006 was $87.5 million, as
compared to $61.6 million in the quarter ended March 31, 2005. The
gross profit margin in the first quarter of 2006 was 26.2%, as compared
to 26.7% in the first quarter of 2005.
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.
The Company's R&D included programs which are coordinated with, and
partially funded by, third parties, including the Israeli Ministry of
Defense ("IMOD"), the Office of the Chief Scientist ("OCS") and
bi-national and European Development funds. The R&D was performed in
all major areas of core technological activities of the Company and
mainly in the areas of advanced airborne systems, cutting edge
electro-optics technology and products for surveillance, aerial
reconnaissance, lasers, space based sensors and homeland security
technologies and products. The Company experienced increased IMOD and
OCS participation in these programs.
Gross R&D expenses in the quarter ended March 31, 2006 totaled $28.6
million (8.5% of revenues), as compared to $19.9 million (8.6% of
revenues) in the quarter ended March 31, 2005.
The increase in R&D expenses resulted mainly from the consolidation of
Elisra's results and projects initiated during 2005, which involved a
high level of R&D activities and corresponding third party
participations.
Net R&D expenses (after reduction of third party participation) in the
quarter ended March 31, 2006 totaled $21.4 million (6.4% of revenues),
as compared to $15.2 million (6.6% of revenues) in the quarter ended
March 31, 2005.
MARKETING AND SELLING EXPENSES
------------------------------
The Company maintains its activities in developing new markets and
pursues at any given time various business opportunities according to
the Company's plan.
Marketing and selling expenses in the quarter ended March 31, 2006 were
$26.2 million (7.8% of revenues), as compared to $16.6 million (7.2% of
revenues) in the quarter ended March 31, 2005.
The increase in marketing and expenses was mainly as a result of
consolidating Elisra's reports starting December 1, 2005.
GENERAL AND ADMINISTRATIVE ("G&A") EXPENSES
-------------------------------------------
G&A expenses were $19.0 million (5.7% of revenues) in the quarter ended
March 31, 2006, as compared to $12.8 million (5.5% of revenues) in the
quarter ended March 31, 2005.
The increase in G&A expenses was mainly as a result of consolidating
Elisra's reports starting December 1, 2005.
5
FINANCE EXPENSE (NET)
---------------------
Net finance expense in the quarter ended March 31, 2006 was $4.2
million, as compared to $1.7 million in the quarter ended March 31,
2005.
The increase in the net finance expense resulted mainly from a higher
level of long-term loans and an increase in interest rates.
TAXES ON INCOME
---------------
Provision for taxes in the quarter ended March 31, 2006 was $4.6
million (effective tax rate of 26.3%), as compared to a provision for
taxes of $4.0 million (effective tax rate of 25.9%) in the quarter
ended March 31, 2005.
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 ENTITIES
--------------------------------------------------
In the first quarter of 2006 the Company had net income of $2.3 million
from its share in earnings of affiliated companies and partnerships, as
compared to $1.0 million in the first quarter of 2005.
The companies and partnerships, in which the Company holds 50% or less
in shares or voting rights and are therefore not consolidated in its
financial statements, operate in complementary areas to the Company's
core business activities, including electro-optics, airborne systems
and communications.
NET EARNINGS AND EARNINGS PER SHARE ("EPS")
-------------------------------------------
Net earnings in the quarter ended March 31, 2006 were $14.5 million
(4.3% of revenues), as compared to net earnings of $12.7 million (5.5%
of revenues) in the quarter ended March 31, 2005. Diluted EPS in the
quarter ended March 31, 2006 was $0.35, as compared to $0.30 in the
quarter ended March 31, 2005.
The number of shares used for computation of diluted EPS in the quarter
ended March 31, 2006 was 41,736 thousand shares, as compared to 41,617
thousand shares in the quarter ended March 31, 2005.
E. LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's net cash flow generated from operating activities in the
quarter ended March 31, 2006 was $75.4 million, resulting mainly from
net income and advances received from customers. The cash inflows were
partially offset, mainly by an increase in inventories.
Net cash flow used for investment activities in the quarter ended March
31, 2006 was $13.0 million, which was used mainly for procurement of
various assets and equipment.
Net cash flow used for financing activities in the quarter ended March
31, 2006 was $68.7 million, which was used mainly for repayment of
long-term loans.
6
On March 31, 2006, the Company had total borrowings in the amount of
$193.5 million, including $161.3 million in long-term loans, and $688.6
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, 2006, the Company had a cash balance
amounting to $87.6 million.
As of March 31, 2006, the Company had working capital of $179.0 million
and its current ratio was 1.26.
F. 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 its exposure to those changes. The
Company also typically enters into forward contracts in connection with
transactions that are denominated in currencies other than U.S. 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, 2006, 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, except for its shareholdings in
Tadiran Communications Ltd. The Company's deposits and loans are based
on variable interest rates, and their value as of March 31, 2006 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,
2006, the Company had exposure due to liabilities denominated in NIS of
$60 million in excess of its NIS denominated assets. These liabilities
represent mostly wages and trade payables. The amount of the Company's
exposure to the changes in the NIS-U.S. dollar exchange rate varies
from time to time.
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, 2006 by forward contracts. On March 31, 2006, the Company had
forward contracts for the sale and purchase of such foreign currencies
totaling $289 million ($93 million in Euro, $191 million in GBP and $5
million in other currencies). The financial derivative activities in
the first quarter of 2006 resulted in an unrealized net gain of
approximately $3.2 million, which was recorded as other comprehensive
income.
On March 31, 2006, the Company had options for hedging future cash flow
denominated in NIS in the amount of $14 million. The fair market value
of the options as of March 31, 2006 was not material.
G. DIVIDENDS
---------
The Board of Directors declared on May 15, 2006 a dividend of $0.15 per
share.
* * * * *
EXHIBIT 3
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ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------
CONDENSED INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF MARCH 31, 2006
--------------------
(Unaudited)
(In thousands of U.S. dollars)
--------------------------------------------------------------------------------
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
--------------------------------------------------------------------------------
C O N T E N T S
---------------
P A G E
-------
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Income 4
Consolidated Statements of Changes in Shareholder's Equity 5-6
Consolidated Statements of Cash Flows 7-8
Notes to the Consolidated Financial Statements 9-11
# # # # # #
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U. S. dollars (In thousands)
MARCH 31, DECEMBER 31,
2006 2005
---------- ----------
(UNAUDITED) (AUDITED)
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $ 87,569 $ 93,887
Short-term bank deposits 454 742
Trading securities 2,236 2,282
Trade receivables, (net of allowance for doubtful
accounts in the amount of $3,038 and $3,221 as of March 31,
2006 and December 31, 2005, respectively) 344,106 346,689
Other receivables and prepaid expenses 75,218 67,096
Inventories, net of advances 350,493 328,428
---------- ----------
Total current assets 860,076 839,124
---------- ----------
INVESTMENTS AND LONG-TERM RECEIVABLES:
Investments in affiliated companies and a partnership 197,496 194,994
Investments in other companies 6,345 6,345
Compensation receivable in respect of fire damages, net 15,530 15,530
Long-term bank deposits and trade receivables 5,581 2,457
Severance pay fund 135,716 133,570
---------- ----------
360,668 352,896
---------- ----------
PROPERTY, PLANT AND EQUIPMENT, NET 285,979 284,997
---------- ----------
INTANGIBLE ASSETS:
Goodwill 63,957 63,957
Other intangible assets, net 76,701 78,771
---------- ----------
140,658 142,728
---------- ----------
$1,647,381 $1,619,745
========== ==========
The accompanying notes are an integral part of the consolidated financial
statements
-2-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------
U. S. dollars (In thousands)
MARCH 31, DECEMBER 31,
2006 2005
----------- -----------
(UNAUDITED) (AUDITED)
----------- -----------
CURRENT LIABILITIES:
Short-term bank credit and loans $ 25,300 $ 30,296
Current maturities of long-term loans 6,862 7,355
Trade payable 140,278 120,260
Dividend payable 5,818 -
Other payables and accrued expenses 227,521 216,539
Customers advances and amounts in excess of
costs incurred on contracts in progress 273,072 237,718
----------- -----------
Total current liabilities 678,851 612,168
----------- -----------
LONG-TERM LIABILITIES:
Long-term loans 161,296 224,982
Advances from customers 140,341 122,263
Deferred income taxes 30,324 31,424
Accrued termination liability 164,936 165,224
----------- -----------
496,897 543,893
----------- -----------
MINORITY INTERESTS 13,570 12,907
----------- -----------
SHAREHOLDERS' EQUITY:
Share capital
Ordinary shares of New Israeli Shekels (NIS) 1 par value;
Authorized - 80,000,000 shares as of March 31, 2006
and December 31, 2005;
Issued-41,451,613 and 41,375,545 shares as of March 31,
2006 and December 31, 2005 respectively;
Outstanding - 41,042,692 and 40,966,624 shares as of March 31, 2006 and
December 31, 2005, respectively 11,653 11,636
Additional paid-in capital 279,039 278,679
Accumulated other comprehensive loss (3,081) (1,340)
Retained earnings 174,773 166,123
Treasury shares - 408,921 shares as of March 31, 2006 and
December 31, 2005 (4,321) (4,321)
----------- -----------
458,063 450,777
----------- -----------
$ 1,647,381 $ 1,619,745
=========== ===========
The accompanying notes are an integral part of the consolidated financial
statements
-3-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
--------------------------------------------------------------------------------
U. S. dollars (In thousands, except share and per share data)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
--------------------------- DECEMBER 31,
2006 2005 2005
----------- ----------- -----------
(UNAUDITED) (AUDITED)
--------------------------- -----------
Revenues $ 334,370 $ 230,688 $ 1,069,876
Cost of revenues 246,830 169,126 786,616
Restructuring expenses - - 3,488
----------- ----------- -----------
Gross profit 87,540 61,562 279,772
----------- ----------- -----------
Research and development costs, net 21,438 15,166 71,903
Marketing and selling expenses 26,248 16,646 78,648
General and administrative expenses 19,007 12,772 54,417
In process research and development write-off - - 7,490
----------- ----------- -----------
66,693 44,584 212,458
----------- ----------- -----------
Operating income 20,847 16,978 67,314
Financial expenses, net (4,241) (1,732) (11,472)
Other income (expenses), net 908 169 (5,326)
----------- ----------- -----------
Income before taxes on income 17,514 15,415 50,516
Taxes on income 4,604 3,987 16,335
----------- ----------- -----------
12,910 11,428 34,181
Equity in net earnings of affiliated companies and
partnership 2,267 *1,042 (1,636)
Minority interests in losses (earnings) of
subsidiaries (709) 220 (58)
----------- ----------- -----------
Net income $ 14,468 *$ 12,690 $ 32,487
=========== =========== ===========
Earnings per share
Basic net earnings per share $ 0.35 *$ 0.31 $ 0.80
=========== =========== ===========
Diluted net earnings per share $ 0.35 *$ 0.30 $ 0.78
=========== =========== ===========
Number of shares used in computation of basic net
earnings per share 41,010 40,645 40,750
=========== =========== ===========
Number of shares used in computation of diluted net
earnings per share 41,736 41,617 41,623
=========== =========== ===========
* Restated see Note 1B.
The accompanying notes are an integral part of the consolidated financial
statements
-4-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------------------------
U. S. dollars (In thousands, except share and per share data)
ACCUMULATED
NUMBER OF ADDITIONAL OTHER
OUTSTANDING SHARE PAID-IN COMPREHENSIVE RETAINED
SHARES CAPITAL CAPITAL LOSS EARNINGS
------------- ----------- ------------- ---------------- ------------
BALANCE AS OF JANUARY 1, 2005
(AUDITED) 40,561,026 $ 11,548 $ 274,432 $ (4,742) $ 155,267
Exercise of options 405,598 88 3,423 - -
Tax benefit in respect of options exercised - - 652 - -
Stock based compensation - - 172 - -
Dividends paid - - - - (21,631)
Other comprehensive income
(loss) net of tax:
Unrealized gains on derivative instruments - - - 6,412 -
Foreign currency translation differences - - - (924) -
Minimum pension liability adjustment - - - (2,086) -
Net income - - - - 32,487
------------- ----------- ------------- ---------------- ------------
Total comprehensive income
BALANCE AS OF DECEMBER 31, 2005
(AUDITED) 40,966,624 $ 11,636 $ 278,679 $ (1,340) $ 166,123
Exercise of options 76,068 17 438 - -
Tax benefit in respect of options exercised - - (78) - -
Dividends declared - - - - (5,818)
Other comprehensive income
(loss), net of tax:
Unrealized losses on derivative
instruments - - - (1,788) -
Foreign currency translation differences - - - 77 -
Minimum pension liability adjustment - - - (30) -
Net income - - - - 14,468
------------- ----------- ------------- ---------------- ------------
Total comprehensive income
BALANCE AS OF MARCH 31, 2006
(UNAUDITED) 41,042,692 $ 11,653 $ 279,039 $ (3,081) $ 174,773
============= =========== ============= ================ ============
TOTAL TOTAL
TREASURY SHAREHOLDERS' COMPREHENSIVE
SHARES EQUITY INCOME
------------ -------------- -----------------
BALANCE AS OF JANUARY 1, 2005
(AUDITED) $ (4,321) $ 432,184
Exercise of options - 3,511
Tax benefit in respect of options exercised - 652
Stock based compensation - 172
Dividends paid - (21,631)
Other comprehensive income
(loss) net of tax:
Unrealized gains on derivative instruments - 6,412 6,412
Foreign currency translation differences - (924) (924)
Minimum pension liability adjustment - (2,086) (2,086)
Net income - 32,487 32,487
------------ -------------- -----------------
Total comprehensive income $ 35,889
=================
BALANCE AS OF DECEMBER 31, 2005
(AUDITED) $ (4,321) $ 450,777
Exercise of options - 455
Tax benefit in respect of options exercised - (78)
Dividends declared - (5,818)
Other comprehensive income
(loss), net of tax:
Unrealized losses on derivative
instruments - (1,788) (1,788)
Foreign currency translation differences - 77 77
Minimum pension liability adjustment - (30) (30)
Net income - 14,468 14,468
------------ -------------- -----------------
Total comprehensive income $ 12,727
=================
BALANCE AS OF MARCH 31, 2006
(UNAUDITED) $ (4,321) $ 458,063
============ ==============
The accompanying notes are an integral part of the
consolidated financial statements.
-5-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CONT.)
------------------------------------------------------------------------------------------------------------------------------------
U. S. dollars (In thousands, except share and per share data)
ACCUMULATED
NUMBER OF ADDITIONAL OTHER
OUTSTANDING SHARE PAID-IN COMPREHENSIVE RETAINED
SHARES CAPITAL CAPITAL INCOME (LOSS) EARNINGS
------------ ------------- ------------- ---------------- ------------
BALANCE AS OF JANUARY 1, 2005
(AUDITED) 40,561,126 $ 11,548 $ 274,432 $ (4,742) $ 155,267
Exercise of options 121,816 28 1,047 - -
Tax benefit in respect of options exercised - - 287 -
Stock-based compensation - - - 212 -
Dividends paid - - - (5,296)
Unrealized gains on derivative instruments (425)
Foreign currency translation differences - - - (175) -
Net income - - - - 12,690
------------ ------------- ------------- ---------------- ------------
Total comprehensive income
BALANCE AS OF MARCH 31, 2005
(UNAUDITED) (*) 40,682,942 $ 11,576 $ 275,766 $ (5,130) $ 162,661
============ ============= ============= ================ ============
TOTAL TOTAL OTHER
TREASURY SHAREHOLDERS' COMPREHENSIVE
SHARES EQUITY INCOME
------------ --------------- -----------------
BALANCE AS OF JANUARY 1, 2005
(AUDITED) $ (4,321) $ 432,184
Exercise of options - 1,075
Tax benefit in respect of options exercised - 287
Stock-based compensation - 212 212
Dividends paid - (5,296)
Unrealized gains on derivative instruments (425) (425)
Foreign currency translation differences - (175) (175)
Net income - 12,690 12,690
------------ --------------- -----------------
Total comprehensive income $12,302
=================
BALANCE AS OF MARCH 31, 2005
(UNAUDITED) (*) $ (4,321) $ 440,552
============ ===============
* Restated see Note 1B.
The accompanying notes are an integral part of the
consolidated financial statements.
-6-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------------------------------------------------------------------------------------------
U. S. dollars (In thousands)
THREE MONTHS ENDED
MARCH 31, YEAR ENDED
----------------------- DECEMBER 31,
2006 **2005 2005
--------- --------- ---------
(UNAUDITED) (AUDITED)
----------------------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 14,468 $ 12,690 $ 32,487
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 14,649 10,794 57,718
Purchased in process R&D - - 7,490
Stock based compensation - - 172
Deferred income taxes (1,698) (527) 6,551
Accrued severance pay, net (2,464) (2,114) (6,707)
Gain on sale of property, plant and equipment (231) (250) (731)
Tax benefit in respect of options exercised - 287 652
Minority interests in earnings (losses) of subsidiaries 709 (220) 58
Equity in net losses (earnings) of affiliated companies and partnership, net of
dividend received (*) (1,736) (42) 13,805
Changes in operating assets and liabilities:
Decrease (increase) in short and long-term receivables and prepaid expenses (9,806) 5,978 (43,420)
Increase in inventories (20,933) (28,778) (43,679)
Increase (decrease) in trade payable, other payables and accrued expenses 30,251 (21,197) (37,859)
Increase in advances received from customers 52,300 72,897 202,450
Settlement of royalties with the Office of the Chief Scientist - - (1,371)
Other adjustments (98) 45 -
--------- --------- ---------
Net cash provided by operating activities 75,411 49,563 187,616
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (14,628) (15,235) (58,735)
Acquisition of subsidiaries and businesses (Schedule A) - (318) (28,331)
Investments in affiliated companies - (9,681) (160,861)
Proceeds from sale of property, plant and equipment 1,323 829 2,712
Proceeds from sale of investment - 3,100 3,100
Investment in long-term bank deposits (215) (359) (1,089)
Proceeds from sale of long-term bank deposits 168 535 1,501
Short-term bank deposits, net 334 (525) (4)
--------- --------- ---------
Net cash used in investing activities (13,018) (21,654) (241,707)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of options 455 1,075 3,511
Repayment of long-term bank loans (82,031) (12,613) (85,035)
Receipt of long-term bank loans 18,353 - 216,500
Dividends paid - - (21,631)
Change in short-term bank credit and loans, net (5,488) (871) 524
--------- --------- ---------
Net cash provided by (used in) financing activities (68,711) (12,409) 113,869
--------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (6,318) 15,500 59,778
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD 93,887 34,109 34,109
--------- --------- ---------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $ 87,569 $ 49,609 $ 93,887
========= ========= =========
* Dividend received $ 500 $ 1,000 $ 12,169
========= ========= =========
** Restated see Note 1B.
The accompanying notes are an integral part of the
consolidated financial statements.
-7-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
-----------------------------------------------------------------------------------------------------------------------------------
U. S. dollars (In thousands)
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- --------
2006 2005 2005
-------- -------- --------
(UNAUDITED) (AUDITED)
--------------------- --------
SUPPLEMENTARY CASH FLOWS ACTIVITIES:
Cash paid during the period for:
Income taxes $ 4,218 $ 4,818 $ 21,475
======== ======== ========
Interest $ 4,930 $ 1,695 $ 13,151
======== ======== ========
SCHEDULE A:
Subsidiaries and businesses acquired
Estimated net fair value of assets acquired and liabilities
assumed at the date of acquisition assumed:
Working capital, net (excluding cash and cash equivalents) - $ (3,281) $ 39,273
Property, plant and equipment - - (28,875)
Other long-term assets - - (74,363)
Goodwill and other intangible assets - (1,514) (53,291)
In process R&D - - (7,490)
Deferred income taxes - - 5,404
Long-term liabilities - 4,477 82,730
Minority interest - - 8,281
-------- -------- --------
- $ (318) $(28,331)
======== ======== ========
The accompanying notes are an integral part of the
consolidated financial statements.
-8-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
--------------------------------------------------------------------------------
U. S. dollars (In thousands)
NOTE 1 - GENERAL
A. The accompanying financial statements have been prepared in
a condensed format as of March 31, 2006, 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. Accordingly, certain information and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles in the United States but which are
not required for interim reporting purposes, have been
condensed or omitted. See Note 4 for the reconciliation
from U.S. 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, 2005.
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,
2005 in order to conform to the current year's
presentation.
Operating results for the three months ended March 31,
2006, are not necessarily indicative of the results that
may be expected for the year ending December 31, 2006.
B. During 2004, the Company acquired 4.3% of Tadiran's
outstanding shares on the Tel Aviv Stock Exchange in
consideration for $15,900. In 2004 and in the first quarter
of 2005 the investment in Tadiran's shares was accounted
for as available-for-sale securities.
In the first and the second quarters of 2005, the Company
acquired additional 17% of Tadiran's outstanding shares in
consideration for $74,100.
As a result of the acquisition in the second quarter of
2005, the Company was able to exercise significant
influence on Tadiran. In accordance with APB 18, "The
Equity Method of Accounting for Investments in Common
Stock", the Company's interest in Tadiran, which was
previously accounted for as available-for-sale securities,
was accounted retroactively under the equity method of
accounting ("step-by-step acquisition"). Implementing the
step-by-step acquisition method resulted in an adjustment
of the Company's financial statements for the first quarter
of 2005, in which the Company's investment in Tadiran was
accounted for as available-for-sale securities.
The following are the effects of the adjustments on the
consolidated statement of income:
Three months ended March 31, 2005
---------------------------------------
As Effect of As
reported adjustments adjusted
-------- ----------- --------
Equity in net earnings of affiliated companies
and partnership $ 1,493 $ (451) $ 1,042
Net income 13,141 (451) 12,690
Basic net earnings per share 0.32 (0.01) 0.31
Diluted net earnings per share $ 0.32 $ (0.02) $ 0.30
-9-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
--------------------------------------------------------------------------------
U. S. dollars (In thousands)
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
A. The significant accounting policies followed in the
preparation of these statements are identical to those
applied in preparation of the latest annual financial
statements, except for the adoption of FASB Statement No.
123 (revised 2004), "Share-Based Payments" ("Statement
123(R)") as follows:
Through December 31, 2005 the Company adopted the fair value
based method of recording stock options for all employee
stock option grants consistent with SFAS No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123").
Effective January 1, 2006, the Company adopted the
provisions of Statement 123(R), using the modified
prospective method. The adoption of Statement 123(R) had an
immaterial effect on the Company's financial position and
results of operations.
B. 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.
NOTE 3 - INVENTORIES, NET OF ADVANCES
MARCH 31, DECEMBER 31,
2006 2005
--------- ---------
(UNAUDITED) (AUDITED)
--------- ---------
Cost of long-term contracts in progress $ 323,920 $ 311,800
Raw materials 88,533 84,343
Advances to suppliers and subcontractors 45,733 40,095
--------- ---------
458,186 436,238
Less - Cost incurred on contracts in progress
deducted from customer advances 20,299 16,178
--------- ---------
437,887 420,060
Less -Advances received from customers 78,830 84,083
Provision for losses 8,564 7,549
--------- ---------
$ 350,493 $ 328,428
========= =========
-10-
ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
--------------------------------------------------------------------------------
U. S. dollars (In thousands)
NOTE 4 - RECONCILIATION TO ISRAELI GAAP
As described in Note 1, the Company prepares its financial
statements in accordance with U.S. GAAP. See Note 23 to the 2005
annual financial statements for a description of the differences
between U.S. GAAP and Israeli GAAP in respect to the Company. The
effects of the differences between U.S. GAAP and Israeli GAAP on
the Company's financial statements are detailed below.
A. Effect on net income
THREE MONTHS ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
--------------------- --------
2006 2005 2005
-------- -------- --------
(UNAUDITED) (AUDITED)
--------------------- --------
Net income as reported according to
according to U.S. GAAP $ 14,468 $ 12,690 $ 32,487
Adjustments to Israeli GAAP (633) (1,522) (9,637)
-------- -------- --------
Net income according to Israeli GAAP $ 13,835 $ 11,168 $ 22,850
======== ======== ========
B. Effect on shareholders' equity
AS PER
AS REPORTED ADJUSTMENTS ISRAELI GAAP
--------- -------- --------
AS OF MARCH 31, 2006 (UNAUDITED)
Shareholders' equity $ 458,063 $(19,912) $438,151
========= ======== ========
AS OF DECEMBER 31, 2005 (AUDITED)
Shareholders' equity $ 450,777 $(19,279) $431,498
========= ======== ========
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