Elbit Systems Reports Fourth Quarter and Full Year 2010 Results

2010 Revenues Amounted to $2,670 million; Net Profit of $183.5 Million and EPS of $4.25; Backlog of Orders Over $5.4 Billion

Mar 15, 2011, 03:07 ET from Elbit Systems Ltd

HAIFA, Israel, March 15, 2011 /PRNewswire-FirstCall/ -- Elbit Systems Ltd. (NASDAQ and TASE: ESLT), the international defense electronics company, reported today its consolidated results for the fourth quarter and full year ended December 31, 2010.

(Logo: http://www.newscom.com/cgi-bin/prnh/20080408/300441 )

In this release, the Company is providing its usual 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.

Fourth quarter 2010 results:

Revenues for the fourth quarter of 2010 increased by 11.8% to $798.7 million, as compared to $714.7 million in the fourth quarter of 2009. The increase in the Company's revenues was driven mainly by the electro-optics and airborne systems areas of operations.

Gross profit for the fourth quarter of 2010 was $231.9 million (29.0% of revenues), as compared to gross profit of $212.0 million (29.7% of revenues) in the fourth quarter of 2009. The reduction in the gross profit margin rate was caused mainly by write-off of inventories as well as additional acquisition expenses related to the acquisitions completed during the fourth quarter of 2010, including mainly Soltam, ITL, Ares and M7.

Research and development expenses, net for the fourth quarter of 2010 were $68.5 million (8.6% of revenues), as compared to $61.8 million (8.7% of revenues) in the fourth quarter of 2009.

Marketing and selling expenses for the fourth quarter of 2010 were $65.9 million (8.2% of revenues), as compared to $59.4 million (8.3% of revenues) in the fourth quarter of 2009.

General and administrative expenses for the fourth quarter of 2010 were $40.8 million (5.1% of revenues), as compared to $32.5 million (4.5% of revenues) in the fourth quarter of 2009. The increase was mainly a result of consolidation of expenses from the newly acquired subsidiaries in the fourth quarter of 2010.

Financial expenses, net for the fourth quarter of 2010 were $11.6 million, as compared to $7.4 million in the fourth quarter of 2009. Expenses were relatively low in the fourth quarter of 2009 due to currency hedging related gains. The increased expenses in the fourth quarter of 2010 were mainly due to higher expenses related to the Series A Notes that the Company issued during the second quarter of 2010, as well as to the revaluation of the New Israeli Shekel against the US dollar.

Taxes on income for the fourth quarter of 2010 were $2.4 million (effective tax rate of 5.4%), as compared to taxes on income of $0.4 million (effective tax rate of 0.8%) in the fourth quarter of 2009. The change in the effective tax rate was attributable mainly to the mix of the tax rates in the various jurisdictions in which the Company's entities generate taxable income. The unusually low effective tax rate in the fourth quarter of 2009 was related to tax adjustments from prior years in some of the Company's subsidiaries. The fourth quarter of 2010 was also affected by an increase in deferred tax assets.

Equity in net earnings of affiliated companies and partnership for the fourth quarter of 2010 increased to $6.1 million (0.8% of revenues), as compared to $4.9 million (0.7% of revenues) in the fourth quarter of 2009.

Net income attributable to non-controlling interests for the fourth quarter of 2010 was $4.9 million, as compared to $3.0 million in the fourth quarter of 2009.

Net income attributable to the Company's ordinary shareholders for the fourth quarter of 2010 was $43.7 million (5.5% of revenues), as compared with $53.7 million (7.5% of revenues) in the fourth quarter of 2009.

Diluted net earnings per share attributable to the Company's ordinary shareholders for the fourth quarter of 2010 were $1.01, as compared with $1.24 for the fourth quarter of 2009.

Full year 2010 results:

Revenues for the year ended December 31, 2010 decreased by 5.7% to $2,670.1 million, as compared to $2,832.4 million in the year ended December 31, 2009. The decrease in the Company's revenues was due mainly to a decrease in sales in the land systems and the C4ISR systems areas of operations. The decrease in revenues in the land systems activities was mainly a result of a lower level of revenues in Europe, including a decrease in the level of revenues due to the winding-up of M-60 project in Turkey, as well as a decrease in the revenues for the Bradley project in the United States. The decrease in the revenues for C4ISR systems was mainly in Europe, as a result of a decreased level of revenues from the Watchkeeper project.

Cost of goods sold for the year ended December 31, 2010 was $1,872.3 million, as compared to $1,983.0 in the year ended December 31, 2009. The decrease in cost of goods sold was mainly as a result of the decrease in sales. The expenses include a write-off of inventories in the amount of approximately $13 million related to the acquisitions of Soltam and ITL. In addition, as a result of the acquisitions the amortization expense of intangible assets increased. The increased expenses were partly offset by improvements in other subsidiaries of the Company.

Gross profit for the year ended December 31, 2010 decreased by 6.1% to $797.9 million (29.9% of revenues), as compared with gross profit of $849.5 million (30.0% of revenues) in the year ended December 31, 2009. The decrease in the amount of gross profit in 2010 resulted primarily from the reduction in revenues.

Research and development expenses, net for the year ended December 31, 2010 were $234.1 million (8.8% of revenues), as compared to $216.8 million (7.7% of revenues) in the year ended December 31, 2009. The increased rate of research and development expenses in 2010 was primarily a result of accelerated development of programs related to technology and the adaptation of products, as well as increased engineering activities to support marketing efforts world-wide.

Marketing and selling expenses for the year ended December 31, 2010 were $229.9 million (8.6% of revenues), as compared to $251 million (8.9% of revenues) in the year ended December 31, 2009.

General and administrative expenses for the year ended December 31, 2010 were $131.2 million (4.9% of revenues), as compared to $119.3 million (4.2% of revenues) in the year ended December 31, 2009. The increase in general and administrative expenses in 2010 was mainly the result of expenses related to acquisitions and the consolidation of expenses from the newly acquired subsidiaries.

Other operational income for the year ended December 31, 2010 amounted to $4.8 million. The amount reflects a net gain of $4.8 million in the second quarter of 2010, related to the revaluation of the previously held Azimuth shares at the acquisition date due to its accounting treatment as a business combination achieved in stages.

Financial expenses, net for the year ended December 31, 2010 were $21.3 million, as compared to $15.6 million in the year ended December 31, 2009. The higher level of financial expenses in 2010 was mainly due to higher expenses related to the Series A Notes that the Company issued during the second quarter of 2010 as well as to the revaluation of the NIS against the US dollar.

Other income for the year ended December 31, 2010 amounted to $13.3 million. It included a gain of $12.8 million related to the selling of Mediguide shares in the first quarter of 2010.

Taxes on income for the year ended December 31, 2010 were $24.0 million (effective tax rate of 12.1%), as compared to taxes on income of $38.1 million (effective tax rate of 15.4%) in the year ended December 31, 2009. Taxes on income in 2010 were reduced by an amount of approximately $10 million related to the deferred tax assets for prior years' losses in one of the Company's subsidiaries. The change in the effective tax rate was also 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 partnership for the year ended December 31, 2010 was $19.3 million (0.7% of revenues), similar to that for the year ended December 31, 2009.

Net income attributable to non-controlling interests for the year ended December 31, 2010 was $11.2 million, as compared to $13.6 million in the year ended December 31, 2009.

Net income attributable to the Company's ordinary shareholders for the year ended December 31, 2010 was $183.5 million (6.9% of revenues), as compared with $214.9 million (7.6% of revenues) in the year ended December 31, 2009.

Diluted net earnings per share attributable to the Company's ordinary shareholders for the year ended December 31, 2010 were $4.25, as compared with $5.00 for the year ended December 31, 2009.

The Company's backlog of orders for the year ended December 31, 2010 totaled $5,446 million, as compared with $5,044 million as of December 31, 2009. Approximately 74% of the current backlog is due to orders from outside Israel. Approximately 72% of the current backlog is scheduled to be performed during 2011 and 2012.

Operating cash flow for the year ended December 31, 2010 was $184.9 million, as compared to $209.7 million in the year ended December 31, 2009. The decrease in the operating cash flow was mainly a result of the decrease in net income.

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 our 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 below 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 below, the Company made the following adjustments: (1) amortization of purchased intangible assets, (2) significant reorganization, restructuring and other related expenses, (3) impairment of investments, including impairment of auction rate securities, (4) gain from changes in holdings, including revaluation of the previously held shares at the acquisition date when a business combination is achieved in stages (step-up) and (5) the income tax effects of the foregoing.

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 (Audited) to Non-GAAP (Unaudited) Supplemental
Financial Data:


                            (US Dollars in millions)

                                                          2010   2009   2008

    GAAP gross profit                                    797.9  849.5  767.4
    Adjustments:
    Amortization of purchased intangible assets           25.0   22.2   28.9
    Reorganization, restructuring and other related
    expenses(1)                                           12.8      -      -
    Non-GAAP gross profit                                835.7  871.7  796.3
    Percent of revenues                                   31.3%  30.8%  30.2%

    GAAP operating income                                207.4  262.5  249.0
    Adjustments:
    Amortization of intangible assets                     47.7   44.0   40.1
    Reorganization, restructuring and other related
    expenses(1)                                           16.4      -    1.0
    Impairment of investments(2)                           1.3    1.4      -
    Gain from changes in holdings(3)                      (4.8)     -      -
    Non-GAAP operating income                            268.0  307.9  290.1
    Percent of revenues                                   10.0%  10.9%  11.0%

    GAAP net income attributable to Elbit Systems'
    shareholders                                         183.5  214.9  204.2
    Adjustments:
    Amortization of intangible assets                     47.7   44.0   40.1
    Reorganization, restructuring and other related
    expenses(1)                                           16.4      -    1.0
    Impairment of investments(2)                           1.3    1.4   29.2
    Gain from changes in holdings(3)                     (17.6)  (1.0)  (100)
    Related tax benefits                                  (8.9)  (9.0)  16.8
    Non-GAAP net income attributable to Elbit            222.4  250.3  191.3
    systems'shareholders
    Percent of revenues                                    8.3%   8.8%   7.3%

    Non-GAAP diluted net EPS                               5.1    5.8    4.5

(1) Adjustment of reorganization, restructuring and other related expenses in 2010, were mainly due to write-off of inventories in the amount of approximately $13 million related to the acquisitions of Soltam and ITL.

(2) Adjustment of impairment of investments in 2010 and 2009 were due to the impairment of ICI intangible assets and in 2008 were due to impairment of auction rate securities ($18.7 million) and the impairment of Sandel shares ($10.5 million).

(3) Adjustment of gain from changes in holdings includes the income from the sale of Mediguide shares ($100 million in 2008, $1 million in 2009 and $12.8 million in 2010) and a gain of $4.8 million from a "step-up" in an investment in 2010.

Recent Events:

On December 15, 2010, the Company's wholly-owned US subsidiary, Elbit Systems of America, LLC, ("ESA") acquired 100% of M7 Aerospace LP ("M7 Aerospace") in an $85 million all cash transaction. Located in San Antonio, Texas, M7 Aerospace is an integrated service company, offering a full suite of aviation services in the areas of Aerostructures Manufacturing, Government Logistics Support Services, Maintenance, Repair & Overhaul, Engineering Services, Aircraft Parts and Support, Supply Chain Management and Purchasing. M7 Aerospace joined ESA as a part of the company's offerings of comprehensive large fleet, multi-site contractor logistics support, life cycle contractors and depot support for fleets operated by the United States military. M7 Aerospace also brings world class capabilities in avionics upgrades, special mission modifications, reset programs and airframe modification and repair for numerous aircraft platforms operated by both commercial and military customers.

On December 30, 2010, the Company acquired the Brazilian companies, Ares Aerospacial e Defesa S.A. ("Ares") and Periscopio Equipamentos Optronicos S.A. ("Periscopio"). The acquisition was accomplished in a series of transactions totaling approximately $35 million. Ares and Periscopio are involved in the area of defense electronic systems and supply a range of products to the Brazilian military as well as to additional markets in South America. Located in the vicinity of Rio de Janeiro, the companies have approximately 70 employees. The selling shareholders are continuing to perform management functions in the companies following the acquisition.

On January 3, 2011, the Company announced that it signed an agreement to invest in Pearls of Wisdom Advanced Technologies Ltd. ("Pearls of Wisdom") an amount of approximately $18 million. The investment will be made by one of Elbit Systems' subsidiaries and will be performed in several stages over several years, according to a road map agreed by the Company and the other investors. The Company's holdings in Pearls of Wisdom will increase gradually. Pearls of Wisdom, an Israeli company, develops micro-sensors for intelligence gathering, enabling terrain dominance.

On January 6, 2011, the Company's Brazilian subsidiary, Aeroeletronica Ltda. ("AEL") was awarded a framework contract, valued at approximately $260 million for the supply of UT30 BR 30mm Unmanned Turrets to the Brazilian Army's Land Forces, as part of the Guarani Project. This award followed an award of a contract to the Company in 2009 to supply several Unmanned Turrets in an open tender in which leading global manufacturers took part. The contract calls for the Company's UT30 BR to be installed onboard a few hundred of Iveco 6x6 APCs, according to a schedule and a multi-year funding profile to be defined by the parties.

On January 11, 2011, the Company's subsidiary, Elisra Electronic Systems Ltd. ("Elisra"), was awarded a contract valued at approximately $29 million to supply the Korean Government with Airborne Electronic Warfare (EW) Suites and Missile Warning Systems (MWS) for its ROKAF CN-235 Transporters. The advanced and integrative EW suites include protection systems against various threats.

On January 19, 2011, the Company's Brazilian subsidiary, AEL, was awarded a contract to supply Hermes(R) 450 Unmanned Aircraft Systems (UAS) to the Brazilian Air Force. The contract is not in an amount that is material to Elbit Systems. This project is a part of the Brazilian Air Force's objective to establish independent UAS capabilities, allowing for self-reliant operation and development of UAS in Brazil. Located in Porto Alegre in southern Brazil, AEL performs a variety of projects for the Brazilian Air Force, as well as other branches of the Brazilian Armed Forces.

On February 9, 2011, the Company announced, further to its announcement of January 20, 2011, that all the requirements for the implementation of the cash tender offer (the "Tender Offer") issued by its wholly-owned subsidiary, Elbit Security Systems Ltd. ("Elsec") for the acquisition of the ordinary shares held by the public of I.T.L Optronics Ltd. ("ITL") were successfully met. Accordingly, Elsec purchased all of ITL's outstanding ordinary shares held by the public, including those of dissenting shareholders, at the Tender Offer price of NIS 12.5 (approximately $3.4) per share, and for a total consideration of NIS 21,533,100 (approximately $5.9 million) for the purchased shares.

On February 22, 2011, the Company reached an agreement to acquire the remaining 30% of the shares of Elisra held by Elta Systems Ltd. ("Elta") (a subsidiary of Israel Aerospace Industries Ltd.) for $67.5 million. The Company currently owns 70% of Elisra's shares, and following the acquisition, Elisra will become a wholly-owned subsidiary of the Company.

Management Comment:

Joseph Ackerman, President and CEO of Elbit Systems, commented: "While 2010 was a challenging year, we witnessed resumed growth in our backlog, while at the same time we achieved increased revenues levels in the fourth quarter. Most important for 2010 was the solid execution of our M&A strategy in support of our long-term goals. 2010 was a year of building on our internal competencies while acquiring complementary technologies and products that broadened our offerings to the defense market. We are also providing in this release certain supplemental non-GAAP financial data, which will enhance understanding of our business and its trends".

Mr. Ackerman continued, "Our recent acquisitions open a number of new doors for us. First, they add additional R&D capabilities in a number of new areas, which can potentially be beneficial across the entire breadth of our operations. Second, the acquisitions strengthen and expand our presence in the Training and Simulation, Artillery and MRO areas. Finally, our M&A and related activities enable us to expand our operations in strategic regions, notably Brazil and Australia. Looking ahead, as we begin to exploit the synergies of this group of new acquisitions, we believe that, as we have done successfully in the past, we will be able to use our combined resources more efficiently and improve our overall margins. As we move through 2011, we are better positioned from strategic, operational and financial perspectives, and we look forward to solid performance in the coming quarters and years.

Dividend:

The Board of Directors declared a dividend of $0.36 per share for the fourth quarter of 2010. The dividend's record date is March 29, 2011, and the dividend will be paid on April 11, 2011, net of taxes and levies, at the rate of 20%.

Conference Call:

The Company will be hosting a conference call today, Tuesday, March 15, 2011 at 10:00 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: 03-918-0644
                  INTERNATIONAL Dial-in Number: +972-3-918-0644

         at: 10:00am Eastern Time; 7:00am Pacific Time; 2:00pm UK Time;
                             4:00pm Israel Time

This call will also be broadcast live on Elbit Systems' web-site at http://www.elbitsystems.com. An online replay will be available from 24 hours after the call ends.

Alternatively, for two days following the call, investors will be able to dial a replay number to listen to the call. The dial-in numbers are:

               1-888-269-0005 (US) or +972-3-925-5921 (Israel and
                               International).

About Elbit Systems:

Elbit Systems Ltd. is an international defense electronics company engaged in a wide range of programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance ("C4ISR"), unmanned aircraft systems ("UAS"), advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Company also focuses on the upgrading of existing military platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services.

    For additional information, visit: http://www.elbitsystems.com.

    Attachments:

    Consolidated balance sheet
    Consolidated statements of income
    Condense consolidated statements of cash flow
    Consolidated revenue distribution by areas of operation and by
    geographical regions



This press release contains forward looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended) regarding Elbit Systems Ltd. and/or its subsidiaries (collectively the Company), to the extent such statements do not relate to historical or current fact. Forward Looking Statements are based on management's expectations, estimates, projections and assumptions. Forward looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results, performance and trends may differ materially from these forward looking statements due to a variety of factors, including, without limitation: scope and length of customer contracts; governmental regulations and approvals; changes in governmental budgeting priorities; general market, political and economic conditions in the countries in which the Company operates or sells, including Israel and the United States among others; differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts; and the outcome of legal and/or regulatory proceedings. The factors listed above are not all-inclusive, and further information is contained in Elbit Systems Ltd.'s latest annual report on Form 20-F, which is on file with the U.S. Securities and Exchange Commission. All forward looking statements speak only as of the date of this release. The Company does not undertake to update its forward-looking statements.

                          (FINANCIAL TABLES TO FOLLOW)
                               ELBIT SYSTEMS LTD.
                           CONSOLIDATED BALANCE SHEETS
                          (In thousands of US Dollars)


                                                      December 31 December 31
                                                         2010        2009
                                                        Audited     Audited
    Assets

    Current assets:
    Cash and cash equivalents                             151,059     140,709
    Short-term bank deposits                               62,662     115,924
    Available for sale an trading marketable
    securities                                                824      23,639
    Trade and unbilled receivables, net                   702,364     652,524
    Other receivables and prepaid expenses                166,124     115,856
    Inventories, net of customers advances                665,270     569,848
    Total current assets                                1,748,303   1,618,500

    Investment in affiliated companies,
    partnership and other companies                        88,116      88,759
    Available for sale marketable securities                7,179      12,941
    Long-term trade and unbilled receivables               90,343      16,949
    Long-term bank deposits and other receivables          44,401      31,230
    Deferred income taxes, net                             29,892       7,992
    Severance pay fund                                    302,351     274,136
                                                          562,282     432,007

    Property, plant and equipment, net                    503,851     404,675
    Goodwill and other intangible assets, net             796,664     598,495
    Total assets                                        3,611,100   3,053,677

    Liabilities and Shareholders' Equity

    Short-term bank credit and loans                       15,115           -
    Current maturities of long-term loans and Series A     43,093       2,663
    Notes
    Trade payables                                        360,736     299,238
    Other payables and accrued expenses                   645,146     557,601
    Customer advances in excess of costs
    incurred on contracts in progress                     302,691     367,137
                                                        1,366,781   1,226,639

    Long-term loans, net of current maturities            292,039     389,222
    Series A Notes and Convertible debentures, net of
    current maturities,                                   273,357           -
    Accrued termination liability                         395,303     350,240
    Deferred income taxes and tax liabilities, net         55,936      59,602
    Customer advances in excess of costs incurred
    on contracts in progress                              177,191     142,566
    Other long-term liabilities                            45,042      28,214
                                                        1,238,868     969,844

    Elbit Systems Ltd.'s shareholders' equity             966,693     832,868
    Non-controlling interests                              38,758      24,326
    Total shareholders' equity                          1,005,451     857,194
    Total liabilities and shareholders' equity          3,611,100   3,053,677





                               ELBIT SYSTEMS LTD.

                        CONSOLIDATED STATEMENTS OF INCOME

           (In thousands of US Dollars, except for share and per share
                                  amounts)

                                            For the Year      Three Months
                                               Ended              Ended
                                            December 31,       December 31,
                                           2010      2009      2010    2009
                                             Audited           Unaudited
    Revenues                          2,670,133 2,832,437   798,749 714,696
    Cost of revenues                  1,872,263 1,982,954   566,891 502,652
    Gross profit                        797,870   849,483   231,858 212,044

    Operating expenses:
    Research and development, net       234,131   216,752    68,471  61,842
    Marketing and selling               229,942   250,963    65,889  59,402
    General and administrative          131,200   119,311    40,831  32,506
    Other income, net                    (4,756)        -         -       -
                                        590,517   587,026   175,191 153,750

    Operating income                    207,353   262,457    56,667  58,294

    Financial expenses, net             (21,251)  (15,585)  (11,593) (7,420)
    Other income, net                    13,259       458      (180)  1,326
    Income before income taxes          199,361   247,330    44,894  52,200
    Taxes on income                     (24,037)  (38,109)   (2,430)   (413)
                                        175,324   209,221    42,464  51,787

    Equity in net earnings of
    affiliated companies and
    partnership                          19,343    19,292     6,138   4,897
    Net income                          194,667   228,513    48,602  56,684

    Less: net income attributable to
    non-controlling interests           (11,169)  (13,566)   (4,915) (2,968)
    Net income attributable to Elbit
    Systems Ltd. shareholders           183,498   214,947    43,687  53,716

    Earnings per share attributable to
    Elbit Systems Ltd. shareholders:
    Basic net earnings per share           4.30      5.08      1.02    1.26
    Diluted net earnings per share         4.25      5.00      1.01    1.24
    Weighted average number of shares
    used in computation of
    basic earnings per share (in
    thousands)                           42,645    42,305    42,685  42,497
    Weighted average number of shares
    used in computation of
    diluted earnings per share (in
    thousands)                           43,217    42,983    43,188  43,253





                               ELBIT SYSTEMS LTD.

                      CONSOLIDATED STATEMENTS OF CASH FLOW

                          (In thousands of US Dollars)


                                                         Year Ended December
                                                                 31,
                                                         2010          2009
                                                               Audited
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                                          194,667      228,513
    Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation and amortization                       132,141      123,473
    Write-off impairment                                  1,284        3,017
    Stock based compensation                              5,211        5,134
    Amortization of Series A Notes discounts and
    related issuance costs                                (258)            -
    Deferred income taxes and reserve, net             (28,162)        7,606
    Gain on sale of property, plant and equipment       (2,600)         (723)
    Gain on sale of investment                         (19,151)       (2,734)
    Equity in net earnings of affiliated companies
    and partnership, net of dividend received (*)       (8,418)       (1,824)
    Change in operating assets and liabilities, net of
    amounts acquired:
    Increase in short and long-term trade receivables,
    and prepaid expenses                               (84,708)     (136,224)
    Decrease (increase) in inventories, net            (49,724)       75,431
    Increase in trade payables, other payables and
    accrued expenses                                    76,808        20,223
    Severance, pension and termination indemnities,
    net                                                  4,160       (16,773)
    Decrease in advances received from customers       (36,396)      (95,397)
    Net cash provided by operating activities          184,854       209,722

    CASH FLOWS FROM INVESTING ACTIVITIES
    Purchase of property, plant and equipment         (138,644)     (107,893)
    Acquisition of subsidiaries and business
    operations                                        (229,556)      (48,234)
    Investments in affiliated companies and other
    companies                                           (4,956)      (19,415)
    Proceeds from sale of property, plant and
    equipment                                           11,841         9,055
    Proceeds from sale of investment                    27,941        33,026
    Investment in long-term deposits                   (14,484)      (24,004)
    Proceeds fro sale of long-term bank deposits        30,240        12,994
    Investment in short-term deposits and available
    for sale securities                               (189,345)     (152,457)
    Proceeds from sale of short-term deposits and
    available for sale securities                      252,550        99,625
    Net cash used in investing activities             (254,413)     (197,303)

    CASH FLOWS FROM FINANCING ACTIVITIES
    Proceeds from exercise of options                    3,590         9,871
    Purchase of non-controlling interests                    -      (110,250)
    Repayment of long-term bank loans                 (488,657)     (148,652)
    Proceeds from long-term bank loans                 387,692       256,354
    Proceeds from issuance of Series A Notes           283,213             -
    Series A Notes issuance costs                       (2,530)            -
    Dividends paid                                     (63,137)      (76,172)
    Tax benefit in respect of options exercised            710             -
    Change in short-term bank credit and loans, net    (40,972)       (7,531)
    Net cash provided by (used in) financing
    activities                                          79,909       (76,380)

    NET INCREASE (DECREASE) IN CASH AND CASH            10,350       (63,961)
    EQUIVALENTS
    CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE  140,709       204,670
    YEAR
    CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR   151,059       140,709
    * Dividend received from affiliated companies and   10,925        17,468
    partnership


                               ELBIT SYSTEMS LTD.

                            DISTRIBUTION OF REVENUES

    Consolidated Revenues by Areas of Operation:

                       For the Year Ended            Three Months Ended
                          December 31,                  December 31,
                       2010           2009           2010           2009
                     $       %      $       %      $       %      $       %
                  millions       millions       millions       millions
    Airborne
    systems          791.1  29.6    693.2  24.5    237.6  29.7    189.2  26.5
    Land systems     363.2  13.6    449.7  15.9     96.9  12.1    120.4  16.8
    C4ISR systems  1,019.1  38.2  1,168.8  41.3    288.3  36.1    270.8  37.9
    Electro-optics   368.8  13.8    406.4  14.3    135.5  17.0     98.7  13.8
    Other (mainly
    non-defense
    engineering
    and production
    services)        127.9   4.8    114.3   4.0     40.4   5.1     35.6   5.0
    Total          2,670.1 100.0  2,832.4 100.0    798.7 100.0    714.7 100.0

    Consolidated Revenues by Geographical Regions:


                       For the Year Ended            Three Months Ended
                          December 31,                  December 31,
                       2010           2009           2010           2009
                     $       %      $       %      $       %      $       %
                  millions       millions       millions       millions
    Israel           651.0  24.4    627.3  22.2    192.1  24.1    159.0  22.3
    United States    844.0  31.6    813.4  28.7    254.4  31.8    210.3  29.4
    Europe           541.7  20.3    728.2  25.7    151.6  19.0    177.4  24.8
    Other
    countries        633.4  23.7    663.5  23.4    200.6  25.1    168.0  23.5
    Total          2,670.1 100.0  2,832.4 100.0    798.7 100.0    714.7 100.0


    Company Contact:

    Joseph Gaspar, Executive VP & CFO
    Tel: +972-4-8316663
    j.gaspar@elbitsystems.com

    Dalia Rosen, VP, Head of Corporate
    Communications

    Tel: +972-4-8316784
    dalia.rosen@elbitsystems.com
    Elbit Systems Ltd.

    IR Contact:

    Ehud Helft
    Kenny Green
    CCG Investor Relations
    Tel: +1-646-201-9246
    elbitsystems@ccgisrael.com

SOURCE Elbit Systems Ltd