• Backlog of orders at $11.0 billion;
  • Revenues of $4.7 billion;
  • Non-GAAP net income of $318.5 million;
  • GAAP net income of $237.7 million;
  • Non-GAAP net EPS of $7.20; GAAP net EPS of $5.38

Haifa, Israel, March 24, 2021 – Elbit Systems Ltd. (the “Company”) (NASDAQ and TASE: ESLT), the international high technology company, reported today its consolidated results for the fourth quarter and full year ended December 31, 2020.

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 view of the Company’s business results and trends. For a description of the Company’s non-GAAP definitions see page 6 below, “Non-GAAP financial data”. Unless otherwise stated, all financial data presented is US-GAAP financial data.

Management Comment:

Bezhalel (Butzi) Machlis, President and CEO of Elbit Systems, commented:

“2020 saw our employees around the world successfully address the challenges presented by the global Covid-19 pandemic and enabled Elbit Systems to achieve positive results for both the fourth quarter and the year. 

Our year-end backlog increased by 10% relative to the end of 2019 demonstrating sustained demand for our systems and services from our customers around the world. I am pleased with our operational performance in a challenging year, particularly the improved cash generation.

Our solid backlog, combined with ongoing worldwide demand for our broad portfolio of technologies and solutions, provides us with confidence in the Company’s future prospects”.

Fourth quarter 2020 results:

Revenues in the fourth quarter of  2020were $1,377.7 million, as compared to $1,321.5 million in the fourth quarter of 2019.

Non-GAAP(*) gross profit amounted to $363.0 million (26.3% of revenues) in the fourth quarter of 2020, as compared to $345.8 million (26.2% of revenues) in the fourth quarter of 2019. GAAP gross profit in the fourth quarter of 2020 was $357.8 million (26.0% of revenues), as compared to $284.3 million (21.5% of revenues) in the fourth quarter of 2019. The gross profit in the fourth quarter of 2019 included expenses of $55.0, related to the acquisition of a U.S. subsidiary, Elbit Night Vision (“ENV”).

__________        

Research and development expenses, net were $109.1 million (7.9% of revenues) in the fourth quarter of 2020, as compared to $97.6 million (7.4% of revenues) in the fourth quarter of 2019.

Marketing and selling expenses, net were $81.2 million (5.9% of revenues) in the fourth quarter of 2020, as compared to $80.5 million (6.1% of revenues) in the fourth quarter of 2019.

General and administrative expenses, net were $62.9 million (4.6% of revenues) in the fourth quarter of 2020, as compared to $46.4 million (3.5% of revenues) in the fourth quarter of 2019. The lower level of general and administrative expenses in the fourth quarter of 2019 resulted mainly from income related to settlement of litigation in the U.S.

Non-GAAP(*) operating income was $113.8 million (8.3% of revenues) in the fourth quarter of  2020, as compared to $125.4 million (9.5% of revenues) in the fourth quarter of 2019. GAAP operating income in the fourth quarter of 2020 was $104.6 million (7.6% of revenues), as compared to $63.6 million (4.8% of revenues) in the fourth quarter of 2019. GAAP operation income in the fourth quarter of 2019 were reduced by $55.0 million due to expenses related to the acquisition of ENV.

Financial expenses, net were $32.5 million in the fourth quarter of 2020, as compared to $16.4 million in the fourth quarter of 2019. The  increase in financial expenses in the fourth quarter of 2020 was mainly a result of the revaluation of lease liabilities due to the  strengthening of the New Israeli Shekel versus the U.S. Dollar.

Other expenses net were $7.3 million in the fourth quarter of 2020, as compared to $1.6 million in the fourth quarter of 2019. Other expenses in the fourth quarter of 2020 were mainly due to the non-service cost components of pension plans.

Taxes on income were a tax expense of $1.9 million in the fourth quarter of 2020, as compared to a tax benefit of $9.1 million in the fourth quarter of 2019. The tax benefit in the fourth quarter of 2019 was related mainly to adjustments for prior years following tax assessments in some of the Company’s subsidiaries in Israel.

Equity in net earnings of affiliated companies and partnerships was $5.0 million in the fourth quarter of 2020, as compared to a net loss of $3.5 million the fourth quarter of 2019. The loss in the fourth quarter of 2019 was mainly a result of a fair value re-evaluation of holdings in an affiliated company.

Net income attributable to non-controlling interests was $0.1 million in the fourth quarter of 2020, as compared to a loss of $0.3 million in the fourth quarter of 2019.

Non-GAAP(*) net income attributable to the Company’s shareholders in the fourth quarter of 2020 was $105.0 million (7.6% of revenues), as compared to $109.3 million (8.3% of revenues) in the fourth quarter of 2019. GAAP net income attributable to the Company’s shareholders in the fourth quarter of 2020 was $67.8 million (4.9% of revenues), as compared to $51.5 million (3.9% of revenues) in the fourth quarter of 2019.

Non GAAP(*) diluted net earnings per share attributable to the Company’s shareholders were $2.38 for the fourth quarter of 2020, as compared to $2.47 for the fourth quarter of 2019. GAAP diluted earnings per share attributable to the Company’s shareholders in the fourth quarter of 2020 were $1.53, as compared to $1.16 in the fourth quarter of 2019.

__________                   

Full year 2020 results:

Revenues for the year ended December 31, 2020were $4,662.6 million, as compared to $4,508.4 million in the year ended December 31, 2019.

For distribution of revenues by areas of operation and by geographic regions see the tables on page 16.

The majority  of the revenues in 2020 were in  the  airborne systems and land systems areas of operation. The strength in the electro-optics area of operation was  mainly due to the revenues of ENV, a U.S. subsidiary acquired during 2019.

On a geographic basis, the increase in North America was mainly a result of higher sales of airborne systems and revenues of ENV products. The increase in Israel was mainly a result of revenues of IMI Systems Ltd. (IMI), that was acquired at the end of 2018. The decrease in Asia-Pacific was mainly a result of lower sales of radios and airborne systems.

Cost of revenues for the year ended December 31, 2020 was $3,497.5 million (75.0% of revenues), as compared to $3,371.9 million (74.8% of revenues) in the year ended December 31, 2019. Cost of revenues in 2020 included non-cash expenses of approximately $60.0 million, related to impairment of assets and inventory write-offs due to the impact of COVID-19. Cost of revenues in 2019 included expenses of $55.0 million, related to the acquisition of ENV.

Non-GAAP(*) gross profit for the year ended December 31, 2020was $1,247.2 million (26.7% of revenues), as compared to $1,213.5 million (26.9% of revenues) in the year ended December 31, 2019. GAAP gross profit in 2020 was $1,165.1 million  (25.0% of revenues), as compared to $1,136.5 million (25.2% of revenues) in 2019.

Research and development expenses, net for the year ended December 31, 2020were $359.7 million (7.7% of revenues), as compared to $331.8 million (7.4% of revenues) in the year ended December 31, 2019.

Marketing and selling expenses, net for the year ended December 31, 2020were $290.7 million (6.2% of revenues), as compared to $301.4 million (6.7% of revenues) in the year ended December 31, 2019.

General and administrative expenses, net for the year ended December 31, 2020were $223.9 million (4.8% of revenues), as compared to $214.7 million (4.8% of revenues) in the year ended December 31, 2019.

Other operating income, net for the year ended December 31, 2020 amounted to $35.0 million, as compared to $33.0 million for the year ended December 31, 2019. Other operating income in 2020 resulted mainly from capital gains related to sale and lease back of buildings by a subsidiary in the U.S. Other operating income in 2019 was mainly a result of a capital gain related to the sale and lease back of buildings by a subsidiary in Israel.

Non-GAAP(*) operating income for the year ended December 31, 2020 was $390.1 million (8.4% of revenues), as compared to $379.7 million (8.4% of revenues) in the year ended December 31, 2019. GAAP operating income in 2020 was $325.7 million (7.0% of revenues), as compared to $321.6 million (7.1% of revenues) in 2019.

Financial expenses, net for the year ended December 31, 2020were $71.3 million, as compared to $69.1 million in the year ended December 31, 2019. Financial expenses, net in 2020 and 2019 included exchange rate differences of approximately $21.0 and $23.1 million, respectively, related to lease liabilities denominated in foreign currencies (mainly in New Israeli Shekels).

___________                     

Other income, net was $7.4 million in 2020, as compared to other expenses of $6.2 million in 2019. Other income in 2020 was a result of revaluation and capital gain related to the sale of shares in a subsidiary in Israel, net of expenses related to non-service costs of pension plans. Other expenses in 2019 were mainly due to the non-service cost components of pension plans.

Taxes on income for the year ended December 31, 2020were $36.4 million (effective tax rate of 13.9%), as compared to $19.4 million (effective tax rate of 7.9%) in the year ended December 31, 2019. 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 and other income that is not part of the taxable income mainly related to non-cash items such as impairment of assets. Taxes on income in 2020 and 2019 were reduced by a tax benefit related to adjustments for prior years following a tax settlement of the Company and some of its subsidiaries in Israel with Israeli tax authorities.

Equity in net earnings (losses) of affiliated companies and partnerships for the year ended December 31, 2020was $12.6 million, as compared $1.8 million in the year ended December 31, 2019. 

Net income attributable to non-controlling interests for the year ended December 31, 2020 was $0.3 million, as compared to $0.8 million in the year ended December 31, 2019.

Non-GAAP(*) net income attributable to the Company’s shareholders for the year ended December 31, 2020was $318.5 million (6.8% of revenues), as compared to $297.8 million (6.6% of revenues) in the year ended December 31, 2019. GAAP  net income attributable to the Company’s shareholders in the year ended December 31, 2020 was $237.7 million (5.1% of revenues), as compared to $227.9 million (5.1% of revenues) in the year ended December 31, 2019.

Non-GAAP(*) diluted net earnings per share attributable to the Company’s shareholders for the year ended December 31, 2020were $7.20, as compared to $6.79 for theyear ended December 31, 2019. GAAP diluted net earnings per share attributable to the Company’s shareholders in the year ended December 31, 2020 were $5.38, as compared to $5.20 in the year ended December 31, 2019.

Backlog of orders for the year ended December 31, 2020 totaled $11,024 million, as compared to $10,029 million as of December 31, 2019. Approximately 65% of the current backlog is attributable to orders from outside Israel. Approximately 65% of the current backlog is scheduled to be performed during 2021 and 2022.

Net cash provided by operating activities in the year ended December 31, 2020was $278.8 million, as compared to $53.3 million net cash used for operating activities in the year ended December 31, 2019. The lower level of operating cash flow in 2019 was mainly a result of lower collection of receipts and advances received from customers, mainly in Israel.

___________                     

Impact of the COVID-19 Pandemic on the Company:

The Coronavirus disease 2019 (COVID-19) was declared a pandemic by the World Health Organization in March 2020. COVID-19 has had significant negative impacts on the worldwide economy, resulting in disruptions to supply chains and financial markets, significant travel restrictions, facility closures and shelter-in-place orders in various locations. Elbit Systems is closely monitoring the evolution of the COVID-19 pandemic and its impacts on the Company’s employees, customers and suppliers, as well as on the global economy.

As we last reported on November 24, 2020, we have been taking a number of actions to protect the safety of our employees as well as maintain business continuity and secure our supply chain. We also reported on a number of activities where we are leveraging our technological capabilities to assist hospital staffs and other first responders protecting our communities from the impact of the pandemic. All of these actions remain ongoing.

We have implemented a series of cost control measures to help limit the financial impact of the pandemic on the Company, in parallel to the measures we are taking to maintain business continuity and deliveries to our customers. We also are working on efficiency initiatives with a number of our suppliers. We continue to evaluate our operations on an ongoing basis in order to adapt to the evolving business environment.

During 2020 our defense activities, which account for most of our business, were not materially impacted by the pandemic, although some of our businesses experienced certain disruptions due to government directed safety measures, travel restrictions and supply chain delays.

The significant slow-down in commercial air traffic, and the expectation that a commercial air traffic recovery to 2019 levels will likely take a number of years, have reduced the demand for products and services for the commercial aviation markets. Additionally, manufacturers of aircraft for these markets have announced plans to reduce production rates to adapt to the lower demand.

Following a review of the economic impact on the Company’s assets overall, and those assets impacted by the commercial aviation industry in particular, the Company recorded in the third quarter of 2020 non-cash expenses related to impairment of assets and inventory write-offs, due to COVID-19, in the amount of approximately $60 million. These expenses were recorded mainly in the “Cost of Revenues” line item in the Consolidated Statement of Income and were eliminated in the non-GAAP results as a category of expenses that are not part of the Company’s recurring business.

We believe that as of December 31, 2020, Elbit Systems had a healthy balance sheet, adequate levels of cash and access to credit facilities that provide liquidity when necessary. We have given high priority to cash management and adequate cash reserves to run the business.

The extent of the impact of COVID-19 on the Company’s performance depends on future developments including the duration and spread of the pandemic,  the measures adopted by governments to limit the spread of the pandemic, including the roll-out of vaccinations,  and resulting actions that may be taken by our customers and our supply chain, all of which contain uncertainties. As noted in our annual report on Form 20-F, the preparation of financial reports requires us to make judgments, assumptions and estimates that affect the amounts reported. For our financial results for the year ended December 31, 2020, we considered the economic impact of the COVID-19 pandemic on our critical and significant accounting estimates. The expected impact of the COVID-19 pandemic did not have a material effect on our judgments, assumptions and estimates reflected in the results. However, our future results may differ materially from our estimates. As events continue to evolve in connection with the COVID-19 pandemic, the estimates we use in future periods may change materially.

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 including significant exchange rate differences, significant effects of retroactive tax legislation, changes in accounting guidance, financial transactions  and other items not considered to be part of regular ongoing business, 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)

 Three Months ended
December 31,
 Year ended
December 31,
 2020 2019 2020 2019
        
GAAP gross profit$357.8   $284.3   $1,165.1   $1,136.5  
Adjustments:       
Amortization of purchased intangible assets5.2   6.5   22.7   22.0  
Covid-19 related expenses and write-offs—   —   56.0   —  
Expenses related to acquisition—   55.0   —   55.0  
Impairment of long-lived assets—   —   3.4   —  
Non-GAAP  gross profit$363.0   $345.8   $1,247.2   $1,213.5  
Percent of revenues26.3 % 26.2 % 26.7 % 26.9 %
        
        
GAAP operating income$104.6   $63.6   $325.7   $321.6  
Adjustments:       
Amortization of  purchased intangible assets9.2   10.6   39.4   36.1  
Covid-19 related expenses and write-offs—   —   56.6   —  
Expenses related to acquisition—   55.0   —   55.0  
Capital gain—   (3.8)  (35.0)  (31.8) 
Changes in holdings—   —   —   (1.2) 
Impairment of long-lived assets—   —   3.4   —  
Non-GAAP operating income$113.8   $125.4   $390.1   $379.7  
Percent of revenues8.3 % 9.5 % 8.4 % 8.4 %
        
        
GAAP net income attributable to Elbit Systems’ shareholders$67.8   $51.5   $237.7   $227.9  
Adjustments:       
Amortization of purchased  intangible assets9.2   10.6   39.4   36.1  
Covid-19 related expenses and write-offs—   —   56.6   —  
Expenses related to acquisition—   55.0   —   55.0  
Capital gain—   (3.8)  (35.0)  (31.8) 
Changes in holdings—   —   —   (1.2) 
Impairment of investments and long-lived assets—   3.7   7.9   3.7  
Revaluation of investment measured under fair value option0.6   (3.7)  (20.8)  (8.3) 
Non-operating foreign exchange losses27.9   2.5   33.4   24.6  
Tax effect and other tax items, net(0.5)  (6.5)  (0.7)  (8.2) 
Non-GAAP  net income attributable to Elbit Systems’ shareholders$105.0   $109.3   $318.5   $297.8  
Percent of revenues7.6 % 8.3 % 6.8 % 6.6 %
        
        
GAAP diluted net EPS$1.53   $1.16   $5.38   $5.20  
Adjustments, net0.85   1.31   1.82   1.59  
Non-GAAP diluted net EPS$2.38   $2.47   $7.20   $6.79  

Recent Events:

On November 26, 2020, the Company announced that it was awarded a contract to supply the E-LynXTM Software Defined Radio (“SDR”) solution for the combat battalion level of the Spanish Army. The new radio network for the battalion level is a first step in the Spanish combat radio network modernization program. The solution to be supplied comprises hundreds of handheld E-LynX SDR systems for dismounted soldiers and vehicular systems that will be installed onboard a range of combat platforms. The contract, which is in an amount that is not material to Elbit Systems, will be performed in cooperation with Telefonica, S.A. (NYSE: TEF, BMD: TEF), within a period of six-months.

On November 29, 2020, the Company announced that it was awarded a contract valued at approximately $96 million to supply a European country with a Rotary-Wing Mission Training Center and support services to train its Air Force, Army and Navy helicopter pilots and crews. The contract will be performed over a nine-year period, with an option to extend the maintenance services for an additional 10-year period.

On December 3, 2020, the Company announced that at its Extraordinary and Annual General Meeting of Shareholders held on December 2, 2020 at the Company’s offices in Haifa, the proposed resolutions described in the Proxy Statement to the Shareholders dated October 28, 2020 and detailed hereunder were approved by the respective required majority:

1. “To re-elect to the Board the following seven members who are not “External Directors” as defined in the Israeli Companies Law 5759-1999, to serve until the close of the next Annual General Meeting of Shareholders: Mr. Michael Federmann, Mrs. Rina Baum, Mr. Yoram Ben-Zeev, Mr. David Federmann, Mr. Dov Ninveh, Prof. Ehood (Udi) Nisan and Prof. Yuli Tamir;

2. To approve the extension of the indemnification letters of Mr. M. Federmann and Mr. D. Federmann, for an additional three years commencing on December 1, 2020; and

3. To re-appoint Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young Global, as the Company’s independent auditor for the fiscal year 2020 and until the close of the next Annual General Meeting of Shareholders.”

On December 14, 2020, the Company announced that it was awarded a contract valued at approximately $27 million from the Romanian-based company, Avioane Craiova S.A., for the first phase of the upgrade program of the Romanian Air Force’s IAR-99 standard trainer aircraft. The contract will be performed over a four-year period and includes integrated logistic support.

On December 16, 2020, the Company announced that it was awarded an approximately $15 million initial contract from the Dutch Ministry of Defense to supply XACT nv32 micro night vision monocular systems for the Armed Forces of the Netherlands. The initial contract will be performed over a period of two years, with the potential for additional follow-on orders over a period of seven years.

On December 16, 2020, the Company announced that it was awarded an approximately $50 million follow-on contract from the Dutch Ministry of Defence (“Dutch MOD”) to supply the Royal Netherlands Army (“RNLA”) with additional digital soldier and vehicular systems, expanding the soldier modernization program of the RNLA. The contract will be performed over a three-year period.

On December 17, 2020, the Company announced, further to the Company’s announcement on October 29, 2019, that it was awarded an approximately $338 million contract by the Swiss Federal Department of Defense, Civil Protection and Sport, to provide the Swiss Armed Forces with an army-wide tactical mobile Software Defined Radio network solution under the Telecommunications Armed Forces digitization program, Ersa mob Komm. The contract will be performed over a period of six years.

On December 23, 2020, the Company announced that its U.S. subsidiary, Elbit Systems of America, LLC (“Elbit Systems of America”), signed a definitive agreement with an affiliate of Cerberus Capital Management, L.P. for the acquisition of Sparton Corporation for a purchase price of $380 million. The transaction is conditioned on various closing conditions, including receipt of U.S. regulatory approvals.

On January 5, 2021, the Company announced that following a competitive process, and as part of an agreement between the Israeli Ministry of Defense (“IMOD”) and the Hellenic Ministry of National Defense, the Company was selected to establish and operate the International Flight Training Center (“Flight Training Center”) of the Hellenic Air Force.

The Hellenic Government approved the establishment and operation of the Flight Training Center by the IMOD and Elbit Systems for an amount of approximately $1.68 billion (approximately €1.375 billion) for a period of approximately 20 years.

The anticipated contract award is contingent on completion of commercial  negotiations with the Hellenic Ministry of National Defence.

On January 6, 2021, the Company announced that it was awarded an approximately $24 million contract from the Dutch MOD to supply the RNLA with new vehicular tactical computers. The contract will be performed over a 30-month period.

On January 11, 2021, the Company announced that its subsidiary, Elbit Systems UK Ltd. (“Elbit Systems UK”), was awarded a contract valued at approximately $166 million (approximately £123 million) from the UK Ministry of Defence for the Royal Navy Future Naval Training Program as part of the Fisher consortium led by Capita plc. (“the Consortium”). The contract will be performed over a 12-year period.

On January 13, 2021, the Company announced that it was awarded a contract to supply Seagull™ USVs (Unmanned Surface Vehicles) to the navy of a country in Asia-Pacific. The contract, that is in an amount that is not material to Elbit Systems, will be performed over a 17-month period.

On January 21, 2021, the Company announced that Elbit Systems UK was awarded an approximately $137 million (approximately £100 million) contract by the UK Ministry of Defence to provide the British Armed Forces with the future target acquisition solution for Joint Terminal Attack Controllers and Fire Support Teams under the Dismounted Joint Fires Integrators program. The contract will be performed over a five-year period.

On January 26, 2021, the Company announced, that it was awarded a contract valued at approximately $172 million to supply light tanks to the Army of a country in Asia-Pacific. The contract will be performed over a three-year period.

On February 7, 2021, the Company announced that it was awarded an approximately $82 million contract from BAE Systems Hägglunds AB (“BAE Systems Hägglunds”) to supply the RNLA with Active Protection Systems and electro-optical commander sights. The contract will be performed over a period of four and a half years.

On February 7, 2021, the Company announced that it was awarded a contract valued at approximately $46 million to supply VBTP 6X6 Armored Personnel Carriers to the army of a country in Asia-Pacific. The contract will be performed over a three-year period.

On March 2, 2021, the Company announced that it was awarded an approximately $300 million contract by a country in Asia to provide HermesTM 900 Unmanned Aircraft Systems. The contract will be performed over a period of five years.

Dividend:

The Board of Directors declared a dividend of $0.44 per share for the fourth quarter of 2020. The dividend’s record date is April 14, 2021. The dividend will be paid from income generated as Preferred Income (as defined under Israeli tax laws), on April 26, 2021, net of taxes, at the rate of 20%. 

Conference Call:

The Company will be hosting a conference call today, Wednesday, March 24, 2021, 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 Number: 1-888-281-1167

Canada Dial-in Number: 1-866-485-2399

ISRAEL Dial-in Number: 03-918- 0610

INTERNATIONAL Dial-in Number:  972-3- 918- 0610

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

The conference call will also be broadcast live on Elbit Systems’ website at https://www.elbitsystems.com/investor-relations/. 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:

1-888-782-4291 (US and Canada) or +972-3-925-5900 (Israel and International).

Attachments:

Consolidated balance sheets

Consolidated statements of income

Consolidated statements of cash flow

Consolidated revenue distribution by areas of operation and by geographical regions

(FINANCIAL TABLES TO FOLLOW)

ELBIT SYSTEMS LTD.

CONSOLIDATED BALANCE SHEETS

(In thousands of US Dollar)

 As of December 31,
 2020 2019
 Audited
Assets   
Cash and cash equivalents$278,794   $221,060  
Short-term bank deposits and restricted deposits1,524   2,213  
Trade and unbilled receivables and contract assets, net2,519,562   2,067,846  
Other receivables and prepaid expenses156,330   160,728  
Inventories, net1,316,688   1,219,920  
Total current assets4,272,898   3,671,767  
    
Investments in affiliated companies, partnerships and other companies184,338   201,574  
Long-term trade and unbilled receivables and contract assets312,097   259,150  
Long-term bank deposits and other receivables69,269   58,076  
Deferred income taxes, net118,513   89,452  
Severance pay fund293,716   287,104  
 977,933   895,356  
    
Operating lease right of use assets423,088   365,763  
Property, plant and equipment, net786,972   766,532  
Goodwill and other intangible assets, net1,597,006   1,635,940  
Total assets$8,057,897   $7,335,358  
    
Liabilities and Equity   
Short-term bank credit and loans$312,993   $208,399  
Current maturities of long-term loans and Series A Notes17,972   199,882  
Operating lease liability65,520   62,565  
Trade payables1,007,237   926,338  
Other payables and accrued expenses1,218,273   1,052,080  
Contract liabilities (customer advances)1,000,159   723,581  
 3,622,154   3,172,845  
    
Long-term loans, net of current maturities408,820   440,124  
Employee benefit liabilities914,364   836,535  
Deferred income taxes and tax liabilities, net132,442   114,419  
Contract liabilities (customer advances)169,073   62,830  
Operating lease liability397,936   323,287  
Other long-term liabilities181,741   225,478  
 2,204,376   2,002,673  
    
Elbit Systems Ltd.’s equity2,218,154   2,141,406  
Non-controlling interests13,213   18,434  
Total equity2,231,367   2,159,840  
Total liabilities and equity$8,057,897   $7,335,358  

ELBIT SYSTEMS LTD.

CONSOLIDATED STATEMENTS OF INCOME

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

  Year Ended
December 31,
 Three Months Ended
December 31,
 2020 2019 2020 2019
 Audited Unaudited
Revenues$4,662,572   $4,508,400   $1,377,732   $1,321,506  
Cost of revenues3,497,465   3,371,933   1,019,899   1,037,211
Gross profit1,165,107   1,136,467   357,833   284,295
        
Operating expenses:       
Research and development, net359,745   331,757   109,062   97,631
Marketing and selling, net290,703   301,400   81,226   80,484
General and administrative, net223,935   214,749   62,920   46,363  
Other operating income, net(34,963)  (33,049)  —   (3,785) 
Total operating expenses839,420   814,857   253,208   220,693
        
Operating income325,687   321,610   104,625   63,602
        
Financial expenses, net(71,270)  (69,072)  (32,525)  (16,357) 
Other income (expense), net7,408   (6,243)  (7,332)  (1,625) 
Income before income taxes261,825   246,295   64,768   45,620
Taxes on income(36,443)  (19,414)  (1,878)  9,129  
 225,382   226,881   62,890   54,749
Equity in net earnings (losses) of affiliated companies and partnerships12,604   1,774   5,025   (3,498) 
   Net income$237,986   $228,655   $67,915   $51,251  
        
Less: net income attributable to non-controlling interests(328)  (798)  (93)  265
Net income attributable to Elbit Systems Ltd.’s shareholders$237,658   $227,857   $67,822   $51,516  
        
        
        
Earnings per share attributable to Elbit Systems Ltd.’s shareholders:      
Basic net earnings per share$5.38   $5.20   $1.53   $1.17  
Diluted net earnings per share$5.38   $5.20   $1.53   $1.16  
        
Weighted average number of shares used in computation of:       
Basic earnings per share (in thousands)44,198   43,787   44,198   44,198  
Diluted earnings per share (in thousands)44,215   43,848   44,198   44,287  

ELBIT SYSTEMS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOW

(In thousands of US Dollars)

 Year Ended December 31,
 2020 2019
 Audited
CASH FLOWS FROM OPERATING ACTIVITIES   
Net income$237,986   $228,655  
Adjustments to reconcile net income to net cash provided by operating activities:   
Depreciation and amortization144,420   137,146  
Write-off impairment7,932   3,692  
Stock-based compensation4,086   3,994  
Amortization of Series A Notes discount (premium) and related issuance costs, net(46)  (93) 
Deferred income taxes and reserve, net(5,345)  (15,059) 
Gain on sale of property, plant and equipment(34,926)  (34,154) 
Gain on sale of investment, remeasurement of investment held under fair value method and deconsolidation of subsidiary(23,572)  (7,928) 
Equity in net (earnings) losses of affiliated companies and partnerships, net of dividend received(*)(7,853)  8,526  
Changes in operating assets and liabilities, net of amounts acquired:   
Increase in short and long-term trade and unbilled receivables and prepaid expenses(508,057)  (267,924) 
Increase in inventories, net(69,762)  (55,841) 
Increase in trade payables and other payables and accrued expenses143,847   115,621  
Severance, pension and termination indemnities, net31,394   4,629  
Increase (decrease) in contract liabilities (customer advances)358,730   (174,582) 
Net cash provided by (used for) operating activities278,834   (53,318) 
CASH FLOWS FROM INVESTING ACTIVITIES   
Purchase of property, plant and equipment and other assets(132,210)  (137,604) 
Acquisition of subsidiaries and business operations218   (357,144) 
Proceeds from premises evacuation grants—   344,913  
Investments in affiliated companies and other companies(8,212)  (8,567) 
Proceeds from sale of property, plant and equipment71,933   36,671  
Proceeds from sale of investments44,200   —  
Proceeds from sale of long-term deposits221   (38) 
Investment in short-term deposits(683)  (2,314) 
Proceeds from sale of short-term1,666   17,294  
Net cash used in investing activities(22,867)  (106,789) 
CASH FLOWS FROM FINANCING ACTIVITIES   
Issuance of treasury shares—   184,840  
Repayment of long-term loans(370,367)  (243,324) 
Proceeds from long-term loans201,551   350,000  
Repayment of Series A Notes(55,532)  (55,532) 
Dividends paid(78,194)  (62,578) 
Change in short-term bank credit and loans, net104,309   (718) 
Net cash provided by (used for) financing activities(198,233)  172,688  
NET INCREASE IN CASH AND CASH EQUIVALENTS57,734   12,581  
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR$221,060   $208,479  
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR$278,794   $221,060  
    
* Dividend received from affiliated companies and partnerships$9,151   $10,300  

ELBIT SYSTEMS LTD.

DISTRIBUTION OF REVENUES

Consolidated Revenues by Areas of Operation:

 Year Ended Three Months Ended
 December 31, December 31,
 2020 2019 2020 2019
 $ millions % $ millions % $ millions % $ millions %
Airborne systems$1,650.4   35.4   $1,617.2   35.9   $480.4   34.9   $438.4   33.2  
C4ISR systems  1,145.7   24.6   1,161.5   25.8   386.1   28.0   356.9   27.0  
Land systems1,258.9   27.0   1,228.3   27.2   342.1   24.8   367.7   27.8  
Electro-optic systems475.9   10.2   374.4   8.3   116.4   8.5   124.7   9.4  
Other (mainly non-defense engineering and production services)131.7   2.8   127.0   2.8   52.8   3.8   33.8   2.6  
Total$4,662.6   100.0   $4,508.4   100.0   $1,377.8   100.0   $1,321.5   100.0  

Consolidated Revenues by Geographical Regions:

 Year Ended Three Months Ended
 December 31, December 31,
 2020 2019 2020 2019
 $ millions % $ millions % $ millions % $ millions %
Israel$1,106.4   23.7   $1,064.8   23.7   $309.6   22.4   $324.6   24.6  
North America  1,500.6   32.2   1,260.5   28.0   423.5   30.7   351.8   26.6  
Europe  819.0   17.6   853.6   18.9   261.9   19.0   270.4   20.5  
Asia-Pacific961.8   20.6   1,029.6   22.8   278.0   20.2   297.7   22.5  
Latin America140.1   3.0   158.1   3.5   40.7   3.0   36.0   2.7  
Other countries134.7   2.9   141.8   3.1   64.1   4.7   41.0   3.1  
Total$4,662.6   100.0   $4,508.4   100.0   $1,377.8   100.0   $1,321.5   100.0  

About Elbit Systems

Elbit Systems Ltd. is an international high technology company engaged in a wide range of defense, homeland security and commercial 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, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios, cyber-based systems and munitions. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems. For additional information, visit: https://elbitsystems.com/, follow us on Twitter or visit our official FacebookYouTube and LinkedIn Channels.

Visit our Press Relations website for background materials and information regarding Elbit Systems fields of activity.