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Elbit Systems Reports Second Quarter 2012 Results

HAIFA, Israel, August 14, 2012 /PRNewswire/ --

Elbit Systems Ltd. (the  " Company " ) (NASDAQ: ESLT, TASE: ESLT), the international defense electronics company, reported today its consolidated financial results for the second quarter ended June 30, 2012.

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 with a more comprehensive understanding of the Company's business results and trends. Unless otherwise stated, all financial data presented is GAAP financial data.

Management Comment :

Joseph Ackerman, President and CEO of Elbit Systems, commented: "In the second quarter we saw a continued focus on improving our internal efficiencies, which enabled us to lower our G&A expenses during the quarter. Our second quarter continues the trend of increased revenues from the Latin American and Asia-Pacific markets, which made up over a third of our revenues in the quarter. In fact, over half of our revenues are coming from regions whose defense budgets are continuing to grow, including Israel. I believe that our focus on these regions will enable us to continue to grow, even against the background of tightening budgets in Europe and the United States."

Ackerman added, "Yesterday our Board of Directors accepted my request to step down after 16 years as President and CEO, effective at the end of March 2013.  After that, I plan to continue to contribute to the Company as may be requested, including as Vice Chairman of the Board.  I am pleased that the Board has approved as my successor Bezhalel (Butzi) Machlis, who currently is an Executive Vice President of the Company and General Manager of Elbit Systems Land and C4I Division.  I am confident that the Company will be well positioned to meet future challenges and achieve future growth under Butzi's leadership."

Second quarter 2012 results :

Revenues were $676.4 million in the second quarter of 2012, as compared to $691.6 million in the second quarter of 2011. The main contributors to the Company's revenues were the C4I and Airborne systems areas of operations.  

Gross profit was $189.6 million (28.0% of revenues) in the second quarter of 2012, as compared to $200.5 million (29.0% of revenues) in the second quarter of 2011. The non-GAAP gross profit in the second quarter of 2012 was $194.8 million (28.8% of revenues), compared to $208.4 million (30.1% of revenues) in the second quarter of 2011.

Research and development expenses, net were $55.6 million (8.2% of revenues) in the second quarter of 2012, as compared to 55.4 million (8.0% of revenues) in the second quarter of 2011.

Marketing and selling expenses were $59.9 million (8.9% of revenues) in the second quarter of 2012, as compared to $57.4 million (8.3% of revenues) in the second quarter of 2011.  

General and administrative expenses were $32.0 million (4.7% of revenues) in the second quarter of 2012, as compared to $35.1 million (5.1% of revenues) in the second quarter of 2011. This continues the trend of reduction in G&A expenses we have experienced over several quarters, partially due to cost cutting and efficiency measures.

Operating Income was $42.1 million (6.2% of revenues), compared to $52.6 million (7.6% of revenues) in the second quarter of 2011. The non-GAAP operating income in the second quarter of 2012 was $54.1 million (8.0% of revenues), as compared to $67.0 million (9.7% of revenues) in the second quarter of 2011.

Financial expenses, net were $2.3 million in the second quarter of 2012, as compared to $9.4 million in the second quarter of 2011. Financial expenses in the second quarter of 2012 were comparatively low due to currency hedging activities.

Taxes on income were $2.8 million (effective tax rate of 7.1%) in the second quarter of 2012, as compared to taxes on income of $5.4 million (effective tax rate of 12.5%) in the second quarter of 2011. The lower effective tax rate in the quarter was attributable mainly to adjustments related to tax positions taken during prior periods and to the mix of the tax rates in the various jurisdictions in which the Company's entities generate taxable income.

Equity in net earnings of affiliated companies and partnerships was $3.8 million (0.6% of revenues) in the second quarter of 2012, as compared to $2.7 million (0.4% of revenues) in the second quarter of 2011.

Net income attributable to non-controlling interests was $1.2 million in the second quarter of 2012, as compared to $1.6 million in the second quarter of 2011.

Net income, attributable to the Company's ordinary shareholders, was $38.3 million (5.7% of revenues) in the second quarter of 2012, as compared to $38.9 million (5.6% of revenues) for the second quarter of 2011. The non-GAAP net income in the second quarter of 2012 was $48.2 million (7.1% of revenues), as compared to $50.5 million (7.3% of revenues) in the second quarter of 2011.

Diluted net earnings per share attributable to the Company's ordinary shareholders were $0.90 for the second quarter of 2012, as compared with $0.90 for the second quarter of 2011. The non-GAAP earnings per share in the second quarter of 2012 were $1.14, as compared to $1.16 in the second quarter of 2011.

The Company ' s backlog of orders as of June 30, 2012 was $5,465, as compared with $5,450 million as of March 31, 2012 and $5,528 million as of December 31, 2011. Approximately 76% of the backlog relates to orders outside of Israel. Approximately 73% of the Company's backlog as of June 30, 2012 is scheduled to be performed, during the second half of 2012 and in 2013.

Operating cash flow was $56.2 million during the first half of 2012, as compared to $23.3 million in the first half of 2011.

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.  

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