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Elbit Systems Reports Third Quarter 2012 Results

The non-GAAP financial data includes reconciliation adjustments regarding non-GAAP gross profit, operating income, net income and diluted EPS. In arriving at non-GAAP presentations, companies generally factor out items such as those that have a non-recurring impact on the income statements, various non-cash items, significant effects of retroactive tax legislation and changes in accounting guidance and other items which, in management's judgment, are items that are considered to be outside of the review of core operating results.

In the Company's non-GAAP presentation, the Company made the following adjustments, in each or some of the applicable periods: (1) added back amortization of purchased intangible assets, (2) added back significant reorganization, restructuring and other related expenses, (3) added back impairment of investments, including impairment of auction rate securities, (4) subtracted 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), (5) added back impairment loss from discontinued operations, (6) excluded the impact of the cessation of a program with a foreign customer and (7) excluded 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 to Non-GAAP (Unaudited) Supplemental Financial Data:
    (U.S. Dollars in millions)
                                Nine Months       Three Months
                                   Ended              Ended        Year Ended
                                September 30       September 30     December 31
                                2012      2011     2012      2011         2011
    GAAP gross profit          576.8     590.3    191.4     204.1        732.0
    Amortization of
    purchased intangible
    assets                      15.6      23.0      5.2       7.5         30.9
    Cessation of program (*)       -         -        -         -         72.8
    Non-GAAP gross profit      592.4     613.3    196.6     211.6        835.7
    Percent of revenues        29.0%     31.0%    29.0%     31.9%        29.7%
    GAAP operating income      132.8     149.8     49.0      56.2        115.7
    Amortization of
    intangible assets           36.2      42.7     12.0      14.1         57.3
    Cessation of program (*)       -         -        -         -         72.8
    Non-GAAP operating
    income                     169.0     192.5     61.0      70.3        245.8
    Percent of revenues         8.3%      9.7%     9.0%     10.6%         8.7%
    GAAP net income
    attributable to Elbit
    Systems' shareholders      110.7     103.3     39.5      36.5         90.3
    Amortization of
    intangible assets           36.2      42.7     12.0      14.1         57.3
    Cessation of program (*)       -         -        -         -         72.8
    Impairment of
    investments                    -       0.5        -         -          0.5
    Gain from changes in
    holdings                   (2.3)         -        -         -            -
    Loss from discontinued
    operations, net              0.3       9.3      0.1       9.0          9.4
    Related tax benefits       (6.5)     (9.8)    (2.2)     (3.2)       (23.7)
    Non-GAAP net income
    attributable to
    Elbit Systems'
    shareholders               138.4     146.0     49.4      56.4        206.6
    Percent of revenues         6.8%      7.4%     7.3%      8.5%         7.3%
    Non-GAAP diluted net EPS    3.26      3.38     1.18      1.31         4.80

(*) Adjustment of expenses related to cessation of program, which resulted in write-off of inventories and other related costs.

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