Elbit Systems Reports Third Quarter 2019 Results

HAIFA, Israel, Nov. 26, 2019 /PRNewswire/ -- Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (the "Company"), the international high technology company, reported today its consolidated results for the quarter ended September 30, 2019.

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

Management Comment:

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

"We are pleased with the strong growth in our revenues, especially in North America, a strategic region for us, where sales in the quarter increased to 30% of our total revenue.

Over the past year we completed a number of important acquisitions that broadened our product portfolio and increased our penetration into strategic markets. The integration of recent acquisitions is progressing as expected, and we continue to explore additional opportunities to extract revenue and cost synergies.

Elbit Systems has a successful track record of value creation through both organic and acquisitive growth, and we intend to continue pursuing this strategy for the foreseeable future."

Third quarter 2019 results:

Revenues in the third quarter of 2019 were $1,101.2 million, as compared to $895.2 million in the third quarter of 2018. The strong growth was driven mainly by the consolidation of IMI.

Non-GAAP ((*)) gross profit amounted to $290.0 million (26.3% of revenues) in the third quarter of 2019, as compared to $260.7 million (29.1% of revenues) in the third quarter of 2018. GAAP gross profit in the third quarter of 2019 was $286.2 million (26.0% of revenues), as compared to $255.9 million (28.6% of revenues) in the third quarter of 2018.

Research and development expenses, net were $79.5 million (7.2% of revenues) in the third quarter of 2019, as compared to $69.6 million (7.8% of revenues) in the third quarter of 2018.

_____________
* see page 4

Marketing and selling expenses, net were $75.5 million (6.9% of revenues) in the third quarter of 2019, as compared to $69.4 million (7.8% of revenues) in the third quarter of 2018.

General and administrative expenses, net were $57.5 million (5.2% of revenues) in the third quarter of 2019, as compared to $37.8 million (4.2% of revenues) in the third quarter of 2018.

Other operating income, net in the third quarter of 2019 was 28.0 million. This was the result of a capital gain related to a sale and lease back of buildings by a subsidiary in Israel.

Non-GAAP((*)) operating income was $80.7 million (7.3% of revenues) in the third quarter of 2019, as compared to $85.7 million (9.6% of revenues) in the third quarter of 2018. GAAP operating income in the third quarter of 2019 was $101.7 million (9.2% of revenues), as compared to $79.1 million (8.8% of revenues) in the third quarter of 2018.

Financial expenses, net were $18.5 million in the third quarter of 2019, as compared to $8.1 million in the third quarter of 2018. Financial expenses, net in the third quarter of 2019 include exchange rate differences of approximately $6.6 million related to the recognition of lease liabilities denominated in foreign currencies (mainly in New Israeli Shekels) as a result of the adoption of ASC 842, Leases, effective January 1, 2019.

Other expenses, net were $2.8 million in the third quarter of 2019, mainly due to the non-service cost components of pension plans, in accordance with ASU 2017-07.

Taxes on income were $7.6 million (effective tax rate of 9.5%) in the third quarter of 2019, as compared to $8.9 million (effective tax rate of 12.6%) in the third quarter of 2018. The effective tax rate is affected by the mix of the tax rates in the various jurisdictions in which the Company's entities generate taxable income and other income and expenses that are not a part of the taxable income.

Equity in net losses of affiliated companies and partnerships was $0.5 million in the third quarter of 2019, as compared to equity in net earnings of $2.7 million in the third quarter of 2018.

Net income attributable to non-controlling interests was $0.3 million in the third quarter of 2019, as compared to $0.7 million in the third quarter of 2018.

Non-GAAP((*)) net income attributable to the Company's shareholders in the third quarter of 2019 was $58.7 million (5.3% of revenues), as compared to $67.3 million (7.5% of revenues) in the third quarter of 2018. GAAP net income attributable to the Company's shareholders in the third quarter of 2019 was $72.1 million (6.5% of revenues), as compared to $64.1 million (7.2% of revenues) in the third quarter of 2018.

Non-GAAP((*)) diluted net earnings per share attributable to the Company's shareholders were $1.33 for the third quarter of 2019, as compared to $1.57 for the third quarter of 2018. GAAP diluted earnings per share in the third quarter of 2019 were $1.63, as compared to $1.50 for the third quarter of 2018.

The Company's backlog of orders as of September 30, 2019 totaled $9,796 million, as compared to $8,108 million as of September 30, 2018. Approximately 62% of the current backlog is attributable to orders from outside Israel. Approximately 46% of the current backlog is scheduled to be performed during the fourth quarter of 2019 and during 2020.

____________
* see page 4

Operating cash flows used in the nine months ended September 30, 2019 were $140.3 million, as compared to $20.3 million used in the nine months ended September 30, 2018.

Investing cash flows in the nine months ended September 30, 2019 included approximately $345 million in proceeds from factoring of the premises evacuation asset related to the IMI acquisition, and approximately $350 million in subsidiaries and business operations as a result of the acquisition of the Night Vision business of L3Harris Technologies in the third quarter of 2019.

Financing cash flows in the nine months ended September 30, 2019 included approximately $184.8 million in proceeds resulting from the issuance of shares to institutional investors.

Adoption of New Accounting Standard:

The Company adopted Accounting Standards Update (ASU) 2016-02, Leases (ASC 842), effective January 1, 2019, using a modified retrospective transition method. Consequently, periods prior to January 1, 2019 are not restated for the adoption of ASC 842.

ASC 842, as amended, requires lessees to recognize a Right of Use (ROU) asset and lease liability on the balance sheet for most lease arrangements and expands disclosures about leasing arrangements for both lessees and lessors, among other items. We adopted ASC 842 using the optional transition method whereby we applied the new lease requirements under ASC 842 through a cumulative-effect adjustment.

On January 1, 2019, we recognized approximately $377 million of ROU operating lease assets and lease liabilities as a result of adopting this standard. As part of our adoption, we elected all of the available practical expedients with the exception of the practical expedient permitting the use of hindsight when determining the lease term and assessing impairment of ROU assets. The adoption of the standard increased our financial expenses in the nine months ended September 30, 2019, in the amount of $21.1 million as a result of exchange rate differences on lease liabilities denominated in foreign currencies (mainly NIS). The comparative periods have not been restated for the adoption of ASU 2016-02.

* 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, the Company factors 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 and changes in accounting guidance and other items, financial transactions which the Company considers not to be part of its 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, except per share amount)








                                                                                                             
            
              Nine Months Ended                                               Three Months Ended                                        Year Ended
                                                                                                                          September 30,                                                   September 30,                                         December 31,



                                                                                                             2019                                        2018                      2019                                        2018                                          2018

                                                                                                                                                                                                                                                                          ---




            
              GAAP gross profit                                                                           $
            
              852.2                                           $
            
              741.3                                                               $
            
              286.2                                            $
      
      255.9   $
        
        976.2



            
              Adjustments:

    ---


            Amortization of purchased intangible assets                                                     15.4                                                    14.0                                                      3.8                                                                        4.8                                      19.1



            Expenses related to IMI acquisition                                                                -                                                                                                                                                                                                                              66.6




            
              Non-GAAP  gross profit                                                                      $
            
              867.6                                           $
            
              755.3                                                               $
            
              290.0                                            $
      
      260.7 $
        
        1,061.9




            
              Percent of revenues                                                                  27.2                                                    29.0                                                     26.3                                                                       29.1
                                                                                                         
          %                                               
          %                                                
          %                                                                  
          %                             28.8
          %







            
              GAAP operating income                                                                       $
            
              258.0                                           $
            
              254.2                                                               $
            
              101.7                                             $
      
      79.1   $
        
        292.8



            
              Adjustments:

    ---


            Amortization of  purchased intangible assets                                                    25.5                                                    19.4                                                      7.0                                                                        6.6                                      26.5



            Other capital gain                                                                            (28.0)                                                                                                         (28.0)



            Expenses related to IMI acquisition                                                                -                                                                                                                                                                                                                              66.8



            Gain from changes in holdings                                                                  (1.2)                                                 (45.4)                                                                                                                                                                     (45.4)




            
              Non-GAAP operating income                                                                   $
            
              254.3                                           $
            
              228.2                                                                $
            
              80.7                                             $
      
      85.7   $
        
        340.7




            
              Percent of revenues                                                                   8.0                                                     8.8                                                      7.3                                                                        9.6
                                                                                                         
          %                                               
          %                                                
          %                                                                  
          %                              9.2
          %







            
              GAAP net income attributable to Elbit                                                       $
            
              176.3                                           $
            
              205.6                                                                $
            
              72.1                                             $
      
      64.1   $
        
        206.7
    Systems' shareholders



            
              Adjustments:

    ---


            Amortization of purchased intangible assets                                                     25.5                                                    19.4                                                      7.0                                                                        6.6                                      26.5



            Expenses related to IMI acquisition                                                                -                                                                                                                                                                                                                              66.8



            Impairment of investment                                                                           -                                                    5.1                                                                                                                                                                        17.6



            Exchange rate differences (*)                                                                   22.1                                                     1.2                                                      6.7                                                                      (2.5)                                      3.4



            Other capital gain                                                                            (28.0)                                                                                                         (28.0)



            Gain from changes in holdings                                                                  (5.8)                                                 (45.4)                                                                                                                                                                     (45.4)



            Related tax (expenses) benefits                                                                (1.5)                                                  (2.5)                                                     0.9                                                                      (0.9)                                    (8.1)




            
              Non-GAAP  net income attributable to                                                        $
            
              188.6                                           $
            
              183.4                                                                $
            
              58.7                                             $
      
      67.3   $
        
        267.5
    Elbit Systems' shareholders




            
              Percent of revenues                                                                   5.9                                                     7.0                                                      5.3                                                                        7.5
                                                                                                         
          %                                               
          %                                                
          %                                                                  
          %                              7.3
          %







            
              GAAP diluted net EPS                                                                         $
            
              4.04                                            $
            
              4.81                                                                $
            
              1.63                                             $
      
      1.50    $
        
        4.84



            Adjustments, net                                                                                0.28                                                  (0.52)                                                  (0.30)                                                                      0.07                                      1.42




            
              Non-GAAP diluted net EPS                                                                     $
            
              4.32                                            $
            
              4.29                                                                $
            
              1.33                                             $
      
      1.57    $
        
        6.26






            (*) Exchange rate differences  in the nine months ended September 30, 2019 included exchange rate differences of $21.1 million on lease contracts as a result of the implementation of ASC 842, effective as of January 1, 2019, as well as other assets and liabilities denominated in currencies other than U.S. dollars.

Recent Events:

On September 10, 2019, the Company announced that its UK subsidiary, Elbit Systems UK Ltd., was awarded an approximately $38 million contract from the UK Ministry of Defence to supply comprehensive JFST systems to the British Army. The JFST systems will be supplied over a period of two years following which Elbit Systems UK will provide an additional four years of maintenance, technical support and on-site training.

On September 15, 2019, the Company announced that its U.S. subsidiary, Elbit Systems of America, LLC, completed the acquisition of the Night Vision business of L3Harris Technologies (NYSE:LHX) for a purchase price of $350 million.

On September 26, 2019, the Company announced that its subsidiary, Elbit Systems of America LLC, was awarded a $85 million firm-fixed-priced contract, with no option periods, by the U.S. Navy for the repair of Digital Display Indicator (DDI) systems aboard F/A-18 aircraft. The contract will be performed in Talladega, Alabama over a five-year period.

On October 3, 2019, the Company announced that its U.S. subsidiary, Elbit Systems of America LLC, was awarded a delivery order valued at approximately $23 million for the supply of systems and various spare components to the U.S. Marine Corps. The order will be executed in Roanoke, Virginia and will be supplied over the next 10 months.

On October 6, 2019, the Company announced that it was awarded a contract valued at approximately $153 million to supply an army of a country in Southeast Asia with a comprehensive, multi-layered array of Unmanned Aircraft Systems. The contract will be performed over a 22-month period.

On October 29, 2019, the Company announced that following extensive testing by Federal Office for Defence Procurement (Armasuisse) and the Swiss Armed Forces, the Company was selected by the Swiss Federal Department of Defence, Civil Protection and Sport ("DDPS") to provide the Swiss Armed Forces with an army-wide tactical Software Defined Radio (SDR) solution under the Telecommunications Armed Forces (TK A) program, Ersa mob Komm. Contract award is subject to Swiss Parliament approvals.

On October 31, 2019, the Company announced that it was awarded a contract valued at approximately $50 million from the Portuguese Ministry of Defense (MoD) to supply the Portuguese Air Force (PtAF) with a complete Electronic Warfare (EW) suite and Customer Logistics Support for the new KC-390 multi-mission aircraft. The contract will be performed over a five-year period.

On November 21, 2019, the Company announced that at its Extraordinary and Annual General Meeting of Shareholders held on November 20, 2019 at the Company's offices in Haifa, the proposed resolutions described in the Proxy Statement to the Shareholders dated October 10, 2019 and detailed hereunder were approved by the respective required majority:

    1. To re-elect Mr. M. Federmann, Mrs. Baum, Mr. Ben-Zeev, Mr. D. Federmann,
       Mr. Ninveh, Prof. Nisan  and Prof. Tamir, as members of the board of
       directors of the Company until the close of next Shareholder's Annual
       General Meeting of the Company.
    2. To elect Mrs. Bilha (Billy) Shapira for a first three-year term as an
       External Director of the Company, commencing on the close of the Meeting
       and ending on November 20, 2022, inclusive.
    3. To re-appoint the Company's independent auditor, Kost, Forer, Gabbay &
       Kasierer, a member of Ernst & Young Global, as independent auditor of the
       Company for the fiscal year 2019 and until  the close of the next
       Shareholders' Annual General Meeting of the Company.

Dividend:

The Board of Directors declared a dividend of $0.44 per share for the third quarter of 2019. The dividend's record date is December 27, 2019. The dividend will be paid from income generated as Preferred Income (as defined under Israel tax laws), on January 13, 2020, net of taxes and levies, at the rate of 20%.

Conference Call:

The Company will be hosting a conference call on Tuesday, November 26, 2019 at 9:00 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
Canada Dial-in Numbers: 1-888-604-5839
UK Dial-in Number: 0-800-917-5108
ISRAEL Dial-in Number: 03-918-0609
INTERNATIONAL Dial-in Number: +972-3-918-0609

at: 9:00 am Eastern Time; 6:00 am Pacific Time; 2:00 pm UK Time; 4:00 pm 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:

1-888-326-9310 (US and Canada) or +972-3-925-5921 (Israel and International).

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 airborne, 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 and munitions. The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services, including training and simulation systems.

For additional information, visit: www.elbitsystems.com or follow us on Twitter.

Attachments:

Consolidated balance sheets
Consolidated statements of income
Consolidated statements of cash flow
Consolidated revenue distribution by areas of operation and by geographical regions


                                    Company Contact
                
            :                               IR Contact
               
     :




       
                Joseph Gaspar, Executive VP & CFO                     
     
                Ehud Helft


       Tel:  +972-772946663                                               
     
                Kenny Green

                                    j.gaspar@elbitsystems.com              
     
                GK Investor Relations

                     Rami Myerson, Investor Relations Director             
     Tel: 1-646-201-9246


       Tel: +972-77-2948984                                                                             elbitsystems@gkir.com

                                    rami.myerson@elbitsystems.com

                     David Vaaknin, VP, Head of Corporate Communications


       Tel: +972-772946691

                                    david.vaaknin@elbitsystems.com



    ---

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 1943, 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.

Elbit Systems Ltd., its logo, brand, product, service and process names appearing in this Press Release are the trademarks or service marks of Elbit Systems Ltd. or its affiliated companies. All other brand, product, service and process names appearing are the trademarks of their respective holders. Reference to or use of a product, service or process other than those of Elbit Systems Ltd. does not imply recommendation, approval, affiliation or sponsorship of that product, service or process by Elbit Systems Ltd. Nothing contained herein shall be construed as conferring by implication, estoppel or otherwise any license or right under any patent, copyright, trademark or other intellectual property right of Elbit Systems Ltd. or any third party, except as expressly granted herein.

(FINANCIAL TABLES TO FOLLOW)


                                                            
       
                ELBIT SYSTEMS LTD.


                                                         
     
         
                  CONSOLIDATED BALANCE SHEETS

                                                                         ---

                                                              
       (In thousands of US Dollars)




                                                                      September 30, 2019                               December 31,
                                                                                                                            2018



                                                                           Unaudited                                      Audited



                                    Assets

    ---


       Current assets:


        Cash and cash
         equivalents                                                                                      $
       165,680                    $
       208,479


        Short-term bank
         deposits and
         restricted
         deposits                                                                  4,165                                      16,447


        Trade and
         unbilled
         receivables and
         contract assets,
         net                                                                   1,882,518                                   1,712,915


        Other receivables
         and prepaid
         expenses                                                                171,994                                     199,148


        Inventories, net                                                       1,375,883                                   1,141,996


        Total current
         assets                                                                3,600,240                                   3,278,985





        Investments in
         affiliated
         companies and
         partnerships and
         other companies                                                         199,862                                     196,180


        Long-term trade
         and unbilled
         receivables and
         contract assets                                                         280,039                                     297,145


        Premises
         evacuation                                                                                                         365,436


        Long-term bank
         deposits and
         other
         receivables                                                              70,688                                      42,962


        Deferred income
         taxes, net                                                               44,935                                      42,804


        Severance pay
         fund                                                                    293,611                                     278,732


                                                                                 889,135                                   1,223,259





        Operating lease
         right of use
         assets                                                                  379,496                                           -


        Property, plant
         and equipment,
         net                                                                     746,470                                     686,620


        Goodwill and
         other intangible
         assets, net                                                           1,628,136                                   1,261,921



                     Total assets                                                          $
              
         7,243,477               $
     
        6,450,785

                                                                                                                                                  ===





                                    Liabilities and Equity

    ---

        Short-term bank
         credit and loans                                                                                 $
       192,982                    $
       208,821


        Current
         maturities of
         long-term loans
         and Series A
         Notes                                                                   166,125                                      62,546


        Operating lease
         liabilities                                                              64,415                                           -


        Trade payables                                                           793,258                                     776,100


        Other payables
         and accrued
         expenses                                                              1,090,023                                   1,081,992


        Contract
         liabilities                                                             786,761                                     780,994


                                                                               3,093,564                                   2,910,453





        Long-term loans,
         net of current
         maturities                                                              475,501                                     467,649


        Series A Notes,
         net of current
         maturities                                                                                                          56,303


        Employee benefit
         liabilities                                                             782,024                                     736,798


        Deferred income
         taxes and tax
         liabilities, net                                                         93,445                                      78,677


        Operating lease
         liabilities                                                             331,941                                           -


        Contract
         liabilities                                                              75,218                                     175,890


        Other long-term
         liabilities                                                             208,781                                     170,607


                                                                               1,966,910                                   1,685,924





        Elbit Systems
         Ltd.'s equity                                                         2,161,030                                   1,832,453


        Non-controlling
         interests                                                                21,973                                      21,955


        Total equity                                                           2,183,003                                   1,854,408



                     Total liabilities
                      and equity                                                           $
              
         7,243,477               $
     
        6,450,785

                                                                                                                                                  ===


                                                                                                                                                                                         
              
                ELBIT SYSTEMS LTD.


                                                                                                                                                                          
              
                
                  CONSOLIDATED STATEMENTS OF INCOME

                                                                                                                                                                                                             ---

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




                                                                                                                             
              
                Nine Months Ended                                                              Three Months Ended                                Year Ended
                                                                                                                                                                                                                            September 30,                                December 31,
                                                                                                                               
              
                September 30,



                                                                                                                        2019                                                      2018                                             2019                2018                 2018

                                                                                                                                                                                                                                                                         ---

                                                                                                                                 
              
                Unaudited                                              
              
                Unaudited                                     Audited




              Revenues                                                                                                                   $
              3,186,894                                                    $
              2,605,844                       $
          1,101,190                                 $
        895,150    $
          3,683,684



              Cost of revenues                                                                                    2,334,720                                                   1,864,515                                                      815,032                     639,231                   2,707,505




              Gross profit                                                                                          852,174                                                     741,329                                                      286,158                     255,919                     976,179





              
                Operating expenses:

    ---


              Research and development, net                                                                         234,126                                                     214,366                                                       79,468                      69,626                     287,352



              Marketing and selling, net                                                                            220,917                                                     207,559                                                       75,512                      69,442                     281,014



              General and administrative, net                                                                       168,385                                                     110,582                                                       57,520                      37,797                     160,348



              Other operating income, net                                                                          (29,264)                                                   (45,367)                                                    (28,030)                                              (45,367)




              Total operating expenses                                                                              594,164                                                     487,140                                                      184,470                     176,865                     683,347



              Operating income                                                                                      258,010                                                     254,189                                                      101,688                      79,054                     292,832






              Financial expenses, net(*)                                                                           (52,715)                                                   (29,142)                                                    (18,461)                    (8,145)                   (44,061)



              Other (expenses) income, net                                                                          (4,618)                                                    (5,063)                                                     (2,811)                         25                    (11,449)



              Income before income taxes                                                                            200,677                                                     219,984                                                       80,416                      70,934                     237,322






              Taxes on income                                                                                      (28,543)                                                   (22,542)                                                     (7,619)                    (8,904)                   (26,445)


                                                                                                                     172,134                                                     197,442                                                       72,797                      62,030                     210,877






              Equity in net earnings (losses) of                                                                      5,272                                                       9,140                                                        (469)                      2,695                     (2,222)
    affiliated companies and partnerships




              Net income                                                                                                                   $
              177,406                                                      $
              206,582                          $
          72,328                                  $
        64,725      $
          208,655




              Less: net income attributable to non-                                                                 (1,063)                                                      (969)                                                       (263)                      (670)                    (1,917)
    controlling interests




              
                Net income attributable to Elbit                                                                   $
              
                176,343                                         $
              
                205,613                    $
       
            72,065                              $
     
          64,055 $
      
            206,738
    Systems Ltd.'s shareholders








              
                Earnings per share attributable to Elbit Systems Ltd
                .'s shareholders:

    ---


              Basic net earnings per share                                                                                                    $
              4.04                                                         $
              4.81                            $
          1.63                                    $
        1.50         $
          4.84




              Diluted net earnings per share                                                                                                  $
              4.04                                                         $
              4.81                            $
          1.63                                    $
        1.50         $
          4.84








              
                Weighted average number of shares (in thousands)(**)

    ---


              Shares used in computation of basic                                                                    43,614                                                      42,753                                                       44,162                      42,753                      42,753
    earnings per share




              Shares used in computation of diluted                                                                  43,666                                                      42,755                                                       44,217                      42,755                      42,753
    earnings per share






              (*) Financial expenses in the first nine months ended September 30,  2019 included exchange rate differences of $21.1 million on lease contracts as a result of the implementation of ASC 842.



              (**) During the second quarter of 2019 the Company issued 1,408,921 shares to institutional investors.


                                                                                     
              
                ELBIT SYSTEMS LTD.


                                                                    
              
                
                  CONSOLIDATED STATEMENTS OF CASH FLOW

                                                                                                        ---

                                                                                      
              (In thousands of US dollars)




                                                                                  Nine Months Ended                                                   Year Ended
                                                                        September 30,                                                    December 31,



                                                     2019                                            2018                      2018

                                                                                                                              ---

                                                              
              
                Unaudited                                                         Audited



                  CASH FLOWS FROM OPERATING ACTIVITIES


                  Net income                                $
              
                177,406                                           $
              
                206,582               $
      
      208,655


     Adjustments to reconcile net income to net
      cash provided by operating activities:


     Depreciation and
      amortization                                 98,280                                                      84,974                                                        118,205


     Adjustment to fair value
      investment                                        -                                                      5,114                                                         13,334


     Stock-based compensation                       2,973                                                         347                                                          1,387


     Amortization of Series A
      Notes premium and
      related issuance costs,
      net                                            (69)                                                       (69)                                                          (92)


     Deferred income taxes and
      reserve, net                                 12,567                                                       6,601                                                         13,724


     Loss (gain) on sale of
      property, plant and
      equipment                                  (28,509)                                                       (30)                                                         2,080


     Gain on sale and
      revaluation of
      investments                                 (4,479)                                                   (42,868)                                                      (41,822)


     Equity in net losses
      (earnings) of affiliated
      companies and
      partnerships, net of
      dividend received (*)                         1,780                                                       (221)                                                        17,929


     Changes in operating assets and
      liabilities, net of amounts acquired:


     Increase in short and
      long-term trade and
      unbilled receivables and
      contract assets and
      prepaid expenses                          (121,167)                                                   (38,460)                                                      (89,099)


     Increase in inventories,
      net                                       (195,857)                                                  (131,635)                                                      (117,221)


     Increase (decrease) in
      trade payables, other
      payables and accrued
      expenses                                      6,710                                                   (157,024)                                                       (89,956)


     Severance, pension and
      termination indemnities,
      net                                           9,000                                                     (7,357)                                                      (31,363)


     Increase (decrease) in
      contract liabilities                       (98,892)                                                     53,790                                                        185,898



     Net cash provided by
      (used in) operating
      activities                                (140,257)                                                   (20,256)                                                       191,659





                  CASH FLOWS FROM INVESTING ACTIVITIES


     Purchase of property,
      plant and equipment and
      other assets                               (97,898)                                                   (66,664)                                                     (102,301)


     Acquisition of
      subsidiaries and
      business operations                       (357,144)                                                  (127,569)                                                      (504,447)


     Proceeds from premises
      evacuation                                  344,913


     Investments in affiliated
      companies and other
      companies                                   (3,350)                                                    (7,181)                                                       (7,538)


     Deconsolidation of
      subsidiary                                        -                                                    (2,873)                                                       (2,873)


     Proceeds from sale of
      property, plant and
      equipment                                    36,189                                                       1,380                                                          4,388


     Investment in long-term
      deposits                                      (289)                                                      (120)                                                         (183)


     Proceeds from sale of
      long-term deposits                              350                                                          81                                                             82


     Investment in short-term
      deposits                                   (15,913)                                                    (5,132)                                                      (10,361)


     Proceeds from sale of
      short-term deposits                          28,789                                                      18,314                                                         30,363



     Net cash used in
      investing activities                       (64,353)                                                  (189,764)                                                      (592,870)





                  CASH FLOWS FROM FINANCING ACTIVITIES


     Proceeds from exercise of
      options                                           -                                                         48                                                             48


     Issuance of shares                           184,840


     Repayment of long-term
      loans                                     (242,440)                                                       (39)                                                         (775)


     Proceeds from long-term
      loans                                       350,000                                                     340,397                                                        342,528


     Repayment of Series A
      Notes                                      (55,532)                                                   (55,532)                                                      (55,532)


     Dividends paid (**)                         (58,922)                                                   (56,479)                                                      (75,305)


     Change in short-term
      bank credit and loans,
      net                                        (16,135)                                                   (22,220)                                                       242,652


     Net cash provided by
      financing activities                        161,811                                                     206,175                                                        453,616





                  Net increase (decrease)
                   in cash and cash
                   equivalents                   (42,799)                                                    (3,845)                                                        52,405


                  Cash and cash equivalents
                   at the beginning of the
                   year                           208,479                                                     156,074                                                        156,074



                  Cash and cash equivalents
                   at the end of the period                 $
              
                165,680                                           $
              
                152,229               $
      
      208,479



                  * Dividend received from
                   affiliated companies and
                   partnerships                               $
              
                7,052                                             $
              
                8,919                $
      
      15,707



                  ** Dividend paid during the nine months ended September 30, 2019, included approximately $1,203 in a dividend paid by    a subsidiary to non-controlling interests.


                                                                                                                                              
      
           ELBIT SYSTEMS LTD.


                                                                                                                                       
           
       
              DISTRIBUTION OF REVENUES

                                                                                                                                                     ---




              
                
                Consolidated Revenues by Areas of Operation:

    ---



                                                                                                 Nine months ended September 30,                                                       Three months ended September 30,


                                                                                            2019                                         2018                                               2019                               2018


                                                                  
              
            $ millions                                    %         
      
           $ millions                              %             
            
     $ millions     %      
     
     $ millions         %

                                                                                                                                                                                                                                                                     ---


              Airborne systems                                                          1,178.8                                  37.0                        1,033.4                            39.7                              397.6   36.1                355.1      39.7



              Land systems                                                                860.7                                  27.0                          409.7                            15.7                              295.2   26.8                153.2      17.1



              C4ISR systems                                                               804.6                                  25.2                          855.1                            32.8                              299.2   27.2                292.0      32.6



              Electro-optic systems                                                       249.6                                   7.8                          231.5                             8.9                               78.3    7.1                 76.7       8.6



              Other (mainly non-defense                                                    93.2                                   3.0                           76.1                             2.9                               30.9    2.8                 18.1       2.0
    engineering and
    production services)

                                                                                                                                                                                                                                                                     ---


              
                Total                                                        3,186.9                                 100.0                        2,605.8                           100.0                            1,101.2  100.0                895.1     100.0

                                                                                                                                                                                                                                                                     ===



       
                
         Consolidated Revenues by Geographical Regions:

    ---



                                                                      Nine months ended September 30,                             Three months ended September 30,

                                                                                                                                    ---

                                                           2019                                             2018                       2019                               2018



                             
              
                $ millions                                          %       
     
     $ millions             %             
            
     $ millions     %      
     
     $ millions         %

                                                                                                                                                                                                                ---


       Israel                                            740.2                                        23.2                 512.8           19.7                              245.9   22.3                160.8      18.0


        North America                                     908.6                                        28.5                 691.3           26.5                              333.4   30.3                230.2      25.7



       Europe                                            583.3                                        18.3                 487.2           18.7                              195.3   17.7                171.5      19.2


        Asia-Pacific                                      732.0                                        23.0                 588.3           22.6                              248.0   22.5                224.3      25.1


        Latin America                                     122.0                                         3.8                 151.4            5.8                               49.5    4.5                 60.4       6.7


        Other countries                                   100.8                                         3.2                 174.8            6.7                               29.1    2.7                 47.9       5.3

                                                                                                                                                                                                                ---

                     Total                              3,186.9                                       100.0               2,605.8          100.0                            1,101.2  100.0                895.1     100.0

                                                                                                                                                                                                                ===

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SOURCE Elbit Systems Ltd.