Elbit Systems Reports Second Quarter 2007 Results

Aug. 14, 2007

HAIFA , Israel , August 14 /PRNewswire-FirstCall/ -- Elbit Systems Ltd. (the "Company") (NASDAQ: ESLT), the international defense company, today reported its consolidated results for the second quarter ended June 30, 2007 .

Completion of Acquisition of Tadiran Communications. On April 26, 2007 , the Company completed the acquisition of the outstanding shares of Tadiran Communications Ltd. ("Tadiran"). Following the acquisition, the Company fully consolidated the results of Tadiran. On July 12, 2007 , the Company reported that it anticipated the acquisition related expenses in the second quarter to be within a range of $25 - 30 million. The Company recorded $27.1 million in expenses in relation to the acquisition as follows: In-Process Research & Development ("IPR&D") write-off of $16.6 million recorded under operating expenses, and restructuring expenses of $10.5 million recorded under cost of good sold.

Backlog of orders as of June 30, 2007 reached a record $4,196 million, compared with $3,786 million as of December 31, 2006 . 73% of the backlog is for sales outside Israel , and approximately 61% of the backlog is scheduled to be performed by the end of 2008. The majority of the balance is scheduled to be performed in 2009 and 2010.

Consolidated revenues for the second quarter of 2007 increased by 36% to $468.2 million, from $344.8 million in the second quarter of 2006.

Reported gross profit for the second quarter of 2007 increased by 30% to $116.5 million (24.9% of revenues), as compared with gross profit of $89.6 million (26.0% of revenues) in the second quarter of 2006. Gross profit for the quarter included the $10.5 million restructuring charge relating to the completed acquisition of Tadiran. Excluding this charge, gross profit in the second quarter of 2007 increased by 42% to $127.0 million (27.1% of revenues).

Reported consolidated net loss for the second quarter of 2007, including the $27.1 million ($24.4 million net) in expenses recorded in relation with the completed acquisition of Tadiran, was $0.7 million, compared with a net income of $15.1 million (4.4% of revenues) in the second quarter of 2006. Loss per diluted share for the second quarter of 2007 was $0.02, as compared with earnings per diluted share of $0.36 for the second quarter of 2006. Consolidated net income for the second quarter of 2007, excluding the IPR&D write-off and restructuring expenses was $23.7 million, or $0.56 per diluted share.

Operating Cash flow generated during the first six months of the year reached a record $129.7 million.

The President and CEO of Elbit Systems, Joseph Ackerman , commented: "We are pleased to report another quarter of growth that is highlighted by record backlog and cash flow. I would like to underline our organic growth that amounted to more than 20% and made a substantial contribution to our overall growth of 36% following the acquisition of Tadiran. We have found that Tadiran has highly professional and talented employees, advanced technologies and a strong presence in the worldwide market. We believe the combined company will quickly evolve into a world leader in the areas of ground systems, communications and C4I. Together with our integration of Tadiran, and based upon the Group's highly qualified and dedicated personnel, strong global presence, growing backlog, continued investment in R&D and solid cash flow, we are confident of our continued success for the future".

The Board of Directors declared a dividend of $0.16 per share for the second quarter of 2007. The dividend's record date is August 28, 2007 , and the dividend will be paid on September 10, 2007 , net of taxes and levies, at the rate of 16.6%.

Conference Call

The Company will also be hosting a conference call today, August 14, 2007 at 8:30 am EDT . On the call, management will review and discuss its second quarter 2007 results and will be available to answer questions.

To participate, please call one of the following teleconferencing numbers. Please begin placing your calls at least 10 minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

US Dial-in Numbers: 1-800-994-4498 UK Dial-in Number: 0-800-032-3367 ISRAEL Dial-in Number: 03-918-0685 INTERNATIONAL Dial-in Number: +972-3-918-0685

at: 8:30 am Eastern Time , 5:30 am Pacific Time , 1:30 pm UK Time, 3:30 pm Israel Time

This call will 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 end of the call, investors will be able to dial a replay number to listen to the call. The dial-in numbers are either: +1-888-254-7270 (US) ; 0-800-028-6837 (UK); or +972-3-925-5921 (International).

About Elbit Systems Ltd.:

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

STATEMENTS IN THIS PRESS RELEASE WHICH ARE NOT HISTORICAL DATA ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES OR OTHER FACTORS NOT UNDER THE COMPANY'S CONTROL, WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM THE RESULTS, PERFORMANCE OR OTHER EXPECTATIONS IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THOSE DETAILED IN THE COMPANY'S PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

(Financial Tables to Follow) Elbit Systems Ltd. Consolidated Balance Sheets (In thousand of US Dollars) June 30 December 31 2007 2006 Unaudited Audited Assets Current Assets: Cash and short term deposits 133,007 85,400 Available for sale marketable securities 210,259 2,106 Trade receivable and others 486,439 463,323 Inventories, net of advances 428,644 371,962 Total current assets 1,258,349 922,791 Affiliated Companies & other Investments 60,397 235,723 Long-term receivables & others 262,523 190,963 Fixed Assets, net 326,483 294,628 Other assets, net 627,104 128,995 2,534,856 1,773,100 Liabilities and Shareholder's Equity Current liabilities 1,092,151 810,885 Long-term liabilities 936,929 461,760 Minority Interest 8,586 6,871 Shareholder's equity 497,190 493,584 2,534,856 1,773,100 Consolidated Statements Of Income (In thousand of US Dollars, except for per share amounts) Six Months Ended Three Months Ended Year Ended June 30 June 30 December 31 2007 2006 2007 2006 2006 Unaudited Unaudited (Audited) Revenues 871,758 679,185 468,158 344,815 1,523,243 Cost of revenues 641,266 502,067 341,204 255,237 1,149,768 Restructurirng expenses 10,482 - 10,482 - - Gross Profit 220,010 177,118 116,472 89,578 373,475 Research and development, net 53,074 39,789 28,981 18,351 92,232 Marketing and selling 71,577 53,630 39,206 27,382 111,880 General and administrative 44,418 37,727 24,100 18,720 77,505 IPR&D write-off 16,560 - 16,560 - - Total operating expenses 185,629 131,146 108,847 64,453 281,617 Operating income 34,381 45,972 7,625 25,125 91,858 Financial expenses, net (7,962) (10,918) (5,034) (6,677) (21,456) Other income (expenses), net 95 160 (18) (748) 1,814 Income before income taxes 26,514 35,214 2,573 17,700 72,216 Taxes on income 12,122 9,366 5,389 4,762 20,694 14,392 25,848 (2,816) 12,938 51,522 Equity in net earnings of affiliated companies and partnership 5,773 3,614 2,373 1,347 14,743 Minority rights (1,757) 77 (248) 786 5,977 Net income (loss) 18,408 29,539 (691) 15,071 72,242 Earnings per share Basic net earnings (loss) per share $ 0.44 $ 0.72 $ (0.02) $ 0.37 $ 1.75 Diluted net earnings $ 0.43 $ 0.71 $ (0.02) $ 0.36 $ 1.72 (loss) per share Company Contact: Joseph Gaspar, Corporate VP & CFO Dalia Rosen, Director of Corporate Communications Elbit Systems Ltd. Tel: +972-4-8316663 Fax: +972-4-8316944 E-mail: [email protected] [email protected] IR Contact: Ehud Helft / Kenny Green G.K. Investor Relations Tel: 1-646-201-0246 Fax: + 972-3-6074711 E-mail: [email protected]

SOURCE Elbit Systems Ltd

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