HAIFA, Israel, March 22, 2017 /PRNewswire/ --

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, 2016.

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. For a description of the Company's non-GAAP definitions see page 5 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: "Our fourth quarter results culminate a good year for Elbit Systems. In addition to the increase in revenues, our backlog continued its positive trend in 2016. Thanks to our growth and operating efficiency measures, we were able to increase our investments in R&D and marketing in order to capitalize on many of the opportunities in our markets and still produce a nice improvement in net income, year-over-year.

In today's geopolitical environment we see increasing demand for our solutions in many markets, and we are pursuing increased opportunities around the world. Based on these opportunities and a growing backlog, we believe that we have the potential for further improvement and growth."

Fourth quarter 2016 results:

Revenues in the fourth quarter of 2016 were $953.7 million, as compared to $886.6 million in the fourth quarter of 2015.

Non-GAAP^(*) gross profit amounted to $288.5 million (30.3% of revenues) in the fourth quarter of 2016, as compared to $262.4 million (29.6% of revenues) in the fourth quarter of 2015. GAAP gross profit in the fourth quarter of 2016 was $280.8 million (29.4% of revenues), as compared to $253.3 million (28.6% of revenues) in the fourth quarter of 2015.

Research and development expenses, net, were $67.0 million (7.0% of revenues) in the fourth quarter of 2016, as compared to $69.3 million (7.8% of revenues) in the fourth quarter of 2015.

Marketing and selling expenses, net, were $88.8 million (9.3% of revenues) in the fourth quarter of 2016, as compared to $66.9 million (7.5% of revenues) in the fourth quarter of 2015.

General and administrative expenses, net, were $37.6 million (3.9% of revenues) in the fourth quarter of 2016, as compared to $39.2 million (4.4% of revenues) in the fourth quarter of 2015.

Non-GAAP^(*) operating income was $97.3 million (10.2% of revenues) in the fourth quarter of 2016, as compared to $91.5 million (10.3% of revenues) in the fourth quarter of 2015. GAAP operating income in the fourth quarter of 2016 was $87.5 million (9.2% of revenues), as compared to $78.0 million (8.8% of revenues) in the fourth quarter of 2015.

Financial expenses, net, were $9.2 million in the fourth quarter of 2016, as compared to $2.3 million in the fourth quarter of 2015. Financial  expenses in the fourth quarter of 2015 were relatively low mainly due to gains from exchange rate differences.

Taxes on income were $9.8 million in the fourth quarter of 2016, as compared to $15.4 million in the fourth quarter of 2015. Taxes in the fourth quarter of 2016 were somewhat lower mainly due to settlements of tax audits for prior years.

Equity in net losses of affiliated companies and partnerships was $0.6 million (0.1% of revenues) in the fourth quarter of 2016, as compared to net earnings of $3.3 million (0.4% of revenues) in the fourth quarter of 2015.

Net income attributable to non-controlling interests was $0.7 million in the fourth quarter of 2016, as compared to $0.8 million in the fourth quarter of 2015.

Non-GAAP^(*) net income attributable to the Company's shareholders in the fourth quarter of 2016 was $77.7 million (8.2% of revenues), as compared to $74.2 million (8.4% of revenues) in the fourth quarter of 2015. GAAP net incomeattributable to the Company's shareholders in the fourth quarter of 2016 was $67.1 million (7.0% of revenues), as compared to $63.0 million (7.1% of revenues) in the fourth quarter of 2015.

Non GAAP^(*) diluted net earnings per share attributable to the Company'sshareholders were $1.82 for the fourth quarter of 2016, as compared to $1.74 for the fourth quarter of 2015. GAAP diluted earnings per share attributable to the Company's shareholders in the fourth quarter of 2016 were $1.57, as compared to $1.47 in the fourth quarter of 2015.

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Full year 2016 results:

Revenues for the year ended December 31, 2016 were $3,260.2 million, as compared to $3,107.6 million in the year ended December 31, 2015. The leading contributors to our revenues were the airborne systems and C4ISR systems areas of operations. The increase in the C4ISR systems area of operations was primarily due to an increase in sales of command and control systems and radio systems in Europe, Asia-Pacific and in Israel. Revenues from land systems decreased due to a decline in sales of tank fire control systems to Asia-Pacific.

On a geographic basis, the decrease in Latin America was mainly a result of lower sales of command and control systems for homeland security applications.

Cost of revenues for the year ended December 31, 2016 was $2,300.6 million (70.6% of revenues), as compared to $2,210.5 million (71.1% of revenues)  in the year ended December 31, 2015.

Non-GAAP^(*) gross profit for the year ended December 31, 2016 was $990.8 million (30.4% of revenues), as compared to $927.0 million (29.8% of revenues) in the year ended December 31, 2015. GAAP gross profit in 2016 was $959.6 million  (29.4% of revenues), as compared to $897.1 million (28.9% of revenues) in 2015.

Research and development expenses, net, for the year ended December 31, 2016 were $255.8 million (7.8% of revenues), as compared to $243.4 million (7.8% of revenues) in the year ended December 31, 2015.

Marketing and selling expenses, net, for the year ended December 31, 2016 were $271.0 million (8.3% of revenues), as compared to $239.4 million (7.7% of revenues) in the year ended December 31, 2015.  The increase in marketing and selling expenses in 2016 was mainly related to the mix of countries and types of marketing activities for projects in which we invested our marketing efforts.

General and administrative expenses, net, for the year ended December 31, 2016 were $151.4 million (4.6% of revenues), as compared to $145.7 million (4.7% of revenues) in the year ended December 31, 2015.

Other operating income, net, for the year ended December 31, 2016 amounted to $17.6 million. This was the result of net gains related to valuation of shares in two of our Israeli subsidiaries in the energy and automotive areas, due to third party investments.

Non-GAAP^(*) operating income for the year ended December 31, 2016 was $322.6 million (9.9% of revenues), as compared to $316.7 million (10.2% of revenues) in the year ended December 31, 2015. GAAP operating income in 2016 was $299.0 million (9.2% of revenues), as compared to $268.6 million (8.6% of revenues) in 2015. The main reason for the improvement of the operating income in 2016 was the increase in the gross profit as compared to 2015.

Other income, net for the year ended December 31, 2016 amounted to $4 million. This was due to a capital gain  related to the sale of real estate acquired in prior years.

Financial expenses, net, for the year ended December 31, 2016 were $23.7 million, as compared to $20.2 million in the year ended December 31, 2015. Financial expenses in 2015 were relatively low mainly due to gains from exchange rate differences.

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Taxes on income for the year ended December 31, 2016 were $45.6 million (effective tax rate of 16.3%), as compared to $46.2 million (effective tax rate of 18.6%) in the year ended December 31, 2015. 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 the settlement in 2016 of tax audits for prior years.

Equity in net earnings of affiliated companies and partnerships for the year ended December 31, 2016 was $5.2 million (0.2% of revenues), as compared to $4.5 million (0.1% of revenues) in the year ended December 31, 2015.

Net income attributable to non-controlling interests for the year ended December 31, 2016 was $1.9 million, as compared to $4.4 million in the year ended December 31, 2015.

Non-GAAP^(*) net income attributable to the Company's shareholders for the year ended December 31, 2016 was $254.2 million (7.8% of revenues), as compared to $242.4 million (7.8% of revenues) in the year ended December 31, 2015. GAAP  net incomeattributable to the Company's shareholders in the year ended December 31, 2016 was $236.9 million (7.3% of revenues), as compared to $202.5 million (6.5% of revenues) in the year ended December 31, 2015.

Non-GAAP^(*) diluted net earnings per shareattributable to the Company'sshareholders for the year ended December 31, 2016 were $5.95, as compared to $5.67 for the year ended December 31, 2015. GAAP diluted netearnings per shareattributable to the Company's shareholders in the year ended December 31, 2016 were $5.54, as compared to $4.74 in the year ended December 31, 2015.

Backlog of orders for the year ended December 31, 2016 totaled $6,909 million, as compared to $6,564 million as of December 31, 2015. Approximately 68% of the current backlog is attributable to orders from outside Israel. Approximately 69% of the current backlog is scheduled to be performed during 2017 and 2018.

Operating cash flow for the year ended December 31, 2016 was $208.0 million, as compared to $434.8 million in the year ended December 31, 2015. The higher level of operating cash flow in 2015 was mainly a result of higher collection of receipts and advances received from customers.

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* 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, 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 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)

Recent Events:

On November 22, 2016, the Company announced that Item 3 (Approval of Amended Compensation Policy for the Company's Executive Officers and Directors) ("Item 3") on the agenda of the Company's Annual General Meeting scheduled to be held on Wednesday, November 23, 2016 (the "Meeting"), as specified in the Company's Proxy Statement of October 19, 2016 (the "Proxy Statement") - was withdrawn in order to allow the Company additional time to consider certain comments received from shareholders or on their behalf with respect to said Item 3 on the Meeting agenda.

On November 23, 2016, the Company announced that its U.S. subsidiary, Elbit Systems of America, LLC was awarded an Indefinite Delivery/Indefinite Quantity ("ID/IQ") contract for the production of mortar weapon systems. The contract, with a maximum value of up to approximately $103 million, will be performed over a five-year period. An initial purchase order, in an amount that is not material to the Company, was awarded.

On January 3, 2017, the Company announced that it was awarded two contracts from Rafael Advanced Defense Systems Ltd. for the supply of airborne laser designators, in a total value of approximately $35 million. The contracts will be performed over a three-year period, and systems will be supplied by Rafael to two countries in the Asia-Pacific region.

On January 8, 2017the Company announced that a Brazilian subsidiary, Ares Aeroespacial e Defesa S.A. ("Ares"), was awarded a framework contract, in a total value of approximately $100 million, to supply 12.7/7.62 mm Remote Controlled Weapon Stations ("RCWS") to the Brazilian Army. The contract includes associated equipment and services. The RCWS, named REMAX, will be supplied over a five-year period. An initial production order, valued at approximately $7.5 million, was received.

On January 12, 2017, the Company announced that Midroog Ltd., an Israeli rating agency ("Midroog"), reaffirmed Midroog's "Aa1" rating (on a local scale), with a stable outlook, of the Series "A" Notes issued by the Company in 2010 and in 2012.

On January 17, 2017, the Company announced that it was awarded a contract to supply multi spectral BrightNite systems to an air force in a NATO country. The contract, in an amount of approximately $17 million, will be performed over a thirty-month period.

On February 6, 2017, the Company announced that its subsidiary Cyberbit Ltd. ("Cyberbit"), was awarded a contract from Ni Cybersecurity Inc., the Japanese cybersecurity service provider, to launch a unique cybersecurity training and simulation center in Tokyo powered by the Cyberbit Range platform.

On February 8, 2017, the Company announced that it was awarded an approximately $110 million contract from an Asia-Pacific country for the upgrade and maintenance of dozens of Mi-17 helicopters. The project will be performed over a five-year period.

On February 9, 2017, the Company announced that its subsidiary, Cyberbit was awarded a contract from the enterprise software provider Infor (US), Inc. for the supply of Cyberbit's Endpoint Detection and Response security platform to be used to support Infor's internal cyber protection. The contract is in an amount that is not material to Elbit Systems.

On February 16, 2017, the Company announced that its subsidiary, Elbit Systems of America LLC. was awarded a ID/IQ contract to provide and field mortar fire control systems for the U.S. Army. The contract was awarded by the U.S. Army Contracting Command, Picatinny Arsenal, New Jersey. If fully ordered, the maximum value of the contract is $102 million to be performed over a five-year period.

Dividend:

The Board of Directors declared a dividend of $0.44 per share for the fourth quarter of 2016. The dividend's record date is March 31, 2017. The dividend will be paid from income generated as Preferred Income (as defined under Israeli tax laws), on April 6, 2017, net of taxes, at the rate of 20%.

Conference Call:

The Company will be hosting a conference call today, Wednesday, March 22, 2017 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: 1-888-668-9141

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

UK Dial-in Number: 0-800-917-5108

ISRAEL Dial-in Number: 03-918-0609

INTERNATIONAL Dial-in Number: +972-3-918-0609

at: 10:00 am Eastern Time; 7:00 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:

1-877-456-0009 (US and Canada) or +972-3-925-5929 (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 aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance ("C4ISR"), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, electronic warfare suites, signal intelligence systems, data links and communications systems and radios. 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

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)

ELBIT SYSTEMS LTD.

CONSOLIDATED STATEMENTS OF INCOME
(In thousands of US Dollars, except for share and per share amounts)

ELBIT SYSTEMS LTD.

CONSOLIDATED STATEMENTS OF CASH FLOW
(In thousands of US Dollars)

** Dividends paid in 2015 included approximately $ 8,222 dividends paid by a subsidiary to non-controlling interests.

ELBIT SYSTEMS LTD.

DISTRIBUTION OF REVENUES

Consolidated Revenues by Areas of Operation:

Consolidated Revenues by Geographical Regions:

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SOURCE Elbit Systems Ltd.