BAE Systems announced today the planned acquisition of three intelligence services companies, for a total investment of almost US$300 million. The companies to be acquired are SpecTal LLC, Advanced Concepts Inc., and McClendon LLC – all part of the L-1 Identity Solutions Inc.’s (L1ID) Intelligence Services Group. Following the completion of the acquisition expected by the fourth quarter of 2010, BAE will add more than 1,000 skilled information and security employees to its workforce. This acquisition reflects its global strategy to enhance and grow its business in the area of customer support and services, which includes cyber and security as well as readiness and sustainment activities focusing on four key customer missions – intelligence and counterintelligence, homeland security, law enforcement and support to military operations. For the six months to 30 June 2010, this area of the business generated 49% of BAE Systems revenues.

Focusing on its core security activities, L1ID itself is being acquired by the French Safran group. This move is expected to be completed by the first quarter of 2011. L1ID provides Secure Credentialing Solutions, Biometric and Enterprise Access Solutions and Enrollment Services. These businesses are expected to have combined estimated Fiscal Year 2010 revenues of $486.0 million. The acquisition by Safran is expected to open international growth opportunities for L-1. According to Jean-Paul Herteman, Chief Executive Officer of Safran, the company plans to integrate L-1′s operations into its subsidiary, Morpho.

Rockwell Collins, Inc. (NYSE: COL) forecasts revenues for 2011 to reach $4.8 to $5.0 billion, with operating margins maintained at 19.5 – 20.5%. As operating conditions continue to improve in the commercial markets, Rockwell Collins expects ‘double digit’ revenue growth in commercial air transport and business aviation. The Government Systems business segment is expected to slow in 2011 but the company sees it as a transitional year that should position it for stronger revenue growth in the years ahead. Overall, the government systems segment is expected to grow by a modest 2% in 2011. Sales of airborne solutions should grow at 3%, driven by new rotary and fix wing platforms including KC-X and CH-47. The growth potential is reduced by other programs that are winding down – including fighter jets and KC-135 GATM upgrades. The pullout of combat brigades from Iraq is also affecting the company, as with lower demand for navigation systems, while JTRS communications systems moving from development into low rate initial production. The company expects the introduction of micro DGAR to increase sales and compensate for these declines.

Elbit Systems (NASDAQ:ESLT) announced today the  acquisition of the three defense companies owned by the Israel based Mikal group for a net payment of $69 million. These companies include artillery and mortar producer Soltam, armored vehicle refurbishing expert Saymar and EO specialist ITL.

Following a significant setback over a major export program, striving for cash, Mikal sold 19% of its share to Elbit for $18 million. This was only the first step, Mikal expected Elbit to further raise its ownership ownership of the entire group. However, after long discussions that lasted about a year the two sides agreed on Elbit acquiring Mikal’s interests in its main subsidiaries rather then the whole group, for $87 million. Mikal could receive more payments in the future, subject to the acquired subsidiaries achieving certain business goals.


Elbit picked the three companies considered to be synergetic to its activities, rather than acquiring the group as a whole. As Elbit Systems already holds about 19% of Mikal, it will transfer its shares the other Mikal shareholders for $18 million.Upon completion of the acquisition, Elbit Systems will hold, a 100% interest in Soltam and Saymar. As for ITL, which was a bitter competitor for the company’s electro-optical systems, Elbit will increase its ownership from 19% to 87.85%. Elbit has increased its holdings in ITL in the recent days, buying over 2% of ITL floating shares. The balance of ITL’s shares are traded on the Tel Aviv Stock Exchange. Last month Elbit failed to buy out all ITL’s outstanding shares, offering over $3 million for the acquisition of 14.35%. The recent announcement will probably renew this buyout momentum.

Joseph Ackerman, President & CEO Elbit Systems

Welcoming the new companies and their employees to Elbit Systems, Joseph Ackerman, Elbit Systems’ President and CEO acknowledged the acquisition is synergetic to Elbit Systems, saying: “the combination of Elbit Systems’ existing capabilities with the technologies of Soltam, Saymar and ITL in platforms, propulsion and electro-optics, will enable us to further enhance our portfolio of solutions to both the Israeli and the global defense market”.

What are the benefits for Elbit Systems?

The synergies gained by this acquisition are significant to Elbit, particularly in the case of Soltam, where the company gains access to the market of main weapon systems. In contrast to past years, artillery and mortars are sold today as integrated systems, combined with command, control, communications, target acquisition and means battle damage assessment, opening new opportunities for the entire group capability – observation systems, data communications, EO payloads and unmanned aerial vehicles. In the past Elbit was working with Soltam as a subcontractor, offering mortar fire control computers but did not have the benefit and advantages available to a prime contractor.

The ability to perform projects a platform prime-contractor open the full potential for Elbit to exploit other opportunities, domestic and international markets and increase profitability, management and control of the entire program. Another new activity for Elbit is ammunition (also produced by Soltam) – sofar Elbit avoided this field and focused on enhancing weapons produced by other manufacturers into ‘smart weapons’.

The synergies with ITL are more complex, as ITL has recently expanded into many of Elbit Systems’ fields of activities, including thermal imagers, enhanced Night Vision Devices, target acquisition and situational awareness systems. The two companies are offering competing product lines of weapon sights, target acquisition systems, etc. Yet, Elbit considers part of ITL’s legacy specialization in image intensifiers (I2), laser markers and range-finding as synergetic to its activity. Besides their fierce competition, the two companies have also worked together – in Israel ITL’s eyepiece is operationally used as part of the Elbit Systems Dominator solution for the IDF’s future soldier program.

Elbit Systems (NASDAQ:ESLT) announced today the  acquisition of the three defense companies owned by the Israel based Mikal group for a net payment of $69 million. These companies include artillery and mortar producer Soltam, armored vehicle refurbishing expert Saymar and EO specialist ITL.

Following a significant setback over a major export program, striving for cash, Mikal sold 19% of its share to Elbit for $18 million. This was only the first step, Mikal expected Elbit to further raise its ownership ownership of the entire group. However, after long discussions that lasted about a year the two sides agreed on Elbit acquiring Mikal’s interests in its main subsidiaries rather then the whole group, for $87 million. Mikal could receive more payments in the future, subject to the acquired subsidiaries achieving certain business goals.

Elbit picked the three companies considered to be synergetic to its activities, rather than acquiring the group as a whole. As Elbit Systems already holds about 19% of Mikal, it will transfer its shares the other Mikal shareholders for $18 million.Upon completion of the acquisition, Elbit Systems will hold, a 100% interest in Soltam and Saymar. As for ITL, which was a bitter competitor for the company’s electro-optical systems, Elbit will increase its ownership from 19% to 87.85%. Elbit has increased its holdings in ITL in the recent days, buying over 2% of ITL floating shares. The balance of ITL’s shares are traded on the Tel Aviv Stock Exchange. Last month Elbit failed to buy out all ITL’s outstanding shares, offering over $3 million for the acquisition of 14.35%. The recent announcement will probably renew this buyout momentum.

President and CEO of Elbit Systems, Joseph Ackerman

Welcoming the new companies and their employees to Elbit Systems, Joseph Ackerman, Elbit Systems’ President and CEO acknowledged the acquisition is synergetic to Elbit Systems, saying: “the combination of Elbit Systems’ existing capabilities with the technologies of Soltam, Saymar and ITL in platforms, propulsion and electro-optics, will enable us to further enhance our portfolio of solutions to both the Israeli and the global defense market”.

What are the benefits for Elbit Systems?

The synergies gained by this acquisition are significant to Elbit, particularly in the case of Soltam, where the company gains access to the market of main weapon systems. In contrast to past years, artillery and mortars are sold today as integrated systems, combined with command, control, communications, target acquisition and means battle damage assessment, opening new opportunities for the entire group capability – observation systems, data communications, EO payloads and unmanned aerial vehicles. In the past Elbit was working with Soltam as a subcontractor, offering mortar fire control computers but did not have the benefit and advantages available to a prime contractor.

The ability to perform projects a platform prime-contractor open the full potential for Elbit to exploit other opportunities, domestic and international markets and increase profitability, management and control of the entire program. Another new activity for Elbit is ammunition (also produced by Soltam) – sofar Elbit avoided this field and focused on enhancing weapons produced by other manufacturers into ‘smart weapons’.

The synergies with ITL are more complex, as ITL has recently expanded into many of Elbit Systems’ fields of activities, including thermal imagers, enhanced Night Vision Devices, target acquisition and situational awareness systems. The two companies are offering competing product lines of weapon sights, target acquisition systems, etc. Yet, Elbit considers part of ITL’s legacy specialization in image intensifiers (I2), laser markers and range-finding as synergetic to its activity. Besides their fierce competition, the two companies have also worked together – in Israel ITL’s eyepiece is operationally used as part of the Elbit Systems Dominator solution for the IDF’s future soldier program.

RADA Electronic Industries, an Israeli avionics and defense electronics company reported today revenues of $6.8 million gained in the second quarter of 2010, reflecting an increase by 125% over last year’s second quarter. The increase in sales moved the company into the black, writing an operating profit of $338,000 compared with operating loss of $647,000 million in the second quarter of 2009.  The improving performance contributed to a symbolic net income of $70,000 ($0.01 per share.),  compared with a nearly a million dollar net year over year.

Zvuka Alon, CEO, RADA

Zvika Alon, RADA’s Chief Executive Officer attributed the improvement to the significant increase in backlog during the first half of 2010, which was first reported in July 2010, indicates continuous growth and encouraging prospects for the future. “The growth in revenue is the result of higher volume programs, including major aircraft upgrades performed this past year, which we expect to leverage for our future business.” New products that matured in the recent year are expected to contribute to maintaining the momentum, among these are navigation systems and the new ‘Sentinel’ radar, designed for Active Protection Systems, which will be marketable to existing as well as new key customers.

For the first six months of 2010 revenues totaled $11.3 million, and operating profit totaled $91,000, compared with operating loss of $704,000 for the same period in 2009. The company decreased the reported net loss for the first half with $448,000 ($0.05 per share) compared with a net loss of $909,000 or $0.10 per share, for the comparable period in 2009.

Elbit Systems reported today revenues of US$603.3 million in sales for the second quarter of 2010, 18% below its reported revenues in second quarter of 2009 and 2.4% below the consecutive (Q1/2010) quarter. The company’s sales have been dropping for the past two quarters, after peaking at $732 million in the third quarter of 2009.

Orders Backlog is at Record High

President and CEO of Elbit Systems, Joseph Ackerman

On the bright side, in the first two quarters the company has increased its order backlog by $314 million, with $111 million added in the past three months, bringing the order backlog to a record level of $5.358 billion in June 30th. “We are encouraged by the renewed increase in our backlog over the past two quarters,” said President and CEO of Elbit Systems, Joseph Ackerman. “It provides us with a foundation for future growth. Elbit Systems remains well positioned strategically, operationally and financially, and the long-term prospects for the company remain promising.” Of this backlog, 61% is scheduled to be performed during the next 18 months. Approximately 71% of the backlog relates to orders outside of Israel.

Delayed Programs Hit C4I Systems

While being one of the company’s growth engines the C4I systems areas was blamed for the reduction in sales, in the second quarter the company points at its domestic and European markets as the problematic regions. In the first quarter of 2010 delays in receipt of C4I and land systems orders, and reduction in short-term projects, contributed to a decrease of 5.9% in sales, compared to the first quarter of 2009. In the second quarter the decrease in C4I sales has contributed to lower gross profit – ($186.3 compared to $211.9 million).

Nevertheless, C4I continues to be the company’s core strength. In March 2010 Elbit Systems has won a $298 million contract in Australia, for the supply of advanced C4I equipment for the Australian Battlegroup and Below C3 modernization program. BGC3 will enable the Australian Army to achieve a major portion of its goal of operating a ‘networked brigade‘ under an all-connected ‘network centric warfare’ type of operation. As part of the new program, communications systems will be integrated into over 1,000 vehicles and supplied to equip more than 1,500 soldiers. In June 2010, Elbit Systems was awarded a contract to supply a Latin American Army with Command, Control, Computer & Communications (C4I) systems and Electronic Warfare (EW) systems, valued at approximately $130 million. The project, to be performed over the next three years, is a part of the Army’s extensive modernization program and is designated for all echelons, from the maneuvering forces up to the command headquarters. The new, unified communications network will facilitate a real-time common operational picture of the battlefield providing the Land Forces with enhanced operational performance and situational awareness, as well as improved force protection and prevention of “friendly fire”.

A Billion Dollar Investment in R&D

“Over the past two years we have spent close to a billion dollars on R&D and business development on a gross basis, a very significant amount for any company. We believe that these investments represent a valuable asset which provides the foundation for our long-term growth and leadership in the defense electronics industry, despite the current challenges we face in the area of revenue growth.” Ackerman added. Since the beginning of 2010 Elbit Systems have invested over $110 million in R&D, reflecting increased efforts on development and adaptations of the company’s products to the market requirements.

Elbit Systems reported today revenues of US$603.3 million in sales for the second quarter of 2010, 18% below its reported revenues in second quarter of 2009 and 2.4% below the consecutive (Q1/2010) quarter. The company’s sales have been dropping for the past two quarters, after peaking at $732 million in the third quarter of 2009.

Orders Backlog is at Record High

On the bright side, in the first two quarters the company has increased its order backlog by $314 million, with $111 million added in the past three months, bringing the order backlog to a record level of $5.358 billion in June 30th. “We are encouraged by the renewed increase in our backlog over the past two quarters,” said President and CEO of Elbit Systems, Joseph Ackerman. “It provides us with a foundation for future growth. Elbit Systems remains well positioned strategically, operationally and financially, and the long-term prospects for the company remain promising.” Of this backlog, 61% is scheduled to be performed during the next 18 months. Approximately 71% of the backlog relates to orders outside of Israel.

Delayed Programs Hit C4I Systems

While being one of the company’s growth engines the C4I systems areas was blamed for the reduction in sales, in the second quarter the company points at its domestic and European markets as the problematic regions. In the first quarter of 2010 delays in receipt of C4I and land systems orders, and reduction in short-term projects, contributed to a decrease of 5.9% in sales, compared to the first quarter of 2009. In the second quarter the decrease in C4I sales has contributed to lower gross profit – ($186.3 compared to $211.9 million).

Joseph Ackerman, President & CEO Elbit Systems

Nevertheless, C4I continues to be the company’s core strength. In March 2010 Elbit Systems has won a $298 million contract in Australia, for the supply of advanced C4I equipment for the Australian Battlegroup and Below C3 modernization program. BGC3 will enable the Australian Army to achieve a major portion of its goal of operating a ‘networked brigade‘ under an all-connected ‘network centric warfare’ type of operation. As part of the new program, communications systems will be integrated into over 1,000 vehicles and supplied to equip more than 1,500 soldiers. In June 2010, Elbit Systems was awarded a contract to supply a Latin American Army with Command, Control, Computer & Communications (C4I) systems and Electronic Warfare (EW) systems, valued at approximately $130 million. The project, to be performed over the next three years, is a part of the Army’s extensive modernization program and is designated for all echelons, from the maneuvering forces up to the command headquarters. The new, unified communications network will facilitate a real-time common operational picture of the battlefield providing the Land Forces with enhanced operational performance and situational awareness, as well as improved force protection and prevention of “friendly fire”.

A Billion Dollar Investment in R&D

“Over the past two years we have spent close to a billion dollars on R&D and business development on a gross basis, a very significant amount for any company. We believe that these investments represent a valuable asset which provides the foundation for our long-term growth and leadership in the defense electronics industry, despite the current challenges we face in the area of revenue growth.” Ackerman added. Since the beginning of 2010 Elbit Systems have invested over $110 million in R&D, reflecting increased efforts on development and adaptations of the company’s products to the market requirements.

IAI’s 2010 second quarter and half-year financial report released today reflects continued improvement in the company’s business performance, despite perceived slowdown in global defense market and slow recovery in commercial aviation market. IAI has reported today sales of US$840 million, an increase of 26% over the second quarter of 2009 and about 9% increase over the first quarter of 2010. In total, IAI’s sales in the first half of 2010 amount to $1.6 billion, $0.2 billion over the performance in the first half of 2009. The company’s backlog has increased from the beginning of the year by $1.3 billion, reaching $9.1 billion. “This backlog is sufficient to support our operations for about three years, adding to the near term and long term stability and growth of IAI” said IAI’s President and CEO Yitzhak Nissan.

The net profit in the 2nd quarter was $36 million, representing an increase of 72% over the 2nd quarter of 2009. The net profit reported in the two quarters of 2010 ads up to $55 million, reflecting 49% increase over the first half of last year. IAI continued its research and development, investing $64 million since the beginning of 2010 (14% increase over 2009). Notable areas of such company funded investments were the G250 business jet and Heron TP unmanned aerial system.

IAI’s Chairman of the Board Yair Shamir expressed his satisfaction from the results, noting that both defense and commercial activities represented significant growth. Defense contracts, being the majority of the company’s sales have increased by 17% ($645 million) in the reported period. Orders for commercial aviation and other civilian programs totaled $195 million in the 2nd quarter of 2010, an of 71% over the second quarter of 2009.

IAI’s 2010 second quarter and half-year financial report released today reflects continued improvement in the company’s business performance, despite perceived slowdown in global defense market and slow recovery in commercial aviation market. IAI has reported today sales of US$840 million, an increase of 26% over the second quarter of 2009 and about 9% increase over the first quarter of 2010. In total, IAI’s sales in the first half of 2010 amount to $1.6 billion, $0.2 billion over the performance in the first half of 2009. The company’s backlog has increased from the beginning of the year by $1.3 billion, reaching $9.1 billion. “This backlog is sufficient to support our operations for about three years, adding to the near term and long term stability and growth of IAI” said IAI’s President and CEO Yitzhak Nissan.

The net profit in the 2nd quarter was $36 million, representing an increase of 72% over the 2nd quarter of 2009. The net profit reported in the two quarters of 2010 ads up to $55 million, reflecting 49% increase over the first half of last year. IAI continued its research and development, investing $64 million since the beginning of 2010 (14% increase over 2009). Notable areas of such company funded investments were the G250 business jet and Heron TP unmanned aerial system.

IAI’s Chairman of the Board Yair Shamir expressed his satisfaction from the results, noting that both defense and commercial activities represented significant growth. Defense contracts, being the majority of the company’s sales have increased by 17% ($645 million) in the reported period. Orders for commercial aviation and other civilian programs totaled $195 million in the 2nd quarter of 2010, an of 71% over the second quarter of 2009.