Source: DTN News / Israel Aerospace Industries • Company backlog at $9.4 billion, an increase of $1.6 billion since the beginning of the year (an increase of 20%) • Net profit of $17 million, an increase of 13% compared to the first quarter of 2009 • Sales at $769 million • Positive cash flow from current activities stands at $330 million
Mr. Itzhak Nissan, President and CEO of IAI Company backlog as of March 31st 2010 had a net growth of $1.55 billion since the beginning of the year, reaching a record high of $9.4 billion. Exports comprise 83% of the backlog orders. Company sales for the first quarter of 2010 reached $769 million, much like the first quarter of 2009. Export sales reached $624 million, an increase of 2% compared to the same quarter in 2009. Gross profit for the quarter reached $112 million (15% of sales), compared to $129 million (17% of sales) in the same quarter in 2009. The decrease in gross profit is primarily a result of the revaluation of the Israeli shekel, which affected the company's shekel-based expenses. Research and development expenses in the first quarter of 2010 were $32 million (4.1% of sales), compared to $28 million (3.7% of sales) in the first quarter of 2009, an increase of 12%.
Marketing, management, and general expenses in the first quarter of 2010 reached $50 million, compared to $47 million in the first quarter of 2009. The increase in expenses stems from the revaluation of the shekel. Other expenses (revenue), net in the first quarter were $10 million, a similar amount to that of the same quarter in 2009. The increase in expenses is a result of the shekel revaluation, which has also affected the company's fiscal responsibilities to its employees.
The company's financial revenues came primarily from income from bonds and from currency hedging operations, both of which are affected by changes in the exchange rate. Net profit for the first quarter was $17 million, compared to $15 million in the first quarter of 2009. This profit was reached in 2010 despite the shekel revaluation and the significant slowdown in certain commercial sectors in which the company operates. Positive cash flow from current activities was $330 million, compared to $209 million as of December 31st, 2009. The improved cash flow reflects the company's financial stability. On May 16th, 2010, the company signed an agreement with Eurocom Communications Ltd, in which IAI sold all of its shares of "Spacecom Ltd" to Eurocom in a private transaction. The shares comprise 14.57% of all issued and outstanding Spacecom shares, which have a total worth of 167,325,000 shekels. At the Board of Directors meeting in which the 2010 first quarter financial statements were approved, Yair Shamir, Chairman of the Board, said: "The company's $17 million net profit for the first quarter of 2010 is greater than the net profit of the same quarter in 2009, and significantly greater than the results of the last quarter. The profit was reached despite the slowdown in the commercial sector, and reflects the company's stability and success in the military sector. In the current quarter there has been a 2% increase in company sales to the military market, and an 8% decrease in sales to the commercial market, as compared to the same quarter in 2009. The slowdown in the commercial sector is continuing, despite some signs of recovery in certain areas, such as passenger-to-freighter aircraft conversions." IAI's President and CEO, Itzhak Nissan, said: "The company's backlog as of the end of the first quarter of 2010 reached $9.4 billion, following a number of new contracts totaling $2.6 billion signed during the quarter. The backlog can last for a number of years, ensuring the company's security in the short and the long term. 83% of the backlog is made up of exports to a variety of customers throughout the world. Export sales, worth $624 million, display a 2% increase compared to export sales in the same quarter of last year." Nissan added, "The company increased its research and development expenses using equity capital from $28 million in the first quarter of 2009, to $32 million in the first quarter of 2010, an increase of 12%. 4.1% of sales is invested in new product development of advanced technologies, contributing to the realization of the goals that company management has set, and thereby ensuring the future and continuing development of the company." IAI's Chief Financial Officer (CFO) Menashe Sagiv, emphasized that the company's cash balance is at $1.6 billion, and the cash flow from joint activities has reached $330 million – both of which reflect the financial strength of the company. The CFO went on the note that "the company conducts currency hedging operations in order to minimize exposure to the exchange rate. The company's current ratio is 1.14, and its quick ratio is 0.99."
About Israel Aerospace Industries Israel Aerospace Industries is Israel's leading technological-industrial company, with approximately 16,400 employees. IAI has gained worldwide recognition as a leading developer of aviation and aerospace technology in both military and civilian markets. IAI provides the Israel Defense Forces (IDF) and its foreign customers with unique, high-quality technological solutions that meet a wide range of needs on the ground, in the sea, in the air, in space and in the field of homeland security. IAI is a world leader in a wide range of advanced technologies, including the development, production, renovation, upgrading, repair and maintenance of aircraft, missiles, launchers, communications satellites, observation satellites and ground services, electronic systems, avionics systems, advanced radar, precision-guided munitions, and unmanned aerial vehicles.
For more information, please contact: Doron Suslik Deputy Vice President of Communications Tel: 03-935-8509 Fax: 03-935-8512 Email: hpaz@iai.co.il
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