Elbit : 20-F for 2023

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

□ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES

EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934 for the fiscal year ended December 31, 2023

Commission File No. 0-28998

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

ELBIT SYSTEMS LTD.

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant's name into English)

Israel

(Jurisdiction of incorporation or organization)

Advanced Technology Center, Haifa 3100401, Israel

(Address of principal executive offices)

Dr. Yaacov Kagan, E-mail:[e-mail], Tel. [phone], Fax:[phone]

Advanced Technology Center, P.O. Box 539 , Haifa 3100401, Israel

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Ordinary Shares, nominal value 1.0 New Israeli Shekel per share

ESLT

The NASDAQ Global Select Market

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Not Applicable

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

Not Applicable

(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report. 44,453,850 Ordinary Shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

☒ Yes □ No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

□ Yes ☒ No

Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

☒ Yes

□ NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes

□ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer", "accelerated filer" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

☒ Yes

□ NoIf securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☒

International Financial Reporting ☐ Standards as issued by the International Accounting Standards Board

Other ☐

If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

□ Item 17

□ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

Table of Contents

Item

Page
1
1
Item 1.	Identity of Directors, Senior Management and Advisers	2
Item 2.	Offer Statistics and Expected Timetable	2
Item 3.	Key Information	3
Item 4.	Information on the Company	17
Item 4A.	Unresolved Staff Comments	36
Item 5.	Operating and Financial Review and Prospects	37
Item 6.	Directors, Senior Management and Employees	60
Item 7.	Major Shareholders and Related Party Transactions	79
Item 8.	Financial Information.	80
Item 9.	The Offer and Listing	81
Item 10.	Additional Information	81
Item 11.	Quantitative and Qualitative Disclosures About Market Risk	97
Item 12.	Description of Securities Other than Equity Securities	99
Item 13.	Defaults, Dividend Arrearages and Delinquencies	99
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds.	99
Item 15.	Controls and Procedures	100
Item 16A.	Audit Committee Financial Expert	101
Item 16B.	Code of Ethics	101
Item 16C.	Principal Accountant Fees and Services	101
Item 16D.	Exemptions from the Listing Standards for Audit Committees	102
Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	102
Item 16F.	Change in Registrant's Certifying Accountant	102
Item 16G.	Corporate Governance	102
Item 16H.	Mine Safety Disclosure	103
Item 17.	Financial Statements	106
Item 18.	Financial Statements	106
Item 19.	Exhibits	107

Description

General Disclosure Standards

Cautionary Statement with Respect to Forward-Looking Statements

PART I

General Disclosure Standards

The consolidated financial statements of Elbit Systems Ltd. (Elbit Systems) included in this annual report on Form 20-F are prepared in accordance with United States generally accepted accounting principles (U.S. GAAP). Unless otherwise indicated, all financial information contained in this annual report is presented in U.S. dollars. References in this annual report to the "Company", "we", "our", "us" and terms of similar meaning refer to Elbit Systems and our subsidiaries unless the context requires otherwise.

The name "ELBIT SYSTEMS", and our logo, brand, product, service and process names appearing in this document, are the trademarks of the Company or our affiliated companies. All other brand, product, service and process names appearing in this document are the trademarks of their respective holders and appear for informational purposes only. Reference to or use of any third-party mark, product, service or process name herein does not imply any recommendation, approval, affiliation or sponsorship of that or any other mark, product, service or process name. 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 the Company or any of our affiliated companies.

Cautionary Statement with Respect to Forward-Looking Statements

This annual report on Form 20-F contains forward-looking statements within the meaning of Section 27A of the

Securities Act of 1933, as amended (the Securities Act), Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act), and the Israeli Securities Law, 1968, as amended (the Israeli Securities Law). These statements relate to our current plans, estimates, strategies, goals, beliefs, intents, expectations, assumptions and projections about future events and as such do not relate to historical or current facts. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended.

Forward-looking statements contained herein generally are identified by the words "anticipate", "intend",

"believe", "estimate", "project", "expect", "will likely result", "strategy", "plan", "may", "should", "will", "would", "will be", "will continue" and similar expressions, and the negatives thereof. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, the outcomes of which cannot be predicted. Therefore, actual future results, performance and trends may differ materially from these forward-looking statements due to a variety of factors, including, without limitation:

• • governmental regulations and approvals;

• • changes in governmental priorities (including budgeting) or policies;

• • general market, political and economic conditions in the countries in which we operate or sell, including Israel and the United States, among others, or which may affect the global economy, including worldwide conflicts such as the ongoing conflict between Russia and Ukraine;

• • implications of conflicts in the Middle East, including the "Swords of Iron" war and any future developments related thereto;

• • global or national health considerations, including the outbreak of a pandemic or contagious disease;

• • the development and launch of our products, or their market acceptance;

• • our projected expenses and capital expenditures;

• • differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price contracts;

• • fluctuations in foreign currency exchange rates;

• • the scope and length of customer contracts;

• • our ability to achieve strategic goals from acquisitions of businesses and the risks associated with the integration of such businesses;

• • our ability to protect our proprietary information;

• • our ability to avoid, withstand and/or recover from cyber-attacks on our systems;

• • the effect of competitive products, technology and pricing;

• • our ability to attract, incentivize and retain key employees;

• • changes in applicable tax rates;

• • changes in interest rates;

• • inventory write-downs and possible liabilities to customers from program cancellations, including due to political relations between Israel and countries where our customers may be located; and

• • the outcome of legal and/or regulatory proceedings and changes in legislation.

The factors listed above are not all-inclusive, and further information about risks and other factors that may affect our future performance is contained in this annual report on Form 20-F. All forward-looking statements speak only as of the date of this annual report, unless otherwise indicated. Although we believe the expectations reflected in the forward-looking statements contained in this annual report are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We expressly disclaim any obligation to update or review any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law.

Item 1. Identity of Directors, Senior Management and Advisers.

Information not required in annual report on Form 20-F.

Item 2. Offer Statistics and Expected Timetable.

Information not required in annual report on Form 20-F.

Item 3. Key Information.

• 3A. [Reserved]

• 3B. Capitalization and Indebtedness

  Information not required in annual report on Form 20-F.

• 3C. Reasons for the Offer and Use of Proceeds Information not required in annual report on Form 20-F.

  Risk Factors

  We attempt to identify, manage and mitigate risks to our business. However, some of these risks are not within our control, and risks and uncertainty cannot be fully eliminated or predicted. Prior to investing in our ordinary shares you should carefully consider the following risk factors as well as other information contained in this annual report. The risk factors presented below may not necessarily be in order of importance or probability of occurrence.

  Risks Related to Our Operations

  A cyber or security attack or other similar incident resulting in a breach, disruption or failure in our or our

supply chain's digital environment could adversely affect us. Our operations depend heavily on the continued and secure functioning of our varied digital environment software and hardware that stores, processes and transmits data within the Company and from and to us and our business partners. This digital environment is subject to breach, damage, destruction, disruption, malfunction or failure from, among other things, cyber-attacks and other unauthorized intrusions, power losses, telecommunications failures, earthquakes, fires and other natural disasters.

We are continuously subjected to attempted cyber-attacks, ranging from standard phishing mails to sophisticated campaigns. Our computer and communications systems, databases and users face ongoing threats of malicious software (malware), social engineering, distributed denial of service (DDoS), malicious code, zero-day vulnerabilities and other security threats and system disruptions carried out by different threat actors. For example, in June 2022, our monitoring and protection systems detected a cyber-incident at our U.S. subsidiary involving unauthorized access by a ransomware group to our subsidiary's network that resulted in disclosure of certain personal data and a minimal amount of non-critical business data. The incident was contained through the implementation of various measures, including the immediate shut-down of the network, which was gradually restored. Relevant authorities were notified by our subsidiary. We believe this incident did not have a material impact on the Company.

In particular, we are targeted by experienced and skilled computer programmers and hackers, including those sponsored by or acting for foreign governments or terrorist organizations. Such programmers and hackers attempt to penetrate or circumvent our cyber security defenses, obtain data and damage or disrupt our digital environment in order to, among other things, misappropriate or compromise our intellectual property or other proprietary or protected information or that of our employees, customers and other business partners, prevent us from being able to use such information in our operations or demand that we pay ransom. Our suppliers are also sometimes subject to cyber-attacks, which pose a risk to those of our systems and operations that are dependent on such suppliers.

Governmental and other end users and customers are increasingly requiring us and our supply chain to meet specific computer system cyber protection and information assurance requirements and standards as a pre-condition to receive customer program-related information and enter into business contracts. We devote significant resources to configure, operate, maintain, monitor, upgrade and improve the security of our systems and databases and to meet applicable customer requirements regarding their protection. However, despite our efforts to secure our systems and databases and meet cyber protection and information assurance requirements, such as by adding data security obligations and data breach notification requirements in our agreements with certain third-party service providers, due to the complex and evolving nature of the cyber security risk landscape, we and our suppliers may still face system failures, data breaches, loss of intellectual property and interruptions in our operations, or fail to meet customer requirements, which could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow. For information about our cybersecurity risk management, strategy and governance, see Item 16K. Cybersecurity.

We may experience production delays, discontinuation of supply or liability if suppliers fail to make compliant or timely deliveries. The manufacturing process for some of our products largely consists of the assembly, integration and testing of purchased components. Some components are available from a small number of suppliers, and in a few cases a single source (sometimes due to limitations we, the Israeli government, the U.S government or others apply with respect to purchase from certain sources). Limited sources of supply, as well as any discontinuation of supply, could result in added costs and manufacturing delays. Moreover, if our subcontractors fail to meet their design, delivery schedule, information assurance, regulatory compliance or other obligations, we could be held liable by our customers, and we may be unable to obtain full or partial recovery from our subcontractors for those liabilities. Similar implications can result from disruptions in transportation and shipping of supplies which could cause delays and increase costs. Worldwide geopolitical conditions, such as the ongoing conflict between Russia and Ukraine and the related sanctions have resulted in a general increase in these risks. These conditions have also resulted in worldwide shortages and supply chain disruption, thereby causing additional procurement costs to the Company and delays in our production. Furthermore, the "Swords of Iron" war and increased tensions in the Middle East have also caused supply chain disruptions due to limitations on export to Israel as well as limited transportation by air and sea and subsequent increase in costs of purchasing and shipping materials. We are working to mitigate these risks, including by increasing our inventories, however we cannot eliminate all potential impacts to our business. The foregoing disruptions could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.

We could be adversely affected if we are unable to recruit and retain key employees and corresponding knowledge. Our success depends on key management, engineering, scientific and technical personnel and our continuing ability to attract and retain highly qualified personnel. Over the past few years, we have witnessed growing competition for the services of such personnel and an increase in the costs required for the recruitment and retention of qualified personnel, particularly in certain engineering areas. We face risks related to business operations, research and development, as well as risks of losing knowledge and expertise through the loss of key employees, including due to geopolitical considerations. Moreover, our competitors may hire and gain access to the expertise of our former employees. The loss of key employees and the failure to attract highly qualified personnel in the future, as well as the failure to maintain and continue to develop knowledge relevant to technological innovation, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.

We face execution risks. In recent years, the Company has experienced a considerable increase in demand for its products resulting in strong order growth. This growth may continue if global demand for the Company's products and solutions is sustained. To address the strong demand for its products and solutions, Elbit has decided to invest additional resources in its manufacturing facilities, recruit additional employees and make additional adjustments such as updating working procedures and processes and information technology systems. If the Company fails to adequately plan for or continuously address the increased demand for its products and solutions due to, for example, insufficient levels of work force, materials or components and/or lacking the required infrastructure, it may not be able to fulfill its existing contracts on schedule or may not be able to enter into new contracts, which could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.

We face acquisition and integration risks. From time to time we make equity or asset acquisitions and investments in companies and technology ventures. Such acquisitions generally are intended to achieve various strategic initiatives including the expansion of our product or service offerings, technical capabilities or customer base. See Item 4. Information on the Company - Mergers, Acquisitions and Divestitures. These acquisitions involve risks and uncertainties such as:

• • our pre-acquisition due diligence may fail to identify material risks or we may fail to accurately estimate the commercial and technical value of the acquired assets;

• • significant acquisitions may negatively impact our financial results, including cash flow and financial liquidity;

• • significant goodwill assets recorded on our consolidated balance sheet from prior acquisitions are subject to impairment testing, and unfavorable changes in circumstances could result in impairment to those assets;

• • acquisitions may result in significant additional unanticipated costs associated with unforeseen risks, price adjustments or write-downs;

• • we may not integrate newly-acquired businesses and operations in an efficient and cost-effective manner;

• • relocation, combination or upgrade of facilities of acquired businesses may be more costly or time consuming than planned;

• • we may fail to achieve the strategic objectives, synergies, cost savings, financial and other benefits expected from acquisitions;

• • the technologies acquired may not prove to be those needed to be successful in our markets, may be less mature or less relevant than anticipated, may not have adequate intellectual property rights protection or may infringe proprietary rights of others;

• • we may assume significant liabilities and exposures that exceed the enforceability or other limitations of applicable indemnification provisions, if any, or the financial resources of any indemnifying parties, including indemnity for intellectual property (IP), tax or regulatory compliance issues, such as anti-corruption and environmental compliance, that may result in us incurring successor liability;

• • we may fail in identifying or transferring some of the assets that are required for the operation of the acquired businesses or fail to retain key employees of the acquired businesses;

• • the attention of senior management may be diverted from our existing operations, or we may spend significant financial and management resources on potential acquisitions that do not materialize;

• • we may be exposed to potential shareholder claims or conflicts if we acquire an interest in a publicly traded company or become a shareholder with partial holdings in a private company;

• • certain of our newly acquired operating subsidiaries in various countries could be subject to more restrictive regulations by the local authorities after our acquisition, including regulations relating to foreign ownership of, and export authorizations for, local companies (which have become more stringent in recent years), which could adversely impact the acquisition's value; and

• • we may lose expertise and knowledge if key employees are not retained for a sufficient period of time.

We cannot ensure that these risks or other unforeseen factors will not offset the intended benefits of the acquisitions, and such risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.

Our operations may be negatively impacted by international health pandemics. In recent years, the Covid-19 pandemic has adversely impacted the global economy, the markets in which we operate and our operations, including a slow-down in our commercial aviation business. The pandemic's macro-economic implications included disrupted transportation networks and global supply chains and shortages of components, which have caused us increased costs and extended lead times, and also prompted us to increase our inventories. The emergence of new variants or other pandemics, as well as possible governmental responsive actions, such as quarantines, lockdowns, restrictions on holding large-sale events and travel restrictions, could create business disruptions for us and our customers, supply chain and other business partners, potentially resulting in cessation, reduction or delay of business and an increase of our costs and may also impact government priorities and budgets and the demand for our products. These could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.

We may be affected by failures of our prime contractors. We often act as a subcontractor, and a failure of a prime contractor to meet its obligations may affect our ability to receive payments under our subcontract.

Undetected problems in our products or manufacturing processes and misuse of our products could impair our financial results and give rise to potential product liability, breach of contract or other claims. We offer a wide portfolio of products and solutions, which is routinely being updated and adjusted. From time to time, we encounter unintentional defects or malfunctions in our products and solutions, or deficiencies in the manufacturing processes of such products and solutions. In addition, we often rely on subcontractors to design and manufacture some components that are embedded in our systems. In the event of defects in the design, production or testing of our or our subcontractors' products and systems, including our products and solutions sold for safety purposes in the homeland security and commercial aviation areas, or if the cyber protection measures included in our products and solutions do not operate as intended, we could face substantial repair, replacement, delays or service costs, potential liability and damage to our reputation. Similar issues could arise if we fail to timely implement and maintain our manufacturing processes or if a defected part affects our development, production and operation infrastructures. In addition, we must comply with regulations and practices to prevent the use of parts and components that are considered as counterfeit or that violate third-party intellectual property rights. Our efforts to implement appropriate design, manufacturing and testing processes for our products or systems may not be sufficient to prevent such occurrences. We could also be subject to claims if our products are intentionally or unintentionally misused. We may not be able to obtain product liability or other insurance to fully cover such risks in a cost-effective manner, which could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.

We may face labor relations disputes or not be able to amend collective bargaining agreements in a timely manner. We are party to collective bargaining agreements that cover a substantial number of our employees, a number which could increase, for example, as a result of future acquisitions of companies. We have faced and may in the future face attempts to unionize additional parts of our organization. Disputes with trade unions or other labor relations difficulties, as well as failure to timely amend or extend collective bargaining agreements, could lead to labor disputes, slow downs, strikes and other measures, which could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow. For further information, see Item 6. - Directors, Senior Management and Employees - Employees - Collective Bargaining Agreements.

Our business could be adversely affected by climate change, regulatory requirements and market responses thereto. Global climate change could increase the risks of natural disasters and hazards, such as earthquakes, flooding, fires, rising temperatures and sea levels. The impacts of such events could affect our operations and facilities, as well as those of our suppliers and customers, and increase our operational costs. Current or future insurance arrangements may not provide protection for costs that may arise from such events, particularly if such events are catastrophic in nature. In addition, increased focus on climate change in recent years has led to emerging regulation and new policy requirements by various authorities around the world, including with respect to greenhouse gas emissions. New and evolving laws and regulations such as recently adopted SEC rules on climate-related disclosures, could mandate different or more restrictive standards than those currently in effect, could require us to change our methods of operation and make additional capital investments, or could result in legal and regulatory proceedings against us. We are currently evaluating the impact of these new rules and regulations on our Company. See also "Risks Related to Legal and Regulatory Requirements - Our operations may expose us to liabilities under various environmental protection, health and safety laws and regulations" below. Climate change, as well as Environmental, Social and Governance (ESG) in general, has also become the focus of investors, advisory service providers, financial institutions, some of our business partners and other market participants, including some of our customers, and those groups are increasingly evaluating our environmental, social and governance practices, disclosures and performance before making investments and other business decisions. The effects and costs of climate change, or any failure to meet related requirements and evolving stakeholder expectations in connection with ESG, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.

Risks Related to Our Markets and Industry

Our future success in a competitive industry depends on our ability to develop new offerings and technologies.

The markets we serve are highly competitive and characterized by rapid changes in technologies and evolving industry standards. In addition, some of our systems and products are installed on platforms that may have a limited life or become obsolete. Unless we develop new offerings or enhance our existing offerings, we may be susceptible to loss of market share resulting from the introduction of new or enhanced offerings by our competitors. We compete with many large and mid-tier defense, homeland security and commercial aviation contractors on the basis of system performance, cost, overall value, delivery and reputation. Many of these competitors are larger and have greater resources than us, and therefore may be better positioned to take advantage of economies of scale and develop new technologies. Some of these competitors are also our suppliers in some programs. Accordingly, our future success will require that we:

• • identify emerging technological trends;

• • identify additional uses for our existing technology to address customer requirements;

• • develop, upgrade and maintain competitive products and services;

• • add innovative solutions that differentiate our offerings from those of our competitors;

• • bring solutions to the market quickly at cost-effective prices;

• • develop working prototypes as a condition to receiving contract awards; and

• • structure our business, through joint ventures, teaming agreements and other forms of alliances, to reflect the competitive environment.