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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, 2025
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: kobi.kagan@elbitsystems.com, Tel. 972-77-294-6663, Fax:972-4-8316659
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. 46,442,352 Ordina ry 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 □ No
Indicate 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 □ No
Indicate 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 □ No
If 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 | Description | Page
General Disclosure Standards | 1
Cautionary Statement with Respect to Forward-Looking Statements | 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 | 21
Item 4A. | Unresolved Staff Comments | 41
Item 5. | Operating and Financial Review and Prospects | 42
Item 6. | Directors, Senior Management and Employees | 61
Item 7. | Major Shareholders and Related Party Transactions | 79
Item 8. | Financial Information. | 81
Item 9. | The Offer and Listing | 81
Item 10. | Additional Information | 81
Item 11. | Quantitative and Qualitative Disclosures About Market Risk | 98
Item 12. | Description of Securities Other than Equity Securities | 100
Item 13. | Defaults, Dividend Arrearages and Delinquencies | 100
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds. | 100
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 16I. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 103
Item 16J. | Insider Trading Policies | 103
Item 16K. | Cybersecurity | 103
Item 17. | Financial Statements | 106
Item 18. | Financial Statements | 106
Item 19. | Exhibits | 107

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 (IP) 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;
•Implications of conflicts in the Middle East, including the “War of Redemption”, also referred to herein by its initial name - the “Swords of Iron” war, the Israel-Iran conflict and any future developments related thereto;
•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;
•The economic impact of increased global conflicts and trade tensions, and the adoption or expansion of economic sanctions, tariffs or trade restrictions, including tariffs already announced;
•Development and launch of our products, or their market acceptance;
•Our projected expenses and capital expenditures;
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•Differences in anticipated and actual program performance, including the ability to perform under long-term fixed-price co ntracts;
•Fluctuations in foreign currency exchange rates;
•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;
•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;
•Global or national health considerations, including the outbreak of a pandemic or contagious disease; and;
•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.
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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, or of our products, 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, acts of war or terror, earthquakes, fires and other natural disasters.
We are continuously subjected to attempted cyber-attacks, ranging from standard phishing mails to sophisticated campaigns, such as spear phishing targeting specific Company management. While we have experienced an increase in the number of such threats and attempted cyber-attacks in recent years, which may be related to the geopolitical environment, none of these acts was believed to have had a material effect on the Company. Where required, relevant authorities were notified in accordance with the law and the relevant procedures the Company and its subsidiaries (as applicable) have in place. 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 a variety of threat actors.
In particular, we have been and may continue to be targeted by nation states and experienced and skilled computer programmers and hackers, including those sponsored by or acting for foreign governments or terrorist organizations and in some cases, using artificial intelligence (AI), including generative AI and agentic AI to facilitate their attacks. 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 IP 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 have increased in recent years and pose a risk to those of our systems and operations that depend on such suppliers. For example, in September 2025 one of our suppliers experienced a cybersecurity incident that resulted in the disclosure of certain unclassified material related to a Company project. Elbit Systems' network was not breached, an investigation was conducted and we believe this incident did not have a material impact on the Company. In some cases, cyber-attacks on our suppliers have led us to delay or halt activities with them until they have implemented appropriate remedial steps mandated by us to further strengthen their cyber security defenses.
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A cybersecurity breach could also contaminate the source code implemented in our products delivered to our customers. Governmental and other end users and customers increasingly require 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. In particular, the National Institute of Standards and Technology Special Publication 800-171 or the U.S. Department of War (DoW)’s (formerly referred to as the U.S. Department of Defense) cybersecurity requirements, including the Cyber Security Material Model Certificate (CMMC), require us to receive specific third-party cybersecurity certifications to be eligible for certain DoW contract awards. CMMC introduces, as a mandatory, enforceable element of DoW contracts, assessment and compliance requirements for contracts according to the CMMC level specified in each DoW solicitation and contract. To the extent we, or our subcontractors or other third parties on whom we rely, are unable to achieve certification in advance of contract awards that specify the requirement, we may be unable to bid on contract awards or follow-on awards for existing work with the DoW, which could have a material adverse effect on our business, results of operations, and financial condition. We devote significant and, in recent years, increasing resources to configure, operate, maintain, monitor, upgrade and improve the security of our systems and databases, handle cyber-incidents and 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, due to the complex and evolving nature of the cyber security risk landscape, we and some of our suppliers have in the past and may in the future face system failures, data breaches, loss of IP 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 and other delays, discontinuation of supply or liability due to supply chain disruptions and failures of our suppliers to comply with our requirements or with applicable laws. 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 impose on ourselves or that are imposed by the Israeli government, the U.S. government or others with respect to purchases from certain sources). Limited supply sources or discontinuation of supply sometimes result in added costs and manufacturing delays. In addition, in some cases components of our products become obsolete and we are required to obtain or design alternative parts, resulting in additional costs and delays. Moreover, a failure of our suppliers and subcontractors to meet their design, delivery schedule, information assurance, regulatory compliance or other obligations, sometimes results in a failure to execute our plans or meet our commitments towards our customers, and in some cases we are unable to obtain full or partial recovery from our subcontractors for the losses or liabilities that result.
Similar outcomes sometimes result from disruptions in transportation and shipping of supplies, including those caused by worldwide geopolitical conditions, such as the ongoing conflict between Russia and Ukraine and related sanctions, the “Swords of Iron” war and increased tensions in the Middle East and the imposition of, and changes in, tariffs, trade restrictions and other protectionist or retaliatory measures between the United States, China and other countries. These conflicts have resulted in increased demand for and worldwide shortages in some of the materials and components we use (including, for example, in electronic components and raw materials required to produce explosives) and supply chain disruption due in part to limitations on export to Israel as well as more limited transportation by air and sea to the region (exacerbated by attacks by the Houthi movement in Yemen on shipping in the Red Sea). Such restrictions have caused a material increase in recent years in the Company's costs of procurement and shipping, leading in some cases to delays and limitations in our production and development. With respect to certain materials, our dependency on single sources of supply has increased. We are working to mitigate these risks, including by increasing our inventories, however we cannot eliminate all potential impacts to our business and such risks may increase in the future. These 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. Success in executing our contracts and our future growth depends on key management, engineering, scientific and technological personnel and on our continuing ability to attract and retain sufficient and highly qualified personnel. Moreover, we rely on personnel with specialized training and high‑level security clearances, which are time‑consuming to obtain. In the past, we have witnessed high 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. Competition for our personnel may also increase as other companies establish or expand operations in the same geographic areas or labor markets in which we operate. Since October 7, 2023, our need for employees, particularly in the fields of production and development in Israel, has increased in light of the higher demand for our products both in Israel and around the world and the call up of some of our employees to military reserve duty. We face risks related to our business operations, research and development, and losing knowledge and expertise through the loss of employees, including key employees. At our subsidiaries outside of Israel, employee loss may be related in part to increased pressure on such employees 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 sufficient and highly qualified personnel, and any resulting failure to maintain and continue to operate and execute our projects and develop knowledge relevant to technological innovation, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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We face operation and 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 Israeli and global demand for the Company's products and solutions is sustained. To address this strong demand, Elbit Systems is investing additional resources in its manufacturing facilities, recruiting additional employees and making additional adjustments such as updating working procedures and processes and information technology systems. The Company has also increased the number of its subsidiaries around the world and is in the process of establishing additional manufacturing facilities in several locations. If the Company fails to successfully plan for and manage its growing operations and efficiently expand its facilities around the world, for example by insufficient levels of work force, materials or components, failure to build the required facilities, infrastructure or systems and failure to adapt its work processes, it may not be able to fulfill its existing contracts on schedule, enter into new contracts or achieve the desired return on investment. Our ability to execute our projects is also affected by other factors such as supply chain, export approvals, transportation and others set forth elsewhere in these risk factors. Any of these factors 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 strategic objectives, synergies, cost savings, financial and other benefits expected from acquisitions;
•the technologies acquired may not prove to be leading technologies in our markets, may be less mature or less relevant than anticipated, may not have adequate IP 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 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;
•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 we make, and such risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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Our operations may be negatively impacted by international health pandemics. Public health crises or contagious disease outbreaks, as well as potential government responses such as quarantines, lockdowns, limitations on holding large-scale 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 in 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.
Malfunctions in, undetected problems with our products or in our manufacturing processes, or 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 thereof. In addition, we often rely on subcontractors to design and manufacture some of the 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, or service costs, delays, potential liability and damage to our reputation. Similar issues could arise if we fail to timely implement and maintain adequate manufacturing processes and safeguards or if a defective part or deficient solution 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 IP 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, which could increase, for example, as a result of future acquisitions. 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, slowdowns, 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, Environmental, Social and Governance (ESG) 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 the costs of our operations. 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. Climate change could also require us to adapt our products to withstand extreme weather conditions or reduce the environmental footprint of our activities. In addition, the expansion of global ESG regulations in recent years has led to new policy requirements by various authorities around the world, including with respect to greenhouse gas emissions. New and evolving laws and regulations, such as the European Commission's Corporate Sustainability Reporting Directive (CSRD) and other climate-related regulations, mandate, and could mandate in the future, different or more restrictive environmental standards and disclosure obligations than those that were previously in effect, and 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 regularly evaluate the impact of this changing area of law on our Company and its operations. 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 ESG in general, are also a focus of investors, advisory service providers, financial institutions, some of our business partners and other market participants, and such groups and constituents regularly evaluate our ESG practices and disclosures before making business decisions. The effects and costs of climate change, or any failure to meet related regulatory requirements and evolving stakeholder expectations regarding ESG, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
6

Risks Related to Our Markets and Industry
Our future success in a competitive industry depends on our ability to develop new offerings and technologies quickly at cost-effective prices. 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 lifespan 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;
•maintain a global presence, working through subsidiaries around the world; and
•structure our business efficiently through joint ventures, teaming agreements and other forms of alliance.
We need to continually invest significant human capital and financial resources to pursue these goals, and there can be no assurance that adequate resources will continue to be available to us or be prioritized for these purposes. We may experience difficulties that delay or prevent our development, introduction and marketing of new or enhanced offerings, and such new or enhanced offerings may not achieve adequate market acceptance. Moreover, new technologies, including disruptive technologies and technologies originating from civilian applications, or changes in industry standards and regulations or customer requirements, could render our offerings obsolete or unmarketable.
We are facing increased competition from startups and non-traditional defense contractors, including companies active in the deep-tech and more specifically, the defense-tech field, which is usually characterized by rapid innovation in areas such as AI, autonomous systems, software only products and the introduction of quantum computing. Such companies often have access to substantial resources from venture capital, private equity and other non-defense investment sources, operate under less stringent legal requirements compared to traditional defense companies and are sometimes favored by procurement policy. These factors may provide such companies with a competitive edge in terms of agility and innovation and may allow them to develop disruptive technologies at a faster pace and offer products at lower prices, with the potential to reshape the traditional defense market. Following recent global conflicts, funds have become increasingly available to these companies, which are expanding and capturing a larger market share on account of the traditional defense sector. If such expansion continues, we might be forced to reduce prices and may lose market share as well as research and development participation from our customers.
Any new offerings and technologies are likely to involve costs and risks relating to design changes, the need for additional capital and new production tools, satisfaction of customer specifications, adherence to delivery schedules, specific contract requirements, supplier performance, customer performance and our ability to predict program costs. New products sometimes lack sufficient demand or experience technological problems or production delays. Our customers frequently require demonstrations of working prototypes prior to awarding contracts for new programs or require short delivery schedules which sometimes require us to purchase long-lead items or materials and commence work in advance, without any certainty of receiving the contract award. Moreover, due to the design complexity of our products, or for other reasons we sometimes experience delays in developing and introducing new products. Such delays have in the past and may in the future result in increased development efforts and costs, divert human and financial resources from other projects or increase the risk that our competitors will develop competing technologies that gain market acceptance in advance of our products. If we fail in our new product development efforts, or our products or services fail to achieve market acceptance more rapidly than the products or services of our competitors, our ability to obtain new contracts could be negatively impacted. Any of the foregoing costs and risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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Our revenues depend on a continued level of government business. We derive most of our revenues directly or indirectly from government agencies, mainly the Israeli Ministry of Defense (IMOD), the DoW and other military or governmental authorities of various countries, pursuant to contracts awarded to us under defense and homeland security-related programs. Israel is also a recipient of significant U.S. security assistance under the Foreign Military Financing (FMF) program, pursuant to a 10-year (2019-2028) MOU with the U.S. The funding of government programs could be reduced, delayed or eliminated due to numerous factors, including geopolitical events and macro-economic conditions, as well as U.S. government shutdowns, as recently occurred, changes in policies or priorities of specific governments or security pacts among several governments. As a result, our current orders from governmental customers may be subject to modifications and terminations, and our future orders may be reduced, due to factors over which we have little or no control. In addition, if the U.S. security assistance to Israel is reduced or discontinued, we may receive fewer U.S. funded orders and FMF funds. In some cases, such developments, as well as other changes relating to specific markets or customers, could lead to our exit from certain business operations, which could also result in asset impairment. Following the outbreak of the war in October 2023, we have in some cases experienced a reluctance from certain countries to purchase from Israeli companies, while in other cases we have experienced an increase in demand for our products. A reduction or elimination of government spending under current contracts with us, changes in future government spending priorities and funding and a discontinuation of certain of our business operations could cause a material adverse effect on our business, reputation, financial condition, results of operations and cash flow. Additionally, pursuant to a January 7, 2026 U.S. Executive Order, the U.S. Secretary of War could seek to limit our ability to pay cash dividends or make share repurchases if the Secretary of War determines that we have underperformed or lacked sufficient prioritization of, investment in or production speed in carrying out or performing under our U.S. government contracts.
We face risks in our international operations. We derive a significant portion of our revenues from international sales. Entry into new markets as well as changes in international, political, economic or geographic conditions could cause significant reductions in our revenues and profitability. In addition to the other risks from international operations set forth elsewhere in these risk factors, some of the risks of doing business internationally include a potential deterioration in geopolitical or trade relations between countries, international trade sanctions, and imposition of or increases in tariffs and other trade barriers and restrictions. Imposition of or increases in import restrictions or tariffs by any government could lead to retaliatory actions by other countries, which could have broad effects in many industries and economies internationally (see also “Financial-Related Risks – Tariffs and trade tensions could have an adverse effect on economic conditions and financial markets” below). Broad-based international trade conflicts, as well as conflicts involving the State of Israel, such as the “Swords of Iron” war and related geopolitical responses, have had and may continue to have negative consequences on the demand for our products and services outside Israel as well as on exports from other countries to Israel, including by our suppliers (see “Risks Related to Our Israeli Operations and Environment – Conditions in Israel and the Middle East may affect our operations” below). Such conflicts could also make it more difficult for us to meet industrial participation requirements. Some of our global subsidiaries and their employees and business partners are also subject from time to time to protests, vandalism and other forms of disruption and attack that are aimed against Israel, Elbit Systems and/or Israeli defense contractors in general, and which sometimes create risks to our people, disrupt our operations and increase our costs. These efforts, which include organized boycotts and divestment efforts aimed at withdrawing investments, terminating various of our engagements and closing regional facilities, could continue or increase in the future. Other risks of doing business internationally include political and economic instability in the countries of our customers and suppliers, changes in diplomatic and trade relationships among countries and the increasing instances of terrorism and armed conflicts worldwide, some of which may be affected by Israel's overall political situation (see “Risks Related to Our Israeli Operations and Environment” below). Trade restrictions applied by the Israeli government on certain countries sometimes limit our sales to other governments that themselves do not impose restrictions. In addition, a variety of entity-specific sanctions by the Israeli government, the EU, the U.S. government or other governments or international organizations that apply with respect to our counterparties to certain contracts, may make it difficult or impossible to complete agreements with such counterparties or other related contracts. A continuation or escalation of the conflict between Russia and Ukraine could continue to affect Eastern Europe and other regions and increase the volatility of global economic conditions. We are unable to predict the full impact of either the conflict between Russia and Ukraine or conflicts in the Middle East on the economy generally or on our business and operations. Any of the foregoing risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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We face increasing requirements for industrial participation and localization by many of our customers. In recent years, there has been a growing trend in numerous countries to encourage work with local industries, including through various incentives, budgetary allocations and tightening regulatory requirements, which sometimes causes operational difficulties and delays. Examples include mandating a preference for purchasing from domestic suppliers and requirements for local development, manufacture or cooperation with local entities, including regarding transfer of technologies and production lines. For example, in 2025 the European Union (EU) adopted the Security Act for Europe (SAFE), establishing a Euro 150 billion loan framework for EU member states to invest specifically in European defense companies. Adhering to localization requirements often involves complex operational issues and investments in facilities and subsidiaries in the local country. In addition, a number of our international programs require us to meet “Industrial Participation” or offset obligations, which have increased in recent years and involve additional costs. See Item 5. Operating and Financial Review and Prospects – Off-Balance Sheet Transactions. If we fail to successfully collaborate with our business partners to meet requirements for local development, manufacture or cooperation with local entities, it could have an adverse effect on our growth. If we fail to meet our Industrial Participation or offset obligations, we could be subject to contractual penalties or termination or inclusion on “black lists”, making it difficult or impossible to do business in such countries in the future. These consequences could, in turn, have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
We are subject to risks associated with artificial intelligence (AI) technologies. When referring to AI, we generally mean a machine-based system with various levels of autonomy that can, for a given set of human-defined objectives, make predictions, recommendations or decisions influencing real or virtual environments, and use machine and human-based inputs to perceive real and virtual environments; abstract such perceptions into models through analysis in an automated manner; and use model inference to formulate options for information or action. We incorporate AI capabilities and generative AI capabilities, some of which we develop internally and some of which we obtain or license from third parties, into some of our products and solutions and in some of our development processes and business operations, and we expect to do so more in the future. Generative AI capabilities generally refers to our use of machine learning, deep learning, or other AI techniques to generate new outputs based on patterns and structures learned from training data, such as advanced data retrieval, code generation, natural language, images, videos, or recommendations. Such capabilities include, among others, large language models and vision language models, which are incorporated into certain of our internal enterprise processes, for example in the areas of supply chain management, engineering workflows, inventory oversight and project execution, and into certain of our products and solutions, for example in the areas of border protection, autonomous solutions, C4I systems, network centric information and operational systems and intelligence gathering systems. The rapid pace and complexity of generative AI development may require the investment of significant resources for us to remain competitive, and such investments may not produce successful outcomes or the returns that we expect. In addition, our competitors may incorporate generative AI into their development tools or products more quickly or more successfully than us, which could impair our ability to compete effectively (see also “Our future success in a competitive industry depends on our ability to develop new offerings and technologies quickly at cost-effective prices” above). It is possible that generative AI will become a disruptive technology, causing a radical change in our industry. If we are unable to timely adapt to such change, we may fall behind our competitors. Generative AI is a rapidly developing technology, with a developing legal framework. Current and future AI-related regulations may impose certain obligations on us, and the costs of monitoring and responding to such regulations, as well as the consequences of non-compliance, could have an adverse effect on our operations or financial condition. Furthermore, our use of AI may expose us to additional liability, litigation, as well as increased cybersecurity risks, risks related to IP ownership, IP infringement, disclosure of personal identifiable information, loss of confidential information (see also “Risks Related to Legal and Regulatory Requirements – Our business depends on proprietary technology that may be infringed or disclosed; our products may infringe third party rights” below), faulty manufacturing, misuse of AI, limited explainability and traceability of AI, as well as other technological, operational, reputational, and regulatory risks that are hard to predict, particularly if the AI we adopt, or data it is based on, produces errors or AI bias, generates inaccurate, incomplete or misleading outputs, contains open source copyrighted material, infringes upon existing technology or otherwise does not function as intended. All of these risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
We are likely to compete with certain potential customers. The defense industry is dominated by a relatively small number of large prime contractors that have, in recent years, aggressively pursued vertical integration by acquiring or developing in-house capabilities that compete with our offerings in certain areas. This trend creates a ‘co-opetition’ dynamic where we must seek subcontracts in some cases from the same entities with whom we compete for larger programs. Decisions by these prime contractors to ‘insource’ requirements rather than utilize our specialized solutions or our failure to maintain good business relations with them, or further horizontal consolidation among them, could significantly reduce our addressable market and harm our financial results.
Our contracts may be terminated by our customers. Our contracts with customers may be terminated, amended or delayed by our customers for various reasons, including for their convenience. Such terminations, amendments or delays, which are experienced by the Company from time to time, may be due to factors over which we have little or no control (see also “Our revenues depend on a continued level of government business” above). In some cases, termination eliminates our right to payment under the contract and could also cause additional expenses, which could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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Part of our revenues are derived from competitively awarded contracts. Part of our revenues are derived from contracts awarded through competitive bidding processes, primarily with governmental customers. These processes are complex, costly and time consuming, and we may not be successful in winning new contracts or renewals on favorable terms, or at all. Competitive procurements sometimes require us to submit technical and pricing proposals before the completion of product design, requiring assumptions regarding performance, cost, schedule and supply chain availability that may later prove inaccurate. If our estimates are incorrect, our margins may be reduced and we may incur losses. In addition, use of tenders, as well as indefinite delivery, indefinite-quantity and other multi-award contracts, may intensify competition, increase pricing pressure and require repeated competition for task or delivery orders. Moreover, even when we possess the necessary qualifications for a specific new contract, we may not secure the business due to the government’s approach of promoting a broad and varied group of contractors. We may also face bid protests from unsuccessful bidders, leading to added costs and possible contract changes and delays. If we are unable to consistently win competitively awarded contracts or replace expiring contracts, this could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
Financial-Related Risks
We face currency exchange risks. We generate a substantial amount of our revenues in currencies other than the U.S. dollar (our financial reporting currency), mainly New Israeli Shekels (NIS), the Euro and Great Britain Pounds (GBP), and we incur a substantial amount of our expenses (primarily human resources, operational and supply chain expenses) in currencies other than the U.S. dollar, mainly NIS. Accordingly, in case of an appreciation of the NIS compared to the U.S. dollar, a significant portion of our costs will likely increase, as has previously happened. During 2025, the NIS appreciated by 12.5% compared to the U.S. dollar, leading to an increase in the portion of our labor‑related and operating expenses denominated in U.S. dollars. We also face the risk of reduced revenues in case of a depreciation of the Euro compared to the U.S. dollar, if we are awarded Euro denominated contracts based on price proposals that were provided when the Euro value was higher compared to the U.S. dollar. To the extent we derive our revenues or incur our expenses in currencies other than the U.S. dollar, we are subject to exchange rate fluctuations between the U.S. dollar and such other currencies. For example, we are sometimes negatively affected by exchange rate changes during the period from the date we submit a price proposal until the date of contract award or until the date(s) of payment. Certain currency derivatives we use to hedge against exchange rate fluctuations may not fully protect against sharp exchange rate fluctuations, and in some cases we are not able to adequately and cost-effectively hedge against all exchange rate fluctuations. See Item 11. Quantitative and Qualitative Disclosures About Market Risk – Exchange Rate Risk Management. In addition, our international operations expose us to the risks of price controls, restrictions on the conversion or repatriation of currencies, or even devaluations or hyperinflation in the case of currencies issued by countries with unstable economies. All of these currency-related risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow. See below “Risks Related to Our Israeli Operations and Environment – We may be affected by changes in Israel’s economy” and Item 5. Operating and Financial Review and Prospects – Impact of Inflation and Exchange Rates.
We may be adversely affected by increased levels of inflation and interest rates. Disruptions and volatility in the global economy and financial markets in recent years have put upward pressure on prices, causing widespread inflation particularly from 2021 to mid-2023. In response to the rising inflation, central banks in the markets in which we operate, including the Bank of Israel and the United States Federal Reserve, raised interest rates and tightened their monetary policies. Despite moderated inflationary pressures during 2024, which remained relatively stable in 2025, the level of inflation remains elevated compared to historical levels. As a result, the Company's employee wages and certain consumer price index (CPI) linked expenses, including the Company's borrowing costs, as well as costs of supplies, significantly increased over the past few years. The moderation of inflation may not continue in the future and interest rates could increase further, causing the Company considerable additional costs, as described above. High interest rates could also cause a significant additional increase in our borrowing costs on existing debt subject to variable interest rates and on new debt that we may issue, while also affecting the fair value of our investments and further exposing us to currency exchange risks. See also “We face currency exchange risks” above and “We face risks relating to financing for our operations and issuing guarantees” below. A global environment of high levels of inflation and interest rates and concurrent increased costs may also continue to impact our customers’ purchasing power, budgets, priorities and our industry overall. Interest rate increases or other government actions taken to reduce inflation could also slow business and government borrowing and spending, thereby placing economic markets at risk of recession, which could also affect the performance of our business partners under our joint projects. All of these risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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We face risks of cost overruns in fixed-price contracts. Most of our contracts are fixed-price contracts, under which we generally assume the risk that increased or unexpected costs may reduce profits or generate a loss. The risk of adverse effects on our financial performance from such increased or unexpected costs can be particularly significant under fixed-price contracts for which changes in estimated gross profit/loss are recorded on a “cumulative catch-up basis”. See Item 5. Operating and Financial Review and Prospects – General – Critical Accounting Policies and Estimates – Revenue Recognition and Item 18. Financial Statements – Note 2S. The costs which typically fluctuate under our fixed-price contracts relate to internal design and engineering efforts, system or product certification processes and purchase of materials and components. In some cases we underestimate the costs to be incurred in a fixed-price contract, and experience a loss on the contract. Losses due to increased or unexpected costs in fixed-price contracts could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
We have risks relating to pre-contract costs. We sometimes participate in “risk-sharing” contracts or incur pre-contract costs relating to specific anticipated contracts or delivery orders, in which our non-recurring costs or other costs that are pre-contract are only recoverable if the contract or order is actually awarded or if there is a sufficient level of sales for the applicable product, which typically is not guaranteed. In some cases, the anticipated contract is not awarded to us or sales do not occur at the level anticipated, and as a result, we are not able to recover our non-recurring or pre-contract costs. Such pre-contract costs could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
We face fluctuations in revenues and profit margins. Our revenues may fluctuate between periods due to changes in pricing, sales volume or project mix. Moreover, because certain of our project revenues are recognized upon achievement of performance milestones, such as units-of-delivery/point-in-time revenue recognition, we sometimes experience fluctuations in year-to-year and quarter-to-quarter financial results, which may be significant. Similarly, our profit margin may vary significantly during the course of a project as a result of changes in estimated project gross profits that are recorded in results of operations on a cumulative catch-up basis pursuant to the percentage-of-completion accounting method. This method relies on judgments and estimates that are complex and subject to a number of variables (such as the complexity of the required work, length of performance, labor productivity, availability of materials, execution by our suppliers and payments by our customers). See Item 5. Operating and Financial Review and Prospects – General – Critical Accounting Policies and Estimates – Revenue Recognition and Item 18. Financial Statements – Note 2S. As a result, our financial results for prior periods may not provide a reliable indicator of our future results. In addition, because of the significance of management’s judgments and estimation processes mentioned above, it is likely that materially different amounts could be recorded if we used different assumptions or if the underlying circumstances were to change. Changes in underlying assumptions, circumstances or estimates may adversely affect our future results of operations and financial condition.
Our backlog of projects under contract is subject to unexpected adjustments, delays in payments and cancellations. Our backlog includes revenue we expect to record in the future from signed contracts and certain other commitments. Many projects may remain in our backlog for an extended period of time due to the size or long-term nature of the contracts. In addition, from time to time, for reasons beyond our control (including economic conditions, exchange rate fluctuations or customer needs), projects are delayed, scaled back, stopped or cancelled, or customers delay making payments, which in some cases adversely affect the revenue, profit and cash flow that we ultimately receive from contracts reflected in our backlog.
We have risks related to our debt obligations. In connection with our bank credits and loans, our notes listed on the Tel-Aviv Stock Exchange and the commercial paper we issued in Israel, we are subject to certain restrictions and/or are obligated to meet certain covenants, including with respect to total equity, equity ratio, operating income, current ratio (the ratio of current assets to current liabilities) and total assets. These restrictions and covenants affect, and may limit or eliminate, our ability to adequately plan for or react to market conditions, meet capital needs or otherwise carry out our activities or business plans. Our ability to comply with the terms of our financing arrangements can be affected by events beyond our control, including prevailing economic, financial market and industry conditions, and there can be no assurance that we will be able to comply with such arrangements. These terms could limit our ability to take advantage of financing, mergers and acquisitions or other opportunities. A breach of any restrictive covenants in our financing agreements, as well as our failure to repay our debts or maintain our rating (including for reasons beyond our control), could result in an event of default under those agreements, which could in turn lead to acceleration of the debts, cross-defaults and other penalties. For additional information on our debt see Item 5. Operating and Financial Review and Prospects – General – Long-Term Arrangements and Commitments – Bank and Notes Covenants; Financial Resources; Israeli Series B, C and D Notes and Israeli Commercial Paper.
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We have risks related to the inherent limitations of internal control systems. We are subject to a range of requirements relating to internal control over financial reporting. Despite our internal control measures, we may still be subject to financial reporting errors or even fraud, which we may not detect. A control system, which is increasingly based on computerized processes, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that its objectives are met. In addition, the benefit of each control must be considered relative to its cost, and the design of a control system must reflect such reasonable resource constraints. Implementation of changes or updates to our control systems, including addition of specific new requirements and deepening the capabilities and outputs of our fully operational enterprise resource planning (ERP) system at additional sites worldwide, sometimes encounter unexpected difficulties and delays. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Further, controls can be circumvented by individual acts, by collusion of two or more persons or by management overriding such controls. Over time, a control may be inadequate because of changes in conditions or the degree of compliance with applicable policies or procedures may deteriorate. See Item 15. Controls and Procedures. Failure to maintain effective internal controls, and any investigations or sanctions by regulatory authorities that result from such failure, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
We face risks relating to financing for our operations and issuing guarantees. From time to time, some of our major projects require us to arrange or provide guarantees in connection with a customer’s financing of a specific project. These include commitments by us as well as guarantees provided by financial institutions or insurance companies relating to payments received from customers. In addition, many of our projects require us to issue advance, performance and/or product guarantees which may be drawn down by our customers. Customers typically have the right to draw down against advance payment guarantees in the event of a default claim under the applicable contract. In addition, some customers require that contract payment periods be extended for a number of years, sometimes beyond the period of contract performance. We may face difficulties in issuing guarantees or providing financing for our programs, and from time to time our customers encounter impaired ability to continue to comply with extended payment terms. Moreover, our balance sheet could reflect increased leverage if we were required to provide significant financing for our programs. See Item 4. Information on the Company – Financing Terms.
In some of our projects, we are exposed to the credit risks of our customers and delays in customer payments, which may adversely affect the collection of our accounts receivable, thereby reducing our cash flow and potentially requiring us to obtain alternative funding at additional cost (see Item 4. Information on the Company – Financing Terms and Item 18. Financial Statements ‒ Note 3). We sometimes seek to protect all or part of such financial exposure by various means such as insurance or factoring (the sale of accounts receivable to third parties); however, such measures may not always be available in a cost-effective manner, may not fully cover our risks and may not be maintained through the entire program term. In addition, we sometimes assist our customers with obtaining financing from third parties. We normally receive insurance for such financing, but when insurance does not cover our full exposure, a customer's failure to pay us may result in a write-off and additional costs to the Company. During and following periods of inflation, such as since 2021, we enter into loan commitments with higher interest rates than comparable loan commitments in the past (see above – “We may be adversely affected by increased levels of inflation and interest rates”). Our borrowings under variable interest rate instruments expose us to interest rate risk. As interest rates increase, our debt service obligations on our variable rate indebtedness will increase even if the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, will correspondingly decrease. Difficulties in obtaining financing at attractive rates could impact our ability to adequately meet our business needs or execute our growth strategy. Any of the foregoing risks could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
Our effective tax rate may be subject to fluctuations. Our worldwide effective tax rate could fluctuate as a result of several factors, many of which are outside of our control, including: (i) changes in the mix of revenues and income we derive from the jurisdictions where we operate that have different statutory tax rates; (ii) amendments to tax laws and regulations and changes in interpretations in the jurisdictions where we operate; and (iii) tax assessments, including any related tax interest or penalties, which could significantly affect our income tax expense for the period in which the assessments take place. In addition, our tax returns are periodically audited or subject to review by tax authorities in the various jurisdictions in which we operate around the world. Moreover, the Organization for Economic Cooperation and Development (OECD) sponsors the base erosion and profit shifting (BEPS) project, which encourages the adoption of certain policies to combat tax avoidance by multinational enterprises. Increases in our effective tax rates from the above factors could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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Changes to tax laws or classifications in any of the jurisdictions in which we operate could materially affect us and our shareholders. Tax laws, including tax rates, in the jurisdictions in which we operate are often unsettled and may be subject to significant changes. For example, the U.S. tax reform enacted in 2025 (informally titled the One Big Beautiful Bill Act) introduced a number of significant changes to the U.S. federal income tax rules. The OECD’s BEPS project has resulted in wide-ranging and continuous changes in the principles of international taxation and the tax laws in individual countries, including the Global Minimum Tax rules (GLOBE) introduced in 2021 (referred to as “Pillar 2”). Pillar 2 rules contemplate changes to numerous international tax principles and national tax incentives and enforce other arrangements such as a minimum effective tax liability of 15%, under certain conditions. Governments have been translating the Pillar 2 rules into specific national tax laws, as previously done with respect to BEPS, and Pillar 2 is effective as of financial year 2024 in certain countries. Israel has enacted a local minimum tax for multinational enterprise groups, and certain of the required measures, effective for tax years beginning on or after January 1, 2026, and is considering additional legislation to align its tax regime with evolving international minimum tax standards; however, not all such measures have been adopted, and future legislative developments, if any, remain uncertain. These changes, when adopted by individual countries, could adversely affect our financial position, including our provision for income taxes. At this stage we are analyzing the potential impact of the new rules on our financial results.
In February 2022, the Council of the EU updated its grey list, which includes countries that do not yet comply with all international tax standards but have committed to implementing reforms, to add Israel and nine other countries. In February 2024, the grey list was updated and Israel was removed therefrom, and was stated to be cooperating with the EU and having no pending commitments. In order to be considered cooperative for tax purposes, jurisdictions are required to meet certain criteria, including: tax transparency, fair taxation and anti-BEPS measures. European entities engaging with countries listed on the grey or black lists may be subject to certain restrictions. Changes in tax laws, policies, treaties or regulations, and their interpretation or enforcement, are unpredictable. Any of these occurrences could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
In addition, changes to tax laws, their interpretation or our classification under them can result in adverse consequences to our shareholders. For example, in case Elbit Systems is treated as a Passive Foreign Investment Company (a PFIC), during any taxable year during which a U.S. Shareholder (as defined in Item 10. Additional Information – Taxation – United States Federal Income Tax Considerations) holds our ordinary shares, certain adverse U.S. federal income tax consequences and additional reporting requirements could apply to that U.S. Shareholder. Based on our audited financial statements and relevant market and shareholder data, we do not believe we were treated as a PFIC with respect to our 2025 or 2024 taxable year and do not expect to be a PFIC for our current taxable year or in the reasonably foreseeable future. However, whether we are a PFIC is a factual determination that must be made at the close of each year and is based on factors that may be outside of our control, including, among other things, the valuation of our ordinary shares and assets, which will likely change from time to time. See Item 10. Additional Information – Taxation – United States Federal Income Tax Considerations.
Tariffs and trade tensions could have an adverse effect on economic conditions and financial markets. The U.S. government has announced a number of tariff-related policies that have resulted in increased tariffs and potentially will result additional tariffs on products imported into the United States. There is no certainty regarding if and how long the existing increased tariffs will remain in place or whether additional tariffs will be imposed and, if so, how long such tariffs will remain in place. These actions have resulted, and may result, in fluctuations in financial markets, including with respect to interest rates, and retaliatory tariffs or trade actions by other countries. If geopolitical tensions or uncertainty continue, they could result in a reduction of trade volume, investment and technological exchange and other economic activities among major international economies, which in turn could lead to a recession and further changes in interest rates. The application of increased tariffs or continuing uncertainty also may result in a material increase to our costs of operation or otherwise limit our commercial opportunities. Any of these events could adversely affect our business, results of operations and financial condition.
Funding obligations to our pension plans could reduce our liquidity. Funding obligations for certain of our pension plans are impacted by the performance of the financial markets and interest rates. When interest rates are low, or if the financial markets do not provide expected returns, we are required to make additional contributions to these pension plans. Volatility in the equity markets or actuarial changes in mortality tables can change our estimate of future pension plan contribution requirements. See Item 18. Financial Statements – Notes 2R and 17.
Our business involves risks that may not be adequately covered by insurance. Our business involves the development and production of products and systems for customers around the world. These products and systems can involve new technologies that are not yet fully tested. Failure of some of our products could result in loss of life or other substantial damages. In addition, in some cases our insurance policies contain exclusions from coverage such as war and terror, natural catastrophes and cybersecurity incidents. We may not be able to obtain product liability or other insurance to fully cover our risks in a cost-effective manner, and the monetary amount of our insurance coverage may not fully cover the liabilities we may incur from our activities, which could be substantial and could harm our business, reputation, financial condition, results of operations and cash flow. In addition, conditions in the global insurance market or in a specific sector or geography may make it more costly to obtain adequate insurance coverage.
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Risks Related to Legal and Regulatory Requirements
We are subject to government procurement and anti-bribery and corruption rules and regulations. We are required to comply with government contracting rules and regulations relating to, among other things, cost accounting, sales of various types of munitions, anti-bribery and procurement integrity, which increase our performance and compliance costs. See Item 4. Information on the Company – Governmental Regulation. Our supply chain is also required to comply with many of these regulations. We engage in certain markets considered to have high bribery and corruption risks. In addition, certain non-governmental entities with which we do business adopt their own anti-bribery and corruption rules and guidelines that may be applicable to us in connection with our engagements with them. In July 2025, the NATO Support and Procurement Agency (“NSPA”), NATO's centralized procurement agency, rather than any individual NATO member state, notified the Company and two of its subsidiaries that they were subject to an internal investigation and in the absence of a waiver, were temporarily suspended from participating in new tenders. NSPA has not informed the Company of the factual circumstances or specific events that are the subject of the investigation and has since extended the temporary suspension until March 2026, while NSPA's internal investigation remains ongoing. The Company did not identify any irregularities or non-compliance in connection with any project involving NSPA. The Company's tender activity and business engagements with NSPA is very limited.
Failure to remain up to date with applicable regulatory changes around the world or to fully comply with these rules and regulations (as well as applicable sanction and export controls requirements, such as those relating to Russia or China), whether directly or indirectly, could result in the modification, termination or reduction of the value of our contracts, additional costs, the assessment of penalties and fines against us, our suspension or debarment from government contracting or subcontracting for a period of time or criminal sanctions or other adverse actions against us or our office holders, employees, supply chain or customers. Non-compliance with the rules and guidelines adopted by commercial entities in this area could adversely affect our business relationships, including disqualification from supplier lists and imposition of other limitations on future transactions. In addition, our employees may be subject to corruption attempts by third parties, in order to obtain business with the Company or receive other benefits. Any of the aforementioned risks, were they to materialize, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
We depend on governmental security clearance and governmental approvals for international sales, procurement and acquisitions. Many of our contracts with governmental customers require us to maintain security clearances and employ staff with specific qualifications, experience, and clearance levels. If we or our employees fail to obtain or maintain the necessary clearances, we may be unable to secure new contracts, and current customers could end their contracts or choose not to renew them. Additionally, our international sales, as well as our ability to attract and retain highly skilled personnel and access or procure technology, software and hardware, depend largely on export authorizations and other approvals from the governments of Israel, the U.S. and other countries, the receipt, maintenance and renewal of which may be delayed or disrupted by government actions or inaction, including regulatory or policy changes or U.S. government shutdowns. Our suppliers are also subject to applicable authorizations and approvals. See Item 4. Information on the Company – Governmental Regulation. From time to time, we are unable to obtain such approvals and approvals granted to us may expire or be revoked or new approval requirements may be implemented by governmental authorities. Since the outbreak of the “Swords of Iron” war, we have experienced increased delays and stringency in the provision of approvals by certain foreign governments to export certain materials and components to Israel, which in some cases has led to delays in receiving these items, causing supply chain disruptions. In addition, in some cases there are inadvertent failures to comply with existing governmental approvals. If we, our customers or our suppliers fail to obtain or comply with governmental approvals, or if certain approvals previously obtained are revoked or expire and are not renewed for any reason, including due to changes in political conditions, increasing stringency of international export control requirements to Israel or to countries we operate in (such as the controls on the export of U.S. developed computer chips that power AI technologies), or imposition of sanctions, our ability to sell our products and services to overseas customers and our ability to obtain, develop or manufacture goods and services essential to our business could be interrupted, resulting in a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
In addition, in the context of mergers and acquisitions, most countries require government approval for acquisitions of domestic defense and homeland security-related businesses, which may be denied, or subject to unfavorable conditions or to conditions that could prevent us from certain business opportunities or increase our ongoing expenses. Such regulations are stringent in a number of countries, including the U.S. We also may be unable to obtain antitrust approvals for certain acquisitions as our operations expand. Failure to obtain such governmental approvals could negatively impact our future business and prospects.
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Our operations may expose us to liabilities under various environmental protection, health and safety laws and regulations. Our operations are subject to environmental protection, health and safety requirements, some of which are also applicable to our suppliers. Changes in laws and regulations around the world may limit or otherwise affect the use of our products or impact our manufacturing processes and necessitate that we dedicate additional resources to comply with environmental protection, health, safety or other requirements. These include, among other things, regulations regarding the storage and handling of hazardous materials, including munitions, used in our operations, as well as standards related to greenhouse gas emissions. See Item 4 – Information on the Company – Governmental Regulation – Environmental, Health and Safety Regulations and “Risks Related to Our Operations – Our business could be adversely affected by climate change, Environmental, Social and Governance (ESG) regulatory requirements and market responses thereto” above.
Some of our operations involve inherent risks of physical injury, such as manufacturing and testing of our systems and platforms, as well as handling of hazardous materials, including munitions and explosives. Despite implementing safety measures, we sometimes experience accidents, resulting in physical injuries and damage to equipment, facilities and the environment. In order to meet increased demand for our products by Israel and by governments around the world since the beginning of the “Swords of Iron” war, we have enhanced the production rate at some of our facilities, including by adding additional shifts. Increased volume of operation enhances the risk that accidents will occur. We are also sometimes subject to certain procedures and orders under environmental, health and safety laws and regulations which require us, or we otherwise choose, to implement remediation measures to comply with such requirements. Furthermore, some of our business licenses and permits are for fixed periods and must be renewed from time to time. Renewal of such licenses and permits is not certain and is sometimes made contingent on additional conditions that impose additional costs on us. In case of violation or liability under environmental, health and safety laws and regulations applicable to us, including with respect to any contamination or our storage, manufacture, testing or handling of munitions and explosives, as a result of our inability to obtain licenses or permits, or due to human error, accident, equipment failure or other causes, we could be subject to fines, costs, civil or criminal sanctions, face property damage or personal injury claims or be required to incur substantial investigation or remediation costs. These factors could cause disruptions in our operations and have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
Our business depends on proprietary technology that may be infringed or disclosed; our products may infringe third party rights. Many of our systems and products depend on our proprietary technology for their success. Like other technology-oriented companies, we rely on a combination of IP, some of which is not formally protected. Our formally protected IP includes patents, trade secrets, copyrights and trademarks. We also utilize non-disclosure agreements, confidentiality provisions in sales, procurement, employment and other agreements and technical measures to establish and protect proprietary rights in our products. We sometimes use open source software in the development of our systems and products and expect to continue to do so. Our ability to successfully protect our IP may be limited because:
•IP laws in certain jurisdictions may be relatively ineffective;
•detecting infringements and enforcing proprietary rights may be difficult due to unavailability of details of competitors' technology and may divert management’s attention and company resources;
•contractual measures such as non-disclosure agreements and confidentiality provisions may afford only limited protection;
•our employees may input our confidential information, including material non-public information, trade secrets or personal identifiable information, into AI applications, resulting in such information becoming accessible by third parties, including our competitors, or in a loss of trade secret status of such information;
•our ownership rights over inventions or works of authorship developed using AI technology may be limited, for example if those are based or rely on, or contain, materials that were used in the training of such AI technologies which are subject to third-party IP or given the position of courts and IP offices in the U.S. and in some other jurisdictions that require sufficient human involvement in such developments;
•our patents may expire, thus providing competitors access to the applicable technology;
•competitors may independently develop products that are substantially equivalent or superior to our products or circumvent our IP rights; and
•IP not formally protected may be misappropriated or leaked to our competitors.
Certain open source licenses may impose conditions that could require us to disclose source code, to license software under specific terms, to distribute software at no cost, or otherwise limit our ability to commercialize our products. In addition, software developed using AI tools may be subject to similar open source requirements if such tools are trained on open source data sets. We may also face claims alleging improper use of, or non‑compliance with, open source licenses, and open source software may contain undetected defects, vulnerabilities or malware.
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Under our development contracts with the IMOD, the U.S. government and certain other foreign governments, such governments usually retain specific rights to IP resulting from our performance under these contracts, which generally include the rights to disclose the information to third parties, including other defense contractors that may be our competitors (See also Item 4. Information on the Company – Intellectual Property – Governmental Customers’ Rights in Data). In addition, sometimes third parties register patents in technologies relevant to our business areas and assert infringement claims against us. The cost of defending against infringement claims could be significant, regardless of whether the claims are valid. If we are not successful in defending against such claims, we may be prevented from using or selling certain products of ours, be liable for damages and required to make adjustments to our software, technology or products, or to obtain licenses, which may not be available on reasonable terms, any of which may have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
We are subject to laws and contractual obligations regarding data protection. Certain information we receive and maintain regarding our employees and third parties is subject to various laws regarding privacy and data protection. Many of these laws are rapidly evolving and increasingly rigorous (See below – Item 4. Information on the Company – Governmental Regulation – Cybersecurity and Data Privacy Regulations). In addition, we are frequently subject to contractual obligations requiring us to protect the confidential information of customers. A failure or perceived failure by us to comply with laws, industry standards or contractual obligations regarding the protection of data, and any inadvertent disclosure of such data, including through our use of AI, could subject us to enforcement actions and other litigation by customers and governmental authorities, fines, damages and negative publicity, or may give rise to specific obligations, including required notices, consents and opt-outs, under various data privacy, protection and cybersecurity laws and regulations in a number of jurisdictions. See our description of a September 2025 cybersecurity incident under “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, or of our products, could adversely affect us” above. These could, in turn, have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow. See also “Risks Related to Our Markets and Industry – We are subject to risks associated with artificial intelligence (AI) technologies” above.
Other Risks Related to Our Ordinary Shares
Our share price may be volatile and may decline. Numerous factors, some of which are beyond our control and unrelated to our operating performance or prospects, may cause the market price of our ordinary shares to fluctuate significantly. Factors affecting market price include, but are not limited to: (i) variations in our operating results and ability to achieve our key business targets; (ii) sales or purchases of large blocks of stock; (iii) changes in securities analysts’ earnings estimates or recommendations; (iv) differences between reported results and those expected by investors and securities analysts; and (v) changes in our business, including announcements of new contracts or other major events by us or by our competitors. In addition, we could be subject to securities class action litigation following periods of volatility in the market price of our ordinary shares.
Other general factors and market conditions that could affect our stock price include but are not limited to changes in: (i) the market’s perception of our business; (ii) the businesses, earnings estimates or market perceptions of our competitors or customers; (iii) the outlook for the defense, homeland security and commercial aviation industries; (iv) general market, economic (including changes in Israel's credit rating) or health (including pandemics) conditions unrelated to our performance; (v) the legislative or regulatory environment; (vi) government defense spending or appropriations; (vii) military or defense activities and conflicts locally and worldwide; (viii) the level of national or international hostilities; and (ix) the general geopolitical environment (including the perceived value of investing in an Israeli defense company). A significant increase in our share price can also increase our payment obligations under our stock price-linked employee compensation plans.
We have a major shareholder with significant influence over certain matters requiring shareholder approval. As of March 5, 2026, Federmann Enterprises Ltd. (FEL) directly and indirectly owns approximately 41.5% of our ordinary shares. Therefore, subject to special majority requirements for certain shareholder approvals under the Israeli Companies Law - 1999, as amended (the Companies Law) and our articles of association, FEL may have significant influence over the outcome of matters requiring shareholder approval, including the election of directors. Michael Federmann, who serves as a member of our board of directors, is (through entities under his control) the controlling shareholder of FEL, and he is also the chair of the board and the chief executive officer of FEL. Therefore, Mr. Federmann controls, directly and indirectly, the vote of our ordinary shares owned by FEL. See Item 6. Directors, Senior Management and Employees – Board Practices – Appointment of Directors; External Directors and Independent Directors – External Directors, Item 7. Major Shareholders and Related Party Transactions – Major Shareholders, Item 10. Additional Information – Approval of Certain Transactions and the Description of Securities filed as Exhibit 2.1 to this annual report (the Description of Securities), under Provisions Relating to Major Shareholders.
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Risks Related to Our Israeli Operations and Environment
Conditions in Israel and the Middle East may affect our operations. Political, economic and military conditions in Israel and the Middle East directly affect our operations. Since the establishment of the State of Israel, a number of armed conflicts have taken place between Israel and some of its Arab neighbors. Although the Abraham Accords have enhanced Israel's relations with certain countries in the Middle East, an ongoing state of hostility, varying in degree and intensity, remains between Israel and several of the other countries in the region, which has caused and may continue to cause security and economic challenges for Israel, and for Israeli businesses and employees. Regime and significant political changes in the Middle East as seen in the ongoing conflict in Syria and the prolonged political and economic crises in Lebanon could also have an effect on such state of hostility. Political, economic and military conditions in Israel and the Middle East, as well as resulting decisions and actions of international judicial bodies, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
On October 7, 2023, Hamas terrorists infiltrated Israel's southern border from the Gaza Strip and conducted a series of brutal attacks on civilian and military targets. Hamas and soon thereafter Hezbollah, operating from Lebanon, launched extensive rocket attacks on the Israeli population and industrial centers, including areas in which some of the Company's facilities and employees were located. Following the October 7 attacks, the State of Israel declared a state of war, which was initially named “Swords of Iron”, commencing a military campaign in Gaza and, at a later stage, in Lebanon. Israel was also subject to missile and drone attacks by Iran and other terrorist organizations on different fronts, including the Houthi movement in Yemen and rebel militia groups in Syria. These attacks prompted military responses by Israel. In addition, the Houthi movement launched attacks on shipping in the Red Sea, resulting in widespread rerouting of cargo ships and some shipping companies ceasing shipments to Israel. On June 13, 2025, the conflict between Israel and Iran escalated into high intensity mutual attacks that lasted until a ceasefire was declared nearly two weeks later. Ceasefires with Lebanon and Hamas were reached in November 2024 and January 2025, respectively, and a subsequent ceasefire with Hamas was agreed to in October 2025. On February 28, 2026, Israel and the U.S. launched a joint attack on Iran named “Operation Roaring Lion” by Israel and “Operation Epic Fury” by the U.S., targeting key Iranian officials and targets. Iran launched attacks against Israel and at U.S. military bases across the region, including strikes in Bahrain, Qatar, Saudi Arabia, Kuwait and Jordan. On March 2, 2026 Hezbollah launched an attack on Israel. Future developments with respect to these and other hostilities in the Middle East are difficult to predict at this time. See Item 4. Information on the Company – Conditions in Israel – Impact of recent conflicts in the Middle East on the Company.
The recent conflicts in the Middle East have resulted in significant economic, military and social consequences to Israel. Any major hostilities involving Israel, regional political instability or the interruption or curtailment of trade between Israel and its trading partners could materially and adversely affect our business, financial condition and results of operations. While Elbit Systems has experienced a continued material increase in orders from the IMOD since October 7, 2023, at the same time these conflicts have caused supply chain and operational constraints, including amongst others, due to the temporary evacuation of employees working at facilities subject to missile attack, relocation on a temporary basis of certain production lines in evacuated areas to alternative facilities, significant employee call up for reserve duty (also see below – “Many of our employees and some of our officers are obligated to perform military reserve duty in Israel”), increase in transportation costs and delays related to the Houthi movement attacks on shipping in the Red Sea, material and component shortages (see also above – “We may experience production and other delays, discontinuation of supply or liability due to supply chain disruptions and failures of our suppliers to comply with our requirements or with applicable laws”), limitations imposed by some countries on exports to and imports from Israel and attacks on some of our global facilities by anti-Israel organizations (also see above – “We face risks in our international operations”).
If the ceasefire currently in effect with Hamas cannot be sustained or the conflict with Iran and Hezbollah is prolonged or escalates further, for example by expanding to additional fronts, or if new conflicts arise, the negative effects on our business may increase, including without limitation an adverse effect on our ability to meet our obligations to our customers, renewed dislocation of our employees and production lines and physical damage to our facilities. The full extent of the effects of ongoing or new conflicts on the Company's performance will depend on future developments that are difficult to predict at this time, and the risks related to the conflicts could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow. See also Item 4. Information on the Company – Conditions in Israel – Impact of recent conflicts in the Middle East on the Company.
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Many of our employees and some of our officers are obligated to perform military reserve duty in Israel. Generally, Israeli citizens and permanent residents are obligated to perform ongoing military reserve duty up to a specified age. Reserve soldiers may also be called to active military duty at any time under emergency circumstances, for extended periods. During the “Swords of Iron” war, a considerable number of our employees were called for reserves duty. As of December 31,
2025, approximately 6% of our work force in Israel had been called up, and as of March 5, 2026, the percentage was increased to approximately 8%, following the launch of “Operation Roaring Lion”. The percentage could fluctuate depending on future developments. In accordance with current Israeli law, employees on reserve duty continue to be fully paid by the Company, while the National Insurance Institute refunds the Company for their salaries, up to a certain statutory ceiling (which is sometimes lower than the salaries we pay to such employees) and, in some cases, partially indemnifies the Company for additional employment costs. As a result, the Company has incurred, and will likely continue to incur, costs in respect of its employees who are called to reserve duty for which it is not fully indemnified by the government. For further details see below Item 4. Information on the Company – Conditions in Israel – National Insurance Institute. Although the Company recruits additional employees when needed to limit the effect of reserve call-ups on its business operations, the absence of our employees, as well as those employees of certain of our suppliers, for extended periods has in the past and may in the future cause delays in our programs and operations. Such delays, if prolonged, as well as the direct costs incurred by the Company as a result of such call-ups, could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
Political relations could limit our ability to sell or buy internationally. We could be adversely affected by the interruption or reduction of trade between Israel and its trading partners. Some countries, companies and organizations continue to participate in a boycott of Israeli firms, other firms doing business with Israel and Israeli-owned companies operating in other countries. These actions have increased since October 7, 2023. In addition, certain foreign government defense export policies have become more stringent towards Israel during this time, making it more difficult for us in some cases to obtain the export authorizations necessary for our activities. See above “Risks Related to Our Markets and Industry”. In some cases Israeli firms such as the Company are prevented from participating in international trade shows. Restrictive laws, policies or practices directed towards Israel or Israeli businesses or a decision to reduce trade with Israeli businesses could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
Reduction in Israeli government spending or changes in priorities for defense products may adversely affect our earnings. While Elbit Systems has experienced a material increase in orders from the IMOD since the start of the “Swords of Iron” war, the Israeli government may reduce its expenditures for defense items or change its defense or other priorities in the coming years. In addition, the Israeli defense budget may be adversely affected if there is a reduction in U.S. foreign military assistance. See above “Risks Related to Our Markets and Industry”. Any of the foregoing circumstances could have a material adverse effect on our business, reputation, financial condition, results of operation and cash flow.
We may be adversely affected as a result of extended periods without a stable Israeli government and delays in adopting a defense budget. Israel has experienced a period of significant political instability in recent years, characterized by five general elections held between 2019 and 2022. This has led to frequent changes in the composition of the government and delays in adopting budgets. Delays in adopting budgets have continued in the following years. Periods without an approved budget have negatively impacted the ability of the IMOD to adopt a new budget, enter into new programs (and specifically multi-year programs) and make timely payments to its suppliers. Should such extended periods of instability or delays in adopting budgets reoccur, it could negatively affect our operations in Israel and have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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We may be affected by changes in Israel’s economy. From time to time Israel’s economy may experience inflation or deflation, the effect of fluctuations in world commodity prices, the impact of military conflicts, civil and political unrest, budgetary constraints and other macro-economic changes. It is widely believed that the “Swords of Iron” war and related conflicts have had and may continue to have adverse effects on the Israeli economy. For example, in October 2024, S&P Global downgraded Israel's long-term credit rating from A+ to A with a negative outlook, reflecting heightened security risk (in November 2025 S&P Global upgraded this rating to A with a stable outlook, reflecting lower-immediate security risk). Reductions by international rating agencies such as S&P Global, Moody's and Fitch Ratings could disrupt the business environment and make investors hesitant to invest or transact business in Israel, as well as make it more difficult and expensive for us to raise capital and negatively influence the market price of our ordinary shares. See above “Other Risks Related to Our Ordinary Shares”. Israel's economy may also be affected by developments in fiscal policies of other international economies, such as those in the U.S. and Europe. For these and other reasons, in the past the government of Israel has intervened in the economy, for example by employing various fiscal and monetary policies and import duties, imposing foreign currency restrictions and controls of wages, prices and foreign currency exchange rates and adopting regulations regarding the lending limits of Israeli banks to companies considered to be in an affiliated group. The Israeli government has periodically changed its policies in these and other areas. In the beginning of 2023, the Israeli government began a process to implement significant changes in the Israeli judicial system. Various financial, legal and commercial organizations and entities claimed that such changes would weaken the Israeli judicial system and, as a result, could negatively impact Israel’s economic and financial conditions. At this stage we cannot assess the likelihood that these or other significant changes will be proposed in the future, the likelihood of their adoption or any potential impact on the Israeli economy or our business. Changes in the Israeli economy, as well as various policies implemented by the Israeli government, could make it more difficult for us to operate our business and could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
Israeli government programs and tax benefits may be terminated or reduced in the future. We participate in programs of the Israel Innovation Authority and the Israel Investment Center, for which we receive tax and other benefits as well as funding for the development of technologies and products. See Item 4. Information on the Company – Conditions in Israel – Israel Innovation Authority and Investment Center Funding. If we fail to comply with the conditions applicable to these programs, we may be required to pay additional taxes and penalties or make refunds and may be denied future benefits. From time to time, the Israeli government has discussed reducing or eliminating the benefits available under these programs, and therefore these benefits may not be available in the future at their current levels or at all.
Israeli law may delay, prevent or impact acquisition of our controlling interest and apply additional restrictions. The Israeli Defense Entities Law (Protection of Defense Interests), 5766 – 2006 (the Israeli Defense Entities Law) requires Israeli government approval of an acquisition of “means of control” in Israeli “defense entities” so designated pursuant to this law, including with respect to Elbit Systems and companies we currently own or may seek to acquire in the future, in the event that relevant orders making such designation are issued by the Israeli government. Such a designation may also contain additional conditions relating to the purchase or transfer of “means of control”. As of the date of this annual report, such designation orders have not been issued in relation to Elbit Systems. However, in 2021 the IMOD initiated a process under which it intends for the Israeli government to designate Elbit Systems and most of our Israeli subsidiaries as “defense entities”. Since the process was initiated, discussions have taken place between Elbit Systems and the IMOD about the terms and conditions of the orders. Additional discussions took place in 2025 and 2026. Our understanding is that the discussions have reached final stages, and we were informed that the IMOD is about to initiate the formal process for approvals required under the Israeli Defense Entities Law. The Company is not in a position to evaluate if or when such orders will be approved by the relevant government authorities and ministers (including the signatures of ministers) and become effective.
Our designation as a “defense entity” would likely limit the ability of a potential purchaser to acquire a significant interest in our shares without the approval of the Israeli government. Orders relating to “defense entities”, including the orders that are expected to be issued with respect to the Company, would likely also, among other matters: (1) impose restrictions on the ability of Israeli or non-Israeli resident citizens to hold means of control or be permitted to “substantially influence” such entities; (2) require that senior officers have appropriate Israeli security clearances; (3) require that the entity’s headquarters be in Israel; (4) require the approval of the IMOD to enter into certain joint ventures and mergers or to transfer certain technology or means of manufacturing; and (5) require such entities to maintain essential production lines and development capacities in Israel. See also Item 4. Information on the Company – Governmental Regulation – Regulation of Israeli Defense Entities.
In addition, under the Equipment Registration and Recruitment Law for the Israel Defense Forces, 5747 –1987, certain orders may be issued by authorized government officials, under specific conditions, among others, to seize certain equipment of private companies or to prevent its movement outside of Israel, for use by the Israel Defense Forces (IDF). Furthermore, the Companies Law regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions. The provisions of each of these laws and related government designations could delay, prevent or impede an acquisition of a significant portion of our shares, as well as other business transactions and operational activities, even if they are considered beneficial by the Company or by our shareholders, which could have a material adverse effect on our business, reputation, financial condition, results of operations and cash flow.
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We may rely on certain Israel “home country” corporate governance practices which may not afford shareholders the same protection afforded to shareholders of U.S. companies. As a foreign private issuer Elbit Systems is permitted to follow, and in certain instances has followed, home country corporate governance practices instead of certain practices otherwise required under the Listing Rules of the Nasdaq Stock Market LLC (Nasdaq Listing Rules) for domestic U.S. issuers. As described in Item 16G. Corporate Governance, we have previously informed Nasdaq that we elected to follow certain procedures permitted under the Companies Law instead of the Nasdaq Listing Rules, which require a listed company to obtain shareholder approval for the establishment or material amendment of an equity-based compensation plan. Under this “home country practice” exception provided in the Nasdaq Listing Rules for foreign private issuers, we could in the future elect to follow home country practices in Israel with regard to a broad range of other corporate governance matters. Following our home country governance practices, as opposed to the requirements that would otherwise apply to U.S. public companies listed on Nasdaq, may afford less protection than is afforded to investors under the Nasdaq Listing Rules applicable to domestic U.S. issuers. See Item 16G. Corporate Governance.
Being a foreign private issuer exempts us from certain SEC requirements. As a foreign private issuer within the meaning of rules promulgated under the Exchange Act, we are exempt from certain Exchange Act rules and requirements that apply to U.S. public companies, including: (i) the requirement to file with the SEC quarterly reports on Form 10-Q and current reports on Form 8-K; (ii) rules regulating the solicitation of proxies in connection with shareholder meetings; (iii) Regulation FD prohibiting selective disclosures of material information; and (iv) rules requiring significant shareholders to disclose stock ownership and trading activities and imposing liability on directors, officers and significant shareholders for profits realized from “short-swing” trading transactions. Because of the foregoing, our shareholders may receive less information about our Company and may be afforded less protection under U.S. federal securities laws than shareholders of a domestic U.S. company. Furthermore, on June 4, 2025, the SEC published a Concept Release highlighting potential amendments to the foreign private issuer definition, such as updating eligibility requirements or adding trading volume and listing criteria. If we lose our status as a foreign private issuer due to new requirements adopted by the SEC or because we no longer meet the current definition, we would be required to file periodic reports and registration statements on more detailed U.S. domestic forms, comply with SEC requirements and Nasdaq corporate governance rules from which we are currently exempt and incur significant additional legal, accounting and administrative expenses.
Rights and responsibilities of shareholders are governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. corporations. Since we are incorporated under Israeli law, the rights and responsibilities of our shareholders are governed by our Articles of Association and Israeli law. As a result, these rights and responsibilities differ in some respects from those of shareholders in U.S. corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters that require shareholder approval. A shareholder also has a general duty not to discriminate against other shareholders. In addition, a controlling shareholder or a shareholder who knows that it possesses the power to determine the outcome of a shareholders’ vote or to appoint or prevent the appointment of an office holder in the company, or has another power with respect to the company, has a duty of fairness towards the company. These provisions may be interpreted to impose additional obligations and liabilities on our shareholders that are not typically imposed on shareholders of U.S. corporations.
It may be difficult to enforce a non-Israeli judgment against us, our officers and directors. We are incorporated in Israel. Our executive officers and directors and our external auditors are not residents of the U.S., and a substantial portion of our assets and the assets of these persons are located outside the U.S. Therefore, it may be difficult for an investor, or any other person or entity, to enforce in an Israeli court a U.S. court judgment against us, our executive officers, directors or external auditors based on the civil liability provisions of the U.S. federal securities laws. It may also be difficult to effect service of process on these persons in the U.S. Also, it may be difficult for an investor, or any other person or entity, to enforce civil liabilities under U.S. federal securities laws in original actions filed in Israel. See Item 4. Information on the Company – Conditions in Israel – Enforcement of Judgments.
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Item 4. Information on the Company.
Company History
Elbit Systems Ltd. is a corporation domiciled and incorporated in Israel where we operate in accordance with the provisions of the Companies Law. Our predecessor Elbit Ltd. was incorporated in Israel in 1966 as Elbit Computers Ltd. Elbit Systems was formed in 1996, as part of the Elbit Ltd. corporate demerger, under which Elbit Ltd.’s defense-related assets and business were spun-off to us.
Trading Symbols, Address and Website
Our shares are traded on the Nasdaq Global Select Market (Nasdaq) and on the Tel-Aviv Stock Exchange (TASE), under the symbol “ESLT”.
Our principal office is located at Advanced Technology Center, Haifa 3100401, Israel, and our telephone number is +972-77-2940000. Our principal offices in the United States are the headquarters of Elbit Systems of America, LLC (ESA) at 4700 Marine Creek Parkway, Fort Worth, Texas 76179-6969, and the main telephone number at that address is 817-234-6600.
Our website address is www.elbitsystems.com. We make our website content available for informational purposes only and should not be relied upon for investment purposes. The information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this annual report. We have included our website address as an inactive textual reference only. The SEC also maintains a website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of this website is http://www.sec.gov/, and is not incorporated by reference into this annual report.
Business Overview
General
We are an international high technology company engaged in a wide range of programs throughout the world, primarily in the defense and homeland security arenas. We develop and supply a broad portfolio of airborne, land and naval systems and products for defense, homeland security and commercial applications. Our systems and products are installed on new platforms, and we also perform comprehensive platform modernization programs. In addition, we provide a range of training and support services.
The Company's strategy is generally based on the following pillars:
Strong worldwide presence – developing a unique global footprint and multiple local subsidiaries, to allow broad sourcing of revenues from different regions, thereby reducing risk. Our subsidiaries are located in several of our key markets, enjoying our advanced technologies and collective experience, while supporting local defense forces in their home markets and strengthening supply chains and local economies.
Trusted and valued partner – positioning ourselves as a strategic partner of our customers, both our end users and OEMs, and not merely a supplier.
R&D and innovative portfolio – investing in research and development, with an aim to increase the breadth of our portfolio both horizontally and vertically, to maximize our position in the markets in which we operate. In recent years we have invested a material percentage of our revenues to develop a broad range of cutting-edge solutions for our customers (see also Item 5. Operating and Financial Review and Prospects – Research and Development (R&D) Expenses).
People – investing in our highly skilled employees to maintain operational experience and technological know-how.
Growth culture – striving for constant value creation, exploring new opportunities and scalable thinking to achieve continuous growth.
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Recent Developments
In recent years the Company has grown significantly, including in terms of our order backlog, revenues, number of employees and large-scale programs. The Company has also broadened its portfolio at a faster pace than in the past, especially in the area of munitions.
In 2025 we continued to invest in R&D, including in the fields of energy weapons and autonomous systems.
Over the course of 2025, we were awarded a variety of contracts, both from the IMOD and from international customers, including:
•approximately $260 million contract to supply Directional Infrared Countermeasure (DIRCM) self-protection systems for Germany's A400M aircraft fleet.
•two contracts in an aggregate amount of approximately $260 million for the supply of advanced airborne munitions to the IMOD.
•approximately $1.6 billion contract to deliver a range of defense solutions to a European country.
•approximately $2.3 billion international contract for a strategic solution.
•contracts with the IMOD in an aggregate amount of approximately $210 million for tank upgrades.
•contracts in an aggregate amount of approximately $275 million for the supply of advanced airborne self-protection electronic warfare suite, including DIRCM systems to an Asia-Pacific country.
•approximately $228 million follow-on contract to provide Iron Fist Active Protection System (APS) for U.S. Army Bradley IFV upgrades.
To support our strategy and growth, in 2025 we continued our strategic CAPEX investments and the process of expanding our operations in Europe, initiating the establishment of new facilities in Sweden and Germany to enhance our local delivery capabilities and customer support. We also built a new facility in the U.S. for our composite and metal aircraft structural operations. The new UAV assembly site opened in 2024 in Israel is already operational and the new munitions production site in Ramat Beka in southern Israel is partially operational, with additional factories expected to join production gradually (see also “Property, Plants and Equipment”– below).
We are increasingly integrating AI, robotics, advanced analytics and advanced production management into our manufacturing facilities. We have formed dedicated teams to integrate AI capabilities into our portfolio and technology solutions and to increase productivity across internal enterprise processes, including supply chain management, engineering workflows, inventory oversight, and project execution. During 2025, we focused on improving operational efficiency by using these technologies to modernize our manufacturing capabilities and support our growth.
We are also continuing our efforts to reduce supply chain disruptions that have increased in recent years, including by increasing inventories and optimizing inventory planning.
Principal Market Environment
The nature of military and homeland security requirements has evolved in recent years following the conflicts in Eastern Europe and the Middle East and the growing geopolitical instability in the Asia Pacific region. Governments around the world have announced plans to increase defense spending and to increase demand for a range of advanced capabilities to better prepare for near peer high intensity conflicts.
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This global trend has increased demand in the areas of C4ISR systems, cyber-defense systems, network centric information and operational systems, intelligence gathering systems, border and perimeter security systems, unmanned aircraft systems, unmanned surface vessels, autonomous systems, land and aerial precision munitions, tank, artillery and mortar munitions, vehicle survivability and force protection systems, signal intelligence (SIGINT) and electronic warfare (EW) systems, space and satellite-based defense capabilities and homeland security solutions. The technological advances in commercial technologies have led to increasing demand for technological solutions that incorporate digital transformation, including AI, big data analytics, robotics, automation and information assurance by military forces. Moreover, there is a continuing demand for cost-effective logistic support and training and simulation services, and overall integrated solutions for the modern battlefield. We believe our synergistic approach of finding solutions that combine elements of our various activities positions us to meet evolving customer requirements in many of these areas.
We tailor and adapt our technologies, integration skills, market knowledge and operationally-proven systems to our customers' requirements in both existing and new platforms. By upgrading existing platforms with advanced technologies, we provide customers with cost-effective solutions, and our customers are able to improve their technological and operational capabilities within limited budgets. Our experience in providing “systems of systems” enables us to provide overall solutions in a range of areas to meet our customers’ comprehensive defense, homeland security and safety needs.
Following recent conflicts, governments around the world are striving to achieve independent capabilities by focusing on the utilization of local defense industries. We believe Elbit Systems' global presence via its subsidiaries as well as its partnerships with leading defense companies worldwide is a significant advantage for the Company.
In light of supply chain challenges since October 7, 2023, the IMOD announced a “Blue and White” strategy in 2024 that involves expanded investment in local production of defense systems and critical components to decrease its dependency on external suppliers. Implementation of this strategy has been reflected in several awards to Elbit Systems, and may lead to additional awards to the Company in the future.
Segments
The Company reports segment information in five segments, four of which are organized based on the nature of the products and services offered, and one geographic segment.
The Company’s five reportable segments are:
–Aerospace – mainly provides products and systems for airborne platforms, unmanned aerial solutions, precision guided munition (PGM) sensors, aerostructures, training and simulator systems, flight academy solutions, and commercial aviation systems.
–C4I and Cyber – mainly provides command, control, communications, computer, intelligence, surveillance and reconnaissance (C4ISR) systems, data links and radio communication systems and equipment, cyber intelligence solutions, autonomous solutions and homeland security solutions.
–Intelligence, Surveillance, Target Acquisition and Reconnaissance (ISTAR) and Electronic Warfare (EW) – mainly provides a wide range of electro-optic laser solutions and countermeasure systems and products, naval systems and a wide range of EW systems and SIGINT systems.
–Land – mainly provides land-based systems and products for armored and other military vehicles, artillery and mortar systems, munitions for land, air and sea applications including PGM, armored vehicle and other platforms’ survivability and protection systems.
–ESA – mainly provides products and systems solutions to U.S. military, foreign military sales (FMS/FMF), homeland security (HLS), medical instrumentation and commercial aviation customers.
Many of the Company's projects and programs are performed across these segments and employees and managers are encouraged to cooperate on such common projects. It is common for the reportable segments to provide their products to the same customers either through joint projects or by marketing and offering combined and integrated solutions containing a variety of capabilities, products, and technologies of the Company’s portfolio from various businesses or subsidiaries, all tailored to satisfy the customer’s or project’s specific requirements. Management also remains focused on the consolidated results as an important measure of performance, particularly given the high level of cooperation among the segments.
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The following is additional information on each of our segments. Additional financial information on the segments is provided in Item 5. Operating and Financial Review and Prospects and in Item 18. Financial Statements – Notes 1, 2AC and 23.
Aerospace. Elbit Systems Aerospace offers a range of solutions including unmanned systems, training solutions, head mounted displays, avionics, PGM sensors, aerostructures and next generation aerial C4I and intelligence-gathering products and systems that are at the core of network-centric and multi-domain operations.
The Aerospace segment portfolio includes the following main capabilities:
Unmanned Aircraft Systems (UAS)
Our portfolio of UAS includes integrated UAS (sometimes referred to as remote piloted vehicles, or RPVs) in various categories and for a range of applications, as well as UAS training systems. The systems include airborne platforms, ground control stations, communication systems and various payloads, including stabilized electro-optic, electronic intelligence (ELINT) and communications intelligence (COMINT) payloads that can be adapted for various types of UAS.
Military Aircraft and Helicopter Systems
We offer a range of airborne systems and products that enhance operational capabilities and extend aircraft life cycles, ranging from a single sensor to an entire cockpit avionics suite. Our systems are integrated on fixed and rotary-wing, eastern and western, new and mature aircraft.
We design and supply advanced helmet-mounted systems, including helmet-mounted displays (HMD) for fixed-wing and rotary-wing aircraft.
Under our fixed-wing aircraft and helicopter upgrade programs, we integrate advanced electronic, communication, navigation, electro-optic and EW systems, such as integrated flight deck systems, mission management computers, displays, digital maps and digital recorders, head-up displays, airborne intelligence-gathering systems, PGM sensors, aircraft structural components and a range of aircraft tactical, virtual, appended and embedded trainers and simulators.
Training Solutions and Support
Our training solutions include simulators with embedded virtual training capabilities for air, land, and naval operations and joint multi-domain training. We establish training centers worldwide and offer comprehensive flight academy solutions and services. We also supply logistic support services for airborne platforms, including repair and maintenance centers.
Commercial Aviation Systems and Aerostructures
Our portfolio of commercial aviation systems includes a range of systems and products for the commercial and business aviation market that are employed on fixed-wing aircraft and commercial helicopters. Our commercial aviation systems in the business aviation, commercial helicopter and air transport areas include full avionic suites, enhanced flight vision products and various other avionics products such as display, communication and flight management systems. We also provide aerostructure products such as pressurized and non-pressurized doors, composite beams and winglets.
C4I and Cyber. Elbit Systems C4I and Cyber offers a range of C4I, communication, autonomous systems and digital intelligence and cyber capabilities providing digital networked warfare solutions to military forces, intelligence agencies, homeland security forces, law enforcement agencies and first responders.
The C4I and Cyber segment portfolio includes the following main capabilities:
Communications
The Communications portfolio includes secured and resilient tactical software defined radios (SDR), HF, VHF and UHF radio and communication systems and products, from single-soldier radios to full-scale militaries, supporting multi-domain operations. Our satellite-on-the-move solutions enable users to share voice, video and data beyond line of sight while on the move. Our solutions support robotic autonomous systems and manned unmanned teaming (MUM-T) operations. Our communication network solution enables over-the-air control, monitoring and configuring of military wide networks and integrated Radio over IP (ROIP).
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Network Combat Systems (C4I)
Elbit Systems C4I and Cyber supports the digitization and modernization of Defense and HLS capabilities enhancing operational effectiveness. Our system engineering and integration capabilities are underpinned by our C4I, sensor and effector expertise combined with a broad portfolio of military grade tactical hardware for dismounted, mounted and fixed applications. Our solutions incorporate a cloud enabled, open standard architecture framework enabling seamless connectivity and interoperability across a multi-domain environment while maintaining an evergreen upgradable approach to enable upgrades to address future battlefield requirements.
Intelligence and Cyber
Our Intelligence & Cyber portfolio includes big data and analysis solutions that provide intelligence, military and law enforcement agencies with timely and actionable intelligence on a range of threats. Our solutions are designed to integrate secure cloud-based and defense driven generative AI products. Our end-to-end solutions aggregate and fuse large volumes of data from a wide spectrum of intelligence sources, including HUMINT, COMINT, WEBINT, OSINT and, IMINT and apply advanced information technologies, including big data, AI and machine learning, to analyze the data. We also provide advanced cyber protection tools to protect network endpoints.
Robotics and Autonomy Systems & Sensing (RAS-S)
We design, integrate and deploy a range of robotic and autonomy systems (RAS). We also develop and produce sensors using a variety of technologies such as light detection and ranging (LIDAR), ultra wide band (UWB) and physical intelligence (PhysInt), for specific tactical mission requirements. We provide comprehensive, multi-layered solutions for one-to-many autonomous swarms and platforms capable of performing tactical operational missions or human-machine teaming by unmanned ground platforms and military-grade tactical drones. Our open architecture modular approach enables integration of robotic systems, sensors and effectors tailored to the operational requirements of the customer.
ISTAR and EW. Elbit Systems ISTAR and EW designs, manufactures and supports a diverse range of systems and sensors that leverage our advanced technological capabilities across electro-optics (EO), lasers and the electromagnetic spectrum. These systems and sensors are incorporated into comprehensive solutions for aerospace, ground and maritime applications. Our systems, sensors and applications can be provided standalone to defense customers or integrated into a solution provided by the Company's other segments and by other defense prime contractors.
The ISTAR and EW segment portfolio includes the following main capabilities:
Optronics and Laser Systems
The Optronics and Laser Systems portfolio includes self-protection suites, electronic countermeasure systems and sensors, surveillance and intelligence sensors for airborne, ground and naval platforms and payloads for unmanned platforms.
Our portfolio of EO systems and solutions includes integrated vision and targeting solutions, laser range-finders and laser designators, stabilized payloads, electro-optic intelligence, surveillance and reconnaissance (ISR) systems and DIRCM systems, as well as multiple vision-enhancing solutions for military forces and multi-spectral payloads and telescopes for space applications. We are a leading supplier of laser technology for military applications including high-power laser (HPL) technology and solutions.
HPL is a high-end evolving application, where high power levels are required. With superior performance and response, adjusted to extreme maneuvering, HPL is intended to provide optimal focus and line of sight, as well as advanced tracking and beam shaping capabilities.
Based on decades of experience in laser technology and advanced EO systems, the Company has been appointed as the developer and provider of military grade HPL by the IMOD, which in 2024 awarded a contract to the Company to supply HPL systems for the “Iron Beam” air defense system. The first Iron Beam system was delivered to the IMOD in 2025.
The Company continues to invest in the development of HPL technologies and solutions (including its HPL airborne solution) that it believes will present a leap forward in future defense against various threats. We have allocated significant engineering resources to this initiative, leading to substantial technical progress and the achievement of key developmental milestones to date. The Company is under a contract for the development and supply of its HPL airborne solution for fighter aircraft and helicopter platforms of the IDF.
The Company also engages in the field of energy weapons, including high‑power microwave (HPM) technologies intended for defense applications.
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Electronic Warfare (EW), Signal Intelligence (SIGINT) and Radar Systems
Our EW and SIGINT portfolio includes intelligence, defensive and offensive solutions for a range of military applications. We provide EW self-protection suites, including radar warning receivers and laser warning systems, for airborne and maritime platform types. We also provide infrared missile warning systems for combat aircraft, as well as for other fixed-wing and rotary-wing platforms, and electronic support solutions for threat identification.
We provide SIGINT systems for tactical and strategic intelligence-gathering including electronic intelligence (ELINT) and electronic countermeasures for naval, ground and airborne applications, communication intelligence (COMINT) and communication jamming systems, counter-improvised explosive devices (CIED) jamming systems for ground forces, counter unmanned aircraft system (C-UAS) and cyber protection capabilities. We also supply command and control systems and simulators for anti-ballistic missiles programs.
Our portfolio also includes radars including unique AI-based multi mission radars capable of detecting, tracking and identifying multiple targets, including humans, vehicles, drones, helicopters, aircraft and vessels simultaneously, in the air, on the ground and at sea. We also provide passive radars for air defense and surveillance applications and ground-based tactical man-carried surveillance radars.
Naval Combat Management and Sonar Systems
We provide unmanned surface vessels (USV) for mine counter-measure (MCM) and anti-submarine warfare (ASW) missions, equipped with an array of sonars and underwater acoustic payloads.
Land. Elbit Systems Land segment provides products and systems for ground forces including military vehicle systems, artillery and mortar systems, rocket artillery systems, active protection systems for vehicles, and a range of air and ground launched precision guided munitions and ammunition. Elbit Systems Land provides solutions for a wide range of threats and operational scenarios for the land, air, and naval arenas. The activities of IMI Systems Ltd., acquired in 2018, were integrated into Elbit Systems Land.
The Land segment portfolio includes the following main capabilities:
Indirect Fire Systems
We provide a range of self-propelled automatic and semi-automatic 155mm howitzers that are designed to be adaptable and mounted on a broad range of truck chassis. We also provide fully automatic rocket-launchers that can launch a broad variety of precision-guided and free-flying rockets with various effective ranges. Our comprehensive mortar and tactical precision firepower solutions include mortar systems integrated on a variety of platforms and a range of 120mm mortar ammunition.
Turrets and Weapons Systems
We design, develop, manufacture and integrate turrets and weapon systems for ground combat vehicles including main battle tanks, armored personnel carriers and infantry fighting vehicles. Our portfolio includes remote-controlled weapon systems, manned and unmanned turrets, tanks and combat vehicle upgrade and modernization solutions, situational awareness systems and other combat vehicle systems.
Ammunition and Munition Systems
Elbit Systems Land develops and manufactures a comprehensive array of precision munitions, precision-guided rockets and missiles, artillery ammunition, tank munitions, explosives, air-to-ground precision strike systems as well as aircraft protection systems including expendable countermeasures. Our small caliber ammunition facility manufactures a complete range of small arms ammunition, ranging from 5.56 mm to 0.50 (12.7mm) calibers.
Active Protection Systems
We provide advanced survivability solutions for combat vehicles. For example, our Iron Fist Active Protection System (APS) provides a multi-layer active armor protection solution and we also supply soft-kill systems. Our advanced combat vehicle systems provide full 360-degree situational awareness in an open architecture as well as integrating the APS. Our solutions are offered as standalone to combat vehicle manufacturers or as part of combat systems provided by Elbit Systems.
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ESA. ESA, a Delaware limited liability company, mainly provides products, system solutions, and support services focused on the defense, homeland security, law enforcement, commercial aviation, and medical instrumentation markets. Most of ESA's revenues are derived from the U.S. government, its allies and large prime U.S. defense contractors.
ESA provides a range of capabilities from advanced electro-optics to maintenance and repair of complex military hardware and systems, commercial aviation and medical instrumentation. These capabilities are used on land, in the sea, and in the air. In addition to developing and manufacturing advanced solutions, we maintain the systems and components we create, and we frequently maintain systems originally manufactured by other contractors.
ESA frequently acts as a prime contractor in the U.S. for the products and services of the Company's other segments, leveraging the Company's wide technologies and capabilities. The ESA portfolio includes various capabilities based on the technologies and solutions of the Company's other segments, as well as U.S. originated capabilities.
The ESA portfolio includes the following main capabilities:
–Airborne holistic situational awareness and decision-making through helmet mounted displays, head-down displays, head-up displays, and mission computers, airborne electronic warfare solutions, and electro-optical infrared systems. This includes a commercial aviation portfolio with a line of air data products, cockpit instrumentation and vision systems. ESA also offers Aftermarket Sustainment and Support services.
–Next-generation warfighter systems through advanced night vision and digital soldier systems.
–Ground combat vehicle systems such as mobile tactical cannons, turrets, vehicle protection systems, 360-degree situational awareness solutions and vehicular components.
–Counter intrusion and border protection systems and Counter-Unmanned Aerial Systems (C-UAS).
–Electro-optics and precision targeting solutions, multi-modal seekers, mortar weapon systems and munitions, as well as launched effects and loitering munitions.
–ESA also has two U.S. subsidiaries that offer additional capabilities:
–Sparton, which provides Maritime solutions, networks, and communications through sonobuoys and undersea warfare systems; and
–KMC Systems, doing business as HiArc, which is a premier engineering design and manufacturing partner for Life Science and Diagnostic customers, specializing in intelligent workflow automation and high-throughput clinical platforms.
Revenues
The following table provides our consolidated revenues by geographic region, expressed as a percentage of total revenues for the years ended December 31, 2023, 2024 and 2025:

| 2023 |  | 2024 |  | 2025
Israel | 19% |  | 29% |  | 32%
North America | 24% |  | 22% |  | 21%
Europe | 30% |  | 27% |  | 27%
Asia-Pacific | 21% |  | 17% |  | 16%
Latin America | 2% |  | 2% |  | 1%
Others | 4% |  | 3% |  | 3%

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Subsidiary Organizational Structure
Our beneficial ownership interest in our major subsidiaries is set forth in Exhibit 8 to this annual report. Our equity and voting interests in these entities are the same as our beneficial ownership interests.
Below is a general description of our major subsidiaries, each of which is wholly-owned. We also have other smaller wholly and partially owned subsidiaries and investments in companies in Israel, Europe, North America, South America and Asia-Pacific (including among others in Germany, the UK, Sweden, Switzerland, Brazil, Romania, Hungary, India, Australia and the United Arab Emirates) that conduct marketing, engineering, manufacturing, logistic support and other activities, principally in the entity’s local market. Our subsidiaries generally operate across our segments, often in collaboration with us and with other subsidiaries.
ESA. Elbit Systems of America, LLC (ESA), and its subsidiaries, provide products and systems solutions focusing on U.S. military, homeland security, medical instrumentation and commercial aviation customers. ESA and its subsidiaries have operational facilities in Fort Worth, Texas; Merrimack, New Hampshire; Charleston, South Carolina; Talladega, Alabama; Roanoke, Virginia; Fairfax, Virginia; Birdsboro, Pennsylvania; Boca Raton, Florida and DeLeon Springs, Florida. ESA also has a 50% interest in a joint venture with Collins Aerospace, a unit of Raytheon Technologies Corp., which is engaged in the area of helmet-mounted display systems for fixed-wing military and para-military aircraft. ESA acts as a contractor for U.S. Foreign Military Financing (FMF) and Foreign Military Sales (FMS) programs. See below “Governmental Regulation – Foreign Military Financing (FMF)”. Each of ESA’s operational facilities has engineering and manufacturing capabilities. ESA’s manufacturing facilities in Alabama, Texas, New Hampshire, Virginia and Florida also have significant maintenance and repair capabilities. See below “Manufacturing” and “Customer Satisfaction and Quality Assurance”.
ESA, Elbit Systems and intermediate Delaware holding company subsidiaries are parties to a Special Security Agreement (SSA) with the DoW. The SSA provides the framework for controls and procedures to protect classified information, controlled unclassified information and export-controlled data. The SSA allows the ESA companies to participate in classified U.S. government programs even though, due to their ownership by Elbit Systems, the ESA companies are considered to be under the control of a non-U.S. interest. Under the SSA, a Government Security Committee of ESA’s board of directors was permanently established to supervise and monitor compliance with ESA’s export control and national security requirements. The SSA also requires ESA’s board of directors to include outside directors who have no other affiliation with the Company. ESA’s board of directors also includes an officer of ESA and up to two inside directors, who have other affiliations with the Company. The SSA requires outside directors and officers of the ESA companies who are directors, and certain other senior officers, to be U.S. resident citizens and eligible for DoW personnel security clearances.
Sparton DeLeon Springs, LLC (Sparton DeLeon Springs), a subsidiary of ESA and Sparton Corporation (Sparton), is a party to and operates under a Proxy Agreement to which ESA, Elbit Systems and the DoW are also parties. The Proxy Agreement is necessary because Sparton DeLeon Springs performs sensitive programs that require additional protection from a U.S. national security perspective. Under the Proxy Agreement, three independent proxy holders, who have no prior affiliation with Sparton DeLeon Springs, Elbit Systems or ESA, govern the affairs of Sparton DeLeon Springs and monitor compliance with the U.S. government’s export control and national security requirements. The Proxy Holders and certain senior officers of Sparton De Leon Springs must be resident U.S. citizens and eligible for DoW personnel security clearances.
C4I and Cyber. Headquartered in Netanya, Israel, Elbit Systems C4I and Cyber Ltd. (C4I and Cyber) is engaged in the worldwide market for C4ISR systems, data links and radio communication systems and equipment, cyber intelligence solutions, autonomous solutions and homeland security solutions.
Elisra. Based in Holon, Israel, Elbit Systems EW and SIGINT – Elisra Ltd. (Elisra) provides a wide range of EW systems, SIGINT systems and C4ISR technological solutions for the worldwide market.
Elop. Based in Rehovot, Israel, Elbit Systems Electro-optics Elop Ltd. (Elop) designs, engineers, manufactures and supports a wide range of electro-optic and laser systems and products mainly for defense, space and homeland security applications for customers worldwide.
ELS. Headquartered in Ramat HaSharon, Israel, Elbit Systems Land Ltd. (ELS) is engaged in the design and manufacture of land-based systems and products for armored and other military vehicles, artillery and mortar systems.
IMI. Headquartered in Ramat HaSharon, Israel, IMI Systems Ltd. (IMI) is engaged in the design and manufacture of a wide range of precision munitions for land, air and sea applications and guided rocket systems, as well as armored vehicle and other platforms survivability and protection systems for defense and homeland security applications.
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Mergers, Acquisitions and Divestitures
Part of our growth strategy includes our continued activity in mergers and acquisitions and joint ventures with respect to businesses, assets and complementary technologies both in Israel and internationally. The Company’s structure often enables us to benefit from synergy with our overall capabilities while at the same time allowing us to focus on local requirements. Our acquisitions enhance our customer reach by strengthening in‑country relationships, supporting customer‑specific research and development and production requirements, and improving our supply‑chain, delivery and sales capabilities through localization.
We continue our efforts to pursue acquisition and investment opportunities that meet our strategic goals and acquisition criteria in key markets For example, in 2025 we entered into an agreement to acquire the remaining equity interest in UAV Tactical Systems Ltd. (U-TacS), which was executed in 2026. Originally established in 2005, U-TacS specializes in advanced tactical unmanned aerial systems.
We regularly evaluate our merger and acquisitions strategy to optimize our portfolio. In addition, we continue to evaluate our portfolio of solutions and assets and from time to time pursue divestiture of businesses that are not considered to be core to our strategy. In 2025 C4I and Cyber sold its shares in Robo-Team Holdings Ltd.
Property, Plants and Equipment
Facilities Owned or Leased by the Company (square feet)

| Israel(1) |  | U.S.(2) |  | Other Countries(3)
Owned | 1,658,140 |  | 977,124 |  | 881,916
Leased | 7,844,631 |  | 968,407 |  | 754,362

(1)Includes offices, development and engineering facilities, manufacturing facilities, maintenance facilities, hangar facilities and landing strips in various locations in Israel.
(2)Includes mainly offices, development and engineering facilities, manufacturing facilities and maintenance facilities of ESA, primarily in Texas, New Hampshire, South Carolina, Florida, Alabama and Virginia. The facilities in New Hampshire, Florida and Alabama are located on owned land totaling approximately 150 acres. Universal Avionics Systems Corporation's facilities are located in Arizona, Washington and Georgia, of which 166,000 square feet are owned and 83,000 square feet are leased.
(3)Includes offices, design and engineering facilities and manufacturing facilities in Europe, Latin America, Canada and Asia-Pacific.
Recent Investment in Facilities. Over the last two years the average annual net investment in our facilities, including land and buildings, equipment, machinery and vehicles, amounted to approximately $220 million. We believe that our current facilities, the vast majority of which are utilized, are adequate for our operations as now conducted.
The Company is in the process of completing the construction of a new munitions production site in Ramat Beka in southern Israel at a scale of approximately 860,000 square feet. Production has commenced at the site and is expected to gradually increase during 2026 and thereafter. In accordance with our understandings with the Israel Land Authority and in light of the continued increased production rate, the Company's evacuation date for its Ramat HaSharon facility in Israel has been extended several times, with the most recent extension until the end of 2026.
For further information see “Manufacturing” below and Item 18. Financial Statements – Notes 10 and 21G.
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Governmental Regulation
Government Contracting Regulations. We operate under laws, regulations, administrative rules and other legal requirements governing defense and other government contracts, mainly in Israel and the United States. Some of these legal requirements carry major penalty provisions for non-compliance, including disqualification from participating in future contracts. In addition, our participation in governmental procurement processes in Israel, the United States and other countries is subject to specific regulations governing the conduct of procuring defense and homeland security contracts, including rigorous requirements in the area of cybersecurity, information assurance and supply chain assurance.
Israeli Export Regulations. Israel’s defense export policy regulates the sale of a number of our systems and products, as well as certain technologies and services. Current Israeli policy encourages exports to approved customers of defense systems and products such as ours, as long as the exports are consistent with Israeli government policy. Subject to certain exemptions, a license is required to initiate marketing activities. We also must receive a specific export license for defense-related hardware, software and technology exported from Israel. Israeli law also regulates export of “dual use” items (items that are typically sold in the commercial market but that also may be used in the defense market). In 2025, approximately 68% of our revenue was derived from exports which were subject to Israeli export regulations.
U.S. and Other Export Regulations. ESA’s export of defense and dual use products, as well as defense-related technical data and defense services to Israel and other countries, is subject to applicable authorizations of the U.S. government, typically under the U.S. International Traffic in Arms Regulations (ITAR) and the U.S. Export Administration Regulations (EAR). Such authorizations may be in the form of export and import licenses, as well as technical assistance agreements (TAAs) or manufacturing license agreements (MLAs) for transfers of technical data and performance of defense services. These requirements also apply to any other U.S. entities who export defense products or defense-related services and technology to our Israeli and other non-U.S. entities, in order to perform work for U.S. programs or to work with U.S. contractors in third countries. Employment by our U.S. affiliated companies of Israeli nationals assigned to work in defense-related technical areas is also subject to licensing requirements. Applications for export authorizations require disclosure of information regarding the intended sales and users of the applicable hardware, software or technology. The U.S. government may deny an export authorization if it determines that a transaction is counter to U.S. policy or national security. Our business is also affected by other governments’ export regulations, including with respect to end user restrictions of our suppliers’ governments.
Regulation of Israeli Defense Entities. The Israeli Defense Entities Law establishes conditions for the approval of an acquisition or transfer of “means of control” of an entity that is designated as an Israeli “defense entity” pursuant to this law. Designation as a “defense entity” occurs through an order to be issued jointly by the Israeli Prime Minister, Defense Minister and Minister of Economy. No such orders for Elbit Systems have been issued as of the date of this annual report. However, in 2021, the IMOD initiated a process under which it intends for the Israeli government to designate Elbit Systems and most of our Israeli subsidiaries as “defense entities”.
Orders to be issued under the Israeli Defense Entities Law may establish various conditions and restrictions. It is likely that Israeli government approval will be required for acquisition of a specific percentage of shares or voting rights in Elbit Systems that would constitute “means of control” under the law. “Means of control” for this purpose could include, for example, the right to vote a specified percentage of shares at a shareholders’ meeting or to appoint a director. Orders relating to “defense entities”, including the orders that are expected to be issued with respect to the Company, would likely also, among other matters: (1) impose restrictions on the ability of Israeli or non-Israeli resident citizens to hold means of control or be permitted to “substantially influence” such entities; (2) require that senior officers have appropriate Israeli security clearances; (3) require that the entity’s headquarters be in Israel; (4) require the approval of the IMOD to enter into certain joint ventures and mergers or to transfer certain technology or means of manufacturing; and (5) require such entities to maintain essential production lines and development capacities in Israel.
Since the IMOD initiated the process mentioned above, discussions have taken place between Elbit Systems and the IMOD regarding the terms, scope and contents of the orders. Additional discussions took place in 2025 and 2026. Our understanding is that the discussions have reached final stages, and we were informed that the IMOD is about to initiate the formal process for approvals required under the Israeli Defense Entities Law. The Company is not in a position to evaluate if or when such orders will be approved by the relevant government authorities and ministers (including the signatures of ministers) and become effective. Such orders, if and when issued, will be published and available to the public in a manner like that of Israeli legislation. In parallel to the finalization of the orders, the Israeli government is anticipated to issue a control and acquisition permit to the existing controlling shareholders of the Company.
As a condition to our acquisition of IMI in 2018, the Israeli government issued an order that requires Israeli government approval in the event of a sale of a controlling interest in IMI.
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Under separate regulations, Elbit Systems and our major Israeli subsidiaries have been designated as “defense companies” by the Defense Minister with respect to Israeli law governing various other aspects of defense security arrangements.
Approval of U.S. and Other Defense Acquisitions. Many countries in addition to Israel require governmental approval of acquisitions of local defense companies, businesses or assets by foreign parties. Mergers and acquisitions of defense-related and other potentially sensitive businesses in the U.S. are subject to the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). Under FIRRMA, our acquisitions of defense-related and other potentially sensitive businesses in the U.S. may, in some cases, require review and approval by the Committee on Foreign Investment in the United States (CFIUS). CFIUS has the authority to impose additional restrictions through National Security Agreements (NSA) as part of its review and approval of the acquisitions as well as monetary penalties or other adverse actions in response to non-compliance with CFIUS regulations or NSAs. ESA is subject to several NSAs.
“Buy American” Laws. The U.S. “Buy American” laws impose price differentials or prohibitions on procurement of products purchased under U.S. government programs. The price differentials or prohibitions apply to products that are not made in the United States or that do not contain U.S. components making up at least 65% of the total cost of all components in the product. However, the current Memorandum of Agreement between the United States and Israeli governments qualifies Israeli products as “U.S. content” for the purposes of the Buy American laws for specified products, including most of the products currently sold in the United States by Elbit Systems and our Israeli subsidiaries.
Foreign Military Financing (FMF). ESA participates in United States FMF programs. These programs require countries, including Israel, receiving military aid from the United States, to use the funds to purchase products containing mainly U.S. origin components. In most cases, subcontracting under FMF contracts to non-U.S. entities is not permitted. As a consequence, ESA generally either performs FMF contracts itself or subcontracts with U.S. suppliers. The U.S. government may authorize the IMOD to utilize a portion of the FMF budget under the United States Subcontracting Procurement (USSP) channel. In such cases, companies such as Elbit Systems or our Israeli subsidiaries, who are acting as the Israeli prime contractor to the IMOD under the NIS-funded portion of an IMOD program, are authorized to negotiate and enter into a subcontract directly with a U.S. supplier. However, payment of the funds under a USSP channel subcontract is administered by the IMOD Purchasing Mission to the U.S. The scope of such USSP channel authorization has increasingly required that the funds be used in U.S. dollars. We believe our U.S. subsidiaries, which are U.S. operating companies, are well positioned to engage in U.S. dollar-funded FMF programs. ESA also participates in U.S. Foreign Military Sales (FMS) programs.
Procurement Regulations. Solicitations for procurement by governmental purchasing agencies in Israel, the United States and other countries are governed by laws, regulations and procedures such as those relating to procurement integrity, including due diligence, avoiding conflicts of interest and corruption, and meeting information assurance and cyber-security requirements. Such regulations also include provisions relating to the avoidance of human trafficking and counterfeit parts in the supply chain. In view of the ongoing conflict between Russia and Ukraine, various countries and organizations have adopted specific sanctions, export controls and other regulations to restrict, among other things, the use of certain goods and technologies originating from Russia. Similarly, the United Stated has adopted specific regulations to restrict, among other things, the procurement of goods or services from specific Chinese entities. China has also applied counter restrictions on sales to the United States. Such regulations and restrictions apply to us, as well as our supply chain.
Anti-Bribery/Corruption Regulations. We conduct operations in a number of markets that are considered high risk from an anti-bribery/anti-corruption compliance perspective. Various laws and regulations, including certain provisions of the Israel Penal Code, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act and corresponding legislation in other countries, prohibit providing personal benefits or bribes to government officials in connection with the governmental procurement process. Israeli defense exporters, such as Elbit Systems, are required to maintain and follow an anti-bribery/corruption compliance program.
Cybersecurity and Data Privacy Regulations. Certain data relating to our employees and third parties including among others, customers and suppliers that we receive and maintain is subject to data privacy regulations, including those of the EU (the General Data Protection Regulation), the U.S. (including U.S. state laws) and Israel. In recent years, there has also been an increased focus on cybersecurity, including related to personal privacy, cybersecurity and data protection. We are required to comply with evolving and increasingly complex cybersecurity regulations and guidelines in the Europe, the U.S., Israel and elsewhere with respect to reporting and public disclosure of adverse events and additional requirements for avoiding or responding to such events.
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In August 2024, the Israeli Knesset amended the Privacy Protection Law, 5741 – 1981 (the Privacy Protection Law), aiming to address challenges related, among others, to the protection of personal information. The amendment, which came into force in August 2025, provides additional enforcement measures to the Israeli Privacy Protection Authority and requires certain defense companies to appoint an internal supervisor to oversee and monitor the implementation of the Privacy Protection Law within the organization and provide annual and ongoing reporting internally and to the head of the Israeli privacy protection authority.
Audit Regulations. The IMOD audits our books and records relating to its contracts with us. Our books and records and other aspects of projects related to U.S. defense contracts are subject to audit by U.S. government audit agencies. Such audits review compliance with government contracting cost accounting and other applicable standards. If discrepancies are found this could result in a downward adjustment of the applicable contract’s price as well as imposition of potential penalties. Some other customers have similar audit rights under specific regulations or contract provisions.
Competition Laws. Competition laws and regulations in Israel, the United States and other countries often require governmental approvals for transactions that are considered to limit competition. Such transactions may include the formation of joint venture entities, cooperative agreements for specific programs or areas, as well as mergers and acquisitions.
Munitions Regulations. Sales of certain types of munitions we produce are subject to various domestic laws and international conventions.
Civil Aviation Regulations. Several of the products sold by Company entities for commercial aviation applications are subject to flight safety and airworthiness standards of the U.S. Federal Aviation Administration (FAA) and similar civil aviation authorities in Israel, Europe and other countries.
Food and Drug Administration Regulations. Medical products designed and manufactured by ESA’s Medical Instruments – HiArc business unit are subject to U.S. Food and Drug Administration (FDA) regulations.
Environmental, Health and Safety Regulations. We are subject to a variety of environmental, health and safety laws and regulations in the jurisdictions in which we have operations. This includes regulations relating to air, water and ground contamination, hazardous waste disposal and other areas with a potential environmental, health or safety impact.
In January 2023, the European Commission's Corporate Sustainability Reporting Directive (CSRD) came into force, which requires in-scope companies, among other things, to prepare sustainability reports including certain mandatory and voluntary disclosures on impacts, risks and opportunities in relation to certain sustainability matters. Currently, the CSRD is not applicable to the Company, however it may in the future apply with respect to certain of our European subsidiaries. Other regulations, such as the California Climate Disclosure law, are or may in the future be applicable to certain activities and/or subsidiaries of the Company. The Company faces meaningful regulatory risks due to evolving climate change requirements from these and other regulatory authorities, which could result in increased compliance costs, disclosure obligations and potential legal liabilities.
Industrial Participation/Offset
As part of their standard contractual requirements for defense programs, many of our customers include “Industrial Participation” or “offset” provisions. These provisions are typically obligations that require us to make, or to facilitate third parties to make, various specified transactions in the customer’s country, such as procurement of defense and commercial products, investment in the local economy, collaborations with academic institutions and transfer of know-how. For further information about Industrial Participation/ offset obligations, see Item 5. Operating and Financial Review and Prospects – Off-Balance Sheet Transactions.
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Financing Terms
Types of Financing. There are several types of financing terms applicable to our contracts. In some cases, we receive progress payments related to our progress in performing the contract. Sometimes we receive advances from the customer at the beginning, or during the course, of the project, and sometimes we also receive payments for achieving specific milestones. In some programs we extend credit to the customer, sometimes based on receipt of guarantees or other security. In other situations work is performed before receipt of the payment, which means that we finance all or part of the project’s costs for various periods of time. In some cases, we enter into arrangements in which we sell our rights under certain accounts receivables from our contracts with customers, on a non-recourse basis, to advance payments on their account. See Item 18. Financial Statements – Notes 2AA and 2AD.
Financing arrangements may extend beyond the term of the contract’s performance. When we believe it is necessary, we seek to protect all or part of our financial exposure by letters of credit, insurance or other measures, although such measures are not readily available in some cases or may not fully cover our risk. In some cases, third parties, such as banks that provide financing to our customers in connection with our programs, have certain types of recourse to us in the event of a default in payment by our customers under their obligations to the financing banks.
Advance Payment Guarantees. When we receive advances prior to incurring contract costs or making deliveries, the customer frequently requires guarantees against advances paid. These guarantees are issued either by financial institutions or insurance companies, or by us. We have received substantial advances from customers under some of our contracts. In certain circumstances, such as if a contract is canceled for default and there have been advance or progress payments made, we may be required to return such payments to the customer as provided in the specific guarantee. As part of the guarantees we provide to receive advance or progress payments, some of our customers require us to transfer to them title in inventory acquired with such payments. See Item 5. Operating and Financial Review and Prospects – General – Long-Term Arrangements and Commitments – Bank and Other Financial Institution Guarantees.
Performance Guarantees. A number of projects require us to provide performance or product (warranty) guarantees in an amount equal to a percentage of the contract price. In certain cases we also provide guarantees related to our performance of Industrial Participation/ offset obligations. Some of our contracts contain clauses that impose penalties on us or reduce the amount payable to us if there is a delay or failure in performing in accordance with the contract or the completion of a phase of work, including in some cases during the warranty period. These types of guarantees may remain in effect for a period of time after completion of deliveries under the contract. Such guarantees are customary in defense transactions, and we provide them in the normal course of our business. See Item 5. Operating and Financial Review and Prospects – General – Long-Term Arrangements and Commitments – Bank and Other Financial Institution Guarantees.
Intellectual Property
Patents, Trademarks and Trade Secrets. We own hundreds of active patent families including patents and patent applications registered or filed in Israel, the United States, the European Patent Office and other jurisdictions. We also hold dozens of active trademark families relating to our products. A significant part of our IP assets relates to unique applications of advanced software-based technologies. Some of these applications are protected by patents, and others are considered as our trade secrets, know-how and proprietary information. We take a number of measures to safeguard our IP against infringement as well as to avoid infringement of other parties’ IP. For risks related to our IP see Item 3. Key Information – Risk Factors – Risks Related to Legal and Regulatory Requirements – Our business depends on proprietary technology that may be infringed or disclosed; our products may infringe third party rights.
Governmental Customers’ Rights in Data. The IMOD usually retains specific rights to technologies and inventions resulting from our performance under contracts for end use by the IMOD or the IDF. This generally includes the right to disclose the information to third parties, including other defense contractors that may be our competitors. When the IMOD funds research and development, it usually acquires rights in the data developed under such funding. We often may retain a non-exclusive license for such inventions. The Israeli government usually is entitled to receive royalties on export sales resulting from government financed development. However, if only our product is purchased without development effort, we normally retain the principal rights to the technology. Sales of our products to the U.S. government and some other customers are subject to similar conditions. Subject to applicable law, regulations and contract requirements, we strive to maintain our IP rights and provide customers with the right to use the technology only for the specific project under contract.
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Licensing. There are relatively few cases where we manufacture under license. Such licensing typically applies to the use of technologies that are the result of collaboration with academic institutions or where we are manufacturing another company’s product in accordance with that company’s specifications. In such cases, the licensor typically is entitled to royalties or other types of compensation. In some cases where we have acquired business lines we obtain a royalty-free license to use the applicable technology for specified applications. We also obtain licenses to use software tools in our engineering and development activities and utilize open source software licenses in projects where such use is appropriate. Occasionally, we license parts of our IP to customers or business partners as part of the requirements of a particular contract. We also sometimes license technology to other companies for specific purposes or markets, such as the right to manufacture certain components of our products or the right to use certain of our IP relating to the operation and adaptation of our training and simulation systems. Due to the growing trend of a number of governments requiring us to work with their local industries, such licensing has become more prevalent.
Research and Development
We invest in research and development (R&D) pursuant to a long-term plan that we update periodically based on estimated market needs. Our R&D efforts focus on anticipating operational needs of our customers, achieving reduced time to market and increasing affordability. We emphasize improving existing systems and products and developing new ones using emerging or existing technologies, including an increasing use of open source software and generative AI.
Our R&D projects relate to defense, homeland security and commercial applications. We perform R&D projects to produce new systems for the IMOD and other customers, sometimes in collaboration with our business partners. These projects give us the opportunity to develop and test emerging technologies. We develop tools for fast prototyping for both the design and development process. Fast prototyping permits the operational team members to effectively specify requirements and to automatically transfer them into software code. We also are engaged in long-term investments in science and technology infrastructure and building blocks, often in collaboration with academic bodies. We employ thousands of software, hardware and systems engineers. In addition, many of our program and business line managers have engineering backgrounds. About half of our total workforce is engaged in technology-related functions, including research, development and engineering.
Our companies in Israel have collectively been awarded the Israel Defense Prize 38 times, recognizing extraordinary contributions to defense technological innovations. In 2025, the Company was awarded the Israel Defense Prize for our role in three separate innovative defense technological projects: developing a breakthrough advanced system that represents a world-class technological achievement; developing and deploying unique operational capabilities that culminated in the elimination of Hezbollah Secretary-General Hassan Nasrallah; and producing technology for the IDF's Eitan Armored Personnel Carrier (APC).
Our customers, the Israel Innovation Authority in the Ministry of Economy and Industry and other R&D granting authorities sometimes participate in our R&D funding for our Israeli-based companies. Some of our subsidiaries outside of Israel receive funding of certain of their R&D activities from their respective governments or customers. We also invest our own funds in research and development activities. This investment is in accordance with our strategy and plan of operations. The table below shows amounts we invested in R&D activities for the years ended December 31, 2023, 2024 and 2025.

(U.S. dollars in millions) | 2023 |  | 2024 |  | 2025
Total Investment | $ | 502.6 |  |  | $ | 544.1 |  |  | $ | 599.6 |
Less Participation* | (78.2) |  |  | (77.7) |  |  | (82.5) |
Net Investment | $ | 424.4 |  |  | $ | 466.4 |  |  | $ | 517.1 |

*See above “Intellectual Property – Governmental Customers' Rights in Data” and see below – “Conditions in Israel – Israel Innovation Authority and Investment Center Funding”.
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Manufacturing
We manufacture and assemble our systems and products at our operational facilities in Israel, the U.S., Europe, India, Brazil and Australia, and at the facilities of certain of our subsidiaries in other countries. These facilities contain warehouses, electronic and other manufacturing areas, mechanical workshops, final assembly and test stations with test equipment. We also have supporting infrastructure including fully automated surface mount technology lines, robots and clean rooms for electro-optic components, solid state components integration, environmental testing and final testing, including space simulation and thermal chambers. We have computerized logistics systems for managing manufacturing and material supply. We have deployed and assimilated a new manufacturing execution system that that is integrated with our ERP system across our manufacturing plants, enhancing optimization, controlled decision making and Industrial Internet of Things implementation. A number of our manufacturing activities are provided on a shared services basis by several of our in-house centers of excellence.
As part of our global ESG strategy, we pursue environmentally friendly manufacturing activities and conduct ongoing measurements to reduce electricity, water and fuel consumption. We invest in technological solutions in our manufacturing processes that support environmental protection, such as the type of energy utilization and choice of components and materials.
We also manufacture and assemble composite materials, metal parts and machinery. One of our Israeli subsidiaries has a high technology semiconductor manufacturing facility where it performs electronic integration and assembly of thermal imaging detectors and laser diodes. We also manufacture and repair test equipment.
We manufacture commercial avionics and aircraft components, as well as perform maintenance, repair and overhaul at our U.S. FAA-registered facilities in the U.S. and Israel. We also manufacture medical equipment at U.S. FDA-registered facilities in the U.S.
As part of our efforts to protect our employees while maintaining business continuity during the “Swords of Iron” war and the conflict with Iran, we relocated some of our production lines to locations outside of areas of the country that were evacuated. All relocated production lines have returned to their original locations.
Seasonality
Although revenues may sometimes increase towards the end of a fiscal year, no material portion of the Company’s business is considered to be seasonal. The timing of revenue recognition is based on several factors. See Item 5. Operating and Financial Review and Prospects – General – Critical Accounting Policies and Estimates – Revenue Recognition.
Supply Chain
We conduct supply chain activities that consist of procurement, logistics and planning at most of our operational facilities. On a global company level, we use a “hybrid” operating model that combines various global procurement management, logistics and planning. By using this model, we strive to leverage economies of scale, develop centers of excellence and reduce supply chain cycle times and risks. The raw materials we use are generally available from a range of suppliers internationally. We generally do not depend on single sources of supply, however, in some cases limited sources are available to us and in certain projects, specific subcontractors are designated by the customer (sometimes with specific requirements for localization). In some cases our sources of supply are limited due to restrictions that we, the Israeli government, the U.S. government or others impose.
We use supplier performance and risk management tools and other methodologies to monitor suppliers’ on-time delivery and quality and encourage them to continuously improve their performance and reduce supply chain risks. We require our suppliers to adhere to our Supplier Code of Conduct and to comply with a range of procurement compliance standards, including those relating to the avoidance of human trafficking, anti-bribery, certain sanction requirements, counterfeit parts and conflict minerals. Our production strategy is usually “Make To Order” (MTO), where materials and products are purchased and manufactured following receipt of a customer purchase order.
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As a result of the conflict between Russia and Ukraine, the increased tension in the Middle East related to the “Swords of Iron” war and the imposition of, and changes in, tariffs, trade restrictions and other protectionist or retaliatory measures between the United States, China and other countries, there has been greater market volatility and uncertainty in recent years than in the past with respect to the costs of transportation to and from the region, the availability of which has become much more limited (due to factors such as attacks on shipping in the Red Sea), the costs and availability of some of the raw materials and components that we utilize (such as materials required to produce explosives and electronic components), as well as certain market shortages and limitations (including in some cases limitations on export to Israel) and delays in supply. With respect to certain materials our dependency on single sources of supply has increased. In some cases, we have increased our inventories in order to partially mitigate these supply chain disruptions, support the growing demand of the IMOD and maintain deliveries to our customers.
Customer Satisfaction and Quality Assurance
We invest in continuous improvement of processes, with emphasis on deficiency mitigation, aiming to achieve customer satisfaction throughout all stages of our operations. This includes development, design, integration, manufacturing and services for software and hardware, for the range of our systems and products. We measure our customers’ satisfaction and feedback annually, using unified questionnaires. Our quality teams are involved in assuring compliance with processes and administrating quality plans. These activities begin at the pre-contract stage and continue through the customer’s acceptance of the product or services.
We also use project management methods such as Kaizen and Lean. We evaluate such processes on a regular basis. Our processes are based on various engineering planning and developing tools. This infrastructure, together with recognized management methodologies and applications, assists us in our efforts to provide high quality and on-time implementation of projects. We have deployed an advanced ERP system in order to consolidate uniform best practices for quality and operations across the organization in one unified ecosystem across the Company. As part of the ERP ecosystem, we have deployed a Manufacturing Operations Management (MOM) system, which is an advanced Manufacturing Execution System (MES), to enhance our production efficiency and “Industry 4.0” processes. In this framework, we deployed digital transformation methodologies, introduced AI tools and integrated advanced analytics in our production lines. We also maintain applicable certifications for our information technology systems, as detailed below.
All Israeli operational sites are certified for one or more of the following: ISO-9001, ISO-90003 for software, AS9100 (certified for revision D and compliant with AQAP requirements), AS9115 for software, ISO-14001, ISO-45001, FAA Part 145 and European Aviation Safety Agency (EASA) Part 145 for maintaining civil products, Part 21 G for production of civil products and EMAR NLD-MAR-21 for production of military aviation products. One of our UK affiliates holds UK.MAA.145.1705 certificate for military aircrafts Maintenance Organization, and UKCA 145.01362 certificate for Civil aircrafts Maintenance organization. All of our operational sites in Israel are also certified for ISO-27001 (Information Security Management System), ISO-27032 and ISO-27035 for cyber security, ISO/IEC 27036 for Information security for supplier relationships, ISO/IEC 27018 for Information technology Security techniques Code of practice for protection of personally identifiable information (PII) in public clouds acting as PII processors and ISO/IEC 27017:2015 (Information technology Security techniques Code of practice for information security controls based on ISO/IEC 27002 for cloud services). Representatives of our customers generally test our products before acceptance. Some of our customers have authorized us to conduct acceptance testing of our products on their behalf.
Quality certifications applicable to defense products of ESA’s operating units include certifications for CMMC Level 2, CMMI Level 3 of the SEI, ISO-9001, AS9100 (certified for revision D) and compliance with NATO AQAP requirements. In the area of commercial aviation ESA’s operating units hold AS9110 (certified to rev. C) for Aviation Maintenance Organizations and NLD-MAR-145, EASA-145 certification as well as a variety of FAA Supplemental Type Certifications (STCs) including FAA Part 145 approved repair stations. In the medical equipment area, ESA is certified for ISO-13485:2016, registered with the FDA as a Contract Manufacturer (FEI Number 1219738) and is FDA-compliant with Quality Systems Regulations 21 CFR Parts 820, 803, 806 and 830.
Service and Warranty
We instruct our customers on the proper maintenance of our systems and products. In addition, we often offer training and provide equipment to assist our customers in performing their own maintenance. When required, support may be provided by a local support team or by specialists sent from our facilities. We also provide performance-based logistics services and operation of flight school fleets. We have implemented an advanced Customer Relations Management (CRM) system at selected sites to enhance our after-sales support services. The CRM system is deployed in certain after‑sales support programs, as required.
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We generally offer a warranty of up to two years for our systems and products following delivery to, or installation by, the customer. In some cases we offer longer warranty periods. We accrue warranty obligations specifically determined for each project based on our experience and engineering estimates. These accruals are intended to cover post-delivery functionality and operating issues for which we are responsible under the applicable contract.
Marketing and Sales
We seek to identify the individual needs of our customers throughout the world. We then focus our research and development activities on systems designed to provide tailored solutions to those needs. We often provide demonstrations of prototypes and existing systems to potential customers.
We market our systems and products either as a prime contractor or as a subcontractor to various governments and companies worldwide. In Israel, we sell our military systems and products mainly to the IMOD. A number of marketing related support services are provided on a central shared services basis to various units in the Company. The marketing of our systems, products and services in other parts of the world is supported by subsidiaries, joint ventures and representatives.
In the U.S., ESA generally leads our sales and marketing activities from its facilities throughout the U.S. ESA operates under a Special Security Agreement, and a subsidiary of ESA (Sparton DeLeon Springs) operates under a Proxy Agreement, both of which allow ESA and its subsidiaries to work on certain classified U.S. government programs. See above “Subsidiary Organizational Structure – ESA”. Our subsidiaries in other countries typically lead the marketing activities in their home countries, often assisted by marketing and business development personnel based in Israel.
We are party to cooperation agreements with defense contractors, platform manufacturers and other companies in Israel, the United States, Europe, Latin America, Asia-Pacific and certain other markets. These agreements provide for joint participation in marketing and performance of a range of projects around the world. In other situations, we actively pursue business opportunities as either a prime contractor or a subcontractor, usually together with local companies. We often enter into cooperation agreements with other companies for such opportunities.
Competition
We operate in a competitive environment for most of our projects, systems and products. Competition is based on product and program performance, price, reputation, reliability, life cycle costs, overall value to the customer, responsiveness to customer requirements and the ability to respond to rapid changes in technology. In addition, our competitive position sometimes is affected by specific requirements in particular markets.
Continuing partnership and collaboration in the defense industry has affected competition. In addition, many major prime contractors are increasing their in-house capabilities. These factors have sometimes decreased the number but increased the relative size and resources of our competitors in the defense industry. In addition, in recent years competition has increased from companies active in the deep-tech, and more specifically – defense-tech, field, which sometimes can be more agile and innovative than our traditional competitors, enabling them to develop disruptive technologies at a faster pace, with the potential to reshape the traditional defense market.
We adapt to market conditions by adjusting our business strategy to changing market conditions.
Competitors in the sale of some of our products to the government of Israel include, among others, Israel Aerospace Industries and Rafael Advanced Defense Systems among others. Outside of Israel, we compete in a number of areas with major international defense and homeland security contractors principally from the United States and Europe. Our main competitors include divisions and subsidiaries of Northrop Grumman, Raytheon, General Dynamics, BAE Systems, L3Harris, Thales, Airbus, Leonardo, Saab, Textron, Teledyne Technologies, Boeing, Lockheed Martin, AeroVironment, Rohde & Schwarz, Rheinmetall, Kongsberg, Safran, Hensoldt, CMC, CAE, Aselsan, Bharat Electronics, Cubic, Cognyte, Baykar, Turkish Aircraft Industries, Hanwha, LIG Next1 and Poongsan. We compete with companies that are active in the deep-tech / defense-tech field, such as Anduril Industries, Palantir Technologies, Shield AI, Helsing, Kela AI Systems and Ondas. Many of these competitors have greater financial, marketing and other resources than we do. We also compete in the worldwide defense and homeland security markets with numerous smaller companies. In certain cases, we also engage in strategic cooperative activities and in specific projects with some of our competitors, such as original equipment manufacturers (OEMs) in the U.S. and Europe.
Overall, we believe we are able to compete on the basis of our systems development and technological expertise, our systems’ operationally-proven performance and our policy of offering customers overall solutions to technological, operational and financial needs.
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Major Customers
Our revenues from individual customers can sometimes account for more than 10% of our revenues in a specific year. Our only such customers during the last three years were the IMOD, which accounted for 16% of our revenues in 2023, 25% in 2024 and 28% in 2025, and the U.S. government, which accounted for 17% of our revenues in 2023, 15% in 2024 and 15% in 2025.
ESG Practices
Policy. We place importance on our ESG practices, including environmental, health and safety (EHS); corporate governance, ethics and anti-corruption; fair labor practices and human rights; supply chain compliance; and social responsibility to the communities in which we live and work. This is consistent with our policy of emphasizing responsible and ethical business practices. Our ESG policies are overseen by our board of directors (Board) and managed by our senior management. We establish multi-year ESG-related goals. Our ESG activities support our involvement as active members in leading sustainability and ethics organizations. We published a comprehensive ESG Report for 2024, which is available on our website, detailing our main ESG-related activities, performance and impact, including our progress towards achieving ESG-related goals.
Environmental, Health and Safety Compliance. We are committed to leading environmental, health and safety standards in all aspects of our operations. This includes applicable regulatory requirements as well as compliance with ISO-14001 and ISO-45001 standards. We also conduct a number of measures on an ongoing basis to promote environmentally friendly operational practices and address climate change goals, including measures to reduce electricity, fuel and water consumption, to increase recycling and to incorporate environmental protection measures in our manufacturing processes (see “Manufacturing” above). We are also engaged in various business and operational activities related to the environment. For example, in 2025 we initiated a transition at many of our Israeli sites to electricity generated from natural gas, which supported our sustainability strategy and helped reduce our environmental footprint.
We utilize a global EHS management system and internal audits and surveys to address risk analysis, regulatory compliance and policy updates. EHS risks are an integral part of our risk management processes. We periodically review and assess our compliance with applicable EHS regulations and our internal policies, address gaps and establish corresponding action plans. In 2025, we participated again in the Carbon Disclosure Project and published an EHS report summarizing key elements of our compliance activities, which is available on our website. There are no material environmental issues that prevent the Company from using our facilities or materially affect our ongoing activities.
Corporate Governance, Ethics and Anti-Corruption. We conduct our business activities and develop Company policies based on a firm commitment to ethical practices and corporate governance best practices. Our Board complies with leading corporate governance practices as set forth in Board committee charters published on our website. We also have a dedicated process for risk management that is coordinated with our Board.
In addition to our Ethics and Compliance Code of Conduct (see Item 16B. Code of Ethics) and compliance with applicable laws and regulations, we have an active Company-wide ethics compliance program, incorporating a range of policies and procedures. This includes the anti-bribery/corruption area where we have a policy of zero tolerance for corruption. Our anti-bribery/corruption compliance program also includes a number of elements, including whistleblower and investigations processes, contractual requirements, due diligence, ongoing organization-wide as well as function-focused training, record keeping and enforcement. We also expect our supply chain and Industrial Participation/ offset transactions to follow ethical practices (see “Supply Chain Compliance” below). Our Ethics and Compliance Code of Conduct, Whistleblower and Investigations Procedure, Anti-Bribery and Corruption Compliance Policy, Business Entertainment and Gifts Policy and Supplier Code of Conduct are published on our website. We are also active in a number of international organizations relating to ethics and compliance.
Fair Labor Practices and Human Rights. Our ESG policies address fairness and transparency in our workforce, and we promote and implement fair labor practices and employee human rights throughout our organization. Our Human Rights Statement and Human Rights Policy are each published on our website. We respect data privacy relating to our employees. We act to prevent sexual harassment and workplace bullying. We have also implemented non-discriminatory hiring and promotion practices and promote inclusion in our workforce. In addition, we promote transparency with our employees regarding our labor and management practices. As part of the implementation of Israel's Equal Pay for Female and Male Employees Law, we conduct an evaluation regarding possible gender pay gaps among our employees according to the criteria specified by the law, and publish the results on our website. We also provide certain information to our employees, as required under the law.
Compliance with the Convention on Cluster Munitions. All of our activities in the area of munitions, including those of IMI, are in compliance with the international Convention on Cluster Munitions that entered into force in August 2010.
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Supply Chain Compliance. Our policy is to follow leading ESG practices in relation to our supply chain. Our suppliers are required to commit to our Supplier Code of Conduct, which is published on our website and addresses supply chain compliance issues s uch as fair labor practices, combating human trafficking, ethics and anti-corruption, avoidance of conflicts of interests, adherence to sanction requirements, restrictions on the use o f conflict minerals, cyber security and prevention of counterfeit parts. Our suppliers are also subject to our due diligence procedures. Our Supplier Code of Conduct provides a whistleblower mechanism for current and potential members of our supply chain. Our Industrial Participation/ offset activities also are conducted in accordance with our supply chain compliance policies and procedures.
Community-Related Activities. Our ESG policy encourages volunteerism by our Company entities and employees, many of whom donate their time and efforts in the support of members of our communities who are in need. In this regard, we strive to give priority to initiatives that promote educational advancement in less developed communities, particularly in the technology sectors. We promote numerous other community support activities, including involvement on a national level in major charitable organizations in Israel and the U.S. In 2025, we held a hackathon in collaboration with the Sheba Medical Center Rehabilitation Department, aimed at identifying technological solutions to support medical and paramedical teams and to enhance rehabilitation and recovery processes for wounded IDF veterans.
Conditions in Israel
Impact of recent conflicts in the Middle East on the Company. The war that began on October 7, 2023 continued throughout most of 2025, with ceasefires agreed to between Israel and Lebanon involving the conflict with Hezbollah in November 2024, and, after an intensified period of conflict that lasted 12 days, a ceasefire was declared with Iran in June 2025. A ceasefire with Hamas was agreed to in January 2025, and a subsequent ceasefire with Hamas was agreed to in October 2025. On February 28, 2026, Israel and the U.S. launched a joint attack on Iran named “Operation Roaring Lion” by Israel and “Operation Epic Fury” by the U.S., targeting key Iranian officials and targets. Iran launched attacks against Israel and at U.S. military bases across the region, including strikes in Bahrain, Qatar, Saudi Arabia, Kuwait and Jordan. On March 2, 2026 Hezbollah launched an attack on Israel. The current situation remains uncertain.
Since the commencement of the war and the escalation of conflicts in the Middle East, Elbit Systems has experienced a continued material increase in the demand for its products and solutions from the IMOD compared to the demand levels prior to the war. Such increased demand may continue and could generate material additional orders for the Company.
As a result of the war and the other conflicts in the Middle East, some of Elbit Systems’ operations have experienced disruptions due to supply chain and operational constraints, including among others increases in transportation costs and delays due to factors such as the Houthi movement attacks on shipping in the Red Sea, material and component shortages and elevated prices, employee call-ups for reserve duty, limitations imposed by some countries on engagement with Israel and attacks on some of Elbit Systems’ global facilities by anti-Israel organizations. Elbit Systems has taken various steps to protect its employees worldwide, to support increased production, to increase raw material and component inventories, to mitigate supply chain disruptions and to maintain business continuity. Following the ceasefire agreements described above, these operational effects on the Company have been reduced, however, in light of the recent escalation of conflicts involving Iran and Hezbollah, such effects on the Company’s performance could increase again, depending on future developments that are difficult to predict at this time, including the duration and scope of these conflicts.
Trade Agreements. Israel is a member of the United Nations, the International Monetary Fund, the International Bank for Reconstruction and Development and the International Finance Corporation. Israel is also a member of the World Trade Organization, which incorporates the General Agreement on Tariffs and Trade and provides for reciprocal lowering of trade barriers among its members.
Israel Innovation Authority and Investment Center Funding. The government of Israel, through the Israel Innovation Authority (IIA) in the Ministry of Economy and the Israel Investment Center, encourages research and development projects oriented towards export products and participates in the funding of such projects as well as company investments in manufacturing infrastructure. Our Israeli companies receive IIA funding through various channels, such as transfer of knowledge from an academic institution for a product, bi-lateral product development and innovative product development. Our companies participating in such development of products usually pay the Israeli government a royalty at various rates, and such funding is typically subject to a number of conditions. See Item 5. Operating and Financial Review and Prospects – General – Long-Term Arrangements and Commitments – Government Funding of Development. Separate Israeli government consent is required to transfer to third parties technologies developed through projects in which the government participates in the funding of the development effort. The Israeli Investment Center promotes product exports and increased industrialization of peripheral areas in Israel through investment in industrial infrastructure. The Israeli Investment Center either provides grants for qualified projects or provides tax benefits for qualified industrial investments by Israeli companies.
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Israeli Labor Laws. Our employees in Israel are subject to Israeli labor laws. Some employees are also affected by provisions of collective bargaining agreements. These labor laws and collective bargaining agreements concern, inter alia, employment terms (such as working hours, minimum wages, pension and social rights, annual leave, sick leave, parental rights and work related accidents), procedures and conditions for dismissal, employment of temporary or external workforce and other conditions of employment.
Severance Pay. Under Israeli law, our Israeli companies are required to make severance payments to terminated Israeli employees. The severance reserve is calculated based on an employee’s last salary and period of employment. A portion of the severance pay and pension obligation is covered by payment of monthly premiums to insurance companies/policies under approved plans and to pension funds. The deposits presented in the balance sheet include profits accumulated to the balance sheet date. However, Elbit Systems and our Israeli subsidiaries have entered into agreements with some of our employees implementing Section 14 of the Severance Payment Law, relating to the treatment of severance pay. See Item 18. Financial Statements – Note 2Q and 17.
National Insurance Institute. Israeli employees and employers are required to pay predetermined sums to the National Insurance Institute, which is similar to the U.S. Social Security Administration. These amounts also include payments for national health insurance. As of December 31, 2025, the payments to the National Insurance Institute were equal to approximately 19.6% of wages (subject to a cap if an employee’s monthly wages exceed a specified amount) with the employee contributing approximately 61.2% and the employer contributing approximately 38.8% of the total amount due.
During the “Swords of Iron” war, some of our employees were mobilized for reserve duty (see above “Impact of recent conflicts in the Middle East on the Company”). As of March 5, 2026, in accordance with the Israeli law in effect, employees on reserve duty continue to be fully paid by the Company, while the National Insurance Institute refunds the Company for their salaries, up to a certain statutory ceiling (which is sometimes lower than the salaries we pay to such employees). Following approval by relevant authorities in some cases and subject to certain conditions, employers will be indemnified for certain additional employment costs related to social benefits of their employees who were called for reserve duty for the period between October 7, 2023 and December 31, 2024, up to a statutory ceiling of 20%. This arrangement has been extended until the end of March 2026. The Company has incurred, and will likely continue to incur, costs in respect of its employees who are called to reserve duty for which it is not fully indemnified by the government.
Enforcement of Judgments
We are incorporated under the laws of the State of Israel. Service of process upon us and upon our directors and officers, substantially all of whom reside outside the United States, may be difficult to obtain within the United States. Furthermore, because substantially all of our assets and substantially all of our directors and officers are located outside the United States, any judgment obtained in the United States against us or any of our directors and officers may not be collectible within the United States.
It may be difficult to initiate an action with respect to U.S. securities law in Israel. Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most appropriate forum to hear such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact by expert witnesses which can be a time-consuming and costly process. Certain matters of procedure may also be governed by Israeli law.
Subject to certain time limitations and legal procedures, Israeli courts may enforce a final executory U.S. judgment for liquidated amounts, including a judgment based upon the civil liability provisions of the Securities Act and the Exchange Act and including a monetary or compensatory judgment in a non-civil matter, provided that, among other things:
•the prevailing law of the foreign state in which the judgment is rendered allows for the enforcement of judgments of Israeli courts;
•adequate service of process has been made and the defendant has had a reasonable opportunity to be heard;
•the judgment and its enforcement are not contrary to the law, public policy, security or sovereignty of the State of Israel;
•the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties;
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•an action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted in the foreign court; and
•the judgment is no longer subject to a right of appeal.
Foreign judgments enforced by Israeli courts generally will be payable in Israeli currency. Under existing Israeli law, a foreign judgment payable in foreign currency may be paid in Israeli currency at the foreign currency’s exchange rate on the payment date or in foreign currency. Until collection, an Israeli court judgment stated in Israeli currency will ordinarily be linked to the Israeli CPI plus interest at the annual rate (set by Israeli regulations) in effect at that time. Judgment creditors must bear the risk of unfavorable exchange rates. The trend in recent years has increasingly been for Israeli courts to enforce a foreign judgment in the foreign currency specified in the judgment, in which case there are also applicable rules regarding the payment of interest.
The above summary is not intended to be, and should not be regarded as, legal advice.
Item 4A. Unresolved Staff Comments.
None.
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Item 5. Operating and Financial Review and Prospects.
The following discussion and analysis should be read together with our audited consolidated financial statements and notes appearing in Item 18 below.
General
Critical Accounting Policies and Estimates
Our significant accounting policies are described in Item 18. Financial Statements – Note 2.
Our results of operations and financial condition are based on our consolidated financial statements, which are presented in conformity with United States generally accepted accounting principles (U.S. GAAP). The preparation of the consolidated financial statements requires management to select accounting policies, and to make estimates, assumptions and judgments that involve the accounting policies described below that affect the amounts reported in the consolidated financial statements. Significant changes in assumptions and/or conditions and changes in our critical accounting policies could materially impact our operating results and financial condition.
We believe our most critical accounting policies relate to:
•Revenue Recognition;
•Impairment of Long-Lived Assets and Goodwill;
•Income Taxes;
•Post-employment Benefits Liabilities.
Revenue Recognition
We generate revenues primarily from fixed-price long-term contracts involving the design, development, manufacture and integration of defense systems and products. In addition, to a lesser extent, we provide non-defense systems and products as well as support and services for our systems and products.
Revenues from our contracts are principally recognized using the Financial Accounting Standards Board (FASB), Accounting Standards Codification (ASC) 606. We assess contractual arrangements at inception according to the five-step model of ASC 606.
We recognize revenues for each of the identified performance obligations when our customer obtains control of the products or services. The assessment of when the customer obtains control involves significant judgments, including, inter alia, whether there is an alternative use for a product, the contract terms, assessment of the enforceable rights for payments, and technical or contractual constraints. As a practical expedient we may occasionally account for group of performance obligations or contracts collectively, as opposed to individually by using the “portfolio approach” or the “series of distinct goods and services” method. Under the “portfolio approach” method, the Company may combine individual performance obligations, if the goods or services of the individual performance obligations have similar characteristics and the Company reasonably expects that the effect on the financial statements of applying this guidance would not defer materially from applying the guidance to the individual contracts or performance obligations within that portfolio. In addition, as a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of control is less than one year.
For most of our long-term contracts, where our performance does not create an asset with an alternative use, we recognize revenue over time as we perform because of continuous transfer of control to the customer. This continuous transfer of control to the customer is supported by the governing law or clauses in the contract that typically allow the customer control in the work-in-process as evidenced either by contractual termination clauses or by our rights to payment for work performed to date plus a reasonable profit for products or services that do not have an alternative use to the Company.
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For these performance obligations that are satisfied over time, we generally recognize revenue using an input method with revenue amounts being recognized proportionately as costs are incurred relative to the total expected costs to satisfy the performance obligation.
Revenue for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer (which is generally when the customer can direct the use of and obtain substantially all of the remaining benefits from the products, generally when the customer obtains control after delivery).
Service revenues include contracts primarily for the provision of supplies and services other than those associated with activities related to design, development or manufacturing or delivery of products. It may be a standalone service contract or a service performance obligation, which are distinct from design, development or products delivery contracts. Our service contracts include contracts in which the customer simultaneously receives and consumes the benefits provided as the contract is performed. Our service contracts primarily include operation-type contracts, outsourcing-type arrangements, “stand ready” type maintenance contracts, training and similar activities. Revenues from service contracts or performance obligations were less than 10% of total revenues in each of the fiscal years 2025, 2024 and 2023. For additional information see Item 18. Financial Statements – Note 2S.
Impairment of Long-Lived Assets and Goodwill
Our long-lived assets, including identifiable property, plant and equipment and intangible assets, are reviewed for impairment in accordance with ASC 360-10-35, “Property, Plant and Equipment Subsequent Measurement”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If an asset is determined to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Fair value of non-financial assets is determined based on market participant assumptions. During the years ended December 31, 2023, December 31, 2024 and December 31, 2025, no material impairment of long-lived assets was identified. See Item 18. Financial Statements – Notes 2O and 2P for additional information.
Goodwill represents the excess of the cost of acquired businesses over the fair values of the assets acquired net of liabilities assumed. Goodwill is not amortized, but is instead tested for impairment at least annually (or more frequently if impairment indicators arise).
We review goodwill for impairment on an annual basis and whenever events or changes in circumstances indicate that the carrying value of goodwill may not be recoverable. Such events or circumstances could include significant changes in the business climate of our industry, operating performance indicators, competition or sale or disposal of a portion of a reporting unit. The assessment is performed at the reporting unit level. Our annual testing date for all reporting units is December 31.
Performing goodwill impairment testing requires judgment, including how we define reporting units and determine their fair value. We consider a component of our business to be a reporting unit if it constitutes a business for which discrete financial information is available and management regularly reviews the operating results of that component. We estimate the fair value of each reporting unit using a discounted cash flow methodology that requires significant judgment. Forecasts of future cash flows are based on our best estimate of future sales and operating costs, based primarily on existing backlog, expected future contracts, contracts with suppliers, labor agreements and general market conditions. We prepare cash flow projections for each reporting unit using a five-year forecast of cash flows and a terminal value based on the Perpetuity Growth Model. The five-year forecast and related assumptions are derived from the most recent annual financial forecast for which the planning process commences in our fourth quarter. The discount rate applied to our forecasts of future cash flows is based on our estimated weighted average cost of capital and includes factors such as the risk-free rate of return and the return an outside investor would expect to earn based on the overall level of inherent risk. The determination of expected returns includes consideration of the beta (a measure of risk) of traded securities of comparable companies. Changes in these estimates and assumptions could materially affect the determination of fair value and/or goodwill impairment for each reporting unit.
We evaluate goodwill for impairment by comparing the estimated fair value of a reporting unit to its carrying value, including goodwill. If the carrying value exceeds the estimated fair value, we measure impairment by comparing the derived fair value of goodwill to its carrying value, and any impairment determined is recorded in the current period. For each of the three years ended December 31, 2025, no material impairment of goodwill was identified. See Item 18. Financial Statements - Note 2P for additional information.
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Income Taxes
We record income taxes using the asset and liability approach, whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and of operating losses and credit carry-forwards, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. We record a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized. We have considered future taxable income on a jurisdiction by jurisdiction basis and used prudent and feasible tax planning strategies and other available evidence in determining the need for a valuation allowance. In the event we determine that we will be able to realize these deferred income tax assets in the future, we would adjust the valuation allowance, which would reduce the provision for income taxes.
We establish reserves for tax-related uncertainties based on estimates of whether, and to what extent, additional taxes will be due. These reserves are established when we believe that certain positions might be challenged despite our belief that the positions we take in our tax returns are in accordance with applicable tax laws. As part of the determination of our tax liability, management exercises considerable judgment in evaluating tax positions we take in determining our income tax provision and establishing reserves for tax contingencies in accordance with ASC 740 “Income Taxes” guidelines. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit, new tax legislation or the change of an estimate based on new information. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences will affect the provision for income taxes in the period in which such determination is made. During 2023, 2024 and 2025, certain of our subsidiaries settled certain income tax matters pertaining to multiple years in Israel and Europe. Elbit Systems and certain of our Israeli and European subsidiaries are undergoing tax audits by the Israeli Tax Authority. As of December 31, 2025, the provision for income taxes includes the effect of reserve provisions and changes to reserves that are considered appropriate, as well as the related interest and penalties.
Management’s judgment is required in determining our provision for income taxes in each of the jurisdictions in which we operate. The provision for income tax is calculated based on our assumptions as to our entitlement to various benefits under the applicable tax laws in the jurisdictions in which we operate. Entitlement to such benefits depends upon our compliance with the terms and conditions set out in these tax laws. Although we believe that our estimates are reasonable and that we have considered future taxable income and ongoing prudent and feasible tax strategies in estimating our tax outcome, there is no assurance that the final tax outcomes will not be different than those which are reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our income tax provision, net income and cash balances in the period in which such determination is made. See Item 18. Financial Statements - Notes 2V and 18.
Post-employment Benefits Liabilities
We have several post-employment benefit plans. The plans are funded partly by deposits with insurance companies, financial institutions or funds managed by a trustee. The plans are classified as defined contribution plans or as defined benefit plans.
Some current and former employees of the Company's subsidiaries, located mainly in Israel and in the U.S., have defined benefit pension plans maintained by the Company. Generally, according to the terms of the plans, the employees are entitled to receive pension payments based on, among other things, their number of years of service (resulting in certain cases of pensions up to 70% of their last base salary) or computed, in certain cases, based on a fixed salary. In addition, some employees of a subsidiary in Israel are entitled to early retirement if they meet certain conditions, including certain age and seniority levels at the time of retirement.
We recognize on a plan-by-plan basis the net funded status of our post-retirement benefit plans under U.S. GAAP as either an asset or a liability on our consolidated balance sheets. The funded status represents the difference between the fair value of each plan’s assets and the benefit obligation of the plan. The benefit obligation represents the present value of the estimated future benefits we currently expect to pay to plan participants based on past service.
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The plan assets and benefit obligations are measured at the end of each year or more frequently, upon the occurrence of certain events such as a significant plan amendment, settlement or curtailment. The amounts we record are measured using actuarial valuations (based on independent actuarial advice) which are dependent upon key assumptions such as: discount rates, the expected long-term rate of return on plan assets (determined by considering the expected return available on assets underlying the current investment policy), participant longevity, employee turnover, inflation rates, future payroll increases and the health care cost trend rates for our retiree medical plans. The assumptions we make affect both the calculation of the benefit obligations as of the measurement date and the calculation of net periodic benefit cost in subsequent periods. When reassessing these assumptions, we consider past and current market conditions and make judgments about future market trends. We also consider factors such as the timing and amounts of expected contributions to the plans and benefit payments to plan participants. Any changes in these assumptions will impact (either increase or decrease) the carrying amount of our post-employment benefit obligations and plan assets. See Item 18. Financial Statements – Notes 2R and 17.
Governmental Policies
Governmental policies and regulations applicable to defense contractors, such as cost accounting and audit, export control, procurement solicitation and anti-bribery rules and regulations, could have a material impact on our operations. See Item 3. Key Information – Risk Factors – Risks Related to Legal and Regulatory Requirements and Item 4. Information on the Company – Governmental Regulation. Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, as amended, we are required to include in our annual report on Form 20-F a report of managment on the effectiveness of our internal control over financial reporting as of the end of each fiscal year. See Item 15. Controls and Procedures – Management’s Annual Report on Internal Control Over Financial Reporting.
Recent Accounting Pronouncements
See Ite m 18. Financial Statements – Note 2AF.
Long-Term Arrangements and Commitments
Government Funding of Development. Elbit Systems and certain of our Israeli subsidiaries partially finance our research and development expenditures through programs sponsored by the Israel Innovation Authority (IIA) in the Ministry of Economy (formerly the Office of the Chief Scientist) for the support of research and development activities conducted in Israel. At the time the funds are received, s uccessful development of the funded projects is not assured. In exchange for these funds, Elbit Systems and the subsidiaries agree to pay 2% to 5% of t otal sales of the products developed under these programs. The obligation to pay these royalties is contingent on actual future sales of the products. Elbit Systems and some of our subsidiaries may also be obligated to pay certain amounts to the IMOD and others entities on certain sales including sales resulting from technologies developed with such respective entity’s fund s. See Item 4. Information on the Company – Conditions in Israel – Israel Innovation Authority and Investment Center Funding and Item 18. Financial Statements – Note 2U and Note 21A.
Lease Commitments. The future minimum lease commitments of the Company under various non-cancelable operating lease agreements for property, motor vehicles and office equipment, excluding imputed interest, as of December 31, 2025 were as follows: $120.7 million for 2026, $89.3 million for 2027, $66.1 million for 2028, $57.3 million for 2029, $54.8 million for 2030 and $339.5 million for 2031 and thereafter. See Item 18. Financial Statements – Note 9.
Bank and Notes Covenants. In connection with our Series B, C and D Notes, bank credits and loans, including performance guarantees issued by banks and bank guarantees in order to secure certain advances from customers, Elbit Systems and certain subsidiaries are obligated to meet certain financial covenants. See below “Financial Resources”. Such covenants include, inter alia, requirements for shareholders’ equity, current ratio, operating profit margin, tangible net worth, EBITDA, interest coverage ratio, total leverage, equity and net financial debt. See Item 18. Financial Statements – Note 21E. In respect of each of the 12 month periods ending December 31, 2024 and 2025, the Company was in material compliance with its loan obligations.
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Commercial Paper. As of December 31, 2025 and 2024, we had series A commercial paper in the amount of approximately $48 million par value issued and outstanding and series A and B commercial paper in the amount of approximately $350 million par value issued and outstanding , respectively. The series A and B commercial paper is for a term of 90 days, which may be extended by additional periods of 90 days each, up to a maximum period of five years, and is also subject to early repayment at the request of an investor or at the Company's discretion. See also Item 18. Financial Statements – Note 12.
Bank and Other Financial Institution Guarantees. As of December 31, 2025 and 2024, guarantees in the aggregate amount of approximately $5,245 million and $4,088 million, respectively, were issued by banks and other financial institutions on behalf of several Company entities primarily in order to secure certain advances from customers and performance obligations.
Purchase Commitments. As of December 31, 2025 and 2024 we had purchase commitments of approximately $4,601 million and $4,345 million, respectively. These purchase orders and subcontracts are typically in standard formats proposed by us. These subcontracts and purchase orders also reflect provisions from the applicable prime contract that apply to subcontractors and vendors. The terms typically included in these purchase orders and subcontracts are consistent with Uniform Commercial Code provisions in the United States for sales of goods, as well as with specific terms requested by our customers in international contracts. These terms include our right to terminate the purchase order or subcontract in the event of the vendor’s or subcontractor’s default, and frequently also include our right to terminate the order or subcontract for our convenience (or if our prime contractor has so terminated the prime contract). Such purchase orders and subcontracts typically are not subject to variable price provisions.
Acquisitions During 2025
See Item 4. Information on the Company – Mergers, Acquisitions and Divestitures and Item 18. Financial Statements – Note 1D.
Backlog of Orders
Our backlog includes firm commitments received from customers for systems, products, services and projects that have yet to be delivered or completed, as applicable. Our policy is to include orders in our backlog only when specific conditions are met. Examples of these conditions may include, among others, receipt of a binding letter of commitment or contract, program funding, advances, letters of credit, guarantees and/or other commitments from customers. As a result, from time to time we could have unrecorded orders not included in our reported backlog.
We reduce backlog when revenues for a specific contract are recognized, such as when delivery or acceptance occurs or when contract milestones or engineering progress under long-term contracts are recognized as achieved, or when revenues are recognized based on costs incurred. In the unusual event of a contract cancellation, we reduce our backlog accordingly. The method of backlog recognition used may differ depending on the particular contract. Orders in currencies other than U.S. dollars are translated periodically into U.S. dollars and recorded accordingly.
Our backlog of orders as of December 31, 2025 was $28,131 million, of which 72% was for orders outside Israel. Our backlog of orders as of December 31, 2024 was $22,617 million, of which 65% was for orders outside Israel. Approximately 54% our backlog as of December 31, 2025 is scheduled to be performed during 2026 and 2027. The rest of the 46% is scheduled to be performed in 2028 and thereafter. Backlog information and any comparison of backlog as of different dates may not necessarily represent an indication of future sales.
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Trends
The recent conflicts in the Middle East, as well as the ongoing conflict between Russia and Ukraine, have elevated geopolitical tensions throughout the world. These conflicts have also changed military and homeland security requirements, that which previously focused on low intensity conflicts and defense against terrorism and cyber-attacks. Since these conflicts began, governments around the world, including the IMOD, have announced plans to increase defense spending and procure a range of advanced capabilities to better prepare for high intensity “near peer” conflicts. Specifically, since October 7, 2023, the IMOD's demand for our products and solutions has materially increased.
The deployment of large armored formations and the increased tempo and intensity of recent conflicts have shifted in defense procurement priorities and increased demand for capabilities that enable the fielding of large mechanized military formations capable of performing multi-domain operations and at the same time, addressing the risks presented by innovative technological capabilities deployed extensively in modern battlefields, such as remotely piloted aircraft and advanced munitions.
This global trend has increased demand in the areas of C4ISR systems, cyber-defense systems, network centric information and operational systems, intelligence gathering systems, border and perimeter security systems, unmanned aircraft systems, unmanned surface vessels, remote controlled systems, precision munitions, tank, artillery and mortar munitions, vehicle survivability and force protection systems, SIGINT and EW systems, space and satellite-based defense capabilities and homeland security solutions. The technological advances in commercial technologies have led to increasing demand for technological solutions that incorporate digital transformation, including AI, big data analytics, robotics, automation and information assurance by military forces. Moreover, there is a continuing demand for cost-effective logistic support and training and simulation services.
In response to these developments, numerous European countries have announced plans to significantly increase defense spending and strengthen their armed forces, though full implementation is expected to take time. The U.S. government has also signaled its intent to materially increase defense spending, with proposed budgets reaching $1.5 trillion in fiscal year 2027. These developments have created various opportunities for the Company and its U.S. and European subsidiaries.
Both the U.S. and European markets continue to place emphasis on local manufacturing capabilities and supply chains. We continue to actively pursue the development of local capabilities in our major markets, including subsidiaries with significant manufacturing capacity and organic supply chains in the U.S. and Europe, among others.
We believe our core technologies and capabilities position us to benefit from these prevailing market trends; however, our participation in certain programs may be restricted by specific eligibility requirements or terms.Furthermore, the ongoing conflicts have contributed to supply chain disruptions, market volatility and global sanctions, each of which present operational challenges (see Item 3. Key Information – Risk Factors – Risks Related to our Operations).
The conflict in the Middle East has also affected our operations, human resources and other aspects of our business. For additional information see Item 4. Information on the Company – Conditions in Israel – Impact of recent conflicts in the Middle East on the Company, and Item 3. Key Information – Risk Factors – Risks Related to Our Israeli Operations and Environment – Conditions in Israel and the Middle East may affect our operations.
Currently, we cannot assess the full impact on our business of the conflicts in the Middle East or between Russia and Ukraine, and the impacts we have experienced so far may not be indicative of our future operating results or financial conditions.
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Summary of Operating Results
The following table sets forth our consolidated statements of operations for each of the three years ended December 31, 2025.
(in thousands of U.S. dollars except per share data)

| Year ended December 31, 2025 |  | % |  | Year ended December 31, 2024 |  | % |  | Year ended December 31, 2023 |  | %
Revenues | $ | 7,938,627 |  |  | 100.0 |  |  | $ | 6,827,871 |  |  | 100.0 |  |  | $ | 5,974,744 |  |  | 100.0 |
Cost of revenues | 6,003,374 |  |  | 75.6 |  |  | 5,186,051 |  |  | 76.0 |  |  | 4,491,790 |  |  | 75.2 |
Gross profit | 1,935,253 |  |  | 24.4 |  |  | 1,641,820 |  |  | 24.0 |  |  | 1,482,954 |  |  | 24.8 |
Research and development (R&D) expenses | 599,567 |  |  | 7.5 |  |  | 544,140 |  |  | 8.0 |  |  | 502,654 |  |  | 8.4 |
Less – participation | (82,425) |  |  | (1.0) |  |  | (77,738) |  |  | (1.2) |  |  | (78,234) |  |  | (1.3) |
R&D expenses, net | 517,142 |  |  | 6.5 |  |  | 466,402 |  |  | 6.8 |  |  | 424,420 |  |  | 7.1 |
Marketing and selling expenses | 399,437 |  |  | 5.0 |  |  | 375,358 |  |  | 5.5 |  |  | 359,141 |  |  | 6.0 |
General and administrative expenses | 347,250 |  |  | 4.4 |  |  | 311,007 |  |  | 4.6 |  |  | 330,285 |  |  | 5.5 |
| 1,263,829 |  |  | 15.9 |  |  | 1,152,767 |  |  | 16.9 |  |  | 1,113,846 |  |  | 18.6 |
Operating income | 671,424 |  |  | 8.5 |  |  | 489,053 |  |  | 7.2 |  |  | 369,108 |  |  | 6.2 |
Financial expenses, net | (138,618) |  |  | (1.8) |  |  | (151,125) |  |  | 2.3 |  |  | (137,827) |  |  | (2.3) |
Other income (expenses), net | 29,109 |  |  | 0.4 |  |  | 3,818 |  |  | 0.1 |  |  | (4,787) |  |  | (0.1) |
Income before taxes on income | 561,915 |  |  | 7.1 |  |  | 341,746 |  |  | 5.0 |  |  | 226,494 |  |  | 3.8 |
Taxes on income | (55,539) |  |  | (0.7) |  |  | (39,058) |  |  | (0.6) |  |  | (22,913) |  |  | (0.4) |
| 506,376 |  |  | 6.4 |  |  | 302,688 |  |  | 4.4 |  |  | 203,581 |  |  | 3.4 |
Equity in net earnings of affiliated companies and partnerships | 29,243 |  |  | 0.3 |  |  | 19,176 |  |  | 0.3 |  |  | 12,275 |  |  | 0.2 |
Net income | $ | 535,619 |  |  | 6.7 |  |  | $ | 321,864 |  |  | 4.7 |  |  | $ | 215,856 |  |  | 3.6 |
Less – net income attributable to non-controlling interests | (1,280) |  |  | — |  |  | (726) |  |  | — |  |  | (725) |  |  | — |
Net income attributable to the Company’s shareholders | $ | 534,339 |  |  | 6.7 |  |  | $ | 321,138 |  |  | 4.7 |  |  | $ | 215,131 |  |  | 3.6 |
Diluted net earnings per share: | $ | 11.39 |  |  |  |  | $ | 7.18 |  |  |  |  | $ | 4.82 |  |  |

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2025 Compared to 2024
The following is an overview for 2025 compared to 2024. A discussion of our results of operations for 2024 compared to 2023 may be found on pages 46-51 of our annual report on Form 20-F filed March 28, 2025 on the EDGAR database of the U.S. Securities and Exchange Commission.
Revenues
Our sales are primarily to governmental entities and prime contractors under government defense and homeland security programs. Accordingly, the level of our revenues is subject to governmental budgetary constraints.
Our consolidated revenues in 2025 increased by 16.3% to $7,938.6 million from $6,827.9 million in 2024.
C4I and Cyber revenues increased by 16% year-over-year mainly due to sales of radio systems and command and control systems in Europe and Israel.
ISTAR and EW revenues increased by 16% mainly due to increased sales of Maritime systems, Electro-Optic systems which include Space systems, as well as a variety of Electronic Warfare systems including C-UAS.
Land revenues increased by 38% mainly due to the increase in sales of ammunition and munitions in Israel and Europe.
ESA revenues increased by 7% mainly due to the increase in sales of night-vision systems and Maritime systems, partially offset by the decrease in medical devices sales.
Aerospace revenues increased by 2% in 2025 as compared to 2024, mainly due to increased sales of Precision Guided Munition (PGM) sales in Asia pacific and Israel, partially offset by lower training and simulation sales in Europe.
The following table sets forth our distribution of revenues by geographical regions ($ millions):

| Year ended December 31, 2025 |  | % |  | Year ended December 31, 2024 |  | %
Israel | $ | 2,556.4 |  |  | 32.2 |  |  | $ | 1,988.0 |  |  | 29.1 |
North America | 1,659.3 |  | 20.9 |  |  | 1,520.3 |  | 22.3 |
Europe | 2,139.5 |  | 27.0 |  |  | 1,820.9 |  | 26.7 |
Asia-Pacific | 1,243.7 |  | 15.7 |  |  | 1,132.7 |  | 16.6 |
Latin America | 99.0 |  | 1.2 |  |  | 150.0 |  | 2.2 |
Other | 240.7 |  | 3.0 |  |  | 216.0 |  | 3.1 |
Total revenues | $ | 7,938.6 |  |  | 100.0 |  |  | $ | 6,827.9 |  |  | 100.0 |

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Cost of Revenues and Gross Profit
Cost of revenues in 2025 was $6,003.4 million (75.6% of revenues), as compared to $5,186.1 million (76% of revenues) in 2024.
Our major components of cost of revenues are (i) wages and related benefits costs, (ii) subcontractors and material consumed and (iii) manufacturing and other expenses. The amounts and percentages of those components in 2025 and 2024 were as follows:
Wages and related benefits costs in 2025 constituted approximately 32% of cost of revenues, as compared to approximately 36% in 2024. The total cost of wages and related benefits in 2025 was approximately $1,968.0 million, as compared to $1,908 million in 2024. .
Subcontractors and material consumed costs in 2025 constituted approximately 55% of cost of revenues, as compered to approximately 52% in 2024. The total amount of subcontractors and material consumed costs in 2025 was approximately $3,417 million, as compared to approximately $2,787 million in 2024.
. The total cost of manufacturing and other expenses in 2025 was approximately $601 million, as compared to approximately $472 million in 2024. The high level of manufacturing and other expenses in 2025 resulted from increased activity.
In 2025, our cost of revenues included an increase in inventories of approximately $217 million in work-in-progress and finished goods inventories, as compared to an increase of approximately $120 million in work-in-progress and finished goods inventories in 2024.
Changes from 2024 to 2025 in our cost of revenues and cost of revenues components, were not material. We did not identify any developing trends in cost of revenues that we believe are likely to have a material impact on our future operations other than the continued changes in the NIS against the U.S. dollar, which could have an impact mainly on our labor costs, the impact of conflicts in the Middle East , including disrupted transportation networks and global supply chains, increased costs and extension of lead times.
Gross profit for the year ended December 31, 2025 was $1,935.3 million (24.4% of revenues), as compared to $1,641.8 million (24.0% of revenues) in the year ended December 31, 2024.
Research and Development (R&D) Expenses
We continually invest in R&D in order to maintain and further advance our technologies, in accordance with our long-term plans, based on our estimate of future market needs. Our R&D costs, net of participation grants, include costs incurred for independent research and development and bid and proposal efforts and are expensed as incurred.
Gross R&D expenses in 2025 totaled $599.6 million (7.5% of revenues), as compared to $544.1 million (8.0% of revenues) in 2024.
Net R&D expenses (after deduction of third party participation) in 2025 totaled $517.1 million (6.5% of revenues), as compared to $466.4 million (6.8% of revenues) in 2024.
Marketing and Selling Expenses
We are active in developing new markets and pursue at any given time various business opportunities according to our plans.
Marketing and selling expenses in 2025 were $399.4 million (5.0% of revenues), as compared to $375.4 million (5.5% of revenues) in 2024.
General and Administration (G&A) Expenses
G&A expenses in 2025 were $347.3 million (4.4% of revenues), as compared to $311.0 million (4.6% of revenues) in 2024.
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Operating Income
Our operating income in 2025 was $671.4 million (8.5% of revenues), as compared to $489.1 million (7.2% of revenues) in 2024.
C4I and Cyber operating income in 2025 was $55.9 million and 6.0% of C4I and Cyber segment revenues, compared to $62.0 million and 7.8% of segment revenues in 2024. The $6.1 million decrease in operating income was mainly due to a decrease of project mix.
ISTAR and EW operating income in 2025 was $129.1 million and 8.5% of ISTAR and EW segment revenues, compared to $96.1 million and 7.3% of segment revenues in 2024. The $33.0 million increase in operating income was mainly due to increased revenue and project mix.
Land operating income in 2025 was $263.7 million and 11.4% of Land segment revenues, compared to $150.7 million and 9.0% of segment revenues in 2024. The $113.0 million increase in operating income was mainly due to increased revenues in munition and ammunition in Israel and Europe.
ESA operating income in 2025 was $122.8 million and 7.2% of ESA segment revenues, compared to an operating income of $56.2 million and 3.5% of segment revenues in 2024. The $66.6 million increase in operating income was mainly due to new contracts signed for Night-Vision systems and Maritime systems, as well as positive program mix.
Aerospace operating income in 2025 was $151.9 million and 7.4% of Aerospace segment revenues, compared to 149.1 million and 7.3% of segment revenues in 2024.
Financial Expense, Net
Net financing expenses in 2025 were $138.6 million, as compared to $151.1 million in 2024. TThe decrease in financial expenses, net in 2025, was mainly due to lower interest expenses and lower level of debt.
Other Income (Expenses), Net
Other income, net was $29.1 million in 2025, as compared to other expenses, net of $3.8 million in 2024. The higher level of expenses in 2024, resulted mainly from revaluation of holdings in affiliated companies, and expenses related to non-service costs of pension plans.
Taxes on Income
Our effective tax rate represents a weighted average of the tax rates to which our various entities are subject. Taxes on income in 2025 were $55.5 million (effective tax rate of 9.9%), as compared to $39.1 million (effective tax rate of 11.4%) in 2024.The decrease in the tax rate in 2025 was as a result of the valuation allowance releases and adjustments to deferred taxes related to prior years following tax settlements in some of the Company's subsidiaries in Israel.
Company’s Share in Earnings of Affiliated Entities
The entities, in which we hold 50% or less in shares or voting rights (affiliates) and are therefore not consolidated in our financial statements, operate in complementary areas to our core business activities, including electro-optics and airborne systems.
In 2025, we had income of $29.2 million from our share in earnings of affiliates, as compared to $19.2 million in 2024.
Net Income Attributable to Non-Controlling Interests
Net income attributable to non-controlling interests in 2025 was $1.3 million, as compared to $0.7 million in 2024.
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Net Income and Earnings Per Share (EPS)
As a result of the above, net income in 2025 was $534.3 million (6.7% of revenues), as compared to net income of $321.1 million (4.7% of revenues) in 2024. The diluted EPS was $11.39 in 2025, as compared to $7.18 in 2024. The number of shares used for computation of diluted EPS in the years ended December 31, 2025 and 2024 were 46,918,000 and 44,709,000 shares, respectively.
Segment Reporting
Revenues
The Company has five reportable segments: Aerospace, C4I and Cyber, ISTAR and EW, Land and ESA (see Item 4. Information on the Company – Business Overview – Segments above, “Segment Reporting” below and Item 18. Financial Statements - Notes 1, 2AC and 23).
The following table presents information about the Company’s reported segments revenues for the periods indicated:

| Year ended December 31, 2025 |  | % |  | Year ended December 31, 2024 |  | % |  | Year ended December 31, 2023 |  | %
Aerospace |  |  |  |  |  |  |  |  |  |  |
External customers | $ | 1,820.9 |  |  | 22.9 |  | 1,780.5 |  |  | 26.1 |  | $ | 1,613.2 |  |  | 27.0
Intersegment revenue | 246.1 |  |  |  |  | 255.8 |  |  |  |  | 260.1 |  |  |
| 2,067.0 |  |  | 24.2 |  | 2,036.3 |  |  | 27.4 |  | 1,873.3 |  |  | 28.6
C4I and Cyber |  |  |  |  |  |  |  |  |  |  |
External customers | 866.2 |  |  | 10.9 |  | 750.6 |  |  | 11.0 |  | 668.4 |  |  | 11.2
Intersegment revenue | 64.7 |  |  |  |  | 49.2 |  |  |  |  | 52.7 |  |  |
| 930.9 |  |  | 10.9 |  | 799.8 |  |  | 10.8 |  | 721.1 |  |  | 11.0
ISTAR and EW |  |  |  |  |  |  |  |  |  |  |
External customers | 1,323.5 |  |  | 16.7 |  | 1,118.6 |  |  | 16.4 |  | 996.9 |  |  | 16.7
Intersegment revenue | 202.3 |  |  |  |  | 199.4 |  |  |  |  | 182.5 |  |  |
| 1,525.8 |  |  | 17.9 |  | 1,318.0 |  |  | 17.8 |  | 1,179.4 |  |  | 18.0
Land |  |  |  |  |  |  |  |  |  |  |
External customers | 2,250.3 |  |  | 28.3 |  | 1,605.1 |  |  | 23.5 |  | 1,241.0 |  |  | 20.8
Intersegment revenue | 68.4 |  |  |  |  | 74.3 |  |  |  |  | 65.2 |  |  |
| 2,318.7 |  |  | 27.2 |  | 1,679.4 |  |  | 22.6 |  | 1,306.2 |  |  | 20.0
ESA |  |  |  |  |  |  |  |  |  |  |
External customers | 1,677.7 |  |  | 21.1 |  | 1,573.1 |  |  | 23.0 |  | 1,455.2 |  |  | 24.4
Intersegment revenue | 16.4 |  |  |  |  | 12.6 |  |  |  |  | 9.7 |  |  |
| 1,694.1 |  |  | 19.8 |  | 1,585.7 |  |  | 21.4 |  | 1,464.9 |  |  | 22.4
Revenues |  |  |  |  |  |  |  |  |  |  |
Total revenues (external customers and intersegment) for reportable segments | $ | 8,536.5 |  |  |  |  | $ | 7,419.2 |  |  |  |  | $ | 6,544.9 |  |  |
Less - Intersegment revenue | (597.9) |  |  |  |  | (591.3) |  |  |  |  | (570.2) |  |  |
Total | $ | 7,938.6 |  |  | 100.0 |  | $ | 6,827.9 |  |  | 100.0 |  | $ | 5,974.7 |  |  | 100.0

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Our sales are primarily to governmental entities and prime contractors under government defense and homeland security programs. Accordingly, the level of our revenues is subject to governmental budgetary constraints.
Operating Income
The following tables present information about the operating income of each of the Company’s reported segments for the periods indicated:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Aerospace | $ | 151.9 |  |  | $ | 149.1 |  |  | $ | 125.4 |
C4I and Cyber | 55.9 |  |  | 62.0 |  |  | 50.7 |
ISTAR and EW | 129.1 |  |  | 96.1 |  |  | 134.9 |
Land | 263.7 |  |  | 150.7 |  |  | 80.6 |
ESA | 122.8 |  |  | 56.2 |  |  | (4.7) |
Segment operating income | 723.4 |  |  | 514.1 |  |  | 386.9 |
Unallocated corporate expense, net | (52.0) |  |  | (25.0) |  |  | (17.8) |
Operating income | $ | 671.4 |  |  | $ | 489.1 |  |  | $ | 369.1 |

Cash Flow
Our operating cash flow is affected by the cumulative cash flow generated from our various projects in the reported periods. Project cash flows are affected by the timing of the receipt of advances and the collection of accounts receivable from customers, as well as the timing of payments made by us in connection with the performance of the project. The receipt of payments usually relates to specific events during the project, while expenses are ongoing. As a result, our cash flow may vary from one period to another. Our policy is to invest our cash surplus mainly in interest bearing deposits, in accordance with our projected needs.
In general, subsidiaries are able to transfer cash dividends, loans or advances to Elbit Systems and among themselves, subject to corporate policy and tax considerations in their applicable jurisdiction and subject to management commitment not to distribute tax exempt earnings. Such tax considerations have not had in the past, and are not anticipated to have, a material impact on our ability to meet our obligations.
Our net cash flow provided by operating activities in 2025 was approximately $778 million, resulting mainly from an increase in advances received from customers of approximately $651 million, and the increase in non-cash operating items of $172 million, offset by the increase in inventories of approximately $358 million and an increase in trade receivables and contract assets of approximately $660 million.
Net cash flow used in investing activities in 2025 was approximately $391 million, which was used mainly for the purchase of property, plant and equipment in the amount of $226 million offset by proceeds from sales of a subsidiary and an investment of approximately $15 million.
Net cash flow used in financing activities in 2025 was approximately $18 million, the proceed from issuance of shares amounted to $573 million, which was used mainly for repayment of commercial papers in the amount of $302 millions and repayment of long and short-term credit and loans in the amount of $110 million, payment of dividends in the amount of $112 million, and repayment of Series B, C and D Notes in the amount of $67 million.
Financial Resources
The financial resources available to us include profits, collection of accounts receivable, proceeds from the issuance of external indebtedness, advances from customers and the government of Israel and other third parties’ programs such as the Israel Innovation Authority and development grants. In addition, we have access to bank credit lines and financing in Israel and abroad based on our capital, assets and activities.
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Elbit Systems and some subsidiaries are obligated to meet various financial covenants set forth in our respective loans, Series B, C and D Notes and credit agreements. Such covenants include inter alia, requirements for shareholders’ equity, current ratio, operating profit margin, tangible net worth, EBITDA, interest coverage ratio, total leverage, equity and net financial debt. In respect of each of the 12 month periods ending December 31, 2024 and 2025, the Company was in material compliance with its loan obligations.
On December 31, 2025, we had total borrowings from banks in an amount of approximately $81 million in short and long-term loans, and outstanding commercial paper in an amount of approximately $48 million. Additionally we had approximately $308 million of outstanding debt of Series B, C and D Notes, intended for general corporate purposes.
On December 31, 2025, we also had $5,245 million in guarantees issued on our behalf by banks and other financial institutions, mainly in respect of advance payment and performance guarantees provided in the regular course of business.
On December 31, 2025, we had a cash balance amounting to $635 million and short-term bank deposits of approximately $181 million. .
In September 2023, we filed a shelf prospectus with the Israeli Security Authority and the TASE (the Shelf Prospectus). The Shelf Prospectus provides a framework for us to raise funds from time to time in Israel through the offering and sale of various debt and equity securities. In September 2025, the shelf prospectus was extended for an additional year with the consent of the Israeli Securities Authority.
On May 21, 2025, Elbit Systems filed a Registration Statement on Form F-3 with the SEC, which became automatically effective. On May 23, 2025, the Company closed an offering of 1,570,267 ordinary shares at a price to the public of $375 per ordinary share, for total gross proceeds to the Company of approximately $588 million. All ordinary shares sold in the offering were offered by the Company and listed for trading on the Nasdaq Global Select Market. The proceeds of the offering are intended for general corporate purposes.
As of December 31, 2025, we had working capital of $1,758 million and a current ratio of 1.29.
For further information on the level, maturity and terms of our borrowings, see Item 18. Financial Statements – Notes 12, 15 and 16.
We believe our cash balance, amounts available under lines of credits, cash flows from operating activities and our ability to access external capital resources is sufficient to satisfy existing short-term and long-term commitments and plans as well as provide adequate financial flexibility to take advantage of potential strategic business opportunities should they arise within the next year. See Item 3. Key Information – Risk Factors – Financial-Related Risks.
Pensions and Other Post-Retirement Benefits. We account for pensions and other post-employment arrangements in accordance with ASC 715 “Compensation – Retirement Benefits”. Accounting for pensions and other post-retirement benefits involves judgment about uncertain events, including estimated retirement dates, salary levels at retirement, mortality rates, rates of return on plan assets, determination of discount rates for measuring plan obligations, healthcare cost trend rates and rates of utilization of healthcare services by retirees. These assumptions are based on the economic environment in each country. For our pension and other post-retirement benefit assumptions at December 31, 2025 and 2024, see Item 18. Financial Statements – Note 17. On December 31, 2025, our employee benefit liabilities were $488 million, of which we had severance funds of $223 million set aside to satisfy potential obligations.
Material Commitments for Capital Expenditures. We believe that we have adequate sources of funds to meet our material commitments for capital expenditures for the fiscal year ending December 31, 2025 and the subsequent fiscal year (see above “Financial Resources”). Our anticipated capital expenditures (which include mainly construction and the purchase of equipment, buildings and enhancements to our ERP system) as of December 31, 2025 are somewhat higher than those as of December 31, 2024, due to an anticipated increase in expenditures for buildings and certain other expenses. We plan to pay for such anticipated capital expenditures using cash from operations. See also Item 18. Financial Statements – Consolidated Statements of Cash Flows and Note 10.
Israeli Series B, C and D Notes
In July 2021, Elbit Systems completed a public notes offering on the TASE of NIS 1.9 billion (equal to approximately $575 million at the time of the offering) Series B, C and D Notes. The Notes were offered and sold pursuant to the Shelf Prospectus filed in 2020 with the Israeli Securities Authority.
Details of the Notes are as follows:
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Tranche | Face Value (NIS) | Maturity | Annual Interest Rate (%) | Adjustments
Series B | 1,500,000,000 | June 30, 2029 | 1.08 | None
Series C | 200,000,000 | June 30, 2029 | 2.12 | Changes in the New Israeli Shekel / U.S. dollar exchange rate
Series D | 200,000,000 | June 30, 2035 | 2.67 | Changes in the New Israeli Shekel / U.S. dollar exchange rate

The Series B, C and D Notes are unsecured and non-convertible. The offering was made exclusively in Israel to residents of Israel only.
The proceeds of the offering are intended for general corporate purposes, which may include, among others, financing of the Company’s operating and investment activities, mergers and acquisitions and payments of outstanding debt under its credit facilities.
Following the completion of the Notes offering, we entered into cross-currency interest rate swap transactions in order to effectively hedge the effect of interest and exchange rate differences resulting from the Series B Notes that are not adjusted in accordance with changes in the NIS/U.S dollar exchange rate. Under the cross-currency interest rate swaps, the Series B Notes were adjusted to the changes of the NIS to the U.S. dollar and paid a fixed U.S. dollar interest rate of 1.92% per annum.
During 2025 and 2024 the company paid installments of Notes B, C and D in the amount of approximately $67 million per year.
Israeli Commercial Paper
In 2023, Elbit Systems issued in Israel a U.S. dollar denominated commercial paper series A in an amount of approximately $314 million par value, bearing an annual interest of the three-months SOFR interest rate and an additional 1% (Series A commercial paper). During 2024, the Company issued additional Series A commercial paper and repaid certain portions of the Series A commercial paper.
The Series A commercial paper is for a term of 90 days, which may be extended by additional periods of 90 days each, up to a maximum period of five years. The Series A commercial paper is also subject to early repayment at the request of an investor or at the Company's discretion - See also Item 18. Financial Statements – Note 12.
In September 2024, Elbit Systems completed an issuance in Israel of a U.S. dollar denominated commercial paper in an amount of $110 million par value bearing an annual interest of the three-months SOFR plus an additional 1.25% (Series B commercial paper). During 2025, the Company fully repaid the Series B commercial paper.
As of December 31, 2025 we had approximately $48 million par value issued and outstanding Series A commercial paper. During February 2026, the Company fully repaid the Series A commercial paper.
Our commercial paper is not listed on any stock exchange.
Impact of Inflation and Exchange Rates
Functional Currency.
Our reporting currency is the U.S. dollar, which is also the functional currency for most of our consolidated operations. A majority of our sales are made outside of Israel in non-Israeli currency, mainly U.S. dollars, as well as a majority of our purchases of materials and components. A significant portion of our expenses, mainly labor costs, are in NIS. Some of our subsidiaries have functional currencies in Euro, GBP, Brazilian reals, Australian dollars and other currencies. Transactions and balances originally denominated in U.S. dollars are presented in their original amounts. Transactions and balances in currencies other than the U.S. dollar are remeasured in U.S. dollars according to the principles set forth in ASC 830 “Foreign Currency Matters”. Exchange gains and losses arising from remeasurement are reflected in financial expenses, net, in the consolidated statements of income.
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Market Risks and Variable Interest Rates
Market risks relating to our operations result mainly from changes in interest rates and exchange rates. We use derivative instruments to limit exposure to changes in exchange rates in certain cases. We also typically enter into forward contracts in connection with transactions where long-term contracts have been signed and that are denominated in currencies other than U.S. dollars or NIS. We also enter from time to time into forward contracts and other hedging instruments related to NIS based on market conditions.
We use financial instruments and derivatives in order to limit our exposure to risks arising from changes in exchange rates and to mitigate our exposure to effects of changes in foreign currency rates and interest rates. The use of such instruments does not expose us to additional exchange rate risks since the derivatives are held against an asset (for example, excess assets in Euros). Our policy in utilizing these financial instruments is to protect the dollar value of our cash and cash equivalent assets rather than to serve as a source of income.
In the context of our overall treasury policy, specific objectives apply to the management of financial risks. These objectives are disclosed under the headings below “NIS/U.S. Dollar Exchange Rates”, “Inflation and Currency Exchange Rates” and “Foreign Currency, Derivatives and Hedging”.
On December 31, 2025, our liquid assets were comprised of bank deposits and short and long-term investments. Our deposits and investments earn interest based on variable interest rates, and their value as of December 31, 2025 was therefore exposed to changes in interest rates. Should interest rates either increase or decrease, such change may affect our results of operations due to changes in the cost of the liabilities and the return on the assets that are based on variable rates.
NIS/U.S. Dollar Exchange Rates. We attempt to manage our financial activities in order to reduce material financial losses in U.S. dollars resulting from the impact of inflation and exchange rate fluctuations on our non-U.S. dollar assets and liabilities. Our income and expenses in NIS are translated into U.S. dollars at the prevailing exchange rates as of the date of the transaction. Consequently, we are affected by changes in the NIS/U.S. dollar exchange rates. We entered into other derivative instruments to limit our exposure to exchange rate fluctuations, related mainly to payroll expenses incurred in NIS. See Item 11. Quantitative and Qualitative Disclosure About Market Risk. The amount of our exposure to the changes in the NIS/U.S. dollar exchange rate may vary from time to time. See Item 3. Key Information – Risk Factors – Financial-Related Risks.
Inflation and Currency Exchange Rates
The U.S. dollar cost of our operations in Israel is influenced by any increase in the rate of inflation in Israel that is not fully offset by the devaluation of the NIS in relation to the U.S. dollar. Unless inflation in Israel is offset by a devaluation of the NIS, such inflation may have a negative effect on the profitability of contracts where Elbit Systems or any of our Israeli subsidiaries receives payment in U.S. dollars, NIS linked to U.S. dollars or other foreign currencies, but incurs expenses in NIS linked to the CPI. Inflation in Israel and currency fluctuations may also have a negative effect on the profitability of fixed-price contracts where we receive payments in NIS.
In the past, our profitability was negatively affected when inflation in Israel (measured by the change in the CPI from the beginning to the end of the calendar year) exceeded the devaluation of the NIS against the U.S. dollar and at the same time we experienced corresponding increases in the U.S. dollar cost of our operations in Israel. In 2025, the inflation rate was approximately a positive 2.6%, and the NIS strengthened against the U.S. dollar by approximately 12.5%. In 2024, the inflation rate was approximately a positive 3.2%, and the NIS weakened against the U.S. dollar by approximately 3.1%. There can be no assurance that we will not be materially adversely affected in the future if inflation in Israel exceeds the devaluation of the NIS against the U.S. dollar or if the timing of such devaluation lags behind increases in inflation in Israel.
A devaluation of the NIS in relation to the U.S. dollar also has the effect of decreasing the dollar value of any of our assets that consist of NIS or accounts receivable denominated in NIS, unless such assets or accounts receivable are linked to the U.S. dollar. Such a devaluation also has the effect of reducing the U.S. dollar amount of any of our liabilities that are payable in NIS, unless such payables are linked to the U.S. dollar. On the other hand, any increase in the value of the NIS in relation to the U.S. dollar will have the effect of increasing the U.S. dollar value of any unlinked NIS assets as well as the U.S. dollar amount of any unlinked NIS liabilities and expenses.
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Foreign Currency, Derivatives and Hedging
While our functional currency is the U.S. dollar, we also have some non-U.S. dollar or non-U.S. dollar linked exposure to currencies other than NIS. These are mainly non-U.S. dollar customer debts, payments to suppliers and subcontractors as well as obligations in other currencies, assets or undertakings. Some subcontractors are paid in local currency under prime contracts where we are paid in U.S. dollars. The exposure on these transactions has not been in amounts that are material to us. However, when we view it economically advantageous, due to anticipated uncertainty in the applicable foreign exchange rates, we seek to minimize our foreign currency exposure by entering into hedging arrangements, obtaining periodic payments upon the completion of milestones, obtaining guarantees and security from customers and sharing currency risks with subcontractors.
A significant part of our future cash flows that will be denominated in currencies other than the NIS and the U.S. dollar were covered as of December 31, 2025 by forward contracts. On December 31, 2025, we had forward contracts for the sale and purchase of Euro, GBP and various other currencies totaling approximately $5,629 million ($4,838 million in Euro, $256 million in GBP and $536 million in other currencies). See also Item 18. Financial Statements – Note 19.
As of December 31, 2025, an unrealized net income of approximately $(239) million was included in accumulated other comprehensive income. As of December 31, 2025, all of the forward contracts are expected to mature during the years 2025 – 2034.
The table below presents the balance of the derivative instruments held in order to limit the exposure to exchange rate fluctuations as of December 31, 2024 and is presented in millions of U.S. dollar equivalent terms:

Forward |  | Notional Amount* |  | Unrealized Gain (Loss)
Buy US$ and Sell: |  |  |  |
Euro |  | 4,520.5 |  |  | (76.5) |
GBP |  | 166.1 |  |  | 0.1 |
Other various currencies |  | 406.7 |  |  | (3.5) |

Forward |  | Notional Amount* |  | Unrealized Gain (Loss)
Sell US$ and Buy: |  |  |  |
Euro |  | 317.1 |  |  | 5.6 |
GBP |  | 89.5 |  |  | 1.1 |
NIS |  | 411.7 |  |  | 67.2 |
Other various currencies |  | 129.0 |  |  | 1.2 |

*Notional amount information is based on the foreign exchange rate at year end.
Off-Balance Sheet Transactions
Offset / Industrial Participation
In connection with projects in certain countries, Elbit Systems and some of our subsidiaries have entered and may enter in the future into “Industrial Participation” or “offset” agreements, required by an increasing number of our customers as a condition to our obtaining orders for our products and services, or as an important consideration for award. These agreements are customary in our industry and are designed to facilitate independence and economic flow back (buy-back) and/or technology transfer to businesses or government agencies in the applicable country. As a result of the conflict between Russia and Ukraine and other geopolitical events, a number of countries are increasing such activities in order to enhance local industry involvement and independence in defense procurement and to have a positive impact on the local economy.
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These commitments may be satisfied by our placement of direct work or vendor orders for supplies and/or services, transfer of technology, investments or other forms of assistance in the applicable country in accordance with applicable local laws and regulations. We attempt to leverage economies of scale by managing our Industrial Participation activities from an overall corporate perspective. The Industrial Participation rules and regulations, as well as the underlying contracts, may differ from one country to another. The ability to fulfill the Industrial Participation obligations may depend, among other things, on the availability of local suppliers with sufficient capability to meet our requirements and which are competitive in cost, quality and schedule. In certain cases, our commitments may also be satisfied through transactions conducted by other parties, including but not limited to our suppliers, or through “swap” transaction among various countries’ Industrial Participation authorities. Our Industrial Participation activities are conducted in accordance with our anti-bribery and corruption compliance policies.
We do not commit to Industrial Participation agreements until orders for our products or services are definitive, but in some cases the orders for our products or services may become effective only after our corresponding Industrial Participation commitments become effective. Industrial Participation programs generally extend at least over the relevant commercial contract period and may provide for penalties in the event we fail to perform in accordance with Industrial Participation requirements. In some cases we provide guarantees in connection with the performance of our Industrial Participation obligations.
We have developed dedicated Industrial Participation management tools and procedures within our ERP system and work to continuously improve our infrastructure in order to efficiently meet our obligations. Furthermore, we manage our Industrial Participation obligations at the corporate level, which helps to increase visibility, facilitate allocations within the Company and reduce risk. However, should we be unable to meet such obligations we may be subject to contractual penalties, our guarantees may be drawn upon and our chances of receiving additional business from the applicable customers could be reduced or, in certain cases, eliminated. See Item 3. Key Information – Risk Factors – Financial-Related Risks.
As of December 31, 2025, we had outstanding Industrial Participation obligations totaling approximat ely $2.502 billion tha t extend through 2038. See Item 18. - Financial Statements - Note 21B.
Non-GAAP Financial Data
The following non-GAAP financial data, including adjusted gross profit, adjusted operating income, adjusted net income, and adjusted diluted earnings per share, is presented to enable investors to have additional information on our business performance as well as a further basis for periodical comparisons and trends relating to our financial results. We believe such data provides useful information to investors and analysts by facilitating more meaningful comparisons of our financial results over time. The non-GAAP adjustments exclude amortization expenses of intangible assets related to acquisitions that occurred mainly in prior periods, capital gains related primarily to the sale of investments, restructuring activities, Non-indemnified costs in respect to special circumstances, non-cash stock based compensation expenses, re-evaluations of investments in affiliated companies, non-operating foreign exchange gains or losses, one-time tax expenses, and the effect of tax on each of these items. We present these non-GAAP financial measures because management believes they supplement and/or enhance management’s, analysts’ and investors’ overall understanding of the Company’s underlying financial performance and trends and facilitate comparisons among current, past, and future periods. Once the special circumstances in Israel ends, the company will discontinue the reconciliation of non‑indemnified costs.
For the years ended December 31, 2025 and 2024, we have included adjustments related to uncompensated labor costs relating to the “Swords of Iron” war. Uncompensated labor costs are certain employment-related expenses incurred by the Company, in respect of its employees that were mobilized for reserve duty in “Swords of Iron” war, which were above the statutory ceiling for refund.
Specifically, management uses adjusted gross profit, adjusted operating income, and adjusted net income attributable to the Company’s shareholders to measure the ongoing gross profit, operating profit and net income performance of the Company, because these measures adjust for more significant non-recurring items, amortization expenses of intangible assets relating to prior acquisitions, and non-cash expense which can fluctuate year to year.
We believe that adjusted gross profit, adjusted operating income, and Adjusted net income attributable to the Company’s shareholders are useful to existing shareholders, potential shareholders and other users of our financial information because they provide measures of the Company’s ongoing performance that enable these users to perform trend analysis using comparable data.
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Management uses adjusted diluted earnings per share to evaluate further adjusted net income attributable to the Company’s shareholders while considering changes in the number of diluted shares over comparable periods.
We believe that adjusted diluted earnings per share is useful to existing shareholders, potential shareholders and other users of our financial information because it also enables these users to evaluate adjusted net income attributable to Company’s shareholders on a per-share basis.
The non-GAAP measures used by the Company are not based on any comprehensive set of accounting rules or principles. We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts associated with our results of operations, as determined in accordance with GAAP, and that these measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP measures.
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. They 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.
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Reconciliation of GAAP (Audited) to
Non-GAAP (Unaudited) Supplemental Financial Data
(U.S. dollars in millions, except for per share amounts)

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
GAAP gross profit | $ | 1,935.3 |  |  | $ | 1,641.8 |  |  | $ | 1,483.0 |
Adjustments: |  |  |  |  |
Amortization of purchased intangible assets (*) | 16.2 |  |  | 18.9 |  |  | 27.3 |
Restructuring of a subsidiary's activities | — |  |  | — |  |  | 17.5 |
Non-indemnified costs in respect to special circumstances | 6.3 |  |  | 7.9 |  |  | 4.3 |
Stock-based compensation | 4.0 |  |  | 2.4 |  |  | 1.8 |
Non-GAAP gross profit | $ | 1,961.8 |  |  | $ | 1,671.0 |  |  | $ | 1,533.9 |
Percent of revenues | 24.7 | % |  | 24.5 | % |  | 25.7 | %
GAAP operating income | $ | 671.4 |  |  | $ | 489.1 |  |  | $ | 369.1 |
Adjustments: |  |  |  |  |
Amortization of purchased intangible assets (*) | 31.0 |  |  | 34.2 |  |  | 43.9 |
Restructuring of a subsidiary's activities | — |  |  | — |  |  | 17.5 |
Stock-based compensation | 26.4 |  |  | 15.8 |  |  | 12.1 |
Non-indemnified costs in respect to special circumstances | 9.0 |  |  | 11.3 |  |  | 6.1 |
Non-GAAP operating income | $ | 737.8 |  |  | $ | 550.4 |  |  | $ | 448.7 |
Percent of revenues | 9.3 | % |  | 8.1 | % |  | 7.5 | %
GAAP net income attributable to Elbit Systems’ shareholders | $ | 534.3 |  |  | $ | 321.1 |  |  | $ | 215.1 |
Adjustments: |  |  |  |  |
Amortization of purchased intangible assets (*) | 31.0 |  |  | 34.2 |  |  | 43.9 |
Restructuring of a subsidiary's activities | — |  |  | — |  |  | 17.5 |
Stock-based compensation | 26.4 |  |  | 15.8 |  |  | 12.1 |
Capital gain | (13.7) |  |  | (2.0) |  |  | — |
Revaluation of investments measured under fair value method | (4.5) |  |  | 19.4 |  |  | 3.0 |
Non-operating foreign exchange (gains) losses | 18.5 |  |  | (0.6) |  |  | 12.0 |
Non-indemnified costs in respect to special circumstances | 9.0 |  |  | 11.3 |  |  | 6.1 |
Tax effect and other tax items, net | (3.0) |  |  | (7.7) |  |  | (10.9) |
Non-GAAP net income attributable to Elbit Systems’ shareholders | $ | 598.0 |  |  | $ | 391.5 |  |  | $ | 298.8 |
Percent of revenues | 7.5 | % |  | 5.7 | % |  | 5.0 | %
GAAP diluted net EPS | $ | 11.39 |  |  | $ | 7.18 |  |  | $ | 4.82 |
Adjustments, net | 1.36 |  |  | 1.58 |  |  | 1.88 |
Non-GAAP diluted net EPS | $ | 12.75 |  |  | $ | 8.76 |  |  | $ | 6.70 |

(*) While amortization of acquired intangible assets is excluded from the measures, the revenue of the acquired companies is reflected in the measures and the acquired assets contribute to revenue generation.
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Item 6. Directors, Senior Management and Employees.
Directors and Executive Officers
Board of Directors
Our directors as of March 5, 2026 a r e as follows:

Name | Age |  | Director Since
David Federmann (Chair) | 51 |  | 2007
Ehud (Udi) Adam | 68 |  | 2023
Noaz Bar Nir (External Director) | 61 |  | 2020
Rina Baum | 80 |  | 2001
Michael Federmann | 82 |  | 2000
Tzipi Livni | 67 |  | 2023
Dov Ninveh | 78 |  | 2000*
Professor Ehood (Udi) Nisan | 58 |  | 2016
Bilha (Billy) Shapira (External Director) | 73 |  | 2019

__________________
* was not a member of the Board from April to October 2013
The term of office of each director, other than the External Directors, expires at the conclusion of the annual general shareholders meeting to be held during 2026, unless any director’s office is vacated earlier in accordance with the provisions of the Companies Law and the Company’s Articles of Association. The third three-year term of office for Bilha (Billy) Shapira as an External Director expires in November 2028, and the second three-year term of office for Noaz Bar Nir as an External Director expires i n August 2026.
David Federmann. David Federmann has served as chair of the Board since August 2023, after serving as vice chair of the Board since 2015. He has served in various management capacities at Federmann Enterprises Ltd. (FEL), a privately-owned Israeli company, since 2000. FEL, directly and through subsidiaries, holds a diversified portfolio of investments, including ownership of approximately 41.5% of the Company’s outstanding shares. FEL also has ownership interests in Dan Hotels Ltd. (Dan Hotels), an Israeli hotel chain, Freiberger Compound Materials GmbH (Freiberger), a German company engaged in the supply of materials for the semi-conductor industry, and several financial, real estate and venture capital investments. David Federmann currently serves as chair of the board of Freiberger and as a member of the boards of directors of Dan Hotels, BGN Technologies Ltd. (the technology transfer company of Ben-Gurion University), and several other private companies. David Federmann is the son of Michael Federmann, who may be considered our controlling shareholder. Mr. David Federmann holds a bachelor’s degree in mathematics and philosophy from New York University.
Ehud (Udi) Adam. Ehud (Udi) Adam has served as a strategic consultant to various public and private companies in the technology sector since June 2020. From 2008 until 2013, Mr. Adam served as the CEO of the Nuclear Research Center-Negev. From 2016 until May 2020, Mr. Adam served as director general of the Israeli Ministry of Defense. Since 2020, Mr. Adam has served as a director of Arma Ferrea Ltd., a company that develops and manufactures reactive armor systems, and as a director of Arma Kinetica Ltd., a company in the field of kinetic energy solutions. Since 2020, he has also served as chair of the board of Armalux Ltd., a company that engages in the field of laser systems. Between 2022 and 2025, Mr. Adam served as chair of the board and since 2025, as a director of Ecology for Protected Community Ltd., a company that employs people with special needs to collect electronic waste. Since 2021, Mr. Adam has served as the chair of a public committee of the Geophysical Institute of Israel and, since 2011, as president of “Midor Ledor”, a non-profit community association. In 2016, Mr. Adam served as chair of the board of IMI Systems Ltd., formerly an Israeli government owned defense company later acquired by the Company. Mr. Adam served in the IDF for 31 years, where he holds the rank of major general (reserves), and served as head of the Technological and Logistics Directorate and as head of the Northern Command. Mr. Adam holds a bachelor of arts degree in political science and government from Bar-Ilan University in Ramat Gan, Israel and a master’s degree in military and strategic leadership from Ecole de Guerre Paris. Mr. Adam serves as chair of the Company’s Corporate Governance and Nominating Committee and as a member of the Company's Compensation Committee and the Audit and Financial Statements Review Committee.
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Noaz Bar Nir. (External Director). Mr. Bar Nir has served as a business consultant for various private and public entities in the areas of medicine and tourism since 2019 and is a lecturer on health systems management in the Netanya Academic College. Noaz Bar Nir has served since 2022 as a director of Yad Ben-Zvi, a research institute established to promote Zionist educational and cultural activities. He also served as a director of Remedor Biomed Ltd., a company specializing in advanced treatment of wounds, from 2016 to 2017 and from 2018 to 2023, and of Radio Ashams FM Ltd., a regional radio station located in northern Israel, since 2019. From 2018 until the end of 2022, he served as a director of Genefron Ltd., a company in the field of genomic-based personal medicine. From 2017 to 2018, Mr. Bar Nir served as CEO of Clalit Health Services Ltd. (Clalit), Israel’s largest health organization, and as chair of the boards of Clalit’s subsidiaries S.L.H Medical Services Ltd., Mor – The Institution of Medical Information Ltd. and Clalit - Medical Engineering Ltd. From 2009 to 2017, he served in various senior executive positions and as chair of several companies in the fields of health and tourism, including as chief executive officer of the Israel Hotel Association from 2015 to 2017, as CEO of Harokeah Ltd., a network of pharmacies from 2014 to 2015, as chair of the board of Shfayim Hotel Ltd. and Shfayim Park Ltd. from 2013 to 2015 and as director general of the Israeli Ministry of Tourism from 2009 to 2013. Prior to that, Mr. Bar Nir held various financial positions, including as chief financial officer of Clalit from 2002 to 2008, and as head of the budgets, economics and cost accounting department of Clalit from 1996 to 2002. From 1991 to 1995, he held several positions in the Israeli Ministry of Finance. From 2005 to 2007 he served as a member of the investments committee of Clal Pension and Gemel Ltd. In addition, from 1993 to 2017, he served as a director in several entities, including among others Dikla Insurance Company Ltd. Mr. Bar Nir holds a bachelor’s degree in economics and an MBA, with proficiencies in financing, information systems and accounting, from the Hebrew University of Jerusalem, Israel. Mr. Bar Nir serves as chair of the Company's Audit and Financial Statements Review Committee and as a member of the Company's Compensation Committee and the Corporate Governance and Nominating Committee. He is considered by the Board to have accounting and financial expertise under the Companies Law and is designated as an audit committee financial expert in accordance with SEC rules.
Rina Baum. Rina Baum is vice president of FEL and has served as a director and CEO of Uni-bit Insurance Agency (1983) Ltd. since 1990. She currently serves as a director of Dan Hotels and as chairman and director of Etanit Building Products Ltd. (Etanit). She also holds other managerial positions with investee companies of FEL. Mrs. Baum holds a law degree (LL.B) from the Hebrew University.
Michael Federmann. Michael Federmann served as chair of the Board between 2000 and August 2023. Since 2002 he has served as chair and CEO of FEL, where he held managerial positions since 1969. Mr. Federmann also serves as a director of Dan Hotels and of Freiberger. He serves as the president of the Germany - Israel Chamber of Industry and Commerce, was awarded the Order of Merit of the Federal Republic of Germany and is an Honorary Commander of the Order of the British Empire (CBE). Michael Federmann may be considered our controlling shareholder and is the father of David Federmann, the chair of the Board. Mr. Michael Federmann holds a bachelor’s degree in economics and political science from the Hebrew University, which has also awarded him an honorary doctorate in philosophy.
Tzipi Livni. Tzipi Livni has served as an external director of Bezeq the Israeli Telecommunication Corp. Ltd., the largest telecommunications company in Israel, and as a director of its subsidiaries – Bezeq International Ltd., Yes TV and Communications Services Ltd. and Pelephone Communications Ltd., each since April 2021. Mrs. Livni has also served as a director of the Institute for National Security Studies, a research institution affiliated with Tel Aviv University, since June 2021, and has been a member of the advisory board of Seevix Material Sciences Ltd., a biotechnology company, since October 2021. Since March 2023, Mrs. Livni has served as a member of the board of trustees of Nizami Ganjavi International Center, a non-profit organization that promotes collaboration among different cultures and civilizations and, since 2018, she has served as a member of the board of trustees of the International Crisis Group. Mrs. Livni is a member of the Aspen Global Cybersecurity Group and previously served as a member of the Multinational Cyber Action Committee. Mrs. Livni also serves as a member of the global steering committee of Campaign for Nature and the Aspen Ministers Forum. Mrs. Livni is also an international speaker and strategic advisor and was a fellow at the Kennedy School of Government at Harvard University in Boston in 2019. Between 1999 and 2019, Mrs. Livni held various political and ministerial positions in Israel, including the Minister of Foreign Affairs and Vice Prime Minister, Minister of Justice, Minister of Regional Cooperation, Minister of Immigrants Absorption, Minister of Housing and Construction and Minister of Agriculture, and was a member of the Security Cabinet and leader of the opposition in the Israeli Knesset. Prior to this time, she was Head of the Government Companies Authority and practiced law. Tzipi Livni holds a law degree (LL.B.) from Bar-Ilan University. Mrs. Livni serves as a member of the Company's Audit and Financial Statements Review Committee.
Dov Ninveh. Dov Ninveh served as chief financial officer and a manager of FEL from 1994 until 2020 and as the general manager of Heris Aktiengesellschaft from 2012 until 2021. He currently serves as a member of the board of directors of Freiberger. Mr. Ninveh served as a director of Dan Hotels from 2003 until 2022 and as a member of the board of directors of Etanit from 1994 until 2023. From 1996 until 2000 he served as director of Elop Electro-Optic Industries Ltd. (Elop) and from 1989 to 1994, he served as deputy general manager of Etanit. Mr. Ninveh holds a bachelor of science degree in economics and management from the Technion – Israel Institute of Technology (the Technion) in Haifa, Israel.
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Professor Ehood (Udi) Nisan. Prof. Ehood (Udi) Nisan is a professor in the School of Public Policy and Government of the Hebrew University. He is an External Director, chair of the investment committee and a member of the risk management and several other committees of Harel Insurance Finance Services Ltd. He is also a member of the audit committee of Azrieli College of Engineering Jerusalem. Since 2023, Prof. Nisan has served as the chairman of the Hebrew University Assets Company Ltd. From 2016 to 2025 he served as an External Director of Rekah Pharmaceutical Industry Ltd. From 2013 to 2025 he served as a member of the board of Bezalel Academy of Art and chair of its finance committee. From 2014 until 2021, he served as a member of the board of the Jerusalem Biblical Zoo. From 2013 to 2016, he was the chair of the board of directors of Delek, The Israel Fuel Corporation Ltd. From 2009 to 2011, Prof. Nisan was the director of the national budget department of the Israeli Ministry of Finance, and from 2007 to 2009, he served as the director of the Government Companies Authority. Prior to that, he served in various executive positions in the Israeli Ministry of Finance and served as a member and chair of several government and public committees, including as the CEO of the Jerusalem Development Authority. Prof. Nisan holds bachelor’s and master’s degrees in economics and business administration, and a PhD in public economics and policy from the Hebrew University. During 2006 - 2007, Prof. Nisan completed his post-doctoral studies at the Kennedy School of Government at Harvard University, where he was also a Senior Fellow in 2011 - 2012. Prof. Nisan serves as a member of the Company's Audit and Financial Statements Review Committee. He is considered by the Board to have accounting and financial expertise under the Companies Law and is designated as an audit committee financial expert in accordance with SEC rules.
Bilha (Billy) Shapira (External Director). Mrs. Bilha (Billy) Shapira serves as a member of the board of directors and of the board of governors of the Azrieli College of Engineering, the boards of several non-profit organizations in Israel and the board of governors of the Hebrew University. She is also a consultant for TABI Learning Technologies Ltd., a start-up company in the field of pedagogical instruments for students with learning and sensory integration disorders. From 2020 until 2024 she served as a member of the audit committee of the Azrieli College of Engineering. From 2018 until 2020, she was the head of the Israeli branch of Helmholtz Association of German Research Centers, a German association with centers worldwide that promotes research collaboration between German institutions and industries and foreign academic institutions, industrial entities and governmental research bodies. From 2009 until 2017, Mrs. Shapira served as vice president and CEO of the Hebrew University and as the CEO of VERA - the Association of Heads of Universities in Israel. Prior to that, she served for 36 years in various management capacities at the Hebrew University. Mrs. Shapira holds a bachelor’s degree in Russian studies and international relations and a master’s degree in administration and public policy from the Hebrew University. Mrs. Shapira serves as chair of the Company’s Compensation Committee and is a member of the Company’s Audit and Financial Statements Review Committee and the Corporate Governance and Nominating Committee. She is considered by the Board to have professional competence under the Companies Law.
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Executive Officers
For purposes of this annual report, our executive officers, who are the President and CEO and the Executive Vice Presidents who report to the President and CEO, as of March 5, 2026, are as follows:

Name |  | Age |  | Position
Bezhalel Machlis |  | 62 |  | President and Chief Executive Officer
Jonathan Ariel |  | 69 |  | Executive Vice President – Chief Legal Officer
Boaz Cohen |  | 61 |  | Executive Vice President – Marketing and Business Development North America, Australia and New Zealand
Haim Delmar |  | 56 |  | Executive Vice President – General Manager C4I and Cyber
Michael Edelstein |  | 59 |  | Executive Vice President – Strategy and Business Development Israel
Dr. Shelly Gordon |  | 65 |  | Executive Vice President – Chief Human Resources Officer
Dr. Yaacov Kagan |  | 61 |  | Executive Vice President – Chief Financial Officer
Ran Kril |  | 55 |  | Executive Vice President – International Marketing and Business Development
Sasson Meshar |  | 58 |  | Executive Vice President – Airborne Electro Optic Systems Business Line & Regional Business Development
Yuval Ramon |  | 60 |  | Executive Vice President – Chief Operating Officer
Oren Sabag |  | 52 |  | Executive Vice President – General Manager ISTAR and EW
Yoram Shmuely |  | 65 |  | Executive Vice President – General Manager Aerospace
Yehuda Vered |  | 68 |  | Executive Vice President – General Manager Land
Yehoshua Yehuda |  | 58 |  | Executive Vice President – Strategy and Chief Technology Officer

Bezhalel Machlis. Bezhalel Machlis has served as the Company’s President and CEO since 2013. From 2008 until 2012, he served as executive vice president – general manager land and C4I, after serving as corporate vice president – general manager land systems and C4I since 2004. In 2003, he served as corporate vice president – general manager ground, C4I and battlefield systems. From 2000 until 2002, he served as vice president – battlefield and information systems. Mr. Machlis joined Elbit Ltd. in 1991 and held various management positions in the battlefield and information systems area. Prior to that, he served as an artillery officer in the IDF, where he holds the rank of colonel (reserves). Mr. Machlis holds a bachelor of science degree in mechanical engineering and a bachelor of arts degree in computer science from the Technion and an MBA from Tel Aviv University, Israel. He is a graduate of Harvard University Business School’s Advanced Management Program in Boston.
Jonathan Ariel. Jonathan Ariel has served as Executive Vice President – Chief Legal Officer since 2012, after serving as senior vice president – general counsel since 2008. He joined Elbit Systems in 1996 and has held several positions within the legal department, including vice president – general counsel of Elbit Systems Electro-Optics Elop Ltd. Prior to joining Elbit Systems, Mr. Ariel served as a legal advisor both in-house and in private law firms in Israel and the U.S. Mr. Ariel holds a law degree (LL.B.) from Tel-Aviv University. He is admitted to the Israeli Bar.
Boaz Cohen. Boaz Cohen was appointed Executive Vice President – Marketing and Business Development North America, Australia and New Zealand in 2021 and 2023, respectively. Prior to that, since 2013 he served as senior vice president – land systems. After retiring from the IDF as a colonel in the Armored Corps in 2007, Mr. Cohen joined Elbit Systems and held various management positions in the land and C4I areas. Mr. Cohen holds a bachelor of arts degree in management and economics from Haifa University, Israel and is a graduate of Harvard University Business School’s Advanced Management Program.
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Haim Delmar. Haim Delmar was appointed Executive Vice President – General Manager C4I and Cyber in 2018, after serving as senior vice president - C4ISR and HLS since 2009. Mr. Delmar joined Elbit Systems in 1993 and held various engineering and management positions in the battlefield and information systems area. From 2000 until 2004, he served in executive positions at Utopy Inc. and Mobilitec Inc. in the telecommunication and data mining fields, returning to Elbit Systems in 2004. Mr. Delmar holds a bachelor of science degree in computer engineering from the Technion and is a graduate of Harvard University Business School’s Advanced Management Program.
Michael Edelstein. Michael (Miki) Edelstein was appointed Executive Vice President – Strategy and Business Development Israel in 2022. Mr. Edelstein joined Elbit Systems in 2021 as senior vice president – strategy and business development Israel. Prior to that, Mr. Edelstein served for 34 years in the IDF, where he holds the rank of Major General (reserves), in a variety of positions, including command of several combat units and as Defense Attaché to the U.S. In 2020 he was awarded the Legion of Merit medal by the U.S. Secretary of Defense. Mr. Edelstein holds a bachelor degree in law and business management from Reichman University in Herzliya, Israel and a Master’s degree in national resources management from the National Defense University in Washington, D.C. and is a graduate of the International Security Program at the Kennedy School of Government at Harvard University.
Dr. Shelly Gordon. Dr. Shelly Gordon was appointed Executive Vice President – Chief Human Resources Officer shortly after joining Elbit Systems in 2015. From 2012 until joining Elbit Systems, she headed executive education at the Interdisciplinary Center Herzliya. From 2005 until 2012, Dr. Gordon served as vice president – organizational development and talent management at Amdocs Limited and served as vice president – human resources at Elite Confectionary Ltd. from 2000 until 2005. Prior to that, she worked as an independent consultant with management teams and senior managers, leading major transformations in varied organizations and industries. Dr. Gordon received a bachelor’s degree in education and art from the Hebrew University, a bachelor’s degree in psychology from Tel-Aviv University and a doctorate in management studies from the University of Hertfordshire in the U.K.
Dr. Yaacov Kagan. Dr. Yaacov (Kobi) Kagan was appointed Executive Vice President – Chief Financial Officer, in 2022. He was appointed in 2018 as deputy general manager and senior vice president – finance and control in Elbit Systems Land, and from 2010 to 2018 he served as Elbit Systems Land and C4I’s vice president – finance and control. Dr. Kagan joined Elbit Systems in 2008 as a sales director at Elbit Systems Land and C4I. Prior to that, Dr. Kagan served for 26 years in the Israeli Navy, where he holds the rank of a naval captain (reserves), and in the IMOD, in a variety of positions, including the Head of the Navy’s budget department. Dr. Kagan holds a bachelor of arts degree in economics and business administration, an MBA in business administration and a PhD in economics from Bar-Ilan University, and is a graduate of Harvard University Business School’s Advanced Management Program.
Ran Kril. Ran Kril was appointed Executive Vice President – International Marketing and Business Development in 2015. From 2013 until his current appointment, he served as aerospace vice president – marketing and sales, after serving as aerospace vice president – sales and contracts since 2007. He joined Elbit Systems in 1997 and held various senior positions in aerospace's marketing, sales and finance departments. Mr. Kril holds a bachelor of science degree in economics and management from the Technion and a master of science of management degree from the Polytechnic University of New York.
Sasson Meshar. Sasson Meshar was appointed Executive Vice President – Airborne Electro-Optic Systems Business Line & Regional Business Development in 2025. Mr. Meshar joined Elbit Systems in 2015 as vice president of the DIRCM business unit in the ISTAR division and, since 2017, served as vice president and later senior vice president, head of the Airborne Electro-Optic business line. Prior to that, Mr. Meshar served for 25 years in the IMOD and the Directorate of Defense Research & Development (DDR&D) in various R&D and program management positions. Mr. Meshar holds a bachelor of science degree in engineering from Ben-Gurion University, master of science degree in engineering from Tel-Aviv University and an MBA from Bar-Ilan university. He is a graduate of Harvard University Business School’s Advanced Management Program.
Yuval Ramon. Yuval Ramon was appointed Executive Vice President – Chief Operating Officer in 2015. From 2014 until his current appointment, he served as vice president – corporate operations. From 1998 to 2013, he served in a number of management positions in ESA, including as senior vice president of operations, site lead at the Merrimack operations and director of sales and contracts for the Fort Worth operations. He joined Elbit Systems in 1994 as a sales and contract manager. Mr. Ramon holds a bachelor of science degree in industrial engineering and economics from the Technion.
Oren Sabag. Oren Sabag was appointed Executive Vice President – General Manager ISTAR and EW in 2022, after serving as executive vice president – co-general manager ISTAR and EW since 2021. From 2014 to 2021, he served as C4I and Cyber senior vice president – radios and secure communications. From 2011 to 2013, he served as vice president for engineering – land and C4I. Mr. Sabag joined Elbit in 1998 and held various engineering and management positions. Mr. Sabag holds a bachelor of science degree in computer engineering from the Technion and an MBA in business management from Haifa University.
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Yoram Shmuely. Yoram Shmuely has served as Executive Vice President – General Manager Aerospace since 2013, after serving as executive vice president – co-general manager aerospace since 2008. From 2003 to 2007, Mr. Shmuely served as corporate vice president – co-general manager airborne and helmet systems. He served as corporate vice president and general manager – helmet-mounted systems from 2000 until 2003. From 1998 until 2000, he was vice president – helmet-mounted systems. From 1996 until 1998, he served as president of a U.S. subsidiary of Elbit Systems. Mr. Shmuely joined Elbit Ltd. in 1990 and served as director of Elbit Ltd.’s helmet-mounted display business. He served as a fighter aircraft pilot in the Israeli Air Force (IAF). Mr. Shmuely holds a bachelor of science degree in electronic engineering from the Technion.
Yehuda Vered. Yehuda (Udi) Vered has served as Executive Vice President – General Manager Land since 2018, after serving as executive vice president – general manager land and C4I since 2013. From 2009 until 2013, Mr. Vered served as executive vice president – service solutions as well as vice president – marketing land and C4I. From 2004 to 2008, he served as land and C4I chief financial officer and vice president for contracts and sales. Mr. Vered joined Elbit Systems in 2003 as ground, C4I and battlefield systems vice president – contracts and sales and chief financial officer. Before that, he served as an aircrew officer in the IAF, where he holds the rank of colonel (reserves). Mr. Vered holds a bachelor of arts degree in management and economics from Tel-Aviv University, an M.B.A from Ben-Gurion University and is a graduate of Harvard University Business School’s Advanced Management Program.
Yehoshua Yehuda. Yehoshua (Shuki) Yehuda was appointed Executive Vice President – Strategy and Chief Technology Officer in 2020. From 2016 until his current appointment, he served as executive vice president – chief technology officer. From 2008 until 2016, he served as Elisra’s vice president and chief technology officer as well as general manager – radar solutions business unit. Prior to that he served in a number of management positions in Elisra, which he joined in 2000. Prior to joining Elisra, Mr. Yehuda served as an officer in the IDF, holding command positions in the Intelligence Corps. Mr. Yehuda holds a bachelor of science degree in electrical engineering from Tel-Aviv University and a master of science degree in neural computation from the Hebrew University. He is a graduate of Harvard University Business School’s Advanced Management Program.
Compensation of Directors and Executive Officers
Compensation Policy
Pursuant to the Companies Law, a public company such as Elbit Systems is required to adopt a compensation policy regarding the terms of office and employment of its Office Holders (as defined in the Companies Law, generally refers to Elbit Systems’ directors and executive officers), including compensation, equity-based awards, exemption from liability, indemnification and insurance, severance and other benefits (Employment Terms).
In addition, pursuant to the Companies Law, every three years a compensation policy needs to be re-approved by the board of directors, following the recommendation of the compensation committee, and re-approved by the company’s shareholders, by a Special Uninterested Majority. Special Uninterested Majority me ans the affirmative vote of a majority of the voting power in the company present at the respective meeting either in person, by proxy or by a voting instrument, and voting on the respective resolution, provided that, either: (a) such majority includes a majority of the shareholders who are not controlling shareholders of the company and do not have a “Personal Interest” in the approval of the respective resolution (disregarding abstentions) or (b) the total number of shares of the shareholders referred to in (a) above that are voted against the approval of the proposed resolution does not exceed two percent (2%) of the total voting rights in the company. For the definition of Personal Interest see Item 10. Additional Information – Approval of Certain Transactions – Personal Interest and Extraordinary Transactions.
At the Extraordinary General Meeting of Shareholders held on September 19, 2024, our shareholders, following a favorable recommendation of the Compensation Committee of the Board (the Compensation Committee) and the approval of the Board, approved an amended compensation policy applicable to Employment Terms and arrangements with our Office Holders (the Compensation Policy). For further information, please see the Compensation Policy filed as Exhibit 4.3 to this annual report.
In accordance with the provisions of the Companies Law as set forth above, the Compensation Policy is in effect for a three-year period ending in September 2027 or as otherwise may be mandated from time to time by the Companies Law.
For further information about the approval of Employment Terms of our Office Holders, see Item 10. Additional Information – Approval of Certain Transactions – Approval of Employment Terms of Office Holders.
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Compensation of Directors and Executive Officers
Aggregate Compensation to Directors and Executive Officers
The following table sets forth the aggregate compensation costs for all of our directors and executive officers as a group for the fiscal year ended December 31, 2025: (U.S. dollars in thousands)*

| Salaries, Directors’ Fees Commissions and Bonuses |  | Pension, Retirement and Similar Benefits
All directors (consisting of 9 persons) | $ | 618 |  |  | $ | — |
All executive officers (consisting of 14 persons) | $ | 14,262 |  |  | $ | 1,415 |

*For information regarding the value of equity awards to the directors and executive officers, see below “2018 Equity Incentive Plan for Executive Officers and Equity Plans in Other Entities”.
Directors Fees
In accordance with the Compensation Policy, the Israeli Companies Regulations (Relief from Related Parties’ Transactions), 5760-2000 and the Israeli Companies Regulations (Relief for Companies whose Securities are Listed on a Stock Exchange outside of Israel), 5760-2000 (collectively, the Relief Regulations), the Compensation Committee and the Board have approved compensation to the Company's directors (including to Michael Federmann who may be considered a controlling shareholder of the Company, and his son David Federmann), in accordance with the maximum regulatory rates payable to External Directors in dual-listed companies where the applicable foreign law imposes additional duties or requirements on the independent or External Director beyond those imposed by Israeli law, as well as reimbursement of expenses in accordance with Israeli law and the Company’s procedures, which are also paid to the Company’s External Directors. As a result, each of the Company’s directors is and will be entitled to an annual fee of approximately NIS 154,945 (equal to approximately $45,200) and a per meeting fee of NIS 4,660 (equal to approximately $1,360), which reflect the current fee levels mentioned above, linked to the Israeli CPI.
2018 Equity Incentive Plan for Executive Officers and Equity Plans in Other Entities
In 2018, our Board approved the 2018 Equity Incentive Plan for Executive Officers (the 2018 Option Plan). See below “Share Ownership – Elbit Systems’ Stock Option Plans – 2018 Equity Incentive Plan for Executive Officers”. In 2025, no options were granted to executive officers under the 2018 Option Plan. On November 17, 2025, our Board approved an extension of the expiration date until July 2027 for approximately 175,000 options previously granted to executive officers under the 2018 Option Plan which were expected to expire during 2026.
In 2025 we recorded an amount of approximately $11.7 million as compensation costs related to options granted to our executive officers under the 2018 Option Plan. See Item 18. Financial Statements Note 22. Not included in this calculation are options granted to one of our executive officers under the Employees Plan prior to his appointment as an executive officer in 2025.
In 2025, we recorded an amount of approximately $4.7 million as compensation costs related to options granted to our executive officers prior to 2025 in start-up entities or similar ventures under their plans (whether by allocation of options by the start-up entities themselves or by allocation of shares or options to purchase shares of such start-up entities which are held by the Company) (Options in Other Entities).
Cash Bonuses
Elbit Systems has implemented an annual pay-for-performance bonus plan (Annual Bonus) based on pre-determined criteria that aims to align and unify our executive officers in reaching Elbit Systems’ short and long-term goals. Annual Bonuses are, therefore, a strictly pay-for-performance element, as payout eligibility and levels are determined based on financial, business and operational results, as applicable, as well as individual performance. Payment of the Annual Bonus is also subject to the fulfillment of preconditions as described in our Compensation Policy. Our executive officers may also be granted other cash bonuses from time to time which are discretionary, subject to required approvals. For additional information, see the Compensation Policy filed as Exhibit 4.3 to this annual report.
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Other Compensation
In addition to payment of monthly salary, bonuses and options, our executive officers are entitled to reimbursement of travel and certain other expenses in a manner similar to other employees and other benefits as described in our Compensation Policy.
Office Holders of the Company, including our directors and executive officers, are also covered by our D&O liability insurance policy and are entitled to indemnification and exemption from certain liabilities, in accordance with our Restated Articles of Association (the Articles of Association) and pursuant to indemnification and exemption letters as approved by our shareholders. For additional information, see Item 10. Additional Information – Exemption, Insurance and Indemnification of Directors and Officers.
Compensation of Five Most Highly Compensated Office Holders
The following describes the compensation of our five most highly compensated Office Holders with respect to the year ended December 31, 2025. All amounts specified are in terms of cost to the Company as recorded in our financial statements.
Compensation for each of the specified Office Holders is indicated in terms of the following types of compensation costs:
(1) Salary Costs. Salary Costs include gross salary and, if and to the extent applicable to a respective Office Holder, social and other benefits such as vacation days, sick days, convalescence pay, monthly remuneration for a study fund, contributions made by the Company on behalf of the Office Holders to an insurance policy or a pension fund, contributions by the Company on behalf of the Office Holders towards work disability insurance, retirement and termination of service benefits and other benefits such as company car and communication costs. U.S. dollar amounts indicated for Salary Costs are based on the exchange rate of 3.428, which represents the average weighted U.S. dollar – NIS exchange rate for the date of payments for each of the months during 2025 (Average Exchange Rate).
(2) Bonus Costs. Bonus Costs represent bonuses (Annual Bonuses, managerial evaluation and/or special bonuses, as the case may be) recorded in connection with the Office Holders with respect to the year ended December 31, 2025. U.S. dollar amounts indicated for Bonus Costs are based on the Average Exchange Rate.
(3) Stock Option Costs. Stock Option Costs are costs recorded with respect to the year ended December 31, 2025 related to the 2018 Option Plan, the 2022 Equity Incentive Plan for Employees and to Options in Other Entities. See above “Aggregate Compensation to Directors and Executive Officers” and “2018 Equity Incentive Plan for Executive Officers and Equity Plans in Other Entities” and below “Share Ownership – Elbit Systems’ Stock Option Plans – 2018 Equity Incentive Plan for Executive Officers” and “2022 Equity Incentive Plan for Employees” and Item 18. Financial Statements – Notes 22C and 22D.
The five most highly compensated Office Holders in 2024 were as follows (U.S. dollar amounts are in thousands, except for per option data):
(1)Bezhalel Machlis – President and CEO. Compensation costs recorded for Mr. Machlis in 2025 included: $1,685 in Salary Costs, $2,870 in Bonus Costs and $5,683 in Stock Option Costs.*
*In September 2024 Mr. Machlis was granted 150,000 Performance-Based options under the 2018 Option Plan which were subject to a special condition for vesting, that has already been met.
(2) Ran Kril – Executive Vice President – International Marketing and Business Development. Compensation costs recorded for Mr. Kril in 2025 included: $575 in Salary Costs, $954 in Bonus Costs and $627 in Stock Option Costs.
(3) Jonathan Ariel – Executive Vice President – Chief Legal Officer. Compensation costs recorded for Mr. Ariel in 2025 included: $708 in Salary Costs, $732 in Bonus Costs and $571 in Stock Option Costs.
(4) Dr. Yaacov Kagan – Executive Vice President – Chief Financial Officer. Compensation costs recorded for Mr. Kagan in 2025 included: $513 in Salary Costs, $744 in Bonus Costs and $664 in Stock Option Costs.
(5) Yoram Shmuely – Executive Vice President – General Manager Aerospace. Compensation costs recorded for Mr. Shmuely in 2025 included: $946 in Salary Costs, $218 in Bonus Costs and $654 in Stock Option Costs.
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Board Practices
Appointment of Directors
Our directors, other than our External Directors, are generally elected by the shareholders at the annual general meeting of shareholders. Their term of office is until the conclusion of the next annual general meeting of shareholders, which is held at least once every calendar year but not more than fifteen months after the previous annual general meeting of shareholders. According to our Articles of Association, the approval of our shareholders at a general meeting is generally required to remove any of our directors from office. Between annual general meetings of shareholders our Board may appoint new directors to fill vacancies. The External Directors are elected at a general meeting of shareholders as described under “External Directors and Independent Directors – External Directors” below. Our Articles of Association authorize a maximum of seventeen directors, a minimum of five directors and, unless otherwise determined by our Board or approved by our shareholders, the number of directors will be nine.
The Companies Law requires the board of directors of a public company, after considering the company’s type and size and the scope and complexity of its activities, to determine the minimum number of directors on the board having “financial and accounting expertise” as defined in the Companies Law. Our Board has adopted a policy pursuant to which it will include a minimum of two directors having financial and accounting expertise as defined under the Companies Law. Currently our Board has two directors who are considered by the Board to have financial and accounting expertise: Mr. Bar Nir and Prof. Nisan. In addition, the Companies Law provides that a person will not be elected and will not serve as a director in a public company if he or she does not have the required qualifications and the ability to dedicate an appropriate amount of time for the performance of his or her director position in the company, taking into consideration, among other factors, the special needs and size of the company. A general meeting of shareholders of a company whose shares are publicly traded, at which the election of a director is to be considered, will not be held, and a director will not be elected, unless:
(1) the nominee has declared to the company that he or she complies with the above-mentioned requirements;
(2) the details of his or her applicable qualifications are provided;
(3) in case such nominee is an “Independent Director” as defined in the Companies Law (see “External Directors and Independent Directors – Independent Directors” below), the nominee has also declared that he or she complies with the independence criteria under the Companies Law; and
(4) in case such nominee is an External Director, the nominee has declared that he or she complies with the requirements for External Directors provided under the Companies Law.
Each of our elected directors has declared to our Board that he or she complies with the required qualifications under the Companies Law for appointment as a member of our Board, detailing his or her applicable qualifications, and that he or she is capable of dedicating the appropriate amount of time for the performance of his or her role as a member of our Board. In addition, Mr. Adam, Mrs. Livni and Prof. Nisan have each declared, and our Audit and Financial Statements Review Committee has determined, that he or she complies with the criteria of an Independent Director under the Companies Law, and Mr. Bar Nir and Mrs. Shapira have each declared that he or she complies with the External Director requirements under the Companies Law.
The terms of office of Mrs. Shapira and Mr. Bar Nir, the current External Directors on our Board, expire as described under “External Directors and Independent Directors – External Directors” below. The terms of office of the other seven current directors, each of whom was appointed at the Annual General Meeting of Shareholders held in October 2025, expire as described under “Directors and Executive Officers – Board of Directors” above. There are no service contracts or similar arrangements with any director that provide for benefits upon termination of directorship.
We are subject to Nasdaq Stock Market Inc. Listing Rules (the Nasdaq Rules) relating to the composition and practices of our Board. Among other things, these rules require that a majority of our directors be “independent” as defined in the applicable Nasdaq Rules and that our Audit and Financial Statements Review Committee, our Compensation Committee and our Corporate Governance and Nominating Committee each be composed exclusively of such independent directors. We comply with these Nasdaq requirements because (a) of our nine directors, the following five directors are independent under Nasdaq Rules: Ehud (Udi) Adam, Noaz Bar Nir, Tzipi Livni, Prof. Ehood (Udi) Nisan and Bilha (Billy) Shapira and (b) our Audit and Financial Statements Review Committee, our Compensation Committee and our Corporate Governance and Nominating Committee are each composed exclusively of directors who are independent under the Nasdaq Rules. Nominees for appointment or election as a director are recommended by the Board’s Corporate Governance and Nominating Committee. See “Corporate Governance and Nominating Committee” below.
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Substitute Directors. The Articles of Association provide that any director may appoint another person to serve as a substitute director. The substitute director will be subject to the same requirements as the appointing director under the Companies Law.
External Directors and Independent Directors
External directors. Under the Companies Law, public companies are required to appoint at least two External Directors. Among other requirements, for each public company such as Elbit Systems that is considered to have a controlling shareholder, a person may serve as an External Director if he or she meets the following requirements (the Affiliation Requirements):
(1) if that person is not a Relative (for definition of the term “Relative” see Item 10. Additional Information – Approval of Certain Transactions – Personal Interest and Extraordinary Transactions) of the controlling shareholder of that company and if that person (and each of that person’s Relatives, partners and employers), or any person to whom he or she is subordinated (directly or indirectly), or any entity controlled by that person, did not have, on the date of the person's appointment or at any time during the two years preceding that person’s appointment as an External Director, any “Affiliation” (as defined in the Companies Law) with any of:
(i) the applicable company;
(ii) the controlling shareholder of the applicable company or any of his or her Relatives on the date of appointment; or
(iii) any entity controlled, on the date of such appointment or at any time within the preceding two years, by the applicable company or by the controlling shareholder of the applicable company;
(“Affiliation” means (subject to certain exceptions provided in regulations promulgated under the Companies Law): (a) an employment relationship, (b) a business or professional relationship maintained on a regular basis (excluding insignificant relationships), (c) control and (d) service as an office holder, excluding a director appointed in order to serve as an External Director of a company that is about to offer its shares in an Initial Public Offering.); and
(2) if and so long as:
(i) no conflict of interest exists or may exist between that person’s role as a member of the board of directors of the respective company and that person’s other positions or business activities; and
(ii) such position or business activities does not impair that person’s ability to serve as a director; and
(3) if and so long as:
(i) that person and each of that person’s Relatives, partners and employers, or any person to whom he or she is subordinated directly or indirectly or any entity controlled by that person has no business or professional relationships with any of the persons or entities mentioned in (1) above, even if such relationship is not on a regular basis (other than a negligible relationship); and
(ii) no other consideration except as permitted under the Companies Law is paid to that person in connection with that person’s position as a director in the relevant company; and
(4) if that person serves also as a member of the board of directors of another company, none of the External Directors of that other company serves at the same time as a member of the board of directors of the respective company; and
(5) if that person is not an employee of a securities authority or a stock exchange in Israel.
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In general, at least one External Director must have financial and accounting expertise and the other External Director(s) must have professional competence as described below. However, in companies such as Elbit Systems that are “dually listed” (for example traded on a stock exchange in both Israel and the U.S.), if one or more other directors who meet the independence criteria applicable to members of the audit committee under the foreign applicable law (including stock exchange rules) have been determined by the board of directors to have financial and accounting expertise, then it is permissible for all of the External Directors to have only “professional competence” as described below.
Under the relevant regulations of the Companies Law, a director has financial and accounting expertise if he or she, based on his or her education, experience and qualifications, is highly skilled in respect of, and understands, business accounting matters and financial statements in a manner that enables him or her to have an in-depth understanding of the company’s financial statements and to stimulate discussion with respect to the manner in which the financial data is presented. The evaluation of the financial and accounting expertise of a director is to be made by the board of directors taking into account, inter alia, the parameters specified in the relevant regulations of the Companies Law.
A director has “professional competence” if he or she (a) has an academic degree in either economics, business administration, accounting, law or public administration or an academic degree or other advanced degree in the company’s main area of business or in a field relevant to such position, or (b) has at least five years' experience in any of the following positions or five years accumulated experience in two or more of them:
(1) a senior position in the business management of any corporate entity with a substantial scope of business;
(2) a senior public office or a senior position in the public service sector; or
(3) a senior position in the field of activity of the company.
The evaluation of the professional competence of a director is to be made by the board of directors.
According to the Companies Law and our Articles of Association, our External Directors serve for a three-year term following which they may stand for up to two additional terms of three years each. Re-election of an External Director for each additional period, beyond the first period, requires that he or she meets the Affiliation Requirements and that he or she:
(1) is recommended for re-election by one or more shareholders holding at least 1% of all voting rights of the relevant company , and has no affiliations as listed in Section 245(a1)(1)(c) of the Companies Law;
(2) is recommended for re-election by the board of directors of the relevant company; or
(3) proposes his or her nomination; and
in each case, the nomination is approved by the general meeting of shareholders of the relevant company with the applicable majority requirements as provided by the Companies Law.
In addition, External Directors in companies such as Elbit Systems that are “dually listed” may stand for re-election for additional terms of up to three years each beyond the first three terms, provided:
(1) the audit committee and the board have each determined that in light of such External Director’s expertise and unique contribution to the work of the board and its committees, his or her nomination for an additional term of office is in the best interest of the company;
(2) his or her election was approved by the company's shareholders’ by a Special Uninterested Majority, provided that, in this regard, (a) a Personal Interest, excludes a Personal Interest that does not result from such shareholder’s relations with the controlling shareholder and (b) the External Director has no affiliations as listed in Section 245(a1)(1)(c) of the Companies Law); and
(3) the term of office of the respective External Director and the reasons of the audit committee and the board for the extension of the term were presented to the company's shareholders prior to their approval.
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Our Articles of Association allow the External Directors of the Company to be elected to more than three terms of service. According to the Companies Law, any committee authorized to exercise powers of the Board must include at least one External Director, and all External Directors must be members of the Audit and Financial Statements Review Committee and the Compensation Committee.
Mrs. Shapira and Mr. Bar Nir currently serve as our Board’s External Directors. The third three-year term of office of Mrs. Shapira ends in November 2028. The second three-year term of office of Mr. Bar Nir ends in August 2026. Mr. Bar Nir was determined by the Board to have financial and accounting expertise under Israeli law, and Mrs. Shapira was determined by the Board to have the applicable “professional competence” to serve as an External Director.
Independent Directors. Pursuant to the Companies Law, a director may be qualified as an independent director if such director is either (i) an external director; or (ii) a director that served as a board member less than nine years and the audit committee has approved that he or she meets the independence requirements of an external director. A majority of the members serving on the audit committee and the compensation committee must be independent under the Companies Law.
In addition, under the Companies Law and regulations thereunder, a director in a company such as Elbit Systems, who qualifies as an independent director under the relevant non-Israeli rules relating to independence standards, such as the Nasdaq director independence criteria, may be considered an independent director pursuant to the Companies Law if such director meets certain conditions listed in the regulations. The Audit and Financial Statements Review Committee has designated Mr. Adam, Mrs. Livni and Prof. Nisan as Independent Directors under the Companies Law.
In accordance with the Israeli regulations with respect to “dual-listed” companies (for example, traded on a stock exchange in both Israel and the U.S.), such companies, including Elbit Systems, may elect an independent director for additional terms beyond the nine year period, provided that the audit committee and the board as a whole have determined that, in light of such independent director’s expertise and unique contribution to the work of the board and its committees, his or her nomination for an additional term of office is to the best interest of the company.
Prof. Nisan has served as an independent director of the Company since November 2016. Accordingly, his nine-year term of office expired in November 2025. Upon the recommendation of the Company’s Corporate Governance and Nominating Committee, Audit and Financial Statements Review Committee and Board, which determined that such extension is advisable and in the best interests of the Company, the general meeting of shareholders of the Company approved, in October 2025, the extension of Prof. Nisan’s term of office for an additional one-year period.
Security Clearances
Directors of the Company are also required to obtain certain security authorization(s) as specified by the Company's Chief Security Officer, who acts under the professional guidance of an “Authorized Officer” as defined in the Israeli Regulation of Security in Public Bodies Law, 5758-1998.
Audit and Financial Statements Review Committee
Pursuant to Sections 114 and 171(e) of the Companies Law, the Companies Regulations (Provisions and Terms for the Approval Process of the Financial Statements) – 5770 - 2010 (the Financial Statements Regulations), and Rule 5605(c)(1) of the Nasdaq Rules, the Company has established an audit and financial statements review committee (the Audit and Financial Statements Review Committee) as a standing committee of its Board. In accordance with the requirements of the Companies Law and Financial Statements Regulations, the committee may act as either an “audit committee” or “financial statements review committee”. Together, in these two frameworks, the Audit and Financial Statements Review Committee performs the duties required under the Nasdaq Rules an d the Companies Law to be performed by an “audit committee”, as well as the duties required under the Companies Law and the Financial Statements Regulations to be performed by a “financial statements review committee”.
Currently, Mr. Bar Nir (chair), Mr. Adam, Mrs. Livni, Prof. Nisan and Mrs. Shapira are members of the Audit and Financial Statements Review Committee. Mr. Ninveh is an observer in the meetings where the committee acts as a financial statements review committee.
SEC and Nasdaq Rules require that our Audit and Financial Statements Review Committee be composed of at least three members, each of whom qualifies as an independent director who must be able to read and understand financial statements. At least one member of such committee must qualify as an “audit committee financial expert” as defined under SEC rules. We comply with these SEC and Nasdaq requirements because each member of our Audit and Financial Statements Review Committee is independent and is able to read and understand financial statements, and our Board has determined that both Mr. Bar Nir and Prof. Nisan qualify as audit committee financial experts.
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Audit and Financial Statements Review Committee - Acting as the Audit Committee
In accordance with the Companies Law, an audit committee must consist of at least three directors qualified to serve as members of an audit committee, including all External Directors, and must be comprised of a majority of directors meeting certain independence criteria of the Companies Law. The chair of the audit committee must be an External Director. We comply with these rules because all of the committee members meet the independence criteria of the Companies Law, all of our External Directors are members of the committee and the chair of the committee is an External Director.
In addition to its other roles, under the Companies Law the audit committee of a public company such as Elbit Systems is required:
(1) to locate deficiencies in the administration of the company's business, inter alia, by consulting with the company's internal or external auditors, and to make proposals to the board of directors regarding ways of correcting such deficiencies;
(2) to determine (i) whether a competitive process or other proceedings will be conducted prior to the company engaging in certain transactions, (ii) the classification of certain acts as “material” or “non-material” and certain transactions as “extraordinary” or “non-extraordinary”, (iii) how to approve certain transactions that the audit committee deems non-negligible and the types of non-negligible transactions that are subject to approval of the audit committee and (iv) to pre-determine principles and guidelines for the proceedings listed above;
(3) to decide whether to approve acts and transactions requiring the approval of the audit committee under sections 255 and 268 to 275 of the Companies Law;
(4) if the board of directors is to approve the audit plan of the internal auditor – to examine such plan and suggest amendments prior to it being presented to the board of directors;
(5) to oversee the performance of the company’s internal auditor and the internal control functions, including the determination whether the internal auditor has sufficient tools and resources required for the performance of his or her duties, taking into account, among other factors, the particular requirements of the company and its size;
(6) to examine the scope and fees of the external auditor; and
(7) to establish a “whistleblower” process for the company.
The Audit and Financial Statements Review Committee, when acting as the audit committee, operates in accordance with a charter that provides the framework for its oversight functions consistent with Israeli and U.S. legal and regulatory requirements. The charter is published on our website.
Audit and Financial Statements Review Committee - Acting as the Financial Statements Review Committee
Pursuant to Nasdaq Rules, the financial statements review committee must oversee the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company. Pursuant to the Israeli Companies Regulations (Financial Statements Approval Procedure), 5770-2010, the financial statements of a public company may be brought for discussion and approval of the board only after a financial statements review committee has discussed and formulated recommendations to the board in connection with:
(1) the estimations and assessments made in connection with the financial statements;
(2) the internal control over financial reporting;
(3) the completeness and adequacy of disclosure in the financial statements;
(4) the accounting and auditing principles and practices, including the accounting policies adopted and accounting treatments applied in the material matters of the company; and
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(5) value evaluations, including the assumptions and estimates on which evaluations are based, and the supporting data in the financial statements.
The Audit and Financial Statements Review Committee, when acting as the financial statements review committee, operates pursuant to the terms of a charter that is published on our website. Pursuant to the Israeli Companies Regulations (Financial Statements Approval Procedure), 5770-2010, a financial statements review committee must consist of at least three members, the chair of the committee must be an External Director, and the majority of its members must be directors who meet certain independence requirements of the Companies Law, and, among other criteria, all of its members must be able to read and understand financial statements, with at least one of the independent members having financial and accounting expertise. We comply with such requirements because the chair of the Committee is an External Director, our Committee has five members, all of which meet the independence criteria of the Companies Law and are able to read and understand financial statements and Mr. Bar Nir and Prof. Nisan have been determined by the Board to have financial and accounting expertise. See Item 16A. Audit Committee Financial Expert.
Compensation Committee
Mrs. Shapira (chair), Mr. Adam and Mr. Bar Nir are members of the Board’s compensation committee (Compensation Committee). Pursuant to the Companies Law (see above “Compensation of Directors and Executive Officers – Compensation Policy”), the compensation committee of a public company, such as Elbit Systems, is required to consist of at least three members, and all of the External Directors must be members of the committee (one of which to be appointed as the chair) and constitute the majority thereof. The remaining members must be directors who qualify to serve as members of the audit committee as defined in the Companies Law and whose compensation is in accordance with the compensation requirements applicable to the External Directors. Furthermore, all of the Committee members must comply with the independence requirements of the SEC and Nasdaq. All of our Compensation Committee members have been determined to be independent as defined by the applicable Nasdaq Rules and those of the SEC and have been determined to be eligible to be members of a compensation committee in accordance with the Companies Law. The chair of our Compensation Committee is an External Director, and the majority of the Committee members are External Directors.
In addition to its other roles, under the Companies Law the compensation committee of a public company such as Elbit Systems is required:
(1) to recommend to the board of directors the compensation policy for the company’s Office Holders to be adopted by the company, and thereafter to recommend to the board of directors, once every three years, regarding any extension or modifications of such compensation policy that had been approved for a period of more than three years;
(2) from time to time to recommend to the board of directors any updates required to the compensation policy and examine the implementation thereof;
(3) to determine whether to approve transactions regarding the Employment Terms of Office Holders, if such transactions require the committee’s approval in the circumstances referenced in Section 118B(3) of the Companies Law; and
(4) in certain situations described in the Companies Law, to determine whether to exempt Employment Terms of a candidate for the position of CEO of the company from the requirement to obtain shareholder approval.
According to the Companies Law, Employment Terms of a public company’s Office Holders must be approved by the compensation committee and the board. In addition, with respect to Employment Terms of the CEO, a director or any Office Holder where the Employment Terms are not consistent with an approved compensation policy or for an Office Holder who is also considered a controlling shareholder (or such controlling shareholder’s Relative), approval by the company’s shareholders is also required in accordance with the applicable majority requirements of the Companies Law. For further information see above “Compensation of Directors and Executive Officers – Compensation Policy”, and see below Item 10. Additional Information – General Provisions of Israeli Law and Related Provisions of Articles of Association – Office Holders and Item 10. Additional Information – Approval of Certain Transactions – Approval of Employment Terms of Office Holders.
Our Compensation Committee operates in accordance with a Compensation Committee charter that provides the framework for its oversight functions consistent with Israeli and U.S. legal and regulatory requirements, including with the compensation committee Nasdaq Rules. The charter is published on our website.
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Corporate Governance and Nominating Committee
Mr. Adam (chair), Mrs. Shapira and Mr. Bar Nir are members of the Board’s corporate governance and nominating committee (Corporate Governance and Nominating Committee). This Committee operates in accordance with a Corporate Governance and Nominating Committee charter that specifies its oversight functions consistent with Israeli and U.S. legal and regulatory requirements. The charter is published on our website. The main role of the Corporate Governance and Nominating Committee is to:
(1) advise the Board periodically as it deems appropriate with regard to the composition, functions and performance of the Board and its committees, including Israeli and U.S. legal and regulatory requirements applicable to the Company as a dually listed company that impact the administration and functioning of the Board and the composition of the Board and its committees; and
(2) recommend members to be elected to the Board.
All of the committee members of such a committee must comply with the independence requirements of the SEC and Nasdaq, and at least one of them must be an External Director under the Companies Law. We comply with such requirements because all of the members of the Corporate Governance and Nominating Committee have been determined to be independent as defined by the applicable Nasdaq Rules and those of the SEC, and two of them are External Directors. In recommending director candidates, our Corporate Governance and Nominating Committee takes into consideration such factors as it deems appropriate based on our current needs.
In addition, while our Board recognizes the benefits of directors serving on the boards of other companies, it believes that the number of such memberships should be reasonably limited in order to allow its members to devote sufficient time to fulfill their duties as directors of the Company. Therefore, as provided in the Corporate Governance and Nominating Committee charter, it is expected that a director will not serve on the boards of more than four other publicly traded companies (for avoidance of doubt, among others, academic institutions and non-profit organizations excluded).
Board Committee Membership

Audit and Financial Statements Review Committee: |  | Corporate Governance and Nominating Committee: |  | Compensation Committee:
Noaz Bar Nir |  | Ehud (Udi) Adam |  | Bilha (Billy) Shapira
(chair) |  | (chair) |  | (chair)
Ehud (Udi) Adam |  | Noaz Bar Nir |  | Noaz Bar Nir
Tzipi Livni |  | Bilha (Billy) Shapira |  | Ehud (Udi) Adam
Ehood (Udi) Nisan |  |  |  |
Bilha (Billy) Shapira |  |  |  |

Board and Committee Meetings
The Board meets quarterly and at other times during the year as necessary to conduct its activities. The Audit and Financial Statement Review Committee, in each of its roles as either the audit committee or the financial statements review committee, meets at least quarterly, and the Compensation Committee and Corporate Governance and Nominating Committee each meet at least annually. In addition, in accordance with the applicable Nasdaq Rules, our independent directors conduct executive sessions at least twice a year. Each of the committees also meets at additional times during the year as may be necessary to carry out its functions. As determined by our Board, Board members are expected to attend at least 90% of all meetings of the Board and the committees on which they serve (unless prevented by extraordinary circumstances). During 2025, the attendance for Board members at Board and committee meetings was 100%.
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Employees
Number of Employees. Most of our employees are based in Israel, and we have a significant number of employees in the United States. The total number of employees worldwide and the number of employees in Israel and the U.S. at the end of 2023, 2024 and 2025 were as follows:

| Total Employee s |  | U.S. Employees |  | Israel Employees
2025 | 20,537 |  |  | 3,267 |  |  | 14,805 |
2024 | 19,712 |  |  | 3,503 |  |  | 13,930 |
2023 | 18,984 |  |  | 3,546 |  |  | 13,200 |

Employment Contracts. The majority of our Israeli employees have individual employment contracts. However, by law some employees receive rights under a number of general collective bargaining agreements and under Israeli employment laws. See Item 4. Information on the Company – Conditions in Israel – Israeli Labor Laws. We believe our overall relationship with our employees is satisfactory.
Collective Bargaining Agreements. In Israel, several of our subsidiaries are each parties to collective bargaining agreements covering a portion of their employees. A total of approximately 5,900 employees in Israel are covered by such agreements that extend for various periods through 2029. In addition, approximately 600 of the employees at ESA’s operations are covered by collective bargaining agreements in effect through various periods through April, 2026.
Share Ownership
As of March 5, 2026, to the Company's best knowledge, th e ownership by the members of our Board and by our executive officers of our ordinary shares (either actual ordinary shares or ordinary shares that the person has the right to acquire within 60 days as the result of the exercise of an option), was as follows (in each case, based on information that each applicable person has provided to us):
(1) Michael Federmann, a member of our Board, has the right to control the voting of the 19,318,508 ordinary shares (i.e., approximately 41.5% of our outstanding ordinary shares) that are owned, directly and indirectly, by FEL (the FEL Share Position) and has an indirect economic interest in the FEL Share Position;
(2) David Federmann, the chair of our Board and the son of Michael Federmann, has an indirect economic interest in the FEL Share Position; and
(3) Except as provided above, as of March 5, 2026, no individual director or executive officer beneficially owned (as determined under SEC rules) 1% or more of our outstanding ordinary shares.
For further information on the FEL Share Po sition, including the indirect economic interests of Michael Federmann and David Federmann, and the shareholdings of other members of the Board and executive officers, see Item 7. Major Shareholders and Related Party Transactions – Major Shareholders – Percentages. The ordinary shares beneficially owned by the above-mentioned persons have the same voting rights as all of our o ther outstanding ordinary shares.
Elbit Systems’ Stock Option Plans
2018 Equity Incentive Plan for Executive Officers
In February 2018, our Board approved the 2018 Equity Incentive Plan for Executive Officers (as may be amended from time to time - the 2018 Equity Plan), for a period of eight years. The purpose of the 2018 Equity Plan is to link the compensation and benefits of our executive officers with the future growth and success of the Company and its affiliates and with long-term shareholder value. Our Board has also approved the appointment of our Compensation Committee as the administrator of the 2018 Equity Plan. Under the 2018 Equity Plan, the Company may allocate options to its Israeli resident executive officers, subject to receipt of approvals as required under Israeli Law (Options). Unless otherwise determined by the plan's administrator, Options are to be exercised using a “Net-Exercise Mechanism”, which entitles the recipients to exercise the Options for an amount of shares reflecting only the benefit factor. In 2018, the Board approved a pool of 1,000,000 Options. In February 2021, the Board approved amendments to the 2018 Equity Plan that increased the pool of Options permitted to be granted under the 2018 Equity Plan to 1,500,000 Options (an increase of 500,000 Options) and extended the duration of the 2018 Equity Plan by an additional three years. In February 2024, the Board further increased the pool of Options permitted to be granted under the 2018 Equity Plan to 2,300,000 (an increase of 800,000 Options), and made additional amendments to the 2018 Equity Plan (the Second Amendment), as reflected below.
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The Options are granted under the provisions of Section 102 of the Israeli Income Tax Ordinance [New Version] of 1961 with respect to the “capital gain tax route”, as well as in compliance with the Israeli Income Tax Rules (Tax Relief in Issuance of Shares to Employees) 2003, as amended from time to time.
The exercise price of an Option is denominated in U.S. dollars and is the higher of:
(1) the average of the closing share price of Elbit Systems ordinary shares on the TASE, during the period of thirty (30) trading days preceding, but not including, the Date of the Board Resolution, converted into U.S. dollars by applying the average representative U.S. dollar - NIS exchange rate during such thirty (30) trading days period; or
(2) the closing share price of our ordinary shares on the TASE on the last trading date preceding the Date of the Board Resolution, converted into U.S. Dollars by applying the representative U.S. dollar - NIS exchange rate most recently published by the Bank of Israel prior to the Date of the Board Resolution.
The Date of the Board Resolution is, unless otherwise determined by the Board, the date on which the grant of the Options was approved by the Board.
The grant date of Options to a recipient is determined to be the latest of (the Grant Date):
(1) the Date of the Board Resolution;
(2) the first trading day after a period of thirty (30) days has elapsed from the date the 2018 Equity Plan is filed with the Israeli Tax Authorities; or
(3) where applicable, the date on which the required corporate approvals have been obtained and/or other
conditions set by the Board have been met.
Unless otherwise determined by the Board, the Options under the 2018 Equity Plan vest, subject to continued employment of the participant with the Company or a subsidiary, as follows:
(1) for Options granted prior to the Second Amendment, forty percent (40%) on the second anniversary of the Grant Date, with the remaining sixty percent (60%) of the Options vesting twenty percent (20%) each on the third, fourth and fifth anniversary of the Grant Date, respectively.
(2) for Options granted on or after the Second Amendment, forty percent (40%) on the second anniversary of the Grant Date, with the remaining sixty percent (60%) of the Options vesting thirty percent (30%) each on the third and fourth anniversary of the Grant Date, respectively.
The 2018 Equity Plan includes customary terms such as adjustments for capital modifications (reverse stock split, stock split, etc.), rights offering restructuring (split, merger, etc.). Under the 2018 Equity Plan, vesting of a participant’s Options granted prior to the Second Amendment will be fully accelerated in case his or her employment is terminated by the Company without cause within a period of twelve (12) months following any change of control over the Company. The 2018 Equity Plan also allows, subject to approvals of the Compensation Committee and the Board, acceleration, continued vesting and exercisability of the Options, as well as post-termination exercise periods, in case of termination of employment without cause, or as a result of death or disability.
In November 2025, the Board approved an additional amendment to the 2018 Equity Plan (the Third Amendment), extending the expiration date of any Options granted on or after such date to 63 months following the Grant Date.
For further information on the terms of the 2018 Equity Plan see the Elbit Systems Ltd. 2018 Equity Incentive Plan for Executive Officers filed as Exhibit 4.2.1 to this annual report.
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2022 Equity Incentive Plan for Employees
On January 16, 2022, our Board approved the 2022 Equity Incentive Plan for Employees (as may be amended from time to time - the Employees Plan), for a period of seven (7) years. The purpose of the Employees Plan is to enable Elbit Systems to link the compensation and benefits of its employees with the future growth and success of Elbit Systems and its affiliates and with long-term shareholder value, through the creation of a long-term incentive for employees. Our Board has also approved the appointment of our Compensation Committee as the administrator of the Employees Plan. Under the Employees Plan, the Company may allocate options to employees of Elbit Systems and its wholly owned subsidiaries. Unless otherwise determined by the plan's administrator, the options are to be exercised using a “Net-Exercise Mechanism”, which entitles the recipients to exercise the options for an amount of shares reflecting only the benefit factor. The Board approved an option pool of 1,100,000 options that may be granted under the Employees Plan. In February 2024, the Board approved an increase of the option pool to 2,050,000 (an increase of 950,000 options that may be granted under the Employees Plan). In November 2025, the Board approved an amendment to the Employees Plan (the First Amendment), extending the expiration date of any options granted on or after such date to 63 months following the Grant Date.
Options to Israeli Employees (as defined under the Employees Plan) are granted under the provisions of Section 102 of the Israeli Income Tax Ordinance [New Version] of 1961, with respect to the “capital gain tax route”, as well as in compliance with the Israeli Income Tax Rules (Tax Relief in Issuance of Shares to Employees) 2003, as amended from time to time.
The exercise price of an option is denominated in U.S. dollars and is the higher of:
(1) the average of the closing share price of Elbit Systems ordinary shares on the TASE, during the period of thirty (30) trading days preceding, but not including, the Grant Date (as defined below), converted into U.S. dollars by applying the average representative U.S. dollar - NIS exchange rate during such thirty (30) trading days period; or
(2) the closing share price of our ordinary shares on the TASE on the last trading date preceding the Grant Date, converted into U.S. dollars by applying the representative U.S. dollar - NIS exchange rate most recently published by the Bank of Israel prior to the Grant Date.
The Grant Date of options to a recipient is determined to be the later of:
(1) the date on which the grant of the options to a participant was approved by the administrator of the plan; or
(2) the first trading day after a period of thirty (30) days has elapsed from the date the Employees Plan is filed with the Israeli Tax Authorities; unless otherwise determined by the Board or required under applicable law.
Granted options vest, subject to continued employment of the participant with the Company or a subsidiary, as follows: forty percent (40%) on the second anniversary of the Grant Date, with the remaining sixty percent (60%) of the Options vesting thirty percent (30%) each on the third and fourth anniversary of the Grant Date, respectively.
The Employees Plan includes customary terms such as adjustments for capital modifications (reverse stock split, stock split, etc.), and rights offering restructuring (split, merger, etc.). The Employees Plan also allows, subject to approvals as set forth in the Employees Plan, acceleration, continued vesting and exercisability of the options, as well as post-termination exercise periods, in case of termination of employment without cause, or as a result of death or disability. For further information on the terms of the Employees Plan see the Elbit Systems Ltd. 2022 Equity Incentive Plan for Employees filed as Exhibit 4.2.2 to this annual report.
2018 Phantom Bonus Retention Plan
In 2018, our Board approved a “Phantom” Bonus Retention Plan for Senior Managers (the 2018 Phantom Plan). The purpose of the 2018 Phantom Plan is to strengthen the alignment of the interests of certain senior managers with those of the Company and its subsidiaries, and their willingness to continue to work at the Company and its subsidiaries, in order to advance the Company’s growth and profitability, through the creation of a long-term incentive for senior managers.
Under the 2018 Phantom Plan, phantom bonus units (2018 Plan Units) were granted to senior managers with three annual tranches, each tranche comprised of a number of units which entitle the recipient to the right to receive the financial benefit deriving from increases in the value of the Company’s shares during the applicable periods, as specified in the 2018 Phantom Plan. 2018 Plan Units are calculated separately for each tranche, and the total accrual period for each tranche is three years from the respective determination date of the applicable 2018 Plan Units.
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At the end of the twelve-month period during the 2018 Plan Units accrual period for each tranche (Yearly Calculation Period), the Company calculates the annual benefit amount of the 2018 Plan Units for such Yearly Calculation Period (Annual Benefit Amount) by multiplying the number of 2018 Plan Units included in the tranche by the difference between (i) the initial value, i.e. the average of the closing share prices of a Company share on the TASE, during the period of thirty (30) trading days preceding the beginning of the respective period, and (ii) the year-end value of the respective Yearly Calculation Period, i.e. the average of the closing share prices of a Company share on the TASE, during the period of thirty (30) trading days preceding the end of the relevant Yearly Calculation Period; provided such amount is positive.
The accrued benefit amount for the 2018 Plan Units (Accrued Benefit Amount) in each yearly tranche is the sum of all three Annual Benefit Amounts. Except in certain circumstances described in the 2018 Phantom Plan, the Accrued Benefit Amount of a tranche is paid to the recipient following the end of the third Yearly Calculation Period of the respective tranche, provided that the recipient remains an employee of the Company. The benefits received under the 2018 Phantom Plan are subject to taxation at ordinary personal income tax rates. For further information see Item 18. Financial Statements – Note 22E.
Item 7. Major Shareholders and Related Party Transactions.
Major Shareholders
Percentages
A s of March 5, 2026, we had 46,508,933 ordinary shares outstanding. The following table sets forth specific information as of March 5, 2026, to th e best of our knowledge, concerning:
•beneficial ownership of more than 5% of our outstanding ordinary shares; and
•the number of ordinary shares beneficially owned by all of our executive officers and directors as a group. Ordinary shares that a person has the right to acquire within 60 days of March 5, 2026 through the exercise of Options under the 2018 Equity Plan or the Employees Plan (see footnote (4) below) are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all executive officers and Board members as a group.

Name of Beneficial Owner | Amount Owned |  | Percent of Ordinary Shares(1)
Federmann Enterprises Ltd. 99 Hayarkon Street Tel-Aviv, Israel | 19,318,508 | (2) | 41.5%
All executive officers and directors as a group (23 persons) | 92,693 | (3) (4) | less than 1%

(1) Based on 46,508,933 ordinary shares outstanding as of March 5, 2026.
(2) Includes 3,836,458 ordinary shares held by Heris Aktiengesellschaft (Heris). Heris is owned, directly and indirectly, by Federmann Enterprises Ltd. (FEL). FEL is controlled by Beit Federmann Ltd. (BFL). BFL is controlled by Beit Bella Ltd. (BBL) and Beit Yekutiel Ltd. (BYL). Michael Federmann is the controlling shareholder of BBL and BYL. He is also a member of Elbit Systems’ Board and the chair of the board and the chief executive officer of FEL. Therefore, M. Federmann controls, directly and indirectly, the vote of ordinary shares owned by Heris and FEL (approximately 41.5% of our outstanding ordinary shares). In addition, Michael Federmann is the trustee of a trust on behalf of his sister, Irith Federmann-Landeau, that holds an indirect non-voting economic interest of approximately 7.26% in our outstanding ordinary shares through an indirect approximately 17.5% non-voting interest in FEL. Michael Federmann and his sons, David (who also serves as the chair of Elbit Systems’ Board), Gideon and Daniel Federmann, collectively hold an indirect economic interest equivalent to approximately 25.7% of our outstanding ordinary shares, with Michael Federmann holding an approximately 5.13% economic interest, David Federmann holding an approximately 8.2% economic interest, and each of Gideon and Daniel Federmann holding an approximately 6.15% economic interest.
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(3) This amount (i) does not include any ordinary shares that may be deemed to be beneficially owned by Michael Federmann or David Federmann as described in footnote (2) above and (ii) includes shares held by the spouse of a director, but the director disclaims beneficial ownership over the spouse's shares.
(4) The 2018 Equity Plan and Employees Plan provide that unless otherwise determined by the respective plan's administrator, a “Net Exercise Mechanism” will be used, which entitles the recipients to exercise Options for the number of shares determined based on the excess, if any, of the fair market value of the shares underlying such options over the exercise price of such options, calculated based on the date of exercise. For further information regarding the 2018 Equity Plan see Item 6. Directors, Senior Management and Employees – Share Ownership – Elbit Systems' Stock Option Plans – 2018 Equity Incentive Plan for Executive Officers, as well as the Elbit Systems Ltd. 2018 Equity Incentive Plan for Executive Officers, filed as Exhibit 4.2.1 to this annual report. For further information regarding the Employees Plan see Item 6. Directors, Senior Management and Employees – Share Ownership – Elbit Systems' Stock Option Plans – 2022 Equity Incentive Plan for Employees , as well as the Employees Plan, filed as Exhibit 4.2.2 to this annual report. The number of ordinary shares reflected above as owned by all executive officers and directors as a group was calculated based on a hypothetical exercise on March 5, 2026, which is a theoretical date. The number of ordinary shares that will actually be issued will vary, depending on the date of exercise and the market price of the ordinary shares on such date. The aggregate number of Options granted to executive officers that are exercisable on or within 60 days following March 5, 2026 is 109,400 Options.
Rights in Shares, Significant Changes in Shareholders and Controlling Shareholders
Our major shareholders generally have the same voting rights as other holders of our ordinary shares. See also the Description of Securities.
In the Company's Annual Report on Form 20-F for 2022, Clal Insurance Enterprises Holdings Ltd. (Clal) and 1832 Asset Management L.P. (1832) were included as major shareholders beneficially owning more than 5% of the Company's ordinary shares. Pursuant to a Schedule 13G filed by Clal with the SEC on February 14, 2024, and a Schedule 13G filed by 1832 with the SEC on February 9, 2024, as of December 31, 2023, each of Clal and 1832 owned less than 5% of the Company’s ordinary shares and therefore were not included in the Company’s Annual Report on Form 20-F for 2023 as major shareholders beneficially owning more than 5% of the Company's ordinary shares. Other than as described above, we are not aware of any significant changes in the number of shares held by our major shareholders during the last three years.
As of March 5, 2026, approximately 14% of our outstanding ordinary shares were held in the United States by approximately 100 shareholders of record registered on the books of our transfer agent.
We are not aware of any arrangement which may result in a change in control of the Company.
In September 2023, we filed a shelf prospectus with the Israeli Securities Authority and with the TASE, under which we may issue, from time to time, different type of securities pursuant to filing supplemental shelf offering reports. In September 2025, the shelf prospectus was extended for an additional year with the consent of the Israeli Securities Authority.
On May 21, 2025, Elbit Systems filed a Registration Statement on Form F-3 with the SEC, which became automatically effective, under which we may offer and sell from time to time, in one or more offerings, ordinary shares, warrants, debt securities, guarantees, purchase contracts, units or any combination thereof, including warrants that may be convertible into or exercisable or exchangeable for ordinary shares or debt securities, and the debt securities may be convertible into or exchangeable for ordinary shares or other debt securities.
Related Party Transactions
The Company engages from time to time, in the normal course of business, in transactions with related parties (including with companies affiliated with FEL, the Company’s major shareholder) for certain goods and services, such as purchase of materials and systems, hotel services and catering services. Related party transactions also include, among others, transactions for the purchase or sale of goods or services, with certain affiliated entities or other entities in which an Office Holder of the Company serves as a director or in which the person has an interest, or investment therein. The Company also has employment agreements and compensation-related engagements with its Office Holders, entered into in the ordinary course of business (see Item 6. Directors, Senior Management and Employees – Compensation of Directors and Executive Officers and Item 10. Additional Information – Exemption, Insurance and Indemnification of Directors and Officers).
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The Company does not believe its transactions with related parties during the annual period commencing on January 1, 2025 are either material to the Company or unusual in their nature or conditions. Certain transactions with related parties may also require special approvals under the Companies Law. For further information see Item 10. Additional Information – Approval of Certain Transactions. For further information regarding certain transactions between the Company and related parties see Item 18. Financial Statements – Note 27.
Item 8. Financial Information.
Consolidated Statements and Other Financial Information
See Item 18. Financial Statements.
Export Sales
In 2025, our sales outside of Israel were approximately $5.4 billion, constituting approximately 68% of our total sales. For further information regarding the allocation of our revenues by geographic region see Item 5. Operating and Financial Review and Prospects – 2025 Compared to 2024 – Revenues.
Legal Proceedings
The Company is involved in various legal proceedings from time to time. For a discussion of our significant legal proceedings see Item 18. Financial Statements – Note 21C.
Dividend Distributions
We do not have an established dividend policy. Regarding declarations of dividends out of certain tax-exempt income see below Item 10. Additional Information – Taxation – Israeli Tax Considerations – General Corporate Tax in Israel –Investment Law. Our Articles of Association provide that the Board may approve dividend payments to shareholders out of surplus earnings as permitted by applicable law. We have consistently paid a quarterly dividend to our shareholders.
Our aggregate quarterly dividend payments for the last three full fiscal years were as follows:
(US dollars)

Year | Dividend
2023 | 2.00 per share
2024 | 2.00 per share
2025 | 2.45 per share

Significant Changes
Other than any significant event that may be described in this annual report, there have not been any significant changes since December 31, 2025.
Item 9. The Offer and Listing.
Share Listings and Trading Prices
Our ordinary shares are listed on the TASE and on Nasdaq and are quoted under the symbol “ESLT”.
Item 10. Additional Information.
General Provisions of Israeli Law and Related Provisions of Articles of Association
Israeli Companies Registrar. We are registered with the Israeli Companies Registrar. Our registration number is 52-004302-7.
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The Companies Law and Restated Articles of Association. The Companies Law is the basic corporation law governing Israeli publicly and privately held companies. The Companies Law mandates that specific provisions be included in an Israeli company’s articles of association, which are included in Elbit Systems’ Articles of Association.
Purpose. Our purpose, as stated in Article 3 of the Articles of Association, includes any objective permitted by law. In addition, Article 3 permits us to contribute reasonable amounts to other worthy causes, even if the cause is not within the specific scope of our business.
Appointment and Removal of Directors. Under our Articles of Association our directors (except for External Directors – see Item 6. Directors, Senior Management and Employees – Board Practices – External Directors and Independent Directors – External Directors) are elected by the shareholders at the annual meeting by a simple majority of our ordinary shares. Directors generally hold office until the next annual general meeting. Under certain circumstances, our Board may appoint new directors to fill vacancies. For further information see Item 6. Directors, Senior Management and Employees – Directors and Executive Officers – Board of Directors.
Internal Auditor. Israeli public companies are required to appoint an internal auditor who was initially recommended by the audit committee. The main role of the internal auditor is to examine whether the company’s activities are conducted in accordance with the law, with integrity and pursuant to orderly business procedures. Our internal auditor operates in accordance with our internal audit charter and our Audit and Financial Statements Review Committee charter, which provides the framework for the committee’s oversight of the internal auditor’s functions, consistent with applicable Israeli and U.S. laws and regulations. Under the Companies Law, the internal auditor may not be an Office Holder (see below “Office Holders”), an “interested party” (as defined below) or a “Relative” (see below “Approval of Certain Transactions – Personal Interest and Extraordinary Transactions”) of any of the foregoing, nor may the internal auditor be the company’s independent auditor or its representative. An “interested party” is generally defined in the Companies Law as any person who (a) serves as a director or the chief executive officer of the company, (b) has the right to appoint a director or chief executive officer or (c) owns 5% or more of the issued share capital or the voting rights.
Office Holders
An “Office Holde r” is defined under the Companies Law as a general manager, chief business manager, deputy general manager, vice general manager, any other person who fulfills these functions without regard to that person’s title as well as a director and any other manager directly subordinate to the general manager. Under the Companies Law, the general manager of a corporation has authority equivalent to that of a president or chief executive officer of a U.S. corporation. For such purposes, our general manager is Bezhalel Machlis, our President and Chief Executive Officer. Each person listed as a director or executive officer in Item 6. Directors, Senior Management and Employees ‒ Directors and Executive Officers, is an Office Holder of Elbit Systems.
The Companies Law specifies the fiduciary duties that an Office Holder owes to a company, which consist of a duty of care and a duty of loyalty. Under the Companies Law, an Office Holder’s duty of loyalty includes the general duty to act in good faith and for the benefit of the company, avoiding any conflict of interest between the Office Holder’s position in the company and his or her other positions or personal affairs. The duty of loyalty also includes avoiding any competition with the company and any exploitation of a business opportunity of the company in order to receive personal advantage for the Office Holder or others. Also, the Office Holder is required to disclose to the company any information or documents relating to the company’s affairs that the Office Holder has received due to his or her position as an Office Holder. Under the Companies Law, voting agreements among directors or a director’s failure to exercise independent judgment while voting are considered breaches of the duty of loyalty. The duty of care requires, among other obligations, that an Office Holder acts in a way that a reasonable Office Holder would act in the same position and under similar circumstances. This includes the duty to utilize reasonable means to obtain information regarding the advisability of a given action submitted for his or her approval or performed by virtue of his or her position and all other relevant information pertaining to such actions.
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Some members of our Board are also directors of FEL or companies controlled by FEL. Therefore, in the event of an issue or transaction between Elbit Systems and any of those companies, directors affiliated with any such companies will be excluded from any decisions concerning the issue or transaction. In addition, an issue or transaction with any such companies also requires authorization in accordance with the requirements of the Companies Law. See below “Approval of Certain Transactions” and the Description of Securities under “Provisions Relating to Major Shareholders”.
Arrangements in connection with the Employment Terms (see Item 6. Directors, Senior Management and Employees ‒ Compensation of Directors and Executive Officers ‒ Compensation Policy) of Elbit Systems’ Office Holders require special authorizations. See below “Approval of Certain Transactions ‒ Approval of Employment Terms of Office Holders”.
Other transactions with Office Holders and affiliates may also require authorization in accordance with the requirements of the Companies Law. See below “Approval of Certain Transactions”.
Approval of Certain Transactions
Approval Procedures. The Companies Law requires that certain transactions, actions and arrangements, mainly with related parties including Office Holders, be approved in the manner provided for in the Companies Law and in a company’s articles of association, which in many cases includes approval by the audit committee or the compensation committee and by the board of directors. In some cases shareholder approval is also required.
Personal Interest and Extraordinary Transactions. The Companies Law requires that an Office Holder or a controlling shareholder of a publicly traded company immediately disclose, no later than the first board meeting at which the transaction is discussed, any Personal Interest, as defined below, that he or she may have, and all related material information known to him or her, in connection with any existing or proposed transaction of the company. A person with a Personal Interest in any such transaction that is brought for approval of the audit committee or board of directors may not be present at the meeting where the transaction is being deliberated or approved (unless the chair of the audit committee or the board, as the case may be, determines that such person’s presence at the meeting is required for presentation of the relevant transaction) and, in case such person is a director, he or she may not vote on the matter, unless a majority of the members of the audit committee or of the board of directors (as the case may be) have a Personal Interest in the approval of the relevant transaction, in which case the directors having such Personal Interest may be present and may participate in the vote. If, however, the majority of the members of the board of directors have a “Personal Interest” in such transaction, the approval of the shareholders is also generally required.
In accordance with the Companies Law:
“Personal Interest” means a personal benefit, gain or other interest derived by a person from approving the respective act or transaction. Any benefit or interest arising solely from holding a company’s shares is not considered such a personal benefit or other interest under the Companies Law. Such personal benefit and other interest includes any personal benefit or other interest of:
(1) a person’s Relative (as defined below);
(2) any entity in which a person or any of his or her Relatives either:
(i) holds 5% or more of such entity’s issued share capital or voting rights;
(ii) has the right to appoint a director to such entity’s board of directors or the chief executive officer thereof; or
(iii) is a member of such entity’s board of directors or serves as the chief executive officer thereof; or
(3) anyone voting by proxy or granting a proxy on behalf of such person with respect to the applicable transaction, whether the proxy holder has discretion to vote or not.
An “Extraordinary Transaction” is a transaction:
(1) other than in the ordinary course of business;
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(2) other than on market terms; or
(3) likely to have a material impact on the company’s profitability, assets or liabilities.
“Relative” means any of the following:
(1) a spouse, brother, sister, parent, grandparent or descendant;
(2) the descendant, brother, sister or parent of a spouse of a person mentioned in (1) above; or
(3) the spouse of any of the persons mentioned in (1) or (2) above.
Approval of Transactions
In accordance with the Companies Law the transactions specified below require the following approvals, provided always that such transactions are for the benefit of the company:
(1) approval of the board of directors: a transaction with an Office Holder, other than arrangements in connection with Employment Terms, or a transaction in which an Office Holder has a Personal Interest, where the audit committee has determined that such transaction is not an Extraordinary Transaction, unless the company’s articles of association provide otherwise;
(2) approval of both the audit committee and the board of directors:
(i) a transaction with an Office Holder, other than arrangements in connection with Employment Terms, or a transaction in which an Office Holder has a Personal Interest, where the audit committee has determined such transaction to be an Extraordinary Transaction;
(ii) a material action or arrangement (unrelated to Employment Terms) that may otherwise be considered a breach of fiduciary duty by an Office Holder; or
(iii) an Extraordinary Transaction of a public company with its controlling shareholder or with another person in which the controlling shareholder has a Personal Interest, including a private offering in which the controlling shareholder has a Personal Interest, as well as an agreement of a public company with its controlling shareholder or his or her Relatives, directly or indirectly, including through a company controlled by him or her, regarding the grant of services to the applicable company, as the case may be (in addition, if he or she is an employee who is not an Office Holder - regarding the terms of his employment); and
(3) approval of both the compensation committee and the board of directors -
(i) an arrangement regarding Employment Terms of an Office Holder; or
(ii) an agreement of a public company with its controlling shareholder or his or her Relatives directly or indirectly, including through a company controlled by him or her, regarding the terms of engagement and employment as an Office Holder of such public company.
Certain transactions and arrangements described above may also require shareholder approval, including, where applicable, by a Special Uninterested Majority. In addition, the Companies Law requires re-approval every three years with respect to some of the matters referred to above in the manner set out in the Companies Law. Re-approval when applicable is required by the audit committee or the compensation committee, as the case may be, and by the board of directors and, except for certain specific exemptions, by the shareholders. See below ‒ “Exemption, Insurance and Indemnification of Directors and Officers ‒ Exemption, Insurance and Indemnification of Directors and Officers under the Articles of Association” and also the Description of Securities under “Provisions Relating to Major Shareholders”.
Under the Companies Law, the audit committee of a public company such as Elbit Systems is also required to determine whether to carry out competitive or other procedures before any engagement in a transaction, even if such transaction is not an Extraordinary Transaction, with a controlling shareholder or in which a controlling shareholder has a Personal Interest.
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Approval of Employment Terms of Office Holders
In accordance with the Companies Law, approval by both the compensation committee and the board of directors is required for all arrangements regarding Employment Terms of an Office Holder. In addition, the Companies Law requires that the company will obtain the approval of the shareholders for any Employment Terms arrangement with (i) the CEO; (ii) a director; (iii) any other Office Holder where the Employment Terms are not consistent with an approved compensation policy; or (iv) an Office Holder who is also considered a controlling shareholder (or his or her Relative). Such shareholders' approval requires a Special Uninterested Majority, except with respect to Employment Terms of a director that are consistent with the company's compensation policy. See Item 6. Directors, Senior Management and Employees ‒ Compensation of Directors and Executive Officers ‒ Compensation Policy.
In accordance with the Companies Law, the compensation committee may determine that an arrangement in connection with Employment Terms of a candidate for the position of the CEO of a public company is exempt from the approval by the shareholders of the company, provided that: (i) the CEO candidate is independent based on criteria set forth in the Companies Law; (ii) the compensation committee determines, based on detailed reasons, that bringing the arrangement to the approval of the shareholders may compromise completing the arrangement; and (iii) the Employment Terms are consistent with the company’s approved compensation policy.
In addition, pursuant to the Companies Law, in special cases the compensation committee and the board of directors may approve Employment Terms of an Office Holder (other than a director or a controlling shareholder, but including the CEO) that otherwise require the approval of the shareholders as specified above, even if the shareholders do not approve such Employment Terms, provided that:
(1) both the compensation committee and the board of directors re-discussed the relevant Employment Terms, considered, among other things, the shareholders' objection and decided to approve them despite the shareholders’ objection, based on detailed reasoning; and
(2) the company is not a “Public Pyramid Held Company”. A “Public Pyramid Held Company” is a public company that is controlled by another public company (including by a company that only issued debentures to the public), which is also controlled by another public company (including a company that only issued debentures to the public) that has a controlling shareholder.
Changes to the terms of a current arrangement regarding Employment Terms of an Office Holder (other than a director or a controlling shareholder) require only the approval of the compensation committee, if the compensation committee has determined that such changes are not material.
For further information see above “General Provisions of Israeli Law and Related Provisions of Articles of Association ‒ Office Holders” and Item 6. Directors, Senior Management and Employees ‒ Compensation of Directors and Executive Officers ‒ Compensation Policy.
Exemption, Insurance and Indemnification of Directors and Officers
Exemption, Insurance and Indemnification under the Companies Law
Under the Companies Law, an Israeli company may not exempt an Office Holder from liability with respect to a breach of his or her duty of loyalty, but may exempt in advance an Office Holder from his or her liability to the company, in whole or in part, with respect to a breach of his or her duty of care, provided that a relevant provision is included in the company’s articles of association. However, a company may not exempt in advance a director from his or her liability to the company with respect to a breach of duty of care in connection with a distribution made by the company.
To the extent specifically allowed by the company’s articles of association, the Companies Law permits a company to obtain an insurance policy covering liabilities of Office Holders resulting from their actions in fulfilling their roles as Office Holders, in any of the following instances:
(1) breach of the Office Holder’s duty of care to the company or to another person;
(2) breach of the Office Holder’s duty of loyalty to the company, to the extent that the Office Holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the interests of the company; or
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(3) monetary liabilities imposed on the Office Holder for the benefit of another person.
The Israeli Securities Law also permits such an insurance policy to cover a payment which an Office Holder is obligated to make to an injured party as set forth in the relevant sections of the Israeli Securities Law, as well as expenses incurred by an Office Holder in connection with certain proceedings that are specified in the Israeli Securities Law, including reasonable litigation expenses (including attorneys’ fees), provided that a relevant provision is included in the company’s articles of association.
Under the Companies Law, a company may indemnify an Office Holder against monetary liabilities and expenses imposed on or incurred by the Office Holder as a result of an act done by virtue of his or her role as an Office Holder for the following matters:
(1) financial liability imposed on the Office Holder in favor of another person pursuant to a judgment, including a judgment in the course of settlement arrangements or an arbitrator’s award approved by a court;
(2) reasonable litigation expenses, including attorneys’ fees, incurred by the Office Holder in an investigation or proceeding that has concluded without an indictment being filed and without any monetary liabilities being imposed on the Office Holder in lieu of criminal proceedings or has concluded without the filing of any indictment but with the imposition of monetary liability in lieu of criminal proceedings in an offense that does not require proof of criminal intent or in connection with a monetary sanction; and
(3) reasonable litigation expenses, including attorneys’ fees, incurred by the Office Holder or imposed by a court in a proceeding instituted against the Office Holder by the company, on its behalf or by any other person, or in connection with criminal proceedings in which the Office Holder was acquitted, or as a result of a conviction for an offense that does not require proof of criminal intent.
Under the Companies Law, a company may indemnify an Office Holder in respect of certain liabilities, either in advance of an event or following an event. If a company undertakes to indemnify an Office Holder in advance of an event, the indemnification, pursuant to (1) above, must be limited to foreseeable events in light of the company’s actual activities at the time the company undertook such indemnification and also limited to amounts or criteria determined by the board of directors as reasonable under the circumstances, and the undertaking to indemnify will specify any such events, amounts or criteria.
In addition, a company may indemnify, including in advance, an Office Holder in respect of payments that the Office Holder is obligated to make to an injured party as set forth in the relevant sections of the Israeli Securities Law, as well as expenses incurred by an Office Holder in connection with certain proceedings that are specified in the Israeli Securities Law, including reasonable litigation expenses (including attorneys’ fees). These indemnifications are subject to the inclusion of relevant provisions in the company’s articles of association.
A company may not indemnify an Office Holder or enter into an insurance contract that would provide coverage for, or exempt an Office Holder from, liability to the company with respect to any of the following:
(1)a breach of duty of loyalty, except indemnification or insurance that provides coverage for a breach of a duty of loyalty to the company while acting in good faith and having a reasonable basis to believe that such act would not prejudice the interests of the company;
(2)a willful or reckless breach of duty of care, other than mere negligence;
(3)an act done with the intent to unlawfully realize a personal gain;
(4)a fine, monetary penalty or forfeiture imposed upon such Office Holder; or
(5)certain monetary liabilities that are set forth in the Israeli Securities Law.
Exemption, Insurance and Indemnification of Directors and Officers under the Articles of Association
In accordance with and subject to the Companies Law and the Israeli Securities Law, Elbit Systems’ Articles of Association permit the Company to exempt, in advance or retroactively, any director or Company officer from any liability to the Company attributed to damage or loss caused by breach of the director’s or officer’s duty of care owed to the Company.
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Furthermore, in accordance with and subject to the provisions of the Companies Law and the Israeli Securities Law, Elbit Systems’ Articles of Association allow for directors and officers liability insurance, in respect of a liability or payment imposed on a director or officer as a result of an act carried out by such person in his or her capacity as a director or officer. This insurance may cover:
(1)a breach of his or her duty of care to Elbit Systems or to another person;
(2)a breach of his or her duty of loyalty to Elbit Systems, provided that the director or officer acted in good faith and had reasonable basis to assume that his or her act would not harm the interests of Elbit Systems;
(3)a financial obligation imposed on him or her in favor of another person;
(4)a payment that he or she is obligated to pay to an injured party as set forth in the relevant sections of the Israeli Securities Law;
(5)expenses incurred by him or her in connection with certain administrative proceedings specified in the Israeli Securities Law, including reasonable litigation expenses (including attorneys’ fees); or
(6)any other event for which insurance of a director or officer is or may be permitted.
In addition, in accordance with and subject to the Companies Law and the Israeli Securities Law, Elbit Systems’ Articles of Association permit indemnification, retroactively or in advance, of a director or officer against liability, payment or expense imposed on or incurred by him or her as a result of an act carried out in his or her capacity as a director or officer, that may include:
(1)a monetary liability imposed on the director or officer or paid by him or her in favor of a third party under a judgment, including a judgment by way of compromise or a judgment of an arbitrator approved by a court; provided however, that in case such undertaking is granted in advance it will be limited to events which, in the Board’s opinion, are foreseeable in light of the Elbit Systems’ actual activities at the time of granting the obligation to indemnify, and to a sum or under criteria as the Board deems reasonable under the circumstances, and the undertaking to indemnify will specify the aforementioned events and sum or criteria;
(2)a payment imposed on him or her in favor of an injured party in the circumstances specified in the relevant sections of the Israeli Securities Law;
(3)reasonable litigation expenses (including attorneys’ fees), incurred by a director or officer as a result of an investigation or proceeding conducted against him or her by an authority authorized to conduct such investigation or procedure, provided that such investigation or procedure: (i) concludes without the filing of an indictment against the director or officer and without imposition of monetary payment in lieu of criminal proceedings; or (ii) concludes with imposing on the director or officer a monetary payment in lieu of criminal proceedings, provided that the alleged criminal offense in question does not require proof of criminal intent or was incurred by the director or officer in connection with a monetary sanction imposed by the Companies Law or the Israeli Securities Law;
(4)expenses incurred by a director or an officer in connection with certain administrative proceedings set forth in the Israeli Securities Law, including reasonable litigation expenses (including attorneys’ fees); and
(5)reasonable litigation expenses (including attorneys’ fees), expended by the director or officer or imposed on him or her by the court for:
(i) proceedings issued against him or her by or on Elbit Systems’ behalf or by a third party;
(ii) criminal proceedings from which the director or officer was acquitted;
(iii) criminal proceedings in which he or she was convicted of an offense that does not require proof of criminal intent; or
(iv) any other liability or expense for which it is or may be permissible to indemnify a director or an officer.
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The Articles of Association permit the grant of similar indemnification to any person acting on behalf or at the request of Elbit Systems as a director or officer of another company in which Elbit Systems is directly or indirectly a shareholder or has any other interest.
The aggregate amount of indemnification by Elbit Systems to our Office Holders may not exceed 25% of Elbit Systems’ consolidated shareholders’ equity as reflected in our most recent consolidated financial statements published prior to the date of the indemnification payment.
In 2011, Elbit Systems’ Audit and Financial Statements Review Committee, Board and shareholders approved the grant to members of our Board (including to Michael Federmann, who may be considered a controlling shareholder of the Company, and to his son David Federmann) of indemnification letters reflecting the above conditions and limitations. Similar letters were also approved by the Audit and Financial Statements Review Committee or Compensation Committee (as the case may be) and the Board for indemnification of Office Holders of Elbit Systems who are not directors.
According to the Companies Law, the granting by a public company, such as Elbit Systems, of an indemnification letter (or exemption letter) to an Office Holder who may be considered a controlling shareholder of that company or his or her relative requires re-approval every three years by the company’s compensation committee, the board of directors and the company’s shareholders. The indemnification letters originally granted to Michael Federmann and David Federmann in 2011 were last re-approved, following the approval of our Compensation Committee and Board, by our shareholders at the Annual General Meeting of Shareholders in 2023, for an additional period of three years commencing on December 1, 2023.
Elbit Systems’ Compensation Policy allows Elbit Systems to purchase, from time to time during the term of the Compensation Policy, directors and officers (D&O) liability insurance. Pursuant to the Compensation Policy, the coverage limit under each such insurance policy will not exceed $250 million, and the insurance policy terms, as well as the premium paid by the Company, will reflect the current market conditions with respect to the Company and the nature of its operations. For additional information, see Item 6. Directors, Senior Management and Employees ‒ Compensation of Directors and Executive Officers ‒ Compensation Policy. In accordance with the Israeli Companies Regulations (Relief from Related Parties’ Transactions), 5760-2000, t he inclusion of our Office Holders in any D&O liability insurance policy that is consistent with our Compensation Policy will require only the approval of our Compensation Committee if the D&O liability insurance policy applicable to each of them (i) is purchased on market terms and (ii) the purchase thereof will not have a material effect on the Company’s profitability, assets or obligations.
In a meeting held on July 10, 2025, our Compensation Committee approved the extension of our existing D&O liability insurance policy which complies with the provisions of our Compensation Policy and the inclusion therein, in addition to all other Office Holders, of Michael Federmann (who may be considered a controlling shareholder of the Company), his son David Federmann and Bezhalel Machlis, our President and CEO, in accordance with the requirements of the Israeli Companies Regulations (Relief from Related Parties’ Transactions), 5760-2000. As of March 5, 2026, the D&O policy’s limit of liability was $100 million. The Compensation Committee also approved the purchase of a D&O liability insurance policy for a subsidiary of the Company, which also covers certain Office Holders of the Company, including our President and CEO, in accordance with the limitations under our Compensation Polic y.
In addition, our Compensation Policy authorizes the Company, subject to applicable law and the Articles of Association, to exempt our Office Holders from liability for violating their duty of care towards the Company. However, such exemption will not apply with respect to any decision or transaction in which a controlling shareholder, executive officer or director of the Company (even if such shareholder, executive officer or director is not the one who is exempted) has a personal interest. At the General Meeting of Shareholders held on April 2021, our shareholders, following recommendation of our Compensation Committee and the approval of our Board, approved providing an exemption letter reflecting the above conditions and limitations to Bezhalel Machlis, our President and CEO, and to the Company's current and future directors (including to Michael Federmann, who may be considered a controlling shareholder of the Company, and to his son David Federmann). Similar letters were also approved by the Compensation Committee and the Board for exemption of other Office Holders of Elbit Systems who are not directors. The exemption letters originally granted to Michael Federmann and David Federmann in 2021 were last re-approved, following the approval of our Compensation Committee and Board, by our shareholders at the Annual General Meeting of Shareholders in 2023, for an additional period of three years commencing on April 7, 2024.
Share Capital
Elbit Systems currently has one type of share, this being ordinary shares. T he share capital of E lbit Systems is NIS 80,000,000 divided into 80,000,000 ordinary shares of NIS 1 nominal (par) value each, of which 46,508,933 ordinary shares were issued and outstanding as of March 5, 2026. All issued and outstanding ordinary shares are fully paid and non-assessable. For information regarding changes in share capital, see the Description of Securities under “Share Capital”.
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Rights, Preferences and Restrictions of Shares
For information regarding voting rights, dividend rights and other rights generally applicable to our ordinary shares, including action necessary to change the rights of holders of our ordinary shares, see the Description of Securities under “Rights Generally Applicable to Ordinary Shares”.
General Meetings of Shareholders
An annual general meeting of our shareholders must be held once each year and not later than 15 months after the preceding annual general meeting. Any general meeting that is not an annual general meeting is defined as an extraordinary general meeting. All shareholders of record are entitled to attend any annual or extraordinary general meeting and vote at general meetings in person, by a voting instrument, by proxy or through the Israeli Securities Authority’s electronic voting system.
Our Board may convene an extraordinary general meeting when and as it sees fit. In addition, the Board must, according to the Companies Law, convene an extraordinary general meeting if it receives a demand to do so from either: (i) at least two directors; (ii) at least one quarter of the members of the Board; or (iii) one or more shareholders who hold: (A) an aggregate of at least 10% of our issued share capital and at least 1% of all voting rights in the Company; or (B) at least 10% of all voting rights in the Company (however, under our Articles of Association it is sufficient for one or more shareholders to hold (A) at least 5% of our issued share capital and at least 1% of all voting rights in the Company, or (B) at least 5% of all voting rights in the Company), and in such case the extraordinary meeting must be held not more than 56 days from the submission date of such request to the Board and not later than 35 days from the applicable notice to shareholders described below. Any demand by a person or persons, as described in (i), (ii) and/or (iii) of this paragraph, who demands that an extraordinary general meeting be convened, must be made in writing and sent to our registered office, which is Elbit Systems Ltd., Advanced Technology Center, Haifa 3100401, Israel.
Subject to the provisions of our Articles of Association, as well as applicable law and regulations, including applicable laws and regulations of any stock market on which our shares are listed, notice of an annual general meeting and of an extraordinary general meeting must be sent at least 21 days (and in some cases at least 35 days) in advance to all shareholders recorded in our shareholders registry. Notice of an annual or extraordinary general meeting may be sent by us by personal delivery or prepaid registered mail. Such notice may also be sent by facsimile, email or other electronic means provided confirmation is made by registered mail and should be sent to shareholders at the address in our records. Further, under our Articles of Association, a notice to shareholders may also be served by publication in a daily Hebrew newspaper appearing in Israel (or any other form permitted by law, which includes posting on the Company's website). Such notice must include the place, date and hour of the meeting, the agenda for the meeting, the proposed resolutions and instructions for proxy voting.
The quorum required for a meeting of shareholders, except in the case of certain extraordinary meetings convened in special circumstances, consists of at least two shareholders present in person or by proxy or other voting instrument and holding or representing between them at least one-third of the voting power. The chair of our Board generally presides at our shareholders’ meetings. A meeting adjourned for lack of a quorum will be adjourned to the same day in the following week, at the same time and place, or to the day, time and place that the Board determines, with notice to the shareholders. At the reconvened meeting, if a quorum is not present within one-half hour from the time appointed for holding the adjourned meeting, the required quorum then is two shareholders, present in person or by proxy or other voting instrument, representing at least 10% of the voting power. Nasdaq Listing Rule 5620(c) provides that a company listed on the Nasdaq Global Select Market should have a quorum requirement for shareholder meetings of at least one-third of the company’s outstanding common voting stock. As described above, our general quorum requirement is consistent with the Nasdaq Listing Rule. However, in the case of an adjourned meeting, our Articles of Association, consistent with what is permissible under the Companies Law, provide for a 10% quorum requirement.
In general, subject to the Companies Law, ordinary resolutions at a general meeting require approval of a majority of the votes cast at the general meeting, whether in person or by proxy, without taking into account abstentions. For information as to the required majority for the approval of related party transactions, see the Description of Securities under “Provisions Relating to Major Shareholders”. However, under our memorandum of association (the Memorandum of Association) and Articles of Association, certain resolutions require a special majority of at least 67% of all votes properly cast at a general meeting, without taking into account abstentions.
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Change of Control
See the Description of Securities under “Change of Control”.
Provisions Relating to Major Shareholders
See the Description of Securities under “Provisions Relating to Major Shareholders”.
Borrowing Power
See the Description of Securities under “Borrowing Power”. For additional information regarding our Articles of Association, see the Description of Securities.
Exchange Controls
No limitations exist or are imposed by Israeli law or our constituent documents with regard to the rights of non-Israeli shareholders or shareholders not resident in Israel to hold or exercise voting rights, except that such limitations may exist with respect to shareholders who are deemed enemies of the State of Israel under Israeli law.
As of the date of this annual report there are no Israeli currency control restrictions on payments of dividends or other distributions with respect to our ordinary shares or the proceeds from the sale of the shares, except that such limitations may exist with respect to shareholders who are deemed enemies of the State of Israel under Israeli law.
Our Memorandum of Association and Articles of Association do not restrict the ownership of ordinary shares by non-residents of Israel. Neither the Memorandum of Association and Articles of Association nor Israeli law restrict the voting rights of non-residents.
In addition, for a description of Israeli regulations relating to Israeli “defense entities” see the Description of Securities under “Regulation of Israeli Defense Entities”.
Taxation
Israeli Tax Considerations
General
The following is a brief summary of aspects of the current tax law applicable to companies in Israel, with special reference to its effect on Elbit Systems and our Israeli subsidiaries, and government programs from which Elbit Systems and some of our Israeli subsidiaries benefit.
The following also contains a discussion of certain material Israeli tax consequences applicable to our shareholders. This summary does not discuss all the tax aspects that may be relevant to a particular shareholder in light of its, his or her personal circumstances, including shareholders that may be subject to special treatment such as partnerships, trusts or traders in securities who are subject to special tax regimes not covered under this discussion. To the extent that the discussion is based on tax legislation that has not been subject to judicial or administrative interpretation, there can be no assurance that the views expressed in the discussion will be accepted by the tax authorities in question. The discussion is not intended, and should not be construed, as legal or professional tax advice and is not exhaustive of all possible tax considerations.
Our income tax liability in Israel is based on our unconsolidated earnings and such earnings of our Israeli-based subsidiaries. It is determined in NIS and not in U.S. dollars. Tax liability of non-Israeli subsidiaries is determined according to the laws of their respective countries of residence. As a result, the tax provision in our consolidated financial statements does not directly relate to income reported on these statements.
Shareholders are urged to consult their own tax advisors as to the israeli or other tax consequences of the purchase, ownership and disposition of our ordinary shares, including, in particular, the effect of any non-israeli, state or local taxes.
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General Corporate Tax in Israel
Israeli companies are generally subject to corporate tax on taxable income and capital gains at the rate of 23%. However, the effective tax rate payable by a company that qualifies as an Industrial Company that derives income from an “Approved Enterprise”, a “Beneficiary Enterprise”, a “Preferred Enterprise” or a “Preferred Technological Enterprise” (as discussed below) may be considerably less. Capital gains derived by an Israeli company are subject to the standard corporate tax rate.
Under the Israeli Tax Ordinance, 1961 (the Ordinance) transfer pricing rules require that cross-border transactions between related parties be carried out implementing an arm’s-length principle and reported and taxed accordingly.
Industry Encouragement. Under the Law for the Encouragement of Industry (Taxes), 1969, a company qualifies as an “Industrial Company” if it is resident in Israel and at least 90% of its income (determined in Israeli currency) in a given tax year, with some exceptions, comes from “Industrial Enterprises” owned by that company. An Industrial Enterprise is defined as an enterprise the primary activity of which in a particular tax year is industrial manufacturing activity.
Below are the main tax benefits available to an Industrial Company:
• amortization of the cost of purchased patent, rights to use a patent, and know-how, which were purchased in good faith and are used for the development or advancement of the Industrial Enterprise, over an eight-year period, commencing on the year in which such rights were first exercised;
• under limited conditions, an election to file consolidated tax returns with controlled Israeli Industrial Companies;
• expenses related to a public offering are deductible in equal amounts over three years commencing on the year of the offering.
We believe Elbit Systems qualifies as an Industrial Company. See further Item 18. Financial Statements – Note 18A(2). There can be no assurance that we will continue to qualify as an Industrial Company or that the tax benefits described above will be available in the future.
Investment Law. The Israeli Law for the Encouragement of Capital Investments, 1959 (the Investment Law) provides tax benefits to companies that make capital investments in eligible fixed assets. Under the Investment Law, subject to applicable conditions, companies could apply to receive “Approved Enterprise”, “Privileged Enterprise” or “Preferred Enterprise” status, each of which provides various tax benefits. See Item 18. Financial Statements – Note 18A.
A portion of our Israeli operations have been granted “Approved Enterprise”, “Privileged Enterprise” and “Preferred Enterprise” status, as described herein. These operations are subject to taxation at reduced rates applicable to those types of enterprises. There can be no assurance that Elbit Systems or our Israeli subsidiaries will continue to qualify for such benefits or benefits under the Law for Encouragement of Industry in the future. There can also be no assurance that we will continue to qualify as an Approved Enterprise, Privileged Enterprise or Preferred Enterprise, or that the benefits described above will be available in the future. See further Item 18. Financial Statements – Note 18A(3).
On November 15, 2021, the Israeli government approved the Economic Efficiency Bill (Legislative Amendments for Attaining Budgetary Objectives for the 2021 and 2022 Budget Years) - 2021 (the Economic Efficiency Bill) regarding repatriation of retained exempt earnings from Approved Enterprises and Privileged Enterprises (Exempt Earnings). The Economic Efficiency Bill includes a temporary provision, effective as of August 15, 2021, offering relief of 30% to 60% on the amount of tax which would otherwise have been required to be paid on distributable earnings, in order to encourage companies to pay the reduced taxes during the next 12 months (the Temporary Provision). The Temporary Provision provides partial relief from Israeli corporate income tax for companies that elect the offered benefit, on a linear basis, resulting in a greater release of Exempt Earnings and greater relief from corporate income tax. According to the new linear statutory formula, the corporate income tax to be paid on Exempt Earnings accumulated until December 31, 2020 that were not yet distributed as a dividend (Selected Accumulated Income) would vary from a 6% to 17.5% effective tax rate (depending on the company’s corporate tax rate in the year in which the income was derived and the amount of Exempt Earnings elected to be relieved), without taking into account the 15% dividend withholding tax (which should be levied only upon actual distribution, if any). The reduced corporate tax is payable within 30 days of making the election. The Temporary Provision does not require the actual distribution of the Selected Accumulated Income, nor does it provide any relief from the 15% dividend withholding tax.
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The partial corporate income tax relief is available to companies that elected to im plement the Temporary Provision by November 15, 2022 in respect of Exempt Earnings acc rued up to December 31, 2020, provided that up to 30% (the exact rate is calculated according to a new statutory formula) of the “released” Selected Accumulated Income is re-invested in Israel through at least one of the following: industrial activities, research and develop ment activities, assets used by the company or salaries of newly recruited employees.
As part of the Temporary Provision, Article 74 of the Investment Law was amended and as a result, starting August 15, 2021, a company with Exempt Earnings that distributes dividends will have to attribute a portion of the distributed sum to Exempt Earnings, and a portion to non-exempt earnings, on a pro-rata basis. The Company elected to implement the Temporary Provision to “release” approximately $784 million of Exempt Earnings and as a result pay the reduced corporate tax in an amount of approximately $80 million. The amount was paid in 2022.
Tax on IP-based Income. In 2016, Israel enacted a tax law amendment introducing a new tax regime for IP based companies. The regime is tailored to a post-BEPS (base erosion profit shifting) world, encouraging multinationals to consolidate IP ownership and profits in Israel along with existing Israeli R&D functions. Tax benefits created to achieve this goal include a reduced corporate income tax rate of 6% on IP-based income and on capital gains from the future sale of IP. The 6% rate would apply to qualifying Israeli companies that are part of a group with global consolidated revenue of over NIS 10 billion (approxim ately $2.9 billion). Other qua lifying companies with globa l consolidated revenue below NIS 10 billion would be subject to a 12% tax rate. However, if the Israeli company is located in development zone “A”, the tax rate is further reduced to 7.5%. Additionally, subject to meeting applicable conditions, withholding tax on dividends may be subject to a reduced rate of 4% for all qualifying companies (unless further reduced by a treaty). See Item 18. Financial Statements ‒ Note 18A(3).
Capital Gains to a Shareholder
General. Israeli law generally imposes a capital gains tax on the sale or disposition of any capital assets by Israeli residents, as defined for Israeli tax purposes, and on the sale of capital assets located in Israel, including shares in Israeli companies, by both Israeli residents as well as non-Israeli residents, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder’s country of residence provides otherwise. The Ordinance distinguishes between real gain and inflationary surplus. The inflationary surplus is a portion of the total capital gain equivalent to the increase of the relevant asset’s purchase price attributable to an increase in the Israeli consumer price index, or, in certain circumstances, a foreign currency exchange rate, between the date of purchase and the date of sale. Inflationary surplus accrued since January 1, 1994 is not subject to tax in Israel. The real gain is the excess of the total capital gain over the inflationary surplus.
Capital gains to Israeli residents. The tax rate on capital gains to a “non-principal” individual shareholder (those persons holding less than 10% of any of our means of control) is 25%, and a tax rate for an individual “principal” shareholder (those persons holding 10% or more of any of our means of control at the time of sale or at any time during the preceding 12- month period) is 30%. Individuals who are subject to income tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) may also be subject to an additional surtax at a rate of 3% or 5%, as discussed below. Dealers in securities in Israel are taxed at regular tax rates applicable to business income. Israeli-resident companies are taxed on capital gains at the applicable corporate tax rate.
Capital gains to non-residents of Israel. Gains on the sale of ordinary shares traded on the TASE and on Nasdaq held by non-Israeli resident investors for tax purposes that are not attributable to an Israeli permanent establishment will generally be exempt from Israeli capital gains tax, subject to the provisions of the Israeli tax legislation. However, non-Israeli corporations will not be entitled to such exemption if Israeli residents (i) have a controlling interest of more than 25% in any of the means of control of such non-Israeli corporation or (ii) are the beneficiaries or are entitled to 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly. Moreover, a sale of shares by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, the United States - Israel tax treaty (the Treaty) generally exempts United States residents who hold less than 10% of our voting rights, and who never held 10% of our voting rights during any part of the twelve months prior to a sale of their shares, from Israeli capital gains tax in connection with such sales under certain circumstances and subject to meeting applicable conditions.
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Taxation on Dividends Paid to a Shareholder
Income tax for individual Israeli residents. Residents of Israel are subject to income tax on distributions of dividends other than bonus shares (stock dividends). The tax rate on dividend income to a “non-principal” individual shareholder is 25% and 30% to an individual “principal” shareholder. The distributing company withholds at source tax at the rate of 25% or 30% in the case of a “principal shareholder” on the distribution date or at any time during the 12-month period prior to the dividend distribution date. A company the stock of which is traded on a stock exchange withholds tax at the rate of 25% from dividends distributes to a shareholder if the shares are registered with a nominee company (whether the recipient is a “principal” shareholder or not). Dividends distributed from “Preferred Income” under Preferred Enterprise status (see above “Investment Law”) are subject to a withholding tax rate of 20%, subject to a reduced tax rate under the provisions of applicable double taxation treaties. Following Elbit Systems' election in February 2022 to implement the Temporary Provision (see above “Investment Law”) and pay a reduced tax on distribution of the Selected Accumulated Income, dividends distributed in the future will include the Selected Accumulated Income, the withholding tax rate for which will be calculated according to the proportion between the Selected Accumulated Income and the total accumulated earnings as of December 31, 2020. Accordingly, the aggregate withholding tax rate on those dividends for individuals and non-residents is expected to be approximately 17%.
Income tax for non-residents of Israel. Non-residents of Israel (whether individuals or corporations) are subject to income tax on distributions of dividends other than bonus shares (stock dividends). The tax rate on dividend income to a “non-principal” non-resident of Israel shareholder is 25% and 30% to a “principal” shareholder (including a foreign company as opposed to an Israeli company) on the distribution date or at any time during the 12-month period prior to the dividend distribution date. The distributing company withholds at source income tax at the rate of 25% for a “non-principal” shareholder, or 30% for a “principal” shareholder. A company whose stock is traded on a stock exchange will withhold tax at the rate of 25% from dividends paid to a “principal” shareholder for shares registered and held by a registration company, unless a lower rate is applicable under a double taxation treaty. Accordingly, Elbit Systems withholds income tax at the source. Generally, dividends distributed from taxable income accrued during the period of benefit of an Approved Enterprise or Privileged Enterprise are taxable at the rate of 15% if the dividend is distributed during the tax benefit period under the Investment Law or within 12 years after the period (this limitation does not apply if the company qualifies as a foreign investors’ company according to the Investment Law). Dividends distributed from “Preferred Income” under a Preferred Enterprise, PTE or SPTE status are subject to a withholding tax rate of 20% (unless a lower treaty rate applies).
In light of Elbit Systems’ election in February 2022 to implement the Temporary Provision and pay a reduced tax on distribution of the Selected Accumulated Income (see above “Investment Law”), dividends to be distributed after such election will include the Selected Accumulated Income, and the withholding tax rate on them will be calculated according to the proportion between the Selected Accumulated Income and the total accumulated earnings as of December 31, 2020. Accordingly, the aggregated withholding tax rate on those dividends for individuals and non-residents is expected to be approximately 17%.
Israeli Tax on United States Shareholders
Dividends paid by Elbit Systems to a shareholder resident in the United States are generally subject to withholding tax in Israel. Under the Treaty, the withholding tax rate on a dividend is normally 25%.
A U.S. corporation would have a reduced withholding tax rate on dividends of 12.5% (or 15% in connection with an Approved Enterprise, Privileged Enterprise or Preferred Enterprise. See above “Investment Law”). The U.S. corporation must own at least 10% of the voting shares during a portion of Elbit Systems’ tax year in which the payment of the dividend occurs but prior to the payment date and during the entire prior tax year. The reduced rate is also subject to a condition that no more than 25% of Elbit Systems’ gross income for the prior tax year consists of interest, other than interest received from banking, financing or similar businesses or from certain subsidiaries. In light of Elbit Systems' election in February 2022 to implement the Temporary Provision and pay a reduced tax on distribution of the Selected Accumulated Income, dividends distributed after such election will include the Selected Accumulated Income, and the withholding tax rate on them will be calculated according to the proportion between the Selected Accumulated Income and the total accumulated earnings as of December 31, 2020. Accordingly, the aggregated withholding tax rate on those dividends for individuals and non-residents is expected to be approximately 17%.
Under the terms of the Treaty, Israel may tax capital gains realized by shareholders resident in the United States on a sale of ordinary shares of Elbit Systems if certain conditions exist. However, since Elbit Systems’ ordinary shares are traded on the TASE and on Nasdaq, gains on the sale of ordinary shares held by non-Israeli resident investors for tax purposes that are not attributable to an Israeli permanent establishment generally will be exempt from Israeli capital gains tax, subject to the provisions of the Israeli tax legislation.
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A non-Israeli resident who receives dividends from which tax was duly withheld is generally exempt from the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was not generated from business conducted in Israel by the taxpayer; (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed, and (iii) the taxpayer is not liable to a surtax (as further explained below).
U.S. Shareholders (as defined in “United States Federal Income Tax Considerations” below), who hold ordinary shares through an Israeli stockbroker or other Israeli intermediary may be subject to Israeli withholding tax on any capital gains recognized if the U.S. Shareholder does not obtain approval of an exemption from the Israeli Tax Authorities. U.S. Shareholders should consult their Israeli stockbroker or other intermediary regarding the procedures for obtaining an exemption.
Surtax
Individuals who are subject to tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident and with respect to a non-Israeli resident, subject to tax treaties not otherwise limiting the applicable tax rate to such non-Israeli resident) are also subject to an additional tax at a rate of 3% on annual income (including, but not limited to, dividends, interest and capital gain) exceeding a certain threshold (currently NIS 721,560 for years 2025 through 2027 (approximately $210,000), which amount will be updated annually starting January 1, 2028, based on the annual change in the Israeli consumer price index) (the “Threshold Amount”).
According to new legislation effective as of January 1, 2025, an additional 2% excess tax will be imposed on “Capital-Sourced Income” (defined as income from any source other than employment income, business income or income from “personal effort”), provided that the Individual’s Capital Sourced Income exceeds the Threshold Amount. This additional excess tax applies, among other things, to income from capital gains, dividends, interest, rental income or the sale of real property.
This summary of Israeli taxation is based on existing treaties, laws, regulations and judicial and administrative interpretations thereof. There can be no assurance that any of these may not be amended or repealed, possibly with retroactive effect, or that a tax authority may not take a contrary position. Also, this summary does not address the tax consequences that may be applicable to specific persons based on their individual circumstances. It also does not address any local or other foreign tax consequences. Each shareholder should consult his or her own tax advisor as to the specific tax consequences of purchasing, holding or transferring our shares.
United States Federal Income Tax Considerations
General
The following is a summary of material U.S. federal income tax considerations relevant to the acquisition, ownership and disposition of our ordinary shares by a “U.S. Shareholder”, which, for these purposes, means a beneficial owner of ordinary shares that is a citizen or resident of the United States, a U.S. domestic corporation, or that otherwise is subject to U.S. federal income taxation on a net income basis in respect of such ordinary shares.
T his summary is based on provisions of the Internal Revenue Code of 1986, as amended (the Code), existing and proposed U.S. Treasury regulations, administrative pronouncements, rulings and judicial decisions in effect as of the date of this annual report. These authorities and their interpretation are subject to change, possibly with retroactive effect. No ruling will be requested by us from the Internal Revenue Service (the IRS) regarding the tax consequences to a U.S. Shareholder, and there can be no assurance that the IRS will agree with the discussion set out below. This summary does not address any U.S. federal tax consequences other than U.S. federal income tax consequences, such as state, local or foreign taxes, the U.S. federal estate and gift taxes, the Medicare contribution tax applicable to net investment income of certain non-corporate U.S. Shareholders, or alternative minimum tax consequences of acquiring, holding or disposing of ordinary shares. Investors are urged to consult their own tax advisors regarding the specific U.S. federal income tax consequences to them of owning and disposing of our ordinary shares in light of their particular circumstances.
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This summary applies to U.S. Shareholders only if they hold ordinary shares as capital assets for tax purposes. In addition, this summary does not discuss all aspects of U.S. federal income taxation that may be applicable to investors in light of their particular circumstances or to investors who are subject to special treatment under U.S. federal income tax law, including, but not limited to, U.S. expatriates, insurance companies, banks, regulated investment companies and real estate investment trusts, securities or currency-dealers, financial institutions, tax-exempt organizations, persons holding ordinary shares as part of a straddle, hedging or conversion transaction, traders in securities that elect to apply a mark‑to‑market method of accounting, persons who acquired our ordinary shares pursuant to the exercise of employee stock options or otherwise as compensation, persons subject to special tax accounting rules as a result of any item of gross income with respect to our ordinary shares being taken into account in an applicable financial statement, entities or arrangements that are treated as partnerships for U.S. federal income tax purposes (or partners therein), persons whose functional currency is not the U.S. dollar, and persons owning (directly, indirectly or by attribution) 10% or more of our shares (by vote or value).
If a partnership or other entity treated as a partnership for U.S. federal income tax purposes holds our ordinary shares, the tax treatment of a partner generally will depend upon the status of the partner and the activities of the partnership. A partner in a partnership that holds our ordinary shares is urged to consult its own tax advisor regarding the specific tax consequences of owning and disposing of our ordinary shares.
The summary of u.s. federal income tax consequences set out below is for general information only. All shareholders and prospective investors should consult their tax advisors as to the particular tax consequences to them of owning our ordinary shares, including the applicability and effect of state, local and non-u.s. tax laws and possible changes in tax law.
Dividends
Subject to the discussion below under “Passive Foreign Investment Company Rules”, a U.S. Shareholder generally will be required to include in income, as ordinary dividend income, the U.S. dollar amount of any distribution of cash or property on our ordinary shares, including the amount of any Israeli withholding tax thereon, to the extent such distribution is paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. We do not intend to compute earnings and profits under U.S. tax principles. U.S. Shareholders therefore should expect that all distributions with respect to our ordinary shares will be treated for U.S. federal income tax purposes as dividends. Dividends paid with respect to our ordinary shares do not qualify for the dividends-received deduction applicable in certain cases to U.S. corporations.
“Qualified dividends” received with respect to our ordinary shares by a U.S. Shareholder that is an individual, trust, or estate generally will be subject to tax at preferential tax rates. Subject to certain exceptions for short-term positions, dividends paid on our ordinary shares will be treated as qualified dividends if the ordinary shares are readily tradable on an established securities market in the United States and we were not, in the year prior to the year in which the dividend was paid, and are not, in the year in which the dividend is paid, a passive foreign investment company (a PFIC).
The ordinary shares are listed on the Nasdaq and will qualify as readily tradable on an established securities market in the United States so long as they are so listed. Based on our audited financial statements and relevant market and shareholder data, we do not believe we were treated as a PFIC with respect to our 2024 and 2025 taxable years and do not expect to be treated as a PFIC for our current taxable year or in the reasonably foreseeable future. See “Passive Foreign Investment Company Rules”, below.
There is no assurance that dividends received with respect to our ordinary shares by U.S. Shareholders will be eligible for such preferential tax rates. U.S. Shareholders of ordinary shares are urged to consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of their own particular situation.
The amount of any distribution paid in NIS will be included in the gross income of a U.S. Shareholder in an amount equal to the U.S. dollar value of the NIS calculated by reference to the spot rate of exchange in effect on the date the distribution is received by the U.S. Shareholder. If a U.S. Shareholder converts dividends paid in NIS into U.S. dollars on the day we distribute the dividends, the U.S. Shareholder generally should not be required to recognize foreign currency gain or loss with respect to such conversion. If the NIS received in the distribution are not converted into U.S. dollars on the date of receipt, any foreign currency gain or loss recognized upon a subsequent conversion or other disposition of the NIS will generally be treated as U.S. source ordinary income or loss. Special rules govern and special elections are available to accrual method taxpayers to determine the U.S. dollar amount that should be included in income in the case of taxes withheld in a foreign currency. Accrual basis taxpayers are urged to consult their own tax advisors regarding the requirements and the elections applicable in this regard.
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Subject to generally applicable limitations and conditions, Israeli dividend withholding tax paid at the appropriate rate applicable to the U.S. Shareholder may be eligible for a credit against such U.S. Shareholder’s U.S. federal income tax liability. These generally applicable limitations and conditions include the requirements adopted by the IRS in regulations promulgated in December 2021, and any Israeli tax will need to satisfy these requirements in order to be eligible to be a creditable tax for a U.S. Shareholder. In the case of a U.S. Shareholder that either (i) is eligible for, and properly elects, the benefits of the Treaty, or (ii) consistently elects to apply a modified version of these rules under recently issued temporary guidance and complies with specific requirements set forth in such guidance, the Israeli tax on dividends will be treated as meeting the new requirements and therefore as a creditable tax. In the case of all other U.S. Shareholders, the application of these requirements to the Israeli tax on dividends is uncertain and we have not determined whether these requirements have been met. If the Israeli dividend tax is not a creditable tax for a U.S. Shareholder or the U.S. Shareholder does not elect to claim a foreign tax credit for any foreign income taxes paid or accrued in the same taxable year, the U.S. Shareholder may be able to deduct the Israeli tax in computing such U.S. Shareholder’s taxable income for U.S. federal income tax purposes. Israeli taxes paid by a U.S. Shareholder under circumstances in which an exemption from such tax was available generally will not be entitled to claim a credit or deduction for such taxes.
Dividend distributions will constitute income from sources without the United States and, for U.S. Shareholders that elect to claim foreign tax credits, generally will constitute “passive category income” for foreign tax credit purposes. The availability and calculation of foreign tax credits and deductions for foreign taxes depend on a U.S. Shareholder’s particular circumstances and involve the application of complex rules to those circumstances. The temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance. U.S. Shareholders should consult their own tax advisors regarding the application of these rules to their particular situations.
Sale, Exchange or Other Disposition
Subject to the discussion below under “Passive Foreign Investment Company Rules”, upon the sale, exchange or other taxable disposition of ordinary shares, a U.S. Shareholder generally will recognize capital gain or loss equal to the difference between the amount realized on the sale, exchange or other disposition and the U.S. Shareholder’s adjusted tax basis in the ordinary shares, in each case, as determined in U.S. dollars. Any gain or loss recognized upon the sale, exchange or other disposition of the ordinary shares will be treated as long-term capital gain or loss if, at the time of the sale, exchange or other disposition, the holding period of the ordinary shares exceeds one year. In the case of individual U.S. Shareholders, long-term capital gains generally are subject to U.S. federal income tax at preferential rates. The deductibility of capital losses by a U.S. Shareholder is subject to significant limitations. U.S. Shareholders should consult their own tax advisors in this regard.
A U.S. Shareholder generally will not be entitled to credit any Israeli tax imposed on the sale or other disposition of the ordinary shares against such U.S. Shareholder’s U.S. federal income tax liability, except in the case of a U.S. Shareholder that consistently elects to apply a modified version of the U.S. foreign tax credit rules that is permitted under the temporary guidance and complies with the specific requirements set forth in such guidance. Additionally, capital gain or loss recognized by a U.S. Shareholder on the sale, exchange or other disposition of ordinary shares generally will be U.S. source gain or loss for U.S. foreign tax credit purposes. Consequently, even if the withholding tax qualifies as a creditable tax, a U.S. Shareholder may not be able to credit the tax against its U.S. federal income tax liability unless such credit can be applied (subject to generally applicable conditions and limitations) against tax due on other income treated as derived from foreign sources. If the Israeli tax is not a creditable tax, such tax would reduce the amount realized on the sale or other disposition of the ordinary shares even if the U.S. Shareholder has elected to claim a foreign tax credit for other taxes in the same year. Israeli taxes paid by a U.S. Shareholder under circumstances in which an exemption from such tax was available generally will not be entitled to claim a credit or deduction for such taxes. The temporary guidance discussed above also indicates that the Treasury and the IRS are considering proposing amendments to the December 2021 regulations and that the temporary guidance can be relied upon until additional guidance is issued that withdraws or modifies the temporary guidance. U.S. Shareholders should consult their own tax advisors regarding the application of the foreign tax credit rules to a sale or other disposition of the ordinary shares and any Israeli tax imposed on such sale or disposition.
If a U.S. Shareholder receives NIS upon the sale of ordinary shares, that U.S. Shareholder may recognize ordinary income or loss as a result of currency fluctuations between the date of the sale of the ordinary shares and the date the sales proceeds are converted into U.S. dollars.
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Passive Foreign Investment Company Rules
Special U.S. tax rules apply to investors in companies that are considered to be PFICs. A non-U.S. corporation will be classified as a Passive Foreign Investment Company (or PFIC) for any taxable year if at least 75% of its gross income consists of passive income (which is generally subject to certain exceptions for active businesses, dividends, interest, rents, royalties and gains from the sales of property generating such income), or at least 50% of the value of its assets (generally determined on the basis of a quarterly average) is attributable to assets that produce, or are held for the production of, passive income. Based on our audited financial statements and relevant market and shareholder data, we do not believe we were treated as a PFIC with respect to our 2024 and 2025 taxable years, and do not expect to be a PFIC for our current taxable year or in the reasonably foreseeable future. However, whether we are a PFIC is a factual determination that must be made at the close of each year and is based on factors that may be outside of our control, including, among other things, the valuation of our ordinary shares and assets, which will likely change from time to time. Therefore, there is no assurance that we will not be classified as a PFIC in the future due to, for example, changes in the composition of our assets or income, or changes in our market capitalization. Under the PFIC rules, if we were considered a PFIC at any time that a U.S. Shareholder holds our ordinary shares, we would continue to be treated as a PFIC with respect to such holder's investment even if we no longer meet the threshold requirements discussed above, unless the U.S. Shareholder has made a “deemed sale” election once we are no longer a PFIC.
If we are considered a PFIC for any taxable year that a U.S. Shareholder holds our ordinary shares, any gain recognized by the U.S. Shareholder on a sale or other disposition of our ordinary shares would be allocated pro-rata over the U.S. Shareholder’s holding period for the ordinary shares. The amounts allocated to the taxable year of the sale or other disposition and to any year before we became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for that taxable year for individuals or corporations, as appropriate, and an interest charge would be imposed. Further, to the extent that the distributions received by a U.S. Shareholder on our ordinary shares in a taxable year during which we are treated as a PFIC exceed 125% of the average of the annual distributions on the ordinary shares received during the preceding three years or the U.S. Shareholder’s holding period, whichever is shorter, those distributions would be subject to taxation in the same manner as gain on the sale or other disposition of ordinary shares, as described above. Certain elections may be available that would result in alternative treatments (such as mark-to-market treatment) of the ordinary shares. If we are treated as a PFIC with respect to a U.S. Shareholder for any taxable year, the U.S. Shareholder will be deemed to own its pro rata share in any of our subsidiaries that also are PFICs, and will be subject to the PFIC rules with respect to each such subsidiary PFIC. If we are considered a PFIC, a U.S. Shareholder also will be subject to annual information reporting requirements.
The PFIC rules are complex. U.S. Shareholders should consult their own tax advisors regarding the potential application of the PFIC rules to the ownership of our ordinary shares.
Foreign Financial Asset Reporting
Individual U.S. Shareholders that own “specified foreign financial assets” with an aggregate value in excess of $50,000 on the last day of the taxable year or $75,000 at any time during the taxable year are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. Higher reporting thresholds apply to certain individuals living abroad and to certain married individuals. Regulations extend this reporting requirement to certain entities that are treated as formed or availed of to hold direct or indirect interests in specified foreign financial assets based on objective criteria. U.S. Shareholders that fail to report the required information could be subject to substantial penalties. In addition, the statute of limitations for assessment of tax would be suspended, in whole or part. Prospective investors are encouraged to consult with their own tax advisors regarding the possible application of these rules, including the application of the rules to their particular circumstances.
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Informational Reporting and Backup Withholding
Dividend payments with respect to ordinary shares and proceeds from the sale, exchange or other disposition of ordinary shares may be subject to informational reporting to the IRS and possible U.S. backup withholding at a current rate of 24%. Backup withholding will not apply, however, to a holder who timely furnishes a correct taxpayer identification number or certificate of foreign status and makes any other required certification or who is otherwise exempt from backup withholding. U.S. persons (as defined in the Code) who are required to establish their exempt status generally must provide IRS Form W-9 (Request for Taxpayer Identification Number and Certification). Non-U.S. persons generally will not be subject to U.S. informational reporting or backup withholding. However, such holders may be required to provide certification of non-U.S. status (generally on IRS Form W-8BEN or W-BEN-E) in connection with payments received in the United States or through certain U.S.-related financial intermediaries.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against a holder’s U.S. federal income tax liability, and a holder may obtain a refund of any excess amounts withheld by timely filing the appropriate claim for refund with the IRS and furnishing any required information.
Holders of our ordinary shares should consult their own tax advisors concerning the specific U.S. federal, state and local tax consequences of the ownership and disposition of the ordinary shares in light of their particular situations as well as any consequences arising under the laws of any other taxing jurisdiction. In particular, U.S. Shareholders are urged to consult their own tax advisors concerning whether they will be eligible for benefits under the Treaty.
Documents on Display
We are subject to the informational requirements of the Exchange Act. In accordance with these requirements, we file reports and other information with the SEC. The SEC maintains an internet website at http://www.sec.gov that contains reports, proxy statements, information statements and other material that are filed through the SEC’s Electronic Data Gathering, Analysis and Retrieval (EDGAR) system. We also file periodic and immediate reports and other information with the Israeli Securities Authority through its electronic filing system at www.magna.isa.gov.il or on the TASE website at www.tase.co.il.
Item 11. Quantitative and Qualitative Disclosures About Market Risk.
General
Market risks relating to our operations result primarily from changes in exchange rates and interest rates. We take various measures to compensate for the effects and fluctuation in both exchange rates and interest rates. We use financial instruments and derivatives in order to limit the exposure to risks deriving from changes in exchange rates and interest rates. No derivative instruments are entered into for trading purposes.
Exchange Rate Risk Management
General
While our functional currency is the U.S. dollar, we also have some non-U.S. dollar or non-U.S. dollar linked currency exposures. These exposures are mainly derived from our revenues and expenses denominated in foreign currencies and non-U.S. dollar accounts receivable, payments to suppliers and subcontractors, obligations in other currencies and payroll related expenses incurred, mainly in NIS. Some subcontractors are paid in local currency under prime contracts where we are paid in U.S. dollars.
We take various measures to compensate for the effects of fluctuations in exchange rates. These measures include currency hedging transactions in which we purchase foreign exchange contracts to reduce the volatility of cash flows associated with project related revenues and expenses denominated in certain foreign currencies (mainly Euro and GBP) and attempts to maintain a balance between monetary assets and liabilities in our functional currencies. We also attempt to share currency risks with subcontractors on a “back-to-back” basis, by having the subcontractor assume a proportional amount of the exchange risk.
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We use currency hedging contracts and other derivative instruments to limit our exposure to exchange rate fluctuations related to payroll expenses incurred in NIS. The objective of the foreign exchange contracts is to better ensure that the U.S. dollar-equivalent cash flows are not adversely affected by changes in U.S. dollar/foreign currency exchange rates. In accordance with ASC 815, “Derivatives and Hedging”, these contracts are designated as cash flow hedges. The gain on the effective portion of a cash flow hedge is initially reported as a component of accumulated other comprehensive income and subsequently reclassified into revenues and to contract expenses when the hedged exposure affects revenues or contract expenses, or as financial expenses, if the hedged transaction becomes probable of not occurring. Any gain or loss after a hedge is de-designated, because the hedged transaction is no longer probable of occurring or related to an ineffective portion of a hedge, is recognized in “financial expenses, net” in our consolidated statements of income.
As of December 31, 2025 and December 31, 2024, the notional amount of our outstanding forward contracts was $6,041.0 and $4,105.8 , respectively. Most of these contracts met the requirements of hedge accounting.
The table below provides information regarding our derivative instruments held in order to limit the exposure to exchange rate fluctuation as of December 31, 2025. The table does not include information regarding the cross-currency interest rate swap transactions in order to effectively hedge the effect of interest and exchange rate differences resulting from the Series B Notes issued during 2021 (see “Interest Rate Risk Management” below).
Maturity Date - Notional Amount - (US dollars in millions)

| 2026 |  | 2027 |  | 2028 |  | 2029 |  | 2030 onwards |  | Total |  | Fair Value at 12/2025
Buy US$ and sell: |  |  |  |  |  |  |  |  |  |  |  |  |
EUR | 1,349.2 |  |  | 668.6 |  |  | 813.5 |  |  | 396.7 |  |  | 1,292.6 |  |  | 4,520.6 |  |  | (76.5) |
GBP | 85.8 |  |  | 35.3 |  |  | 32.3 |  |  | 8.4 |  |  | 4.3 |  |  | 166.1 |  |  | 0.1 |
NIS | 0.4 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 0.4 |  |  | — |
Other currencies | 274.6 |  |  | 67.5 |  |  | 56.7 |  |  | 7.9 |  |  | — |  |  | 406.7 |  |  | (3.5) |
Total | 1,710.0 |  |  | 771.4 |  |  | 902.5 |  |  | 413.0 |  |  | 1,296.9 |  |  | 5,093.8 |  |  | (79.9) |

Maturity Date - Notional Amount - (US dollars in millions)

| 2026 |  | 2027 |  | 2028 |  | 2029 |  | 2030 onwards |  | Total |  | Fair Value at 12/2025
Sell US$ and buy: |  |  |  |  |  |  |  |  |  |  |  |  |
EUR | 260.9 |  |  | 37.9 |  |  | 12.9 |  |  | 5.0 |  |  | 0.3 |  |  | 317.0 |  |  | 5.6 |
GBP | 46.7 |  |  | 21.4 |  |  | 21.3 |  |  | — |  |  | — |  |  | 89.4 |  |  | 1.1 |
NIS | 411.7 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 411.7 |  |  | 67.2 |
Other currencies | 111.4 |  |  | 9.2 |  |  | 3.2 |  |  | 5.0 |  |  | 0.4 |  |  | 129.2 |  |  | 1.2 |
Total | 830.7 |  |  | 68.5 |  |  | 37.4 |  |  | 10.0 |  |  | 0.7 |  |  | 947.3 |  |  | 75.0 |

On December 31, 2025, a 5% and 10% strengthening of the U.S. dollar relative to the currencies in which our derivative instruments were denominated would have resulted in unrealized losses of $178.7 and $355.7 million, respectively, and a 5% and 10% weakening in the value of the U.S. dollar relative to the currencies in which our derivative instruments were denominated would have resulted in unrealized gains of $180.1 and $361.5 million, respectively. This calculation assumes that each exchange rate would have changed in the same direction relative to the U.S. dollar. Consistent with the use of these contracts to neutralize the effect of exchange rate fluctuations, most of such unrealized losses or gains would be offset by corresponding gains or losses, respectively, in the remeasurement of the underlying transactions being hedged. When taken together, these forward currency contracts and the offsetting underlying commitments did not create material market risk.
Interest Rate Risk Management
On December 31, 2025 our liquid assets and obligations were comprised of cash and cash equivalents, bank deposits, short and long-term loans, commercial paper and Notes. Our deposits were mainly in U.S. dollars.
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In 2021, we issued NIS 1.9 billion (approximately $575 million) in Series B, C and D Notes. Following the issuance of Series B Notes we entered into cross-currency interest rate swap transactions in order to effectively hedge the effect of interest and exchange rate differences resulting from the NIS Notes. Under the cross-currency interest rate swaps, the Series B Notes were adjusted to the changes of the NIS to the U.S.dollar and will pay a fixed U.S. dollar interest rate of 1.92% per annum. Since the Notes issuance we repaid annually installments of the Notes in the amount of approximately $67 million annually. As of December 31, 2025 the balance of the Notes was approximately $308 million.
During 2024 and 2023, we completed issuances in Israel of a U.S. Dollar denominated commercial paper. On December 31, 2025, we had commercial paper in an aggregate amount of approximately $48 million par value issued and outstanding. The commercial paper bears an annual interest of the SOFR interest rate and an additional 1% - 1.25%. S&P Global Ratings Maalot Ltd. has assigned an ilA-1+ (on local scaling) short-term rating to the above mentioned commercial paper. See also Item 18. Financial Statements – Note 12.
The remaining debt is mainly short and long-term loans in U.S. dollars.
Item 12. Description of Securities Other than Equity Securities.
Not applicable.
Item 13. Defaults, Dividend Arrearages and Delinquencies.
Not applicable.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds.
Not applicable.
Item 15. Controls and Procedures.
Disclosure Controls and Procedures. We maintain disclosure controls and procedures designed to cause that information required to be disclosed in our periodic filings with the SEC is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. These controls and procedures also provide that such information is accumulated and communicated to our management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Also, management necessarily was required to use its judgment in evaluating the cost to benefit relationship of possible disclosure controls and procedures. As of December 31, 2025, we performed an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. The evaluation was performed with the participation of senior management and key corporate functions and under the supervision of the CEO and CFO. Based on the evaluation, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective. There have been no significant changes in our internal controls or in other factors that could significantly affect internal controls after the date we completed the evaluation.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) under the Exchange Act, as amended, as a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
(1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of assets;
(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that our receipts and expenditures are being made in accordance with authorizations of our management and directors; and
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(3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements including the possibility of human error and the circumvention or overriding of sound control procedures. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Our management, including our CEO and CFO, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control – Integrated Framework (2013 Framework”). Based on this assessment, management believes that, as of December 31, 2025, our internal control over financial reporting was effective.
The effectiveness of our internal control over financial reporting as of December 31, 2025 has been audited by Kost Forer Gabbay & Kasierer (Kost), a member of EY Global, an independent registered public accounting firm (PACOB) , as stated in their report included in Item 18. Financial Statements.
Changes in Internal Control over Financial Reporting. During the period covered by this annual report, there have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except as discussed in “Enterprise Resource Planning (ERP) Implementation” below.
Enterprise Resource Planning (ERP) Implementation. We have deployed an advanced ERP system as part of a multi-year plan to integrate and upgrade our systems and processes. The ERP system, which has been implemented in phases since it began began in 2020, is now fully operational. The system has been implemented at the Company's corporate headquarters and at our segments' main sites, with operational capability gradually increasing in these sites as we continue with our ongoing efforts to optimize the ERP ecosystem and add more capabilities. Such operational capabilities include, among others, real time data integration, streamlined inventory management and automated workflows, improved demand forecasting, optimizing logistics and increased coordination across procurement, production and distribution. As the phased and ongoing maturing implementation of our ERP system occurs, we expect to experience certain changes to our processes and procedures which, in turn, may result in changes to our internal control over financial reporting.
Item 16A. Audit Committee Financial Expert.
As determined by our Board, Mr. Bar Nir and Prof. Nisan, members of our Audit and Financial Statements Review Committee, both meet the criteria of an “Audit Committee Financial Expert” under the applicable rules and regulations of the SEC, as determined by the Board. They are each independent, as that term is defined in the Nasdaq Rules. See also Item 6. Directors, Senior Management and Employees – Directors and Executive Officers – Board of Directors.
Item 16B. Code of Ethics.
We have adopted an ethics and compliance code of conduct that is applicable to all our directors, officers and employees, including our principal executive, financial and accounting officers and persons performing similar functions. The ethics and compliance code of conduct was approved by our Board and covers areas of professional and business conduct. It is intended to promote honest and ethical behavior, including fair dealing and the ethical handling of conflicts of interest. The ethics and compliance code of conduct is supplemented by our anti-bribery and corruption compliance policy, our human rights policy and other related policies and procedures, including those relating to our whistleblower and investigations process, due diligence and business entertainment and gifts. We also have a supplier code of conduct that is applicable to ethics and compliance requirements for our supply chain. We provide training on our ethics and compliance code of conduct to all of our employees. In accordance with the Company’s procedures, routine conflicts of interest and other day to day ethics related issues are reviewed and addressed on an ongoing basis by the Company’s authorized officers. Our ethics and compliance code of conduct, anti-bribery and corruption compliance policy, human rights policy and supplier code of conduct, as well as certain other compliance related policies, are each posted on our website: www.elbitsystems.com. A copy of the ethics and compliance code of conduct is available, without charge, to any Elbit Systems investor, employee or other person upon request to Elbit Systems Ltd., Office of the Corporate Secretary, P.O. Box 539, Advanced Technology Center, Haifa 3100401 Israel. For additional information on our ethics and anti-bribery and corruption compliance policies, see Item 4. Information on the Company – ESG Practices.
Item 16C. Principal Accountant Fees and Services.
101

At the Annual General Meeting of Shareholders held in October 2025, our shareholders reappointed Kost to serve as our independent auditors. Kost and other EY affiliates billed the Company the following fees for professional services in each of the last two fiscal years:
(U.S. dollars in thousands)

|  | Year ended December 31, 2025 |  | Year ended December 31, 2024
Audit and Audit Related Fees |  | $ | 4,963 |  |  | $ | 4,642 |
Tax Fees |  | 530 |  |  | 359 |
Total |  | $ | 5,493 |  |  | $ | 5,001 |

“Audit and Audit Related Fees” are the aggregate fees for the audit of our consolidated annual financial statements. This category also includes assurance and related services reasonably related to the performance of the audit or review of the our consolidated financial statements and services generally provided by the independent auditor, such as consents and assistance with and review of documents filed with the SEC. It also includes fees billed for accounting consultations regarding the accounting treatment of matters that occur in the regular course of business, implications of new accounting pronouncements and other accounting issues that occur from time to time.
“Tax Fees” are the aggregate fees billed for professional services rendered for tax compliance and tax advice, other than in connection with the audit. Tax compliance involves preparation of original and amended tax returns, tax planning and tax advice.
“Other Fees” are fees billed for services related to assessment of finance software.
Kost and other EY affiliates did not bill the Company for services other than the Audit Fees, Tax Fees and Other Fees described above for fiscal year 2024 or fiscal year 2025.
Our Audit and Financial Statements Review Committee has adopted a pre-approval policy for the engagement of our independent auditors to perform audit and permitted non-audit services. Under this policy, which is designed to assure that such engagements do not impair the independence of our auditors, the Audit and Financial Statements Review Committee pre-approves annually a range of specific audit and non-audit services in the categories of Audit Services, Audit-Related Services, Tax Services and other services that may be performed by our independent auditors, and the maximum pre-approved fees that may be paid as compensation for each pre-approved service in those categories. Any proposed services exceeding the pre-approved fees or which include other scope of work, require specific pre-approval by the Audit and Financial Statements Review Committee. Accordingly, all of the above-mentioned independent auditor fees were pre-approved by our Audit and Financial Statements Review Committee.
Item 16D. Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Reference is made to the disclosure relating to changes in shareholdings of major shareholders in Item 7. Major Shareholders and Related Party Transactions of this annual report on Form 20-F.
No shares were repurchased by Elbit Systems during 2025.
Item 16F. Changes in Registrant’s Certifying Accountant.
Not Applicable.
Item 16G. Corporate Governance.
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Generally, we follow corporate governance standards applicable to us under Israeli and U.S. laws and regulations and Nasdaq Rules.
As a foreign private issuer, Nasdaq Rule 5615(a)(3) allows us to follow Israeli corporate governance practices instead of certain Nasdaq requirements, subject to certain exceptions. This rule requires that we provide Nasdaq with a written statement from outside Israeli couns el stating that our corporate governance practices are not prohibited by Israeli law and disclose in our annual report the Nasdaq requirements we do not follow and the equivalent Israeli requirement.
According to our Articles of Association, the quorum required for a meeting of our shareholders, except in the case of certain extraordinary meetings convened in special circumstances, consists of at least two shareholders present in person or by proxy or other voting instrument and holding or representing between them at least one-third of the voting power. If a quorum is not present within one-half hour from the time appointed for the meeting, the meeting will be adjourned and at the adjourned meeting, the required quorum is then two shareholders, present in person or by proxy or other voting instrument, representing at least 10% of the voting power. Nasdaq Rule 5620(c) provides that a company listed on the Nasdaq Global Select Market should have a quorum requirement for shareholder meetings of at least one-third of the company’s outstanding common voting stock. As described above, our general quorum requirement is consistent with the Nasdaq Rule 5620(c). However, in the case of an adjourned meeting, our Articles of Association, consistent with what is permissible under the Companies Law, provide for a 10% quorum requirement.
In 2018, our Board approved the establishment of the 2018 Equity Plan and authorized the grant of up to 1,000,000 options to purchase our ordinary shares. In 2021, our Board approved an amendment to the 2018 Equity Plan to authorize the grant of up to additional 500,000 options thereunder and in 2024 our Board approved an amendment to the 2018 Equity Plan and authorized the grant of up to additional 800,000 options thereunder. In 2022, our Board approved the establishment of the Employees Plan and authorized the grant of up to 1,100,000 options to purchase our ordinary shares. In 2024 our Board authorized the grant of up to additional 950,000 options thereunder. In lieu of Nasdaq Rule 5635(c), the Company follows home country practice, which does not require shareholder approval in connection with the establishment or amendment of the 2018 Equity Plan or the Employees Plan. In connection with these actions, we provided Nasdaq with written statements from outside Israeli counsel as required under Nasdaq Rule 5615(a)(3). See also Item 6. Directors, Senior Management and Employees – Share Ownership – Elbit Systems’ Stock Option Plans – 2018 Equity Incentive Plan for Executive Officers and – 2022 Equity Incentive Plan for Employees.
Item 16H. Mine Safety Disclosure.
Not applicable.
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.
Not applicable.
Item 16J. Insider Trading Policies.
The Company has adopted an Insider Trading Policy governing the purchase, sale, and other dispositions of the Company's securities by directors, senior management and employees, that it bel ieves is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and listing standards applicable to the Company. For further information, please see the Insider Trading Policy filed as Exhibit 11.1 to this annual report.
Item 16K. Cybersecurity.
Risk Management and Strategy
As part of our overall risk management processes, we maintain a process for assessing, identifying and managing material risks from cybersecurity threats, including risks relating to the disruption of business operations or financial reporting systems, IP theft, source code contamination, fraud, extortion, harm to employees or customers, violations of privacy laws and other legal and reputational risks (Cybersecurity Management Process). This process is focused on our main operating facilities and networks in Israel, while the processes at our subsidiaries abroad are led by local management and vary in light of their respective needs, operational considerations and regulatory requirements.
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Cybersecurity risks are considered under our Cybersecurity Management Process on an ongoing basis and alongside other company risks as part of the Board's annual review of the Company's overall risk profile. The Cybersecurity Management Process is based on methodologies implemented in consultation with external enterprise risk professionals and with the involvement of Company subject matter experts and management, as applicable. The process includes gathering the information necessary to identify risks, evaluating the nature and severity of these risks, identifying mitigation strategies, assessing the impact of these strategies on residual risks and effectively responding to cybersecurity incidents when they occur.
Our Cybersecurity Management Process includes:
•a cybersecurity and information security framework that includes risk assessment and mitigation through a threat intelligence-driven approach, application controls, and enhanced security defenses. We comply with the guidelines and instructions of the Israeli Director of Security of the Defense Establishment (DSDE) and look to industry best practices in developing our processes in this area;
•development, implementation, and improvement of policies and procedures designed to safeguard information and maintain the availability of critical data and systems;
•utilization of software and hardware solutions designed to protect and monitor our environment, including, among others, multifactor authentication, access controls, system backups, encryption, firewalls, intrusion detection and prevention systems, misconfiguration systems and identity management systems – in each case, for relevant systems as determined by the Company;
•leveraging certifications under ISO-27001/27032/27035/27036 and ISO-27017/27018 standards for general information technology controls, and the requirements of the Sarbanes-Oxley Act of 2002 for assessment of internal controls;
•information security awareness training, including among others “phishing testing” conducted on a quarterly basis by our cybersecurity team for employees, regular cybersecurity updates and enhanced quarterly training for specialized employees involved in our systems and processes that handle sensitive information, customer data or audits. We also run annual tabletop exercises led by our Chief Information Security Officer (CISO) for our Executive Vice President - Chief Operating Officer (COO), Chief Security Officer (CSO) and Chief Information Officer (CIO) to simulate a response to a cybersecurity incident, and use the findings to improve our practices, procedures, and technologies;
•a Cybersecurity Incident Response Plan, which provides a framework for handling cybersecurity incidents. Our Cybersecurity Incident Response Plan is based on the severity of the incident and facilitates cross-functional coordination across the Company and compliance with potentially applicable legal obligations, including processes for reporting cybersecurity incidents with an estimated material effect to the Board and issuing timely public disclosures, when applicable. In addition, we have established a Security Operations Center (SOC) at our headquarters in Israel to monitor and detect cyber incidents in real time and to manage our methodological response to such incidents, which is managed by our detection and response (D&R) team;
•regular testing of our controls through penetration testing, vulnerability scanning, and attack simulations (including the use of breach and attack simulation systems and independent third-party service providers, as described below);
•collaborating with our peers in the areas of threat intelligence, vulnerability management, response and drills, and sharing threat intelligence and best practices across industries to fight cybercrime, enhance privacy, discuss new technologies, better understand the evolving regulatory environment, and advance capabilities in these areas;
•identification of threats associated with our use of third-party service providers, including conducting surveys as necessary on a project-by-project basis, taking into consideration the needs of the project and the level of risk associated with such project. We also include data security obligations and data breach notification requirements in our agreements with third-party service providers that have access to information originating from our IT systems, as necessary on a project-by-project basis; and
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•engagement of independent third-party service providers in connection with our Cybersecurity Management Process who regularly: (a) review, assess and report on our internal incident response preparedness and help identify areas for continued focus and improvement; and (b) test for cyber vulnerabilities. Elbit Systems has also initiated regular information technology reviews performed by a third party based on ISO-27001/27032/27035 and ISO-27017/27018. In addition, as an Israeli defense company, we are subject to periodic reviews by the DSDE, in which our cybersecurity processes, technologies and professional capabilities and certifications are evaluated in relation to the DSDE's requirements and standards.
In recent years we have devoted significant increasing resources, to configuring, operating, maintaining, monitoring, upgrading and improving the security of our systems and databases, handling cyber incidents and meeting applicable customer requirements regarding their protection. As of the date hereof, our business strategy, results of operations and financial condition have not been materially affected by risks from cybersecurity threats, including as a result of previous cybersecurity incidents; however, we cannot provide assurance that they will not be materially affected in the future by such risks and any future material incidents. We have experienced an increase in the number of these threats and attempted cyber-attacks in recent years, which may be related to the geopolitical environment. In particular, we have been, and may continue to be, targeted by nation states and experienced and skilled computer programmers and hackers, including those sponsored by or acting for foreign governments or terrorist organizations and in some cases, using AI, including generative AI and agentic AI to facilitate their attacks. However, none of these acts were believed to have had a material effect on the Company. Where required, relevant authorities were notified in accordance with the law and the relevant procedures the Company and its subsidiaries have in place. Our suppliers are also sometimes subject to cyber-attacks, which have increased in recent years and pose a risk to those of our systems and operations that depend on such suppliers. For example, in September 2025 one of our suppliers experienced a cybersecurity incident that resulted in the disclosure of certain unclassified material related to a Company project. Elbit Systems' network was not breached, an investigation was conducted and we believe this incident did not have a material impact on the Company. For additional information related to our cybersecurity risks, see Item 3. Key Information – Risk Factors – 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, or of our products, could adversely affect us.
Governance
Management
The Cybersecurity Management Process described above is managed by our COO and primarily implemented by our CISO, CIO and CSO.
Our CSO is authorized in accordance with the Israeli Regulation of Security in Public Bodies Law, 5758-1998, and the procedures of the DSDE and the Company, to implement and oversee the Company's security guidelines and protection of the Company's networks in Israel, including by managing information security incidents, including cybersecurity incidents.
The day-to-day execution of our Cybersecurity Management Process, including the implementation of our information security strategy, policies, operations and cyber threat detection and response, is led by our CISO, who directly manages our cybersecurity team, comprising mainly of: (i) the design and implementation (D&I) team, which focuses on planning cyber defense architecture, topology and solutions for various Company systems, including our IT environment, and ongoing work with other relevant parties in the Company on the implementation of such cyber defense solutions; (ii) the governance, risk, compliance awareness (GRACE) team, which manages the Company's cybersecurity operations, including: (A) applying procedures, principles and rules aimed at creating a secure organizational environment that corresponds with the Company's policies and values; (B) identifying, verifying and managing cybersecurity risks, including by simulating cybersecurity attacks; (C) determining compliance standards with applicable laws, regulations and internal procedures; (D) creating organizational awareness to cybersecurity threats and their effects; and (E) educating and exercising both human and technological systems to address cyber events; (iii) the D&R team, as described above, which monitors and detects cyber incidents in real time through the SOC, provides proactive defense by collecting cyber threat intelligence (CTI) and manages our methodological response to cyber incidents; (iv) the Intelligence & Defense (I&D) team, which consolidates intelligence obtained from different sources and submits it to the Company's relevant planning and application parties, who translate such intelligence to a collection of various defensive actions, and liaises between the CISO and the Company's divisions regarding cybersecurity aspects originating from the security policies of the DSDE and/or the Company; (v) the system defense team, which focuses on cybersecurity aspects related to the Company's products and on the security of the supply chain from a software, code and development perspective; and (vi) the application security team, which focuses on cybersecurity aspects related to our secure software development lifecycle. The execution of our cybersecurity processes is achieved also through ongoing periodic updates by our CISO to our COO, CIO and CSO, based on a predefined topic-based reporting matrix as well as ad-hoc updates and reports, as required.
105

Our CISO, who has served in this role since 2023, is a certified Chief Information Security Officer, cyber security methodology professional and cyber security technology professional and has over 15 years of extensive professional experience in cybersecurity, information security, information technologies operations and in designing, implementing, and managing enterprise security solutions at large scales and across multiple regions.
Our cybersecurity processes, which are part of our Cybersecurity Management Process, are reviewed, updated and approved by our COO, CIO and CSO, with the involvement of additional professionals as applicable, based on analysis of the Company's current cybersecurity needs and the tools and technologies that could further enhance the Company's cybersecurity resilience and capabilities to address such needs.
Management has also adopted a multi-year cybersecurity work plan, which is formulated in coordination with the Company's cybersecurity professionals and approved annually (Cybersecurity Work Plan) by our COO and President and CEO, and which translates the priorities and mitigation strategies identified through the Company’s Cybersecurity Management Process into execution and resource planning. The Cybersecurity Work Plan generally addresses, among other things, identifying and assessing cybersecurity threats and significant cybersecurity risks, selecting and deploying appropriate tools and technologies, and budgeting and resource allocation to support these activities. The Cybersecurity Work Plan and its implementation are reviewed and assessed by our COO on a periodic basis or earlier as necessary.
As an additional and complementary layer of review and assessment of our Cybersecurity Management Process, our internal auditor annually examines risk-related aspects of the Company's cybersecurity controls. The findings and suggestions of such audits are reported by our internal auditor to our Audit and Financial Statements Review Committee - Acting as the Audit Committee, which discusses such reports, findings and suggestions and provides updates and recommendations to the Board, where necessary. Furthermore, within the framework of our Cybersecurity Incident Response Plan, we have internal escalation processes in place regarding cybersecurity incidents, to facilitate an efficient and timely flow of information to our CISO, CSO and relevant members of management and ultimately, to our Board, as discussed below.
Board of Directors and Audit and Financial Statements Review Committee - Acting as the Audit Committee
The Board is primarily responsible for oversight of risks from cybersecurity threats. To fulfill this responsibility, our Board holds cybersecurity discussions on a semi-annual basis, during which it receives reports regarding cybersecurity risks from our COO, CISO, CSO and/or CIO and reviews the implementation and administration of the Cybersecurity Management Process. These reports may include, among others and as relevant: (a) a presentation of the Cybersecurity Work Plan and its status; (b) updates from the Audit and Financial Statements Review Committee - Acting as the Audit Committee in respect of its discussions and review of audit reports from the internal auditor; (c) information regarding resource utilization, main actions taken, external consulting, new tools, audits and training with respect to cybersecurity; (d) updates regarding material cybersecurity threats or incidents with an estimated material effect and responses thereto, if relevant; (e) regulatory updates; and (f) updates on cybersecurity trends, the threat intelligence landscape and the results of assessments performed by internal stakeholders or third-party advisors.
Furthermore, as part of the Company's risk management process, the Board holds an annual review of the Company's risk profile which considers cybersecurity risks, as described above. In addition, the Board, as well as the Audit and Financial Statements Review Committee - Acting as the Audit Committee, may conduct discussions on cybersecurity matters outside of the semi-annual discussions, as it deems necessary.
As mentioned above, internal escalation processes are in place within the framework of our Cybersecurity Incident Response Plan to provide ad hoc updates to the Board regarding cybersecurity incidents with an estimated material effect.
Item 17. Financial Statements.
Not applicable.
Item 18. Financial Statements.
See Consolidated Financial Statements attached to this annual report on Form 20-F.
106

Item 19. Exhibits.
(a) Index to Financial Statements

| Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:1281) | F - 2 - F - 6
Consolidated Balance Sheets | F - 5 - F -8
Consolidated Statements of Income | F - 8
Consolidated Statements of Comprehensive Income | F - 8
Statements of Changes in Equity | F - 10 - F - 13
Consolidated Statements of Cash Flows | F - 12 - F - 14
Notes to the Consolidated Financial Statements | F - 15 - F - 74
Schedule I – Valuation and Qualifying Accounts | S-1

(b) Exhibits

# | Description
1.1 | Elbit Systems’ Memorandum of Association(1)
1.2 | Elbit Systems’ Restated Articles of Association(2)
2.1 | Description of Securities
4.2.1 | Elbit Systems Ltd. 2018 Equity Incentive Plan for Executive Officers
4.2.2 | Elbit Systems Ltd. 2022 Equity Incentive Plan for Employees
4.3 | Elbit Systems Ltd. Compensation Policy for Executive Officers and Directors(3)
4.4 | Summary of IMI Acquisition Agreements(4)
8 | Major Operating Subsidiaries of Elbit Systems(5)
11.1 | Insider Trading Policy
12.1 | Certification of Chief Executive Officer of the Registrant pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended
12.2 | Certification of Chief Financial Officer of the Registrant pursuant to Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934, as amended
13.1 | Certification of Chief Executive Officer of the Registrant pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.2 | Certification of Chief Financial Officer of the Registrant pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
15 | Consent of Kost Forer Gabbay & Kasierer
97 | Policy Regarding Recovery of Erroneously Awarded Compensation(6)
101 | Inline XBRL Interactive Data File
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

107

(1) Filed as Exhibit 1.1 to Elbit Systems’ annual report on Form 20-F, filed with the SEC on March 25, 2020, and incorporated herein by reference.
(2) Filed as Exhibit 1.2 to Elbit Systems’ annual report on Form 20-F, filed with the SEC on March 20, 2025, and incorporated herein by reference.
(3) Filed as Exhibit 4.3 to Elbit Systems’ annual report on Form 20-F, filed with the SEC on March 20, 2025, and incorporated herein by reference.
(4) Filed as Exhibit 4.4 to Elbit Systems’ annual report on Form 20-F, filed with the SEC on March 19, 2019, and incorporated herein by reference.
(5) Filed as Exhibit 8 to Elbit Systems’ annual report on Form 20-F, filed with the SEC on March 20, 2025, and incorporated herein by reference.
(6) Filed as Exhibit 97 to Elbit Systems’ annual report on Form 20-F, filed with the SEC on March 28, 2024, and incorporated herein by reference.
108

SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant certifies that it meets all of the requirements for filing on Form 20-F and has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 17, 2026

| ELBIT SYSTEMS LTD.
| By: | /s/ BEZHALEL MACHLIS
| Name: | Bezhalel Machlis
| Title: | President and Chief Executive Officer
|  | (Principal Executive Officer)

109

ELBIT SYSTEMS LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2025
110

ELBIT SYSTEMS LTD. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
As of December 31, 2025
in thousands of U.S. dollars
C O N T E N T S

| Page
REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PCAOB ID:1281) | F - 2 - F - 6
CONSOLIDATED FINANCIAL STATEMENTS: |
Consolidated Balance Sheets | F - 5 - F -8
Consolidated Statements of Income | F - 8
Consolidated Statements of Comprehensive Income | F - 8
Statements of Changes in Equity | F - 10 - F - 13
Consolidated Statements of Cash Flows | F - 12 - F - 14
Notes to the Consolidated Financial Statements | F - 15 - F - 77

F - 1

| Kost Forer Gabbay & Kasierer 144 Menachem begin St. Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Elbit Systems Ltd.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Elbit Systems Ltd. and subsidiaries (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes, and financial statement schedule listed in the Index at Item 19(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025 , based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 17 , 2026, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F - 2

| Kost Forer Gabbay & Kasierer 144 Menachem begin St. Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com

Title | Revenue Recognition
Description of the Matter | As described in note 2 to the consolidated financial statements, the Company generated the majority of its revenues from long-term contracts with its customers for which the related performance obligations are satisfied over time. The Company recognizes revenues on such contracts using the percentage-of-completion cost-to-cost measure of progress. Under this method, the Company measures progress towards completion based on the ratio of costs incurred to date to the estimated total costs to complete the performance obligation(s) (referred to as the estimate-at-completion, or “EAC”). The determination of contract EACs requires management to make significant estimates and assumptions to estimate contract revenues, costs and profit associated with its contracts with customers. At the outset of a long-term contract, the Company identifies risks to the achievement of the technical, schedule and cost aspects of the contract or anticipated contract, estimates the consideration to be received, and monitors and assesses the effects of those risks on its estimates throughout the contract’s life cycle. Significant changes in EAC estimates could have a material effect on the Company’s estimated revenue and gross profit recorded during the period under audit. Auditing revenue recognition based on the percentage-of-completion cost-to-cost measure of progress method was complex due to the judgment involved in evaluating management’s significant estimates and assumptions about project economics, schedule and technical feasibility, both at contract inception and throughout the contract’s life cycle.
How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of relevant internal controls over the Company’s revenue recognition process. For example, we tested internal controls over management’s preparation and periodic reviews of the EAC analyses, and the significant assumptions underlying a contract’s estimated value and estimated total EAC. We also tested internal controls that management executes to assess the accuracy and completeness of the underlying data used in management’s EAC analyses. To test the Company’s EAC analyses, our audit procedures included obtaining an understanding of the contract and the contractual terms, evaluated, for a sample of contracts, the Company’s historical ability to accurately estimate expected costs by comparing management’s estimates of labor hours, subcontractor costs and materials required to complete the contract to actual results. We also verified costs incurred by comparing them to supporting documents and agreed key terms to contract documentation, including estimated contract value. In addition, we verified that the variances in costs incurred from projected costs are properly reflected in the EAC analyses.

/s/ Kost Forer Gabbay & Kasierer
A member of EY Global
We have served as the Company's auditor since 2003.
Tel Aviv, Israel
March 17, 2026
F - 3

| Kost Forer Gabbay & Kasierer 144 Menachem begin St. Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com

Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Elbit Systems Ltd.
Opinion on Internal Control Over Financial Reporting
We have audited Elbit Systems Ltd. and subsidiaries’ internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Elbit Systems Ltd. and subsidiaries’ (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 19(a) and our report dated March 17, 2026, expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Kost Forer Gabbay & Kasierer
A member of EY Global
Tel Aviv, Israel
March 17, 2026
F - 4

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

U.S. dollars (In thousands, except share data)

| Note |  | December 31, 2025 |  | December 31, 2024
CURRENT ASSETS: |  |  |  |  |
Cash and cash equivalents |  |  | $ | 635,141 |  |  | $ | 265,351 |
Short-term bank deposits |  |  | 180,604 |  |  | 1,330 |
Trade and unbilled receivables and contract assets, net | 3 |  | 3,332,249 |  |  | 2,942,886 |
Other receivables and prepaid expenses | 4 |  | 457,385 |  |  | 371,918 |
Inventories, net | 5 |  | 3,129,756 |  |  | 2,773,696 |
Total current assets |  |  | 7,735,135 |  |  | 6,355,181 |
LONG-TERM INVESTMENTS AND RECEIVABLES: |  |  |  |  |
Investments in affiliated companies and other companies | 6 |  | 126,900 |  |  | 126,007 |
Long-term trade and unbilled receivables and contract assets | 7 |  | 719,078 |  |  | 516,299 |
Long-term bank deposits and other receivables | 8 |  | 51,601 |  |  | 67,510 |
Deferred income taxes, net | 18F |  | 86,679 |  |  | 34,064 |
Severance pay fund | 2R |  | 222,555 |  |  | 223,167 |
|  |  | 1,206,813 |  |  | 967,047 |
OPERATING LEASE RIGHT OF USE ASSETS | 9 |  | 515,620 |  |  | 527,075 |
PROPERTY, PLANT AND EQUIPMENT, NET | 10 |  | 1,382,120 |  |  | 1,276,948 |
GOODWILL | 11 |  | 1,497,180 |  |  | 1,490,585 |
OTHER INTANGIBLE ASSETS, NET | 11 |  | 324,650 |  |  | 354,760 |
TOTAL ASSETS |  |  | $ | 12,661,518 |  |  | $ | 10,971,596 |

F - 5

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

U.S. dollars (In thousands, except share data)

| Note |  | December 31, 2025 |  | December 31, 2024
CURRENT LIABILITIES: |  |  |  |  |
Short-term credit and loans | 12 |  | $ | 50,532 |  |  | $ | 450,856 |
Current maturities of long-term loans and Series B, C and D Notes | 15,16 |  | 83,452 |  |  | 74,561 |
Operating lease liabilities | 9 |  | 98,464 |  |  | 84,912 |
Trade payables |  |  | 1,511,671 |  |  | 1,343,816 |
Other payables and accrued expenses | 13 |  | 1,549,139 |  |  | 1,207,717 |
Contract liabilities | 14 |  | 2,683,180 |  |  | 2,149,306 |
Total current liabilities |  |  | 5,976,438 |  |  | 5,311,168 |
LONG-TERM LIABILITIES: |  |  |  |  |
Long-term loans, net of current maturities | 15 |  | 18,000 |  |  | 27,395 |
Series B, C and D Notes, net of current maturities | 16 |  | 237,625 |  |  | 278,529 |
Employee benefit liabilities | 2Q,17 |  | 487,760 |  |  | 454,334 |
Deferred income taxes and tax liabilities, net | 18F |  | 137,662 |  |  | 73,916 |
Contract liabilities | 14 |  | 934,256 |  |  | 816,796 |
Operating lease liabilities | 9 |  | 476,737 |  |  | 454,057 |
Other long-term liabilities | 20 |  | 263,067 |  |  | 274,421 |
Total long-term liabilities |  |  | 2,555,107 |  |  | 2,379,448 |
COMMITMENTS AND CONTINGENT LIABILITIES | 21 |  |  |  |
EQUITY: | 22 |  |  |  |
Elbit Systems Ltd. equity: |  |  |  |  |
Share capital: |  |  |  |  |
Ordinary shares of 1 New Israeli Shekels (“NIS”) par value each; Authorized – 80,000,000 shares as of December 31, 2025 and 2024; Issued and outstanding 46,442,352 and 44,547,673 shares as of December 31, 2025 and 2024, respectively. |  |  | 13,436 |  |  | 12,842 |
Additional paid-in capital |  |  | 1,058,191 |  |  | 459,330 |
Accumulated other comprehensive income (loss) |  |  | (93,201) |  |  | 64,298 |
Retained earnings |  |  | 3,151,172 |  |  | 2,741,070 |
Total Elbit Systems Ltd. equity |  |  | 4,129,598 |  |  | 3,277,540 |
Non-controlling interests |  |  | 375 |  |  | 3,440 |
Total equity |  |  | 4,129,973 |  |  | 3,280,980 |
TOTAL LIABILITIES AND EQUITY |  |  | $ | 12,661,518 |  |  | $ | 10,971,596 |

The accompanying notes are an integral part of the consolidated financial statements.
F - 6

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

U.S. dollars (In thousands, except per share data)

| Note |  | Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Revenues | 2S, 23 |  | $ | 7,938,627 |  |  | $ | 6,827,871 |  |  | $ | 5,974,744 |
Cost of revenues |  |  | 6,003,374 |  |  | 5,186,051 |  |  | 4,491,790 |
Gross profit |  |  | 1,935,253 |  |  | 1,641,820 |  |  | 1,482,954 |
Operating expenses: |  |  |  |  |  |  |
Research and development, net | 24 |  | 517,142 |  |  | 466,402 |  |  | 424,420 |
Marketing and selling, net |  |  | 399,437 |  |  | 375,358 |  |  | 359,141 |
General and administrative, net |  |  | 347,250 |  |  | 311,007 |  |  | 330,285 |
Total operating expenses |  |  | 1,263,829 |  |  | 1,152,767 |  |  | 1,113,846 |
Operating income |  |  | 671,424 |  |  | 489,053 |  |  | 369,108 |
Financial expenses, net | 25 |  | (138,618) |  |  | (151,125) |  |  | (137,827) |
Other income (expenses), net | 26 |  | 29,109 |  |  | 3,818 |  |  | (4,787) |
Income before income taxes |  |  | 561,915 |  |  | 341,746 |  |  | 226,494 |
Income taxes | 18D |  | (55,539) |  |  | (39,058) |  |  | (22,913) |
|  |  | 506,376 |  |  | 302,688 |  |  | 203,581 |
Equity in net earnings of affiliated companies and partnerships | 6B |  | 29,243 |  |  | 19,176 |  |  | 12,275 |
Net income |  |  | $ | 535,619 |  |  | $ | 321,864 |  |  | $ | 215,856 |
Less: net income attributable to non-controlling interests |  |  | (1,280) |  |  | (726) |  |  | (725) |
Net income attributable to Elbit Systems Ltd.’s shareholders |  |  | $ | 534,339 |  |  | $ | 321,138 |  |  | $ | 215,131 |
Basic net earnings per share attributable to Elbit Systems Ltd.’s shareholders | 22 |  | $ | 11.69 |  |  | $ | 7.22 |  |  | $ | 4.85 |
Diluted net earnings per share attributable to Elbit Systems Ltd.’s shareholders |  |  | $ | 11.39 |  |  | $ | 7.18 |  |  | $ | 4.82 |
Weighted average number of shares used in computation of basic net earnings per share |  |  | 45,710 |  |  | 44,480 |  |  | 44,375 |
Weighted average number of shares used in computation of diluted net earnings per share |  |  | 46,918 |  |  | 44,709 |  |  | 44,592 |

The accompanying notes are an integral part of the consolidated financial statements.
F - 7

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

U.S. dollars (In thousands)

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Net income | $ | 535,619 |  |  | $ | 321,864 |  |  | $ | 215,856 |
Other comprehensive income (loss), net of tax:(*) |  |  |  |  |
Foreign currency translation differences | 22,421 |  |  | (17,951) |  |  | 4,441 |
Unrealized gains (losses) on derivative instruments | (119,555) |  |  | 67,899 |  |  | (15,197) |
Pension and other post-retirement benefit plans | (60,365) |  |  | 32,147 |  |  | 64,517 |
| (157,499) |  |  | 82,095 |  |  | 53,761 |
Total comprehensive income | 378,120 |  |  | 403,959 |  |  | 269,617 |
Less: comprehensive income attributable to non-controlling interest | 1,542 |  |  | 652 |  |  | 856 |
Comprehensive income attributable to Elbit Systems Ltd.’s shareholders | $ | 376,578 |  |  | $ | 403,307 |  |  | $ | 268,761 |

(*) Other comprehensive income, net of tax expenses in the amounts of $3,414, $3,541 and $132 for the years 2025, 2024 and 2023, respectively.
The accompanying notes are an integral part of the consolidated financial statements.
F - 8

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN EQUITY

U.S. dollars (In thousands, except share data)

| Number of outstanding shares |  | Share capital |  | Additional paid–in capital |  | Accumulated other comprehensive income (loss) |  | Retained earnings |  |  |  | Non– controlling interest |  | Total equity
Balance as of January 1, 2023 | 44,344,206 |  |  | $ | 12,786 |  |  | $ | 431,429 |  |  | $ | (71,558) |  |  | $ | 2,382,564 |  |  |  |  | $ | 2,454 |  |  | $ | 2,757,675 |
Exercise of options | 109,644 |  |  | 30 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 30 |
Stock based compensation | — |  |  | — |  |  | 12,141 |  |  | — |  |  | — |  |  |  |  | — |  |  | 12,141 |
Dividends paid and declared | — |  |  | — |  |  | — |  |  | — |  |  | (88,781) |  |  |  |  | (522) |  |  | (89,303) |
Other comprehensive income, net of tax expense of $132 | — |  |  | — |  |  | — |  |  | 53,761 |  |  | — |  |  |  |  | 131 |  |  | 53,892 |
Net income attributable to non-controlling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 725 |  |  | 725 |
Net income attributable to Elbit Systems Ltd.'s shareholders | — |  |  | — |  |  | — |  |  | — |  |  | 215,131 |  |  |  |  | — |  |  | 215,131 |
Balance as of December 31, 2023 | 44,453,850 |  |  | $ | 12,816 |  |  | $ | 443,570 |  |  | $ | (17,797) |  |  | $ | 2,508,914 |  |  |  |  | $ | 2,788 |  |  | $ | 2,950,291 |

The accompanying notes are an integral part of the consolidated financial statements.
F - 9

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN EQUITY

U.S. dollars (In thousands, except share data)

| Number of outstanding shares |  | Share capital |  | Additional paid–in capital |  | Accumulated other comprehensive income (loss) |  | Retained earnings |  |  |  | Non– controlling interest |  | Total equity
Balance as of January 1, 2024 | 44,453,850 |  |  | $ | 12,816 |  |  | $ | 443,570 |  |  | $ | (17,797) |  |  | $ | 2,508,914 |  |  |  |  | $ | 2,788 |  |  | $ | 2,950,291 |
Exercise of options | 93,823 |  |  | 26 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 26 |
Stock-based compensation | — |  |  | — |  |  | 15,760 |  |  | — |  |  | — |  |  |  |  | — |  |  | 15,760 |
Dividends paid and declared | — |  |  | — |  |  | — |  |  | — |  |  | (88,982) |  |  |  |  | — |  |  | (88,982) |
Other comprehensive income, net of tax income of $3,541 | — |  |  | — |  |  | — |  |  | 82,095 |  |  | — |  |  |  |  | (74) |  |  | 82,021 |
Net income attribuatable to non controlling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 726 |  |  | 726 |
Net income attributable to Elbit Systems Ltd.'s shareholders | — |  |  | — |  |  | — |  |  | — |  |  | 321,138 |  |  |  |  | — |  |  | 321,138 |
Balance as of December 31, 2024 | 44,547,673 |  |  | $ | 12,842 |  |  | $ | 459,330 |  |  | $ | 64,298 |  |  | $ | 2,741,070 |  |  |  |  | $ | 3,440 |  |  | $ | 3,280,980 |

The accompanying notes are an integral part of the consolidated financial statements.
F - 10

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
STATEMENTS OF CHANGES IN EQUITY

U.S. dollars (In thousands, except share data)

| Number of outstanding shares |  | Share capital |  | Additional paid–in capital |  | Accumulated other comprehensive income (loss) |  | Retained earnings |  |  |  | Non– controlling interest |  | Total equity
Balance as of January 1, 2025 | 44,547,673 |  |  | $ | 12,842 |  |  | $ | 459,330 |  |  | $ | 64,298 |  |  | $ | 2,741,070 |  |  |  |  | $ | 3,440 |  |  | $ | 3,280,980 |
Exercise of options | 324,412 |  |  | 128 |  |  | — |  |  | — |  |  | — |  |  |  |  | — |  |  | 128 |
Issuance of shares, net | 1,570,267 |  |  | 466 |  |  | 572,470 |  |  | — |  |  | — |  |  |  |  | — |  |  | 572,936 |
Stock-based compensation | — |  |  | — |  |  | 26,391 |  |  | — |  |  | — |  |  |  |  | — |  |  | 26,391 |
Purchase of non controlling interests | — |  |  | — |  |  | — |  |  |  |  |  |  |  |  | $ | (4,592) |  |  | $ | (4,592) |
Dividends paid and declared | — |  |  | — |  |  | — |  |  | — |  |  | (124,237) |  |  |  |  | (15) |  |  | (124,252) |
Other comprehensive income, net of tax expense of $(3,414) | — |  |  | — |  |  | — |  |  | (157,499) |  |  | — |  |  |  |  | 262 |  |  | (157,237) |
Net income attributable to non controlling interests | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  |  |  | 1,280 |  |  | 1,280 |
Net income | — |  |  | — |  |  | — |  |  | — |  |  | 534,339 |  |  |  |  | — |  |  | 534,339 |
Balance as of December 31, 2025 | 46,442,352 |  |  | $ | 13,436 |  |  | $ | 1,058,191 |  |  | $ | (93,201) |  |  | $ | 3,151,172 |  |  |  |  | $ | 375 |  |  | $ | 4,129,973 |

The accompanying notes are an integral part of the consolidated financial statements.
F - 11

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars (In thousands)

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
CASH FLOWS FROM OPERATING ACTIVITIES |  |  |  |  |
Net income | $ | 535,619 |  |  | $ | 321,864 |  |  | $ | 215,856 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |
Depreciation and amortization | 171,434 |  |  | 158,391 |  |  | 164,799 |
Stock-based compensation | 26,391 |  |  | 15,760 |  |  | 12,141 |
Amortization of Series B, C and D related issuance costs, net | 394 |  |  | 493 |  |  | 579 |
Deferred income taxes and reserve, net | (14,687) |  |  | 1,649 |  |  | (13,165) |
Loss (gain) on sale of property, plant and equipment | 2,893 |  |  | (596) |  |  | (651) |
Loss (gain) on sale of investments, remeasurement of investments held under fair value method | (4,518) |  |  | 18,136 |  |  | 4,990 |
Equity in net earnings of affiliated companies and partnerships, net of dividend received(*) | (10,190) |  |  | (8,213) |  |  | 10,046 |
Changes in operating assets and liabilities, net of amounts acquired: |  |  |  |  |
Increase in short and long-term trade and unbilled receivables and contract assets, net and prepaid expenses | (659,951) |  |  | (473,926) |  |  | (96,594) |
Increase in inventories, net | (357,926) |  |  | (480,309) |  |  | (351,594) |
Increase in trade payables, other payables and accrued expenses | 463,913 |  |  | 65,663 |  |  | 175,446 |
Severance, pension and termination indemnities, net | (26,328) |  |  | (40,159) |  |  | (24,331) |
Increase in contract liabilities | 651,334 |  |  | 955,857 |  |  | 16,187 |
Net cash provided by operating activities | 778,378 |  |  | 534,610 |  |  | 113,709 |
CASH FLOWS FROM INVESTING ACTIVITIES |  |  |  |  |
Purchase of property, plant and equipment and other assets, net of investment grants and evacuation grants | (225,568) |  |  | (215,051) |  |  | (187,037) |
Acquisitions of subsidiaries and business operations, net of cash assumed (Schedule A) | — |  |  | — |  |  | (10,380) |
Investments in affiliated companies and other companies, net | (2,288) |  |  | (3,603) |  |  | (5,416) |
Deconsolidation of subsidiary (Schedule B) | 400 |  |  | 7,376 |  |  | — |
Proceeds from sale of property, plant and equipment | 1,133 |  |  | 4,107 |  |  | 1,466 |
Proceeds from sale of investments | 14,600 |  |  | 18,594 |  |  | 151 |
Proceeds from sale (investment in) of long-term deposits, net | (31) |  |  | (180) |  |  | 83 |
Proceeds from (investment in) short-term deposits, net | (178,962) |  |  | 9,923 |  |  | (9,467) |
Net cash used in investing activities | (390,716) |  |  | (178,834) |  |  | (210,600) |
CASH FLOWS FROM FINANCING ACTIVITIES |  |  |  |  |
Proceeds from issuance of shares and exercise of options | 573,064 |  |  | 26 |  |  | 30 |
Issuance (repayment) of commercial paper, net | (301,591) |  |  | 36,380 |  |  | 313,620 |
Repayment of long-term loans | (11,423) |  |  | (11,320) |  |  | (246,231) |
Proceeds from long-term loans | — |  |  | — |  |  | 20,000 |
Repayment of Series B, C and D Notes | (67,496) |  |  | (61,862) |  |  | (62,434) |
Dividends paid | (111,693) |  |  | (88,958) |  |  | (89,248) |
Change in short-term bank credit and loans, net | (98,733) |  |  | (162,120) |  |  | 147,475 |
Net cash (used in) provided by financing activities | (17,872) |  |  | (287,854) |  |  | 83,212 |
Net increase (decrease) in cash and cash equivalents | 369,790 |  |  | 67,922 |  |  | (13,679) |
Cash and cash equivalents at the beginning of the year | $ | 265,351 |  |  | $ | 197,429 |  |  | $ | 211,108 |
Cash and cash equivalents at the end of the year | $ | 635,141 |  |  | $ | 265,351 |  |  | $ | 197,429 |
(*) Dividends received from affiliated companies | $ | 19,053 |  |  | $ | 10,963 |  |  | $ | 22,321 |

The accompanying notes are an integral part of the consolidated financial statements.
F - 12

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
SUPPLEMENTAL CASH FLOW ACTIVITIES:

Cash paid during the year for: | Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Income taxes, net | $ | 58,503 |  |  | $ | 34,890 |  |  | $ | 30,708 |
Interest paid, net | $ | 37,485 |  |  | $ | 76,332 |  |  | $ | 66,766 |

Schedule A: Acquisitions of subsidiaries and business operations

Fair value of assets acquired and liabilities assumed at the date of acquisition was as follows: | Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Working capital (deficit), net (excluding cash and cash equivalents) | $ | — |  |  | $ | — |  |  | $ | 246 |
Property, plant and equipment | — |  |  | — |  |  | 19 |
Other long-term assets | — |  |  | — |  |  | 77 |
Goodwill and other intangible assets | — |  |  | — |  |  | 16,220 |
Long-term liabilities | — |  |  | — |  |  | (6,182) |
Non controlling interests | $ | — |  |  | $ | — |  |  | $ | — |
| $ | — |  |  | $ | — |  |  | $ | 10,380 |

Schedule B: Deconsolidation of subsidiary

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Working capital (deficit), net (excluding cash and cash equivalents) | $ | (194) |  |  | $ | (4,070) |  |  | $ | — |
Property, plant and equipment | (151) |  |  | (1,597) |  |  | — |
Other long-term assets | (55) |  |  | (3,179) |  |  | — |
Other long-term liabilities | — |  |  | 83 |  |  | — |
Other comprehensive income | — |  |  | 1,479 |  |  | — |
Gain from deconsolidation | — |  |  | (92) |  |  | — |
| $ | (400) |  |  | $ | (7,376) |  |  | $ | — |

Schedule C: Supplemental disclosures of non-cash investing activities

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Purchase of property and equipment with accounts payable | $ | 43,570 |  |  | $ | 79,197 |  |  | $ | 82,515 |
Purchase of non controlling interest | $ | 4,592 |  |  | $ | — |  |  | $ | — |

The accompanying notes are an integral part of the consolidated financial statements.
F - 13

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 1 - GENERAL
A. GENERAL
Elbit Systems Ltd. (“Elbit Systems”) is an Israeli corporation that is approxima tely 41.6% owned by Federmann Enterprises Ltd. Elbit Systems’ shares are traded on the Nasdaq Global Select Market in the United States (“Nasdaq”) and on the Tel-Aviv Stock Exchange (“TASE”).
Elbit Systems and its subsidiaries (collectively the “Company”) are engaged mainly in the fields of defense, homeland security and commercial aviation. Elbit Systems' major wholly-owned subsidiaries are Elbit Systems of America, LLC (“ESA”), Elbit Systems Electro-Optics Elop Ltd. (“Elop”), Elbit Systems C4I and Cyber Ltd. (“C4I and Cyber”), Elbit Systems EW and SIGINT - Elisra Ltd. (“Elisra”), Elbit Systems Land Ltd. (“ELS”) and IMI Systems Ltd. (“IMI”).
The Company reports segment information in five segments, four of which are organized based on the nature of the products and services offered, and one geographic segment (See Note 23). The Company’s five reportable segments are:
–Aerospace – mainly provides products and systems for airborne platforms, unmanned aerial solutions, precision guided munition (PGM) sensors, aerostructures, training and simulator systems, flight academy solutions, and commercial aviation systems.
–C4I and Cyber – mainly provides command, control, communications, computer, intelligence, surveillance and reconnaissance (C4ISR) systems, data links and radio communication systems and equipment, cyber intelligence solutions, autonomous solutions and homeland security solutions.
–Intelligence, Surveillance, Target Acquisition and Reconnaissance (ISTAR) and Electronic Warfare (EW) – mainly provides a wide range of electro-optic laser solutions and countermeasure systems and products, naval systems and a wide range of EW systems and SIGINT systems.
–Land – mainly provides land-based systems and products for armored and other military vehicles, artillery and mortar systems, munitions for land, air and sea applications including PGM, armored vehicle and other platforms’ survivability and protection systems.
–ESA – mainly provides products and systems solutions to U.S. military, foreign military sales (FMS/FMF), homeland security (HLS), medical instrumentation and commercial aviation customers.
B. SALES TO GOVERNMENTAL AGENCIES
The Company derives a majority of its revenues from direct or indirect sales to governments or governmental agencies. As a result, these sales are subject to the special risks associated with sales to governments or governmental agencies. These risks include, among others, dependence on the resources allocated by governments to defense programs, changes in governmental priorities, anti-corruption regulations, changes in governmental regulations, cyber security and information assurance requirements and changes in governmental approvals regarding export licenses required for the Company’s products and for its suppliers. As for major customers, refer to Note 23B.
F - 14

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 1 - GENERAL
C. IMPACT OF THE RECENT CONFLICT IN THE MIDDLE EAST
The war which began on October 7, 2023, continued throughout most of 2025, with ceasefires agreed to between Israel and Lebanon involving the conflict with Hezbollah in November 2024, and, after an intensified period of conflict that lasted 12 days, a ceasefire was declared with Iran in June 2025. A ceasefire with Hamas was agreed to in January 2025, and a subsequent ceasefire with Hamas was agreed to in October 2025. On February 28, 2026, Israel and the U.S. launched a joint attack on Iran named “Operation Roaring Lion” by Israel and “Operation Epic Fury” by the U.S., targeting key Iranian officials and targets. Iran launched attacks against Israel and at U.S. military bases across the region, including strikes in Bahrain, Qatar, Saudi Arabia, Kuwait and Jordan. On March 2, 2026 Hezbollah launched an attack on Israel. The current situation remains uncertain.
Since the commencement of the war and the escalation of conflicts in the Middle East, Elbit Systems has experienced a continued material increase in the demand for its products and solutions from the Israel Ministry of Defense (IMOD) compared to the demand levels prior to the war. Such increased demand may continue and could generate material additional orders to the Company.
As a result of the war and the other conflicts in the Middle East, some of Elbit Systems' operations have experienced disruptions due to supply chain and operational constraints, including among others increases in transportation costs and delays due to factors such as the Houthi movement attacks on shipping in the Red Sea, material and component shortages and elevated prices, employee call-ups for reserve duty, limitations imposed by some countries on engagement with Israel and attacks on some of Elbit Systems' global facilities by anti-Israeli organizations.
Elbit Systems has taken various steps to protect its employees worldwide, to support increased production, to increase raw material and component inventories, to mitigate supply chain disruptions and to maintain business continuity. Following the ceasefire agreements described above, these operational effects on the Company have been reduced, however, in light of the recent escalation of conflicts involving Iran and Hezbollah, such effects on the Company’s performance could increase again, depending on future developments that are difficult to predict at this time, including the duration and scope of these conflicts.
F - 15

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 1 - GENERAL (Cont.)
D. ACQUISITIONS AND INVESTMENTS
1.On December 31, 2025 the Company completed the acquisition of the remaining 49% equity interest in the U.K. Subsidiary that it previously held by a non-controlling interest. As a result, the U.K subsidiary became a wholly-owned subsidiary of the Company.
2.On December 17, 2025, C4I and Cyber sold its holdings in Robo-Team Holdings Ltd. for the proceeds of approximately $16,000, as a result the company recognized a gain of approximately $12,000 (see Note 26).
3.On February 29, 2024, the Company's subsidiary, Elbit Systems United Kingdom, sold its holdings in a wholly-owned subsidiary, Elite KL Ltd., for approximately $7,400. As a result the Company recognized a gain of approximately $92.
4.On April 1, 2023, ESA completed the acquisition of 100% of Pacific Electronics Enterprises Inc. ("PEE") for a purchase price of approximately $10,000. PEE is located in Huntington beach, California, and specializes in the overhaul and repair of a wide spectrum of avionic equipment (communication, navigation, radar) and ground-based electronic systems.
5.On April 1, 2022, the Company completed the acquisition of 100% of an Israeli affiliated company, Opgal Industries Ltd. (Opgal) previously held by the Company at 50%, for a purchase price of approximately $8,000.
During 2025 the Company sold Opgal's civilian operations for a total consideration of $ 2,200.
6.On November 1, 2022, the Company completed the acquisition of 100% of a Swiss company, for a purchase price of approximately $24,000, of which approximately $21,000 is contingent consideration, which may become payable on the occurrence of certain future events. As of December 31, 2025, the contingent consideration was approximately $13,000 (See Note 20).
F - 16

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).
A. USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. The most significant assumptions are employed in estimates used in determining values of business combinations, impairment of long-lived assets and goodwill, useful lives of long-lived assets, income taxes including the valuation of deferred tax assets and uncertain tax positions, stock-based compensation expenses, post-employment benefits liabilities (including the actuarial assumptions), as well as in estimates used in applying the Company's revenue recognition policies. Actual results may differ from estimated results.
B. FUNCTIONAL CURRENCY
The Company’s revenues are generated mainly in U.S. dollars. In addition, most of the Company’s costs are incurred in U.S. dollars. The Company’s management believes that the U.S. dollar is the primary currency of the economic environment in which the Company operates. Thus, the functional and reporting currency of the Company is the U.S. dollar.
Transactions and balances of the Company and certain subsidiaries that are denominated in other currencies have been remeasured into U.S. dollars in accordance with principles set forth in ASC 830, “Foreign Currency Matters”. All exchange gains and losses from the remeasurement mentioned above are reflected in the statement of income as financial expenses or income, as appropriate.
For those Israeli and non-Israeli subsidiaries and investees whose functional currency has been determined to be other than the U.S. dollar, assets and liabilities are translated at year-end exchange rates, and statement of income items are translated at average exchange rates prevailing during the year. Resulting translation differences are recorded as a separate component of accumulated other comprehensive income (loss) in equity.
C. PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Elbit Systems and its wholly and majority-owned subsidiaries and variable interest entities that are required to be consolidated.
Intercompany transactions and balances, including profit from intercompany sales not yet realized outside the Company, have been eliminated upon consolidation.
F - 17

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
D. COMPREHENSIVE INCOME
The Company accounts for comprehensive income in accordance with ASC 220, “Comprehensive Income”. This statement establishes standards for the reporting and display of comprehensive income and its components. Comprehensive income generally represents all changes in shareholders' equity during the period except those resulting from investments by, or distributions to, shareholders. Accordingly, the Company presents a separate statement of consolidated comprehensive income.
The following table displays the changes in accumulated other comprehensive income (loss), net of taxes, in the amount of $157,499, $82,095 and $53,761, for the years ended December 31, 2025, 2024 and 2023, respectively, by components:

|  | Unrealized gains (losses) on derivative instruments |  |  |  | Unrealized gains (losses) with respect to pension and post-retirement benefit plans |  | Foreign currency translation differences |  | Total
Balance as of December 31, 2022 |  | $ | (36,434) |  |  |  |  | $ | 31,148 |  |  | $ | (66,272) |  |  | $ | (71,558) |
Other comprehensive income (loss) before reclassifications |  | (112,641) |  |  |  |  | 88,686 |  |  | 4,441 |  |  | (19,514) |
Amount reclassified from accumulated other comprehensive income (loss) |  | 97,444 |  |  |  |  | (24,169) |  |  | — |  |  | 73,275 |
Net current-period other comprehensive income (loss) |  | (15,197) |  |  |  |  | 64,517 |  |  | 4,441 |  |  | 53,761 |
Balance as of December 31, 2023 |  | $ | (51,631) |  |  |  |  | $ | 95,665 |  |  | $ | (61,831) |  |  | $ | (17,797) |
Other comprehensive income (loss) before reclassifications |  | 42,653 |  |  |  |  | 75,218 |  |  | (17,951) |  |  | 99,920 |
Amount reclassified from accumulated other comprehensive income (loss) |  | 25,246 |  |  |  |  | (43,071) |  |  | — |  |  | (17,825) |
Net current-period other comprehensive income (loss) |  | 67,899 |  |  |  |  | 32,147 |  |  | (17,951) |  |  | 82,095 |
Balance as of December 31, 2024 |  | $ | 16,268 |  |  |  |  | $ | 127,812 |  |  | $ | (79,782) |  |  | $ | 64,298 |
Other comprehensive income (loss) before reclassifications |  | (34,241) |  |  |  |  | (10,479) |  |  | 22,421 |  |  | (22,299) |
Amount reclassified from accumulated other comprehensive income (loss) |  | (85,314) |  |  |  |  | (49,886) |  |  | — |  |  | (135,200) |
Net current-period other comprehensive income (loss) |  | (119,555) |  |  |  |  | (60,365) |  |  | 22,421 |  |  | (157,499) |
Balance as of December 31, 2025 |  | $ | (103,287) |  |  |  |  | $ | 67,447 |  |  | $ | (57,361) |  |  | $ | (93,201) |

F - 18

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
E. BUSINESS COMBINATIONS
The Company applies ASC 805, “Business Combinations”. ASC 805 requires recognition of assets acquired, liabilities assumed and non-controlling interest in the acquired entity at the acquisition date, measured at their fair values as of that date. This ASC also requires the fair value of acquired in-process research and development (“IPR&D”) to be recorded as intangibles with indefinite lives, contingent consideration to be recorded on the acquisition date and restructuring and acquisition-related deal costs to be expensed as incurred. During the measurement period, which is not to exceed one year from the acquisition date, adjustments to the assets acquired and liabilities assumed are recorded with the corresponding offset to goodwill. Subsequent adjustments, as well as any excess of the fair value of net assets acquired over purchase price or changes in the fair value of contingent consideration, are recognized in earnings. In addition, changes in valuation allowance related to acquired deferred tax assets and in acquired income tax positions are to be recognized in earnings.
F. CASH AND CASH EQUIVALENTS
Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less, when purchased.
G. SHORT-TERM BANK DEPOSITS
Short-term bank deposits are deposits with original maturities of more than three months but less than one year. The short-term bank deposits are presented at their cost, which approximates fair value.
H. INVENTORIES
Inventories are stated at the lower of cost or net realizable value. Inventory write-offs are provided to cover risks arising from slow-moving items or technological obsolescence for which recoverability is not probable.
Cost is determined as follows:
•Raw materials using the average or FIFO cost method.
•Work in progress:
•Costs incurred on certain long-term contracts in progress, but for which control has not transferred to the customer, include direct labor, material, subcontractors, other direct costs and an allocation of overheads, which represent recoverable costs incurred for production, allocable operating overhead cost and, where appropriate, research and development costs (See Note 2(U)).
•Labor overhead is generally included on the basis of updated hourly rates and is allocated to each project according to the amount of hours expended. Material overhead is generally allocated to each project based on the value of direct material that is charged to the project.
Pre-contract costs are generally expensed, but can be deferred and included in inventory only when such costs can be directly associated with a specific anticipated contract and if their recoverability from the specific anticipated contract is probable according to the guidelines of ASC 340-40.
F - 19

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
I. INVESTMENT IN AFFILIATED COMPANIES, PARTNERSHIPS AND OTHER COMPANIES
Investments in affiliated companies and partnerships that are not controlled but over which the Company can exercise significant influence (generally, entities in which the Company holds approximately between 20% to 50% of the voting rights of the investee) are presented using the equity method of accounting. Profits on inter-company sales, not realized outside the Company, are eliminated. The Company discontinues applying the equity method when its investment (including advances and loans) is reduced to zero and the Company has not guaranteed obligations of the affiliate or otherwise committed to provide further financial support to the affiliate.
For certain investments, the Company elected to measure the investments at fair value. Such elections are irrevocable. Under the fair value method, investments are recorded at fair value and any changes in fair value are reported in the consolidated statements of operations. All costs (other than purchase price) directly associated with the acquisition of an investment to be accounted for using the fair value method are expensed as incurred.
Investments in preferred shares, which do not result in significant influence and without readily determinable fair value, are measured at cost, less impairments, plus or minus observable price changes. Equity investments without readily determinable fair value are assessed for impairment periodically.
Management evaluates investments in affiliated companies, partnerships and other non-marketable equity securities for evidence of other-than-temporary declines in value. Such evaluation is dependent on the specific facts and circumstances. Accordingly, in determining whether other-than-temporary declines exist, management evaluates various indicators for other-than-temporary declines and evaluates financial information (e.g, budgets, business plans, financial statements, etc.). D uring 2025, 2024 and 2023 no impairment was recorded.
J. VARIABLE INTEREST ENTITIES
ASC 810-10, “Consolidation”, provides a framework for identifying variable interest entities (“VIEs”) and determining when a company should include the assets, liabilities, non-controlling interests and results of activities of a VIE in its consolidated financial statements. According to ASC 810-10, the Company consolidates a VIE when it has both (1) the power to direct the economically significant activities of the entity and (2) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to the VIE. The determination of whether the Company should consolidate a VIE is evaluated continuously as existing relationships change or future transactions occur.
The Company’s assessment of whether an entity is a VIE and the determination of the primary beneficiary is judgmental in nature and involves the use of significant estimates and assumptions. Those include, among others, forecasted cash flows, their respective probabilities and the economic value of certain preference rights. In addition, such assessment also involves estimates of whether an entity can finance its current activities, until it reaches profitability, without additional subordinated financial support.
Also according to ASC 810, a non-controlling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as a separate component of equity in the consolidated financial statements. As such, changes in the parent’s ownership interest with no change of control are treated as equity transactions, rather than acquisitions achieved in stages or dilution gains or losses. Losses of partially-owned consolidated subsidiaries will continue to be allocated to the non-controlling interests even when the investment in the subsidiary was already reduced to zero.
F - 20

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
J. VARIABLE INTEREST ENTITIES (Cont.)
The Company holds 50% of the contractual rights in, and is the primary beneficiary of, an Israeli limited partnership, which is considered to be a VIE and is consolidated in the Company’s financial statements.
K. LONG-TERM RECEIVABLES
Long-term trade, unbilled (contract assets) and other receivables, with payment terms in excess of one year that are considered collectible, are recorded at their estimated present values (determined based on the market interest rates at the date of initial recognition).
L. LONG-TERM BANK DEPOSITS
Long-term bank deposits are deposits with maturities of more than one year. These deposits are presented at cost and earn interest at market rates. Accumulated interest to be received over the next year is recorded as a current asset. The deposits and accumulated interest approximate fair value.
M. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, net of accumulated depreciation and investment grants. For equipment produced for the Company’s own use, cost includes materials, labor and overhead (including interest costs, when applicable) but not in excess of the fair value of the equipment.
Depreciation is calculated by the straight-line method over the estimated useful life of the assets at the following annual rates:

| % |  |
Buildings and leasehold improvements (*) | 2%-17% |  |
Instruments, machinery and equipment | 6%-32% |  |
Office furniture and other | 7%-11% |  |
Motor vehicles and airplanes | 13%-17% |  | (Mainly 15%)

(*) Leasehold improvements are amortized generally over the term of the lease or the useful life of the assets, whichever is shorter.
The Company capitalizes direct costs (internal and external) of materials and services used in the development and purchase of internal-use software. Amounts capitalized are amortized on a straight-line basis over a period of 3 to 12 years and are reported as a component of property and equipment.
F - 21

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
N. INTANGIBLE ASSETS
Other identifiable intangible assets mainly consist of purchased technology, customer relations and trademarks. These intangible assets are stated at cost, net of accumulated amortization and impairments, and are amortized over their useful life using the straight-line method or the accelerated method, whichever better reflects the applicable expected utilization pattern.
O. IMPAIRMENT OF LONG-LIVED ASSETS
The Company’s long-lived assets and finite-lived intangible assets are reviewed for impairment in accordance with ASC 360 “Property, Plant and Equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets (or assets group) to be held and used is determined by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset. If the carrying amount is higher, an asset is deemed to be impaired and the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. For the years ended December 31, 2025, 2024 and 2023, no impairment was recognized.
P. GOODWILL IMPAIRMENT
Goodwill is subject to an impairment test at the reporting unit level on an annual basis during the fourth quarter of the year (or more frequently if impairment indicators arise). Our annual testing date for all reporting units is December 31.
The Company identified several reporting units based on the guidance of ASC 350, “Intangibles – Goodwill and Other”.
The impairment test compares carrying values of the reporting units to its estimated fair values. If the carrying value exceeds the fair value, then the Company recognizes an impairment of goodwill for the amount of this excess. For each of the three years in the period ended December 31, 2025, no impairment was identified.
As required by ASC 820, “Fair Value Measurement”, the Company applies assumptions that market place participants would consider in determining the fair value of each reporting unit.
Q. SEVERANCE PAY
Elbit Systems’ and its Israeli subsidiaries’ obligations for severance pay are calculated pursuant to Israel’s Severance Pay Law, based on the most recent salary of the employees multiplied by the number of years of employment as of the balance sheet date and are presented on an undiscounted basis (the “Shut Down Method”). Subject to certain conditions, employees are entitled to one month’s salary for each year of employment or a portion thereof. The obligation is funded by monthly deposits through insurance policies and by an accrual. The value of these policies is recorded as an asset on the Company’s balance sheet. The deposited funds may be withdrawn only upon the fulfillment of the obligation, pursuant to the Severance Pay Law or labor agreements. The value of the deposited funds is based on the cash surrender value of these policies and includes profits (or losses) accumulated to the balance sheet date.
Elbit Systems and its Israeli subsidiaries have entered into an agreement with some of its employees implementing Section 14 of the Severance Pay Law and the General Approval of the Labor Minister dated June 30, 1998, issued in accordance with such Section 14. The agreement mandates that upon termination of such employees’ employment, all the amounts accrued in their insurance policies will be released to them. The severance pay liabilities and deposits covered by these plans are not reflected in the balance sheet, as the severance pay risks have been irrevocably transferred to the severance funds.
Severance pay expenses for the years ended December 31, 2025, 2024 and 2023, amounted to approximately $96,543, $85,685 and $78,659, respectively.
F - 22

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
R. PENSION AND OTHER POSTRETIREMENT BENEFITS
The Company accounts for its obligations for pension and other post-retirement benefits in accordance with ASC 715, “Compensation – Retirement Benefits”. The Company reports the service cost component of net retirement benefit cost separately from the other components of net retirement benefit cost in the Consolidated Statement of Income (see Note 17).
S. REVENUE RECOGNITION
The Company generates revenues primarily from fixed-price long-term contracts involving the design, development, manufacture and integration of defense systems and products. To a lesser extent, the Company generates revenues from short-term contracts or support and services which could be either fixed-price or cost-reimbursement contracts.
Revenues from our contracts are recognized using the five-step model in ASC 606, “Revenue from Contracts with Customers”. At first, the Company determines if an agreement with a customer is considered a contract to the extent it has a commercial substance, it is approved in writing by both parties, all rights and obligations including payment terms are identifiable, the agreement between the parties creates enforceable rights and obligations, and collectability in exchange for goods and services that will be transferred to the customer is considered probable. The Company then assesses the transaction price for a contract in order to determine the consideration the Company expects to receive, excluding amounts collected on behalf of other third parties and indirect taxes, for satisfying the performance obligations called for in the contract. At contract inception, the Company also assesses the timing of transfer of goods and services to the customer as compared to the timing of payments, to determine whether a significant financing component exists. In certain limited instances, we may provide our customers with long-term financing arrangements which are assessed if they meet the criteria to become a significant financing component. To the extent such long-term financing creates a significant financing component, it is reflected as a reduction to the transaction price with a corresponding interest income pro-rata over the credit period. A payment received from customers in advance of the satisfaction of the corresponding performance obligation for a period extending 12 months or more that is deemed significant may also be considered to be a significant financing component. To the extent such an advance payment create a significant financing component, it is reflected as an addition to the transaction price, with a corresponding interest expense over the period the performance obligation is satisfied. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of control is less than one year. To the extent the transaction price includes variable consideration (e.g., contract penalties, economic price adjustments, unpriced change orders or like measures), the Company usually estimates the most likely amount that should be included in the transaction price subject to constraints based on the specific facts and circumstances.
At the inception of a contract, the Company also evaluates the products and services promised by it in order to determine if the contract should be separated into more than one performance obligation. The products and services in the Company's contracts are often not distinct from one another due to a customer defined interrelated operational performance requirement, a highly complex interrelated and integrated system or solutions design and significant contract management requirements. To a lesser extent, such performance obligations could be for performance of services, or other distinct performance obligations such as indirect buy-back transactions (see Note 21B), which may be distinct and separated into a performance obligation. Following the determination of the performance obligations in the contract, the Company allocates the total transaction price to each performance obligation in an amount based on the estimated relative standalone selling prices of the promised goods or services underlying each performance obligation.
Standalone selling price is the price at which the Company would sell a promised good or service separately to a customer. Standalone selling prices for the Company’s products and services are generally not observable, and consequently the Company would use the “Expected Cost plus a Margin” approach to determine a standalone selling price. Expected costs are typically derived from our performance cost forecast information.
F - 23

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
S. REVENUE RECOGNITION (Cont.)
The Company recognizes revenues for each of the identified performance obligations when its customer obtains control of the products or services. The assessment of when the customer obtains control involves significant judgments, which consider, among other things, whether there is an alternative use for a product, the contract terms, assessment of the enforceable rights for payments and technical or contractual constraints. As a practical expedient we may occasionally account for a group of performance obligations or contracts collectively, as opposed to individually by using the “portfolio approach”. Under the “portfolio approach” method, the Company may combine individual performance obligations, if the goods or services of the individual performance obligations have similar characteristics and the Company reasonably expects that the effect on the financial statements of applying this practical expedient would not differ materially from applying the expedient to the individual contracts or performance obligations within that portfolio.
For most of the Company's long-term contracts, where the Company's performance does not create an asset with an alternative use and the Company has right to payment for performance completed to date, the Company recognizes revenue over time as it performs because of continuous transfer of control to the customer. For Israeli, U.S. and some other government contracts, this continuous transfer of control to the customer is supported by the governing law or clauses in the contract that typically allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit and take control of any work-in-process. Similarly, for other government contracts, the customer typically controls the work-in-process as evidenced either by contractual termination for convenience clauses or by the Company's rights to payment for work performed to date plus a reasonable profit for products or services that do not have an alternative use to the Company.
For these performance obligations that are satisfied over time, the Company generally recognizes revenue using an input method with revenue amounts being recognized proportionately as costs are incurred relative to the total expected costs to satisfy the performance obligation. The Company believes that costs incurred as a portion of total estimated costs is an appropriate measure of progress towards satisfaction of the performance obligation since this measure reasonably depicts the progress of the work effort. Revenue for performance obligations that are not recognized over time are recognized at the point in time when control transfers to the customer (which is generally upon delivery and acceptance). For performance obligations that are satisfied at a point in time, the Company evaluates the point in time when the customer can direct the use of, and obtain the benefits from, the products and services. Shipping and handling costs are not considered performance obligations and are included in cost of sales as incurred.
Service revenues include contracts primarily for the provision of supplies and services other than those associated with design, development or manufacturing or delivery of products. It may be a standalone service contract or a service performance obligation, which is distinct from a contract or performance obligation for the design, development or delivery of products. Our service contracts include contracts in which the customer simultaneously receives and consumes the benefits provided as the performance obligations are satisfied. Our service contracts primarily include operation-type contracts, outsourcing-type arrangements, maintenance contracts, training and similar activities. Revenues from service contracts or performance obligations were less than 10% of total revenues in each of the years ended December 31, 2025, 2024 and 2023.
Accounting for long-term contracts involves the use of various techniques to estimate total contract revenue and performance costs. For long-term contracts, the Company estimates the profit on a contract as the difference between the total estimated transaction price and the total expected performance costs of the contract and recognizes revenue and costs over the life of the contract. Changes to performance cost estimates under a contract may occur in a situation where: (a) identified contract risks cannot be resolved within the cost estimates included in a contract's estimated costs at completion (“EAC”); or (b) new or unforeseen risks or changes in the performance cost estimates must be incorporated into the contract's EAC. The nature of the Company's numerous contracts is such that refinements of the estimated performance costs or revenues for a project may occur for various reasons, including: contract change orders, option exercise, changes in labor costs, change in subcontractors and other procurement costs, efficiency variances, customer specifications and testing requirement, economic price adjustments, significant technical and development matters encountered during performance and provision for loss. Changes to performance cost or revenues estimates on contracts are considered in estimating sales and profit margins and are recorded when they are probable and reasonably determinable by management.
F - 24

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
S. REVENUE RECOGNITION (Cont.)
Changes in estimated revenues and/or estimated project costs which are related to an existing performance obligation, and that are not distinct from those goods and services already provided, and therefore form part of single performance obligation, are recorded in the period the change is reasonably determinable, with the full amount of the inception-to-date effect of such changes recorded in such period on a “cumulative catch-up” basis. For contracts that are deemed to be loss contracts, the Company establishes forward loss reserves for total estimated costs that are in excess of total estimated consideration under a contract in the period in which they become probable. If any of the above factors were to change, or if different assumptions were used in estimating progress cost and measuring progress towards completion, it is possible that materially different amounts would be reported in the Company’s consolidated financial statements.
Management periodically reviews the estimates of progress towards completion and contract costs. These estimates are determined, based on engineering estimates and past experience, by personnel having the appropriate authority and expertise to make reasonable estimates of the related costs. Such engineering estimates are reviewed for each specific contract by professional personnel from various disciplines within the organization. These estimates take into consideration the probability of achievement of certain milestones, as well as other factors that might impact the contract’s completion and projected cost.
The aggregate cumulative catch-up adjustment in EAC estimates on significant contracts had the following favorable/ (unfavorable) impact on the Company's operating results:
The Company's operating results included cumulative catch-up adjustment in EAC resulting from changes in performance cost estimates to decrease of approximately $98,800 (1.65% of cost of revenues), a decrease of $78,800 (1.52% of cost of revenues) and a decrease of $51,000 (1.14% of cost of revenue) for the years ended December 31, 2025, 2024 and 2023, respectively. These adjustments changed the Company's net income by approximately $87,500 (decrease of $1.86 per diluted share), $69,800 (decrease of $1.56 per diluted share) and $44,700 (decrease of $1.00 per diluted share) for the years ended December 31, 2025, 2024 and 2023, respectively.
In addition, the net impact of these EAC adjustments on revenue recognized from the Company's performance obligations was approximately $(59,200), $(36,400) and $(23,300) for the years ended December 31, 2025, 2024 and 2023, respectively.
The Company has recognized lease revenues from sale-type lease in accordance with ASC 842 of approximately $83,000 and $169,000 for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and 2024 the Company's lease receivables balances were zero as the amount was paid in advance.
Disaggregation of revenue:
Revenue by products and services was as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023 |
Revenue from sale of products | $ | 7,298,232 |  |  | $ | 6,222,939 |  |  | $ | 5,412,455 |  |
Service revenue | 640,395 |  |  | 604,932 |  |  | 562,289 |  |
| $ | 7,938,627 |  |  | $ | 6,827,871 |  |  | $ | 5,974,744 |  |

F - 25

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
S. REVENUE RECOGNITION (Cont.)
Revenue by transfer type was as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Over time | $ | 4,723,715 |  |  | $ | 4,119,580 |  |  | $ | 3,987,097 |
Point in time | 3,214,912 |  |  | 2,708,291 |  |  | 1,987,647 |
| $ | 7,938,627 |  |  | $ | 6,827,871 |  |  | $ | 5,974,744 |

Revenue by customers was as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024
Israel Government Authorities (1,2) | $ | 2,302,025 |  |  | $ | 1,755,695 |
US Government (2) | 1,206,104 |  |  | 1,022,277 |
Other Governments | 3,904,658 |  |  | 3,496,079 |
Commercial sales and other | 525,840 |  |  | 553,820 |
| $ | 7,938,627 |  |  | $ | 6,827,871 |

(1) Including U.S. Foreign Military Financing sales
(2) Including indirect sales
See Note 23 for disaggregation of revenues by segments and geographic areas.
Remaining performance obligations (“Backlog”):
Backlog represents the future revenues expected to be recognized on firm orders received by the Company and is equivalent to the Company’s remaining performance obligations at the end of each period for a remaining period of more than a year. Unexercised contract options and indefinite delivery indefinite quantity (“IDIQ”) contracts are not included in backlog until the time an option or specific task order is authorized, exercised or awarded.
The Company's backlog as of December 31, 2025 was $28.1 billion. The Company expects to recognize approximately 54% as revenues in 2026 and 2027, with the remainder to be recognized thereafter.
T. WARRANTY
The Company estimates the costs that may be incurred under its basic warranty. Such costs are estimated as part of the total contract’s cost and are recorded as a liability at the time revenue is recognized. The specific terms and conditions of those warranties vary depending upon the product sold and the country in which the Company does business. Factors that affect the Company’s warranty cost include the number of delivered products, engineering estimates and anticipated rates of warranty claims. The Company periodically assesses the adequacy of its recorded warranty cost and adjusts the amount as necessary.
Changes in the Company’s provision for warranty, which is included mainly in other payables and accrued expenses in the balance sheet, are as follows:

| 2025 |  | 2024
Balance, at January 1 | $ | 81,441 |  |  | $ | 88,475 |
Warranties issued during the year | 16,754 |  |  | 18,942 |
Reduction due to expired warranties or claims during the year | (24,053) |  |  | (25,594) |
Reduction due to deconsolidation of a subsidiary | — |  |  | (382) |
Balance, at December 31 | $ | 74,142 |  |  | $ | 81,441 |

F - 26

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
U. RESEARCH AND DEVELOPMENT COSTS
Research and development costs, net of participation grants, include costs incurred for independent research and development and bid and proposal efforts and are expensed as incurred unless the costs are related to certain contractual arrangements, which are recorded as part of cost of revenues over the period that revenue is recognized, consistent with the Company’s revenue recognition accounting policy. The Company does not perform significant standalone research and development for others.
The Company has certain research and development contractual arrangements that meet the requirements for best efforts research and development accounting. Accordingly, the amounts funded by the customer are recognized as an offset to its research and development expenses rather than as contract revenues.
Elbit Systems and certain Israeli subsidiaries receive grants (mainly royalty-bearing) from the Israeli Innovation Authority of the Ministry of Economy (formerly the Office of Chief Scientist) and from other sources for the purpose of partially funding approved research and development projects. The grants are not to be repaid, but instead Elbit Systems and certain Israeli subsidiaries are required to pay royalties as a percentage of future sales if and when sales from the funded projects are generated. These grants are recognized as a deduction from research and development costs at the time the applicable entity is entitled to such grants on the basis of the research and development costs incurred. Since the payment of royalties is not probable when the grants are received, the Company records a liability in the amount of the estimated royalties for each individual contract, when the related revenues are recognized, as part of Cost of revenues (COR). For more information regarding such royalty commitments see Note 21A. For more information regarding grants and participation received see Note 24.
V. INCOME TAXES
The Company accounts for income taxes and uncertain tax positions in accordance with ASC 740, “Income Taxes”. This guidance prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to amounts that are more likely than not to be realized.
The Company establishes reserves for uncertain tax positions based on an evaluation of whether the tax position is “more likely than not” to be sustained upon examination. The Company records interest and penalties pertaining to its uncertain tax positions in the financial statements as income tax expense.
W. CONCENTRATION OF CREDIT RISKS
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short and long-term deposits, derivative instruments and accounts receivables.
The majority of the Company’s cash and cash equivalents and short and long-term deposits are invested with major banks, mainly in Israel and the United States. Deposits in the U.S. may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company’s investments have a high credit rating.
F - 27

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
W. CONCENTRATION OF CREDIT RISKS (Cont.)
The Company’s trade receivables are derived primarily from sales to large and stable customers and governments located mainly in Israel, the United States, Europe and Asia-Pacific. The Company performs ongoing credit evaluations of its customers and has not experienced in recent years any unexpected material losses. An allowance for expected credit loss is recognized to the extent that those amounts are not expected to be collected.
The Company entered into foreign exchange forward contracts and cross currency interest rate swaps (together “derivative instruments”) intended to protect against the increase in the dollar equivalent value of forecasted non-dollar currency cash flows and interest as applicable. These derivative instruments are designed to effectively hedge the Company’s non-dollar currency and interest rates exposures (see Note 2X).
X. DERIVATIVE FINANCIAL INSTRUMENTS
The Company accounts for derivatives and hedging based on ASC 815, “Derivatives and Hedging”, which requires the Company to recognize all derivatives on the balance sheet at fair value. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the gain or loss on the derivative instrument is reported as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Changes in the fair values of hedge components excluded from the assessment of effectiveness are recognized in net earnings on a straight-line basis, which the Company has determined is a systematic and rational method. The classifications of gains or losses recognized on cash flow hedging instruments and excluded components within the Consolidated Statements of Income are the same as the underlying exposures.
For derivative instruments that do not meet the definition of a hedge, the changes in fair value are included immediately in earnings in “Financial expenses, net” in each reporting period (see Note 25).
As part of its hedging strategy, the Company enters into forward exchange contracts in order to protect the Company from the risk that the eventual dollar cash flows from the sale to international customers and purchase of products from international vendors will be adversely affected by changes in exchange rates.
The Company also may enter into forward exchange contracts and options strategies in order to limit the exposure to exchange rate fluctuation associated with payroll expenses mainly incurred in NIS.
In connection with the issuance of Series B Notes in 2021 on the Tel Aviv Stock Exchange (see Note 16), the Company entered into cross-currency interest rate swap transactions with a notional principal of NIS 1.5 billion, to effectively hedge the effect of interest and exchange rate difference from the NIS Series B Notes. The cross-currency interest rate swap instruments effectively convert the NIS fixed interest rate of the debt to U.S. dollar fixed interest rate. The terms of the swap agreements substantially match the terms of the debt. Under the terms of the swap agreements, the Company pays interest semi-annually in U.S. dollars at an annual weighted rate of 1.92%.
The swap agreements are designated as a cash flow hedge.
F - 28

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Y. STOCK-BASED COMPENSATION
The Company accounts for share-based arrangements under ASC 718, “Compensation – Stock Compensation”, which requires all share-based payments, including grants of employee stock options to be recognized in the income statement based on their fair values.
Z. FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and cash equivalents, short-term bank deposits, trade and unbilled receivables and contract assets, net, short-term bank credit and loans and trade payables approximate their fair values due to the short-term maturities of such instruments.
The fair value of long-term loans is estimated by discounting the future cash flows using current interest rates for loans of similar terms and maturities. The carrying amount of the long-term loans approximates their fair value.
The Company accounts for certain assets and liabilities at fair value under ASC 820, “Fair Value Measurement”. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. The Company categorizes each of its fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.
The three levels of inputs that may be used to measure fair value are as follows:
Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets;
Level 2 - Includes other inputs that are directly or indirectly observable in the marketplace, other than quoted prices included in Level 1, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets with insufficient volume or infrequent transactions or other inputs that are observable (model-derived valuations in which significant inputs are observable), or can be derived principally from or corroborated by observable market data; and
Level 3 - Unobservable inputs that are supported by little or no market activity.
F - 29

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Z. FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont.)
The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety of factors, including, for example, the type of instrument, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the instruments are categorized as Level 3.
Under FASB ASC 825-10, the Company may elect to report certain other items at fair value on an instrument-by-instrument basis with changes in fair value reported in net income. After the initial adoption, the election is made at the time an eligible financial asset or financial liability or firm commitment is acquired or incurred, as applicable, or when certain specified reconsideration events occur. The fair value election, with respect to an item, may not be revoked o nce an election is made.
The Company has elected to account for certain investments that would otherwise be accounted for under the equity method using the fair value method (see Note 6). For these investments the Company will also measure any guarantee at fair value, with changes in fair value reported through earnings. Such investments are categorized as level 3.
Investments elected to be accounted for using the fair value method classified under Level 3, evaluated by applying relevant methods as the market approach with the use of an option pricing method or the earning approach using discounted future cash flows.
The Company’s cross-currency interest rate swaps are valued under an income approach using industry-standard models that consider various assumptions, including time value, volatility factors, current market and contractual prices for the underlying and counterparty non-performance risk. Substantially all of these assumptions are observable in the marketplace throughout the full term of the instruments, and can be derived from observable data or are supported by observable levels at which transactions are executed in the marketplace. Accordingly, such instruments are categorized as Level 2.
The Company’s foreign currency derivative instruments are classified as Level 2 because valuation inputs are based on quoted prices and market observable data of similar instruments.
Contingent purchase obligations and deferred payments related to acquisitions accounted under Level 3 are accounted for under the discounted cash flow method.
F - 30

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Z. FAIR VALUE OF FINANCIAL INSTRUMENTS (Cont.)
Assets and liabilities measured at fair value on a recurring basis are summarized below:
Fair value measurement at December 31, 2025 using:

| Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Description of Assets |  |  |  |  |
Foreign currency derivatives | $ | — |  |  | $ | 88,388 |  |  | $ | — |
Cross-currency interest rate swap | — |  |  | 1,812 |  |  | — |
Investments elected to be accounted for using the fair value method | — |  |  | — |  |  | 13,561 |
Liabilities |  |  |  |  |
Contingent purchase obligation (*) | — |  |  | — |  |  | (13,035) |
Foreign currency derivatives | — |  |  | (92,767) |  |  | — |
Total | $ | — |  |  | $ | (2,567) |  |  | $ | 526 |

(*) for the main change during the year please refer to Note 1(D)(6).
Fair value measurement at December 31, 2024 using:

| Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Description of Assets |  |  |  |  |
Foreign currency derivatives | $ | — |  |  | $ | 106,932 |  |  | $ | — |
Premises evacuation building input index receivable | — |  |  | — |  |  | 22,587 |
Investments elected to be accounted for using the fair value method | — |  |  | — |  |  | 24,862 |
Liabilities |  |  |  |  |
Contingent purchase obligation | — |  |  | — |  |  | (20,564) |
Foreign currency derivatives | — |  |  | (23,741) |  |  | — |
Cross-currency interest rate swap | — |  |  | (29,202) |  |  | — |
Total | $ | — |  |  | $ | 53,989 |  |  | $ | 26,885 |

F - 31

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
AA. TRANSFERS OF FINANCIAL ASSETS
ASC 860, “Transfers and Servicing”, establishes a standard for determining when a transfer of financial assets should be accounted for as a sale. The Company's arrangements are such that the underlying conditions are met for transfers of financial assets to qualify for accounting as a true sale. Transfers of financial assets typically consist of the factoring of receivables to Israeli and European financial institutions. Financial expenses related to the sold rights were $27,925, $42,654 and $17,474 for the years ended December 31, 2025, 2024 and 2023, respectively. The increase in factoring expenses during 2024, is mainly due to the extension of the premise evacuation agreement.
The Company's agreement pursuant to which the Company sells its trade receivables is structured such that the Company (i) transfers the proprietary rights in the receivable from the Company to the financial institution, (ii) legally isolates the receivable from the Company's other assets, and presumptively puts the receivable beyond the lawful reach of the Company and its creditors, even in bankruptcy or other receivership, (iii) confers on the financial institution the right to further pledge or exchange the receivable and (iv) eliminates the Company's effective control over the receivable, in the sense that the Company is not entitled and will not be obligated to repurchase the receivable other than in case of failure by the Company to fulfill its commercial obligation under the contract giving rise to the receivable.
AB. BASIC AND DILUTED NET EARNINGS PER SHARE
Basic earnings per share are computed based on the weighted average number of outstanding ordinary shares during each year. Diluted earnings per share are computed based on the weighted average number of outstanding ordinary shares during each year, plus dilutive potential ordinary shares outstanding during the year. Outstanding stock options are excluded from the calculation of the diluted earnings per share when their effect is anti-dilutive.
AC. SEGMENT REPORTING
The Company reports segment information based on a management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments (See Note 23).
AD. SUPPLIER FINANCE PROGRAM OBLIGATIONS
The Company facilitates a voluntary supplier finance programs through a financial institution that allows certain suppliers in Israel to request early payment for invoices, at a discount, from the financial institution. The Company’s obligations to its suppliers, including amounts due and payment terms, are consistent, irrespective of whether a supplier participates in the program. The Company is not party to the arrangements between the participating suppliers and the financial institution. Under this program, the Company confirms the validity of supplier invoices to the financial institution and remits payments to it based on the original payment terms. The outstanding obligation under the suppliers finance program are included within the short-term and long-term account payables in the consolidated balance sheet. As of December 31, 2025 and 2024 the amount of supplier finance obligation was as follows:

| December 31, 2025 | December 31, 2024 |  |
Opening balance | $ | 241,769 |  | $ | 149,000 |  |  |
Additions (new agreements) | 280,818 |  | 143,897 |  |  |
Payments | (253,559) |  | (51,128) |  |  |
Ending balance | $ | 269,028 |  | $ | 241,769 |  |  |

F - 32

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
AE. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
1.In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities to enhance the transparency and decision-usefulness of income tax disclosures, particularly in the rate reconciliation table and disclosures about income taxes paid.The Company adopted the ASU on a prospective basis . See Note 18.
2.The Company early adopted FASB ASU 2025-12 (Codification Improvements) Issue 20, Clarify Guidance for the Transfer of Receivables from Contracts with Customers. Issue 20 specifies that receivables arising from customer contracts (before performance obligations are complete) are financial assets, and thus any transfers of such receivables fall under ASC 860. The adoption of Issue 20 did not have a material effect on the Company’s consolidated financial statements. See Note 3.
AF. RECENT ACCOUNTING PRONOUNCEMENTS
1.In November 2024, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This ASU requires an entity to disclose the amounts of purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. It also requires an entity to include certain amounts that are already required to be disclosed under current GAAP in the same disclosure. Additionally, it requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and to disclose the total amount of selling expenses and, in annual reporting periods, an entity’s definition of selling expenses. The amendments in the ASU are effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. An entity may apply the amendments prospectively for reporting periods after the effective date or retrospectively to any or all prior periods presented in the financial statements. the Company currently evaluating the impact of ASU 2024-03 and expect the standard will only impact the disclosures with no material impact on operating results, financial position, or cash flows.
2.In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses for Accounts Receivable and Contract Assets, which provides a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606, Revenue from Contracts with Customers. The practical expedient assumes that current conditions as of the balance sheet date do not change for the remaining life of the assets. The guidance is effective for the Company beginning December 15, 2025, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements.
3.In September 2025, the FASB issued ASU 2025-06, Intangible - Goodwill and Other Internal-Use Software (Subtopic 350-40), Targeted Improvements to the Accounting for Internal-Use Software, which modernizes the accounting guidance for costs to develop software for internal use. It removes the previous development stage model and introduces a more judgment-based approach. The guidance is effective for the Company for the beginning December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statement disclosures.
4.In November 2025, the FASB issued ASU 2025-09 to amend the guidance in Derivatives and Hedging (Topic 815). The update provides targeted improvements intended to enhance the application of hedge accounting, including expanded eligibility of forecasted transactions, additional flexibility in measuring hedge effectiveness, and clarifications related to hedging non-financial items. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company is currently evaluating the impact on its financial statement disclosures.
F - 33

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 2 - SIGNIFICANT ACCOUNTING POLICIES (Cont.)
AF. RECENT ACCOUNTING PRONOUNCEMENTS
5.In December 2025, the FASB issued ASU 2025-12 Codification Improvements to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to U.S. GAAP. The update represents changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments make the Codification easier to understand and apply. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The Company early adopted ASU 2025-12 as discussed above. Other than that, the Company is currently evaluating the impact on its consolidated financial statements.
6.In December 2025, the FASB issued ASU 2025-11 to amend the guidance in Interim Reporting (Topic 270). The update provides clarifications intended to improve the consistency and usability of interim disclosure requirements, including a comprehensive listing of required interim disclosures and a new disclosure principle for reporting material events occurring after the most recent annual period. The amendments do not change the underlying objectives of interim reporting but are designed to enhance clarity in application. The guidance is effective for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. The Company is currently evaluating the impact on its consolidated financial statements.
7.In December 2025, the FASB issued ASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The update provides recognition, measurement, presentation, and disclosure requirements for government grants, including guidance for grants related to an asset and grants related to income. The amendments introduced two permitted approaches for asset-related grants: a deferred income approach or a cost accumulation approach. The guidance is effective for the Company beginning December 15, 2028, with early adoption permitted. The Company is currently evaluating the impact on its consolidated financial statements.
AG. RECLASSIFICATIONS
Certain financial statement data for prior years has been reclassified to conform to current year financial statement presentation.
F - 34

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 3 - TRADE AND UNBILLED RECEIVABLES AND CONTRACT ASSETS, NET
The following table presents the components of trade receivables and contract assets, net as of December 31, 2025 and 2024.

| December 31, 2025 |  | December 31, 2024
Trade and unbilled receivables (1) | $ | 1,236,425 |  |  | $ | 1,006,557 |
Contract assets (2) | 2,108,022 |  |  | 1,948,464 |
Less – allowance for credit loss (3) | (12,198) |  |  | (12,135) |
| $ | 3,332,249 |  |  | $ | 2,942,886 |

(1) Trade and unbilled receivables balances represents amounts for which the Company's right for consideration is unconditional. The balance also includes receivables from affiliated companies in the amounts of $172,388 and $120,039, as of December 31, 2025 and 2024, respectively. Trade receivables and contract assets are expected to be billed and collected during 2026.
Short and long-term trade receivables and contract assets include amounts related to contracts with the Israeli Ministry of Defense (“IMOD”) in the aggregate amounts of $1,029,515 and $761,536, as of December 31, 2025 and 2024, respectively.
(2) Contract assets (unbilled receivables) include unbilled amounts typically resulting from sales under contracts for which over-time method of revenue recognition is utilized, and revenue recognized exceeds the amount billed to the customer.
Contract assets are net of progress payments and advance payments. Contract assets increased during 2025, primarily due to revenue recognized. There were no significant credit or impairment losses related to our contract assets during 2025 and 2024.
Contract assets reflect revenue recognized and performance obligations satisfied in advance of customer billings. contract liabilities relates to payments received in advance of the satisfaction of performance under the contract. The Company receive payments from customers based on the terms established in the contracts. Total contract assets and contract liabilities as of December 31,2025 and 2024 were as follow:

| December 31, 2025 |  | December 31, 2024
Contract assets | $ | 2,748,723 |  |  | $ | 2,405,780 |
Contract liabilities | (3,617,436) |  |  | (2,966,102) |
Net contract liabilities | $ | (868,713) |  |  | $ | (560,322) |

(3) Allowance for credit losses reflects its current estimate of credit losses expected to be incurred over the life of the trade receivables based on historical experience, current conditions and reasonable and supportable forecasts. The changes in the allowance for credit losses were as follows:

| 2025 |  | 2024
Balance as of January 1, | $ | 14,006 |  |  | $ | 9,172 |
Current period provision for expected credit loss | 796 |  |  | 5,701 |
Write-off charges against the allowance for expected credit losses | (618) |  |  | (867) |
Balance as of December 31, | $ | 14,184 |  |  | $ | 14,006 |

As for long-term trade and unbilled receivables. (see Note 7).
F - 35

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 4 - OTHER RECEIVABLES AND PREPAID EXPENSES
The following table presents the components of other receivables and prepaid expenses as of December 31, 2025 and 2024.

| December 31, 2025 |  | December 31, 2024
Prepaid expenses | $ | 182,315 |  |  | $ | 106,406 |
Government institutions | 101,613 |  |  | 92,993 |
Derivative instruments | 75,738 |  |  | 82,605 |
Premises evacuation building input index receivable (1) | 26,243 |  |  | 19,995 |
Cost to obtain | 35,805 |  |  | 15,131 |
Other receivables | 35,671 |  |  | 54,788 |
Total | $ | 457,385 |  |  | $ | 371,918 |

(1) During 2019, the Company sold the premises evacuation receivable to an Israeli bank and is still entitled to receive CPI index adjustments on the base premises evacuation receivable, which is recorded as a financial asset measured at fair value (see Note 1D(4)).
Note 5 - INVENTORIES, NET
The following table presents the components of inventories, net of customer advances as of December 31, 2025 and 2024.

| December 31, 2025 |  | December 31, 2024
Cost incurred on long-term contracts in progress(*) | $ | 1,249,400 |  |  | $ | 1,026,611 |
Raw materials | 1,506,847 |  |  | 1,373,491 |
Advances to suppliers and subcontractors | 404,370 |  |  | 414,626 |
| 3,160,617 |  |  | 2,814,728 |
Less: Provision for losses on long-term contracts | (30,861) |  |  | (41,032) |
| $ | 3,129,756 |  |  | $ | 2,773,696 |

(*) Costs incurred to fulfill a contract in advance of the contract being awarded are included in inventories as work-in-process if the Company determines that those costs relate directly to a contract or to an anticipated contract that can be specifically identified and contract award is probable, the costs generate or enhance resources that will be used in satisfying performance obligations, and the costs are recoverable (referred to as pre-contract costs). Pre-contract costs that are initially capitalized in inventory are generally recognized as cost of revenues consistent with the transfer of control of the products and services to the customer. All other pre-contract costs, including start-up costs, are expensed as incurred. As of December 31, 2025 and 2024 pre-contract costs were included in inventory in the amount of, $118,170 and $167,094, respectively.
F - 36

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 6 - INVESTMENTS IN AFFILIATED COMPANIES AND OTHER COMPANIES
A. INVESTMENTS IN AFFILIATED COMPANIES:

| December 31, 2025 |  | December 31, 2024
Companies accounted for under the equity method(1) | $ | 113,339 |  |  | $ | 101,145 |
Companies accounted for under the fair value method and other investments(2) | 13,561 |  |  | 24,862 |
| $ | 126,900 |  |  | $ | 126,007 |

(1) See Note 6B.
(2) See Note 6C.
B. INVESTMENTS IN COMPANIES ACCOUNTED FOR UNDER THE EQUITY METHOD:

| December 31, 2025 |  | December 31, 2024
Company A (1) | $ | 99,102 |  |  | $ | 88,974 |
Company B (2) | 5,634 |  |  | 5,220 |
Company C (3) | 4,147 |  |  | 3,641 |
Other | 4,456 |  |  | 3,310 |
| $ | 113,339 |  |  | $ | 101,145 |

(1)Company A is an Israeli company, held 50% by the Company and 50% by Rafael Advanced Defense Systems Ltd. (“Rafael”). Company A is engaged in the development and production of various thermal detectors and laser diodes. Company A is jointly controlled and therefore is not consolidated in the Company’s financial statements. During 2025 and 2024, the Company received from Company A dividends in amounts of approximately $17,500 and $10,800, respectively.
(2)Company B is a U.K. joint venture held 50% by a wholly-owned U.K. subsidiary of the Company and 50% by Kellogg Brown & Root Limited.
(3)Company C is an Asia pacific joint venture held 49% by the Company and 51% by Adani group.
F - 37

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 6 - INVESTMENTS IN AFFILIATED COMPANIES AND OTHER COMPANIES (Cont.)
B. INVESTMENTS IN COMPANIES ACCOUNTED FOR UNDER THE EQUITY METHOD (Cont.):
Equity in net earnings of affiliated companies and partnerships is as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Company A | $ | 25,556 |  |  | $ | 20,492 |  |  | $ | 10,526 |
Company B | 1,088 |  |  | 1,582 |  |  | 1,822 |
Company C | 506 |  |  | 522 |  |  | (93) |
Other | 2,093 |  |  | (3,420) |  |  | 20 |
| $ | 29,243 |  |  | $ | 19,176 |  |  | $ | 12,275 |

The summarized aggregate financial information of companies accounted for under the equity method is as follows:
Balance Sheet Information:

| December 31, 2025 |  | December 31, 2024
Current assets | $ | 368,866 |  |  | $ | 327,961 |
Non-current assets | 147,926 |  |  | 159,219 |
Total assets | $ | 516,792 |  |  | $ | 487,180 |
Current liabilities | $ | 253,886 |  |  | $ | 229,280 |
Non-current liabilities | 59,468 |  |  | 66,165 |
Shareholders' equity | 203,438 |  |  | 191,735 |
Total liabilities and equity | $ | 516,792 |  |  | $ | 487,180 |

Income Statement Information:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Revenues | $ | 455,127 |  |  | $ | 390,225 |  |  | $ | 328,138 |
Gross profit | $ | 161,142 |  |  | $ | 143,055 |  |  | $ | 111,698 |
Net income | $ | 52,792 |  |  | $ | 32,440 |  |  | $ | 10,391 |

F - 38

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 6 - INVESTMENTS IN AFFILIATED COMPANIES AND OTHER COMPANIES (Cont.)
C. INVESTMENTS ACCOUNTED FOR UNDER THE FAIR VALUE METHOD AND OTHER INVESTMENTS:
Investments accounted for under the fair value method are evaluated by applying relevant methods as the market approach with the use of an option pricing method or the earning approach using discounted future cash flows, as follows:

| December 31, 2025 |  | December 31, 2024
Company D (1) | $ | 13,561 |  |  | $ | 13,561 |
Company E (2) | — |  |  | 7,301 |
Company F (3) | — |  |  | 4,000 |
| $ | 13,561 |  |  | $ | 24,862 |

(1) Company D is an Israeli Company held 5% by the Company. During 2025 and 2024 there was no indication of change in Company D fair value.
(2) Company E engages in developing surgeon-centered visualization technologies. During 2021, following a third party investments, the Company re-evaluated the fair value of its holdings in Company E and recognized in other income a gain of approximately $4,800. During 2022, the Company invested in Company E $1,400 and following third parties investments, the Company re-evaluated the fair value of its holdings in Company E and recognized in other income a gain of approximately $3,200. During 2023, the Company invested in Company E $3,600 and following third parties investments, the Company re-evaluated the fair value of its holdings in Company E and recognized in other income a loss of approximately $1,300. During 2024 the Company invested in Company E $2,800. The Company re-evaluated the fair value of its holding in Company E and during 2025 and 2024 the Company recognized in other income a loss of approximately$7,300 and $14,900, respectively (See Note 26).
(3) Company F is an Israeli company of which the Company owns 25% of the outstanding share capital, which is engaged in the field of tactical ground robotic systems. During the first quarter of 2022 the Company invested $2,000 in Company F. During the last quarter of 2022 the Company re-evaluated its investment in Company F and decreased its value in the amount of approximately $4,000. During 2024 there was no indication of change in Company F fair value. During 2025, the Company sold its holdings in Company F for the proceeds of approximately $16,000, as a result the company recognized a gain of approximately $12,000 (see Note 26).
F - 39

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 7 - LONG-TERM TRADE AND UNBILLED RECEIVABLES AND CONTRACT ASSETS
The following table presents the components of long-term trade and unbilled receivables and contract assets as of December 31, 2025 and 2024.

| December 31, 2025 |  | December 31, 2024
Trade and unbilled receivables | $ | 80,363 |  |  | $ | 60,854 |
Contract assets | 640,701 |  |  | 457,316 |
Less - allowance for credit loss | (1,986) |  |  | (1,871) |
Total | $ | 719,078 |  |  | $ | 516,299 |

The majority of the long-term contract assets are expected to be billed and collected during the years 2026-2033. L ong-term trade receivables and contract assets are mainly related to contracts with the IMOD.
Note 8 - LONG-TERM BANK DEPOSITS AND OTHER RECEIVABLES
The following table presents the components of long-term bank deposits and other receivables as of December 31, 2025 and 2024:

| December 31, 2025 |  | December 31, 2024
Derivative financial instruments(1) | $ | 12,650 |  |  | $ | 24,327 |
Premises evacuation building input index receivable(2) | — |  |  | 22,587 |
Long term balances of Non-qualified deferred compensation plan (3) | 25,171 |  |  | 11,524 |
Cross-currency interest rate swap | 1,812 |  |  | — |
Deposits with banks and other long-term receivables | 11,968 |  |  | 9,072 |
| $ | 51,601 |  |  | $ | 67,510 |

(1) Derivative financial instruments related to long term projects.
(2) During 2019, the Company sold the premises evacuation receivable to an Israeli bank and is still entitled to receive building inputs index adjustments on the base premises evacuation receivable. As of December 31, 2025 the balance classified to short-term and presented as other receivables (see also Note 4).
(3) Includes long-term balances of a non-qualified deferred compensation plan structured under Section 409A of the U.S. Internal Revenue Code and long-term balances related to defined contribution plan (see Note 17).
F - 40

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 9 - LEASES
The Company's leases mainly include buildings for its facilities worldwide and vehicles leases, which are all classified as operating leases. Certain lease agreements include rental payments that are adjusted periodically for the consumer price index (“CPI”). The right of use (ROU) and lease liability were calculated using the initial CPI and will not be subsequently adjusted unless the liability is reassessed. Certain lease agreements provide one or more options to renew. When determining lease terms, the Company uses the non-cancellable period of the leases and do not assume renewals unless it is reasonably certain that the Company will exercise that option. The renewal options were included in the ROU and include renewal options that are under the Company's sole discretion.
The interest rate used to determine the present value of the future lease payments is the Company’s incremental borrowing rate, because the interest rate implicit in the Company’s leases is not readily determinable. The Company’s incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.
A. Supplemental Consolidated Statement of Financial Position information related to leases was as follows:

| December 31, 2025 |  | December 31, 2024
Operating lease right of use assets | $ | 515,620 |  |  | $ | 527,075 |
Current portion of operating lease liabilities | 98,464 |  |  | 84,912 |
Non-current portion of operating lease liabilities | 476,737 |  |  | 454,057 |
Total operating lease liabilities | $ | 575,201 |  |  | $ | 538,969 |
Weighted average remaining lease term (years) | 4.61 |  | 4.63
Weighted average discount rate | 4.31% |  | 4.12%

B. For the years ended December 31, 2025, 2024 and 2023, cash payments against operating lease liabilities totaled approximately $116,212, $98,318 and $89,251, respectively, and non-cash transactions to recognize operating assets and liabilities for new leases totaled approximately $58,223, $194,863 and $101,971, respectively.
Maturities of o perating lease liabilities for the next five years are as follows:

| December 31, 2025
2026 | $ | 120,729 |
2027 | 89,281 |
2028 | 66,057 |
2029 | 57,318 |
2030 | 54,812 |
2031 and thereafter | $ | 339,486 |
Total lease payments | $ | 727,683 |
Less imputed interest | 152,482 |
Total | $ | 575,201 |

C. Lease expenses for the years ended December 31, 2025, 2024 and 2023 amounted to $116,501, $107,678 and $94,296, respectively.
D. The Company has lease income for the years ended December 31, 2025, 2024 and 2023 amounted to $12,297, $12,220 and $8,338, respectively.
F - 41

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 10 - PROPERTY, PLANT AND EQUIPMENT, NET
The following table presents the components of property, plant and equipment, net as of December 31, 2025 and 2024:

| December 31, 2025 |  | December 31, 2024
Cost (1): |  |  |
Land, buildings and leasehold improvements (2) | $ | 1,235,808 |  |  | $ | 1,156,083 |
Instruments, machinery and equipment | 1,539,384 |  |  | 1,420,055 |
ERP (3) | 133,330 |  |  | 132,817 |
Office furniture and other | 97,638 |  |  | 90,461 |
Motor vehicles and airplanes | 48,777 |  |  | 49,871 |
Total cost | 3,054,937 |  |  | 2,849,287 |
Accumulated depreciation | (1,672,817) |  |  | (1,572,339) |
Depreciated cost | $ | 1,382,120 |  |  | $ | 1,276,948 |

Depreciation expenses for the years ended December 31, 2025, 2024 and 2023 amounted to $140,477, $124,185 and $120,895, respectively.
(1) Includes equipment produced by the Company for its own use in the aggregate amount of $143,558 and $130,300 as of December 31, 2025 and 2024, respectively. Net of investment grants received (mainly for construction, machinery and equipment) in the amounts of $134,380 and $77,118 as of December 31, 2025 and 2024, respectively.
(2) Set forth below is additional information regarding the real estate owned or leased by the Company (square feet):

| Israel(a) |  | U.S.(b) |  | Other Countries(c)
Owned | 1,658,140 |  | 977,124 |  | 881,916
Leased | 7,844,631 |  | 968,407 |  | 754,362

a.Includes offices, development and engineering facilities, manufacturing facilities, maintenance facilities, hangar facilities and landing strips in various locations in Israel. The Company is in the process of completing the construction of a new munitions production site in Ramat Beka in southern Israel at a scale of approximately 860,000 square feet. Production has commenced at the site and is expected to gradually increase during 2026 and thereafter. In accordance with our understandings with the Israel Land Authority and in light of the continued increased production rate, the Company's evacuation date for its Ramat HaSharon facility in Israel has been extended several times, with the most recent extension until the end of 2026.
b.Includes mainly offices, development and engineering facilities, manufacturing facilities and maintenance facilities of ESA, primarily in Texas, New Hampshire, South Carolina, Florida, Alabama and Virginia. The facilities in New Hampshire, Florida and Alabama are located on owned land totaling approximately 150 acres. Universal Avionics Systems Corporation's facilities are located in Arizona, Washington and Georgia, of which 166,000 square feet are owned and 83,000 square feet are leased.
c.Includes offices, design and engineering facilities and manufacturing facilities in Europe, Latin America, Canada and Asia-Pacific.
(3) The Enterprise Resource Planning (“ERP”) system includes certain costs incurred during the application development stage that have been capitalized in accordance with authoritative accounting guidance related to accounting for the cost of computer software developed or obtained for internal use. These costs are amortized over the system's estimated useful life.
As for liens on assets – see Notes 21G.
F - 42

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 11 - GOODWILL AND OTHER INTANGIBLE ASSETS, NET
A. COMPOSITION OF IDENTIFIABLE INTANGIBLE ASSETS:

|  | December 31, 2025 |  | December 31, 2024
Original cost: |  |  |  |
Technology |  | $ | 406,919 |  |  | $ | 405,004 |
Customer relations |  | 388,807 |  |  | 388,112 |
Trademarks and other |  | 207,054 |  |  | 207,011 |
|  | 1,002,780 |  |  | 1,000,127 |
Accumulated amortization: |  |  |  |
Technology |  | 285,367 |  |  | 272,035 |
Customer relations |  | 187,738 |  |  | 176,702 |
Trademarks and other |  | 205,025 |  |  | 196,630 |
|  | 678,130 |  |  | 645,367 |
Amortized cost |  | $ | 324,650 |  |  | $ | 354,760 |

B. EXPENSES
Amortization expenses amounted to $30,957, $34,206 and $43,903 for the years ended December 31, 2025, 2024 and 2023, respectively.
C. AMORTIZATION EXPENSES FOR FIVE SUCCEEDING YEARS
The estimated aggregate amortization expenses for each of the five succeeding fiscal years and thereafter are as follows:

2026 |  | $ | 33,443 |
2027 |  | 30,544 |
2028 |  | 27,777 |
2029 |  | 22,080 |
2030 |  | 21,395 |
2031 | and thereafter | 189,411 |
|  | $ | 324,650 |

F - 43

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 11 - GOODWILL AND OTHER INTANGIBLE ASSETS, NET (Cont.)
D. CHANGES IN GOODWILL
Changes in goodwill during 2025 were as follows:

| Aerospace |  | C4I and Cyber |  | ISTAR and EW |  | Land |  | ESA |  | Total
Balance, at January 1, 2024 | $ | 63,188 |  |  | $ | 316,655 |  |  | $ | 133,228 |  |  | $ | 571,866 |  |  | $ | 414,128 |  |  | $ | 1,499,065 |
Sale of a subsidiary (1) | — |  |  | — |  |  | — |  |  | (3,211) |  |  | — |  |  | (3,211) |
Net translation differences (2) | (2,333) |  |  | — |  |  | (2,936) |  |  | — |  |  | — |  |  | (5,269) |
Balance, at January 1, 2025 | $ | 60,855 |  |  | $ | 316,655 |  |  | $ | 130,292 |  |  | $ | 568,655 |  |  | $ | 414,128 |  |  | $ | 1,490,585 |
Net translation differences (2) | 1,530 |  |  | — |  |  | 5,065 |  |  | — |  |  | — |  |  | 6,595 |
Balance, at December 31, 2025 | $ | 62,385 |  |  | $ | 316,655 |  |  | $ | 135,357 |  |  | $ | 568,655 |  |  | $ | 414,128 |  |  | $ | 1,497,180 |

(1)See Note 1D(3).
(2)Foreign currency translation differences resulting from goodwill allocated to reporting units, whose functional currency has been determined to be other than the U.S. dollar.
Note 12 - SHORT-TERM CREDIT AND LOANS

| Interest % |  | December 31, 2025 |  | December 31, 2024
Loans | SOFR + 1.0% - 1.5% |  | $ | — |  |  | $ | 100,179 |
Commercial papers, Series A and B (*) | SOFR + 1.0% - 1.25% |  | 48,410 |  |  | 350,000 |
Bank credit | SOFR + 1.0% - 1.5% |  | 2,122 |  |  | 677 |
|  |  | $ | 50,532 |  |  | $ | 450,856 |

As of December 31, 2025 the SOFR rate of short-term loans w as 3.87%.
(*) In 2023, the Company completed an issuance in Israel of a U.S. Dollar denominated commercial paper series A in an aggregate par value amount of approximately $313,620. The Series A commercial paper bears annual interest at the three-months SOFR rate plus a margin of 1%. The series A commercial paper has an original maturity of 90 days, which may be extended for additional 90-days periods, up to a maximum cumulative term of 5 years. The Series A commercial paper is subject to early repayment at the request of an investor upon seven business days' notice, or at the Company's discretion, upon a twenty-one days' prior notice. During 2024, the Company issued additional amounts of series A commercial paper and repaid certain portions thereof.
In September 2024, the Company completed an issuance in Israel of a U.S. Dollar denominated commercial paper series B in a par value amount of $110 million. The Series B commercial paper bears annual interest at the three-month SOFR rate plus a margin of 1.25%. The series B commercial paper is has an original maturity of 90 days and may be extended for additional 90 days periods, up to a maximum cumulative term of 5 years. The Series B commercial paper is subject to early repayment at the request of an investor upon thirty days' notice, or at the Company's discretion upon twenty-one days notice.
In June 2025, the Company repaid the entire outstanding Series B commercial paper in an aggregate par value amount of $110 million. In addition, during 2025 the Company repaid an additional aggregate par value amount of approximately $191.6 million of Series A commercial paper.
The Series A commercial paper is not listed on any stock exchange. As of December 31, 2025, the issued and outstanding par value of Series A commercial paper amounted to approximately $ 48,400.
F - 44

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 13 - OTHER PAYABLES AND ACCRUED EXPENSES

| December 31, 2025 |  | December 31, 2024
Payroll and related expenses | $ | 460,893 |  |  | $ | 353,976 |
Provision for vendors on accrued expenses | 106,720 |  |  | 99,389 |
Provision for vacation pay (1) | 103,960 |  |  | 91,179 |
Provision for warranty and cost | 79,149 |  |  | 87,488 |
Provision for royalties | 91,660 |  |  | 72,187 |
Provision for losses on long-term contracts | 186,299 |  |  | 69,816 |
Provision for income tax, net of advances | 59,342 |  |  | 34,130 |
Derivative instruments | 42,363 |  |  | 24,924 |
Value added tax (“VAT”) payable | 42,793 |  |  | 21,049 |
Other (2) | 375,960 |  |  | 353,579 |
| $ | 1,549,139 |  |  | $ | 1,207,717 |

(1)Long-term provision for vacation pay - see Note 20.
(2)Includes provisions for estimated future costs in respect of (1) unbilled services of certain third parties, (2) probable loss from claims (legal or asserted) in the ordinary course of business and (3) damages caused by the items sold and claims as to the specific products ordered.
Note 14 - CONTRACT LIABILITIES (CUSTOMER ADVANCES)

| December 31, 2025 |  | December 31, 2024
Contract liabilities | $ | 3,617,436 |  |  | $ | 2,966,102 |
Less: Contract liabilities presented under long-term liabilities | 934,256 |  |  | 816,796 |
| $ | 2,683,180 |  |  | $ | 2,149,306 |

During the year ended December 31, 2025, the Company recognized approximately $1,500,000 of its contract liabilities at December 31, 2024. During the year ended December 31, 2024, the Company recognized approximately $1,100,000 of its contract liabilities at December 31, 2023. Contract liabilities increased during 2025, primarily due to payments received in excess of revenue recognized on these performance obligations.
As for guarantees see Notes 21D and 21G.
F - 45

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 15 - LONG-TERM LOANS, NET OF CURRENT MATURITIES

| Currency |  | Interest % |  | Years of maturity |  | December 31, 2025 |  | December 31, 2024
Long-term loans | USD |  | S + 1.35% - 1.75% |  | 2025-2028 |  | $ | 632 |  |  | $ | 949 |
| EURO |  | 2.02% - 2.50% |  | 2025-2028 |  | 30,061 |  |  | 37,614 |
|  |  |  |  |  |  | 30,693 |  |  | 38,563 |
Less: current maturities |  |  |  |  |  |  | 12,693 |  |  | 11,168 |
|  |  |  |  |  |  | $ | 18,000 |  |  | $ | 27,395 |

For covenants see Note 21E.
As of December 31, 2025, the SOFR quarterly interest rate for long-term loans denominated in U.S. dollars was 3.65%.
The maturities of these loans for periods after December 31, 2025, are as follows:

2026 - current maturities | 12,915 |
2027 | 13,278 |
2028 | 4,500 |
| $ | 30,693 |

F - 46

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 16 - SERIES B, C AND D NOTES, NET OF CURRENT MATURITIES

| December 31, 2025 |  | December 31, 2024
Series B, C and D Notes | $ | 309,173 |  |  | $ | 343,105 |
Less – Current maturities | (70,758) |  |  | (63,393) |
Premium (discount) on Series B, C and D Notes, net | (790) |  |  | (1,183) |
| $ | 237,625 |  |  | $ | 278,529 |

In July 2021, the Company issued Series B, C and D Notes in the aggregate principal amount of NIS 1.9 billion (approximately $579,000) as follow:
Series B Notes in the amount of NIS 1.5 billion (approximately $457,000) that are paid in eight equal annual installments on June 30 of each of the years 2022 through 2029 (inclusive). The Series B Not es bear a fixed interest rate of 1.08% per annum and will not be adjusted to any currency or index changes.
Series C Notes in the amount of NIS 200 million (approximately $61,000) that are paid in eight equal annual installments on June 30 of each of the years 2022 through 2029 (inclusive). The Series C Notes bear a fixed U.S. dollar interest rate of 2.12% per annum and will be adjusted to the changes of the NIS versus U.S. dollar currency exchange rate.
Series D Notes in the amount of NIS 200 million (approximately $61,000) that are paid in fourteen annual installments as follows: thirteen equal annual installments in an amount equal to 7.14% of the nominal value of the principal on June 30 of each of the years 2022 through 2034 (inclusive) and the final annual installment in an amount equal to 7.18% of the nominal value of the principal on June 30, 2035. They bear a fixed interest rate of 2.67% per annum and will be adjusted to changes in the NIS versus U.S. dollar currency exchange rate.
During the year ended December 31, 2025, the Company record ed $7,362, as interest expense s and $393 as amortization of debt issuance costs a nd premium, net, on the Series B, C and D Notes.
The Company also entered into eight cross-currency interest swap transactions of 8 years to effectively hedge the effect of interest and exchange rate differences resulting from Series B Notes. Under the cross-currency interest rate swaps, the Company receives a fixed NIS rate of 1.08% on the NIS of 1.5 billion and pays an average fixed U.S dollar interest rate of 1.92% on $463,000. Both the debt and the swap instruments pay semi-annual interest - on June 30 and December 31.
During 2025, the Company paid the fourth installment of Notes B, C and D in an aggregate amount of approximately $67,496.
Future principle payments for Series B, C and D Notes, including the effect of cross-currency interest rate swap transactions, are as follows:

Future principal payments for Series B, C and D Notes: |
2026 Current maturities | $ | 69,917 |
2027 | 69,917 |
2028 | 69,917 |
2029 | 69,917 |
2030 | 26,140 |
| $ | 305,808 |

F - 47

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 17 - BENEFIT PLANS AND OBLIGATIONS FOR TERMINATION INDEMNITY
The Company’s subsidiaries ESA, IMI and its subsidiaries in Israel, a German subsidiary (the “German Subsidiary”) and a Belgian subsidiary (the “Belgian Subsidiary”) sponsor benefit plans for their employees in the U.S., Israel, Germany and Belgium, respectively, as follows:
1. Defined Benefit Retirement Plan based on Employer’s Contributions
a) ESA has five defined benefit pension plans (the “Plans”) which cover the employees of ESA’s two subsidiaries and represented two other subsidiaries. Monthly benefits are based on years of service and annual compensation. Annual contributions to the Plans are determined using the unit credit actuarial cost method and are equal to or exceed the minimum required by law. Pension fund assets of the Plans are invested primarily in stocks, bonds and cash by a financial institution, as the investment manager of the Plans’ assets. The service cost component of net periodic pension and other post-retirement benefit plan expense is recorded in operating profit and is allocated between the cost of sales and general and administrative expenses, depending on the responsibilities of the employees. The non-service cost components of net periodic pension and other post-retirement benefit plan expense (i.e., interest cost, expected return on plan assets and net actuarial gains or losses) are included in the line item Other (income) expense, net in the income statement.
Participation in the ESA’s qualified defined benefit plans was frozen as of January 1, 2010, for non-represented employees. Benefit accruals ceased for non-represented employees effective December 31, 2018. Benefit accruals ceased for all represented employees effective December 31, 2020.
In July 2025, the investment finance committee of ESA approved a resolution to terminate four defined benefit Plans. During the third and fourth quarters of 2025, ESA settled the benefits directly with vested participants electing a lump sum payout, and purchased group annuity contracts from Mutual of Omaha Insurance ESA to administer all future payments to remaining participants. The net funded asset position of all of the plans was sufficient to cover the lump sum payments and the purchase of the group annuity contracts in addition to settling remaining benefit obligations of ESA.
After the settlement of the benefit obligation and payment of expenses, ESA had excess assets in the Plans of approximately $30,256. The Company elected to utilize the remaining surplus after the payment of administrative expenses for ESA’s future discretionary contributions. The transfer of the surplus amount of $30,526 which approximates its fair value as of December 31, 2025 .
Upon settlement of the pension liability, the Company recognized a non-operating settlement benefit of approximately $10,200. See Note 26.
The measurement date for the remaining ESA subsidiaries' benefit obligation is December 31, 2025.
F - 48

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 17 - BENEFIT PLANS AND OBLIGATIONS FOR TERMINATION INDEMNITY (Cont.)
b) IMI and its subsidiaries have several post-employment benefit arrangements, which are based on collective agreements concluded with certain groups of employees before the privatization of IMI. According to these agreements, some groups of employees possess special retirement conditions and preferable rights for post-employment benefits that apply to employees who will terminate their employment in the event of relocation of plants as part of the post privatization restructuring of IMI and subsidiaries. The arrangements are determined according to the various existing formats of employment, seniority and other factors. The liabilities recognized in respect of these arrangements are calculated on an actuarial basis.
c) The German Subsidiary, which is wholly-owned by the Company, has mainly one defined benefit pension plan (the “P3-plan”) which covers all employees. The P3-plan provides for yearly cash balance credits equal to a percentage of a participant’s compensation, which accumulates together with the respective interest credits on the employee’s cash balance accounts. In case of an insured event (retirement, death or disability) the benefits can be paid as a lump sum, in installments or as a life-long annuity. The P3-plan is an unfunded plan.
d) The Belgian Subsidiary, which is wholly-owned by the Company, has a defined benefit pension plan, which is divided into two categories:
1) Normal retirement benefit plan, with eligibility at age 65. The lump sum is based on employee contributions of 2% of the final pensionable salary up to a certain breakpoint, plus 6% exceeding the breakpoint at a maximum of 5% of pensionable salary, and the employer contributions, with a maximum of 40 years. The vested benefit is equal to the retirement benefit calculated with the pensionable salary and pensionable service observed at the date of leaving service.
2) Pre-retirement death benefit to employees.
The plan is funded and includes profit sharing.
F - 49

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 17 - BENEFIT PLANS AND OBLIGATIONS FOR TERMINATION INDEMNITY (Cont.)
The following table sets forth the Plans’ funded status and amounts recognized in the consolidated financial statements for the years ended December 31, 2025 and 2024:

| December 31, 2025 |  | December 31, 2024
Changes in benefit obligation: |  |  |
Benefit obligation at beginning of year | $ | 510,130 |  |  | $ | 566,786 |
Service cost | 1,950 |  |  | 10,200 |
Interest cost | 25,851 |  |  | 24,605 |
Exchange rate differences | 31,286 |  |  | (251) |
Actuarial gain | (16,342) |  |  | (56,174) |
Benefits paid | (30,555) |  |  | (35,036) |
Effect of settlement commitment | (273,937) |  |  | — |
Benefit obligation at end of year | $ | 248,383 |  |  | $ | 510,130 |
Changes in the Plans’ assets: |  |  |
Fair value of Plans’ assets at beginning of year | $ | 301,816 |  |  | $ | 290,008 |
Benefit assets related to acquired companies | — |  |  | 203 |
Actual return on Plans’ assets (net of expenses) | 27,116 |  |  | 21,287 |
Employer contribution | 1,184 |  |  | 6,719 |
Benefits paid | (18,537) |  |  | (16,401) |
Exchange rate differences | 1,195 |  |  | — |
Assets transferred to defined contribution plan | (30,526) |  |  | — |
Effect of settlement commitment | (273,937) |  |  | — |
Fair value of Plans’ assets at end of year | $ | 8,311 |  |  | $ | 301,816 |
Accrued benefit cost, end of year: |  |  |
Funded (unfunded) status | $ | (240,074) |  |  | $ | (208,316) |
Unrecognized net actuarial loss | (68,944) |  |  | (117,865) |
| $ | (309,018) |  |  | $ | (326,181) |
Amount recognized in the statement of financial position: |  |  |
Accrued benefit liability, current | $ | (35,273) |  |  | $ | (38,200) |
Accrued benefit liability, non-current | (204,801) |  |  | (170,116) |
Accumulated other comprehensive income, pre-tax | (68,944) |  |  | (117,865) |
| $ | (309,018) |  |  | $ | (326,181) |

F - 50

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 17 - BENEFIT PLANS AND OBLIGATIONS FOR TERMINATION INDEMNITY (Cont.)

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Components of the Plans’ net periodic pension cost: |  |  |  |  |
Service cost | $ | 1,950 |  |  | $ | 10,200 |  |  | $ | 5,578 |
Interest cost | 25,851 |  |  | 24,605 |  |  | 29,429 |
Expected return on Plans’ assets | (21,330) |  |  | (17,742) |  |  | (17,825) |
Amortization of prior service cost | — |  |  | — |  |  | (1,246) |
Recognition of net actuarial gain | (27,591) |  |  | (30,343) |  |  | (5,098) |
Total net periodic benefit cost | $ | (21,120) |  |  | $ | (13,280) |  |  | $ | 10,838 |
Additional information |  |  |  |  |
Accumulated benefit obligation | $ | 248,382 |  |  | $ | 510,130 |  |  | $ | 561,350 |

| December 31, 2025 |  | December 31, 2024
Weighted average assumptions: |  |  |
Discount rate as of December 31 | 4.4 | % |  | 5.4 | %
Expected long-term rate of return on Plans’ assets | — | % |  | 7.0 | %
Rate of compensation increase | 3.5 | % |  | 1.5 | %

Asset allocation by category as of December 31:

| 2025 |  | 2024
Asset category: |  |  |
Equity Securities | 46.0 | % |  | 49.2 | %
Debt Securities | 54.0 | % |  | 48.4 | %
Other | — | % |  | 2.4 | %
Total | 100.0 | % |  | 100.0 | %

The investment policy of ESA is directed toward a broad range of securities. The diversified portfolio seeks to maximize investment return while minimizing the risk levels associated with investing. The investment policy is structured to consider the Plans' obligations and the expected timing of benefit payments. The target asset allocation for the Plans' years presented is as follows:

| 2025 |  | 2024
Asset category: |  |  |
Equity Securities | 46.0 | % |  | 53.0 | %
Debt Securities | 54.0 | % |  | 46.0 | %
Other | — | % |  | 1.0 | %
Total | 100.0 | % |  | 100.0 | %

F - 51

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 17 - BENEFIT PLANS AND OBLIGATIONS FOR TERMINATION INDEMNITY (Cont.)
The fair value of the asset values by category at December 31, 2025, was as follows:

| Total |  | Quoted prices in active markets for identical assets (level 1) |  | Significant observable inputs (level 2) |  | Significant unobservable inputs (level 3)
Asset category |  |  |  |  |  |  |
Cash | $ | 4,453 |  |  | $ | 4,453 |  |  | — |  |  | — |
Cash equivalents: |  |  |  |  |  |  |
Money market funds (a) | 3,858 |  |  | 3,858 |  |  | — |  |  | — |
Mutual funds (d) |  |  |  |  |  |  | — |
Total | $ | 8,311 |  |  | $ | 8,311 |  |  | $ | — |  |  | $ | — |

(a) This category includes highly liquid daily traded cash-like vehicles.
(b) This category invests in highly liquid mutual funds representing a diverse offering of debt issuance.
(c) This category represents common stocks of companies domiciled outside of the U.S.; they can be represented by ordinary shares or American Depository Receipts (ADRs).
(d) This category represents mutual funds investing principally in a variety of equity assets.
In developing the overall expected long-term rate of return on assets assumption, ESA used a building block approach in which rates of return in excess of inflation were considered separately for equity securities, debt securities, real estate and all other assets. The excess returns were weighted by the representative target allocation and added along with an approximate rate of inflation to develop the overall expected long-term rate of return.
It is the policy of ESA to meet the ERISA minimum contribution requirements for a Plan year. The minimum contribution requirements for the 2025 Plan year have been satisfied as of December 31, 2025. Benefit payments over the next five years are expected to be $80 in 2026, $78 in 2027, $87 in 2028, $84 in 2029 and $82 in 2030.
F - 52

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 17 - BENEFIT PLANS AND OBLIGATIONS FOR TERMINATION INDEMNITY (Cont.)
2. Retiree Medical Plan
ESA offers retiree medical benefits to a limited number of retirees. The measurement date for ESA's benefit obligation is December 31. The following table sets forth the retiree medical plans’ funded status and amounts recognized in the consolidated financial statements for the years ended December 31, 2025 and 2024:

| December 31, 2025 |  | December 31, 2024
Change in benefit obligation: |  |  |
Benefit obligation at beginning of period | $ | 1,239 |  |  | $ | 1,231 |
Service cost | 109 |  |  | 128 |
Interest cost | 66 |  |  | 58 |
Actuarial (gain) loss | 88 |  |  | (148) |
Employee contribution | 5 |  |  | 9 |
Benefits paid | (23) |  |  | (39) |
Benefit obligation at end of period | $ | 1,484 |  |  | $ | 1,239 |
Change in plan assets: |  |  |
Employer contribution | $ | 19 |  |  | $ | 31 |
Employee contribution | 4 |  |  | 8 |
Benefits paid | (23) |  |  | (39) |
Fair value of Plan assets at end of period | $ | — |  |  | $ | — |

| Year ended December 31, 2025 |  | Year ended December 31, 2024
Accrued benefit cost, end of period: |  |  |
Funded (unfunded) status | $ | (1,484) |  |  | $ | (1,238) |
Unrecognized net actuarial gain | (1,380) |  |  | (1,626) |
Accrued benefit cost, end of period | $ | (2,864) |  |  | $ | (2,864) |
Amounts recognized in the statement of financial position: |  |  |
Accrued benefit liability, current | $ | (109) |  |  | $ | (61) |
Accrued benefit liability, non-current | (1,375) |  |  | (1,177) |
Accumulated other comprehensive gain, pretax | (1,380) |  |  | (1,626) |
Net amount recognized | $ | (2,864) |  |  | $ | (2,864) |

Components of net periodic pension cost (for period): | Year ended December 31, 2025 |  | Year ended December 31, 2024
Service cost | $ | 109 |  |  | $ | 128 |
Interest cost | 66 |  |  | 58 |
Amortization of net actuarial gain | (157) |  |  | (138) |
Total net periodic benefit cost | $ | 18 |  |  | $ | 48 |

F - 53

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 17 - BENEFIT PLANS AND OBLIGATIONS FOR TERMINATION INDEMNITY (Cont.)
2. Retiree Medical Plan (Cont.)

Assumptions as of end of period: | Year ended December 31, 2025 |  | Year ended December 31, 2024
Discount rate | 5.10 | % |  | 5.50 | %
Health care cost trend rate assumed for next year | 7.00 | % |  | 6.50 | %
Ultimate health care cost trend rate | 4.00 | % |  | 4.00 | %

The effect of a 1% change in the health care cost trend rate at December 31, 2025 was as follows:

| 1% increase |  | 1% decrease
Net periodic benefit cost | $ | 17 |  |  | $ | (15) |
Benefit obligation | $ | 115 |  |  | $ | (104) |

3. Defined Contribution Plan
The 401(k) savings plan (“401(k) plan”) is a defined contribution retirement plan that covers all eligible ESA employees, as defined in section 401(k) of the U.S. Internal Revenue Code. Employees may elect to contribute a percentage of their annual gross compensation to the 401(k) plan. ESA may make discretionary matching contributions as determined by ESA. Total expense under the 401(k) plan amounted to $18,008, $18,582 and $16,961 for the years ended December 31, 2025, 2024 and 2023, respectively. Expense for the deferred 401(k) plan is allocated between cost of sales and general and administrative expenses depending on the responsibilities of the related employees.
4. Non-Qualified Defined Contribution Plan
ESA has two benefit plans for the executives of the organization. The non-qualified, defined contribution plan is structured under Section 409(A). The plan provides the employees at vice president level and above the opportunity to defer up to 100% of their salary to the 409(A) plan. ESA provides a match of 0.005 cents on the dollar up to 10% of the employees’ total salary and incentive-based compensation. The contribution can be made into the 401(k) plan, the 409(A) plan or both plans. The purpose is to provide comparable defined contribution plan benefits for the senior management across ESA locations. The 409(A) plan funds are contributed to several life insurance policies. Participant contributions to the plan were $2,353, $1,558 and $2,418 for the years ended December 31, 2025, 2024 and 2023, respectively, and the total ESA contribution to the plan was $235 for 2025. The cash surrender value of these life insurance policies at December 31, 2025 was $8,175. The total liability related to the 409(A) plan was $22,443 at December 31, 2025.
The second plan implemented is a non-qualified, defined benefit plan for certain executives of ESA. The plan provides the executives with a calculated, guaranteed payment in addition to their regular pension through the company upon retirement. The plan is funded with several life insurance policies. The policies are not segregated into a trust or otherwise effectively restricted. These policies are corporate owned assets that are subject to the claims of general creditors and cannot be considered as formal plan assets. The defined benefit plan put in place meets the ERISA definition of an unfunded deferred compensation plan maintained for the benefit of a select group of management or highly compensated employees. The plan assets of life insurance policies had a cash surrender of $4,796 at December 31, 2025. Related liability for the pension payments was $10,946 at December 31, 2025. As of December 31, 2025, all executives had partially vested balances in the plan.
F - 54

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME
A. APPLICABLE TAX LAWS
(1)Israeli Corporate Income Tax Rates
Generally, regular corporate tax rates and real capital gain tax rates in Israel effective as of January 1, 2018 and onwards is 23%. The Company is also eligible for tax benefits as further described below.
(2)Tax benefits under Israel’s Law for the Encouragement of Industry (Taxes), 1969:
Elbit Systems and most of its subsidiaries in Israel currently qualify as “Industrial Companies”, as defined by the Law for the Encouragement of Industry (Taxes), 1969, and as such, are entitled to certain tax benefits, mainly amortization of costs relating to know-how and patents over eight years, accelerated depreciation, the right to deduct public issuance expenses for tax purposes and an election under certain conditions to file a consolidated tax returns with additional related Israeli Industrial Companies.
Elbit Systems and several of its Israeli subsidiaries (also industrial companies) submitted an election to the Israel Tax Authority to file a consolidated tax return.
(3)Tax benefits under Israel’s Law for the Encouragement of Capital Investments, 1959:
The operations of Elbit Systems and certain of its Israeli subsidiaries (“the Companies”) have been granted “Privileged Enterprise” status under Israel’s Law for the Encouragement of Capital Investments, 1959 (the “Law”). Accordingly, certain income of the Companies derived from the Privileged Enterprise programs was tax exempt for two years and subject to reduced tax rates of 25% for five-year to eight-year periods or tax exempt for a ten-year period, commencing in the first year in which the companies had taxable income (limited to twelve years from commencement of production or fourteen years from the date of approval, whichever is earlier).
At least 25% of the Privileged Enterprise program’s income must be derived from exports.
Tax-exempt income generated by the Company and certain of its Israeli subsidiaries’ Privileged Enterprises will be subject to tax upon dividend distribution or complete liquidation.
The entitlement to the above benefits is subject to the Companies’ fulfilling the conditions specified in the Law, and the regulations promulgated thereunder. In the event of failure to comply with these conditions, the benefits may be canceled and the companies may be required to refund the amount of the benefits, in whole or in part, including interest.
As of December 31, 2025, the Company’s management believes that the Company and its Israeli subsidiaries met all conditions of the Law and letters of approval.
F - 55

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
A. APPLICABLE TAX LAWS (Cont.)
(3)Tax benefits under Israel’s Law for the Encouragement of Capital Investments, 1959 (Cont.):
On November 15, 2021, the Israeli government approved the Economic Efficiency Bill (Legislative Amendments for Attaining Budgetary Objectives for the 2021 and 2022 Budget Years) - 2021 (the Economic Efficiency Bill) regarding repatriations of retained exempt earnings from Approved Enterprises and Privileged Enterprises (Exempt Earnings). The Economic Efficiency Bill includes a temporary provision, offering relief of 30%-60% on the amount of tax which would otherwise have been required to be paid on attributable earnings, in order to encourage companies to pay the reduced taxes during the next 12 months (the Temporary Provision). The Temporary Provision provides partial relief from Israeli corporate income tax for companies that elect the offered benefit, on a linear basis, which is a greater release of Exempt Earnings, resulting in a higher relief from corporate income tax. According to the new linear statutory formula, the corporate income tax to be paid, on Exempt Earnings accumulated until December 31, 2020 that were not yet distributed as a dividend (Selected Accumulated Income) would vary from 6% to 17.5% effective tax rate (depending on the company’s corporate tax rate in the year in which the income was derived and the amount of Exempt Earnings elected to be relieved), without taking into account the 15% dividend withholding tax (which should be levied only upon actual distribution, if any). The reduced corporate tax is payable within 30 days of making the election. The Temporary Provision does not require the actual distribution of the Selected Accumulated Income, nor does it provide any relief from the 15% dividend withholding tax.
The partial corporate income tax relief was available to companies that elected to implement the temporary reduced tax relief by November 15, 2022 in respect of Exempt Earnings accrued up to December 31, 2020, provided that up to 30% (the exact rate is calculated according to a new statutory formula) of the “released” Selected Earnings Income are re-invested in Israel though at least one of the following: industrial activities, research and development activities, assets used by the company or salaries of newly recruited employees.
As part of the Temporary Provision, Article 74 of the Investment Law was amended and as a result, starting August 15, 2021, a company with Exempt Earnings that distributes dividends will have to attribute a portion of the distributed sum to Exempt Earnings, and a portion to non-exempt earnings, on a pro-rata basis.
The Company elected to implement the Temporary Provision to “release” approximately $784 million of Exempt Earnings, and included in its 2021 results, in taxes on income, a provision for corporate tax in an amount of approximately $80 million. The amount was paid in 2022.
As a result of the Company's election, the Company is required to invest approximately $66 million in its industrial enterprise by the end of 2026. As of December 31, 2025, the Company's management believes that Elbit Systems will meet this criteria.
Enhancement of Current Tax Incentives Regime:
Tax incentives in Israel are also available to certain Israeli industrial companies and to R&D centers (operating on a cost plus basis) under two tracks: (i) a Preferred Enterprise and (ii) a Special Preferred Enterprise, aimed at large enterprises that meet certain investment requirements. Accordingly, a Preferred Enterprise is eligible for a reduced corporate income tax rate of 16%. However, if the company is located in Jerusalem or in certain northern or southern parts of Israel, the tax rate was further reduced to 9%. On December 15, 2016, the Finance Committee approved a further 1.5% reduction in the tax rate for such locations, from 9% to 7.5%.
A flat rate tax applies to companies eligible for the Preferred Enterprise status. In order to be eligible for a Preferred Enterprise status, a company must meet minimum requirements to establish that it contributes to the country’s economic growth and is a competitive factor for the Gross Domestic Product (a competitive enterprise).
F - 56

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
A. APPLICABLE TAX LAWS (Cont.)
(3)Tax benefits under Israel’s Law for the Encouragement of Capital Investments, 1959 (Cont.):
Enhancement of Current Tax Incentives Regime (cont.):
Israeli companies that currently benefit from Privileged Enterprise status and meet the criteria for qualification as a Preferred Enterprise can elect to apply the Preferred Enterprise benefits by waiving their benefits under the Privileged Enterprise status. The Company and several of its Israeli subsidiaries have elected the Preferred Enterprise status.
Benefits granted to a Preferred Enterprise include a reduced tax rate of 9% in the Development Area A regions and 16% in other regions. Preferred Enterprises in peripheral regions are eligible for Investment Center grants, as well as the applicable reduced tax rates.
A distribution from a Preferred Enterprise out of “Preferred Income” is subject to 20% withholding tax for Israeli-resident individuals and non-Israeli residents (subject to applicable treaty rates).
In December 2016, the Knesset (Israeli Parliament) approved amendments to the Law that introduced an innovation box regime for intellectual property (IP)-based companies, enhanced tax incentives for certain industrial companies and reduced the standard corporate tax rate and certain withholding rates starting in 2017.
F - 57

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
A. APPLICABLE TAX LAWS (Cont.)
(3)Tax benefits under Israel’s Law for the Encouragement of Capital Investments, 1959 (Cont.):
Innovation Box Regime Special Technological Preferred Enterprise
The regime was tailored by the Israeli government to a post BEPS world, encouraging multinationals to consolidate IP ownership and profits in Israel along with existing Israeli research and development (“R&D”) functions. Tax benefits created to achieve this goal include a reduced corporate income tax rate of 6% on IP-based income and on capital gains from future sale of IP.
The 6% tax rate applies to qualifying Israeli companies that are part of a group with global consolidated revenue of over NIS 10 billion (approximately US $2.8 billion). Other qualifying companies with global consolidated revenue below NIS 10 billion are subject to a 12% tax rate. However, if the Israeli company is located in Jerusalem or in certain northern or southern parts of Israel, the tax rate is further reduced to 7.5%. Additionally, withholding tax on dividends for foreign investors is subject to a reduced rate of 4% for all qualifying companies (unless further reduced by a treaty).
Entering into the regime is not conditioned on making additional investments in Israel, and a company could qualify if it invested at least 7% of the last three years’ revenue in R&D (or incurred NIS 75 million in R&D expense per year) and met one of the following three conditions:
1. At least 20% of its employees are R&D employees engaged in R&D (or more than 200 R&D employees);
2. Venture capital investments of NIS 8 million were previously made in the company; or
3. Average annual growth over three years of 25% in sales or employees.
A company that does not meet the above conditions may still be considered as a qualified company at the discretion of the Israeli Innovation Authority of the Ministry of Economy and Industry (formerly, the Office of the Chief Scientist). Companies wishing to exit from the regime in the future will not be subject to clawback of tax benefits. The Knesset also approved a stability clause in order to encourage multinationals to invest in Israel. Accordingly, companies will be able to confirm the applicability of tax incentives for a 10-year period under a pre-ruling process. Further, in line with the Organization for Economic Co-operation and Development (“OECD”) Nexus Approach, in 2017 the Israeli Finance Minister promulgated regulations to ensure companies are benefiting from the regime to the extent qualifying R&D expenditures are incurred.
As of December 31, 2025, the Company's management believes that Elbit Systems' and certain of its Israeli subsidiaries' meet the conditions and qualify as a “Special Preferred Technological Enterprise” tax regime.
Since the Company and its Israeli subsidiaries are operating under more than one program or incentive segment, and since part of their taxable income is not entitled to tax benefits under the Law and is taxed at the regular tax rates, the effective tax rate is the result of a weighted combination of the various applicable rates and tax exemptions, and the computation is made for income derived from each program on the basis of formulas specified in the Law.
F - 58

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
(4)New OECD Global Minimum Tax rules (GLOBE)
The OECD’s BEPS project has resulted in wide-ranging and continuous changes in the principles of international taxation and the tax laws in individual countries, including the Global Minimum Tax rules (GLOBE) introduced in 2021 (referred to as “Pillar 2”). Pillar 2 rules contemplate changes to numerous international tax principles and national tax principles and enforce other arrangements such as a minimum effective tax liability of 15%, under certain conditions. Governments have been translating the Pillar 2 rules into specific national tax laws, as previously done with respect to BEPS.
As of December 31, 2025 the government of Israel has adopted Pillar 2, and enacted a local minimum tax for multinational enterprise groups, effective for tax years beginning on or after January 1, 2026 .Thus, there was no impact on the Company and its Israeli subsidiaries in 2025. At this stage the Company is analyzing the potential implications Pillar 2 may have on its consolidated financial statements.
F - 59

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
B. NON-ISRAELI SUBSIDIARIES
Non-Israeli subsidiaries are generally taxed based upon tax laws applicable in their countries of residence.
C. INCOME FROM CONTINUING OPERATIONS BEFORE TAXES ON INCOME

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Income before taxes on income: |  |  |  |  |
Domestic | $ | 429,828 |  |  | $ | 326,544 |  |  | $ | 250,831 |
Foreign | 132,087 |  |  | 15,202 |  |  | (24,337) |
| $ | 561,915 |  |  | $ | 341,746 |  |  | $ | 226,494 |

D. TAXES ON INCOME

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Current taxes: |  |  |  |  |
Domestic | $ | 90,632 |  |  | $ | 63,326 |  |  | $ | 41,553 |
Foreign | 13,514 |  |  | 11,520 |  |  | 4,045 |
| 104,146 |  |  | 74,846 |  |  | 45,598 |
Adjustment for previous years: |  |  |  |  |
Domestic | 810 |  |  | (19,838) |  |  | (19,404) |
Foreign | 601 |  |  | 92 |  |  | (330) |
| 1,411 |  |  | (19,746) |  |  | (19,734) |
Deferred income taxes: |  |  |  |  |
Domestic | (44,798) |  |  | (16,972) |  |  | (5,434) |
Foreign | (5,220) |  |  | 930 |  |  | 2,483 |
| (50,018) |  |  | (16,042) |  |  | (2,951) |
Total taxes on income | $ | 55,539 |  |  | $ | 39,058 |  |  | $ | 22,913 |
Total: |  |  |  |  |
Domestic | $ | 46,644 |  |  | $ | 26,516 |  |  | $ | 16,715 |
Foreign | 8,895 |  |  | 12,542 |  |  | 6,198 |
Total taxes on income | $ | 55,539 |  |  | $ | 39,058 |  |  | $ | 22,913 |

F - 60

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
E. UNCERTAIN TAX POSITIONS
A reconciliation of the beginning and ending amount of unrecognized tax positions is as follows:

| 2025 |  | 2024
Balance at the beginning of the year | $ | 94,265 |  |  | $ | 81,058 |
Additions related to interest and currency translation | 17,268 |  |  | 3,614 |
Tax positions related to prior period | 110 |  |  | (99) |
Reductions related to settlement of tax matters | (16,950) |  |  | (20,905) |
Additions based on tax positions taken during the current period | 30,487 |  |  | 31,581 |
Reductions related to a lapse of applicable statute of limitation | (344) |  |  | (984) |
Balance at the end of the year | $ | 124,836 |  |  | $ | 94,265 |

On December 31, 2025 a nd 2024, the Company had a provision for unrecognized tax positions of $124,836 and $94,265, respectively, which if recognized, would affect the Company's effective tax rate, including an accru al for the payment of related interest and penalties, of $3,940 and $1,458 for the years 2025 and 2024, respectively. The Company recognized interest and penalties related to unrecognized tax benefits in the provision for income taxes.
During 2025 and 2024, the Company and certain of its subsidiaries settled certain income tax matters pertaining to multiple years in Israel and Europe. As a result of the settlement of the tax matters, the Company recorded tax benefits of approximately $16,950 and $20,905 during the years 2025 and 2024, respec tively, in the statements of income in “taxes on income”. Following the examination by the Israeli Tax Authority, the Company applied some of the items for which a settlement was reached for subsequent outstanding years.
The Company operates in multiple jurisdictions throughout the world, and its tax returns are periodically audited or subject to review by both domestic and foreign authorities. Certain Israeli subsidiaries are currently undergoing tax audits by the Israeli Tax Authority.
As a result of ongoing examinations, tax proceedings in certain countries and additions to unrecognized tax benefits for positions taken and interest and penalties, if any, arising in 2025, it is not possible to estimate the potential net increase or decrease to the Company’s unrecognized tax benefits during the next twelve months.
F - 61

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
F. DEFERRED INCOME TAXES
Significant components of net deferred tax assets and liabilities are based on separate tax jurisdictions as follows:

| December 31, 2025 |  | December 31, 2024
Deferred tax assets: |  |  |
Reserves and allowances | $ | 55,049 |  |  | $ | 27,287 |
Inventory allowances | 23,064 |  |  | 14,740 |
Property, plant and equipment | 1,545 |  |  | 432 |
Operating lease right of use assets | 29,777 |  |  | 24,092 |
Other assets | 145,572 |  |  | 127,217 |
Carry-forward losses | 38,660 |  |  | 47,504 |
| 293,667 |  |  | 241,272 |
Valuation allowance | (47,036) |  |  | (77,913) |
| 246,631 |  |  | 163,359 |
Deferred tax liabilities: |  |  |
Intangible assets | (80,800) |  |  | (73,324) |
Property, plant and equipment | (40,099) |  |  | (38,777) |
Operating lease liabilities | (29,144) |  |  | (23,598) |
Reserves and allowances | (30,454) |  |  | (6,783) |
| (180,497) |  |  | (142,482) |
Net deferred tax assets | $ | 66,134 |  |  | $ | 20,877 |

Deferred tax assets and liabilities are measured based on the enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid.
G. CARRY-FORWARD TAX LOSSES
As of December 3 1, 2025 the Company and its Israeli subsidiaries had estimated total available carry-forward operating tax losses of approximately $117,280, and its non-Israeli subsidiaries had estimated available carry-forward operating tax losses of approximately $41,094. The Company and its Israeli subsidiaries had estimated carry-forward capital losses of approximately $70,459. A valuation allowance was provided on the sum of approximately $31,434. Most of the carry-forward losses can be offset indefinitely.
F - 62

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
H. RECONCILIATION
Reconciliation of the actual tax expense as reported in the statements of operations to the amount computed by applying the Israeli statutory tax rate is as follows:

| Year ended December 31, 2025 |  |
| $ |  | % |  |
Income Before Tax | $ | 561,915 |  |  | — | % |  |
Statutory tax | 129,240 |  |  | 23 | % |  |
Foreign Tax Effect |  |  |  |  |
USA |  |  |  |  |
Tax rate difference | (14,417) |  |  | (3) | % |  |
Changes in valuation allowance | (11,303) |  |  | (2) | % |  |
Other | 1,459 |  |  | — | % |  |
Other foreign jurisdictions | 2,390 |  |  | 1 | % |  |
Preferred tax benefit regimes | (59,422) |  |  | (11) | % |  |
Changes in valuation allowance | (29,488) |  |  | (5) | % |  |
Changes in unrecognized tax benefits | 30,571 |  |  | 6 | % |  |
Other | 6,508 |  |  | 1 | % |  |
Actual tax expenses and effective tax rate | $ | 55,539 |  |  | 10 | % |  |

During the year ended December 31, 2025, the income taxes paid by the Company and its subsidiaries are $56,040, out of which $44,671, and $3,409 were paid in Israel and Belgium, accordingly.

| Year ended December 31, 2024 |  | Year ended December 31, 2023 |  |
Income before taxes as reported in the consolidated statements of income | $ | 341,746 |  | $ | 226,494 |  |
Statutory tax rate | 23 | % |  | 23 | % |  |
Theoretical tax expense | $ | 78,602 |  | $ | 52,094 |  |
Tax benefit arising from reduced rate as "Preferred Enterprise” and other tax benefits (*) | (5,058) |  | (27,741) |  |
Tax adjustment in respect of different tax rates for foreign subsidiaries | 60,100 |  | (3,508) |  |
Changes in carry-forward losses and valuation allowances | (78,356) |  | 12,714 |  |
Taxes resulting from non-deductible expenses | 1,260 |  | 2,299 |  |
Difference in basis of measurement for financial reporting and tax return purposes | 3,835 |  | 8,339 |  |
Taxes in respect of prior years (see Note 18D above) | (19,746) |  | (19,734) |  |
Other differences, net | (1,579) |  | (1,549) |  |
Actual tax expenses | $ | 39,058 |  | $ | 22,913 |  |
Effective tax rate | 11.43 | % |  | 10.12 | % |  |
(*) Net earnings per share – amounts of the benefit resulting from the Approved, Privileged and Preferred Enterprises: |  |  |  |  |
Basic and diluted | $ | 0.11 |  | $ | 0.63 |  |

F - 63

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 18 - TAXES ON INCOME (Cont.)
I. FINAL TAX ASSESSMENTS
Final income tax assessments have been received by the Company up to and including the tax year 2017 and by certain subsidiaries up to 2022.
Note 19 - DERIVATIVE FINANCIAL INSTRUMENTS
A. FAIR VALUE OF DERIVATIVE INSTRUMENTS
Derivative financial instruments are presented as other assets or other payables. For asset derivatives and liability derivatives, the fair values of the Company’s outstanding derivative instruments as of December 31, 2025 and December 31, 2024 are summarized below:

| Asset Derivatives as of December 31, 2025(*) |  | Asset Derivatives as of December 31, 2024(*) |  | Liability Derivatives as of December 31, 2025(**) |  | Liability Derivatives as of December 31, 2024(**)
Derivatives designated as hedging instruments |  |  |  |  |  |  |
Foreign exchange contracts | $ | 83,734 |  |  | $ | 104,317 |  |  | $ | 91,813 |  |  | $ | 17,836 |
Cross-currency interest rate swaps | 2,315 |  |  | — |  |  | — |  |  | 29,202 |
| $ | 86,049 |  |  | $ | 104,317 |  |  | $ | 91,813 |  |  | $ | 47,038 |
Derivatives not designated as hedging instruments |  |  |  |  |  |  |
Foreign exchange contracts | 4,152 |  |  | 2,615 |  |  | 954 |  |  | 5,905 |
| $ | 90,201 |  |  | $ | 106,932 |  |  | $ | 92,767 |  |  | $ | 52,943 |

(*) Presented as part of other receivables and long-term other receivables.
(**) Presented as part of other payables and long-term other payables.
B. EFFECT ON CASH FLOW HEDGING
The effect of derivative instruments on cash flow hedging and the relationship between income and other comprehensive income for the years ended December 31, 2025, 2024 and 2023 are summarized below:
Gain (Loss) Recognized in Other Comprehensive Income, net (*):

| as of December 31, 2025 |  | as of December 31, 2024 |  | as of December 31, 2023 |  |  |  |
Payroll | $ | 135,725 |  |  | $ | (18,324) |  |  | $ | (64,512) |  |  |  |  |
Gain from projects (Hedging) | (170,932) |  |  | 69,597 |  |  | (55,269) |  |  |  |  |
| $ | (35,207) |  |  | $ | 51,273 |  |  | $ | (119,781) |  |  |  |  |

Gain (Loss) on of Derivative Reclassified from Accumulated Other Comprehensive Income (*):

| as of December 31, 2025 |  | as of December 31, 2024 |  | as of December 31, 2023 |  |  |  |
Payroll | $ | (104,709) |  |  | $ | (36,927) |  |  | $ | (125,063) |  |  |  |  |
Gain from projects (Hedging) | 14,905 |  |  | 13,206 |  |  | 21,442 |  |  |  |
Foreign exchange contracts | $ | (89,804) |  |  | $ | (23,721) |  |  | $ | (103,621) |  |  |  |  |

(*) Presented as part of revenues, cost of revenue and equity in net earnings of affiliated companies and partnerships.
F - 64

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 19 - DERIVATIVE FINANCIAL INSTRUMENTS (Cont.)
B. EFFECT ON CASH FLOW HEDGING (Cont.)
Amount Excluded from Effectiveness Testing Recognized in Income (*):

|  | as of December 31, 2025 |  | as of December 31, 2024 |  | as of December 31, 2023
Foreign exchange contracts |  | $ | 31,187 |  |  | $ | (671) |  |  | $ | 13,791 |
Derivatives not designated as hedging instruments: |  |  |  |  |  |
Foreign exchange contracts and other derivatives instruments |  | $ | (10,388) |  |  | $ | 4,954 |  |  | $ | (3,906) |

(*) Presented as part of revenues/cost of revenue and equity in net earnings of affiliated companies and partnerships.
C. NET EFFECT OF CROSS-CURRENCY SWAPS
The net effect on earnings from the cross-currency swaps in 2025 was a loss of approximately $35,623, of which approximately $33,400 was offset against exchange rate differences related to Series B Notes and approximately $2,223 increased the interest expenses.
D. FORWARD CONTRACTS
The notional amounts of outstanding foreign exchange forward contracts at December 31, 2025 is summarized below:

| Buy December 31, 2025 |  | Buy December 31, 2024 |  | Sell December 31, 2025 |  | Sell December 31, 2024
Euro | $ | 317,075 |  |  | $ | 187,873 |  |  | $ | 4,520,517 |  |  | $ | 1,408,619 |
GBP | 89,490 |  |  | 118,687 |  |  | 166,109 |  |  | 45,159 |
NIS | 411,689 |  |  | 1,703,972 |  |  | 386 |  |  | — |
Other | 129,006 |  |  | 69,525 |  |  | 406,743 |  |  | 571,956 |
| $ | 947,260 |  |  | $ | 2,080,057 |  |  | $ | 5,093,755 |  |  | $ | 2,025,734 |

Note 20 - OTHER LONG-TERM LIABILITIES
The following table presents the components of other long-term liabilities as of December 31, 2025 and 2024:

| December 31, 2025 |  | December 31, 2024
Accounts payables | $ | 88,277 |  |  | $ | 131,502 |
Provision for vacation pay | 63,967 |  |  | 51,108 |
Derivative financial instruments | 50,404 |  |  | 28,019 |
Contingent purchase obligation | 13,035 |  |  | 20,564 |
Provision for compensated absences | 12,296 |  |  | 12,382 |
Other | 35,088 |  |  | 30,846 |
| $ | 263,067 |  |  | $ | 274,421 |

F - 65

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 21 - COMMITMENTS AND CONTINGENT LIABILITIES
A. ROYALTY COMMITMENTS
Elbit Systems and certain Israeli subsidiaries partially finance their research and development expenditures under grant programs sponsored by the Israel Innovation Authority (“IIA”) of the Ministry of Economy and Industry (formerly the Office of Chief Scientist) for the support of research and development activities conducted in Israel. At the time the grants were received from the IIA, successful development of the related projects was not assured.
In exchange for participation in the programs by the IIA, Elbit Systems and the subsidiaries agreed to pay 2% - 5% of total sales of products developed within the framework of these programs. The royalties will be paid up to a maximum amount equaling 100% to 150% of the grants provided by the IIA, linked to the dollar, bearing annual interest at a rate based on LIBOR \ SOFR (SOFR only commencing 2023). The obligation to pay these royalties is contingent on actual sales of the products, and in the absence of such sales payment of royalties is not required.
In some cases, the Government of Israel’s participation (through the IIA) is subject to export sales or other conditions. The maximum amount of royalties is increased in the event of production outside of Israel.
Elbit Systems and certain of its subsidiaries may also be obligated to pay certain amounts to the IMOD and others on certain sales including sales resulting from the development of certain technologies.
Royalties expenses amounted to $14,949, $15,676 and $19,878 in 2025, 2024 and 2023, respectively.
B. COMMITMENTS IN RESPECT OF LONG-TERM PROJECTS
In connection with projects in certain countries, Elbit Systems and some of its subsidiaries have entered and may enter in the future into “buy-back” or “offset” agreements, required by a number of the Company’s customers for these projects as a condition to the Company obtaining orders for its products and services. These agreements are customary in the Company’s industry and are designed to facilitate economic flow back (buy-back) and/or technology transfer to businesses or government agencies in the applicable country.
These commitments may be satisfied by the Company’s placement of direct work or vendor orders for supplies and/or services, transfer of technology, investments or other forms of assistance in the applicable country. The buy-back rules and regulations, as well as the underlying contracts, may differ from one country to another. The ability to fulfill the buy-back obligations may depend, among other things, on the availability of local suppliers with sufficient capability to meet the Company's requirements and which are competitive in cost, quality and schedule. In certain cases, the Company’s commitments may also be satisfied through transactions conducted by other parties.
The Company does not commit to buy-back agreements until orders for its products or services are definitive, but in some cases the orders for the Company’s products or services may become effective only after the Company’s corresponding buy-back commitments are in effect.
Buy-back programs generally extend at least over the relevant commercial contract period and may provide for penalties in the event the Company fails to perform in accordance with buy-back requirements. In some cases the Company provides guarantees in connection with the performance of its buy-back obligations.
Should the Company be unable to meet such obligations it may be subject to contractual penalties, the Company's guarantees may be drawn upon, and the Company's chances of receiving additional business from the applicable customers could be reduced or, in certain cases, eliminated.
At December 31, 2025, the Company had outstanding buy-back obligations totaling approximately $2,502 that extend through 2038.
F - 66

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 21 - COMMITMENTS AND CONTINGENT LIABILITIES (Cont.)
C. LEGAL CLAIMS
The Company and its subsidiaries are involved in legal claims arising in the ordinary course of business. The Company’s management, based on the opinion of its legal counsel, believes that any financial impact from the settlement of such claims in excess of the accruals recorded in the financial statements will not have a material adverse effect on the financial position or results of operations of the Company. As of December 31, 2025, the Company was not involved in significant legal proceedings.
D. GUARANTEES
As of December 31, 2025, the issued and outstanding guarantees amounted to approximately $5,244,714 were issued by banks and other financial institutions on behalf of the Company and certain of its subsidiaries mainly in order to secure certain contract liabilities (advances from customers), performance obligation and employee benefit plans.
E. COVENANTS
In connection with Series B, C and D Notes, commercial paper, bank credits and loans, including performance guarantees issued by banks and bank guarantees in order to secure certain advances from customers, performance obligation and employee benefit plans, the Company and certain subsidiaries are obligated to meet certain financial covenants. Such covenants include requirements for shareholders’ equity, current ratio, operating profit margin, tangible net worth, EBITDA, interest coverage ratio and total leverage.
In respect of each of the 12 month periods ending December 31, 2025 and 2024, the Company was in material compliance with its loan obligations.
F. CONTRACTUAL OBLIGATIONS
Substantially all of the Company’s purchase commitments relate to obligations under purchase orders and subcontracts entered into by the Company. These purchase orders and subcontracts are typically in standard formats proposed by the Company, with the subcontracts and purchase orders also reflecting provisions from the Company’s applicable prime contract that apply on a flow down basis to subcontractors and vendors. The terms typically included in these purchase orders and subcontracts are consistent with Uniform Commercial Code provisions in the United States for sales of goods, as well as with specific terms called for by its customers in various countries. These terms include the Company’s right to terminate the purchase order or subcontract in the event of the vendor’s or subcontractor’s default, and typically include the Company’s right to terminate the order or subcontract for the Company’s convenience (or if the Company’s prime contractor has so terminated the prime contract). Such purchase orders and subcontracts typically are not subject to variable price provisions. As of December 31, 2025 and 2024, the purchase commitments were $4,600,858 and $4,344,779, respectively. The Company's purchase commitments are expected to be realized during the years 2026 - 2031.
G. FIXED LIENS
In order to secure bank loans and bank and other financial institutions guarantees in the amount of approximately $1,855 as of December 31, 2025, certain Company entities recorded fixed liens on most of their machinery and equipment, mortgages on most of their real estate and floating charges on most of their assets.
F - 67

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 22 - SHAREHOLDERS’ EQUITY
A. SHARE CAPITAL
Ordinary shares confer upon their holders voting rights and the right to receive dividends.
On May 23, 2025, the Company issued 1,570,267 ordinary shares at a price of $375 per ordinary share, for the net proceeds of approximately $573,000 after deducting issuance expenses of approximately $15,000. All ordinary shares are listed for trading on the Nasdaq Global Select Market.
B. EQUITY INCENTIVE PLANS
2018 Equity incentive plan for executive officers:
In 2018 the Company's Board of Directors approved the 2018 Equity Incentive Plan for Executive Officers (the “2018 Equity Plan”). Under the 2018 Equity Plan, the Company may allocate options to its Israeli resident executive officers, subject to receipt of approvals as required under Israeli Law (options). Options are to be exercised using a “Net-Exercise Mechanism”, which entitles the recipients to exercise the options for an amount of shares reflecting only the benefit factor.
In 2018, the Board approved a pool of 1,000,000 Options. In February 2021, the Board approved amendments to the 2018 Equity Plan that increased the pool of options permitted to be granted under the 2018 Equity Plan to 1,500,000 options (an increase of 500,000 Options) and extended the duration of the 2018 Equity Plan by an additional 3 years.
In February 2024, the Board further increased the pool of options permitted to be granted under the 2018 Equity Plan to 2,300,000 (an increase of 800,000 Options), and made additional amendments to the 2018 Equity Plan (the Second Amendment), as reflected below.
The exercise price of an option is denominated in U.S. dollars and is the higher of:
(1) The average of the closing share price of Elbit Systems ordinary shares on the TASE, during the period of thirty (30) trading days preceding, but not including, the Date of the Board Resolution, converted into U.S. dollars by applying the average representative U.S. dollar - NIS exchange rate during such thirty (30) trading days period; or
(2) The closing share price of our ordinary shares on the TASE on the last trading date preceding the Date of the Board Resolution, converted into U.S. Dollars by applying the representative U.S. dollar - NIS exchange rate most recently published by the Bank of Israel prior to the Date of the Board Resolution.
The Date of the Board Resolution is, unless otherwise determined by the Board, the date on which the grant of the Options was approved by the Board.
The grant date of Options to a recipient is determined to be the latest of (the Grant Date):
(1) The Date of the Board Resolution;
(2) The first trading day after a period of thirty (30) days has elapsed from the date the 2018 Equity Plan is filed with the Israeli Tax Authorities; or
(3) Where applicable, the date on which the required corporate approvals have been obtained and/or other
conditions set by the Board have been met.
Unless otherwise determined by the Board, the Options under the 2018 Equity Plan vest, subject to continued employment of the participant with the Company or a subsidiary, as follows:
(1) for Options granted prior to the Second Amendment, forty percent (40%) on the second anniversary of the Grant Date, with the remaining sixty percent (60%) of the Options vesting twenty percent (20%) each on the third, fourth and fifth anniversary of the Grant Date, respectively.
(2) for Options granted on or after the Second Amendment, forty percent (40%) on the second anniversary of the Grant Date, with the remaining sixty percent (60%) of the Options vesting thirty percent (30%) each on the third and fourth anniversary of the Grant Date, respectively.
F - 68

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 22 - SHAREHOLDERS’ EQUITY
B. EQUITY INCENTIVE PLANS (Cont.)
2018 Equity incentive plan for executive officers (Cont.):
The 2018 Equity Plan includes customary terms such as adjustments for capital modifications (reverse stock split, stock split, etc.), rights offering restructuring (split, merger, etc.). Under the 2018 Equity Plan, vesting of a participant’s Options granted prior to the Second Amendment will be fully accelerated in case his or her employment is terminated by the Company without cause within a period of twelve (12) months following any change of control over the Company. The 2018 Equity Plan also allows, subject to approvals of the Compensation Committee and the Board, acceleration, continued vesting and exercisability of the Options, as well as post-termination exercise periods, in case of termination of employment without cause, or as a result of death or disability.
In November 2025, our Board approved an extension of the expiration date until July 2027 for approximately 175,000 options previously granted to executive officers under the 2018 Option Plan which were expected to expire during 2026.
In November 2025, our Board approved an additional amendment to the 2018 Equity Plan (the Third Amendment), extending the expiration date of any Options granted on or after such date to 63 months following the Grant Date.
As of December 31, 2025, there were approximately 34,000 Options available for future grants under the 2018 Equity Incentive Plan.
2022 Equity incentive plan for employees:
On January 16, 2022, our Board approved the 2022 Equity Incentive Plan for Employees for a period of seven years. Under the Employees Plan, the Company may allocate options to employees of Elbit Systems and its wholly owned subsidiaries. The options are to be exercised using a “Net-Exercise Mechanism”, which entitles the recipients to exercise the options for an amount of shares reflecting only the benefit factor. The Board approved an option pool of 1,100,000 options that may be granted under the Employees Plan. In February 2024, the Board approved an increase of the option pool to 2,050,000 (an increase of 950,000 options that may be granted under the Employees Plan).
Options to Israeli Employees (as defined under the Employees Plan) are granted under the provisions of Section 102 of the Israeli Income Tax Ordinance [New Version] of 1961, with respect to the “capital gain tax route”, as well as in compliance with the Israeli Income Tax Rules (Tax Relief in Issuance of Shares to Employees) 2003, as amended from time to time.
The exercise price of an option is denominated in U.S. dollars and is the higher of:
(1) The average of the closing share price of Elbit Systems ordinary shares on the TASE, during the period of thirty (30) trading days preceding, but not including, the Grant Date (as defined below), converted into U.S. dollars by applying the average representative U.S. dollar - NIS exchange rate during such thirty (30) trading days period; or
(2) The closing share price of our ordinary shares on the TASE on the last trading date preceding the Grant Date, converted into U.S. dollars by applying the representative U.S. dollar - NIS exchange rate most recently published by the Bank of Israel prior to the Grant Date.
The Grant Date of options to a recipient is determined to be the later of:
(1) The date on which the grant of the options to a participant was approved by the administrator of the plan; or
(2) The first trading day after a period of thirty (30) days has elapsed from the date the Employees Plan is filed with the Israeli Tax Authorities; unless otherwise determined by the Board or required under applicable law.
Granted options vest, subject to continued employment of the participant with the Company or a subsidiary, as follows: forty percent (40%) on the second anniversary of the Grant Date, with the remaining sixty percent (60%) of the Options vesting thirty percent (30%) each on the third and fourth anniversary of the Grant Date, respectively.
In November 2025, the Board approved an amendment to the Employees Plan, extending the expiration date of any options granted on or after such date to 63 months following the Grant Date.
The Employees Plan includes customary terms such as adjustments for capital modifications (reverse stock split, stock split, etc.), and rights offering restructuring (split, merger, etc.). The Employees Plan also allows, subject to approvals as set forth in the Employees Plan, acceleration, continued vesting and exercisability of the options, as well as post-termination exercise periods, in case of termination of employment without cause, or as a result of death or disability.
As of December 31, 2025, there were approximately 215,000 Options available for future grants under the Employees Plan.
F - 69

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 22 - SHAREHOLDERS’ EQUITY (Cont.)
B. EQUITY INCENTIVE PLANS (Cont.)
The fair value based cost of employee stock options is estimated at the grant date using a lattice-based option valuation model. During the years ended 2025 and 2024, the Company granted 121,200 and 1,743,650 options, respectively.
The valuation includes the following weighted average assumptions:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  |
Dividend yield | 1.94 | % |  | 1.94 | % |  |
Expected volatility | 29.74 | % |  | 27.83 | % |  |
Risk-free interest rate | 3.66 | % |  | 4.07 | % |  |
Contractual life | 4.64 years |  | 4.25 years |  |
Forfeiture rate | 10.00 | % |  | 10.00 | % |  |
Suboptimal factor | 1.25 |  |  | 1.25 |  |  |

Because lattice-based option valuation models incorporate ranges of assumptions for inputs, the averages of those ranges are disclosed. Expected volatilities are based on implied volatilities from the historical volatility of Elbit Systems Ltd.’s stock and other factors. The Company uses historical data to estimate option exercise and employee termination within the valuation model. The expected term of options granted is derived from the output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The average of the range, given above, results from certain groups of employees exhibiting different behavior. The risk-free interest rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option. The dividend yield assumption is based on historical dividends.
The following is a summary of Elbit Systems' options activity under the equity incentive plans:

| Number of options 2025 |  | Weighted average exercise price 2025 |  | Number of options 2024 |  | Weighted average exercise price 2024
Outstanding - beginning of the year | 2,863,082 |  |  | 186.90 |  |  | 1,452,821 |  |  | 163.30 |
Granted | 121,200 |  |  | 497.50 |  |  | 1,743,650 |  |  | 201.53 |
Exercised | (546,724) |  |  | 157.94 |  |  | (293,049) |  |  | 156.89 |
Forfeited | (29,140) |  |  | 196.01 |  |  | (40,340) |  |  | 187.20 |
Outstanding - end of the year | 2,408,418 |  |  | 208.99 |  |  | 2,863,082 |  |  | 186.90 |

Aggregate intrinsic value of outstanding options as of December 31, 2025, was $805,958. The aggregate intrinsic value represents the total intrinsic value (the difference between Elbit Systems’ closing stock price on the last trading day of the fourth quarter of the applicable fiscal year and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2025. This amount changes, based on the market price of the Company’s stock and the average exercise price of in-the-money options.
As of December 31, 2025, there was $56,141 of total unrecognized compensation cost related to share-based compensation arrangements granted under the Equity Incentive Plans. That cost is expected to be recognized over a weighted average period of 3 years.
As of December 31, 2025, 2,408,418 options were vested and expected to be vested at a weighted average exercise price of $208.99 per share. The weighted average remaining contractual life of exercisable options as of December 31, 2025, is approximately 3 years.
F - 70

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 22 - SHAREHOLDERS’ EQUITY (Cont.)
C. OUTSTANDING OPTIONS AND COMPENSATION EXPENSES
Compensation expenses related to the Equity Incentive Plans amounted to $26,391, $15,760 and $12,141 for the three years ended December 31, 2025, 2024 and 2023 respectively, which were recognized, as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Cost of revenues | $ | 3,960 |  |  | $ | 2,365 |  |  | $ | 1,822 |
General and administration expenses | 22,431 |  |  | 13,395 |  |  | 10,319 |
| $ | 26,391 |  |  | $ | 15,760 |  |  | $ | 12,141 |

D. COMPUTATION OF EARNINGS PER SHARE
Computation of basic and diluted net earnings per share:

| Net income to shareholders of ordinary shares Year ended December 31, 2025 | Weighted average number of shares (*) Year ended December 31, 2025 | Per share amount Year ended December 31, 2025 |  | Net income to shareholders of ordinary shares Year ended December 31, 2024 | Weighted average number of shares (*) Year ended December 31, 2024 | Per share amount Year ended December 31, 2024
Basic net earnings | $ | 534,339 |  | 45,710 |  | $ | 11.69 |  |  | $ | 321,138 |  | 44,480 |  | $ | 7.22 |
Effect of dilutive securities: |  |  |  |  |  |  |
Employee stock options | — |  | 1,208 |  | (0.30) |  | — |  | 229 |  | (0.04)
Diluted net earnings | $ | 534,339 |  | 46,918 |  | $ | 11.39 |  |  | $ | 321,138 |  | 44,709 |  | $ | 7.18 |

(*) In thousands.
F - 71

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 22 - SHAREHOLDERS’ EQUITY (Cont.)
E. 2018 PHANTOM BONUS RETENTION PLAN
In 2018, the Company’s Board of Directors approved a “Phantom Bonus Retention Plan” for Senior Managers (the “2018 Phantom Plan”).
The 2018 Phantom Plan provides for phantom bonus units which entitle the recipients to receive payment in cash of an amount reflecting the “benefit factor”, which is linked to the performance of Elbit Systems’ stock price in the TASE over the applicable periods (tranches) under the 2018 Phantom Plan. As of December 31, 2025, 678,100 phantom bonus units of the Plan were granted with a weighted average basic price per unit, as defined in the Plan, of $139.51.
The benefit earned for each year of a tranche is the difference between the basic price and the closing price of the Company’s share for that year, as defined in the 2018 Phantom Plan, not to exceed an increase of 100% in the Company's share price from the basic price of the first year of a tranche.
The Company recorded an amount of approximately $1,868, $1,101 and $10,589, during the three years ended December 31, 2025, 2024 and 2023, respectively, as compensation costs related to the phantom bonus units granted under the 2018 Phantom Plan, as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Cost of revenues | $ | 1,481 |  |  | $ | 575 |  |  | $ | 6,164 |
General and administration expenses | 281 |  |  | 460 |  |  | 2,635 |
Marketing and selling | 106 |  |  | 66 |  |  | 1,790 |
| $ | 1,868 |  |  | $ | 1,101 |  |  | $ | 10,589 |

F. DIVIDEND POLICY
Dividends declared by Elbit Systems are paid subject to statutory limitations.
F - 72

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 23 - SEGMENT DISCLOSURE, MAJOR CUSTOMER AND GEOGRAPHIC INFORMATION
A. SEGMENT DISCLOSURE:
The Company reports segment information based on a management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the Company’s reportable segments.
The Company’s President and Chief Executive Officer is our chief operating decision maker (“CODM”). The CODM assesses the performance of each operating segment using information about revenue and segment operating income that is defined as operating income generated at the segment level, excluding unallocated corporate income or expense and other operating income (expenses), net, such as sale of buildings or shares.
The Company’s CODM does not regularly review assets and liabilities information by reportable segments. Therefore, the Company does not report assets and liabilities information by segment.
The segments are encouraged to cooperate on a range of common projects performed by the Company. It is common for the reportable segments to provide their products to the same customers either through joint projects or by marketing and offering a combined and integrated solution containing a variety of capabilities, products, and technologies of the Company’s portfolio from various businesses or subsidiaries, all tailored to satisfy the customer’s or project’s specific requirements. Intersegment transactions are sales between segments and are eliminated in consolidation.
The following tables present information about the Company’s reported segment revenues and operating income for the periods indicated:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Revenues: |  |  |  |  |
Aerospace |  |  |  |  |
External customers | $ | 1,820,911 |  |  | $ | 1,780,483 |  |  | $ | 1,613,137 |
Intersegment revenue | 246,051 |  |  | 255,805 |  |  | 260,144 |
Total | $ | 2,066,962 |  |  | $ | 2,036,288 |  |  | $ | 1,873,281 |
C4I and Cyber |  |  |  |  |
External customers | $ | 866,205 |  |  | $ | 750,573 |  |  | $ | 668,414 |
Intersegment revenue | 64,668 |  |  | 49,227 |  |  | 52,702 |
Total | $ | 930,873 |  |  | $ | 799,800 |  |  | $ | 721,116 |
ISTAR and EW |  |  |  |  |
External customers | $ | 1,323,489 |  |  | $ | 1,118,628 |  |  | $ | 996,927 |
Intersegment revenue | 202,308 |  |  | 199,399 |  |  | 182,500 |
Total | $ | 1,525,797 |  |  | $ | 1,318,027 |  |  | $ | 1,179,427 |
Land |  |  |  |  |
External customers | $ | 2,250,354 |  |  | $ | 1,605,046 |  |  | $ | 1,241,023 |
Intersegment revenue | 68,390 |  |  | 74,339 |  |  | 65,174 |
Total | $ | 2,318,744 |  |  | $ | 1,679,385 |  |  | $ | 1,306,197 |
ESA |  |  |  |  |
External customers | $ | 1,677,668 |  |  | $ | 1,573,141 |  |  | $ | 1,455,243 |
Intersegment revenue | 16,427 |  |  | 12,572 |  |  | 9,695 |
Total | $ | 1,694,095 |  |  | $ | 1,585,713 |  |  | $ | 1,464,938 |
Revenues |  |  |  |  |
Total revenues (external customers and intersegment) for reportable segments | $ | 8,536,471 |  |  | $ | 7,419,213 |  |  | $ | 6,544,959 |
Less -Intersegment revenue | (597,844) |  |  | (591,342) |  |  | (570,215) |
Total consolidated revenues | $ | 7,938,627 |  |  | $ | 6,827,871 |  |  | $ | 5,974,744 |

F - 73

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 23 - SEGMENT DISCLOSURE, MAJOR CUSTOMER AND GEOGRAPHIC INFORMATION
A. SEGMENT DISCLOSURE (Cont.):

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Operating income: |  |  |  |  |
Aerospace | $ | 151,927 |  |  | $ | 149,060 |  |  | $ | 125,455 |
C4I and Cyber | 55,911 |  |  | 61,987 |  |  | 50,653 |
ISTAR and EW | 129,121 |  |  | 96,110 |  |  | 134,882 |
Land | 263,687 |  |  | 150,684 |  |  | 80,610 |
ESA | 122,757 |  |  | 56,199 |  |  | (4,687) |
Segment operating income | 723,403 |  |  | 514,040 |  |  | 386,913 |
Unallocated corporate expenses and inter-company unrealized profit | (51,979) |  |  | (24,987) |  |  | (17,805) |
Operating income | 671,424 |  |  | 489,053 |  |  | 369,108 |
Financial expenses, net (see note 25) | (138,618) |  |  | (151,125) |  |  | (137,827) |
Other income (expenses), net (see note 26) | 29,109 |  |  | 3,818 |  |  | (4,787) |
Income before income taxes | $ | 561,915 |  |  | $ | 341,746 |  |  | $ | 226,494 |

|  | Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Aerospace |  |  |  |  |  |
Revenues |  | $ | 2,066,962 |  |  | $ | 2,036,288 |  |  | $ | 1,873,281 |
Research and development, net |  | (107,600) |  |  | (104,946) |  |  | (107,883) |
Other expenses (*) |  | (1,807,435) |  |  | (1,782,282) |  |  | (1,639,943) |
Operating income |  | $ | 151,927 |  |  | $ | 149,060 |  |  | $ | 125,455 |
C4I and Cyber |  |  |  |  |  |
Revenues |  | $ | 930,873 |  |  | $ | 799,800 |  |  | $ | 721,116 |
Research and development, net |  | (71,073) |  |  | (70,286) |  |  | (72,663) |
Other expenses (*) |  | (803,889) |  |  | (667,527) |  |  | (597,800) |
Operating income |  | $ | 55,911 |  |  | $ | 61,987 |  |  | $ | 50,653 |
ISTAR and EW |  |  |  |  |  |
Revenues |  | $ | 1,525,797 |  |  | $ | 1,318,027 |  |  | $ | 1,179,427 |
Research and development, net |  | (103,405) |  |  | (100,205) |  |  | (87,112) |
Other expenses (*) |  | (1,293,271) |  |  | (1,121,712) |  |  | (957,433) |
Operating income |  | $ | 129,121 |  |  | $ | 96,110 |  |  | $ | 134,882 |
Land |  |  |  |  |  |
Revenues |  | $ | 2,318,744 |  |  | $ | 1,679,385 |  |  | $ | 1,306,197 |
Research and development, net |  | (165,100) |  |  | (133,552) |  |  | (85,604) |
Other expenses (*) |  | (1,889,957) |  |  | (1,395,149) |  |  | (1,139,983) |
Operating income |  | $ | 263,687 |  |  | $ | 150,684 |  |  | $ | 80,610 |
ESA |  |  |  |  |  |
Revenues |  | $ | 1,694,095 |  |  | $ | 1,585,713 |  |  | $ | 1,464,938 |
Research and development, net |  | (64,595) |  |  | (54,685) |  |  | (68,779) |
Other expenses (*) |  | (1,506,743) |  |  | (1,474,829) |  |  | (1,400,846) |
Operating income |  | $ | 122,757 |  |  | $ | 56,199 |  |  | $ | (4,687) |
Segment operating income |  | $ | 723,403 |  |  | $ | 514,040 |  |  | $ | 386,913 |

(*) Other expenses includes expenses of cost of revenues, marketing and selling and general and administrative.
F - 74

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 23 - SEGMENT DISCLOSURE, MAJOR CUSTOMER AND GEOGRAPHIC INFORMATION
A. SEGMENT DISCLOSURE (Cont.):

Depreciation and amortization by segment: |  |  |  |  |
| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Aerospace | $ | 38,211 |  |  | $ | 34,958 |  |  | $ | 36,284 |
C4I and Cyber | 8,931 |  |  | 9,440 |  |  | 12,551 |
ISTAR and EW | 38,314 |  |  | 32,978 |  |  | 29,001 |
Land | 39,437 |  |  | 34,813 |  |  | 34,747 |
ESA | 44,351 |  |  | 44,307 |  |  | 50,526 |
Unallocated corporate expenses | 2,190 |  |  | 1,895 |  |  | 1,690 |
Total depreciation and amortization | $ | 171,434 |  |  | $ | 158,391 |  |  | $ | 164,799 |

Revenue are attributed to geographic areas based on the location of the end customers as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
North America | $ | 1,659,290 |  |  | $ | 1,520,338 |  |  | $ | 1,417,742 |
Asia-Pacific | 1,243,687 |  |  | 1,132,701 |  |  | 1,263,771 |
Israel | 2,556,388 |  |  | 1,987,974 |  |  | 1,167,228 |
Europe | 2,139,541 |  |  | 1,820,912 |  |  | 1,776,412 |
Latin America | 99,033 |  |  | 150,013 |  |  | 120,700 |
Other | 240,688 |  |  | 215,933 |  |  | 228,891 |
| $ | 7,938,627 |  |  | $ | 6,827,871 |  |  | $ | 5,974,744 |

B. MAJOR CUSTOMER DATA AS A PERCENTAGE OF TOTAL REVENUES:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
IMOD | 28% |  | 25% |  | 16%
U.S. Government | 15% |  | 15% |  | 17%

C. LONG-LIVED ASSETS BY GEOGRAPHIC AREAS:
The Company's long-lived assets for the year ended December 31, 2025, 2024 and 2023, includes property plant and equipment and operating lease right of use assets, as follows:

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Israel | $ | 1,502,694 |  |  | $ | 1,396,297 |  |  | $ | 1,098,074 |
U.S. | 285,771 |  |  | 298,984 |  |  | 307,239 |
Other | 109,275 |  |  | 108,742 |  |  | 108,521 |
| $ | 1,897,740 |  |  | $ | 1,804,023 |  |  | $ | 1,513,834 |

F - 75

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 24 - RESEARCH AND DEVELOPMENT, NET

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Total expenses | $ | 599,567 |  |  | $ | 544,140 |  |  | $ | 502,654 |
Less - grants and participation | (82,425) |  |  | (77,738) |  |  | (78,234) |
| $ | 517,142 |  |  | $ | 466,402 |  |  | $ | 424,420 |

Note 25 - FINANCIAL EXPENSES, NET

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Expenses: |  |  |  |  |
Interest on short-term bank credit and loans | $ | (22,476) |  |  | $ | (59,211) |  |  | $ | (58,253) |
Factoring expenses | (27,925) |  |  | (42,654) |  |  | (17,474) |
Interest on Commercial Securities Series A and B | (13,100) |  |  | (21,009) |  |  | (3,382) |
Guarantees expenses | (20,510) |  |  | (17,613) |  |  | (22,339) |
Interest on Series B, C and D Notes, net | (7,362) |  |  | (8,864) |  |  | (9,537) |
Interest on long-term bank debt | (711) |  |  | (928) |  |  | (8,677) |
Gain (loss) from revaluation of lease liabilities and exchange rate differences, net | (18,473) |  |  | 594 |  |  | (11,962) |
Gain (loss) from derivative financial instruments, net | (10,388) |  |  | 4,954 |  |  | (3,906) |
Other | (25,500) |  |  | (13,035) |  |  | (8,374) |
| (146,445) |  |  | (157,766) |  |  | (143,904) |
Income: |  |  |  |  |
Interest on cash, cash equivalents and bank deposits | 6,301 |  |  | 5,121 |  |  | 2,359 |
Other | 1,526 |  |  | 1,520 |  |  | 3,718 |
| $ | (138,618) |  |  | $ | (151,125) |  |  | $ | (137,827) |

F - 76

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Note 26 - OTHER INCOME (EXPENSES), NET

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Pension non-service cost | $ | 15,757 |  |  | $ | 20,906 |  |  | $ | (6,596) |
Revaluation of investments (1) | (7,301) |  |  | (19,536) |  |  | (2,963) |
Gain (loss) on sale of investments | 11,790 |  |  | 2,043 |  |  | — |
Gain on termination of pension (2) | 10,219 |  |  | — |  |  | — |
Insurance compensation | — |  |  | — |  |  | 5,200 |
Other | (1,356) |  |  | 405 |  |  | (428) |
| $ | 29,109 |  |  | $ | 3,818 |  |  | $ | (4,787) |

(1) During 2025, 2024 and 2023, the Company recognized gains and losses as a result of revaluation of its investments accounted for under the fair value method (see Note 6C(2)).
(2) Upon settlement of ESA pension liability, the Company recognized a net non-operating gain of $10,200 offset by related settlement expenses (See Note 17).
Note 27 - RELATED PARTIES' TRANSACTIONS AND BALANCES

| Year ended December 31, 2025 |  | Year ended December 31, 2024 |  | Year ended December 31, 2023
Income - |  |  |  |  |
Sales to related-party companies (*) | $ | 155,126 |  |  | $ | 151,708 |  |  | $ | 147,807 |
Interest income | $ | 75 |  |  | $ | 41 |  |  | $ | — |
Cost and expenses - |  |  |  |  |
Supplies from related parties (**) | $ | 39,707 |  |  | $ | 34,564 |  |  | $ | 27,099 |

Balances: | December 31, 2025 |  | December 31, 2024
Trade receivables and other receivables (*) | $ | 183,649 |  |  | $ | 138,529 |
Trade payables and advances (**) | $ | 48,556 |  |  | $ | 55,746 |
Loans to related parties (***) | $ | 1,541 |  |  | $ | 1,500 |

The sales to the Company’s related parties in respect of U.S. government defense contracts are made on the basis of cost.
(*) A significant portion of the sales and balances include sales of helmet mounted cueing systems purchased from the Company by a 50%-owned affiliate of ESA.
(**) Includes mainly electro-optics components and sensors, purchased by the Company from a 50%-owned Israeli company.
(***) Includes mainly $ 1,500 loan to a 49%-owned affiliate of a subsidiary, bearing a 5% annual interest rate. The loan was granted for ongoing operational purposes, in addition to a $ 3,000 guarantee.
¬ ¬ ¬
F - 77

ELBIT SYSTEMS LTD. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars (In thousands, except per share data)
Schedule I – Valuation and Qualifying Accounts
(In thousands of U.S. dollars)

|  | Column A |  | Column B |  | Column C |  | Column D |  | Column E
Description |  | Balance at b eginning of period |  | Additions (charged to costs and expenses) |  | Deductions (write-offs and actual losses incurred) |  | Additions r esulting from a cquisitions |  | Balance at e nd of period
Year ended December 31, 2025: |  |  |  |  |  |  |  |  |  |
Provisions for Losses on Long-Term Contracts (*) |  | 110,848 |  | 133,076 |  | 26,764 |  | — |  | 217,160
Provisions for Claims and Potential Contractual Penalties and Others |  | 6,045 |  | 983 |  | 2,021 |  | — |  | 5,007
Credit risk (**) |  | 14,006 |  | 796 |  | 618 |  | — |  | 14,184
Valuation Allowance on Deferred Taxes |  | 77,913 |  | — |  |  | 30,877 |  | — |  | 47,036
Year ended December 31, 2024: |  |  |  |  |  |  |  |  |  |
Provisions for Losses on Long-Term Contracts (*) |  | 95,450 |  | 34,975 |  | 19,577 |  | — |  | 110,848
Provisions for Claims and Potential Contractual Penalties and Others |  | 3,661 |  | 2,946 |  | 562 |  | — |  | 6,045
Credit risk (**) |  | 9,172 |  | 5,701 |  | 867 |  | — |  | 14,006
Valuation Allowance on Deferred Taxes |  | 165,199 |  | — |  | 87,286 |  | — |  | 77,913
Year ended December 31, 2023: |  |  |  |  |  |  |  |  |  |
Provisions for Losses on Long-Term Contracts (*) |  | 80,962 |  | 38,560 |  | 24,072 |  | — |  | 95,450
Provisions for Claims and Potential Contractual Penalties and Others |  | 2,557 |  | 1,244 |  | 140 |  | — |  | 3,661
Credit risk (**) |  | 9,162 |  | 674 |  | 664 |  | — |  | 9,172
Valuation Allowance on Deferred Taxes |  | 164,906 |  | 293 |  | — |  | — |  | 165,199

(*) As of December 31, 2025, 2024 and 2023 an amount of $30,861, $41,032 and $34,820, respectively, is presented as a deduction from inventories. As of December 31, 2025, 2024 and 2023 an amount of $186,299, $69,816 and $60,630, respectively, is presented as part of other payables and accrued expenses.
(**) As of December 31, 2025, an amount of $7,473 and $6,711 is related to corporate customers and government customers, respectively.
S-1