United States securities and exchange commission logo
February 14, 2023
Kobi Kagan
Chief Financial Officer
ELBIT SYSTEMS LTD
Advanced Technology Center
PO Box 539
Haifa 3100401, Israel
Re: ELBIT SYSTEMS LTD
Form 20-F for the
Year Ended December 31, 2021
Response Letter
dated January 19, 2023
File No. 000-28998
Dear Kobi Kagan:
We have reviewed your January 19, 2023 response to our comment
letter and have the
following comments. In some of our comments, we may ask you to provide
us with information
so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your response to these comments, we may have
additional
comments. Unless we note otherwise, our references to prior comments are
to comments in our
December 13, 2022 letter.
Form 20-F for the Year Ended December 31, 2021
Note 23. Major Customers and Geographic Information, page F-73
1. We note from your
response to our prior comments that you have joint BU projects which
require cooperation and
sharing of resources among business units (BUs). Please tell us
how you manage joint BU
projects, including how you determine the following:
The BU that will
bid on a specific project;
The BU that will
act as the lead on a project;
The additional BUs
which will work on a specific project; and
Who is accountable
for the project, including whether it is a GM for a particular BU,
a project manager,
or other.
Also, please tell us
the percentage of projects that are run as joint BU projects versus those
Kobi Kagan
FirstName LastNameKobi
ELBIT SYSTEMS LTD Kagan
Comapany14,
February NameELBIT
2023 SYSTEMS LTD
February
Page 2 14, 2023 Page 2
FirstName LastName
performed within a single BU. Finally, tell us if any inter-BU sales
information is
provided to the CODM and, if so, tell us how this information is
provided and how he
uses that information.
2. We note from your response at the bottom of page 2 of your January 19,
2023 letter, that
Managerial Financial Information is neither suitable for resource
allocation nor useful in
analyzing long-term trends. Please provide further detail as to why
you believe this
information is not being used to allocate resources or assess
performance as required in
ASC 280-10-50-1(b). As part of your response, please address the
following:
Please describe the preparation of Managerial Financial
Information in greater detail,
including the duplication of elements and managerial
credits/debits affecting
revenues and operating income. Also, tell us if this information
is prepared on the
same basis as your BU operating budgets, which represent the
aggregation of
operating budgets of entities under the BU s direct management
with the addition of
certain financial information , as outlined in the first
paragraph on page 6 of your
January 19, 2023 letter;
Please provide us an example of the Managerial Financial
Information;
Describe the type of financial information related to projects or
resources that is
included in the financial information for more than one BU;
In your December 12, 2022 letter, you state that BU operating
results are not used
for resource allocation since it frequently contains
duplication of elements
performed by other BUs. Please explain the nature of the
elements which are
duplicated and tell us why this limits the usefulness of this
information ;
Please clearly explain to us the meaning of the statement on page
2 of your January
19, 2023 letter that the CODM utilizes the Managerial Financial
Information for
high-level tracking of BU ongoing performance to ensure that
managerial budget
objectives are met ;
Tell us why the CODM reviews the BU information to assign
strategic Group-level
guidance and business and operational emphasis for the
performance of the Group
as a whole. As part of this, tell us why he uses this
information instead of
consolidated information;
Please tell us how often the CODM makes changes to the structure
of the BUs and
how significant these changes are;
You respond in paragraph 2 on page 4 of your January 19, 2023
letter that the GM is
responsible for meeting Managerial Financial Information
objectives. Please explain
to us the nature of these objectives and tell us why they are the
responsibility of the
GM; and
Tell us the nature of the costs included in Managerial Financial
Information that the
GM of each BU is responsible for and the costs the GM is not
responsible for. Also,
provide us an estimate of the % of costs incurred by the BU that
the GM is
responsible for managing.
Kobi Kagan
ELBIT SYSTEMS LTD
February 14, 2023
Page 3
3. Please provide us more information regarding the parallel budgeting
process whereby
each BU aggregates the operating budgets of the entities under its
direct management,
including the nature of certain financial information additions
and why these are
important. Tell us why there is an additional process to develop
managerial budgets which
is performed in addition to the consolidated budgeting process. Please
explain to us how
this process is similar to or different from the consolidated
budgeting process and why it is
useful to running your business. Finally, please explain how the
actual amounts are
reviewed against the budgets and identify for us the individual/level
that performs this
review and the nature of the decisions that are made based on the
Company versus BU
performance compared to the budget.
4. We note from your response on page 14 of your December 12, 2022
letter, that resource
allocation is commonly determined on a joint project or on a
Group-wide basis rather than
solely on a BU basis. Please clearly explain to us the meaning of
this statement and
describe in detail the nature of the resources that are allocated and
how this allocation is
performed.
5. We note your response on page 4 of your January 19, 2023 letter that
the compensation
provided to GMs generally consists of three main elements, and is to a
large extent
dependent on Company-wide aspects. However, we also note that GM cash
bonuses may
be based on metrics based on Managerial Financial information. Please
tell us if any of
the GMs compensation is based on BU financial performance, and if
so, tell us the nature
of the financial information used to assess that performance and
explain why their
performance is based on that financial information.
You may contact Claire Erlanger at (202) 551-3301 or Kevin Woody at
(202) 551-3629 if
you have questions regarding comments on the financial statements and related
matters.
FirstName LastNameKobi Kagan Sincerely,
Comapany NameELBIT SYSTEMS LTD
Division of
Corporation Finance
February 14, 2023 Page 3 Office of
Manufacturing
FirstName LastName