MIRA INFORM
REPORT
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Report Date : |
26.02.2011 |
IDENTIFICATION DETAILS
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Correct Name : |
ISRAEL AEROPSPACE INDUSTRIES LTD. |
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Formerly Known As : |
ISRAEL AIRCRAFT INDUSTRIES LTD |
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Registered Office : |
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Country : |
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Financials (as on) : |
30.09.2010 |
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Date of Incorporation : |
27.02.1966 |
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Legal Form : |
Government – Owned Company |
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Line of Business : |
Development, Manufacture, Overhaul, Repair, Maintenance, Export and
Marketing of Civilian and Military Aircrafts, Medium-Sized Jets and Aerospace
Equipment, Electronic and Advanced Technology Systems, Weapon and Armament
Systems, Law Enforcement, Training And Simulation Systems, Etc. |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Status : |
Good |
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Payment
Behaviour : |
No complaints |
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Litigation : |
Clear |
NOTES :
Any query related to this report can be made
on e-mail : infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – June 30, 2010
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Country Name |
Previous Rating (01.04.2010) |
Current Rating (30.06.2010) |
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A2 |
A2 |
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Risk Category |
ECGC
Classification |
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Insignificant |
A1 |
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Low |
A2 |
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Moderate |
B1 |
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High |
B2 |
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Very High |
C1 |
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Restricted |
C2 |
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Off-credit |
D |
Company name and address
ISRAEL AEROPSPACE
INDUSTRIES LTD.
(Known in short as IAI)
Telephone 972 3 935 31 11
Fax 972 3 935 41 62
LOD 70100
HISTORY & LEGAL FORMATION
A government-owned
company, incorporated as per file No. 52-002719-4 on the 27.02.1966 (incorporation
formation as a limited shares company), taking over activities originally
founded in
Originally
registered under the name ISRAEL AIRCRAFT INDUSTRIES LTD., which changed to the
present name on the 06.11.2006.
SHARE CAPITAL
Authorized share
capital
SHAREHOLDERS
Subject is fully
owned by the State of Israel, through the Ministry of Defense.
DIRECTORS
1. Yair Shamir, Chairman,
2. Ms. Hava Shechter,
3. Amram Mitzna,
4. Ofer Dekel,
5. Ms. Aliza Sharon,
6. Reuven Gerstl,
7. Ms. Naomi Steinfeld,
8. Ran (Peker) Ronen,
9. Ms. Ofra Fridman,
10. Mishael Vaknin.
GENERAL MANAGER
Itzhak Nissan.
BUSINESS
Engaged in the development, manufacture, overhaul, repair, maintenance,
export and marketing of civilian and military aircrafts, medium-sized jets and
aerospace equipment, electronic and advanced technology systems, weapon and
armament systems, law enforcement, training and simulation systems, etc.
In 2009 some 78% of sales were to the military/ defense sectors (were
61% in 2008 and 59% in 2007), the rest to the civilian sector.
Activities are through several operating Groups:
BEDEK Aviation
Group: one-stop shop for commercial aircraft conversion into cargo airplanes
(among customers: UPS), as well as maintenance services for aviation companies,
and the Israeli Air Force.
Civilian Aircraft
Group: develop, engineer and manufacture of mid-size business jets and perform
works for major international OEMs, including aero structure assemblies and
systems, etc. The Group has a strategic cooperation with GULFSTREAM of the
Military Aircraft Group: Operating in
front of the military clients in Israel and all over the world and include development,
manufacturing and providing of manned and unmanned Aerial Vehicles (UAV)
solutions. Also deal in the development of avionic systems
and data channels for the upgrading of combat aircrafts, training aircrafts and
helicopters, delivering maintenance and logistic services for world air forces.
As of January 2007, also manufacturing wires for aircrafts and helicopters
and operating as a main subcontractor in assemblies manufacturing.
This Group also upgrades military aircrafts and manufactures unique
aviation parts, for instance for LOCKHEED MARTIN's F-16 aircraft. Among main
clients is the Israeli Air Force.
The Group includes the following Divisions: MLT Div, Magnet Div. and the
Lahav Div.
Missile Systems
and Aerospace Group: development, manufacturing and marketing of
various sorts of missiles (including the "Arrow" Anti-Tactical
Ballistic Missiles and the "Barak" naval anti-ballistic missiles
system), as well as satellites, including communication satellites ("Amos"
series) and observation satellites ("Ofeq" and "Eros").
The Group includes the following Divisions: MLM Div., MBT Missiles Div.,
MBT Space Div., MBT Technologies Div. and TMM Div.
ELTA SYSTEMS LTD., subject's largest
wholly-owned subsidiary, developers, manufacturers, exporters and marketers of
defense electronic systems, specializing in radar systems, electronic warfare
and communication, information systems, homeland security, etc.
Local suppliers (among many others): TEKTEAM, TILTAN SYSTEMS
ENGINEERING, ELBE LEADING TECHNOLOGICAL SOLUTIONS, GRAND ENTERPRISES, NEXTEC
TECHNOLOGIES, SHAFIR PROD
Operating from a
large complex of plots and buildings in the Ben Gurion Airport Compound
(2,000,000 sq. meters, long-term lease from the State), Lod. Also operating
from plants in the Industrial Zones Yehud (MBT & TMM Divs.), Beer Yaakov
(MLM Div.), Beer Sheva (RAMTA Div.), Ashdod (ELTA),
Subject also
leases properties abroad.
Having some 16,757
employees (including subsidiaries) as of early 2010. Had 17,209 employees at
the end of 2008. Subject has been going through a retirement plan (over 1,600
employees retired in 2010).
MEANS
In May 2007
subject published prospects offering its bonds for the public via the Tel Aviv
Stock Exchange, raising a sum of approximately
In November
subject raised
In May 2009 it was
reported that subject is intending to publish a prospect for an IPO in the
NASDAQ with a value of US$ 4 billion – US$ 5 billion (did not materialize so
far).
There are 4 charges
for unlimited amounts registered on company’s assets, in favor of a local and a
foreign bank and local insurance companies.
Balance Sheet
Consolidated B/S shows:
US$
(millions)
30.09.2010 31.12.2009
ASSETS
Current assets
Cash
and equivalents 848 757
Short
term financial assets 763 520
Customers 353 405
Accounts
receivable for work-in-process, net 630 597
Other
debtors and pre-paid expenses 297 207
Inventory
and work-in-process, net 409 495
3,300 2,981
Non-current assets
Fixed assets,
net 586 577
Intangible
assets, net 119 105
Other
non-current assets 289 316
994 998
4,294 3,979
====== ======
LIABILITIES
Current
liabilities 2,957 2,578
Non-current liabilities 575 685
Equity 762 716
4,294 3,979
====== ======
ANNUAL SALES
Consolidated
Statement of Income
Year
ended 31.12
US$
(millions)
2007 2008 2009
Revenues, net 3,299 3,585 2,881
Gross profit 462 509 436
Operating income 133 137 75
Profit before tax 145 109 84
Net income 118 91 61
====== ====== ======
Consolidated revenues for the first 9 months of
2010 were US$ 2,299 million, making a gross profit of US$ 331 million, an
operating profit of US$ 56 million, and a net profit of US$ 80 million.
OTHER COMPANIES
IAI NORTH AMERICA
INC., 100%,
IAI ASIA PTE LTD.,
100%,
ELTA SYSTEMS LTD.,
100%, whose subsidiaries include: DESARROLLO DE TECNOLOGIAS Y SISTEMAS LIMITADA
(50.01%, Chile), GAL – EL (MMIC) PARTERSHIP (50%), DECOLINK WIRELESS LTD. (30%),
ELBATECH LTD. (50%), D.T.S. LTDA (50%, Brazil), OPTIGO SYSTEMS LTD. (50%), 4D
SECURITY SOLUTIONS INC. (50%, USA), HBL ELTA AVIONICS SYSTEMS PVT. LTD. (26%,
India), LARDOSA INVESTMENT B.V. (100%, Holland) and 30% in ELISRA ELECTRONICS
SYSTEMS LTD., developers, manufactures, marketers and exporters equipment and
systems for air, naval and ground military forces, focusing on Electronic
warfare (EW), Electronic intelligence (Elint) - airborne radar warning,
shipborne self-defense systems, etc. and Microwave components. Owns (100%):
TADIRAN ELECTRONIC SYSTEMS LTD., integrated IT based C4I and EW solutions, and
TADIRAN SPECTRALINK LTD., wireless communications products for manned and
unmanned aircraft, guided weapons and space platforms.
SAFEX IMPORT AND
EXPORT GMBH, 100%,
EAT - EUROPEAN
ADVANCED TECHNOLOGIES S.A, 100%,
MARDAN PTY LTD.,
100%,
NOAMAR AIR
HANDLING HOLDCO N.V, 40%,
PIONEER UAV INC. ("PUI"), 50%, USA,
IMAGE SAT
INTERNATIONAL N.V. (ISI), 46.4%, Dutch
BECONTREE
AVIATION
ASTRA JET, 100%, USA,
EMPIRE AERO CENTER INC., 100%, USA,
STARK AVIATION INC., 100%, USA,
ISRAEL AIRCRAFT SERVICES INC, 100%, USA,
BIFC MANAGEMENT
LTD., 50%,
PSF CONVERSIONS
LLP, 50%,
ISRAELI UAV
PARTNERSHIP, 50%,
TILTAN SYSTEMS
ENGINEERING LTD., 35%,
BANKERS
Bank Hapoalim
Ltd., Central Branch (No. 600), Tel Aviv.
Bank Leumi Le’Israel Ltd., Central Branch
(No. 800), Tel Aviv.
Israel Discount Bank Ltd., Tel Aviv Main Branch (No. 010), Tel Aviv.
Also working with
other local branches of the above banks.
CHARACTER AND REPUTATION
There have been legal claims against subsidiary (46%)
IMAGESAT INTERNATIONAL (ISI) and the other shareholder ELBIT (14%) by ISI
minority shareholders, regarding performance and operation of the company
(satellite services) during the recent years in which ISI turned down contracts
due to political motives. After one lawsuit was turned down in July by American
court, couple of other lawsuits followed later which claims damages of hundreds
US$ millions. Subject totally rejects the allegations.
In December 2007, subject reported that American company AVIATION
TECHNOLOGY GROUP INC (ATG), in which subject also holds 12.2%, encountered
financial difficulties. Subject has agreements with ATG, including developing
for ATG training jets, and its investments may be written-off.
Apart from the above, nothing unfavorable learned.
In May 2001
subject sold its 50% subsidiary GALAXY AEROSPACE LTD., manufacturers and
marketers of executive jets “Galaxy”, to GENERAL DYNAMICS (GD) subsidiary
GULFSTREAM, in consideration of US$ 365 million, and further US$ 315 million, according
to GALAXY performance till 2006.
The cooperation between subject and GULFSTREAM intensified and in mid
2008 subject commemorated the delivery of 200 executive airplanes (G-200) in
total value of US$ 4 billion.
In June 2002, subject and KOOR INDUSTRIES signed an agreement according
to which subject’s subsidiary ELTA will acquire 30% of KOOR’s owned ELISRA ELECTRONIC SYSTEMS LTD., based
on a company value of US$ 330 million (with an option to purchase a further 8%
of ELISRA within the next 2 years).
The deal was
severely criticized by the State Comptroller Office, which set "too
high" value to the acquired company. That requires subject to make a
deduction in ELISRA's share values in its books (
Major deals reported in 2005: March 2005 - won a
US$ 500 million tender to provide aviation parts to BOEING. April 2005 -
together with ELBIT SYSTEMS, won a US$ 183 million contract with the Turkish
army.
Subject's main
contracts during 2006 were with the R & D agency of the Indian Ministry of
Defense (D.R.D.D.) for the development of naval missile "Barak 8", in
volume of over US$ 300 million. Other contracts were the supply UAV's to
In September 2006 subject, the European Concern
EIDS and the French purchasing agency of the Ministry of Defense completed the
senior flight of the UAV called "Eagle". US$ 40 million were invested
in the "Eagle" project.
In January 2007
subject and Japanese company MITSU & CO. signed an agreement to establish a
joint venture, to be called M&B CONVERSIONS LTD., for converting Boeing
passenger airplanes type 767-300 into a cargo airplane. The cargo airplanes
market has been growing fast in the recent years and subject operates via its
BEDEK Division in this market.
In July 2007
subject signed a long term cooperation agreement with German RHEINMETAL, for
the development of advanced intelligence combat systems.
In May 2008,
subject signed of an agreement with Indian TATA Concern for cooperation,
designed to develop and manufacture defense and aviation equipment and systems.
A joint new company was established called TASL, subject’s share 26%, and
subject’s Board approved initial investment of up to US$ 50 million. TASL would
be the platform for vast operation with Indian government. In late 2010 it was
reported that TATA also entered with subject (via subsidiary ELTA) in another
joint venture for radar manufacturing.
Indeed, in March
2009 subject announced a huge deal with the Indian Army in value of US$ 1.4
billion, where subject will develop ground and naval defensive missile systems.
There were recent
reports on other major deals with the Indian government worth over US$ 2
billion, including intelligence aircrafts, missiles, UAVs and radar systems (on
the background of one large deal were reports on Indian authorities
investigation of suspicions related to bribe by former Indian Defense
Minister).
In June 2008, subject signed an agreement with SYNERGY GROUP CORP., a
leading corporate in South America in the aviation, energy and shipyard fields,
to establish a joint company, which will develop a wide range of products in
the security and aviation areas, as well as supply services for commercial
airlines.
In October 2008 subject announce a joint development with GULFSTREAM of a
new executive jet with advanced capabilities.
Among deals reported in recent years:
An overall service
agreement with local Ministry of Defense, for period of 9.5 years, designed to
serve the Air Force heavy transportation aircrafts, a deal volume may reach US$
170 million; A US$ 100 million 10 years contract for upgrade
and maintenance for KENYA AIRWAYS jet engines (by BEDEK Div.); Aircraft conversion
into cargo airplanes for AIR TRANSPORT SERVICE GROUP subsidiary CARGO in volume
of US$ 100 million; Upgrade F16 jets for foreign armies (Morocco,
Poland & Romania) in value of US$ 100 million; In the framework of
subject’s cooperation with Japanese MITSUI, initial US$ 15 million supply contract
signed; Subsidiary ELTA won jointly with ELBIT SYSTEMS EL-OP a US$ 141 million
contract (of which US$ 54 million for ELTA) to supply combined airborne imagery
intelligence systems to the Turkish Air Force; Sale of fuelling jets to
Colombian Army for US$ 60 million;
In May 2010
subject sold EUROCOM Group all its shares (20.5%) in SPACE COMMUNICATION LTD.
(SPACECOM), marketers of satellite services from the Israeli Satellite “AMOS”
(manufactured by subject), for NIS 167.325 million.
In summer 2010 it was
reported that subsidiary ELTA will sell radar systems to two armies in Asia in
total volume of US$ 33 million, air defense radars to a client in Asia for US$
57 million and communication systems to foreign clients in volume of US$ 55
million. Another major deal was reported with
In recent years subject signed and delivered several major contracts for supply
of UAVs to foreign armies. In 2008 it had a contract jointly with Canadian
partner MDA for supply of UAVs to Canadian Army in value of US$ 80 million
(with potential for extension); In mid 2010 subject signed a continuous deal
with the Australian Army in volume if tens of US$ millions (also with MDA). The
latest large deal is the sale of UAVs systems to the Russian company OPK
OBORNPROM in volume of US$ 400 million (in 3 years). Another report in mid 2010
mentions a coming deal to supply Brazilian forces with 12 UAVs (Brazilian
Police already acquired couple of UAVs in the past), designed towards the 2014
World Cup games and 2016 Olympic Games in the country, in a deal which could
reach US$ 400 million.
In January
The government decision RAFAEL has been preferred over the bids of the two
other leading players in Israel’s military industry, ELBIT SYSTEMS LTD. and
subject, who wanted (and still attempting to convince the government) to take
over IMI.
Subject, jointly with 3 other Israeli companies, was ranked among the
world's top 100 defense and military companies by the American weekly
"Defense News". In the 2008 list published, subject was ranked 33rd,
being the highest ranked among the Israeli companies.
SUMMARY
Good for trade engagements
and for all credit sums.
Note: The telephone numbers you gave belong to subject’s Missile Systems and
Aerospace Group.
FOREIGN EXCHANGE RATES
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Currency |
Unit
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Indian Rupees |
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US Dollar |
1 |
Rs.45.37 |
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1 |
Rs.73.24 |
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Euro |
1 |
Rs.62.68 |
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest capability
for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NB |
New Company |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this report.
The assessed factors and their relative weights (as indicated through %) are as
follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)
This report is issued at your request without any risk
and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its
officials.