SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ______________ FORM 20-F ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2006 Commission File No. 0-28998 ______________ ELBIT SYSTEMS LTD. (Exact Name of Registrant as Specified in its Charter and Translation of Registrant's Name into English) Israel (Jurisdiction of incorporation or organization) Advanced Technology Center, Haifa 31053, Israel (Address of principal executive offices) ______________ Securities registered or to be registered pursuant to Section 12(b) of the Act: Ordinary Shares, nominal value 1.0 New Israeli Shekels per share (Title of Class) Securities registered or to be registered pursuant to Section 12(g) of the Act: Not Applicable Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: 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: [40,966,624] ordinary shares Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes _ No 2006 Form 20-F - June 2007 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 _ 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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. Large accelerated filer Accelerated filer _ Non-accelerated filer Indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18 _ 2006 Form 20-F - __ June 2007 ] Table of Contents Page International Disclosures Standards 1 Item 1. Identity of Directors, Senior Management and Advisors ........................................................ 1 Item 2. Offer Statistics and Expected Timetable ................................................................................ 1 Item 3. Key Information.................................................................................................................... 1 Item 4. Information on the Company ............................................................................................. 13 Item 4A. Unresolved Staff Comments .............................................................................................. 77 Item 5. Operating Financial Review and Prospects – Management’s Discussion and Analysis ........ 78 Item 6. Directors, Senior Management and Employees................................................................. 100 Item 7. Major Shareholders and Related Party Transactions. ........................................................ 111 Item 8. Financial Information....................................................................................................... 119 Item 9. Offer and Listing. ............................................................................................................ 120 Item 10. Additional Information. ................................................................................................... 122 Item 11. Quantitative and Qualitative Disclosure of Market Risk. .................................................. 133 Item 12. Description of Securities Other than Equity Securities. ..................................................... 133 Item 13. Defaults, Dividend Arrearages and Delinquencies. ........................................................... 133 Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds. ................ 134 Item 15T. Controls and Procedures .................................................................................................. 134 Item 16. ... ……………………………………………………………………………………………135 Item 17. Financial Statements. ....................................................................................................... 136 Item 18. Financial Statements. ....................................................................................................... 136 Item 19. Exhibits. .......................................................................................................................... 137 (i) 2006 Form 20-F - June 2007 PART I International Disclosures Standards Elbit Systems Ltd.’s (Elbit Systems) consolidated financial statements are prepared based upon United States Generally Accepted Accounting Principles (U.S. GAAP). Unless otherwise indicated, all financial information contained in this Form 20-F is in U.S. dollars. References in this Form 20-F to the “Group” are to Elbit Systems and our subsidiaries. Item 1. Identity of Directors, Senior Management and Advisors Information not required in Annual Report on Form 20-F. Item 2. Offer Statistics and Expected Timetable Information not required in Annual Report on Form 20-F. Item 3. Key Information Selected Financial Data The following selected consolidated financial data of Elbit Systems for the years ended December 31, 2002, 2003, 2004, 2005 and 2006 are derived from our audited consolidated financial statements of which the financial statements as of December 31, 2005 and 2006 and for each of the years ended December 31, 2004, 2005 and 2006, appear later in this Form 20-F. The audited financial statements have been prepared in accordance with U.S. GAAP. 1 2006 Form 20-F - June 2007 Year Ended December 31 2002 2003 2004* 2005 2006 (U.S. dollars in millions except for share and per share amounts) Income Statement Data: Revenues $827 $898 $940 $1,070 $1,523 Cost of revenues 605 673 690 787 1,150 Restructuring Expenses - - - 3 - Gross profit 222 225 250 280 373 Research and development expenses, net 57 55 67 72 92 Marketing, selling, general and administrative expenses, net 107 116 118 133 189 In-process research and development write-off - - - 8 - Operating income 58 54 65 67 92 Finance income (expense) (4) (4) (6) (11) (21) Other income (expenses), net 0 0 1 (5) 2 Income before taxes on income 54 50 60 51 72 Taxes on income 9 11 15 16 21 Equity in net earnings (loss) of affiliated companies and partnership - 7 7 (2)** 15 Net income $45 $46 $52 $33 $72 Earnings per share: Basic net income per Share $1.17 $1.18 $1.30 $0.80 $1.75 Weighted average number of shares used in computation of basis net income per share (in thousands) 38,489 39,061 39,952 40,750 41,340 Diluted net income per share $1.13 $1.14 $1.26 $0.78 $1.72 Weighted average number of shares used in computation of diluted net income per share 39,863 40,230 41,041 41,623 41,880 (in thousands) _______________________ * As adjusted – see below – Item 18. Financial Statements – Note 1(G) ** Includes acquired in-process research and development write-off of $8.5 and $2.2 in 2005 and 2006, respectively 2 2006 Form 20-F - June 2007 December 31 2002 2003 2004 2005 2006 (U.S. dollars in millions except for share and per share amounts) Balance Sheet Data: Cash, cash equivalents and short-term investments $78 $77 $35 $97 $88 Long-term deposits and trade receivables 4 2 2 2 6 Working capital 206 199 173 227 118 Short-term debt 31 15 10 38 28 Long-term debt 73 62 86 225 125 Share capital 11.2 11.3 11.5 11.6 11.9 Shareholders’ equity 411 452 432 451 494 Total assets $1,000 $1,024 $1,034 $1,622 $1,770 Outstanding ordinary shares of NIS 1 par value (in thousands) 38,804 39,337 40,561 40,967 42,017 Dividends paid per ordinary share with respect to the applicable year $0.34 $0.40 $2.17* $0.54 $0.61 _____________________ * Including an extraordinary dividend of $1.80 declared in the second quarter of 2004 3 2006 Form 20-F - June 2007 Forward Looking Statements This Annual Report on Form 20-F contains "forward-looking" statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities and Exchange Act of 1934, as amended. These are statements that are not historical facts and include statements about our beliefs and expectations. These statements contain potential risks and uncertainties, and actual results may differ significantly. Forward-looking statements are typically identified by the words “believe,” “expect,” “intend,” “estimate” and similar expressions. Those statements appear in this Annual Report and include statements regarding the intent, belief or current expectation of Elbit Systems or our directors or officers. Actual results may differ materially from those projected, expressed or implied in the forward-looking statements as a result of several factors including, without limitation, the factors set forth below under the caption “Risk Factors” (we refer to these factors as Cautionary Statements). Any forward-looking statements contained in this Annual Report speak only as of the date of this Report, and we caution potential investors not to place undue reliance on these statements. We undertake no obligation to update or revise any forward-looking statements. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the Cautionary Statements.