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. 21 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. 22 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. 23 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). 24 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. 25 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. 26 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% 27 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. 28 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. 29 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. 30 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. 31 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. 32 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. 33 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”. 34 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. 35 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. 36 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. 37 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. 38 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 such as fair labor practices, combating human trafficking, ethics and anti-corruption, avoidance of conflicts of interests, adherence to sanction requirements, restrictions on the use of 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. 39 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; 40 •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.