Elbit Systems Ltd. Completes Merger With El-Op Electro-Optics Industries Ltd.

Business Editors

HAIFA, Israel--(BUSINESS WIRE)--July 6, 2000

Elbit Systems Ltd. (NASDAQ: ESLTF) ("the Company") announced today that, further to its announcements on December 20, 1999, February 28, 2000 and March 20, 2000, the Company completed its merger with El-Op Electro-Optics Industries Ltd. ("El-Op") on July 5, 2000. El-Op will operate as a subsidiary of Elbit Systems' and its activities will be integrated within the Company's new organizational structure that became effective upon the completion of the merger.

El-Op is a leading company in the field of advanced electro-optical products for military and civilian purposes. El-Op's business areas include development and production of thermal imaging products, laser products, optical systems for space applications, airborne reconnaissance systems, optical communications systems, fire control systems for combat vehicles and security systems and products. In 1999, El-Op's revenues were approximately $303 million, and it recorded a net profit of $14.6 million, before deduction of management fees (after tax). The net profit does not include the amortization of goodwill arising from the merger. El-Op's backlog of orders as of December 31, 1999 was $558 million.

Elbit Systems will include El-Op results in its consolidated financial reports starting with the third quarter of 2000. As announced in the Company's Proxy Statement dated February 28, 2000, Elbit Systems estimated that the merger acquisition costs allocable to in-process research and development will be between $30 to $50 million. The process of assessing the amount of such costs to be written-off has not yet been completed. The amount to be determined will be reflected in the Company's financial results for the third quarter of 2000.

Joseph Ackerman, President and CEO, of Elbit Systems, stated, "The merger between Elbit Systems and El-Op is a major milestone for both companies. It unites the complimentary strengths of two industry leaders, each one backed by decades of specialized expertise at the forefront of technology. The combination of the existing capabilities of the two companies, within an organizational framework that maximizes the companies' high level human resources and other assets, gives us the ability to better respond to the needs of our customers and to improve our competitive position in the worldwide defense marketplace. The merger will help enhance our business growth for the benefit of our employees and shareholders."

With the completion of the merger, resolutions have become effective that were approved at a March 19, 2000 meeting of the Company's shareholders. These include:

1. An increase in the Company's registered share capital;

2. Issuance of 12,100,000 of the Company's ordinary shares to the

Federmann Group;

3. Amendments to the Company's by-laws as provided in the merger

agreement;

4. Appointment of Michael Federmann as Chairman of the Company's

Board of Directors;

5. Appointment of Joseph Ackerman as President and Chief Executive

Officer of the Company;

6. Appointment of the Company's Board of Directors, consisting of:

Michael Federmann, Ami Erel, Joseph Ackerman, Lenny Recanati,

Jacob Toren, Jacob Eshel, Aharon Beth-Halachmi, Dov Ninveh, Yigal

Baruchi and the external directors, Amnon Harari and Yoram

Shapira.

The Company's Proxy Statement, dated February 28, 2000, contained terms regarding the employment of Joseph Ackerman as President and Chief Executive Officer of the Company and Jacob Toren as Chairman of the Merger Committee of the Company's Board of Directors. These terms were approved at the Extraordinary Shareholders' Meeting on March 19, 2000. Further to those terms, on July 5, 2000 the Audit Committee of the Board of Directors and the Board of Directors as a whole, approved employment agreements for Mr. Ackerman and Mr. Toren, respectively, including provisions for annual bonuses, stock options and other employment conditions. These agreements are subject to the approval of the Company's shareholders. The specific terms of the employment agreements will be included in a Proxy Statement to be issued to shareholders in connection with the next Annual General Meeting of Shareholders of the Company.

ABOUT ELBIT SYSTEMS

Elbit Systems Ltd. is engaged in a wide range of defense-related airborne, ground and command, control and communications ("C3") programs throughout the world. The Company focuses on upgrading of existing military platforms and developing new technologies for defense applications.

Forward looking statements with respect to the Company's business, financial condition and results of operations, in this release are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated in such forward looking statements, including, but not limited to, product demand, pricing, market acceptance, changing economic conditions, risks in product and technology development, the effect of the Company's accounting policies as well as certain other risk factors which are detailed from time to time in the Company's SEC filings.