Elbit Systems Reports First Quarter 2005 Results.

Revenues Increased by 8% to $230.7 Million

Backlog of Orders Reached a New Record of $ 2.37 Billion

Diluted EPS Was $0.32 Compared to $0.30 for the Corresponding Quarter Last Year

HAIFA, Israel, May 17 /PRNewswire-FirstCall/ -- Elbit Systems Ltd. (the "Company") , the international defense company, today reported its consolidated results for the first quarter ended March 31, 2005.

The Company's backlog of orders as of March 31, 2005 reached $2,373 million, as compared with $2,154 million at the end of 2004. 65% of the backlog relates to orders outside of Israel. Approximately 63% of the Company's backlog as of March 31, 2005 is scheduled to be performed over the next three quarters of 2005 and during 2006.

Consolidated revenues for the first quarter of 2005 increased by 8.0% to $230.7 million from $213.7 million in the corresponding quarter in 2004.

Consolidated net income for the first quarter of 2005 was $13.1 million (5.7% of revenues), as compared with $12.3 million (5.7% of revenues) in the same period in 2004. Diluted earnings per share for the first quarter of 2005 were $0.32, as compared with $0.30 for the first quarter of 2004.

Gross profit for the first quarter of 2005 was $61.6 million (26.7% of revenues), as compared with gross profit of $56.6 million (26.5% of revenues) in the first quarter of 2004.

During the first quarter of 2005 the Company produced operating cash flow of $49.6 million.

During the fourth quarter of 2004, the Company adopted the fair value recognition provision of SFAS No. 123, effective as of January 1, 2004, using the Black-Scholes-Merton formula to estimate the fair value of stock options granted to employees. Accordingly, compensation cost is recorded over the vesting period on a straight-line basis. Following the adoption of SFAS 123, the financial results are no longer materially affected by the impact of changes in the Company's share price on employee stock-based compensation. Therefore, in accordance with SFAS 123, the Company's 2004 financial comparative results have been adjusted retroactively to reflect the adoption of the fair value recognition provision effective as of January 1, 2004.

The President and CEO of Elbit Systems, Joseph Ackerman, commented: "We are pleased to report our first results for 2005, which continue the long established positive path we have followed of increased revenues and profits year after year. We continue to concentrate on the long-term development of the Company, and during the quarter we completed the first stage of the transaction to acquire equity in Tadiran Communications. We also completed the acquisition of the now privatized IMI aviation business and won several important contracts. Our backlog reached another new record level, and the new business received, combined with our continued investment in research and development, will ensure the continued future success of Elbit Systems."

The Board of Directors declared a dividend of $0.13 per share for the first quarter of 2005. The dividend's record date is June 7th, 2005, and the dividend will be paid on June 20, 2005, net of taxes and levies, at the rate of 20.58%.

Conference Call

The Company will be hosting a webcast and conference call today, Tuesday, May 17th at 10.00am EST. On the call, management will review and discuss the results, and will be available to answer investor questions.

To participate, please access Elbit Systems' investor relations web-site at http://www.elbitsystems.com/. An online replay will be available from 2 hours after the call end, and will be available for 30 days.

Alternatively, please call one of the teleconferencing numbers that follow. Please begin placing your calls at least 5 minutes before the conference call commences. If you are unable to connect using one of the toll-free numbers, please try the international dial-in number.

                     US Dial-in Numbers: 1 866 860 9642
                      UK Dial-in Number: 0 800 917 5108
                     ISRAEL Dial-in Number: 03 918 0610
                INTERNATIONAL Dial-in Number: [phone]

At: 10:00am Eastern Standard Time, 7:00am Pacific Standard Time, 3:00pm UK Time or 5:00pm Israel Time.

In addition, a replay of the call will be available by telephone starting two hours after the call ends until Thursday, May 19, 10:00 am EST. To access the replay please dial:

  1-877-332-1104 (US) or [phone] (international and Israel)
  About Elbit Systems Ltd.

Elbit Systems Ltd. is an international defense electronics company engaged in a wide range of defense-related programs throughout the world, in the areas of aerospace, ground and naval systems, command, control, communications, computers, intelligence, surveillance and reconnaissance (C4ISR) and advanced electro-optic technologies. The Company focuses on the upgrading of existing military platforms and developing new technologies for defense applications. For further information, please visit the Company web site at http://www.elbitsystems.com/

  Company Contact:                 IR Contact:

  Ilan Pacholder                   Ehud Helft / Kenny Green
  V.P. Finance & Capital Markets
  Corporate Secretary
  Elbit Systems Ltd                GK International
  Tel: [phone]             Tel: [phone]
  Fax: [phone]             Fax: [phone]
  E-mail: [e-mail]    E-mail: [e-mail]
                                   E-mail: [e-mail]

STATEMENTS IN THIS PRESS RELEASE WHICH ARE NOT HISTORICAL DATA ARE FORWARD-LOOKING STATEMENTS WHICH INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES OR OTHER FACTORS NOT UNDER THE COMPANY'S CONTROL, WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE MATERIALLY DIFFERENT FROM THE RESULTS, PERFORMANCE OR OTHER EXPECTATIONS IMPLIED BY THESE FORWARD-LOOKING STATEMENTS. THESE FACTORS INCLUDE, BUT ARE NOT LIMITED TO, THOSE DETAILED IN THE COMPANY'S PERIODIC FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.

                             ELBIT SYSTEMS LTD.
                         CONSOLIDATED BALANCE SHEETS
                         ---------------------------
                         (In thousand of US Dollars)

                                           March 31  December 31
                                             2005       2004
                                           ---------   ---------
                                           Unaudited   Audited

  Assets
  ------

  Current Assets:
  Cash and short term deposits                50,872      34,847
  Trade receivable and others                261,826     267,151
  Inventories, net of advances               267,781     249,041
                                           ---------   ---------
  Total current assets                       580,479     551,039

  Affiliated Companies & other Investments    70,241      62,886
  Long-term receivables & others              85,508      85,100
  Fixed Assets, net                          249,902     244,288
  Other assets, net                           95,749      95,987
                                           ---------   ---------
                                           1,081,879   1,039,300
                                           ---------   ---------
                                           ---------   ---------

  Liabilities and Shareholder's Equity
  ------------------------------------

  Current liabilities                        395,717     378,450
  Long-term liabilities                      238,522     221,810
  Minority Interest                            4,121       4,340
  Shareholder's equity                       443,519     434,700
                                           ---------   ---------
                                           1,081,879   1,039,300
                                           ---------   ---------
                                           ---------   ---------



                              ELBIT SYSTEMS LTD.
                      CONSOLIDATED STATEMENTS OF INCOME
                      ---------------------------------
          (In thousand of US Dollars, except for per share amounts)

                                        Three Months Ended  Year Ended
                                              March 31       December 31
                                          2005      2004       2004
                                         --------- --------- -----------
                                             Unaudited        Audited

  Revenues                                230,688   213,672     939,925
  Cost of revenues                        169,126   157,080     689,626
                                         --------- --------- -----------
    Gross Profit                           61,562    56,592     250,299

  Research and development, net            15,166    13,294      66,846
  Marketing and selling                    16,646    16,498      69,912
  General and administrative               12,772    11,562      47,832
                                         --------- --------- -----------
  Total operating expenses                 44,584    41,354     184,590
                                         --------- --------- -----------

  Operating income                         16,978    15,238      65,709

  Financial expenses, net                 (1,732)     (479)     (5,852)
  Other income, net                           169       215         770
                                         --------- --------- -----------
    Income before income taxes             15,415    14,974      60,627
  Provisions for income taxes               3,987     4,075      15,219
                                         --------- --------- -----------
                                           11,428    10,899      45,408

  Company's share of partnerships and
   affiliated Companies income, net         1,493     1,358       7,765
  Minority rights                             220       (5)       (180)
                                         --------- --------- -----------
    Net income                             13,141    12,252      52,993
                                         --------- --------- -----------
                                         --------- --------- -----------

  Earnings per share
    Basic net earnings per share             0.32      0.31        1.33
                                         --------- --------- -----------
                                         --------- --------- -----------

    Diluted net earnings per share           0.32      0.30        1.29
                                         --------- --------- -----------
                                         --------- --------- -----------

CONTACT: Company Contact: Ilan Pacholder, V.P. Finance & Capital Markets, Corporate Secretary, Elbit Systems Ltd, Tel: [phone], Fax: [phone], E-mail: [e-mail]; IR Contact: Ehud Helft / Kenny Green, GK International, Tel: [phone], Fax: [phone], E-mail: [e-mail], E-mail: [e-mail]