Elbit Systems Reports Fourth Quarter and Year-End Results for 2004; Record Revenues, Net Earnings and Order Backlog.

HAIFA, Israel, March 15 /PRNewswire-FirstCall/ --

  - 22.9% Increase in Backlog of Orders to $2.15 Billion
  - 4.7% Increase in Annual Consolidated Revenues to $940 million
  - 15.3% Increase in Annual Consolidated Net Earnings to $53 Million
  - EPS $1.36 Excluding Non-Cash Effect of Option Plan

Elbit Systems Ltd. (the "Company") , the international defense electronics company, today reported its consolidated results for the fourth quarter and year-ended December 31, 2004.

The Company's backlog of orders as of December 31, 2004 reached $2.15 billion, as compared with $1.75 billion at the end of 2003. 66% of the backlog relates to orders outside of Israel. Approximately 74% of the Company's backlog as of December 31, 2004 is scheduled to be performed during 2005 and 2006.

Consolidated revenues for the year ended December 31, 2004 increased by 4.7% to $940 million from $898 million in 2003.

Consolidated revenues for the fourth quarter of 2004 increased by 3.1% to $270.8 million from $262.8 million in the corresponding quarter in 2003.

Consolidated net earnings for the year ended December 31, 2004 increased by 15.3% to $53 million, as compared to $45.9 million in 2003. Diluted earnings per share in ("EPS") 2004 were $1.29, as compared with $1.14 in 2003. Excluding the non-cash effect of the Company's option plan, EPS in 2004 was $1.36, as compared to $1.24 in 2003.

Consolidated net earnings for the fourth quarter of 2004 were $14.1 million, compared to $12.5 million in the same period in 2003. Diluted EPS for the fourth quarter of 2004 were $0.34, as compared with $0.31 for the fourth quarter of 2003. Excluding the non-cash effect of the Company's option plan, EPS in the fourth quarter of 2004 was $0.35 as compared to $0.34 in the fourth quarter of 2003.

During the fourth quarter of 2004, the Company adopted the fair value recognition provision of SFAS No. 123, effective January 1, 2004. The Company uses the Black-Scholes-Merton formula to estimate the fair value of stock options granted to employees. Compensation cost is recorded over the vesting period on a straight-line basis. Following the adoption of SFAS 123 the financial result will no longer be affected by the impact of changes in the Company's share price on employees stock based compensation.

Gross profit for the fourth quarter of 2004 was $72.6 million, as compared with gross profit of $54.1 million in the fourth quarter of 2003, and the gross profit margin in the fourth quarter of 2004 was 26.8%, as compared with 20.6% in the fourth quarter of 2003.

The Company produced an operating cash flow of $81.5 million in 2004.

The President and CEO of Elbit Systems, Joseph Ackerman, commented: "We are pleased to report our ninth consecutive year of increased revenues, net profit and backlog of orders. 2004 was a very important year for Elbit Systems in terms of key programs, with the win of the Digital Army Program in Israel and the selection for the Watchkeeper Program in the UK together with Thales. On the acquisitions side, we signed an agreement to acquire the controlling shareholdings of Tadiran Communications and Elisra. We believe that the investments made in the development of new technologies, and the strategic steps taken in 2004, lay a solid foundation for the continued development of Elbit Systems in accordance with our long-term business plan."

The Board of Directors has declared a dividend of $0.13 per share for the fourth quarter of 2004. The dividend will be paid on April 18, 2005, net of taxes and levies, at the rate of 20.58%. The record date of the dividend is April 5, 2005. The total dividend to be paid for 2004 is $2.17 per share.

Conference Call

The Company will be hosting a webcast and conference call today, Tuesday, March 15th at 10.30am 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 ends, 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: [phone]
                      UK Dial-in Number: 0-800-917-5108
                     ISRAEL Dial-in Number: 03-918-0610
                INTERNATIONAL Dial-in Number: [phone]

At: 10:30am Eastern Standard Time, 7:30am Pacific Standard Time, 3:30pm Greenwich Mean Time or 5:30pm Israel Time.

In addition, a replay of the call will be available by telephone starting two hours after the call ends until Thursday, March 17, 10:30 am EST. To access the replay please dial:

  [phone] (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                      Gelbart Kahana
  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.

                        (FINANCIAL TABLES TO FOLLOW)

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


                                                   December 31  December 31
                                                       2004        2003
                                                      Audited     Audited
  Assets

  Current Assets:
  Cash and short term deposits                          34,847      76,846
  Trade receivable and others                          267,151     251,644
  Inventories, net of advances                         249,041     249,225
  Total current assets                                 551,039     577,715

  Affiliated Companies & other Investments              62,886      38,223
  Long-term receivables & others                        85,100      78,565
  Fixed Assets, net                                    244,288     229,221
  Other assets, net                                     95,987     100,012
                                                     1,039,300   1,023,736

  Liabilities and Shareholder's Equity

  Current liabilities                                  378,450     378,731
  Long-term liabilities                                221,810     188,811
  Minority Interest                                      4,340       4,115
  Shareholder's equity                                 434,700     452,079
                                                     1,039,300   1,023,736


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

                                     For the Year Ended  Three Months Ended
                                         December 31         December 31
                                       2004      2003      2004      2003
                                           Audited            Unaudited

  Revenues                           939,925   897,980   270,775   262,757
  Cost of revenues                   689,626   672,711   198,198   208,649
    Gross Profit                     250,299   225,269    72,577    54,108

  Research and development, net       66,846    54,919    23,277    11,913
  Marketing and selling               69,912    69,943    19,190    19,247
  General and administrative          47,832    46,077    12,876    12,153
  Total operating expenses           184,590   170,939    55,343    43,313

  Operating income                    65,709    54,330    17,234    10,795

  Financial expenses, net             (5,852)   (4,870)   (2,974)   (1,403)
  Other income (expenses), net           770        53       831       542
   Income before income taxes         60,627    49,513    15,091     9,934
  Provisions for income taxes         15,219    11,334     3,507       832
                                      45,408    38,179    11,584     9,102

  Company's share of partnerships
  and affiliated Companies income,
  net                                  7,765     7,209     3,180     3,271
  Minority rights                       (180)      557      (639)      101
  Net income                          52,993    45,945    14,125    12,474

  Earnings per share
  Basic net earnings per share          1.33      1.18      0.35      0.32

  Diluted net earnings per share        1.29      1.14      0.34      0.31

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, Gelbart Kahana, Tel: [phone] Fax: [phone], E-mail: [e-mail], E-mail: [e-mail]