Elron Electronic Industries Announces: $17.4 Million Net Income in the Fourth Quarter of 2006; Net Income in 2006 Amounted to $3.0 Million; $123.5 Million Cash Balance at Year-End; and Investments in 2006 Amounted to $53.8 Million.

TEL AVIV, Israel -- Elron Electronic Industries Ltd. (Nasdaq and TASE: ELRN) today reported unaudited financial results for the fourth quarter and year ended December 31, 2006.

Net income in the fourth quarter of 2006 amounted to $17.4 million, or $0.6 per share. Net income for the year ended December 31, 2006 amounted $3.0 million, or $0.1 per share.

The net income that Elron reported in the fourth quarter of 2006 was mainly due to a gain, net of tax, of approximately $21.2 million from the sale of all the remaining 3,914,715 shares of Partner Communications Company Ltd. (Nasdaq: PTNR) held by Elron, for approximately $39.9 million. In addition, Elron recorded a $2.5 million gain resulting from the completion of a $15 million financing round in 3DV Systems Ltd. ("3DV").

Net income in the fourth quarter of 2005 amounted to $0.5 million.

Elron's net income in 2006 resulted mainly from the above gain which was offset primarily by Elron's share in the net losses of its group companies, amounting to $22.7 million.

In 2005, net income was $47.3 million, or $1.61 per share, mainly due to a gain, net of tax, of approximately $45.4 million resulting from the sale of 12,765,190 shares of Partner for $94 million, and a gain, net of tax, of approximately $17.2 million resulting from the sale of Elron's holding in Oren Semiconductor Inc. for $20.3 million. The above gains were offset in part by Elron's share in the net losses of its group companies in the amount of $23 million.

During 2006, Elron invested, directly and indirectly through its subsidiary, RDC Rafael Development Corporation Ltd. ("RDC"), approximately $53.8 million, of which $12.8 million were invested in two new companies namely, Neurosonix Ltd., which is developing a medical device for the prevention of acute cerebral embolism during open-heart cardiac surgery, and Atlantium Inc., a water technology company specializing in the development of innovative hydro-optic water disinfection solutions providing unprecedented microbe inactivation for water-intensive applications, serving both industrial and municipal markets.

As of December 31, 2006, Elron's cash, debentures and deposits amounted to approximately $123.5 million compared with $133.8 million at December 31, 2005.

Shareholders' equity at December 31, 2006, was approximately $297.5 million, which represented approximately 91% of Elron's total assets, compared to approximately $302.1 million, representing approximately 85% of Elron's total assets at December 31, 2005.

Elron further reported that its results for the year ended December 31, 2006 are unaudited due to the fact that it has not yet received audited financial results from Given Imaging Ltd (Nasdaq & TASE: GIVN), an approximately 21% held affiliated company. Given Imaging reported that it is analyzing treatment of intercompany transactions resulting in accumulated net operating losses in its U.S. subsidiary which may require adjustments to Given Imaging's deferred tax asset, taxes on income and a related tax liability. Given Imaging further reported that it believes that any adjustments related to this analysis will be limited to these captions and net income in its 2006 financial statements. Given Imaging expects this analysis will be completed before it files its Annual Report on Form 20-F for the year ended December 31, 2006, which it plans to file during the second quarter of 2007. Elron believes that if Given Imaging will be required to adjust its net income in Given Imaging's 2006 financial statements, it may affect Elron's 2006 financial statements. Elron will file its 2006 audited financial statements on or before the filing of Elron's Annual Report on Form 20-F for the year ended December 31, 2006 which will be filed during the second quarter of 2007.

Major Developments in Elron's Group Companies

The following are the major developments in Elron's group companies during 2006 and at the beginning of 2007:

* Galil Medical (a 20% holding), 3DV (a 45% holding) and AMT (a 34% holding) completed financing rounds from new investors, raising $40 million, $15 million, and $14 million, respectively.

* Galil Medical acquired the urology cyrotheraphy business of Oncura with annual revenues of approximately $20 million.

* NetVision completed the acquisition of Barak International Telecommunications Services and Globcall Communications through a merger completed in January 2007 (following which Elron now holds approximately 18% in NetVision) creating a company with approximately $250 million in revenues.

* ChipX (a 29% holding), completed the acquisition of some of the U.S. based business assets of Oki Semiconductor Company, which will potentially double ChipX's revenues in 2007.

* NuLens (a 29% holding), BrainsGate (a 22% holding) and Neurosonix (a 16% holding), achieved major development milestones in 2006 as they commenced human clinical trials, and Impliant (a 22% holding), commenced clinical trials for FDA approval. Medingo (a 100% holding by Elron's subsidiary, RDC), is progressing well in the development of its miniature disposable insulin pump.

* Starling (a 50% holding), is in the final phase of completing flight tests for its broadband Internet connectivity solutions for commercial aircrafts and private jets, Wavion (a 38% holding), has commenced beta tests at several customer sites and Enure (a 41% holding), received its first large order from a large telecommunications operator. Jordan Valley (a 27% holding), significantly increased its sales and orders backlog in 2006 and expects continued growth during 2007.

"During 2006, the majority of our group companies achieved major developments and important milestones in their respective fields, creating a promising group of companies with significant potential to enhance shareholder value in the years ahead", said Doron Birger, Elron's President and CEO. "We enter 2007 with $123.5 million of cash resources which will enable us to continue building our group companies and to invest in new opportunities", concluded Doron Birger.

Conference call details:

Today, Wednesday, March 14, 2007 10:00 a.m. (EST); 4:00 p.m. (Israel)

In the US: 1 888 668 9141

In the UK: 0 800 051 8913

In Israel: 03 918 0650

International Participants: [phone]

For your convenience, a replay of the call will be available starting three hours after the call ends until Friday, March 16th, 2007. To access the replay please dial 1-888-782-4291 (US), [phone] (Israel) and 0 800 028 6837 (UK). A replay of the call will also be available for ninety days on the company website.

Elron Electronic Industries Ltd. (TASE & NASDAQ: ELRN), a member of the IDB Holding group, is a leading Israel-based technology holding company directly involved in the long-term performance of its group companies. Elron identifies potential technologies, creates strategic partnerships, secures financing, and recruits highly qualified management teams. Elron's group companies currently comprise a diverse range of publicly-traded and privately held companies primarily in the fields of medical devices, information & communications technology, clean technology and semiconductors. For further information, please visit www.elron.com

(Any statements in this press release that may be considered forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Actual results may differ from such forward-looking statements due to the risk factors discussed in periodic reports filed by the Company with the Securities and Exchange Commission, which the Company urges investors to consider).

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