Elron Reports Third Quarter Net Income of $13.3 Million As Compared With $2.5 Million Last Year.

HAIFA, Israel--(BUSINESS WIRE)--November 10, 1997--Elron Electronic Industries Ltd. (NASDAQ/ELRNF), a leading multinational high technology holding company, today announced 1997 third quarter net income of approximately $13.3 million, or $0.66 per share, as compared with approximately $2.5 million, or $0.12 per share, in the same period last year. In the nine months ended September 30, 1997 net income amounted to approximately $22.5 million, or $1.11 per share, as compared with approximately $7.5 million, or $0.37 per share, in the same period last year.

Elron's earnings result from three main sources: Elron's share in the net income (loss) of affiliated companies, gain on equity from change in holdings in affiliated companies and other income resulting primarily from the decision to sell some investments or holdings:

1. Elron's share in the net income of affiliated companies, accounted for on the equity basis, in the third quarter of 1997, amounted to approximately $0.7 million, as compared with approximately $0.4 million in the same quarter last year. In the nine months ended September 30, 1997 Elron's share amounted to approximately $1.0 million, as compared with approximately $1.9 million in the same period last year.

2. In the third quarter of 1997 the Company had a gain of approximately $7.4 million from change in its holding in Elbit Systems Ltd. (ESL) as a result of ESL's successful completion of a public offering in the U.S. Elron now holds approximately 35% in ESL. In the same period last year the Company had a minor loss of $21 thousand from change in holding in affiliated companies. In the nine months ended September 30, 1997and 1996 the Company had a gain of approximately $7.4 million and $0.7 million, respectively.

3. Elron's other income, in the third quarter and the first nine months of 1997, amounted to approximately $6.1 million and $16.8 million, respectively, as compared with approximately $2.7 million and $7 million, respectively, in the same periods last year. Approximately $7.8 million, in the third quarter of 1997, was derived from the sale of 200,000 shares of Orbotech (NASDAQ/ORBKF). In the same period last year, Elron had a gain of approximately $1.8 million from the sale of Orbotech shares. Elron now holds about 4% of Orbotech's share capital. In the first nine months of 1997 other income amounted to approximately $16.8 million which resulted primarily from the sale of 1,046,000 Orbotech shares. In the first nine months of 1996 other income amounted to approximately $7.0 million which included a gain of approximately $4.9 million from the sale of Orbotech and Zoran shares.

As previously announced on October 29, 1997 the Company entered into a definitive agreement with ON Technology Corporation (NASDAQ/ONTC) to acquire through a newly established, wholly-owned U.S. subsidiary, Elron Software Inc., all of the Network Management and Network Security business assets, subject to the approval of ON Technology's shareholders which is expected in the first quarter of 1998.

Elron's Board of Directors declared a third quarter dividend of $0.06 per share, to be paid on December 15, 1997 to shareholders of record at the close of business on December 1, 1997. The Company will deduct income tax at source at a rate currently estimated to be 25%.

Uzia Galil, Chairman and Chief Executive Officer of the Company, said:" We are very pleased to recognize the success of the Elbit demerger into the three companies, which has not only helped to focus the management on each of its own market but has also created considerable value both for the Elbit and Elron shareholders. The successful public issue of Elbit systems signifies the new opportunities resulting from this demerger."

Elron Electronic Industries Ltd. is a multinational high technology holding company based in Israel. Through affiliates, Elron is engaged with a group of high technology operating companies in the fields of medical diagnostic imaging, advanced defense electronics, communication, semiconductors, networking, software and information technology. For further information, visit Elron at http://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. -0-

Elron Electronic Industries Ltd.
CONDENSED STATEMENT OF INCOME
(U.S. Dollars in thousands except per share amounts)

                                   Three Months Ended  Nine Months Ended
                                         Sept. 30,          Sept. 30,
                                        (Unaudited)        (Unaudited)
                                       1997    1996     1997      1996
                                      ------  ------    ------   -----
Income
Company's share
in net income of
affiliated companies, net      $      657  $   422   $    995  $  1,925
Gain (loss) from
changes in
holdings in affiliated
companies                           7,359      (21)     7,388       666
                                    6,118    2,666     16,768     7,021
Other income, net                     302      140        663       465
Interest income, net               14,436    3,207     25,814    10,077

                                    1,108      703      3,326     2,602
Costs and expenses, net
                                 $ 13,328 $  2,504   $ 22,488  $  7,475
Net income
                               $     0.66 $   0.12   $   1.11  $   0.37
Earnings per share

Weighted average number of
shares outstanding (thousands)     20,290   20,287     20,290    20,287


Elron Electronic Industries Ltd.
CONDENSED BALANCE SHEET
(U.S. Dollars in thousands)


                             September 30,       December 31,
                              (Unaudited)         (Audited)
                           1997        1996          1996

Current Assets            $ 25,226   $  8,993     $ 12,039

Investments
- Affiliated companies     178,164    179,693      174,585
- Other investments         14,855     12,221       16,085
                           193,019    191,914      190,670
                          --------   --------     --------
Fixed Assets, net              383        624          569
                          --------   --------     --------
                          $218,628   $201,531     $203,278

Current Liabilities       $  2,104   $  1,908     $  1,931
                           216,524    199,623      201,347
Shareholders' Equity      $218,628   $201,531     $203,278

CONTACT: Elron Technologies, Inc.

Yung Jin Kim

Tel #: [phone] ext. 18

Fax #: [phone]

email: [e-mail]

or

Elron Electronic Industries Ltd.

Doron Birger

Tel. [phone]

[e-mail]