Eltek Announces First-Quarter 2008 Financial Results.

Revenues Reach a Record of $10.5 Million in the First Quarter of 2008

PETACH-TIKVA, Israel -- Eltek Ltd. (Nasdaq:ELTK), the leading Israeli manufacturer of advanced flex-rigid circuitry solutions, today announced its financial results for the first quarter of 2008.

Eltek reported revenues for the three months ended March 31, 2008 of $10.5 million compared with $10.2 million for the first quarter of 2007. The increase in revenues is attributable to the receipt of new orders from new and existing customers, reflecting recovery from the loss of the Company's former major customer.

The Company incurred a net loss for the first quarter of $809,000 compared with net profit of $565,000 in the first quarter in 2007. The loss in the first quarter of 2008 is mainly attributable to the devaluation of the U.S. dollar against the NIS. If the exchange rate had remained the same as in the comparable 2007 period, the Company's net loss for Q1-2008 would have been approximately $84,000 on a non-GAAP basis. The Company's revenues are primarily denominated in U.S. dollars, while its operating expenses, mainly salaries and energy costs are primarily denominated in NIS. In addition to the effect of the devaluation of the US dollar against the NIS, the Company's cost of sales increased due to the replacement of its former major customer's single product with many new items; and incurred additional sales and marketing expenses due to the expansion of the Company's sales force in the US and Europe, which is expected to generate increased sales of high-end products in the near future.

EBITDA:

In the first quarter of 2008, Eltek had a negative EBITDA of $180,000 compared to EBITDA of $1.3 million in first quarter of 2007.

ELTEK uses EBITDA as a non-GAAP financial performance measurement. EBITDA is calculated by adding back to net income interest, taxes, depreciation and amortization. EBITDA is provided to investors to complement results provided in accordance with GAAP, as management believes the measure helps illustrate underlying operating trends in the Company's business and uses the measure to establish internal budgets and goals, manage the business and evaluate performance. EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP.

Management Comments:

Arieh Reichart, President and Chief Executive Officer of Eltek, commented: "During the first quarter we continued our growth and experienced an increase in our backlog. We achieved a growth in revenues due to our efforts to broaden our customer base by adding diversified small and medium sized companies to our customer list. Driven by continued demand and market share growth we improved our ability to deliver high quality products and services to all sorts of customers, including a major Fortune100 US manufacturer and a foreign defense conglomerate."

Mr. Reichart noted: "The continued delivery of revenue growth is encouraging considering the fact that we lost a major customer in 2007 and are facing a negative macroeconomic environment. In 2008, we plan to follow our existing business model while we continue to support our marketing efforts to broaden our distribution channels and customer base. We remain confident of our ability to grow our revenues due to our leading products and technologies."

Amnon Shemer, CFO of Eltek, commented: "The favorable revenue growth was offset by increased operating and manufacturing costs, due to the impact of the dollar-shekel exchange rates. The average exchange rate of the US dollar in the first quarter of 2008 was approximately 15% lower than in 2007. If the exchange rate had remained the same as in the comparable 2007 period, our net loss for Q1-2008 would have been approximately $84,000 on a non-GAAP basis. The replacement of one major customer's product by many new items resulted in diversification of our customer base, but at the same time, it increased our cost of sales, as normally new projects require (mainly due to the learning curve encountered with such products)."

"In order to compensate for the adverse impact of the dollar's plunge against the NIS, we have executed plans to increase our selling prices wherever possible, along with increasing the actual exchange rates underlying our price lists. In addition, although our manufacturing processes are in line with the industry, we also initiated plans to improve our production yields, thus decreasing our cost of sales," Mr. Shemer concluded.

About the Company

Eltek is Israel's leading manufacturers of printed circuit boards, the core circuitry of most electronic devices. It specializes in the complex high-end of PCB manufacturing, i.e., HDI, multilayered and flex-rigid boards. Eltek's technologically advanced circuitry solutions are used in today's increasingly sophisticated and compact electronic products. For more information, visit Eltek's World Wide Web site at www.eltekglobal.com.

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