Elbit Systems — Earnings Release 2004

Aug 9, 2004

9.8.04

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Earnings Release

ELBIT SYSTEMS REPORTS SECOND QUARTER 2004 RESULTS

Revenues Increase To $231.6 million from $218.8 million in Second Quarter Last Year Net Profit Increases To $11.3 million from $9.2 million in Second Quarter Last Year Backlog of Orders Reaches a Record $1.9 billion Extraordinary Dividend of $1.80 Per Share

Haifa, Israel, August 9, 2004 – Elbit Systems Ltd. (the “Company”) (NASDAQ: ESLT) , the international defense company, today reported its consolidated results for the quarter ended June 30, 2004.

Consolidated revenues for the second quarter of 2004 increased 5.9% to $231.6 million from $218.8 million in the corresponding quarter in 2003.

Consolidated revenues for the six month period ended June 30, 2004 increased 5.8% to $445.3 million from $420.9 million in the same period in 2003.

Consolidated net income for the second quarter of 2004 was $11.3 million (4.9% of revenues) as compared with $9.2 million (4.2% of revenues) in the same period in 2003. Diluted earnings per share (“EPS”) for the second quarter of 2004 was $0.28 as compared with $0.23 for the second quarter of 2003.

The Company’s financial results were affected by the increase in the Company’s share price during the reported periods, due to non-cash expenses related to the employees “phantom” option plan.

Excluding the phantom option plan non-cash expenses, net income in the second quarter of 2004 was $14.0 million (6.1% of revenues), and the diluted EPS was $0.34, as compared to net income of $13.3 million (6.1% of revenues) and diluted EPS of $0.33 in the second quarter of 2003.

Consolidated net income for the first six months of 2004 was $24.0 million (5.4% of revenues), compared with $21.5 million (5.1% of revenues) for the same period in 2003.

Diluted EPS for the six months ended June 30, 2004 was $0.59 compared with $0.54 for the corresponding period in 2003.

Excluding the phantom option plan non-cash expenses in 2004, net income for the six months ended June 30, 2004 was $27.0 million (6.1% of revenues), and diluted EPS was $0.66. For the six-month period ended June 30, 2003, net income was $26.6 million (6.3% of revenues) and diluted EPS was $0.66.

Gross profit for the second quarter of 2004 was $58.5 million (25.3% of revenues), as compared with gross profit of $57.2 million (26.2% of revenues) in the second quarter of 2003.

Excluding non-cash expenses related to the Company’s phantom option plan, gross profit in the quarter ended June 30, 2004 was $60.4 million, or 26.1% of revenues, as compared with $60.0 million, or 27.6% of revenues in the quarter ended June 30, 2003.

Gross profit for the first six months of 2004 was $115.4 million (25.9% of revenues) as compared with $114.1 million (27.1% of revenues) in the same period of 2003.

Excluding non-cash expenses related to the Company’s phantom option plan, gross profit for the six months ended June 30, 2003 was $117.5 million, or 26.4% of revenues, as compared with $117.7 million, or 28.0% of revenues in the six-month period ended June 30, 2003.

Backlog of orders as of June 30, 2004 reached $1,906 million, as compared with $1,752 million at the end of 2003. 68% of the backlog relates to orders outside of Israel. Approximately 63% of the Company’s backlog as of June 30, 2004, is scheduled to be performed over the next two quarters of 2004 and during the year 2005.

The President and CEO of Elbit Systems, Joseph Ackerman, commented: “The second quarter results reflect the continuation of improvement in our net profit that we saw in the first quarter, and a continued growth in revenues and backlog of orders. These results are evidence of the success of the strategy that we have taken, focusing on the development of our technological growth engines and on cooperation with other leading companies worldwide. We see the fruits of the significant investments made by the Company in these areas and anticipate this trend to continue".

The Board of Directors declared an extraordinary dividend of $1.80 per share. The record date of the dividend is September 7, 2004. The dividend will be paid on September 20, 2004, net of taxes and levies, at the rate of approximately 22%.

Conference Call

Elbit Systems will host a conference call today, Monday, August 9, 2004 at 10:30 AM ET. To take part in the conference call, please dial 1-866-860-9642 (U.S.), 0800-9175108 (U.K.) or +972-3-918-0610 (International and Israel) a few minutes before 10:30 AM ET. For your convenience, an instant replay will be available starting at 12:30 PM ET the same day until Wednesday, August 11, 2004 at 12:30 PM ET. The replay telephone number is 1-866-276-1485 (U.S.), 0800 169 8104 (U.K.) or +972-3-925-5948 (International and Israel).

This call will also be broadcasted live on: www.elbitsystems.com. and an online replay will be available for 30 days.

About Elbit Systems

Elbit Systems Ltd. is an international defense electronics company engaged in a wide range of defenserelated programs throughout the world, in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence, surveillance and reconnaissance (“C4ISR”), advanced electro-optic and space technologies. The Company focuses on the upgrading of existing military platforms and developing new technologies for defense and homeland security applications.

For more about Elbit Systems, please visit our website at www.elbitsystems.com

Contacts

Company contact IR Contacts Ilan Pacholder, Corporate Secretary and Ehud Helft/Kenny Green VP Finance & Capital Markets Elbit Systems Ltd Gelbart Kahana Tel: 972-4 831- 6632 Tel: 1-866-704-6710 Fax: 972-4 831- 6659 Fax: 972-3-607-4711 pacholder@elbit.co.il ehud@gk-biz.com kenny@gk-biz.com

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.