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<SEC-DOCUMENT>0000910680-03-000955.txt : 20031112
<SEC-HEADER>0000910680-03-000955.hdr.sgml : 20031111
<ACCEPTANCE-DATETIME>20031112093820
ACCESSION NUMBER:		0000910680-03-000955
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		4
CONFORMED PERIOD OF REPORT:	20031111
FILED AS OF DATE:		20031112

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ELBIT SYSTEMS LTD
		CENTRAL INDEX KEY:			0001027664
		STANDARD INDUSTRIAL CLASSIFICATION:	AIRCRAFT PART & AUXILIARY EQUIPMENT, NEC [3728]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			L3
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-28998
		FILM NUMBER:		03991038

	BUSINESS ADDRESS:	
		STREET 1:		ADVANCED TECHNOLOGY CENTER
		STREET 2:		PO BOX 539
		CITY:			HAIFA, ISRAEL
		STATE:			L3
		ZIP:			31053
		BUSINESS PHONE:		01197248316626
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>form6k-11102003.txt
<DESCRIPTION>NOVEMBER 11, 2003
<TEXT>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                              ____________________

                                    FORM 6-K

                        Report of Foreign Private Issuer
                        Pursuant to Rule 13a-16 or 15d-16
                     of the Securities Exchange Act of 1934
                         For the Month of November 2003

                             _______________________

                               ELBIT SYSTEMS LTD.
                 (Translation of Registrant's Name into English)
           Advanced Technology Center, P.O.B. 539, Haifa 31053, Israel
                    (Address of Principal Corporate Offices)

Indicate by check mark whether the registrant  files or will file annual reports
under cover of Form 20-F or Form 40-F:

                   |X|      Form 20-F         |_|     Form 40-F

Indicate by check mark if the  registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(1): |_|

NOTE:  Regulation  S-T Rule  101(b)(1) only permits the submission in paper of a
Form 6-K if submitted  solely to provide an attached  annual  report to security
holders.

Indicate by check mark if the  registrant is submitting the Form 6-K in paper as
permitted by Regulation S-T Rule 101(b)(7): |_|

NOTE:  Regulation  S-T Rule  101(b)(7) only permits the submission in paper of a
Form 6-K  submitted to furnish a report or other  document  that the  registrant
foreign  private  issuer  must  furnish  and make  public  under the laws of the
jurisdiction  in which the  registrant  is  incorporated,  domiciled  or legally
organized  (the  registrant's  "home  country"),  or under the rules of the home
country exchange on which the registrant's securities are traded, as long as the
report or other document is not a press  release,  is not required to be and has
not been distributed to the registrant's  security holders, and, if discussing a
material  event,  has already been the subject of a Form 6-K submission or other
Commission filing on EDGAR.

Indicate by check mark whether the  registrant  by  furnishing  the  information
contained  in this  form is  also  thereby  furnishing  the  information  to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

                   |_|      Yes               |X|      No

If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule

12g3-2(b):  82-______________

<PAGE>

         Attached  hereto as Exhibit 1 and  incorporated  herein by reference is
the Registrant's management report for the quarter ended September 30, 2003.

         Attached  hereto as Exhibit 2 and  incorporated  herein by reference is
the report of the  Registrant's  auditors for the quarter  ended  September  30,
2003.

         Attached  hereto as Exhibit 3 and  incorporated  herein by reference is
the Registrant's press release dated November 11, 2003.


                                    SIGNATURE
                                    ---------

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  Registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                      ELBIT SYSTEMS LTD.
                                      (Registrant)


                                      By: /s/ Ilan Pacholder
                                          ----------------------------------
                                          Name:  Ilan Pacholder
                                          Title:  Corporate Secretary

Dated:  November 11, 2003.






<PAGE>

                                  EXHIBIT INDEX
                                  -------------


    EXHIBIT NO.      DESCRIPTION
    -----------      -----------

             1.      Management report for the quarter ended September 30, 2003.

             2.      Auditor's report for the quarter ended September 30, 2003.

             3.      Press release dated November 11, 2003.









</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>exhibit-1.txt
<DESCRIPTION>EXHIBIT 1
<TEXT>

                                    EXHIBIT 1
                                    ---------

                               ELBIT SYSTEMS LTD.
                               ------------------
                               MANAGEMENT'S REPORT
                               -------------------
         FOR THE THREE AND NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2003
         ------------------------------------------------------------


         This  report  should  be read  together  with the  Company's  unaudited
         financial  statements for the quarter ended  September 30, 2003 and the
         Company's Form 20-F for the year ended December 31, 2002,  filed by the
         Company with the U.S.  Securities and Exchange  Commission and with the
         Israeli Securities Authority.

A.       THE COMPANY'S BUSINESS OVERVIEW
         -------------------------------

         Elbit  Systems Ltd.  ("Elbit  Systems")  and its  subsidiary  companies
         (together  the  "Company"  or  the  "Group")  operate  in the  area  of
         upgrading existing airborne, ground and naval defense platforms and are
         engaged in projects  involving  the design,  development,  manufacture,
         integration  and  marketing  of advanced  integrated  defense  systems,
         electronic  systems,  electro-optic  systems and  products and software
         intensive  programs and products for the defense and homeland  security
         sectors.  In addition,  the Company  provides support services for such
         platforms, systems and products.

         The Company is engaged in leading projects in Israel and worldwide,  in
         areas such as air,  ground and naval Command,  Control,  Communication,
         Computers,  Intelligence,  Surveillance  and  Reconnaissance  ("C4ISR")
         systems,  digital  maps,  night vision  systems,  pilot helmet  mounted
         systems,  display and data  processing  systems,  unmanned air vehicles
         ("UAVs"),  computerized  simulators,  communication systems,
         thermal imaging  products,  laser  products,  optical systems for space
         applications,  airborne  reconnaissance  systems,  optic  communication
         systems  and  products,  security  systems and  products,  surveillance
         products and systems and electric drive systems.

         The  Company  provides  a wide  range  of  logistic  support  services,
         including  operation  of pilot  training  services  for the Israeli Air
         Force on a private financing  initiative ("PFI") basis.  Several of the
         Group's  companies also provide advanced  engineering and manufacturing
         services   to   various   customers,    utilizing   their   significant
         manufacturing   capabilities.   The  Company  often   cooperates   with
         industries in Israel and in various other countries.

B.       BACKLOG OF ORDERS
         -----------------

         The Company's backlog of orders as of September 30, 2003 reached $1,702
         million,  of which  64.0%  were  for  orders  outside  of  Israel.  The
         Company's  backlog as of December 31, 2002 was $1,689  million,  out of
         which 62% were for orders outside of Israel.

         Approximately  58% of the Company's backlog as of September 30, 2003 is
         scheduled to be performed in the forth quarter of 2003 and during 2004.
         The  majority of the 42% balance is  scheduled  to be performed in 2005
         and 2006.


<PAGE>

         The relatively small increase in the Company's  backlog resulted mainly
         from a slowdown in orders received from the Israeli Ministry of Defense
         ("IMOD") due to the budgetary considerations and continued postponement
         in placing new orders made by the IMOD.

C.       MAJOR SUBSIDIARIES AND AFFILIATED COMPANIES
         -------------------------------------------

         o        Elop Electro-Optics Industries Ltd. ("El-Op") - a wholly owned
                  subsidiary  registered  in Israel,  is engaged in the field of
                  advanced  electro-optical   products  for  defense,   homeland
                  security  and  civil  applications.   El-Op's  main  areas  of
                  activity include development and production of thermal imaging
                  products,   laser   products,   optical   systems   for  space
                  applications,   airborne   reconnaissance   systems,   optical
                  communications   systems,  fire  control  systems  for  combat
                  vehicles,  homeland  security  products and other  systems for
                  defense applications.

         o        EFW Inc. ("EFW") - a wholly owned subsidiary registered in the
                  United States,  serves as the base for the Group's  activities
                  in the  United  States,  mainly  in the  area of  development,
                  production and  maintenance of advanced  defense  products and
                  systems.

         o        Vision  Systems  International  LLC  ("VSI")  - an  affiliated
                  company  in the  United  States,  owned  50%  each  by EFW and
                  Rockwell  Collins  Inc.,  is  engaged  in the  area of  helmet
                  mounted systems primarily for fighter aircraft.

         o        Cyclone  Aviation  Products Ltd.  ("Cyclone") - a wholly owned
                  subsidiary registered in Israel, provides logistic support and
                  maintenance   services  for  aircraft  and   helicopters   and
                  manufactures   structure  components  and  sub-assemblies  for
                  aircraft.

         o        Silver  Arrow  LP  -  a  wholly  owned   limited   partnership
                  registered  in  Israel,  is  engaged  in the  business  of UAV
                  systems and products.

         o        Ortek Ltd. ("Ortek") - a wholly owned subsidiary registered in
                  Israel, is engaged mainly in the area of security products and
                  systems and night vision equipment.

         o        Kinetics Ltd. ("Kinetics") - a 51% owned subsidiary registered
                  in  Israel,   is  involved   mainly  in  the  development  and
                  production of systems and components for combat vehicles.

         o        Semi-Conductor   Devices  ("SCD")  -  an  Israeli   affiliated
                  partnership,   owned  50%  each  by  the  Company  and  Rafael
                  Armaments Development Authority Ltd. ("Rafael"), is engaged in
                  the development and production of infrared detectors and laser
                  diodes.

         o        Opgal  Optronic   Industries  Ltd.   ("Opgal")  -  an  Israeli
                  affiliated  company,  owned  50.1% by the Company and 49.9% by
                  Galram Technologies Ltd., a wholly owned subsidiary of Rafael,
                  is engaged mainly in the area of thermal  imaging  systems for
                  commercial applications.


<PAGE>

         o        The Company has holdings,  directly and indirectly, in several
                  relatively  small  companies  in  various   countries.   These
                  companies are engaged mainly in the  manufacturing,  marketing
                  and servicing of defense  avionics and  electronics as well as
                  defense related software.

         The Company  also has  holdings,  directly and  indirectly,  in several
         non-defense technology spin-off companies whose activities are based on
         technologies that were developed by the Company. The spin-off companies
         are  involved  primarily  in the areas of  medical  equipment,  optical
         communications and space satellites.

         The Company evaluates investments in affiliates, partnerships and other
         companies,  and when relevant  factors  indicate  other than  temporary
         decline  in the fair  value of the  investments  below  their  carrying
         value,  the Company adjusts the investment to the estimated fair value.
         The value of these  companies is subject to ongoing  changes  resulting
         from their business conditions.

D.       CRITICAL ACCOUNTING POLICIES AND ESTIMATES
         ------------------------------------------

         The Company's  significant  accounting policies are described in Note 2
         to the  audited  consolidated  financial  statements  included in Elbit
         Systems' annual report form 20-F for the year ended December 31, 2002.

         The Company's  results of operations and financial  condition are based
         on the preparation of consolidated  financial  statements in conformity
         with  generally  accepted  accounting  principles  in the  U.S.  ("U.S.
         GAAP").  The  preparation  of  the  consolidated  financial  statements
         requires   management  to  select  accounting   policies  for  critical
         accounting  areas as well as estimates and assumptions  that affect the
         amounts reported in the consolidated financial statements.  Significant
         changes in  assumptions  and/or  conditions  and  changes  in  critical
         accounting  policies could  materially  impact the Company's  operating
         results and financial condition.

         In the Company's opinion,  its most critical  accounting policy relates
         to revenue recognition based on SOP 81-1 "Accounting for Performance of
         Construction  Type and Certain  Production  Type  Contracts",  which is
         relevant to most of its revenues.

         Under SOP 81-1, the Company has adopted the  "percentage of completion"
         accounting method.  Under this method, the Company recognizes  revenues
         and profits on long-term fixed price  contracts  generally based on the
         ratio of costs  incurred to  estimates  of costs to be incurred for the
         total contract.  Under this approach,  the Company  compares  estimated
         costs to complete an entire  contract to total revenues for the term of
         the contract in order to arrive at an estimated gross margin percentage
         for each contract.  The updated  estimated  gross margin  percentage is
         applied,  and the current period gross profit is the difference between
         the cumulative  earned gross profit and gross profit reported for prior
         periods.

         Management  reviews these estimates  periodically and the effect of any
         change in the  estimated  gross  margin  percentage  for a contract  is
         reflected  in cost of sales in the period in which the  change  becomes
         known.  If  increases  in  projected  costs to complete a contract  are
         sufficient  to create a loss in  completing  the  contract,  the entire
         estimated loss is charged to cost of sales in the period the loss first
         becomes known.


<PAGE>

         A number of internal and external  factors  affect the  Company's  cost
         estimates,  including labor rates,  estimated  future material  prices,
         revised estimates of uncompleted work, efficiency variances, linkage to
         indices and exchange rates,  customer  specifications  and requirements
         and testing  requirement  changes.  If any of the above factors were to
         change,  or if different  assumptions  were used in the  application of
         this and  other  accounting  policies,  it is  likely  that  materially
         different  amounts  would be  reported  in the  Company's  consolidated
         financial statements.

E.       IMPAIRMENT OF GOODWILL AND OTHER LONG-LIVED ASSETS
         --------------------------------------------------

         Consistent with Statement of Financial  Accounting  Standards  ("SFAS")
         No.  142,  "Goodwill  and Other  Intangible  Assets,"  goodwill  is not
         amortized,  and is  tested  at least  annually  for  impairment.  As of
         September  30, 2003,  the Company's  goodwill and assembled  work force
         amounted to $32.6 million.

         Consistent  with  SFAS  No.  144,  "Accounting  for the  Impairment  or
         Disposal of Long-Lived Assets," the Company evaluates long-lived assets
         for impairment and assesses their recoverability based upon anticipated
         future cash flows.  As of September 30, 2003, the Company's  long-lived
         assets  amounted  to  $289.4   million,   including  $69.5  million  in
         intangible  assets,  and the Company  concluded  that no  assessment of
         impairment loss was necessary.

         Should  future  impairment  tests made by the  Company  determine  that
         impairment  has  occurred  in the value of the  Company's  goodwill  or
         long-lived  assets,  such  impairment may have a material effect on the
         financial  results of the Company in the period in which the impairment
         is determined.

F.       SPECIAL EVENTS THAT AFFECTED THE BUSINESS RESULTS
         -------------------------------------------------

         The  change  in  the  Company's  share  price  affected  the  Company's
         financial  results due to the impact of the employee  stock option plan
         for key employees adopted in 2000. The program was comprised of options
         for 5 million  shares,  divided  into  options  to  purchase  up to 2.5
         million  shares and  additional  2.5  million  "phantom"  options.  The
         phantom   options   grant  the  option   holders  a  number  of  shares
         corresponding  to the benefit  component of the options  exercised,  as
         calculated on the exercise date, in  consideration  for their par value
         only, and are  considered as a variable  option plan. The actual number
         of options  granted as of  September  30,  2003 was  approximately  4.5
         million.

         Under U.S. GAAP, the change in the share price is recorded periodically
         as compensation  expense, or income, based on the vesting period of the
         options.  The effect is allocated mainly to the Company's cost of goods
         sold and general and  administrative  expenses,  with  smaller  amounts
         allocated to R&D and sales and marketing expenses.

I.       SUMMARY OF FINANCIAL RESULTS
         ----------------------------

         The following table sets forth the reported consolidated  statements of
         operations  of the Company for the three and  nine-month  periods ended
         September 30, 2003 and September 30, 2002.

<PAGE>
<TABLE>
<CAPTION>
                                                  For the nine months ended                     For the three months ended
                                                        September 30                                   September 30
                                            ------------------------------------------  -------------------------------------------
                                                    2003                    2002                   2003                  2002
                                            --------------------    ------------------     -----------------      ------------------
                                                $           %           $         %           $          %           $          %
                                            ---------   --------    --------   -------     ---------  ------      ---------  -------
                                                                         (In thousands of U.S. dollars except per share data)

<S>                                           <C>         <C>        <C>        <C>         <C>        <C>         <C>        <C>
Total revenues                                635,223     100.0      589,143    100.0       214,275    100.0       210,155    100.0
Cost of revenues                              464,882      73.2      434,216     73.7       158,078     73.8       150,738     71.7
                                              -------     -----      -------    -----       -------    -----       -------    -----
Gross profit                                  170,341      26.8      154,927     26.3        56,197     26.2        59,417     28.3
                                              -------     -----      -------    -----       -------    -----       -------    -----
Research and development expenses, net         43,006       6.8       39,710      6.8        14,518      6.8        14,785      7.0
Marketing and selling expenses                 50,696       8.0       47,289      8.0        15,573      7.3        17,346      8.3
General and administrative expenses            33,924       5.3       30,741      5.2        11,035      5.1        10,760      5.1
                                              -------     -----      -------    -----       -------    -----       -------    -----
                                              127,626      20.1      117,740     20.0        41,126     19.2        42,891     20.4
                                              -------     -----      -------    -----       -------    -----       -------    -----
Operating  income                              42,715       6.7       37,187      6.3        15,071      7.0        16,526      7.9
Finance expenses, net                         (3,467)     (0.5)        (690)    (0.1)         (161)    (0.1)         (595)    (0.3)
Other income (expenses), net                      332       0.1        (524)    (0.1)           241      0.1         (115)    (0.1)
                                              -------     -----      -------    -----       -------    -----       -------    -----
Income before income taxes                     39,580       6.3       35,973      6.1        15,151      7.0        15,816      7.5
Taxes on income                                10,502       1.7        6,810      1.1         3,900      1.8         1,565      0.7
                                              -------     -----      -------    -----       -------    -----       -------    -----
                                               29,078       4.6       29,163      5.0        11,251      5.2        14,251      6.8
Minority interest in losses (gains) of
subsidiaries                                      456       0.1          269      0.0         (234)    (0.1)           139      0.1
Equity in net earnings of affiliated
companies and partnership                       3,938       0.6        2,554      0.4           989      0.5         1,114      0.5
                                              -------     -----      -------    -----       -------    -----       -------    -----
Net earnings                                   33,472       5.3       31,986      5.4        12,006      5.6        15,504      7.4
                                               ======       ===       ======      ===        ======      ===        ======      ===
Diluted earnings per share                       0.83                   0.80                   0.30                   0.39
                                                 ====                   ====                   ====                   ====

</TABLE>



<PAGE>

         NON -US GAAP DISCLOSURE
         -----------------------

         The  following  table sets forth the  Company's  results of  operations
         excluding  the  effect  of the  Company's  phantom  stock  option  plan
         ("phantom plan") in 2003 and 2002, the non-recurring  charge related to
         the  agreement  reached by El-Op with the Office of the  Israeli  Chief
         Scientist ("OCS") and the tax adjustment in 2002.

<TABLE>
<CAPTION>
                                                                   For the nine months                    For the three months
                                                                    ended September 30                     ended September 30
                                                             -----------------------------------   ---------------------------------
                                                                   2003                2002              2003               2002
                                                               $          %        $         %       $        %         $         %
                                                             -------    ----    -------    ----    ------    ----     ------    ----
                                                              (In thousands of U.S. dollars except per share data)

<S>                                                          <C>        <C>     <C>        <C>     <C>       <C>      <C>       <C>
GROSS PROFIT AS REPORTED                                     170,341    26.8    154,927    26.3    56,197    26.2     59,417    28.3
Non-recurring charge due to OCS agreement                          -       -      9,801     1.7         -       -          -       -
Non-cash expense (income) related to phantom plan              1,863     0.3      (510)   (0.1)   (1,669)   (0.8)      (173)   (0.1)
                                                             -------    ----    -------    ----    ------    ----     ------    ----
Gross  profit  excluding  phantom plan effect in 2003 and
2002, and non-recurring OCS charge in 2002                   172,204    27.1    164,218    27.9    54,528    25.4     59,244    28.2
                                                             =======     ===     ======     ===     =====     ===     ======     ===
OPERATING  INCOME AS REPORTED                                 42,715     6.7     37,187     6.3    15,071     7.0     16,526     7.9

Non-recurring charge due to OCS agreement                          -       -      9,801     1.7         -       -          -       -
Non-cash expense (income) related to phantom plan              3,387     0.6      (928)   (0.2)   (3,034)   (1.4)      (314)   (0.2)
                                                             -------    ----    -------    ----    ------    ----     ------    ----
Operating  profit  excluding  phantom plan effect in 2003
and 2002, and non-recurring  OCS charge in 2002               46,102     7.3     46,060     7.8    12,037     5.6     16,212     7.7
                                                             =======     ===     ======     ===     =====     ===     ======     ===
NET EARNINGS AS REPORTED                                      33,472     5.3     31,986     5.4    12,006     5.6     15,504     7.4

Non-recurring charge due to OCS agreement, net                     -       -      7,840     1.3         -       -          -       -
Tax adjustment                                                     -       -    (2,800)   (0.5)         -       -    (2,800)   (1.3)
Non-cash expense (income) related tophantom plan, net          2,710     0.4      (687)   (0.1)   (2,427)   (1.1)      (208)   (0.1)
                                                             -------    ----    -------    ----    ------    ----     ------    ----
Net  earnings  excluding  phantom plan effect in 2003 and
2002,  non-recurring  OCS  charge and tax  adjustment  in
2002                                                          36,182     5.7     36,339     6.2     9,579     4.5     12,496     5.9
                                                              ======     ===     ======     ===     =====     ===     ======     ===
DILUTED EARNINGS PER SHARE AS REPORTED                          0.83               0.80              0.30               0.39

Diluted earnings per share excluding  phantom plan effect
in  2003  and  2002,   non-recurringOCS  charge  and  tax
adjustment in 2002                                              0.90               0.91              0.24               0.31
                                                                ====               ====              ====               ====
</TABLE>


<PAGE>

         REVENUES
         --------

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         The  Company's  consolidated  revenues  increased by 7.8%,  from $589.1
         million in the nine months ended  September 30, 2002, to $635.2 million
         in the nine months ended September 30, 2003.

         The following  table sets forth the Company's  revenue  distribution by
         areas of operation:

<TABLE>
<CAPTION>
                                                                                  Nine-Month Period ended
                                                              ---------------------------------------------------------
                                                                   September 30, 2003           September 30, 2002
                                                              ---------------------------   ---------------------------
                                                                   $ millions           %     $ millions          %

<S>                                                                     <C>          <C>           <C>         <C>
         Airborne systems                                               304.8        48.0          274.8       46.7
         Combat vehicle systems                                         118.4        18.6           96.2       16.3
         C4I systems                                                     95.4        15.0           86.1       14.6
         Electro-optics                                                  79.1        12.5          101.1       17.2
         Other  (mainly non-defense engineering    and
         production services)                                            37.5         5.9           30.9        5.2
                                                                         ----         ---           ----        ---
         Total                                                          635.2       100.0          589.1      100.0
                                                                        =====       =====          =====      =====
</TABLE>

         Some of the  Electro-optics  products  are  incorporated  in the higher
         level  systems,  primarily  in the Combat  vehicle  systems and sold as
         such.

         The following  table sets forth the Company's  distribution of revenues
by geographical regions:

<TABLE>
<CAPTION>
                                                                                Nine-Month Period ended
                                                              ---------------------------------------------------------
                                                                   September 30, 2003           September 30, 2002
                                                              ---------------------------   ---------------------------
                                                                   $ millions           %     $ millions          %
<S>                                                                     <C>          <C>           <C>         <C>
         Israel                                                         186.3        29.3          149.9       25.5
         United States                                                  244.7        38.5          196.8       33.4
         Europe                                                          71.7        11.3          102.7       17.4
         Other countries                                                132.5        20.9          139.7       23.7
                                                                        -----        ----          -----       ----
         Total                                                          635.2       100.0          589.1      100.0
                                                                        =====       =====          =====      =====
</TABLE>

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         The consolidated  revenues increased by 2.0% from $210.2 million in the
         third quarter of 2002 to $214.3 million in the third quarter of 2003.

         The following  table sets forth the Company's  revenue  distribution by
         areas of operation:

<PAGE>
<TABLE>
<CAPTION>
                                                                                Three-Month Period ended
                                                              ---------------------------------------------------------
                                                                   September 30, 2003           September 30, 2002
                                                              ---------------------------   ---------------------------
                                                                   $ millions           %     $ millions          %
<S>                                                                     <C>          <C>           <C>         <C>
         Airborne systems                                               103.6        48.3          104.9       49.9
         Combat vehicle systems                                          42.6        19.9           26.1       12.4
         C4I systems                                                     30.8        14.4           30.1       14.3
         Electro-optics                                                  24.4        11.4           36.9       17.6
         Other  (mainly non-defense engineering    and
         production services)                                            12.9         6.0           12.2        5.8
                                                                         ----         ---           ----        ---
         Total                                                          214.3       100.0          210.2      100.0
                                                                        =====       =====          =====      =====
</TABLE>


         The following  table sets forth the Company's  distribution of revenues
         by geographical regions:

<TABLE>
<CAPTION>
                                                                                Three-Month Period ended
                                                              ---------------------------------------------------------
                                                                   September 30, 2003           September 30, 2002
                                                              ---------------------------   ---------------------------
                                                                   $ millions           %     $ millions          %
<S>                                                                      <C>         <C>            <C>        <C>
         Israel                                                          74.5        34.8           53.1       25.3
         United States                                                   85.1        39.7           69.6       33.1
         Europe                                                          22.7        10.6           37.9       18.0
         Other countries                                                 32.0        14.9           49.6       23.7
                                                                         ----        ----           ----       ----
         Total                                                          214.3       100.0          210.2      100.0
                                                                        =====       =====          =====      =====
</TABLE>


         The Company's  sales are made  primarily to  governmental  entities and
         prime contractors under government defense programs.  Accordingly,  the
         level of the Company's  revenues is subject to  governmental  budgetary
         constraints.  The recent economic  situation in Israel has created some
         uncertainty  with  respect  to the  Israeli  Government's  general  and
         defense budgets.

         The third  quarter  sales  were  effected  by delays in  receipt of new
         orders, which were planned to be sold during the quarter, as well as by
         delays in reaching milestones in technologicaly advanced programs.

         GROSS PROFIT
         ------------

         The Company's  gross profit  represents  the  aggregate  results of the
         Company's activities and projects,  and is based on the mix of programs
         in which the Company is engaged during the reported period.

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         Reported  gross profit in the nine months ended  September 30, 2003 was
         $170.3  million as compared to $154.9  million in the nine months ended
         September 30, 2002. The reported gross profit margin in the nine months
         ended  September  30,  2003  was  26.8%  as  compared  to  26.3% in the
         corresponding period of the previous year.

         The Company's cost of goods sold in the nine months ended September 30,
         2003  included  $1.9 million in non-cash  expenses  resulting  from its
         phantom  option  plan,  as compared to an income of $0.5 million in the
         nine months ended September 30, 2002.

         Excluding  non-cash  expenses related to the Company's  phantom option,
         gross  profit in the nine months  ended  September  30, 2003 was $172.2
         million, or 27.1% of revenues.


<PAGE>

         Excluding  the  non-recurring  charge under the OCS  agreement  and the
         phantom option plan effect, gross profit in the nine-month period ended
         September 30, 2002 was $164.2 million, or 27.9% of revenues.

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         Reported gross profit in the quarter ended September 30, 2003 was $56.2
         million as compared to $59.4 million in the quarter ended September 30,
         2002. The reported gross profit margin in the third quarter of 2003 was
         26.2% as compared to 28.3% in the same period last year.

         The Company's  cost of goods sold in the third quarter of 2003 included
         $1.7 million in non-cash income resulting from its phantom option plan,
         as compared to an immaterial amount in the third quarter of 2002.

         Excluding  non-cash  expenses  related to the Company's  phantom option
         compensation  costs,  gross profit in the quarter  ended  September 30,
         2003 was $54.5 million, or 25.4% of revenues.

         The decrease in gross profit  resulted  mainly from the mix in revenues
         and increased  costs  required to complete  milestones in certain fixed
         price programs.

         RESEARCH AND DEVELOPMENT ("R&D")
         --------------------------------

         The Company continually invests in R&D in order to maintain and further
         advance its technologies, in accordance with a long-term plan, based on
         its estimate of future market needs.

         The Company's R&D activities in the reported  period were in accordance
         with its plans.

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         Gross R&D expenses in the nine months ended  September 30, 2003 totaled
         $47.1 million (7.4% of revenues), as compared to $42.7 million (6.8% of
         revenues) in the nine months ended September 30, 2002.

         Net R&D expenses (after deduction of the OCS participation) in the nine
         months  ended  September  30,  2003  totaled  $43.0  million  (7.2%  of
         revenues),  as compared to $39.7 million (6.7% of revenues) in the nine
         months ended September 30, 2002.

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         Gross R&D  expenses in the quarter  ended  September  30, 2003  totaled
         $16.2 million (7.6% of revenues), as compared to $15.9 million (7.5% of
         revenues) in the quarter ended September 30, 2002.


<PAGE>

         Net R&D  expenses  (after  deduction of the OCS  participation)  in the
         quarter  ended  September  30,  2003  totaled  $14.5  million  (6.8% of
         revenues), as compared to $14.8 million (7.0% of revenues) in the third
         quarter of 2002.

         R&D  expenses  in the quarter  ended  September  30,  2003  included an
         immaterial  amount of non-cash income related to the Company's  phantom
         option plan.

         MARKETING AND SELLING EXPENSES
         ------------------------------

         The Company invests significantly in developing new markets and pursues
         at  any  given  time  various  business  opportunities.  The  continued
         investment in  developing  new business  opportunities,  as well as the
         reflected increased length of time required for marketing efforts until
         orders are received, is related to marketing and selling expanses.

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         Marketing and selling  expenses in the nine months ended  September 30,
         2003 were  $50.7  million  (8.0% of  revenues),  as  compared  to $47.3
         million (8.0% of revenues) in the nine months ended September 30, 2002.

         Excluding the phantom option plan non-cash expenses in 2003,  marketing
         and selling  expenses in the nine months ended  September 30, 2003 were
         $50.2 million (7.9% of revenues).

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         Marketing and selling  expenses in the quarter ended September 30, 2003
         were $15.6  million  (7.3% of  revenues),  as compared to $17.3 million
         (8.3% of revenues) in the quarter ended September 30, 2002.

         Excluding the phantom  option plan non-cash  income in 2003,  marketing
         and selling expenses in the quarter ended September 30, 2003 were $16.0
         million (7.5% of revenues).

         GENERAL AND ADMINISTRATIVE ("G&A") Expenses
         -------------------------------------------

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         G&A expenses  were $33.9  million (5.3% of revenues) in the nine months
         ended  September  30,  2003,  as  compared  to $30.7  million  (5.2% of
         revenues) in the nine months ended September 30, 2002.

         Excluding  the phantom  option  plan  non-cash  expenses  in 2003,  G&A
         expenses in the nine months ended September 30, 2003 were $33.1 million
         (5.2% of revenues).


<PAGE>

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         G&A expenses were $11.0 million (5.1% of revenues) in the quarter ended
         September 30, 2003, as compared to $10.8 million (5.1% of revenues) in
         the quarter ended September 30, 2002.

         Excluding the phantom option plan non-cash income in 2003, G&A expenses
         in the quarter  ended  September  30, 2003 were $11.8  million (5.5% of
         revenues).

         OPERATING INCOME
         ----------------

         The  majority of the  Company's  operating  expenses are related to the
         Company's  investment in the  development  of future  technologies  and
         products,  and in generating new business.  These expenses are included
         in the Company's R&D and marketing and sales  expenses,  which together
         accounted for 73.4% and 73.2% of the operating expenses during the nine
         and three-month periods ended September 30, 2003, respectively.

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         As a result of all of the above,  reported operating income in the nine
         months ended  September  30, 2003 was $42.7 million (6.7% of revenues),
         as  compared to $37.2  million  (6.3% of  revenues)  in the nine months
         ended September 30, 2002.

         For the nine months ended  September 30, 2003, the Company's  operating
         profit included $3.4 million in non-cash  expenses  associated with the
         Company's phantom option plan, as compared to an income of $0.9 million
         in the nine months ended September 30, 2002.

         Excluding phantom share  compensation  costs,  operating income totaled
         $46.1 million (7.3% of revenues) in the nine months ended September 30,
         2003.

         Excluding  the  non-recurring  charge under the OCS  agreement  and the
         phantom option plan effect,  operating income in the nine-month  period
         ended September 30, 2002 was $46.1 million, or 7.8% of revenues.

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         As a result  of all of the  above,  reported  operating  income  in the
         quarter ended  September 30, 2003 was $15.1 million (7.0% of revenues),
         as compared to $16.5  million  (7.9% of revenues) in the quarter  ended
         September 30, 2002.

         During  the third  quarter  of 2003,  the  Company's  operating  profit
         included $3.0 million in non-cash income  associated with the Company's
         phantom option plan, as compared to an immaterial  amount in the second
         quarter of 2002.

         Excluding phantom share compensation  income in 2003,  operating income
         totaled $12.0 million (5.6% of revenues) in the quarter ended September
         30, 2003.


<PAGE>

         FINANCE EXPENSE (NET)
         ---------------------

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         Net finance  expense in the nine months  ended  September  30, 2003 was
         $3.5  million,  as compared to $0.7  million of finance  expense in the
         nine months ended September 30, 2002.

         The increase in the net finance  expense during the  nine-month  period
         ended  September 30, 2003 as compared to the respective  period in 2002
         resulted mainly from a higher level of short-term loans from banks, and
         from the effect of the  devaluation  of the US dollar  against  the New
         Israeli Shekel ("NIS") on NIS denominated  loans, which occurred in the
         first and second quarters of 2003.

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         Net finance  expense in the quarter  ended  September 30, 2003 was $0.2
         million,  as compared to $0.6 million of finance expense in the quarter
         ended September 30, 2002.

         TAXES ON INCOME
         ---------------

         The Company's tax rate  represents a weighted  average of the tax rates
         to which the various companies in the Group are subject. The changes in
         the  effective tax rate are  attributable  mainly to the mix of the tax
         rates in the various tax  jurisdictions in which the Group's  companies
         generating the taxable income operate.

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         Provision  for taxes in the nine months  ended  September  30, 2003 was
         $10.5 million (effective tax rate of 26.5%), as compared to a provision
         for  taxes of $6.8  million  (effective  tax rate of 18.9%) in the nine
         months ended September 30, 2002.

         The provision for taxes in the third quarter of 2002 include  reduction
         of tax expenses in the amount of $2.8  million,  due to  adjustment  of
         estimated  taxes and completion of tax  assessments  for prior years in
         respect of various Group companies.

         Excluding the tax reduction  mentioned  above, the Company tax rate for
         the nine-months ended September 30, 2002 would have been 27.5%.

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ONSEPTEMBER 30, 2002
         --------------------------

         Provision  for taxes in the quarter  ended  September 30, 2003 was $3.9
         million  (effective tax rate of 25.7 %), as compared to a provision for
         taxes of $1.6 million (effective tax rate of 9.9%) in the quarter ended
         September 30, 2002.

         Excluding the tax reduction mentioned above, the tax rate for the third
         quarter of 2002 would have been 27.6%.


<PAGE>

         COMPANY'S SHARE IN EARNINGS OF AFFILIATED COMPANIES AND PARTNERSHIP
         -------------------------------------------------------------------
         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         In the nine months ended  September 30, 2003 the Company had net income
         of $3.9 million from its share in earnings of affiliated  companies and
         partnership,  as  compared  to $2.6  million in the nine  months  ended
         September 30, 2002.

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         In the third quarter of 2003 the Company had net income of $1.0 million
         from its share in earnings of affiliated companies and partnership,  as
         compared to $1.1 million in the third quarter of 2002.

         The affiliated companies and partnership in which the Company holds 50%
         or less in shares or voting rights and are  therefore not  consolidated
         in the Company's financial statements,  operate mainly in the Company's
         core business areas, including electro-optics and airborne systems.

         NET EARNINGS AND EARNINGS PER SHARE ("EPS")
         -------------------------------------------

         NINE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO NINE MONTHS ENDED
         ----------------------------------------------------------------------
         ON SEPTEMBER 30, 2002
         ---------------------

         Reported net earnings in the nine months ended  September 30, 2003 were
         $33.5 million (5.3% of revenues),  as compared to reported net earnings
         of $32.0 million (5.4% of revenues) in the nine months ended  September
         30, 2002.  Diluted EPS in the nine months ended  September 30, 2003 was
         $0.83,  as  compared  to  $0.80  per  share in the  nine  months  ended
         September 30, 2002.

         Excluding  the phantom  option  plan  non-cash  expenses  in 2003,  net
         earnings in the nine months ended September 30, 2003 were $36.2 million
         (5.7% of revenues) and the EPS was $0.90.

         Excluding the non-recurring charge under the OCS agreement, the phantom
         option  plan  effect  and  the  tax  adjustment,  net  earnings  in the
         nine-month  period ended September 30, 2002 were $36.3 million (6.8% of
         revenues) and the EPS was $0.91.

         The number of shares  used for  computation  of diluted EPS in the nine
         months ended September 30, 2003 was 40,198 thousand shares, as compared
         to 39,896  thousand shares in the nine months ended September 30, 2002.
         The  increase in the number of shares used for  computation  of diluted
         EPS was due mainly to the exercise of options by  employees  during the
         period.

         THREE MONTHS ENDED ON SEPTEMBER 30, 2003, COMPARED TO THREE MONTHS
         ------------------------------------------------------------------
         ENDED ON SEPTEMBER 30, 2002
         ---------------------------

         Reported  net  earnings in the quarter  ended  September  30, 2003 were
         $12.0 million (5.6% of revenues),  as compared to reported net earnings
         of $15.5 million (7.4% of revenues) in the quarter ended  September 30,
         2002. Diluted EPS in the quarter ended September 30, 2003 was $0.30, as
         compared to $0.39 in the quarter ended September 30, 2002.


<PAGE>

         Excluding the phantom option plan non-cash income in 2003, net earnings
         in the quarter  ended  September  30, 2003 were $9.6  million  (4.5% of
         revenues), and the EPS was $0.24.

         Excluding the phantom  option plan effect and the tax  adjustment,  net
         earnings  in the third  quarter  of 2002 were  $12.5  million  (5.9% of
         revenues) and the EPS was $0.31.

         The number of shares used for computation of diluted EPS in the quarter
         ended  September 30, 2003 was 40,406  thousand  shares,  as compared to
         39,772  thousand  shares in the quarter ended  September 30, 2002.  The
         increase  in the number of shares used for  computation  of diluted EPS
         was due mainly to exercise of options by employees during the period.

J.       LIQUIDITY AND CAPITAL RESOURCES
         -------------------------------

         The Company's cash flows are effected by the  cumulative  cash flows of
         its various  projects in the reported  periods.  Project cash flows are
         affected by the timing of the receipt of advances and the collection of
         accounts  receivable  from  customers,  which relate to specific events
         during the project,  while  expenses  are  on-going.  As a result,  the
         Company's cash flows may vary from one period to another.

         The  Company's  policy  is to  invest  its cash  surplus  primarily  in
         interest bearing deposits in accordance with its projected needs.

         The  resources   available  to  the  Company  include  mainly  profits,
         collection of accounts receivable,  advances from customers, as well as
         Government of Israel  grants and  participation  and bank  financing in
         Israel  and  elsewhere  based  on the  Company's  capital,  assets  and
         activities.  In  addition,  the  Company has the ability to raise funds
         through the offering of shares and  debentures  to the public from time
         to time.

         The Company's net cash flows generated from operating activities in the
         nine-month period ended September 30, 2003 were $12.7 million.

         Net cash flows used for investment  activities in the nine-month period
         ended September 30, 2003 were $37.4 million, which were used mainly for
         procurement of property,  plant and  equipment.  The  investments  were
         primarily in equipment for the Group's various manufacturing plants and
         in buildings  being  constructed at Elbit  Systems'  facility in Haifa,
         Israel and El-Op's site in Rehovot, Israel.

         Net cash flows used for financing  activities in the nine-month  period
         ended  September 30, 2003 were $5.7  million.  The cash flows were used
         mainly for reduction of long-term loans, which were partially offset by
         proceeds from share options exercised.

         On September 30, 2003,  the Company had total  borrowings in the amount
         of $107.8  million,  including $41.0 million in short-term  loans,  and
         $394.0 million in guarantees  issued on its behalf by banks,  mainly in
         respect of advance payment and performance  guarantees  provided in the
         regular  course of business.  On September 30, 2003,  the Company had a
         cash balance amounting to $45.9 million.

         As of  September  30, 2003,  the Company had working  capital of $185.4
         million and its current ratio was 1.47.  The Company's  ratio of equity
         to total assets was 46.6%.


<PAGE>

K.       DERIVATIVES AND HEDGE
         ---------------------

         Market risks relating to the Company's operations result primarily from
         changes in interest rates and exchange  rates,  and the Company may use
         financial  instruments to limit exposure.  The Company typically enters
         into  forward  contracts  in  connection  with  transactions  that  are
         denominated  in  currencies  other than US dollars and NIS. The Company
         may enter from time to time into forward contracts related to NIS.

         On September 30, 2003,  the Company's  liquid assets were  comprised of
         bank deposits,  and it had no  investments in liquid equity  securities
         that were subject to market  fluctuations.  The Company's  deposits and
         loans are  based on  variable  interest  rates,  and their  value as of
         September  30,  2003 was  therefore  not exposed to changes in interest
         rates.  Should interest rates either increase or decrease,  such change
         may affect the Company's  results of  operations  due to changes in the
         cost of its  liabilities and the return on its assets that are based on
         variable rates.

         The Company's  functional currency is the U.S. dollar. On September 30,
         2003, the Company had exposure due to liabilities denominated in NIS of
         $41.4  million  in  excess  of  its  NIS  denominated   assets.   These
         liabilities  represent  mostly  wages,  trade  payables and loans.  The
         amount of the Company's exposure to the changes in the NIS/US$ exchange
         rate may vary  from  time to time.  In order to hedge  against  certain
         expected NIS  payments,  the Company  entered  into  forward  contracts
         designated as hedging.  As of September  30, 2003,  the results of then
         existing  derivatives  were being deferred until payments are realized,
         which is expected to occur during  2003.  On  September  30, 2003,  the
         Company had forward  contracts  covering  NIS exposure in the amount of
         $6.9 million.

         Most of the Company's  assets and liabilities  which are denominated in
         currencies  other than the NIS and the U.S.  dollar were  covered as of
         September 30, 2003 by forward  contracts.  On September  30, 2003,  the
         Company  had  contracts  for the  sale  and  purchase  of such  foreign
         currencies totaling $28.2 million.

L.       DIVIDENDS
         ---------

         The Board of  Directors  declared  on  November  10, 2003 a dividend of
         $0.10 per share.

                                           * * *
         -----------------------------------------------------------------------
         Forward  looking  statements  with respect to the  Company's  business,
         financial  condition  and results of  operations  in this  document are
         subject to risks and  uncertainties  that could cause actual results to
         differ  materially  from those  contemplated  in such  forward  looking
         statements,  including,  but not limited to, product  demand,  pricing,
         market acceptance,  changing economic conditions,  risks in product and
         technology development, the effect of the Company's accounting policies
         as well as certain  other risk factors  which are detailed from time to
         time in the Company's SEC filings.





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>exhbit2.txt
<DESCRIPTION>EXHIBIT 2
<TEXT>

                                    EXHIBIT 2
                                    ---------


- --------------------------------------------------------------------------------
                     ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
- --------------------------------------------------------------------------------












                         CONDENSED INTERIM CONSOLIDATED
                              FINANCIAL STATEMENTS

                            AS OF SEPTEMBER 30, 2003
                            ------------------------
                                   (Unaudited)
                         (In thousands of U.S. dollars)

<PAGE>



- --------------------------------------------------------------------------------
                     ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES
- --------------------------------------------------------------------------------










C O N T E N T S


                                                                        P a g e
                                                                        -------


CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)

    Consolidated Balance Sheets                                          2 - 3

   Consolidated Statements of Operations                                   4

   Consolidated Statements of Changes in Shareholders' Equity            5 - 6

   Consolidated Statements of Cash Flows                                  7 - 8

   Notes to the Consolidated Financial Statements                        9 - 13







                                   # # # # # #






<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS

                         (In thousands of U.S. dollars)



<TABLE>
<CAPTION>
                                                                            September 30,        December 31,
                                                                                 2003                 2002
                                                                          ----------------    -----------------
                                                                             (Unaudited)            (Audited)

<S>                                                                           <C>                   <C>
CURRENT ASSETS
  Cash and cash equivalents                                                   $45,947               $76,280
  Short-term bank deposits                                                      1,509                 1,650
  Trade receivables, net of allowance for doubtful
    accounts of $3,622 and $3,411 as of September 30,
    2003 and December 31, 2002, respectively.                                 211,818               227,724
  Other receivables and prepaid expenses                                       40,892                34,376
  Inventories, net of advances                                                280,542               220,399
                                                                          ----------------    -----------------
  Total current assets                                                        580,708               560,429
                                                                          ----------------    -----------------

INVESTMENTS AND LONG-TERM RECEIVABLES
 Investments in affiliated companies and partnership                           24,265                21,947
 Investments in other companies                                                11,092                11,104
  Long-term receivables                                                           315                20,859
  Long-term bank deposits and loan                                              1,972                 3,686
 Severance pay fund                                                             7,626                 6,641
                                                                          ----------------    -----------------
                                                                               45,270                64,237
                                                                          ----------------    -----------------

PROPERTY, PLANT AND EQUIPMENT, NET                                            219,882               202,961
                                                                          ----------------    -----------------



OTHER ASSETS, NET
  Goodwill, net                                                                32,559                32,162
  Know-how and other intangible assets, net                                    69,525                73,607
                                                                          ----------------    -----------------
                                                                              102,084               105,769
                                                                          ----------------    -----------------

                                                                             $947,944              $933,396
                                                                          ================    =================
</TABLE>

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
                       CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES



CONSOLIDATED BALANCE SHEETS

                (In thousands of U.S. dollars except share data)



<TABLE>
<CAPTION>
                                                                            September 30,        December 31,
                                                                                 2003                 2002
                                                                          ----------------    -----------------
                                                                             (Unaudited)            (Audited)

<S>                                                                             <C>                <C>
CURRENT LIABILITIES
  Short-term bank credit and loans                                              $41,049            $30,915
  Trade payables                                                                103,244             82,521
  Other payables and accrued expenses                                           156,262            140,981
  Customer advances in excess of costs incurred                                  94,751            108,418
                                                                          ----------------    -----------------
  Total current liabilities                                                     395,306            362,835
                                                                          ----------------    -----------------

LONG-TERM LIABILITIES
  Long-term loans                                                                66,792             73,173
  Advances from customers                                                         1,766             40,411
  Deferred income taxes                                                          14,536             16,413
  Accrued severance pay                                                          23,113             24,486
                                                                          ----------------    -----------------
                                                                                106,207            154,483
                                                                          ----------------    -----------------

MINORITY INTEREST                                                                 4,296              4,717
                                                                          ----------------    -----------------

SHAREHOLDERS' EQUITY
  Share capital

    Ordinary shares of NIS 1 par value; Authorized - 80,000,000
      shares; Issued- 39,609,547 shares and 39,212,328 shares as
      of September 30, 2003 and December 31, 2002, respectively;
      Outstanding - 39,200,726 shares and 38,803,507 shares as
      of September 30, 2003 and December 31, 2002, respectively                  11,242             11,154
  Accumulated other comprehensive loss                                           (2,025)            (2,882)
  Additional paid-in capital                                                    255,706            248,387
  Retained earnings                                                             181,533            159,023
  Treasury stock- 408,821 shares                                                 (4,321)            (4,321)
                                                                          ----------------    -----------------
                                                                                442,135            411,361
                                                                          ----------------    -----------------

                                                                               $947,944           $933,396
                                                                          ================    =================
</TABLE>

                  THE ACCOMPANYING NOTES ARE AN INTEGRAL PART
                    OF THE CONSOLIDATED FINANCIAL STATEMENTS.



<PAGE>

                    ELBIT SYSTEMS LTD. AND ITS SUBSIDIARIES



CONSOLIDATED STATEMENTS OF OPERATIONS

              (In thousands of U.S. dollars, except per share data)


<TABLE>
<CAPTION>
                                                       NINE MONTHS ENDED              THREE MONTHS ENDED            YEAR ENDED
                                                          SEPTEMBER 30,                  SEPTEMBER 30,              DECEMBER 31,
                                                      2003             2002           2003           2002              2002
                                                    -----------   -----------       -----------   -----------       ------------
                                                           (UNAUDITED)                       (UNAUDITED)              (AUDITED)
                                                    -------------------------       --------------------------      ------------

<S>                                                 <C>             <C>             <C>             <C>             <C>
Revenues                                            $ 635,223       $ 589,143       $ 214,275       $ 210,155       $ 827,456
Cost of revenues                                     (464,882)       (424,415)       (158,078)       (150,738)       (595,512)
Chief Scientist  ("OCS")                                    -          (9,801)              -               -          (9,801)
                                                    -----------   -----------       -----------   -----------       ------------
           Gross profit                               170,341         154,927          56,197          59,417         222,143
                                                    -----------   -----------       -----------   -----------       ------------

Research and development costs, net                    43,006          39,710          14,518          14,785          57,010
Marketing and selling expenses                         50,696          47,289          15,573          17,346          65,691
General and administrative expenses                    33,924          30,741          11,035          10,760          41,651
                                                    -----------   -----------       -----------   -----------       ------------

                                                      127,626         117,740          41,126          42,891         164,352
                                                    -----------   -----------       -----------   -----------       ------------

         Operating income                              42,715          37,187          15,071          16,526          57,791

Financial expenses, net                                (3,467)           (690)           (161)           (595)         (3,035)
Other income (expenses), net                              332            (524)            241            (115)           (462)
                                                    -----------   -----------       -----------   -----------       ------------
       Income before taxes on income                   39,580          35,973          15,151          15,816          54,294
Taxes on income                                        10,502           6,810           3,900           1,565           9,348
                                                    -----------   -----------       -----------   -----------       ------------
                                                       29,078          29,163          11,251          14,251          44,946
Equity in net earnings of affiliated companies
   and partnership                                      3,938           2,554             989           1,114             675
Minority interest                                         456             269            (234)            139            (508)
                                                    -----------   -----------       -----------   -----------       ------------
         Net income                                 $  33,472       $  31,986       $  12,006       $  15,504       $  45,113
                                                    ===========   ===========       ===========   ===========       ============
  Earnings per share

   Basic earnings per share                         $    0.86       $    0.83       $    0.31       $    0.40       $    1.17
                                                    ===========   ===========       ===========   ===========       ============

 Weighted average number of shares used in
    computation (in thousands)                         38,994          38,459          39,168          38,515          38,489
                                                    ===========   ===========       ===========   ===========       ============

 Diluted earnings per share                         $    0.83       $    0.80       $    0.30       $    0.39       $    1.13
                                                    ===========   ===========       ===========   ===========       ============

 Weighted average number of shares used
    in computation (in thousands)                      40,198          39,896          40,406          39,772          39,863
                                                    ===========   ===========       ===========   ===========       ============

</TABLE>

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
                       CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                         (In thousands of U.S. dollars)



<TABLE>
<CAPTION>
                                                                                Accumulated
                                                                    Additional     other                                   Total
                                             Number of   Share       paid-in  comprehensive  Retained   Treasury       comprehensive
                                             Shares      capital      capital      loss      earnings   stock     Total    income
                                             ------      -------      -------      ----      --------   -----     -----    ------

<S>                                          <C>          <C>        <C>       <C>          <C>        <C>       <C>         <C>
UNAUDITED
Balance as of January  1, 2003               38,803,507   $11,154    $248,387  $(2,882)     $159,023   $(4,321)  $411,361
Exercise of options                             397,219        88       3,808        -             -         -      3,896
Tax benefit in respect of options exercised         477         -           -        -           477
Amortization of deferred stock compensation           -         -       3,034        -             -         -      3,034
Dividend paid                                         -         -           -        -       (10,962)        -    (10,962)
Net income                                            -         -           -        -        33,472         -     33,472    $33,472
Unrealized gains on derivative instruments            -         -           -      857             -         -        857        857
                                             ----------   -------    --------  -------      --------   -------   --------    -------
BALANCE AS OF SEPTEMBER 30, 2003             39,200,726   $11,242    $255,706  $(2,025)     $181,533   $(4,321)  $442,135    $34,329
                                             ==========   =======    ========  =======      ========   =======   ========    =======


Balance as of January 1, 2002                38,330,272   $11,054    $244,625        -      $126,627   $(4,321)  $377,985
Exercise of options                             205,093        45       1,866        -             -         -      1,911
Tax benefit in respect of options exercised           -         -         390        -             -         -        390
Amortization of deferred stock compensation           -         -      (1,216)       -             -         -     (1,216)
Dividend paid                                         -         -           -        -        (9,249)        -     (9,249)
Net income                                            -         -           -        -        31,986         -     31,986    $31,986
                                             ----------   -------    --------  -------      --------   -------   --------    -------
BALANCE AS OF SEPTEMBER 30, 2002             38,535,365   $11,099    $245,665        -      $149,364   $(4,321)  $401,807    $31,986
                                             ==========   =======    ========  =======      ========   =======   ========    =======


</TABLE>







               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
                       CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CONT.)

                         (In thousands of U.S. dollars)


<TABLE>
<CAPTION>
                                                                               Accumulated
                                                                   Additional     other                                   Total
                                             Number of   Share      paid-in  comprehensive  Retained   Treasury       comprehensive
                                             Shares      capital     capital      loss      earnings   stock     Total    income
                                             ------      -------     -------      ----      --------   -----     -----    ------

<S>                                          <C>          <C>       <C>       <C>          <C>        <C>       <C>         <C>
UNAUDITED BALANCE AS OF JULY 1, 2003         39,152,148   $11,231   $258,580    $(738)    $173,438    $(4,321)  $438,190
Exercise of options                              48,578        11        470        -            -          -        481
Tax benefit in respect of options exercised           -         -         43        -            -          -         43
Amortization of deferred stock compensation           -         -     (3,387)       -            -          -     (3,387)
Dividend paid                                         -         -          -        -       (3,911)         -     (3,911)
Net income                                            -         -          -        -       12,006          -     12,006     12,006
Unrealized losses on derivative instruments           -         -          -   (1,287)           -          -     (1,287)    (1,287)
                                             ----------   -------   --------  -------     --------    -------   --------    -------
BALANCE AS OF SEPTEMBER 30, 2003             39,200,726   $11,242   $255,706  $(2,025)    $181,533    $(4,321)  $442,135    $10,719
                                             ==========   =======   ========  =======     ========    =======   ========    =======

BALANCE AS OF JULY 1, 2002                   38,905,182   $11,090   $245,902        -     $136,940    $(4,321)  $389,611
Exercise of options                              39,004         9        312        -            -          -        321
Tax benefit in respect of options exercised           -         -         54        -            -          -         54
Amortization of deferred stock compensation           -         -       (603)       -            -          -       (603)
Dividend paid                                         -         -          -        -       (3,080)         -     (3,080)
Net income                                            -         -          -        -       15,504          -     15,504    $15,504
                                             ----------   -------   --------  -------     --------    -------   --------    -------
BALANCE AS OF SEPTEMBER 30, 2002             38,944,186   $11,099   $245,665        -     $149,364    $(4,321)  $401,807    $15,504
                                             ==========   =======   ========  =======     ========    =======   ========    =======

AUDITED BALANCE AS OF JANUARY  1, 2002       38,330,272   $11,054   $244,625        -     $126,627    $(4,321)  $377,985
 Exercise of options                            473,235       100      4,040        -            -          -      4,140
 Tax benefit in respect of options exercised          -         -        648        -            -          -        648
 Amortization of deferred stock compensation          -         -       (926)       -            -          -       (926)
 Dividend paid                                        -         -          -        -      (12,717)         -    (12,717)
 Net income                                           -         -          -        -       45,113          -     45,113    $45,113
 Minimum pension liability                            -         -          -   (2,882)           -          -     (2,882)    (2,882)
                                             ----------   -------   --------  -------     --------    -------   --------    -------
BALANCE AS OF DECEMBER 31, 2002              38,803,507   $11,154   $248,387  $(2,882)    $159,023    $(4,321)  $411,361    $42,231
                                             ==========   =======   ========  =======     ========    =======   ========    =======

</TABLE>


               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
                       CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                         (In thousands of U.S. dollars)


<TABLE>
<CAPTION>
                                                                                  NINE MONTHS ENDED        YEAR ENDED
                                                                                     SEPTEMBER 30,        DECEMBER 31,
                                                                                 2003          2002          2002
                                                                                     (UNAUDITED)           (AUDITED)
                                                                               ------------------------   -------------
<S>                                                                            <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                                   $  33,472     $  31,986     $  45,113
  Adjustments to reconcile net income to net cash provided by
     operating activities:
      Depreciation and amortization                                               27,966        25,598        32,937
         Amortization of deferred stock compensation                               3,034        (1,216)         (926)
      Deferred income taxes                                                         (199)          382        (5,620)
      Severance pay fund                                                            (985)          915          (113)
      Accrued severance pay                                                       (1,553)        1,007         6,373
      Loss (gain) on disposal of property, plant and equipment                      (870)          372           743
      Tax benefit in respect of options exercised                                    477           390           648
      Minority interests                                                            (456)         (269)          508
      Equity in net earnings of affiliated companies and partnership,
       net of dividend received (*)                                               (2,773)       (2,554)         (675)
      Other adjustments                                                              472          (369)          683

    Changes in operating assets and liabilities:

       Decrease in trade and other receivables and prepaid expenses               35,339        40,572        58,554
       Increase in inventories                                                   (52,909)      (54,826)      (55,106)
       Increase (decrease) in trade and other payables and accrued expenses       27,740       (30,867)      (19,321)
       Increase (decrease) in advances received from customers                   (55,607)       41,755        42,999
       Liabilities to Chief Scientist                                               (447)        9,935         9,197
                                                                               ------------  ----------   -------------
  Net cash provided by operating activities                                       12,701        62,811       115,994
                                                                               ------------  ----------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property, plant and equipment and other assets                     (43,494)      (30,353)      (46,003)
  Investment grants received for property, plant and equipment                         -             -           119
  Acquisition of businesses and subsidiaries (Schedule A)                         (2,458)       (5,280)       (5,280)
  Investments in affiliated companies and subsidiaries                                 -        (1,784)       (1,681)
  Proceeds from sale of property, plant and equipment and investments              4,831           805           956
   Long-term loan granted                                                              -             -          (714)
   Long-term loan repaid                                                           2,400             -             -
   Short-term loan repaid (granted)                                                 (350)            -         1,371
  Long-term bank deposits made                                                    (1,064)         (555)       (1,228)
  Long-term bank deposits redeemed                                                 1,820           818         1,689
  Short-term bank deposits, net                                                      955           180          (204)
                                                                               ------------  ----------   -------------
         Net cash used in investing activities                                   (37,360)      (36,169)      (50,975)
                                                                               ------------  ----------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from exercise of options                                                3,896         1,911         4,140
  Repayment of long-term bank loans                                              (23,212)       (1,634)       (3,249)
  Proceeds from long-term bank loans                                              10,000         2,241         2,233
  Dividends paid                                                                 (10,962)       (9,249)      (12,717)
   Change in short-term bank credit and loans, net                                14,604       (15,092)      (19,729)
                                                                               ------------  ----------   -------------
         Net cash used in financing activities                                    (5,674)      (21,823)      (29,322)
                                                                               ------------  ----------   -------------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             (30,333)        4,819        35,697
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD                          76,280        40,583        40,583
                                                                               ------------  ----------   -------------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD                             $  45,947     $  45,402     $  76,280
                                                                               ============  ==========   =============
     (*)  Dividend received                                                    $   1,165       $     -       $     -
                                                                               ============  ==========   =============

</TABLE>


               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
                       CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.)

                         (In thousands of U.S. dollars)


<TABLE>
<CAPTION>

                                                                          NINE MONTHS ENDED                YEAR ENDED
                                                                            SEPTEMBER 30,                  DECEMBER 31,
                                                                           2003            2002              2002
                                                                       ------------   ------------        -------------
                                                                             (UNAUDITED)                    (AUDITED)

<S>                                                                     <C>              <C>                   <C>
SUPPLEMENTARY CASH FLOWS ACTIVITIES:

     Cash paid during the period for:

       Income taxes                                                     $11,144          $17,878               $21,730
                                                                       ============   ===========         ==============
       Interest                                                          $2,645           $2,778                $2,947
                                                                       ============   ===========         ==============


SCHEDULE A:
Acquisition of businesses and subsidiaries

Estimated net fair value of assets acquired and liabilities
assumed at the date of acquisition:

     Working capital deficiency (except cash and cash equivalents)         $632        $      -                   $  -
     Property, plant and equipment                                         (249)           (275)                 (275)
     Know-how and other intangible assets                                (1,309)         (5,078)               (5,078)
     Deferred income taxes                                               (1,765)              -                      -
     Long-term liabilities                                                  198               -                      -
     Minority interest                                                       35               -                      -
                                                                       ------------   ------------          ------------

                                                                         (2,458)         (5,353)               (5,353)
                                                                       ------------   ------------          ------------
     Less- short- term debt incurred on acquisition                           -              73                     73
                                                                       ------------   ------------          ------------
                                                                        $(2,458)        $(5,280)              $(5,280)

</TABLE>



               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE
                       CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES

           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED



NOTE 1  - GENERAL

         The accompanying financial statements have been prepared in a condensed
         format as of  September  30,  2003,  and for the nine  months and three
         months then ended in  accordance  with  generally  accepted  accounting
         principles in the United States (U.S. GAAP) relating to the preparation
         of  financial  statements  for  interim  periods.  See  Note 6 for  the
         reconciliation from US GAAP to accounting principles generally accepted
         in Israel (Israeli GAAP).

         THESE  FINANCIAL  STATEMENTS  SHOULD  BE READ IN  CONJUNCTION  WITH THE
         COMPANY'S  ANNUAL  FINANCIAL  STATEMENTS AND  ACCOMPANYING  NOTES AS OF
         DECEMBER 31, 2002.

         The interim financial  statements reflect all adjustments which are, in
         the opinion of management,  necessary for a fair presentation. All such
         adjustments were of a normal recurring nature.  Reclassifications  have
         been made to  comparative  data in the balance sheet as of December 31,
         2002, in order to conform with the current year's presentation.

         Operating results for the nine months ended September 30, 2003, are not
         necessarily indicative of the results that may be expected for the year
         ending December 31, 2003.

NOTE 2 - SIGNIFICANT ACCOUNTING  POLICIES

             A.   The   significant   accounting   policies   followed   in  the
                  preparation of these statements are identical to those applied
                  in preparation of the latest annual financial statements.

                  The  accompanying  financial  statements have been prepared in
                  U.S.  dollars  since the  functional  currency  of the primary
                  economic  environment  in which  the  operations  of the Group
                  (which includes Elbit Systems Ltd. and its  subsidiaries)  are
                  conducted is the U.S. dollar.

             B.   RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

                  In January 2003,  the  Financial  Accounting  Standards  Board
                  issued   Interpretation  No.  46,  Consolidation  of  Variable
                  Interest  Entities,  an interpretation of Accounting  Research
                  Bulletin No. 51 ("the interpretation"). In general, a variable
                  interest  entity (VIE) is an entity that has (1)  insufficient
                  amount of  equity  for the  entity  to carry on its  principal
                  operations,  without additional subordinated financial support
                  from other  parties,  (2) a group of equity  investors that do
                  not have the ability  through voting or similar rights to make
                  decisions  about the  entity's  activities,  or (3) a group of
                  equity investors that do not have the obligation to absorb the
                  entity's  losses or have the right to receive the  benefits of
                  the entity. The



<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES

                       NOTES TO THE CONSOLIDATED FINANCIAL
                         STATEMENTS - UNAUDITED (CONT.)


NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.)

             B. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS (Cont.)

                  interpretation  requires  the  consolidation  of a VIE  by the
                  primary  beneficiary.  The primary  beneficiary  is the entity
                  that  absorbs a  majority  of the  entity's  expected  losses,
                  receives a majority of the entity's expected residual returns,
                  or  both,  as a  result  of  ownership,  contractual  or other
                  financial interests in the entity.

                  Presently,   entities  are   generally   consolidated   by  an
                  enterprise that has a controlling  financial  interest through
                  ownership of a majority voting interest in the entity.

                  Pursuant  to FASB Staff  Position  Fin 46-6,  the  Company has
                  decided to apply the provisions of this  interpretation  as of
                  December  31, 2003,  in respect of variable  interests in VIEs
                  created  before  February  1,  2003.  The  provisions  of this
                  interpretation apply immediately to variable interests in VIEs
                  created after January 31, 2003.  Since the Company has no such
                  interests  in  VIEs  created  after  January  31,  2003,   the
                  application  of  this  interpretation  had  no  impact  on the
                  Company's  consolidated  results of operations or consolidated
                  balance sheet to date.

                  The Company has investments in and loans to various  companies
                  that are engaged  primarily in the fields of high  technology.
                  Most  of  these   companies  are  in  their  early  stages  of
                  development   and  will   require   substantial   third  party
                  investments  until they can finance their  activities  without
                  additional  support from other  parties.  These  companies are
                  currently primarily funded with financing from venture capital
                  funds,  other  holding  companies and private  investors.  The
                  investments in these  companies are  consolidated or accounted
                  for by the equity or cost method by the Company.

                  The  Company  is  currently  evaluating  the  effects  of this
                  interpretation  in respect of its investments.  It is possible
                  that some of its unconsolidated  investees may be considered a
                  VIE in accordance with the interpretation.  Accordingly, if it
                  is determined that the Company is the primary beneficiary of a
                  VIE, the Company will be required to consolidate the financial
                  statements of such a VIE with its own financial  statements as
                  of December 31, 2003.

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES

                       NOTES TO THE CONSOLIDATED FINANCIAL
                         STATEMENTS - UNAUDITED (CONT.)


NOTE 3 - INVENTORIES, NET OF ADVANCES


<TABLE>
<CAPTION>
                                                                    DECEMBER 31,              SEPTEMBER 30,
                                                                       2003                        2002
                                                                    (UNAUDITED)                  (AUDITED)
                                                                  ----------------          -----------------
         <S>                                                         <C>                            <C>
         Cost of long-term contracts in progress                     $268,535                    $210,418
         Raw materials                                                 80,890                      75,579
         Advances to suppliers and subcontractors                      19,337                      25,047
                                                                     --------                    --------
                                                                      368,762                     311,044
         Less-
         Cost of contracts in progress deducted
           from customer advances                                      15,354                      10,658
                                                                     --------                    --------
                                                                      353,408                     300,386
         Less -
         Advances received from customers                              59,650                      67,624
         Provision for losses                                          13,216                      12,363
                                                                     --------                    --------
                                                                     $280,542                    $220,399
                                                                     ========                    ========

         </TABLE>

NOTE 4 - ACQUISITION OF COMPANY

         On June 30,  2003,  the Company  (through  El-Op)  acquired  all of the
         outstanding  ordinary  shares of Optronics  Instruments & Products N.V.
         (O.I.P.),  a company  registered in Belgium,  in consideration for Euro
         1.6 million  ($1,846) in cash. The acquisition was accounted for by the
         purchase method of accounting.

         O.I.P. develops,  manufactures and supports  electro-optical  products,
         mainly for the defense and space markets.

         The following table  summarizes the estimated fair values of the assets
         acquired and liabilities assumed at the date of acquisition.

             Current assets                                            $6,896
             Property and equipment                                       168
             Deferred tax assets                                        1,700
                                                                       ------
                Total assets acquired                                   8,764

             Current liabilities                                       (6,918)
                                                                       ------
             Net assets acquired                                       $1,846
                                                                       ======



<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES

                       NOTES TO THE CONSOLIDATED FINANCIAL
                         STATEMENTS - UNAUDITED (CONT.)

NOTE 5 - STOCK-BASED COMPENSATION

         The Company has elected to follow  Accounting  Principles Board Opinion
         No. 25, ("APB 25")  "Accounting  for Stock Issued to Employees" and the
         FASB  Interpretation  No.  44,  "Accounting  for  Certain  Transactions
         Involving  Stock  Compensation"  in accounting  for its employee  stock
         option  plans.  According to APB 25,  compensation  expense is measured
         under the intrinsic value method, whereby compensation expense is equal
         to the excess,  if any, of the quoted  market price of the stock at the
         grant  date of the award or other  measurement  date over the  exercise
         price.

         The  following  pro  forma  information  presents  the  effect  on  the
         Company's  consolidated  stock-based employee compensation expense, net
         income  and  earnings  per  share as if the  fair  value  based  method
         provided  under FASB Statement No. 123 ("SFAS 123") had been applied to
         all outstanding awards in each period.

         Under SFAS 123,  the fair value of each option  grant was  estimated on
         the date of grant using the Black-Scholes option-pricing model.


<TABLE>
<CAPTION>

                                                       NINE MONTHS ENDED            THREE MONTHS ENDED             YEAR ENDED
                                                          SEPTEMBER 30,                SEPTEMBER 30,               DECEMBER 31,
                                                  -----------------------------    ---------------------------     -----------
                                                      2003              2002          2003          2002               2002
                                                  -------------      ----------    -----------      ----------     -----------
                                                          (UNAUDITED)                  (UNAUDITED)              (AUDITED)
                                                               472                                         5

<S>                                               <C>                <C>            <C>             <C>             <C>
Net income as reported                            $      33,472      $   31,986     $   12,006      $   15,504      $   45,113

Stock- based compensation expense
  (income), net of related tax effects as
  reported                                                2,710            (687         (2,427)           (209)           (767)
Stock- based compensation expense  under fair
 value based method of SFAS 123,
  net of  related tax effects                            (2,217)         (2,161           (739)           (720)         (3,059)
                                                  -------------      ----------    -----------      ----------      ----------

Pro forma net income                              $      33,965      $   29,138    $     8,840      $   14,575      $   41,287
                                                  =============      ==========    ===========      ==========      ==========

Basic earnings per share as reported              $        0.86      $     0.83    $      0.31      $     0.40      $     1.17
                                                  =============      ==========    ===========      ==========      ==========

Pro forma basic earnings per share                $        0.87      $     0.76    $      0.23      $     0.38      $     1.07
                                                  =============      ==========    ===========      ==========      ==========

Diluted earnings per share as reported            $        0.83      $     0.80    $      0.30      $     0.39      $     1.13
                                                  =============      ==========    ===========      ==========      ==========

Pro forma diluted earnings per share              $        0.84      $     0.70    $      0.22      $     0.37      $     1.04
                                                  =============      ==========    ===========      ==========      ==========

</TABLE>

<PAGE>

                               ELBIT SYSTEMS LTD.
                              AND ITS SUBSIDIARIES

                       NOTES TO THE CONSOLIDATED FINANCIAL
                         STATEMENTS - UNAUDITED (CONT.)

NOTE 6 - RECONCILIATION TO ISRAELI GAAP

         As described in Note 1, the Company  prepares its financial  statements
         in accordance with U.S. GAAP. See Note 26 to the 2002 annual  financial
         statements  for a description  of the  differences  between US GAAP and
         Israeli GAAP in respect of the Company.  The effects of the differences
         between US GAAP and Israeli GAAP on the Company's financial  statements
         are detailed below.

         1. Effect on net income and earnings per share

<TABLE>
<CAPTION>
                                                                 Nine months ended              Year ended
                                                                   September 30,               December 31,
                                                                2003          2002                 2002
                                                                    (Unaudited)                 (Audited)
<S>                                                            <C>         <C>                  <C>
         Net income as reported according to U.S. GAAP         $33,472     $31,986              $45,113
              Adjustments to Israeli GAAP                          847      (3,163)              (4,227)
                                                               -------      -------              -------
         Net income according to Israeli GAAP                  $34,319      $28,823              $40,886
                                                               =======      =======              =======
</TABLE>


         2. Effect on shareholders' equity

<TABLE>
<CAPTION>
                                                                                                        As per
                                                                   As reported       Adjustments     Israeli GAAP
                                                                   -----------       -----------     ------------
<S>                                                                   <C>                 <C>             <C>
            As of September 30, 2003 (Unaudited)
              Shareholders' equity                                    $442,135            $(10,706)       $431,429
                                                                      ========            ========        ========

            As of December 31, 2002 (Audited)
              Shareholders' equity                                    $411,361            $(11,076)       $400,285
                                                                      ========            ========        ========
</TABLE>




                                  # # # # # # #






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>5
<FILENAME>exhibit3.txt
<DESCRIPTION>EXHIBIT 3
<TEXT>

                                    EXHIBIT 3
                                    ---------


[GRAPHICS OMITTED]


EARNINGS RELEASE


                ELBIT SYSTEMS REPORTS THIRD QUARTER 2003 RESULTS
                ------------------------------------------------

Backlog of Orders Reaches $1.7 billion; Revenues at $214 Million;

HAIFA,  ISRAEL,  NOVEMBER 11, 2003 - ELBIT SYSTEMS LTD. (THE "COMPANY") (NASDAQ:
ESLT),  the  international  defense  company,  today  reported its  consolidated
results for the quarter ended September 30, 2003.

CONSOLIDATED  REVENUES FOR THE THIRD QUARTER OF 2003 reached  $214.3  million as
compared to $210.2 million in the corresponding quarter in 2002.

CONSOLIDATED  REVENUES FOR THE NINE MONTHS ENDED  SEPTEMBER  30, 2003  increased
7.8% to $635.2 million from $589.1 million in the same period in 2002.

CONSOLIDATED  NET INCOME FOR THE THIRD  QUARTER OF 2003 was $12 million (5.6% of
revenues) as compared  with $15.5  million (7.4% of revenues) in the same period
in 2002.

DILUTED  EARNINGS  PER SHARE  (EPS) FOR THE THIRD  QUARTER  OF 2003 was $0.30 as
compared with $0.39 for the third quarter of 2002.

CONSOLIDATED  NET  INCOME FOR THE FIRST  NINE  MONTHS OF 2003 was $33.5  million
(5.3% of  revenues),  compared  with $32 million (5.4% of revenues) for the same
period in 2002.

DILUTED EPS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2003 was $0.83 compared with
$0.80 for the corresponding period of 2002.

The Company's  financial results were affected by the changes in its share price
during the first nine months of 2003 and during the third  quarter of 2003.  The
non-cash effect related to the employees  "phantom" option plan on the Company's
results  (net of taxes)  resulted  in a $2.7  million  expense in the first nine
months of 2003 and $2.4 million income in the third quarter of 2003.

CONSOLIDATED  NET INCOME FOR THE THIRD  QUARTER OF 2003,  EXCLUDING  THE PHANTOM
OPTION PLAN EFFECT was $9.6 million or $0.24 per share.

EXCLUDING THE PHANTOM OPTION PLAN EFFECT,  CONSOLIDATED  NET INCOME FOR THE NINE
MONTHS ENDED  SEPTEMBER 30, 2003 was $36.2 million (5.7% of revenues),  or $0.90
per share.


<PAGE>

In 2002, the Company's  financial results for nine-month period ending September
30, were affected by a one time charge  related to an agreement  with the Office
of the Chief  Scientist  ("OCS")  amounting to $9.8 million (before tax) and tax
credit amounting to $2.8 million.  Excluding the Israeli OCS one-time charge the
tax adjustment and the phantom option plan effect, net income for the nine-month
period ended  September 30, 2002 was $36.3  million (6.2% of revenues),  and the
EPS was $0.91.

GROSS  PROFIT  FOR THE  THIRD  QUARTER  OF 2003  was  $56.2  million  (26.2%  of
revenues), as compared with gross profit of $59.4 million (28.3% of revenues) in
the third quarter of 2002.

EXCLUDING THE COMPANY'S PHANTOM OPTION PLAN EFFECT,  GROSS PROFIT IN THE QUARTER
ENDED SEPTEMBER 30, 2003, was $54.5 million, or 25.4% of revenues.

EXCLUDING  THE PHANTOM  OPTION PLAN EFFECT,  GROSS  PROFIT IN THE QUARTER  ENDED
SEPTEMBER 30, 2002 was $59.2 million, or 28.2% of revenues.

Gross  profit for the first nine  months of 2003 was  $170.3  million  (26.8% of
revenues) as compared with $154.9 million (26.3% of revenues) in the same period
of 2002.

EXCLUDING  THE  COMPANY'S  PHANTOM  OPTION PLAN EFFECT GROSS PROFIT FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 2003 was $172.2 million, or 27.1% of revenues.

EXCLUDING THE NON-RECURRING  CHARGE UNDER THE OCS AGREEMENT,  THE PHANTOM OPTION
PLAN EFFECT, GROSS PROFIT FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2002 was
$164.2 million, or 27.9% of revenues.

THE  COMPANY'S  BACKLOG OF ORDERS AS OF SEPTEMBER 30, 2003 crossed for the first
time the $1.7 billion mark,  reaching  $1,702  million,  as compared with $1,689
million at the end of 2002.  Approximately  58% of the  Company's  backlog as of
September 30, 2003, is scheduled to be performed in the last quarter of 2003 and
during 2004. The growth of the Company's  backlog is still being affected by the
continued postponement in placing orders by the Israeli Ministry of Defense.

The President and CEO of Elbit Systems, Joseph Ackerman,  commented:  "While our
revenues for the first three  quarters of this year are 7.8% ahead of last year,
and we reached a record  level of backlog,  we did not meet all of our goals for
the third  quarter.  This was due in part,  to delays  in  receipt  of orders we
expected to sell in the period, and we hope that the uncertainties existing with
regards to the Israel Defense Ministry budget will be resolved.  In parallel, we
are  implementing  steps to further  reduce costs and improve our efficiency and
bottom line."

The Board of  Directors  declared  a  dividend  of $0.10 per share for the third
quarter of 2003.  The dividend  will be paid on December 15, 2003,  net of taxes
and levies,  at the rate of 19%.  The record date of the dividend is December 2,
2003.

CONFERENCE CALL

Elbit Systems will host a conference call today,  TUESDAY,  NOVEMBER 11, 2003 at
10:30 AM ET. To take part in the  conference  call,  please dial  1-877-332-1104
(U.S. and Canada) or 1-866-500-4953 (U.S.) or +972-3-925-5910  (International) a
few minutes before the 10:30 AM ET START TIME. For your convenience,  AN INSTANT
REPLAY WILL BE  AVAILABLE  STARTING at 12:30 PM ET the same day until  Thursday,
November 13, 2003 at 5:00 PM ET. The replay telephone  number is  1-866-500-4953
(U.S. and Canada) or +972-3-925-5945 (International).


<PAGE>

This call will also be broadcasted live on: www.elbit.co.il and an online replay
will be available for 30 days.

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
AND  INTELLIGENCE  (C4I) 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 .

CONTACT

Ilan Pacholder, Vice President                          Marilena LaRosa
  & Corporate Secretary
Elbit Systems Ltd                                       Investor Relations
Tel: 972-4 831-6632                                     The Anne McBride Company
Fax: 972-4 831-6659                                     1212-983-1702 ext. 208
pacholder@elbit.co.il                                   mlarosa@annemcbride.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.

                                        (FINANCIAL TABLES FOLLOW)


<PAGE>



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


<TABLE>
<CAPTION>
                                                                          September 30         December 31
                                                                              2003                2002
                                                                        ----------------    ---------------
                                                                         Unaudited             Audited

<S>                                                                           <C>                 <C>
ASSETS
- ------

Current Assets:
Cash and short term deposits                                                  47,456              77,930
Trade receivable and others                                                  252,710             262,100
Inventories, net of advances                                                 280,542             220,399
                                                                        ----------------    ---------------
Total current assets                                                         580,708             560,429

Affiliated Companies & other Investments                                      35,357              33,051
Long-term receivables & others                                                 9,913              31,186
Fixed Assets, net                                                            219,882             202,961
Other Assets, net                                                            102,084             105,769
                                                                        ----------------    ---------------
                                                                             947,944             933,396
                                                                        ================    ================

LIABILITIES AND SHAREHOLDER'S EQUITY
- ------------------------------------

Current liabilities                                                          395,306             362,835
Long-term liabilities                                                        106,207             154,483
Minority Interest                                                              4,296               4,717
Shareholder's equity                                                         442,135             411,361
                                                                        ----------------    ---------------
                                                                             947,944             933,396
                                                                        ================    ================

</TABLE>



<PAGE>



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


<TABLE>
<CAPTION>
                                                                                                      For the Year
                                                   Nine Months Ended          Three Months Ended          Ended
                                                      September 30               September 30          December 31
                                                   2003          2002         2003          2002          2002
                                                 ----------    -----------    ---------   ----------     ----------
                                                       Unaudited                   Unaudited             Audited

<S>                                               <C>            <C>          <C>          <C>           <C>
Revenues                                          635,223        589,143      214,275      210,155       827,456
Cost of revenues                                  464,882        434,216      158,078      150,738       605,313
                                                 ----------    -----------    ---------   ----------     ----------
  Gross Profit                                    170,341        154,927       56,197       59,417       222,143

Research and development, net                      43,006         39,710       14,518       14,785        57,010
Marketing and selling                              50,696         47,289       15,573       17,346        65,691
General and administrative                         33,924         30,741       11,035       10,760        41,651
                                                 ----------    -----------    ---------   ----------     ----------
Total operating expenses                          127,626        117,740       41,126       42,891       164,352
                                                 ----------    -----------    ---------   ----------     ----------

Operating income                                   42,715         37,187       15,071       16,526        57,791

Financial expenses, net                            (3,467)          (690)        (161)        (595)       (3,035)
Other income (expenses), net                          332           (524)         241         (115)         (462)
                                                 ----------    -----------    ---------   ----------     ----------
  Income before income taxes                       39,580         35,973       15,151       15,816        54,294
Provisions for income taxes                        10,502          6,810        3,900        1,565         9,348
                                                 ----------    -----------    ---------   ----------     ----------
                                                   29,078         29,163       11,251       14,251        44,946

Company's share of partnerships and
affiliated Companies income (loss), net             3,938          2,554          989        1,114           675

Minority rights                                       456            269         (234)         139          (508)
                                                 ----------    -----------    ---------   ----------     ----------
  Net income                                       33,472         31,986       12,006       15,504        45,113
                                                 ==========    ===========    =========   ==========     ==========

Basic Earnings per share                             0.86           0.83         0.31         0.40          1.17
                                                 ==========    ===========    =========   ==========     ==========

Diluted net earnings per share                       0.83           0.80         0.30         0.39          1.13
                                                 ==========    ===========    =========   ==========     ==========

===================================================================================================================

Net earnings excluding phantom plan effect
in 2003 and 2002, non-recurring OCS charge
and tax adjustment in 2002                         36,182        36,339        9,579       12,496        50,153
                                                 ==========    ===========    =========   ==========     ==========

Diluted earnings per share excluding phantom
plan effect in 2003 and 2002,  non-recurring
OCS charge and tax adjustment in 2002                0.90          0.91         0.24         0.31          1.26
                                                 ==========    ===========    =========   ==========     ==========
</TABLE>




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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