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<SEC-DOCUMENT>0000910680-06-000914.txt : 20070103
<SEC-HEADER>0000910680-06-000914.hdr.sgml : 20070101
<ACCEPTANCE-DATETIME>20060914103630
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0000910680-06-000914
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20060914

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:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		ADVANCED TECHNOLOGY CENTER
		STREET 2:		PO BOX 539
		CITY:			HAIFA, ISRAEL
		STATE:			L3
		ZIP:			31053
		BUSINESS PHONE:		01197248316626

	MAIL ADDRESS:	
		STREET 1:		ADVANCED TECHNOLOGY CENTER
		STREET 2:		PO BOX 539
		CITY:			HAIFA, ISRAEL
		STATE:			L3
		ZIP:			31053
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
<FILENAME>filename1.htm
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<P ALIGN=RIGHT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>September 13, 2006&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT></P>


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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Linda Cvrkel<BR>
Branch Chief<BR>
Mail Stop 3651<BR>
Securities and Exchange Commission<BR>
450 Fifth Street, N.W.<BR>
Washington, D.C. 20549</FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Re:  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=85%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;&nbsp;<U>Elbit
Systems Ltd. Annual Report on Form 20-F/A for the year ended December 31, 2005 (File No.
000-28998)</U>&nbsp; </FONT></TD>
</TR>
</TABLE>
<BR>


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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Dear Ms. Cvrkel: </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Set forth herein are responses of Elbit
Systems Ltd. (the &#147;Company&#148;) to the comments contained in the comment letter of
the staff of the Securities and Exchange Commission (the &#147;Staff&#148;), dated August
8, 2006, with respect to the Company&#146;s Form 20-F/A for the fiscal year ended December
31, 2005 (the &#147;Form 20-F&#148;), filed with the Commission on July 6, 2006. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>At your request, we hereby
acknowledge that: </FONT></P>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149; </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
Company is responsible for the adequacy and accuracy of the disclosure in its filing; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;Staff
comments or changes to disclosure in response to Staff comments in the filings reviewed
by the Staff do not foreclose the Commission from taking any action with respect to the
filing; and  </FONT></TD>
</TR>
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<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;  </FONT></TD>
<TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;the
Company may not assert Staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United States.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For your convenience, we have
reprinted the Staff&#146;s written comments below prior to the Company&#146;s responses.
The numbering corresponds to the comment numbers in the Staff&#146;s above referenced
letter. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Courtesy copies of this letter have
been sent to the Staff&#146;s examiners via courier. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-1- </FONT></P>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Notes to consolidated
financial statements, page 10 &#150; General</U> </FONT></P>

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<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>We
note from a Reuters news article dated May 18, 2006, that Russia has           refused to
certify the upgrades to certain </I><I>helicopters. Please tell us           and revise
future filings as necessary to include disclosures as to the impact           that this
</I><I>refusal will have on your results of operations, if           significant.</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response</U>: </FONT></H1>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company has performed numerous upgrade programs for helicopters of both eastern and
western origin. This includes upgrade programs for helicopters originally of Russian
design. As indicated in the Form 20-F in Item 4 (Information on the Company &#150; Current
Business Operations &#150; Military Aircraft and Helicopter Systems &#150; Helicopter
Upgrade Programs), in December 2005, the Company was awarded an approximately $70 million
contract to upgrade MI-24 and MI-17 helicopters for the Bulgarian Air Force.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
the terms of the contract for the program, the Company is permitted to obtain
certification of the upgrade from certification authorities in Bulgaria. Therefore, even
though the aircraft was originally of Russian design, certification of the upgrade by
Russian authorities is not mandatory for the Bulgarian program. The contract for the
Bulgarian program is being performed. The Company and the customer for the program are
currently discussing potential changes to the contract schedule and other program matters
unrelated to the certification issue, and the Company anticipates that these matters will
be mutually agreed.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Certification
by non-Russian authorities of upgrades of originally Russian designed aircraft platforms
is not uncommon for programs of this nature, and none of the Company&#146;s other
helicopter or fixed wing aircraft upgrade programs have in the past or currently require
such Russian certification. Therefore, the Company estimates that the issue of Russian
certification will not have a significant effect on the Company&#146;s results of
operation and will not result in the need to revise future filings.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Acquisitions During 2005</U> </FONT></P>

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<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>Given
the Company&#146;s acquisitions of a 40% interest in Tadiran           Communications
during 2004 and 2005, please explain how Elbit </I><I>Systems           portion of
Tadiran Communications results of $3.8 million was determined. Also,           please
explain what the &#147;net </I><I>effect&#148; of $(11.1) million is           supposed
to represent as it is unclear from your disclosure on page 72.</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-2- </FONT></P>


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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response</U>: </FONT></H1>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
acquisition of Tadiran Communication Ltd.&#145;s (&#147;Tadiran&#148;) shares was made in
several stages during the last quarter of 2004 and during 2005 as described in Note 1.G
of the Company&#146;s 2005 financial statements. The Company reached a 40% interest in
Tadiran only at the last quarter of 2005. The Company&#146;s share in Tadiran&#146;s
results (before investor&#146;s adjustments according to the equity method) was
calculated based on the weighted average holding percentage in Tadiran during each
quarter of 2005. Due to the recurring nature of Tadiran&#146;s operations during each
quarter, such weighted average calculation would not be materially differ from a
calculation of the Company&#146;s share in Tadiran&#146;s results based upon the actual
holding percentage at any given time. The weighted average calculation is described in
the following table (U.S.$ in millions):  </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE CELLPADDING=0 CELLSPACING=0 BORDER=0 ALIGN=Center WIDTH=100%>
<TR VALIGN=Bottom>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Q1-2005</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Q2-2005</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Q3-20005</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Q4-2005</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2005</FONT><HR WIDTH=100% SIZE=1 COLOR=BLACK NOSHADE></TH></TR>
<TR VALIGN=Bottom>
     <TD WIDTH=58% ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Percentage held at the beginning of quarter</FONT></TD>
     <TD WIDTH=9% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.3%</FONT></TD>
     <TD WIDTH=9% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.6%</FONT></TD>
     <TD WIDTH=9% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21.3%</FONT></TD>
     <TD WIDTH=9% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.5%</FONT></TD>
     <TD WIDTH=6% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=6><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Percentage acquired during the quarter</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.3%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>14.7%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.2%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.5%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=6><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Percentage held at the quarter end</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.6%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>21.3%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>26.5%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>40%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=6><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Weighted average holding percentage(*)</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.7%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>18.1%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>23.3%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>31%</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=6><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Tadiran results</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.7</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.2</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>13.5</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-7.5</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR>
     <TD COLSPAN=6><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
<TR VALIGN=Bottom>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The Company's portion</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>0.6</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.4</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-2.3</FONT></TD>
     <TD ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.8</FONT></TD></TR>
<TR>
     <TD COLSPAN=6><HR NOSHADE COLOR=#000000 SIZE=1></TD></TR>
</TABLE>

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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=90%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
*
The weighted average holding percentage was calculated based on the relevant proportional
amount of the interest acquired in the applicable quarter multiplied by the number of
days such interest was held in the quarter.  </FONT></TD>
</TR>
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<BR>

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<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
&#147;net effect&#148; of the $11.1 million loss represents the net equity in losses of
Tadiran that were included in the income statement line item &#147;Equity in net earnings
(losses) of affiliated companies and partnerships&#148;. This amount includes the Company&#146;s
share in Tadiran&#146;s results of $3.8 million in income as discussed above, and the
amortization of the investor&#146;s fair value adjustments according to the equity
method. In 2005, such amortization included write off of the amount allocated to In
Process R&amp;D ($8.5 million) and the amortization of amounts allocated to the inventory
($2 million) and intangible assets ($4.4 million) of Tadiran.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-3- </FONT></P>

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<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>Please
verify why the $3.5 of pre-contract costs relating to duplicated           inventories
and equipment were accounted for as </I><I>restructuring costs           rather than
included as adjustments to the purchase price allocation.</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

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<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response</U>: </FONT></H1>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
As
mentioned in EITF 95-3, &#147;Recognition of Liabilities in Connection with a Purchase
Business Combination&#148;, costs related to activities or employees of the acquiring
company are not considered in the purchase price allocation because the cost of the
acquisition is not allocated to the assets and liabilities of the acquiring company as
discussed in Technical Bulletin 85-5.  </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
pre-contract costs relating to inventories and equipment written off represent inventory
and equipment that existed in the Company (i.e. the acquirer) at the time Elisra was
acquired and that became redundant due to advanced technology that existed at Elisra and
which would be used in place of the Company&#146;s own technology. Since the assets
written off were related to the acquirer they were included in the Company&#146;s results
and not as an adjustment to the purchase price allocation.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Note 1. General &#150; G.
page 12</U> </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>In
future filings, please revise Note 1.G to include disclosure of the           primary
reasons for the Tadiran acquisition, </I><I>including a description of           the
factors that contributed to a purchase price that results in recognition of
          goodwill. Refer </I><I>to the disclosure requirements outlined in paragraph 51b
          of SFAS No. 141. Additionally, in future filings, please revise </I><I>your
          disclosure of the purchase price allocation to show how the total purchase
price           for each step of the acquisition was </I><I>allocated to the major
categories           of assets and liabilities acquired, as opposed to showing only the
allocation of           the </I><I>excess purchase price to intangible assets and
goodwill. Refer to           the guidance outlined in paragraph 51e of SFAS No. 141. </I><I>The
disclosures           provided in Note 1.H. with regards to the acquisition of Elisra
should be           similarly revised.</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response</U>: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
future filings we will so revise Note 1.G with respect to the Tadiran acquisition and
purchase price allocation. We will also revise in future filings Note 1.H with regards to
the Elisra acquisition. The Notes will be revised in accordance with the disclosure
requirements in SFAS 141 paragraphs 51b and 51e.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-4- </FONT></P>

<DIV STYLE="page-break-after:always"></DIV>
<!-- MARKER PAGE="sheet: 4; page: 4" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER FORMAT-SHEET="Para Default" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><IMG SRC="elbitlogo0913.jpg"><BR><IMG SRC="elbitlogocorp091306.jpg"></FONT></P>




<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Note 7. Compensation
Receivables in Respect of Fire Damage, page 36</U> </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>5.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>Please
explain why you believe it is appropriate to reflect a receivable in           your
financial statements for amounts </I><I>aggregating $25,884 from your           insurer
when it appears this amount is subject to a dispute with your insurance
          company. As </I><I>part of your response, please explain why you do not believe
          this amount represents a gain contingency pursuant to paragraph </I><I>17 of
          SFAS No. 5 which should not be recognized in your financial statements until
          realized. Please note that in accordance </I><I>with the guidance outlined in
          paragraph 140 of SOP 96-1, the existence of pending litigation surrounding the
          collection of </I><I>this claim provides a rebuttable presumption that the
          realization of this claim is not probable. Please explain in detail </I><I>why
          you believe the collection of this claim is probable. Also, explain how the
          amount recognized for this claim was </I><I>classified in your statement of
          operations. We may have further comment upon receipt of your response.</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response</U>: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>A.
$25.9 million Recorded as a Receivable</U> </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
fire occurred at the manufacturing facilities of Elisra Electronic Systems Ltd.&#145;s (&#147;Elisra&#148;)
subsidiaries Tadiran Electronic Systems Ltd. and Tadiran Spectralink Ltd. (the &#147;Subsidiaries&#148;)
prior the acquisition of Elisra&#146;s shares by the Company. Elisra and the Subsidiaries
are referred to as the &#147;Elisra Group&#148;. The fire caused damage to equipment,
building, inventory and work in progress. The book value of the equipment, inventory and
costs incurred in the work in progress damaged by the fire, together with the costs of
repairing the buildings and other assets, was approximately $36 million. Through December
31, 2005, advances were received from the insurance company in the aggregate amount of
approximately $10 million, and therefore a net amount of $25.9 million was recorded as a
receivable in Elisra&#146;s books prior to its acquisition by the Company. This amount
does not represent a contingent gain according to paragraph 17 of SFAS No. 5 since, as
explained above, the recognition of the receivable did not result in a gain.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
claim submitted by the Elisra Group to the insurance company (which is based on the terms
of the insurance policy) also includes a demand for consequential damages along with
other damages that the Elisra Group believes are covered by the insurance policy.
Therefore, the total amount of the claim is much higher than the asset recorded in the
balance sheet.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Elisra Group is pursuing legal action in order to receive the insurance amounts and
submitted a claim to the District Court of Tel-Aviv against the insurance company and its
assessors, in the aggregate amount of approximately $96 million (representing total
damages of approximately $106 million less the advance received). Also, the Elisra Group
filed a motion for partial summary judgment for an amount of approximately $23 million,
which based on preliminary evidentiary findings, the Elisra Group believes, is not in
dispute. Together with interest, such amount as of the acquisition date was approximately
$26 million.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-5- </FONT></P>

<DIV STYLE="page-break-after:always"></DIV>
<!-- MARKER PAGE="sheet: 5; page: 5" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER FORMAT-SHEET="Para Default" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><IMG SRC="elbitlogo0913.jpg"><BR><IMG SRC="elbitlogocorp091306.jpg"></FONT></P>


<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
It
is common practice in Israel that insurance litigation of this nature can continue for an
extended period. During the course of this litigation, at the court&#146;s request, the
parties referred the matter to a mediator, which suspended the court proceedings,
including the motion for partial summary judgment. The mediation did not result in a
determination. Therefore the matter is currently being remanded to the court, and the
Elisra Group intends to reassert the motion for partial summary judgment as well as to
actively pursue the entire claim.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Elisra&#146;s
management estimated, based on the opinion of its legal advisors, that it is probable
that the Elisra Group will receive compensation from the insurance company in an amount
at least equivalent to the receivable currently recorded as an asset in the financial
statements. Pursuant to paragraph 8 in FAS 5, as this amount is probable to be received,
Elisra did not record a loss in respect of the fire at the time the fire occurred. In
addition, Elisra did not record any future gain to be realized pursuant to paragraph 17
of SFAS 5.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Under
the agreement for the purchase of the Elisra shares, the Company agreed to pay to the
seller, Koor Industries Ltd. (&#147;Koor&#148;), a portion of the consideration to be
received from the insurance company under the fire damage insurance claim. As part of the
allocation of Elisra&#146;s acquisition cost, the Company allocated an amount of $15.5
million to the insurance company receivable (net of $10.4 million to be paid to Koor in
the event that $25.9 million is collected from the insurance company). This amount was
determined based on the guidance in paragraph 40 of FAS 141 relating to pre-acquisition
contingencies.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
During
the allocation period, the fair value of this contingency (i.e. the insurance company
claim) could not have been determined by the Company. However, as described above, at the
time of the acquisition it was probable, based on the opinion of Elisra&#146;s legal
advisors that an asset existed in respect of the fire damage insurance claim. Moreover,
the opinion of Elisra&#146;s legal advisors was found to be reasonable by the Company&#146;s
legal advisors. Therefore, the Company estimated the amount of the receivable in respect
of the fire damage insurance claim in the amount that the Elisra Group believes, based on
preliminary evidentiary findings, is not in dispute, which as mentioned above amounted to
approximately $26 million at the acquisition date. The Company deducted from the $26
million the amount to be paid to Koor in the event that $26 million will be collected
from the insurance company (i.e. $10.4 million) and recorded as part of the purchase
price allocation an asset (i.e. the receivable) of approximately $15.5 million.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
<U>B.
Classification of Claim in Statement of Operations</U></FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
receivable in respect to the compensation from the claim by the Elisra Group against the
insurance company relating to the fire damage was part of the assets acquired by the
Company in the acquisition of Elisra in the last quarter of 2005. As such, no amount
related to this claim was included in the Company&#146;s statements of operations.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-6- </FONT></P>

<DIV STYLE="page-break-after:always"></DIV>

<!-- MARKER PAGE="sheet: 6; page: 6" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER FORMAT-SHEET="Para Default" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><IMG SRC="elbitlogo0913.jpg"><BR><IMG SRC="elbitlogocorp091306.jpg"></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Note 10. Intangible
Assets, page 39</U> </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>6.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>Please
revise the notes to your financial statements in future filings to           include an
analysis of the changes in goodwill </I><I>that occurred during the           periods
presented in your consolidated balance sheets. Refer to the requirements           of
paragraph 45c </I><I>of SFS No. 142.</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response:</U> </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
future filings we will so revise the notes of the Company&#146;s financial statements to
include an analysis of the changes in goodwill that occurred during the periods presented
in the consolidated balance sheets.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Note 17 &#150;
Commitments and Contingent Liabilities, page 51</U> </FONT></P>

<!-- MARKER FORMAT-SHEET="Para (List) Hang Level 2" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>7.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>Please
tell us and explain in Note 17 how you accounted for the put option           with
respect to Kinetics outstanding shares that </I><I>was held by three           founding
employees prior to its expiration on December 31, 2005. If no           accounting
recognition was </I><I>required with respect to this put option,           please explain
your basis for this conclusion.</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response</U>: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
The
Company accounted for the put option with respect to Kinetics in accordance with EITF
00-6 &#147;Accounting for Freestanding Derivative Financial Instruments Indexed to, and
Potentially Settled in, the Stock of a Consolidated Subsidiary&#148; until July 1, 2003
and from such date pursuant to the provisions of SFAS 150. Both pursuant to EITF 00-6 and
FAS 150 the put option written by the Company in respect of Kinetics shares should be
carried at fair value with changes in fair value recognized in earnings. Throughout the
period since the put option came into effect and until its expiration date the fair value
of the option was not material to the Company&#146;s balance sheet and results of
operations. As of December 31, 2004 the fair value of the Kinetics option was
approximately $150,000, and as of December 31, 2005 the option was expired. Accordingly,
the put option was not recognized in the Company&#146;s financial statements.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2><U>Form 6-K for the Month of
March 2006, filed March 16, 2006</U> </FONT></P>

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<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD ALIGN=RIGHT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.  </FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=91%><P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;<I>We
note several non-GAAP measures used in the earnings release such as net           income,
gross profit margin and diluted earnings </I><I>per share excluding           one-time
charges such as IPR&amp;D and write-offs relate to the purchase of           Elisra
shares. Please note that </I><I>these non-GAAP measures must be           displayed with
equal prominence of the most directly comparable GAAP measure and           reconciled
</I><I>to the most comparable measure under U.S. GAAP. Revise future           filings to
incorporate the reconciliations and disclosures. </I><I>Refer to           Regulation G,
Item 100(a).</I> </FONT></P></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-7- </FONT></P>

<DIV STYLE="page-break-after:always"></DIV>
<!-- MARKER PAGE="sheet: 7; page: 7" -->
<HR SIZE=5 COLOR=GRAY NOSHADE>

<!-- MARKER FORMAT-SHEET="Para Default" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><IMG SRC="elbitlogo0913.jpg"><BR><IMG SRC="elbitlogocorp091306.jpg"></FONT></P>


<!-- MARKER FORMAT-SHEET="Head Major Left Bold" FSL="Default" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=3><U>Response</U>: </FONT></H1>

<!-- MARKER FORMAT-SHEET="Para Flush Level 1" FSL="Default" -->
<TABLE WIDTH=100% CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=5%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp; </FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
In
future filings, if non-GAAP measures are included, the Company will so incorporate the
reconciliations and disclosures with respect to non-GAAP measures as required. It should
be noted that consistent with the Staff&#146;s comment the Company omitted these non-GAAP
measures in its Form 20-F for fiscal year 2005.  </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush" FSL="Default" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Please feel free to contact the
undersigned at 011-972-4-8316663 if you have any questions about this letter. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Sincerely, </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Left" FSL="Default" -->
<P ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/&nbsp;Joseph Gaspar<BR>Joseph Gaspar<BR>
Corporate Vice President and<BR>
Chief Financial Officer </FONT></P>


<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="70%">
<TR VALIGN="TOP">
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">cc:</FONT></TD>
     <TD WIDTH="95%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Heather Tress,<BR>
U.S. Securities and Exchange Commission<BR>
<BR>
Henry I. Rothman, Esq.<BR>
Troutman Sanders LLP<BR>
<BR>
Ilan Gizbar<BR>
Kost Forer Gabbay &amp; Kasierer, a member of Ernst &amp; Young Global<BR>
<BR>
David Block Temin<BR>
Ilan Pacholder<BR>
Elbit Systems Ltd<BR>
<BR>
</FONT></TD></TR>
</TABLE>
<BR><BR><BR><BR><BR><BR>

<!-- MARKER FORMAT-SHEET="Head Minor Center" FSL="Default" -->
<P ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>-8- </FONT></P>


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</SEC-DOCUMENT>
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