Gross profit in the fourth quarter ended December 31, 2008 was $1.1 million (11.9% of revenues) compared with $895,000 reported in the fourth quarter of 2007 (9.1% of revenues). The improved gross margin was achieved primarily as a result of reduced raw material consumption.

Net loss for the fourth quarter of 2008 was $784,000 (on a non-GAAP basis) before an impairment of goodwill charge and related expenses, or $0.12 per fully diluted share (non-GAAP), compared with a net loss of $472,000 or $0.07 per fully diluted share for the same period in 2007. In the fourth quarter of 2008 the Company recorded an impairment of goodwill charge in respect of its German subsidiary, Kubatronik Leiterplatten GmbH, in the amount of $379,000 and general and administrative expenses of $126,000 associated with the write down of its investment in Kubatronik. Net loss in the fourth quarter of 2008 after such impairment charge amounted to $1.3 million or $0.20 per fully diluted share.

EBITDA:

In fiscal year 2008, Eltek had EBITDA of $ 983,000 compared to EBITDA of $2.1 million in fiscal year 2007. In the fourth quarter ended December 31, 2008, Eltek recorded negative EBITDA of ($169,000) compared with EBITDA of $113,000 in the comparable period in 2007.

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

Management Comments:

Arieh Reichart, President and Chief Executive Officer of Eltek commented: “2008 was a tough year in a very difficult and unprecedented operating environment, in which we were forced to battle two disparate phenomenons. The first, the weakness of the US dollar during the first three quarters of the year, which adversely affected our results, but we managed to minimize such adverse effect mainly through increased sales and a reduced rate of raw material consumption. The second phenomenon, the global financial crisis caused many of our customers to reduce their inventory by withholding purchase orders, thus the immediate effect on us was a significant decline in our revenues in the fourth quarter. Eltek is prepared for the upcoming challenges in 2009 and has taken a number of steps to cope with the new market conditions.”

“We recently received the necessary approval from US authorities that enables us to sell PCBs to the defense industry, an important market for us. This license has opened the gate for us to a major potential market, which we estimate to account for approximately 40% of the relevant military rigid-flex and high-reliability boards in the western world. We are working hard to leverage this opportunity, which we believe is an important element in the course of our returning to profitability. In 2008, revenues from customers in the defense and medical markets, sectors that we believe have suffered less than other sectors from the current crisis, accounted for 66% of our total revenues, and following a period of inventory adjustments, we believe these customers will once again place orders for our products, as we began to see in the first quarter of 2009,” Mr. Reichart concluded.

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Amnon Shemer, CFO of Eltek, added: “The major portion of our loss in 2008 was recorded in the first and the last quarters. In the first quarter, the loss was due the impact of the plunge of the US dollar that affected the profitability of the large backlog of signed orders we had on hand at the time. We managed to reduce the loss in the second quarter and to break even in the third quarter, although the exchange rate of the dollar was still below NIS/$3.5, which demonstrates our capability to overcome this negative factor. Similarly, we believe that we have implemented an operating plan that will allow us to deal with the negative effects of the downturn caused by the global financial crisis.”

“We have executed a cost reduction plan, including a reduction in the number of employees and a salary cut for all management personnel. We expect that these steps along with increased revenues and the higher dollar exchange rate will lead to improved results in the first quarter of 2009,” added Mr. Shemer.

“The loss we incurred in 2008 along with our repayments of long term loans to the banks and for capital expenditures, resulted in a reduced cash position at year end. We are working with our banks and other financial institutions to obtain additional lines of credit”. Mr. Shemer concluded.

About the Company

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

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Forward Looking Statement:

Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to statements regarding expected results in future quarters, risks in product and technology development and rapid technological change, product demand, the impact of competitive products and pricing, market acceptance, the sales cycle, changing economic conditions and other risk factors detailed in the Company’s Annual Report on Form 20-F and other filings with the United States Securities and Exchange Commission.

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Eltek ltd.
Consolidated Statements of Operations
(In thousands US$, except per share data)

			Year ended						Three months ended
			December 31,						December 31,
			2008			2007			2008			2007
			Unaudited			Audited			Unaudited			Unaudited
Revenues				43,138			37,476			8,982			9,889
Costs of revenues				(37,282	)		(31,879	)		(7,915	)		(8,994	)
Gross profit				5,856			5,597			1,067			895
Research and development income (expenses), net				100			(74	)		0			25
Selling, general and administrative expenses				(7,199	)		(5,683	)		(1,778	)		(1,377	)
Impairment loss on goodwill				(379	)		0			(379	)		0
Operating loss				(1,622	)		(160	)		(1,090	)		(457	)
Financial expenses, net				(826	)		(145	)		(222	)		(31	)
Loss before other income, net				(2,448	)		(305	)		(1,312	)		(487	)
Other income, net				1			8			0			3
Loss before tax expenses				(2,447	)		(297	)		(1,312	)		(484	)
Income tax expenses				0			0			0			0
Loss after taxes on income				(2,447	)		(297	)		(1,312	)		(484	)
Minority interests				1			(4	)		23			12
Net loss for the period				(2,446	)		(301	)		(1,289	)		(472	)
Basic net loss per ordinary share				(0.37	)		(0.05	)		(0.20	)		(0.07	)
Diluted net loss per ordinary share				(0.37	)		(0.05	)		(0.20	)		(0.07	)
Weighted average number of ordinary shares
used to compute basic net loss per
ordinary share (in thousands)				6,610			6,247			6,610			6,610
Weighted average number of ordinary shares
used to compute diluted net loss per
ordinary share (in thousands)				6,610			6,247			6,610			6,610

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Eltek ltd.
Consolidated Balance Sheets
(In thousands US$)

			December 31,
			2008			2007
			Unaudited			Audited
Assets
Current assets
Cash and cash equivalents				1,556			2,467
Receivables: Trade, net of provision for doubtful accounts				7,248			8,173
Other				229			742
Inventories				4,429			4,271
Prepaid expenses				181			204
Total current assets				13,643			15,857
Assets held for employees' severance benefits				1,166			1,319
Fixed assets, less accumulated depreciation				10,090			10,997
Goodwill				554			1,009
Total assets				25,453			29,182
Liabilities and Shareholder's equity
Current liabilities
Short-term credit and current maturities of long-term debts				5,898			4,623
Accounts payable: Trade				5,381			6,669
Related parties				561			685
Other				3,684			3,147
Total current liabilities				15,524			15,124
Long-term liabilities
Long term debt, excluding current maturities				2,607			4,243
Employee severance benefits				1,363			1,388
Total liabilities				19,494			20,755
Minority interests				330			353
Shareholders' equity
Ordinary shares, NIS 0.6 par value authorized 50,000,000
shares, issued and outstanding 6,610,107 as of December
31, 2008, and 6,609,807 as of December 31, 2007				1,384			1,384
Additional paid-in capital				14,328			14,328
Cumulative translation adjustment related to change in reporting currency				2,596			2,412
Cumulative foreign currency translation adjustments				268			451
Capital reserve				695			695
Accumulated deficit				(13,642	)		(11,196	)
Total shareholders equity				5,629			8,074
Total liabilities and shareholders equity				25,453			29,182

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Non-GAAP EBITDA Reconcilliations

			Year ended						Three months ended
			December 31,						December 31,
			2008			2007			2008			2007
GAAP net loss				(2,446	)		(301	)		(1,289	)		(472	)
Add back items:
Financial expenses, net				826			145			222			31
Impairment loss on goodwill				379			0			379			0
Depreciation				2,224			2,264			519			554
Adjusted EBITDA				983			2,108			(169	)		113

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Non-GAAP Earnings Reconcilliations

			Year ended						Three months ended
			December 31,						December 31,
			2008			2007			2008			2007
Net loss before goodwill impairment charge and
general and administrative expenses associated
with the write down of the investment in
Kubatronik (non-GAAP)				(1,941	)		(301	)		(784	)		(472	)
Add back items:
Goodwill impairment charge				(379	)		0			(379	)		0
General and administrative expenses associated with
the write down of the investment in Kubatronik				(126	)		0			(126	)		0
GAAP net loss				(2,446	)		(301	)		(1,289	)		(472	)

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