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Elbit Systems to record $7m expenses for 2001 due to 45% rise in share price

Company says share price could continue impacting earnings in the future

Elbit Systems (Nasdaq:ESLT) was among the most successful shares in 2001. The shares rose by 45%, from $12.75 at the beginning of 2001, to $18.5 at year-end. The rise benefited both investors and employees holding stock options.

But the company will have to pay for the sharp rise of the share price.

Today Elbit Systems announced it is to record $7 million net expenses after tax for 2001. Most of this write down will be recorded in the fourth quarter of 2001.

The reason for this is the change in the accounting booking method of the "phantom" options allocated to the workers in the course of 2000. Elbit Systems said that the share price could continue impacting its earnings also in the future, as long as a significant volume of these options has not been exercised.

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In November 2000, the company allocated 2.5 million "phantom" stock options. These can be exercised beginning two years from the end of the lockup period, and up to six years from their allocation.

President and CEO Joseph Ackerman received 10% of these "phantom" options.