ECI Reports Flat Q3

PETAH TIKVA, Israel - ECI Telecom Ltd. (Nasdaq: ECIL - news) today announced consolidated results of operations for the third quarter and nine months ended September 30, 2001. Revenues for the third quarter of 2001 were $262.9 million compared to $266.4 million in the second quarter of 2001 and $310.3 million in the third quarter of 2000. Gross profit was $83.1 million compared to $84.5 million in the second quarter of 2001 and $135.7 million in the third quarter of 2000. Excluding one-time items, the operating loss for the third quarter of 2001 was ($16.8 million) compared to an operating loss of ($24.8 million) in the second quarter of 2001 and operating income of $7.4 million for the third quarter of 2000. Including one-time items (mainly impairment of assets), the operating loss for the third quarter of 2001 was ($65.1 million), compared to an operating loss of ($34.7 million) in the second quarter of 2001, and operating income of $5.4 million for the third quarter of 2000. During the quarter, the Company wrote down $56.8 million, of which $46.8 million was the impairment of goodwill related to the merger with Tadiran Telecommunications (in accordance with FAS-121). This is the result of the significant reduction in projected revenues of the acquired businesses, mainly Enavis. The Company also wrote off $10 million associated with equity investments in three different start-up companies. On a pro-forma basis, the net loss from continuing operations for the third quarter of 2001 was ($21.4 million) or ($0.23) per diluted share compared to ($26.1 million) or ($0.28) per diluted share for the second quarter of 2001 and net income of $8.4 million or $0.09 per diluted share in the third quarter of 2000. The net loss, including one time items, was ($76.8 million), or ($0.83) per diluted share in the third quarter of 2001, compared to a net loss of ($36.0 million) or ($0.39) per share in the second quarter of 2001 and net income of $6.5 million, or $0.07 per diluted share for the same period last year.ECI Telecom Ltd.