PETAH TIKVA, Israel -- ECI Telecom Ltd. (Nasdaq: ECIL - News) today announced consolidated results of operations for the second quarter and six months ended June 30, 2002. Revenues for the second quarter of 2002 were $188 million compared to $195 million in the first quarter of 2002 and $266 million in the second quarter of 2001. Revenues in the second quarter of last year include $15.5 million from Business Systems, which was sold during the 4th quarter of 2001. Gross profit was $72.6 million (38.6% of revenues), compared to gross profit of $71.7 million (36.8%) in the first quarter of 2002 and $79.8 million, (29.9%) in the second quarter of 2001. The operating loss for the second quarter of 2002 was ($4.2 million) compared to a pro forma operating loss of ($4.0 million) in the first quarter - excluding $15.8 million of one time charges and a pro forma operating loss of ($24.8 million) in the second quarter of last year - excluding $9.9 million of one time charges. The net loss for the second quarter of 2002 was ($7.5 million), or ($0.07) per share compared to a pro forma net loss of ($8 million) or ($0.08) per share in the first quarter, excluding one time gains and charges, and pro forma ($26.1 million), or ($0.28) per share for the same period last year excluding one time charges. During the quarter, ECI continued to improve its balance sheet. The Company repaid an additional $13.3 million of bank debt. Nevertheless, net cash (cash, equivalents and short term investments minus bank debt) increased to $88 million, compared to $53 million at the end of the first quarter and negative $87 million at the end of 2001. During the quarter, inventories declined by $25 million and trade receivables by almost $10 million. During the quarter, the Company agreed to defer a portion of the interest due (up to $11 million), in the next 18 months, on a $115 million long term receivable. Commenting on the results, Doron Inbar, President and CEO said, "Although the market continued to deteriorate in the second quarter, ECI made progress in its three main priorities: preserving the top line, improving financial performance and pursuing key strategic markets. ECI also made significant progress in building its international Board of Directors and senior management team. Industry conditions are expected to continue to deteriorate in the second half of 2002. As a result, the Company expects third quarter revenues to decline roughly 13% - 17% compared to the second quarter of 2002, due primarily to declines at Inovia, and at Innowave. The Company is working to minimize the impact of the revenue decline on its operating results. ECI Telecom Ltd.