ECI Telecom Announces Record Orders And Earnings For The First Quarter 1997.

PETAH TIKVA, Israel--(BUSINESS WIRE)--May 15, 1997--

First Quarter Revenues Increase 22%; Net Income up 23%

Gross Margins Widen Significantly

ECI TELECOM LTD. (NASDAQ/NM Symbol: ECILF), today announced consolidated unaudited results of operations for the first quarter ended March 31, 1997.

Revenues for the first quarter increased by 22% to $160,059,000 compared with $131,559,000 for the comparable period in 1996. Gross profits rose 24% from $63,146,000 to $78,094,000. Operating income increased by 33% from $23,633,000 to $31,404,000. Net income for the first quarter rose 23% to $29,421,000, or $0.39 per share, compared with $24,016,000 or $0.32 per share, in the corresponding period last year.

The Company recorded growth across all Strategic Business Units except ACCESS. Particularly strong were sales of DCME and SDH, which rose by 70% and 74%, respectively, compared with the first quarter of 1996. Telematics demonstrated early signs of turn around.

The ACCESS Business Unit had an 11% decrease in revenues compared with the first quarter of 1996 as a result of the late arrival of several substantial orders, some of which were received and announced late in the quarter.

The trend of gross margin erosion was reversed in the quarter. Gross margins of 48.8% increased by 80 basis points compared with the first quarter of 1996 and 320 basis points compared with the last quarter margins of 45.6%. The improvement is attributable mainly to the product mix and to the effect of DCME and Telematics performance on the sales mix.

The DCME Business Unit continued its strong growth as the new product families of DTX-360 and Quadcoder were deployed globally.

The SDH Strategic Business Unit introduced the SDM-1 micro miniature multipurpose 155Mbit/s add and drop multiplexer family, SDM-16 (2.5Gbit/s). It has been received enthusiastically.

Telematics SBU sales increased 5% over last year and 17% on a sequential quarter basis. Sales included revenue from all three new product lines; NCX 1E6-ATM, NCX FRS-800 - Frame Relay and the mass dial up Access platform - "Nevada".

Geographical distribution of sales indicates overall stronger sales in the U.S. compared with 1996.

Inventories were $165 million, an $11.8 million decrease compared with the last quarter.

Further to a Board of Directors' decision, an interim quarterly cash dividend of $0.05 per share, to be paid out of 1997 profits, will be distributed on or about June 12, 1997. The dividend, net of taxes to be withheld at source and in compliance with Israel's foreign currency law, will be paid to shareholders of record as of the close of business on May 3, 1997.

A provider of integrated network solutions, ECI TELECOM designs, develops, manufacturers and markets digital telecommunications and data transmission systems, enabling network operators to deliver cost-effective services. ECI TELECOM's systems provide capacity expansion, flexibility and management functions to better utilize existing and new telecommunications, data and integrated networks.

This press release and additional information about the Company, is now available on ECI TELELCOM's site on the World Wide Web: http//www.ecitele.com

Certain statements contained in this release, contain forward-looking information with respect to plans, projections or future performance of the Company, the occurrence of which involves certain risks and uncertainties, including, but not limited to, product and market acceptance risks, the impact of competitive pricing, product development, commercialization and technological difficulties and other risks detailed in the Company's filings with the Securities and Exchange Commission.

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                  ECI TELECOM LTD.
                  AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF INCOME
      (In thousands, except per share figures)
                     (unaudited)

                                                     Three Months Ended
                                                     March 31
                                                       1997      1996
Revenues                                             $160,059  $131,559
Cost of revenues                                       81,965    68,413
Gross profit                                           78,094    63,146

Research and development costs                         20,143    17,766
Less - royalty-bearing participations                 (4,466)   (4,439)
Net                                                    15,677    13,327

Selling, general and administrative expenses           31,013    26,186
Operating income                                       31,404    23,633
Financial income - net                                   670     1,363
Other expenses - net                                  (1,102)     (246)
Income before taxes on income                          30,972    24,750
Taxes on income                                         1,551       734
Net income                                             29,421    24,016

Earnings per share
Net income per ordinary share                           $0.39     $0.32

Weighted average number of shares
 used to compute earnings per share                    76,074    76,112

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                             ECI TELECOM LTD.
                             AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED BALANCE SHEETS
                          (in thousands of U.S.$)

                                               March 31       December 31
                                                 1997           1996
                                              (Unaudited)     (Audited)

Assets

Current Assets
Cash and cash equivalents                        $124,800      $128,369
Short-term investments                              4,638         1,461
Trade receivables                                 180,651       184,110
Other receivables and prepaid expenses             21,354        24,419
Inventories                                       165,162       176,826
Total current assets                              496,605       515,185

Investments, long-term bank deposits, and
 receivables, net                                  71,737        61,072

Property, plant and equipment - net               106,289       104,992
Software development costs - net                   22,283        20,670
Other assets                                       11,230         7,811

                                                  708,144       709,730

Liabilities and Shareholders' Equity

Current Liabilities
Short-term credit and current maturities of
 long term debt                                     1,104         6,021
Trade payables                                     36,893        47,501
Other payables and accrued liabilities             50,566        63,095
Advances from customers                             1,530         1,607
Proposed dividend                                   3,806         3,800

Total current liabilities                          93,899       122,024

Long-term liabilities, net of current maturities  101,070       101,112

Liability for employee severance benefits           1,966         2,088

Shareholders' equity
Share capital                                       5,291         5,287
Capital surplus                                   139,448       137,545
Net unrealized loss on available sale
 securities                                         (816)            -
Retained earnings                                 374,568       348,956
                                                  518,491       491,788
Company stock held by subsidiaries                (7,282)       (7,282)

                                                  511,209       484,506

                                                  708,144       709,730
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CONTACT: Doron Inbar Jody Burfening/Jennifer Agatston

ECI Telecom Ltd., Lippert/Heilshorn & Associates Inc.

30 Hasivim Street, 212 838 3777 (ext. 106 or ext. 128)

Petah Tikva 49133 [e-mail]

Tel: [phone] [e-mail]

Fax: [phone]