MicroTel Will Sell and Report as a Discontinued Operation the Last Remaining Operating Unit of Its Former Circuits Segment.

Business Editors and High-Tech Writers

RANCHO CUCAMONGA, Calif.--(BUSINESS WIRE)--Nov. 21, 2000

Third Quarter Results Have Been Restated To Reflect the Sale and

Discontinuation 

MicroTel International Inc. (OTCBB:MCTL)("MicroTel") Tuesday announced that its XIT Corp. subsidiary will sell, with a retroactive effective date of Nov. 15, 2000, its XCEL Etch-Tek Division (XET).

XET will be sold for $260,000 in cash and a note of $50,000 and the assumption by the buyer of $75,000 in trade payables. However, there can be no assurance that the sale of XET will be completed as expected. XET is the last remaining operating unit of the company's former Circuits Business Segment.

The XET unit recorded a loss of $528,000 in 1999 (unaudited) and a loss of $277,000 (unaudited) for the nine months of 2000. The forecasted loss from Etch-Tek operations for the 45-day period of the fourth quarter ending Nov. 15, 2000 is $158,000 for a total year 2000 loss of $434,000.

MicroTel has recorded a loss on the sale of XET's assets of $476,000. This loss on the sale of assets together with a forecasted loss in the fourth quarter of $158,000 results in a total loss of $634,000, which has been taken as a discontinued operation charge to the third quarter P&L.

The third quarter net income released in a news release on Oct. 25, 2000, totaled $1,028,000. This profit was reduced by $634,000 to reflect the loss on the sale of XET and XET's forecasted fourth quarter loss. This brings the adjusted profit for the third quarter to $394,000 after giving effect to the discontinued operation.

Restated net income from continuing operations for the three and nine month periods ended on Sept. 30, 2000 is $1,112,000 or five cents per diluted share and $1,324,000 or six cents per diluted share, respectfully.

For the three and nine month periods ended on Sept. 30, 1999, restated net loss from continuing operations is $742,000 or four cents per diluted share and $2,305,000 or a loss of 14 cents per diluted share, respectfully.

Commenting on the sale, Randolph D. Foote, CFO, stated: "We are very pleased to complete the sale of this last remaining loss operation of our former Circuits Business Segment. We previously sold XCEL Arnold Circuits Inc. in March of 1998 and we sold HyComp Inc. in April of 1999.

"With the imminent sale of XCEL Etch-Tek we will have finally completed the divestment of all of our money losing Circuits operations."

Carmine T. Oliva, chairman, president and CEO stated: "We did not think we would be successful in concluding the sale XCEL Etch-Tek at the time we released our third quarter earnings press release on October 25, 2000. However, based upon the recent completion of a favorable Phase I & II Environmental Site Assessment the choice of shutting down the operation became economically feasible.

"Therefore, we determined that if for any reason we were not successful in completing the sale as contemplated we would then proceed to shut it down.

"With this decision made, prior to the release of our third quarter 10Q results, we had the opportunity to declare our Circuits Segment a discontinued operation and take the write-off on the sale of the assets and the estimated forward losses as a charge to the third quarter rather than the fourth quarter.

"This action now leaves our fourth quarter free of XCEL Etch-Tek's losses and the loss on the sale of the XET assets."

Oliva stated further: "During the period from March 1998 to November 15, 2000 MicroTel divested XCEL Arnold Circuits Inc., HyComp Inc., XCEL Etch-Tek Division, the Xcelite product line and discontinued sub-system assembly operations.

"In addition, the company sold its half interest in Capital Source Partners which owned a 93,000 square foot building in which MicroTel had its previous headquarters offices and the XIT Corporation Digitran Division operations.

"The divestment of loss operations, together with two acquisitions, Belix and T-Com, cost reductions and especially the increase in the sale of new test instruments by our CXR Telcom Corporation are the driving factors in MicroTel's return to profitability.

"And despite the divestment of over $20 million in revenue, the company still anticipates year 2000 revenue to approach $30 million. With the divestment program completed, the anticipated fourth quarter profit will be the first quarterly profit since the program began in 1998 that will be indicative of the company's real profit potential.

"We are especially looking forward to the release of our fourth quarter results."

MicroTel International is an international telecommunications electronics company comprising three wholly owned subsidiaries -- CXR Telcom Corp. in Fremont, Calif., CXR, S.A. in Paris, and XIT Corp. in Rancho Cucamonga.

CXR Telcom and CXR, S.A. design, manufacture and market field and central office electronic telecommunications test instruments, voice, data and video transmission and network access equipment. XIT designs manufactures and markets electronic components including digital switches and power suppliers. The company operates out of facilities in the United States, France, England and Japan.

The statements in this news release relating to matters that are not historical are forward-looking statements which involve risks and uncertainties including, without limitation, economic and competitive conditions in the markets served by the company affecting the demand for the company's products, product pricing, market acceptance, access to distribution channels and other risks detailed from time to time in the company's Securities and Exchange Commission filings. These risks could cause actual results to differ materially from those anticipated or described herein.

             MicroTel International Inc. and Subsidiaries
   Consolidated Condensed Statements of Operations and Comprehensive
                                Income
                              (Unaudited)

                            Three months ended       Nine months ended
                                September 30,          September 30,
                            2000          1999      2000          1999
                              (in thousands except per share amounts)

Net sales                  $ 6,871     $ 6,448  $ 19,559      $ 19,444
Cost of sales                3,080       4,203    10,645        12,269

Gross profit                 3,791       2,245     8,914         7,175

Operating expenses:
 Selling, general and
  administrative             2,467       2,385     6,923         8,494
 Engineering and product
  development                  277         459       772         1,462

Income (loss) from
 operations                  1,047        (599)    1,219        (2,781)

Other income (expense)
 Interest expense             (110)        (80)     (263)         (209)
 Equity in earnings of
  unconsolidated affiliates      -          28         -           755
 Other                         177         (79)      381           (45)

Income (loss) from continuing
 operations before income
 taxes                       1,114        (730)    1,337        (2,280)

Income tax expense               2          12        13            25

Income (loss) from continuing
 operations                  1,112        (742)    1,324        (2,305)

Discontinued operations:
 Loss from operations of
  discontinued segment         (84)       (292)     (276)         (949)
 Gain (loss) on disposal of
  discontinued segment,
  including provision for phase
  out period of $158 in 2000
  periods                     (634)          -      (634)          331

                              (718)       (292)     (910)         (618)

Net income (loss)              394      (1,034)      414        (2,923)

Other comprehensive income
 (expense):
 Foreign currency translation
  adjustment                  (218)        244      (435)         (180)

Total comprehensive income
(loss)                       $ 176      $ (790)    $ (21)     $ (3,103)

Earnings (loss) per share:
 Continuing operations
  Basic                     $ 0.05      $(0.04)   $ 0.07        $(0.14)
  Diluted                   $ 0.05      $(0.04)   $ 0.06        $(0.14)

 Discontinued operations
  Basic                     $(0.03)     $(0.02)   $(0.05)       $(0.04)
  Diluted                   $(0.03)     $(0.02)   $(0.04)       $(0.04)

 Net income (loss)
  Basic                     $ 0.02      $(0.06)   $ 0.02        $(0.18)
  Diluted                   $ 0.02      $(0.06)   $ 0.02        $(0.18)