Eltek Ltd. Reports Third Quarter and Nine-Month Results

    PETACH-TIKVA, Israel, Nov. 20 /PRNewswire/ -- Eltek Ltd. (Nasdaq:   ELTK),
 the leading Israeli manufacturer of advanced circuitry solutions, today
 announced results for the third quarter and nine months ended September 30,
 2001.
     Eltek reported revenues for the three months ended September 30, 2001 of
 NIS 24.5 million ($5.6 million), compared with NIS 26.9 million ($6.2 million)
 during the second quarter of 2001 and NIS 36.7 million ($8.4 million) reported
 for the three month period ended September 30, 2000. Net loss for the third
 quarter totaled NIS 1.3 million ($288,000) or NIS 0.26 per diluted share
 ($0.06), compared with net income of NIS 874,000 ($201,000), or NIS 0.18 per
 diluted share ($0.04) for the second quarter of 2001 and NIS 5.6 million
 ($1.3 million), or NIS 1.07 per diluted share ($0.25) for the quarter ended
 September 30, 2000.
     Gross profit for the quarter was NIS 1.5 million ($347,000), compared with
 NIS 4.9 million ($1.1 million) during the second quarter and NIS 10.8 million
 ($2.5 million) during the comparable period in 2000.  Operating loss was
 NIS 1.8 million ($419,000) compared with operating income of NIS 1.4 million
 ($317,000) reported for the second quarter, and NIS 6.0 million ($1.4 million)
 reported for the comparable quarter in 2000.
     For the nine month period ended September 30, 2001, the company reported
 revenues of NIS 87.1 million ($20.0 million), compared with revenues of
 NIS 95.1 million ($ 21.8 million) during the comparable period in 2000. Net
 income for the nine months was NIS 4.3 million ($997,000), or NIS 0.89 per
 diluted share ($0.20), compared with net income of NIS 11.0 million
 ($2.5 million), or NIS 2.21 per diluted share ($0.51) for the nine months
 ended September 30, 2000.
     Gross profit for the period was NIS 15.5 million ($3.6 million), compared
 with NIS 23.6 million ($5.4 million) during the comparable period in 2000.
 Operating income was NIS 4.7 million ($1.1 million) compared with
 NIS 12.4 million ($2.8 million) reported during the same period in 2000.
     Additionally, the Company announced today that it has begun implementing a
 cost reduction program, which will initially include a workforce reduction of
 approximately 10%, as well as a 10% reduction in management salaries.
 Additional measures are being implemented throughout the remainder of the
 fourth quarter and into the first quarter of 2002. The Company anticipates
 part of the cost savings will be realized immediately, with increased savings
 to be seen during the first quarter.
     In announcing the results, Arieh Reichart, President and CEO of Eltek
 said, "Our financial results for the third quarter were impacted by the
 continuing weakness in the economy. We have undertaken recovery measures to
 help reduce costs in the short term, including workforce reductions and
 management pay cuts. Nevertheless, we remain confident in the Company's
 future. We are optimistic that a recovery may be beginning, as evidenced by
 our announcement earlier today that we have received a $1.2 million order from
 one of our major customers. While visibility is still somewhat low, we expect
 that our results for the fourth quarter will be better than our third quarter
 results."
 
     About Eltek
     Eltek is one of Israel's leading manufacturers of printed circuit boards,
 the core circuitry of most electronic devices. It specializes in the complex
 high-end of PCB manufacturing, i.e., HDI, multi-layered and flex-rigid boards.
 Eltek's technologically advanced circuitry solutions are used in today's
 increasingly sophisticated and compact electronic products. The Company has
 invested heavily in upgrading its production facilities over the past five
 years.
 
     Certain matters discussed in this news release are forward-looking
 statements that involve a number of risks and uncertainties including, but not
 limited to statements regarding expected results in future quarters, risks in
 product and technology development and rapid technological change, product
 demand, the impact of competitive products and pricing, market acceptance, the
 sales cycle, changing economic conditions and other risk factors detailed in
 the Company's United States Securities and Exchange Commission filings.
     You may register to receive Eltek's future press releases or to download a
 complete Digital Investor Kit(TM) including press releases, regulatory filings
 and corporate materials by clicking on the "Digital Investor Kit(TM)" icon at
 http://www.kcsa.com .
 
                                   ELTEK LTD.
                     Consolidated Statements of Operations
              Adjusted to New Israeli Shekels as of September 2001
                     (In thousands, except per share data)
 
 
                                 Convenience                     Convenience
                                 translation                     translation
                     Nine           Nine           Three           Three
                    Months         Months          Months          Months
                    Ended           Ended           Ended           Ended
                   Sept. 30,       Sept. 30,       Sept. 30,      Sept. 30,
                  2000    2001       2001       2000     2001       2001
                   NIS    NIS        U.S.$      NIS      NIS       U.S.$
                  (Unaudited)    (Unaudited)    (Unaudited)     (Unaudited)
 
     Revenues    95,132  87,135     20,008     36,670  24,475      5,620
     Costs of
      revenues  *71,510  71,648     16,452    *25,894  22,963      5,273
 
     Gross
      profit    *23,622  15,487      3,556    *10,776   1,512        347
 
     Research
      and development
      costs,
      net          *328     383         88       *127      41          9
 
     Selling, general
      and administrative
      expenses   10,935  10,357      2,378      4,630   3,296        757
 
     Operating income
      (loss)     12,359   4,747      1,090      6,019  (1,825)      (419)
 
     Financial expenses,
      net         1,366   1,094        251        413     170         39
 
     Other incomes,
      net             9     691        158         29     741        170
 
     Income (loss)
      before taxes
      on income  11,002   4,344        997      5,635  (1,254)      (288)
     Taxes on
      income         --      --         --         --      --         --
 
     Net income
      (loss) for the
       period    11,002   4,344        997      5,635  (1,254)      (288)
 
     Basic earnings
      (loss) per
      share        2.21    0.89       0.20       1.14   (0.26)     (0.06)
 
     Weighted average
      number of
      ordinary shares
      used to compute
      basic earnings
     (loss) per ordinary
      share       4,967   4,855      4,855      4,967   4,855      4,855
 
     Diluted earnings
      (loss) per
      share        2.21    0.89       0.20       1.07   (0.26)     (0.06)
 
     Weighted average
      number of
      ordinary shares
      used to compute
      diluted earnings
      (loss) per ordinary
      share       4,967   4,855      4,855      5,407   4,855      4,855
 
     * Reclassified
 
 
                                   Eltek Ltd.
               Consolidated Condensed Balance Sheets (Unaudited)
          Adjusted to New Israeli Shekels as of September 2001
 
                           September 30,  September 30,    Convenience
                                                           translation
                                2000         2001             2001
                                NIS           NIS             U.S.$
                                         (in thousands)
 
     Assets
 
     Current assets
     Cash and cash
      equivalents             3,527           6,968           1,600
     Receivables: Trade      30,864          21,887           5,025
     Other                   *1,453           2,529             581
     Inventories             12,485          13,543           3,110
     Prepaid expenses          *588           1,279             294
 
     Total current assets    48,917          46,206          10,610
 
     Investment                  11              11               3
 
     Property and equipment,
      net                    43,110          53,308          12,240
 
 
     Total assets            92,038          99,525          22,853
 
     Liabilities and
      Shareholder's
      Equity
 
     Current Liabilities
     Short term credit and
      current installments of
      long-term debts        13,524          15,918           3,655
     Trade payables          22,025          15,342           3,523
     Other liabilities
       and accrued
       expenses               8,695           7,318           1,680
 
     Total current
      liabilities            44,244          38,578           8,858
 
     Long- term liabilities
     Long term debt,
      excluding current
     insaiiments             11,118          14,138           3,247
     Employee severance
      benefits                1,459             999             229
 
     Total liabilities       56,821          53,715          12,334
 
     Shareholders' equity
     Ordinary shares, NIS 0.6
      par value. Authorized
      50,000,000 shares,
      issued and outstanding
      4,850,151 and 4,792,452,
      in 2001 and 2000
      respectively           28,183          28,218           6,479
     Additional paid in
      capital                48,916          49,489          11,364
     Deferred compensation
      costs                     615             397              91
     Capital reserves
      related to loans
     from controlling
      shareholders            9,637           9,637           2,213
     Capital reserve          6,436           6,436           1,478
 
     Accumulated deficit    (58,570)        (48,367)        (11,106)
 
     Total shareholders'
      equity                 35,217          45,810          10,519
 
     Total liabilities
       and shareholders'
       equity                92,038          99,525          22,853
 
     * Reclassified
 
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SOURCE Eltek Ltd.

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