Level 8 Systems Nasdaq:LVEL, a provider of high performance eBusiness integration software, today announced that revenues for the third quarter amounted to $5.9 million.

That result is down 17% decline from the previous quarter and 74% from the parallel quarter of 2000.

Its implosion resulted from the continued slowdown in the economy, particularly in the financial services industry - Level 8's target market, the company said. Its chief executive Anthony Pizi commented that the company has made "difficult choices" to contend with the times, including "selling lines of business, impairing assets, taking restructuring charges and downsizing".

"Our organization transition is complete, our balance sheet is improved, we are converging our product strategy, leveraging our partner relationships, and focusing on markets where we see strong revenue opportunity and growth," Pizi added.

Level 8 reported a pro forma net loss for the quarter, excluding all non-cash charges and one-time charges of $3.4 million or $0.21 per share as compared to a pro forma income of $1.8 million and $0.10 per share in the same period last year.

Including all non-cash charges and one-time charges, which totaled $21.6 million, the company reported a loss for the quarter of approximately $25 million or $1.55 per share.

In 2000, the company reported a loss of $4.5 million or $0.34 per share. In the third quarter, the company recognized an impairment to the carrying value of certain assets in the amount of $10.9 million and an impairment in the equity investment of a public company in the amount of approximately $3.7 million. For the nine months ended September 30, 2001, the company reported revenues of $21 million, which represent a decrease of 66% or $42 million over the same period of the previous year.

On a pro forma basis, the company incurred a loss of $18.7 million or $1.17 per share as compared to a pro forma loss of $1 million or $0.01 per share in the same period last year.

On a GAAP basis, including all non-cash and one-time charges, the company reported a loss of $86.4 million or $5.51 per share compared with a loss of $18.1 million or $1.37 per share last year.

Included in the current year's loss is $32.7 million of impairment charges, $8.6 million of restructuring charges, a one-time charge of $3.7 million for uncollected charges relating to a significant customer who filed for bankruptcy protection and the recognition of the permanent impairment of an equity investment in another public company in the amount of $3.7 million.

Software license revenue for the quarter amounted to $772,000, which is an increase of $390,000 over the previous quarter and down from $14.4 million from the same period last year.

The company has continued to transition from its legacy products to its newer solutions such as Cicero software. Revenue from Maintenance and Services amounted to $5.1 million, which is down from both the previous quarter and the prior year.

The decline in service revenues results from underutilization of Level 8's consulting staff. The decline in maintenance is due to a delay in notification of renewals.

On October 1, 2001, Level 8 concluded the sale of its AppBuilder product line to BluePhoenix Solutions for $20 million. Level 8 utilized $12 million of the proceeds to reduce its short-term borrowings and extended the maturity on the remaining balance of $3 million to November 2003. In addition, Level 8 retired another $10 million in long-term debt, liquidating $22 million of liabilities.

Subsequent to September 30, 2001, Level 8 affected an exchange of its outstanding preferred shareholdings and warrants, allowing the company to raise additional capital and to eliminate the $1.7 million per year dividend payment.